| AGs Score Big Here are some of the largest settlements between corporations and attorneys general |
2006 | |||
| Date/Company | Complaint | Number of states |
Penalty* | Remedies |
| 1/24 Ameriquest |
Misrepresented loan terms and inflated appraisals | 49+DC | $325 million | Improve disclosure of loan terms and change sales incentives to eliminate conflicts of interest | 2005 |
| 12/13 DirecTV |
Failed to clearly disclose charges and limits of program availability to customers signing long-term contracts | 22 | $5 million | Improve disclosure, allow free service cancellations, and pay restitution to consumers making complaints related to the settlement |
| 11/14 Western Union |
Allowed high volume of money to be wired to scam artists and other fraudsters | 47+DC | $8.1 million** | Fund national awareness campaign, post prominent fraud warnings, improve agent training, and work with states to block transfers to known scam artists |
| 3/30 Blockbuster |
Misled customers with "No late fees" promotion | 47+DC | $630,000 | Provide one-time full refund to customers who did not understand program |
| 1/10 State Farm Mutual Insurance |
Did not properly mark the titles of vehicles taken from policyholders due to damage or theft | 49+DC | $40 million*** | State Farm will pay to identify improperly titled vehicles and locate their new owners to provide compensation | 2004 |
| 10/20 Organon USA |
Violated antitrust laws by delaying entry of generic competition for antidepressant drug Remeron | 50+DC | $36 million | Agreed to injunctive relief requiring timely listing of patents and prohibiting company from submitting false or misleading listing information to the FDA |
| 8/12 Alpharma and Perrigo |
Violated antitrust laws by jointly plotting to eliminate competition for generic versions of Children's Motrin | 50+DC | $1 million + $10,000 to each state |
Combined $1m payment from the two firms paid directly to the National Association of Attorneys General to support future antitrust actions |
| 7/22 Verizon, Cingular, and Sprint PCS |
Misled consumers with ads and unclear disclosures regarding service-agreement terms and wireless-coverage areas | 32 | $1.67 million each | All three carriers to provide coverage maps to consumers, and give them two weeks to terminate service contracts without incurring any penalties. Also mandates changes to ways carriers advertise and sell their services |
| 6/10 Ford Motor Credit, Ford, Lincoln Mercury Dealers |
Overcharged consumers who terminated lease agreements early to purchase their vehicles | 38 | Approx. $15 million*** + $6.3 million |
Primarily restitution, though Ford voluntarily changed its lease documents and established an 800 number that consumers can call to determine payoff amount |
| 5/13 Warner-Lambert division of Pfizer |
Marketed Neurontin for nonapproved uses | 50+DC | $38 million | As part of financial settlement, must fund $28m program to address problems associated with direct marketing by pharmas to doctors |
| 4/26 Medco Health Solutions |
Encouraged doctors to switch patients to different prescription drugs, deceptively suggesting the move would save patients money | 20 | $22.7 million*** + $6.6 million |
Disclose to patients and doctors the cost savings, side effects, and financial incentives for alternative drugs, and inform consumers that they can decline such drugs | 2003 |
| 5/22 EchoStar Satellite |
Failed to clearly disclose the terms and financial conditions customers agree to upon purchase of a satellite dish | 13 | $5 million | Improved disclosure practices, including listing all fees and highlighting those that differ from fees charged by comparable cable-TV services |
| 5/12 Bristol-Myers Squibb |
Monopolized the market for the drug Taxol and generic equivalents | 50 | $55 million | The suit, and a related suit over the drug Buspar, ultimately cost the company more than $600 million in settlements with attorneys general, consumers, and competitors |
| 4/24 H&R Block |
Charged consumers $22 for optional "Peace of Mind" guarantee without disclosing the charge | 41+DC | $2.3 million | Provide refunds of $22 — totaling about $1m — to consumers claiming they were not informed of the charge |
| 1/27 Aventis Pharmaceuticals and Andrx |
Violated antitrust laws when Aventis paid Andrx $90m not to market generic of Aventis's Cardizem CD heart drug | 50+DC | $80 million*** | Restitution to consumers, state agencies, and insurance companies | 2002 |
| 12/20 Ford |
Knowingly sold consumers sport-utility vehicles prone to tire failures and rollovers | 50+DC | $51.5 million | Fund a $30m advertising campaign on SUV safety. Ford also prohibited from misrepresenting the handling characteristics of its SUVs |
| 10/10 Household Finance |
Misrepresented loan terms and failed to disclose important information to borrowers | 19+DC | $484 million | Pay restitution to consumers and make extensive changes to lending and disclosure practices |
| 9/30 Various recording companies+ |
Price-fixing of music CDs | 50+DC | $67.3 million | Provide $75m worth of free CDs to nonprofits, charitable organizations, schools, and libraries |
| 9/6 Salton |
Price-fixing of George Foreman grills and pressuring retailers not to sell competing products | 44+DC | $8.2 million | In addition to financial penalty, must cover the costs of notifying consumers about settlement |
| *Unless otherwise noted, penalties are amounts paid to states in fines and reimbursement of legal or investigative costs. **To be spent over 5 years for national peer-counseling programs overseen by the American Association of Retired People Foundation. ***To be paid in restitution to consumers. +Bertelsmann Music Group, EMI Music Distribution, Warner-Elektra-Atlantic, Sony Music Entertainment, Universal Music Group, Trans World Entertainment, MTS/Tower Records, and Musicland Stores. |
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The Spitzer Backlash
(continued)
Most Popular
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Inside the March 2006 Issue
Cover Story
- The Spitzer Backlash
Features
- Help Wanted: Immigration Reform
- What CFOs Really Think about Sarbox
- The Trouble with COSO
- Directors Wary of Compliance Litigation
Also Inside
- From the Editor, March 2006
- Letters to the Editor, March 2006
- Topline, March 2006
- View from China: Stakeholder Capitalism
- House-poor Consumers: Tapped Out?
- I Am Joe's Conscience
- Unifying Information-Security Standards
- Rx for Merger Trauma
- Staples' John Mahoney
- Avoiding Tax on Foreign Collateral
- Choosing Your Personal Financial Adviser
- Becoming a Bigger Fish in a Smaller Pond
- Grapevine, March 2006
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Paul Gross
Mar 15, 2006 8:02 AM ET
Spitzer
What is scary for New York businesses is that Spitzer now looks like a runaway candidate for governor. The state is … more
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