June 08, 2022

State AG Updates: Intuit, Ford, H&M and Marriott Settlements; Zuckerberg Suit re Cambridge Analytica; and Social Media Investigation re Buffalo Shootings

In this edition of Faegre Drinker’s State Attorneys General Update, we discuss:

  • Intuit’s $141 million nationwide settlement of false advertising claims relating to its TurboTax software
  • Ford’s multistate settlement of false advertising claims relating to some of its vehicles
  • The New York AG’s:
    • $36 million settlement with H&M relating to unused gift cards
    • $2.9 million settlement with Marriott over claims relating to employee severance payments
    • Investigation of social media companies following a mass shooting in Buffalo
  • The Washington, D.C., AG’s suit against Meta (f/k/a Facebook) CEO Mark Zuckerberg

Intuit Settles Claims Relating to Alleged Fraudulent Marketing of Its TurboTax Software 

Intuit entered a settlement with the Attorneys General of all 50 states and the District of Columbia to resolve claims that it used deceptive tactics to steer low-income tax filers who qualified for free filing software under an IRS program into a pay version of its TurboTax software. Among other things, the Attorneys General alleged that the company deceived consumers by using confusing names in identifying versions of TurboTax — i.e., calling the free version the “Freedom Edition” while calling a “freemium” version through which add-on products were sold the “Free Edition”; preventing the website for the free version of the software from being indexed by search engines; paying for targeted advertising in response to online searches that directed searchers to the TurboTax freemium version rather than the free version; using commercials with inadequate disclaimers that Intuit only provided free software for “simple” tax returns; failing to advise customers they were ineligible for free services until after they spent significant time inputting their tax information; and failing to include the TurboTax free version on the “Products and Pricing” screen of Intuit’s website. Under the terms of the settlement, Intuit is enjoined from violating the states’ consumer protection acts; must disclose certain, specific information regarding its products; and is barred from participating in the IRS’s Free File Program, unless the settlement is amended. Additionally, Intuit must pay $141 million. The company neither admitted nor denied any of the allegations in the settlement. A copy of the Assurance of Voluntary Compliance setting for the agreement is available here and a copy of Intuit’s blog post regarding the settlement is available here

Forty State Attorneys General Enter Into a $19.2 Million Multistate Settlement With Ford Motor Company

Forty state Attorneys General reached “a $19.2 million multistate settlement with Ford Motor Company regarding claims that Ford falsely advertised the real-world fuel economy of model year 2013–2014 C-Max hybrids and the payload capacity of model year 2011–2014 Super Duty pickup trucks.” In addition to monetary relief, the settlement requires Ford to correct the alleged deceptive advertising practices. The multistate investigation into Ford’s marketing practices allegedly found that “Ford made misleading representations about 2013–2014 C-Max hybrids including misrepresenting the distance consumers could drive on one tank of gas, marketing that driving style would not impact real-world fuel economy, and claiming superior real-world fuel economy compared to other hybrids.” The investigation also reportedly found that, “when advertising its 2011–2014 Super Duty pickup trucks, Ford purposefully omitted standard cargo truck items such as the spare wheel, tire and jack, and car radio when making weight calculations to raise the payload capacity.” In entering the settlement, Ford specifically denied that it violated any state or federal laws. 

Retailer H&M Agrees to Pay $36 Million to Settle Allegations It Failed to Escheat Money From Unused Gift Cards to New York

Taking up a qui tam suit, the New York AG accused retailer H&M Hennes & Mauritz, L.P. (a New York subsidiary of a Swedish holding company) of knowingly withholding funds from unspent gift cards in violation of New York’s Abandoned Property Law (APL) and violating New York’s False Claim Act. Under the APL, any unused balance remaining on a gift card after five years must be transferred to the state’s Abandoned Property Fund. The AG alleged that H&M entered into a contract with an Ohio company to make it appear that the Ohio company — instead of H&M — had issued the gift cards and, therefore, the unused funds were not subject to the APL. Under the terms of the contract, however, H&M retained the right to manage the proceeds from gift card sales. In 2011, according to the AG, H&M represented to New York that it had sold its gift card liabilities to the Ohio company and did not disclose that H&M retained the unused balances in its bank accounts or that it remained responsible for honoring the gift cards. The AG alleged that this conduct represented a breach of the APL and the False Claims Act. To resolve these allegations, H&M agreed to pay the state $36 million. The relator will receive $7.74 million of those funds. In entering the settlement, H&M neither admitted nor denied any wrongdoing. Copies of the AG’s press release and the settlement agreement are available here.

Marriott Agrees to Pay $2.95 Million to Resolve Claims It Made Inadequate Severance Payments When Discharging Employees

The New York AG entered a settlement with Marriott International, Inc., relating to its termination of employees at its Times Square hotel because of the pandemic in March 2021. According to the AG, over the years, various Marriott supervisors and managers told hourly employees that they would receive pay and benefits as good or better than those received by unionized employees at other hotels. When Marriott terminated employees in March 2021, it provided severance pay based on years of service. Those payments were capped, however, at the equivalent of ten weeks’ pay. The AG alleged that this cap, when viewed in conjunction with prior statements regarding providing benefits equal to those of unionized workers, constituted civil fraud because some unionized hotel workers in New York received severance packages that were not capped at ten weeks when they were discharged. Marriott agreed to pay $2.95 million to discharged workers to resolve the AG’s investigation. Copies of the AG’s press release and the settlement agreement are available here

N.Y. AG Investigates Social Media Companies Following the Mass Shooting in Buffalo

In response to a request from the governor, the New York AG announced that she will investigate how social media companies may have been used to stream, promote or plan a mass shooting in Buffalo. The investigation will include, at the least, the platforms Twitch, 4chan, 8chan and Discord. It is being conducted pursuant to New York Executive Law § 63(8), which empowers the AG to “inquire into matters concerning the public peace, public safety and public justice.” Copies of the AG’s press release and the governor’s request are available here.

Washington, D.C., AG Sues Meta CEO Mark Zuckerberg

The Washington, D.C., AG sued Meta CEO Mark Zuckerberg for “directly participating in decision-making that allowed the Cambridge Analytica data breach — the largest consumer privacy scandal in the nation’s history — while Facebook misled users with claims of privacy and data protection.” The complaint outlines the role Mr. Zuckerberg allegedly played in the decision-making process and alleges that Mr. Zuckerberg violated the district’s Consumer Protection Procedures Act. Specifically, the complaint alleges that Facebook, acting under Mr. Zuckerberg’s control, violated the act by failing to disclose to consumers that their personal information was being shared with third-party applications without their knowledge or consent — despite having made representations to consumers that Facebook would protect their privacy. A copy of the AG’s press release is available here.

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