Dec 7, 2017 | Consumer Protection, Employment & Technology Archive
CFPB Takes Action Against Citibank, N.A. For Student Loan Servicing Failures That Harmed Borrowers
Action Against Citibank, N.A. For Deceiving Borrowers About Tax Benefits, Incorrectly Charging Late Fees and Interest, Sending Misleading Monthly Bills and Incomplete Notices
On November 21, 2017, the Consumer Financial Protection Bureau (“CFPB”) announced that the CFPB
. . . took action against Citibank, N.A. for student loan servicing failures that harmed borrowers. Citibank misled borrowers into believing that they were not eligible for a valuable tax deduction on interest paid on certain student loans. The company also incorrectly charged late fees and added interest to the student loan balances of borrowers who were still in school and eligible to defer their loan payments. Citibank also misled consumers about how much they had to pay in their monthly bills and failed to disclose required information after denying borrowers’ requests to release loan cosigners. The [CFPB] is ordering Citibank to end these illegal servicing practices, and to pay $3.75 million in redress to consumers and a $2.75 million civil money penalty.
The CFPB found that “[f]or the student loan accounts that Citibank was servicing . . . Citibank misrepresented important information on borrowers’ eligibility for a valuable tax deduction, failed to refund interest and late fees it erroneously charged, overstated monthly minimum payment amounts in monthly bills, and sent faulty notices after denying borrowers’ requests to release a loan cosigner.”
Specifically, the CFPB found that Citibank:
Misled borrowers about their tax-deduction benefits: Federal law allows some borrowers to deduct up to $2,500 in student loan interest paid on “qualified education loans” annually. On its website and periodic account statements, Citibank made statements that suggested borrowers had not paid qualified interest, or that the borrowers were not eligible for the qualified interest tax deduction. Consequently, borrowers did not seek this tax benefit, even though they may have been able to benefit from it.
Incorrectly charged late fees and interest on loan balances to students still in school: Current students are eligible for in-school deferments, which postpone repayment until six months after they are no longer enrolled in school. Citibank erroneously canceled in-school deferments for certain borrowers based on inaccurate information about their enrollment status. In doing so, Citibank charged late fees when the borrowers did not make payments, even though payments should not have been due. Citibank also erroneously added interest to the loan principal, and failed to refund late fees and erroneously charged interest after discovering that in-school deferments had been terminated in error.
Overstated the minimum monthly payment due on account statements: Citibank serviced some loans for “mixed-status borrowers,” who had multiple student loans with Citibank, some of which were in repayment status, while other loans were in deferment status. While loans were in deferment, no payment was required, though borrowers had the option to make payments on those loans. For mixed-status borrowers with student loans in or approaching repayment, Citibank overstated the minimum amount due on the mixed-status account statements.
Failed to disclose required information after refusing to release a cosigner: Many consumers applied for student loans from Citibank with a cosigner to help guarantee the loan. Some of these borrowers later requested that these cosigners be released for some or all of their student loans with Citibank. When Citibank received an application from a student loan borrower to release a cosigner and place the loan in the borrower’s name only, Citibank would make a determination based on information in the borrower’s credit report and score. When Citibank denied a cosigner release application, it failed to provide the borrower with all of the information required under the Fair Credit Reporting Act.
CFPB Enforcement Action Against Citibank, N.A.
According to the CFPB:
Under the Dodd-Frank Wall Street Reform and Consumer Protection Act, the [CFPB] has the authority to take action against institutions violating consumer financial laws, including engaging in unfair, deceptive, or abusive acts or practices. The CFPB’s order requires Citibank to:
Refund $3.75 million to harmed consumers: The [CFPB’s] order requires Citibank to pay $3.75 million in restitution to harmed consumers who were charged erroneous interest or late fees, paid an overstated minimum monthly payment, or received inadequate notices as a result of Citibank’s faulty servicing.
Make changes to their servicing practices: The [CFPB’s] order requires Citibank to provide accurate information regarding student loan interest paid, implement a policy to reverse erroneously assessed interest or late fees, and to provide borrowers who were denied a cosigner release with their credit scores, the phone number of the credit reporting agency that generated the credit report, and disclosure language confirming that the credit reporting agency did not make the decline decision.
Pay a $2.75 million fine: The [CFPB’s] order requires Citibank to pay a $2.75 million penalty to the CFPB’s Civil Penalty Fund.
A copy of the CFPB’s Consent Order can be viewed by clicking CFPB_Citibank_Consent Order.
Kehoe Law Firm, P.C. is a multidisciplinary, plaintiff–side law firm dedicated to protecting investors and consumers from corporate fraud, negligence, and other wrongdoing. Driven by a strong and principled sense of social responsibility and obtaining justice for the aggrieved, Kehoe Law Firm, P.C. represents plaintiffs seeking to recover investment losses resulting from securities fraud, breaches of fiduciary duty, corporate wrongdoing or malfeasance, those harmed by anticompetitive practices, and consumers victimized by fraud, negligence, false claims, deception, data breaches or whose rights to minimum wage and overtime compensation under the federal Fair Labor Standards Act and state wage and hour laws have been violated.
Dec 7, 2017 | Consumer Protection, Employment & Technology Archive
Otsuka Holdings Co., Ltd. (OTSKY)
On October 12, 2017, CNN.com published an article, “The little red pill being pushed on the elderly,” which described the marketing efforts of Otsuka’s subsidiary, Avanir Pharmaceuticals (“Avanir”), with respect to Nuedexta, a treatment for pseudobulbar affect.
According to the article:
The maker of a little red pill intended to treat a rare condition is raking in hundreds of millions of dollars a year as it aggressively targets frail and elderly nursing home residents for whom the drug may be unnecessary or even unsafe, a CNN investigation has found.
And much of the money is coming straight from the federal government.
The pill, called Nuedexta, is approved to treat a disorder marked by sudden and uncontrollable laughing or crying — known as pseudobulbar affect, or PBA. This condition afflicts less than 1% of all Americans, based on a calculation using the drugmaker’s own figures, and it is most commonly associated with people who have multiple sclerosis (MS) or ALS, also known as Lou Gehrig’s disease.
Nuedexta’s financial success, however, is being propelled by a sales force focused on expanding the drug’s use among elderly patients suffering from dementia and Alzheimer’s disease, and high-volume prescribing and advocacy efforts by doctors receiving payments from the company, CNN found.
The CNN.com article further reported that “[s]oon after Nuedexta hit the market in 2011, doctors, nurses and family members began filing reports of potential harm – – ranging from rashes, dizziness and falls to comas and death.”
On October 19, 2017, CNN.com reported that Los Angeles City Attorney Mike Feuer had “launched an investigation” into Avanir, stating that “his office is seeking information and tips from the public to help determine whether state or federal laws have been broken in the sale, marketing or prescribing of Nuedexta.”
On December 4, 2017, CNN.com published an article, “Drugmaker paid doctors with problem records to promote its pill,” which reported that Avanir “paid nearly 500 doctors to speak or consult on its drug, Nuedexta, between 2013 and 2016, according to government data” and that “[t]hrough a review of the top prescribers and top paid physicians in this group, CNN identified a dozen who have been disciplined by state medical boards. These offenses included the harmful treatment of nursing home residents and ‘grossly negligent acts’ involving the inappropriate prescribing of dangerous and addictive drugs – – resulting in probation, suspension, fines and revoked licenses.”
On this news, Otsuka’s American Depositary Receipt (OTSKY) price declined sharply during intraday trading on December 5, 2017.
Kehoe Law Firm, P.C. is a multidisciplinary, plaintiff–side law firm dedicated to protecting investors and consumers from corporate fraud, negligence, and other wrongdoing. Driven by a strong and principled sense of social responsibility and obtaining justice for the aggrieved, Kehoe Law Firm, P.C. represents plaintiffs seeking to recover investment losses resulting from securities fraud, breaches of fiduciary duty, corporate wrongdoing or malfeasance, those harmed by anticompetitive practices, and consumers victimized by fraud, false claims, deception or data breaches. Together, the partners of Kehoe Law Firm, P.C. have spent more than 30 years prosecuting precedent-setting securities and financial fraud cases in federal and state courts on behalf of institutional and individual clients.
Dec 7, 2017 | Consumer Protection, Employment & Technology Archive
INC Research Holdings, Inc.
A class action lawsuit was filed against INC Research (INCR changed to SYNH on Jan. 8, 2018) and certain of its officers related to alleged violations of federal securities laws. INC, a clinical research company that provides Phase I-IV clinical development services to pharmaceutical, biotechnology, and medical device companies, announced on August 1, 2017, that it completed a merger with inVentiv Health, Inc. and represented that the merger “marks the beginning of an industry-changing company, purpose-built to achieve the singular goal of accelerating biopharmaceutical performance.”
The INC Research press release regarding the INC Research and inVentiv Health merger can be viewed by clicking INC Research & inVentiv Health Merger News.
On November 9, 2017, the first quarter after the merger, INC reported a net loss of $88.9 million, as well as an impairment charge to the INC Research trademark and intangible asset. According to INC Research:
For the three and nine months ended September 30, 2017, we generated a loss from operations of $88.9 million and $43.9 million, respectively, compared to income from operations of $39.4 million and $111.6 million for the three and nine months ended September 30, 2016, respectively. Our operating results for the three and nine months ended September 30, 2017 were impacted by (i) Merger-related transaction expenses of $84.3 million and $108.1 million, respectively, (ii) an impairment charge of $30.0 million recorded in the third quarter of 2017 with respect to the INC Research trademark and intangible asset, and (iii) an increase in amortization expense of $41.9 million in both periods due to the acquisition of intangible assets as a result of the Merger.
The INC Research/inVentiv Health press release regarding Q3 2017 results can be viewed by clicking INC Research_inVentiv Health Q3 2017 Results.
Reportedly, analysts noted that INC Research Holdings’ fourth quarter guidance was “worrisome” given the challenges that inVentiv’s business faced.
On this news, the stock price of INC Research fell $16.35 per share, or 28.4%, to close at $41.15 per share on November 9, 2017, on unusually heavy trading volume. Further, the share price of INC Research declined over the next three trading sessions, closing on November 14, 2017 at $34.35 per share, a total decline of $23.15 per share, or 40.3%.
What Can Investors Do?
If you purchased INC Research common stock between May 10, 2017 and November 9, 2017 and would like to speak privately with a securities attorney to contribute to or learn more about the investigation, please complete the form to the right or contact John Kehoe, Esq., (215) 792-6676, Ext. 801, [email protected] or send an e-mail to [email protected].
Kehoe Law Firm, P.C. is a multidisciplinary, plaintiff–side law firm dedicated to protecting investors and consumers from corporate fraud, negligence, and other wrongdoing. Driven by a strong and principled sense of social responsibility and obtaining justice for the aggrieved, Kehoe Law Firm, P.C. represents plaintiffs seeking to recover investment losses resulting from securities fraud, breaches of fiduciary duty, corporate wrongdoing or malfeasance, those harmed by anticompetitive practices, and consumers victimized by fraud, false claims, deception or data breaches. Together, the partners of Kehoe Law Firm, P.C. have spent more than 30 years prosecuting precedent-setting securities and financial fraud cases in federal and state courts on behalf of institutional and individual clients.
Dec 1, 2017 | Consumer Protection, Employment & Technology Archive
Triangle Capital – Class Action Lawsuit Filed
A class action lawsuit has been filed against Triangle Capital Corporation (“Triangle Capital”) (NYSE:TCAP) and certain of its officers in United States District Court, Southern District of New York, on behalf of investors who purchased or otherwise acquired Triangle Capital’s securities between May 7, 2014 and November 1, 2017, both dates inclusive (the “Class Period”), seeking to recover damages caused by Defendants’ violations of the federal securities laws and to pursue remedies under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 10b-5 promulgated thereunder, against Triangle Capital and certain of its executives.
Triangle Capital is “a publicly-traded, internally managed business development company” that “offer[s] a wide variety of investment structures, with a primary focus on junior capital – debt and equity, for lower middle market companies.”
The class action complaint alleges that during the Class Period, Triangle Capital Defendants made materially false and misleading statements regarding the Company’s business, operational and compliance policies. Defendants allegedly made false and/or misleading statements and/or failed to disclose that:
(i) as early as 2013, Triangle Capital’s investment professionals had internally recommended moving away from mezzanine loan deals due to changes in the market that no longer made these investments attractive risk-reward opportunities; (ii) Triangle Capital’s former Chief Executive Officer, Garland S. Tucker, III, ignored the advice of Triangle Capital’s investment professionals to chase higher short-term yields by causing Triangle Capital to invest in mezzanine debt despite the poor quality of the loans and their increased risk of defaults and nonaccruals; (iii) Triangle Capital’s entire vintage of 2014 and 2015 investments were at substantial risk of non-accrual as a result of the poor quality of the investments and deficient underwriting practices in place at the time of the investments; (iv) more than 13% of Triangle Capital’s investment portfolio at cost was at risk of non-accrual and, thus, the fair value of Triangle Capital’s asset portfolio was artificially inflated; (v) Triangle Capital had materially understated the number of loans performing below expectations and/or in non-accrual and had delayed writing down impaired investments; (vi) Triangle Capital failed to implement effective underwriting policies and practices to ensure it received appropriate risk-adjusted returns on its investments; and (vii) as a result of the foregoing, during the Class Period, Triangle Capital’s shares traded at artificially inflated prices and class members suffered significant losses and damages.
On November 1, 2017, Triangle Capital issued a press release announcing its financial results for the quarter ended September 30, 2017. While discussing Triangle Capital’s results, Triangle Capital’s CEO said the following:
The third quarter was a challenging quarter for Triangle as we experienced meaningful unrealized depreciation associated with certain assets which previously had been valued below cost. Our origination platform continues to find investment opportunities which are more senior-oriented in nature; however, certain legacy investments, predominantly associated with investment vintages 2014 and 2015, are under-performing from a credit perspective. As we take aggressive action to move through these legacy investments as quickly as possible, our Board has lowered our quarterly dividend to $0.30 per share. In addition, as we continue to transition our investment portfolio from historic mezzanine-centric investments to more secure, senior-oriented investments, our Board of Directors has elected to pursue the exploration of certain strategic alternatives, including the potential sale of certain investments, the potential benefit of partnering with another organization to accelerate our corporate initiatives, as well as other alternatives. Our Board is engaged in discussions with several investment banking firms and expects to announce the formal engagement of an advisor in the near future.
The press release (which can be viewed by clicking TCAP_Press Release_11.01.2017) also stated that:
[t]otal investment income during the third quarter of 2017 was $29.9 million, compared to total investment income of $31.2 million for the second quarter of 2017. The decrease in quarter-over-quarter total investment income resulted primarily from a $2.1 million decrease in investment income relating to non-accrual assets partially offset by a $0.6 million increase in quarter-over-quarter non-recurring dividend and fee income. Non-recurring dividend and fee income was $2.1 million in the third quarter of 2017 as compared to $1.5 million during the second quarter of 2017.
Net investment income during the third quarter of 2017 was $17.2 million, compared to net investment income of $19.4 million for the second quarter of 2017. Net investment income per share during the third quarter of 2017 was $0.36, based on weighted average shares outstanding during the quarter of 47.7 million, compared to $0.41 per share during the second quarter of 2017, based on weighted average shares outstanding of 47.7 million.
The Company’s net decrease in net assets resulting from operations was $57.5 million during the third quarter of 2017, compared to a net decrease in net assets resulting from operations of $2.0 million during the second quarter of 2017. The Company’s net decrease in net assets resulting from operations was $1.20 per share during the third quarter of 2017, compared to a decrease of $0.04 per share during the second quarter of 2017.
The Company’s net asset value, or NAV, at September 30, 2017, was $13.20 per share as compared to $14.83 per share at June 30, 2017 and $15.13 per share at December 31, 2016. As of September 30, 2017, the Company’s weighted average yield on its outstanding, currently yielding debt investments was approximately 11.2%.
Following these disclosures, Triangle Capital’s share price fell $2.57, or 20.98%, to close at $9.68 on November 2, 2017.
Have You Purchased or Acquired Triangle Capital Shares?
If you purchased or otherwise acquired Triangle Capital shares and would like to speak privately with a securities attorney to learn whether you may have legal claims, please complete the form to the right or contact John Kehoe, Esq., (215) 792-6676, Ext. 801, [email protected] or send an e-mail to [email protected].
Kehoe Law Firm, P.C. is a multidisciplinary, plaintiff–side law firm dedicated to protecting investors and consumers from corporate fraud, negligence, and other wrongdoing. Driven by a strong and principled sense of social responsibility and obtaining justice for the aggrieved, Kehoe Law Firm, P.C. represents plaintiffs seeking to recover investment losses resulting from securities fraud, breaches of fiduciary duty, corporate wrongdoing or malfeasance, those harmed by anticompetitive practices, and consumers victimized by fraud, false claims, deception or data breaches. Together, the partners of Kehoe Law Firm, P.C. have spent more than 30 years prosecuting precedent-setting securities and financial fraud cases in federal and state courts on behalf of institutional and individual clients.
Nov 29, 2017 | Consumer Protection, Employment & Technology Archive
Checkers – Telephone Consumer Protection Act (“TCPA”) Class Action Lawsuit Filed
Lexology recently reported that fast food chain Checkers Drive-In Restaurants, Inc. (“Checkers”) and its affiliate mobile marketer were sued in federal district court for alleged violations of the TCPA.
According to Lexology:
Checkers operates more than 850 Checkers and Rally’s drive-thru restaurants in 29 states and the District of Columbia. As an advertising vehicle for its fast food products, Checkers works with marketing affiliates to offer digital coupons and other promotions to prospective and existing customers. Some such promotions offer coupon codes for free Checkers[‘] or Rally’s menu items to consumers who use their mobile phones to text a specific keyword to a designated five-digit short code.
Louisiana resident Toby Branden, presumably enticed by a Checkers coupon offer, texted “Coupons” and “70117” to a Checkers mobile marketing short code. Branden alleges that mobile marketer Vibes Media, LLC (“Vibes”) subsequently delivered multiple advertising text messages to her mobile phone number on Checkers’ behalf.
Further, Lexology reported that
[o]n November 3, 2017, Branden filed a putative class action text message lawsuit against both Checkers and Vibes in the U.S. District Court for the Northern District of Illinois . . . on behalf of all cell phone users who received unauthorized text messages from Checkers or Vibes.
The complaint alleges that Checkers and Vibes violated the TCPA by sending commercial text messages to consumers without obtaining each recipient’s prior express written consent to receive such messages. Braden’s text message lawsuit claims that the Defendants texted thousands of consumers nationwide, and seeks damages of $500 to $1,500 per text message delivered.
Have You Received Unwanted, Unsolicited or Harassing Telephone, Telemarketing, Autodial or Robocalls or Text Messages?
If you have received unwanted, unsolicited or harassing telephone, telemarketing, autodial or robocalls or text messages and would like to speak privately with an attorney to learn more about your potential legal rights, please complete the form to the right or contact Michael Yarnoff, Esq., (215) 792-6676, Ext. 804, [email protected]; John Kehoe, Esq., (215) 792-6676, Ext. 801, [email protected]; or send an e-mail to [email protected].
Kehoe Law Firm, P.C. is a multidisciplinary, plaintiff–side law firm dedicated to protecting investors and consumers from corporate fraud, negligence, and other wrongdoing. Driven by a strong and principled sense of social responsibility and obtaining justice for the aggrieved, Kehoe Law Firm, P.C. represents plaintiffs seeking to recover investment losses resulting from securities fraud, breaches of fiduciary duty, corporate wrongdoing or malfeasance, those harmed by anticompetitive practices, and consumers victimized by fraud, negligence, false claims, deception, data breaches or whose rights to minimum wage and overtime compensation under the federal Fair Labor Standards Act and state wage and hour laws have been violated.
Nov 27, 2017 | Consumer Protection, Employment & Technology Archive
Preliminary Approval Given to Class Action Settlement Resolving Wage and Hour Violation Allegations
On November 21, 2017, Law360 reported that
“[a] California federal judge preliminarily approved . . . Phillips 66’s $5.5 million settlement that would resolve a putative class action alleging the energy company violated wage and hour statutes shorting refinery operators’ pay, but she required the parties to refine the class notice so it’s easier to understand.”
A class-action complaint was filed in federal court against Phillips 66 in January 2017 by operators at Phillips 66’s California Refineries. According to the complaint, refinery “operators work a continuous rotating shift during which they are never fully relieved from duty” and
“[t]hroughout their shifts, Phillips 66 requires Plaintiffs and the other operators to monitor the refining process, respond to upsets and critical events, and maintain the safe and stable operation of their units. In order to do so, Plaintiffs and the other operators are required to remain attentive, carry radios, and be reachable at all times during their shifts. Plaintiffs are also required to remain in contact with supervisors and other employees working in their unit throughout their shifts. As a result, Plaintiffs never receive off-duty breaks because they are constantly and continuously responsible for their units.”
The complaint also alleged that “[b]ecause operators are responsible for their units throughout their shifts, with no designated rest breaks or relief, Phillips 66 does not authorize or permit Plaintiffs to take off-duty rest breaks for every four-hour work period or major fraction thereof, as required by law.”
Additionally, according to the complaint, “Phillips 66 does not have a policy or system for providing relief to Plaintiffs to allow them to take off-duty rest breaks”; “Phillips 66 does not pay Plaintiffs an extra hour of wages for each work day during which they are not provided the off-duty rest breaks to which they are entitled under California law”; and “Phillips 66 also routinely fails to maintain complete and accurate payroll records for Plaintiffs showing, inter alia, the gross and net wages earned, including wages for missed rest breaks.”
A copy of the initial complaint, filed in United States District Court for the Northern District of California, can be viewed by clicking Buzas, et al v. Phillips 66 Company.
Law360 also reported that
[s]ince the suit was filed, the parties struck a deal under which class counsel will receive up to 25 percent of the common fund, or $1.375 million, in fees and up to $40,000 for costs. Meanwhile, the three lead plaintiffs would each receive a $7,500 incentive award and the company will make a $37,000 payment to the state to resolve PAGA claims. On average, the approximately 530 class members will receive $5,500, depending on the number of shifts they had, according to court documents.
The Kehoe Law Firm, P.C. is a multidisciplinary, plaintiff–side law firm dedicated to protecting investors and consumers from corporate fraud, negligence, and other wrongdoing. Driven by a strong and principled sense of social responsibility and obtaining justice for the aggrieved, Kehoe Law Firm, P.C. represents plaintiffs seeking to recover investment losses resulting from securities fraud, breaches of fiduciary duty, corporate wrongdoing or malfeasance, those harmed by anticompetitive practices, and consumers victimized by fraud, negligence, false claims, deception, data breaches or whose rights to minimum wage and overtime compensation under the federal Fair Labor Standards Act and state wage and hour laws have been violated.
