Consumer Protection

SACRAMENTO — California Attorney General Bonta issued the following statement after Senate Bill 976 (SB 976) Protecting Our Kids from Social Media Addiction Act passed the Senate. SB 976, sponsored by Attorney General Bonta and authored by Senator Nancy Skinner (D-Berkeley), would limit the harms associated with social media addiction. This marks an important continuation of Attorney General Bonta’s commitment to improving child safety online.

“SB 976 puts control back in the hands of parents and children. Our children and teens are experiencing a public health crisis, caused by social media companies in their thirst for profits,” said Attorney General Bonta. “In California, we take mental health seriously, we take children’s online safety seriously — and we know that we don’t have a minute to waste to protect our kids. In California, we move fast and fix things.”

SB 976, co-sponsored by Public Health Advocates and the Association of California School Administrators, takes steps to protect young users from online addiction. First, SB 976 would give parents the choice of whether users under the age of 18 would receive a chronological feed from users they already follow or the current default on addictive social media platforms, an algorithmic feed. Algorithmic feeds fuel harmful and addictive use of the platforms and heavy social media use can cause mental health harms to young users. Second, the bill would prohibit social media platforms from sending notifications between 12:00 a.m. and 6:00 a.m. to users under age 18, unless a parent or guardian has provided consent. Third, SB 976 expands parental controls by requiring social media platforms to provide parents the ability to establish certain protections that will be turned on by default, including the ability to halt social media notifications and to block access to platforms for minors during nighttime hours and during the school day. 

OAKLAND — California Attorney General Rob Bonta today announced a settlement with Liberty Tax (Liberty) for running deceptive advertisements that misled consumers into thinking they were getting a free advance on their tax refund when they were actually taking out a high-cost loan. These actions violated California law and a 2009 injunction obtained by the California Department of Justice following trial, which required Liberty to clearly disclose in every refund loan advertisement that the product is a loan. Under today’s settlement, which the court will enter as an amended judgment, Liberty must pay $150,000 in civil penalties and comply with enhanced disclosure requirements about its loan products.

“Liberty tax deceived hardworking families, eager for their tax refunds, into falling for high-priced loans. This is illegal and as the People’s Attorney, I will not stand for it,” said Attorney General Bonta. “This settlement prevents Liberty Tax from lying and misleading their customers in the future and serves as a warning to other tax preparation servicers: My office is watching, and we are prepared to go to the mat for California consumers."

Liberty provides tax preparation services directly to consumers, and as part of that, sells refund anticipation loan products, which are short-term loans with applicable fees secured by a consumer’s anticipated tax refund. 

In 2007, then Attorney General Brown sued Liberty, alleging that it deceptively advertised its refund anticipation loans by failing to clearly disclose that they were costly loans and not advances on consumers’ actual tax refunds. In 2009, Liberty was ordered to pay $1,161,699 in civil penalties and $135,866 in restitution and submit strong injunctive terms barring Liberty from deceptive advertising. Specifically, Liberty was ordered to clearly and “conspicuously” disclose in every refund loan advertisement that the product is a loan, and that fees and interest may apply.

Despite this court order, Liberty again began advertising “Easy Advance” and “Holiday Advance” refund anticipation loans online and in its stores without adequately disclosing that the products are loans. Today’s settlement imposes civil penalties for those violations and strengthens Liberty’s disclosure requirements. The new injunctive terms specifically define “conspicuous” in a number of advertising contexts, require Liberty to include the word “loan” in the name of each refund anticipation loan product, and require that Liberty use the full name of the loan product whenever the product is mentioned. This is intended to prevent marketing that might mislead consumers into thinking they are getting an advance on their tax refund when they are actually applying for a loan.

Attorney General Bonta is committed to standing up for Californians’ financial protection and their right to file taxes safely.

Last March, Attorney General Bonta issued a consumer alert with tips on preparing taxes safely, and Californians to file early, take actions to protect themselves online, and learn about free or low-cost tax filing opportunities. In May 2022, Attorney General Bonta, as part of a coalition of 51 attorneys general and with the Los Angeles City Attorney and Santa Clara County Counsel, announced a $141 million settlement against Intuit, resolving allegations that the California-based company deceptively advertised its “free” online TurboTax products. In May 2023, Attorney General Bonta  announced that consumers who were tricked by TurboTax’s owner Intuit into paying for free tax services would begin receiving checks. Californians received more than $12.2 million, distributed to the more than 400,000 consumers who were eligible for a free tax filing program and were instead deceived into paying to file their federal tax return.

The proposed judgment, which remains subject to court approval, is available here. 

Borrowers should not be held responsible for student loan servicers’ misconduct or oversight failures

OAKLAND — California Attorney General Rob Bonta today joined a multistate coalition of 19 attorneys general in sending a letter to the U.S. Department of Education (ED) supporting ED’s proposed regulations that would expand debt relief to more federal student loan borrowers. U.S. borrowers currently hold over $1.7 trillion in federal student loan debt; 3.8 million Californians owe over $142 billion of this debt.

“For many students, especially low-income students and students of color, college is only possible because of student loans. Most students have no choice but to go into significant debt to afford higher education,” said Attorney General Bonta. “Policy failures and misconduct by student loan servicers have left many borrowers in the dark, unable to navigate complicated and burdensome loan repayment and forgiveness programs. The path to relief is for many, a new barrier to jump though instead of a quick and simple step. These new regulations will expand relief to more borrowers, I urge the Department of Education to very quickly apply relief.”

In the letter, the attorneys general support the proposed federal policy, which would waive repayment for borrowers who have seen their debt balloon beyond the amounts they originally owed, borrowers who have been struggling under the burden of student loan debt for decades, and borrowers who attended schools that failed to provide sufficient value to their students. The proposed regulations also would waive remaining loan balances for borrowers who meet the eligibility criteria for loan forgiveness under existing programs but have not achieved forgiveness because they have not successfully enrolled in or applied to these programs.  

The letter continues by urging ED to implement the relief quickly to help alleviate borrowers of the financial and psychological burdens associated with long-term student loan debt. Attorneys general have long been on the front lines of the student debt crisis, fighting on behalf of student loan borrowers who have been struggling for years due to the undeniable shortcomings of the student loan system; shortcomings which are disproportionately borne by low-income borrowers and borrowers of color. One study found that, 20 years after starting college, the average Black student loan borrower still owes 95% of their original balance, while the average white borrower owes only 6%. Due to racial wealth disparities, most Black and Latino college students come from low-income backgrounds and can count on only a fraction of the financial support as their white counterparts. More debt and less support have undeniably led to long-term debt burden and severe financial consequences. According to the California Department of Financial Protection and Innovation, although more students of color are attending college, student debt has delayed them from purchasing homes, starting businesses, and building generational wealth. 

In sending today’s letter, Attorney General Bonta joins the attorneys general of Massachusetts, Colorado, Connecticut, Delaware, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New York, Oregon, Pennsylvania, Rhode Island, Vermont, Washington, and the District of Columbia.

Attorney General Bonta has been active in in protecting and obtaining meaningful relief for student loan borrowers.

• In September 2023, Attorney General Bonta submitted a letter to the Biden-Harris Administration raising concerns about the resuming of federal student loan payments and asking for robust measures to protect borrowers.
• In January 2023, Attorney General Bonta, along with 21 other state attorneys general, filed an amicus brief in the U.S. Supreme Court in support of the Biden Administration’s plan to discharge between $10,000 and $20,000 in federal student loan debt for certain lower-income borrowers. 
• In January 2022, Attorney General Bonta announced a multistate settlement against Navient, one of the largest student loan servicers in the country, to resolve allegations of misconduct in the servicing and collection of federal student loans. The settlement includes $95 million in nationwide restitution for federal student loan borrowers and additional private student loan debt cancellation. Attorney General Bonta called on the U.S. Department of Education to address the $1.7 trillion student loan crisis and longstanding failures in federal student loan servicing.

A copy of the letter can be found here.

OAKLAND — California Attorney General Rob Bonta today released the following statement after the Supreme Court upheld the Consumer Financial Protection Bureau’s (CFPB) funding structure as constitutional and protected its past and ongoing regulatory actions in Consumer Financial Protection Bureau v. Community Financial Services Association of America (CFSA).

“Today’s decision reaffirms the absolutely critical role CFPB has in advancing consumer protection and regulating the financial services industry. The CFPB has been an invaluable enforcement partner to California, working to protect consumers from fraud, abuse, and unfair business practices —  and has returned a staggering $17.5 billion to Americans since its creation,” said Attorney General Bonta. “My office will continue to use all legal tools at our disposal to robustly enforce California’s consumer protection laws. We look forward to continued collaboration with the CFPB.”

Attorney General Bonta has been a strong ally of the CFPB at every step in the legal process.

In May 2023, Attorney General Bonta, as part of a coalition of 24 attorneys general, filed an amicus brief supporting the CFPB’s contention that the agency’s funding structure is constitutional and that the court should not invalidate the CFPB’s past and ongoing regulatory and enforcement actions even if it determines that the agency’s current funding structure is not constitutional. In October 2023, Attorney General Bonta issued a statement in response to the Supreme Court hearing oral argument in this case. 

Martin paid $256,997.65 in restitution to victims

SAN DIEGO — California Attorney General Rob Bonta and San Diego District Attorney Summer Stephan this week announced that defendant Marie Martin, a San Diego-based travel agent and registered seller of travel, was sentenced to six months of home confinement and six months of felony probation for embezzling travel funds from more than 150 parents who paid for eighth-grade school trips to the East Coast. After the school trips were cancelled due to the COVID-19 pandemic, Martin refused to provide refunds to the parents, instead spending funds on personal expenses. Following her guilty plea in January, as part of the sentencing, Martin paid $256,997.65 in restitution to victims.

“Parents all over California are willing to spend their time and money to give their children a better life. Marie Martin financially took advantage of more than 150 families during an already traumatic and financially challenging time,” said Attorney General Rob Bonta. “I am proud to fight for the rights of consumers and thank the San Diego District Attorney’s Office for their partnership in investigating and prosecuting this case.”

“This defendant’s disgraceful crimes cheated parents who are working to give their children expanded educational opportunities that would broaden their horizons,” said San Diego County District Attorney Summer Stephan. “Together with the Attorney General, our Consumer Protection Unit delivered justice and restitution to the families who were defrauded out of their hard-earned income.” 

In early 2019, Martin solicited funds from parents at nine schools in Los Angeles and Orange counties for eighth-grade school trips to Washington, D.C., and the East Coast. The school trips were supposed to take place in 2020, but were canceled due to the COVID-19 pandemic. When the parents who paid for these trips requested refunds, Martin declined. Instead, she allegedly used client funds for personal expenses, including credit card purchases, rent, and artwork. The investigation revealed that even before the pandemic, Martin was experiencing cash flow problems and commingling client funds. Because Martin had used the parents’ funds for personal expenses, she was unable to refund parents when the pandemic halted all travel. 

The Attorney General’s Office operates the Seller of Travel Program, which registers travel agents and certain other travel businesses operating in California. The Attorney General, local district attorneys, and city attorneys can bring enforcement actions against sellers of travel for violations of the law. Any Californian who believes they have been wronged by a seller of travel is encouraged to contact their local district attorney and/or local law enforcement agency, and file a complaint with our office at ‪www.oag.ca.gov/report. California consumers who suffer losses due to a registered seller of travel’s failure to provide travel services or refunds may be eligible to file a restitution claim with The Travel Consumer Restitution Corporation.

OAKLAND — California Attorney General Rob Bonta announced that the U.S. District Court in Arizona denied Avid Telecom’s (Avid) attempts to dismiss and delay a bipartisan, 49-state lawsuit against the company and its owner, Michael D. Lansky, for allegedly initiating and facilitating billions of unlawful robocalls in California and around the country. Those robocalls included Social Security Administration scams, Medicare scams, and employment scams; two robocall examples can be found here and here. Forty-nine attorneys general who are also members of the Anti-Robocall Multistate Litigation Task Force sued Avid in May 2023.

“Robocalls recklessly interrupt people’s busy days and cause Californians real financial damage every year,” said Attorney General Bonta. “Avid Telecom was responsible for delivering not hundreds, or thousands, or millions of robocalls — but billions of robocalls, and will now have to take responsibility. My office stands ready to defend Californians against bad actors looking to exploit consumers.”

Avid Telecom allegedly sent or attempted to transmit more than 24 billion scam calls in a four-year period about Social Security Administration scams, Medicare scams, auto warranty scams, Amazon scams, DIRECTV scams, credit card interest rate reduction scams, and employment scams. They continued transmitting these calls even after being notified at least 329 times that these illegal robocalls were being sent across their networks. 

A copy of the order is available here.

A significant resolution to a nationwide problem 

OAKLAND — California Attorney General Rob Bonta today, alongside a bipartisan, multistate coalition, announced a $10.25 million settlement with major U.S wireless carriers after an industry-wide investigation of misleading advertising practices. The settlement, which is subject to court approval, resolves the allegations that the carriers violated the Unfair Competition Law and False Advertising Law by engaging in deceptive and misleading advertising. Today’s settlement provides strong, industry-wide injunctive relief that applies to all major wireless carriers and includes a payment of $10.25 million to the states, with $1.2 million going to California.  

“We have all heard and seen advertisements announcing too good to be true cell phone deals, offering wireless devices for free or “unlimited” data. Turns out, many of those deals are indeed too good to be true,” said Attorney General Bonta. “Wireless carriers have exploited the fact that cell phones are now essential to our day-to-day lives, especially for low-income or immigrant consumers who are more likely to depend on cell phone plans for internet access. I am proud that this settlement requires industry-wide changes to the deceptive advertising practices which have become commonplace in the marketing of cell phones. As the People’s Attorney, I am committed to enforcing consumer laws in the state of California and speaking out for consumers nationwide.”

Today’s settlement provides industry-wide injunctive relief, which addresses all of the common misleading advertising practices committed by major wireless carriers. In addition to ensuring that all advertising is truthful, accurate, and non-misleading, the wireless carriers must comply with specific requirements, including: 

• Unlimited Claims: Whenever a Wireless Carrier makes an “unlimited” data claim, they are required to clearly and conspicuously explain all material restrictions on data speed, including any thresholds at which unlimited data speeds may be slowed. Wireless carriers are prohibited from claiming that plans which set numerical caps on the quantity of data available are unlimited.  

• Switch-and-Save Offers: Whenever a Wireless Carrier makes an offer to pay a consumer’s cost to switch carriers, the Wireless Carrier must clearly and conspicuously explain all requirements a consumer must fulfill to take advantage of the offer.

• Discounted Services Claims: Whenever a Wireless Carrier makes a cost-comparison or discounted services offer, they must make comparisons between services that are similar rather than making misleading apples-to-oranges comparisons. Similarly, if a Wireless Carrier intends to provide a discount or a savings after-the-fact in the form of cash, credit, or a rebate, they must explain how the consumer will receive the funds and how long the consumer must wait to receive the funds.

• Free or Discounted Device Claims: Whenever a Wireless Carrier offers consumers a “free” device as part of a plan, they must explain everything a customer must do to obtain the “free” device, including any fees they must pay or other devices they are required to purchase. Wireless Carriers are also prohibited from increasing the price of the underlying service or other relevant devices to make up for the cost of the “free” device.

• Device Lease Claims: Whenever a Wireless Carrier offers a device on lease as opposed to for purchase, they must make that fact clear to a consumer. Wireless Carriers are prohibited from characterizing leases as purchases.

• Employee Training: The Wireless Carriers are required to train all employees responsible for advertising and all customer service representatives on the provisions of this settlement to ensure on-the-ground compliance.

• Complaint Representatives: The Wireless Carriers are required to designate a dedicated employee to work with the attorneys general to resolve complaints from everyday consumers.

Over the years, competition among wireless carriers has been growing, and advertising by the carriers has become increasingly aggressive. As more consumers use their mobile phones for internet access, especially low-income consumers whose mobile phones may be their primary form of internet access, the cost and quality of mobile phone plans is increasingly important. In 2021, 27% of people with a household income of $30,000 or less were reliant on their smartphones for online access, compared to only 6% of people with a household income of over $75,000. Cell phones and mobile plans represent one of the larger financial decisions low-income consumers make in a given year.

Attorney General Bonta is committed to investigating and remedying harm to consumers affected by unlawful and deceptive business practices. 

• Earlier this month, Attorney General Bonta, along with the District Attorneys of Alameda and Marin counties, and city and county of San Francisco, announced a $23 million settlement with Service Corporation International, the nation’s largest funeral service provider for engaging in false advertising and unlawful and deceptive acts in its marketing and sale of pre-need cremation packages.
• Also in April, Attorney General Bonta submitted a comment letter supporting the Consumer Financial Protection Bureau’s proposed rule which would close a regulatory loophole that enables banks to extract billions of dollars from consumers by charging overdraft fees without adequately disclosing basic credit terms.
• In February, Attorney General Bonta announced a settlement with two separate local Bakersfield landlords and their property management company, for multiple violations of the Tenant Protection Act, including unlawful rent increases, unlawful evictions, and failure to return security deposits on time.
• In December, Attorney General Bonta submitted a comment letter to the FCC applauding its efforts to re-establish nationwide net neutrality rules and urging the FCC not to preempt California’s own net neutrality law. In its draft order, the FCC agreed with Attorney General Bonta and concluded that California’s law is consistent with the proposed rules and should stay on the books.

Copies of the complaints can be found here, here, and here. Copies of the proposed judgments, pending court approval, can be found, here, here, and here. 

Rapidly changing technology requires responsive, flexible state privacy policy

OAKLAND — California Attorney General Rob Bonta today led a multistate coalition of 15 attorneys general urging congressional leaders to remove preemption language in the current draft of the American Privacy Rights Act (APRA), a proposed federal data privacy bill. The preemption clause currently in the APRA would result in California’s landmark privacy law being replaced with weaker protections and would hamper the ability of California to adequately protect the privacy of its citizens in the future. In today’s letter, Attorney General Bonta and colleagues from across the country call on Congress to set a floor and not a ceiling with any federal privacy law, and to respect additional protections states provide or would provide in future state-level legislation.

“Federal action to protect Americans' privacy is essential, but not at the expense of the robust protections already in place in California and in states across the country. California is at the forefront of privacy protections and must retain the ability to respond to privacy concerns as tech rapidly innovates,” said Attorney General Bonta. “We urge Congress not to undercut the important protections that states have established; states must be able to protect their residents from evolving privacy threats.”

With the first comprehensive privacy law in the country, California has the strongest protections in the nation. Californians currently have robust protections and rights to manage and control the use of their data through the California Consumer Privacy Act and other state laws. Since California passed the first comprehensive privacy law in 2018, numerous states have followed suit. States play a critical role in flexibly adapting to real-world circumstances and have set minimum data privacy standards that have driven innovation, including in the adoption of the global privacy control, and have not impeded business or technology. 

In the letter, the attorneys general highlight the importance of current and future state privacy protections, and ask that any federal privacy framework leave room for states to legislate responsively to changes in technology and data collection practices, as states are better equipped to quickly adjust to the challenges presented by technological innovation that may elude federal oversight. As Congress considers adopting APRA, the coalition urges changes to the proposed law — the APRA in its current form would impair some existing state protections and hamper state efforts to keep up with and adapt laws to changing technology.

In sending today's letter, Attorney General Bonta was joined by the attorneys general of Connecticut, Delaware, Hawaii, Illinois, Maine, Massachusetts, Maryland, Minnesota, Nevada, New York, Oregon, Pennsylvania, Vermont, and the District of Columbia.   

Attorney General Bonta is committed to protecting the privacy rights of Californians:  

• Last month, Attorney General Bonta and California Governor Gavin Newsom sent a letter to Congress urging congressional leaders to not include preemption language in the APRA.
• Last year, Governor Gavin Newsom, Attorney General Bonta, and the California Privacy Protection Agency (CPPA) sent a joint letter to Congress opposing preemption language in similar proposed legislation.
• In March, Attorney General Bonta joined a bipartisan multistate letter to the Federal Trade Commission expressing support for updates to the Children’s Online Privacy Protection Act and advocating for further clarity for proposed rules.
• In February Attorney General Bonta announced a settlement with DoorDash, resolving allegations that the company violated the CCPA and the California Online Privacy Protection Act (CalOPPA) by selling its California customers’ personal information without providing notice or an opportunity to opt out of that sale.
• In January, Attorney General Bonta, Assemblymember Buffy Wicks, and Senator Nancy Skinner introduced the California Children’s Data Privacy Act (AB 1949 Wicks), and the Protecting Our Kids from Social Media Addiction Act (SB 976 Skinner), landmark legislation seeking to protect youth online. These two bills would, respectively, limit the harms associated with social media addiction and provide more robust protections for kids’ data privacy.
• Earlier this year, as part of ongoing efforts to enforce the CCPA, Attorney General Bonta announced an investigative sweep, and sent letters to businesses with popular streaming apps and devices, alleging that they fail to comply with the CCPA. The sweep focused on the compliance of streaming services with CCPA’s opt-out requirements for businesses that sell or share consumer personal information, including those that do not offer an easy mechanism for consumers who want to stop the sale of their data.  
• In September 2023, Attorney General Bonta announced a $93 million settlement with Google resolving allegations that its location-privacy practices violated California consumer protection laws.

A copy of the letter can be found here. 

New law aims to tackle surge of hidden fees that are added to Californians' bills at the very end of a transaction 

California law goes into effect as federal government considers similar measures nationwide

OAKLAND — As the landmark price transparency law is set to go into effect July 1, California Attorney General Rob Bonta today released guidance to help businesses across the state comply with the new law. According to 2018 data from Consumer Reports, at least 85% of Americans have experienced a hidden or unexpected fee for a service, and more than two-thirds of those surveyed in 2023 said they were paying more now in surprise charges than they did five years earlier. Consumer Reports noted that hidden fees can increase the price of live event tickets by as much as 30% to 40%. Senate Bill 478 (SB 478) makes it illegal for businesses to advertise or list a price for a good or service that does not include all required fees or charges other than certain government taxes and shipping costs. Also known as the “Honest Pricing Law” or “Hidden Fees Statute,” SB 478 is a price transparency law that protects consumers from deceptive price advertising and allows them to make an informed decision by seeing the all-in price of goods or services up-front, before they get the bill. SB 478 has no effect on prices; the law does not ask businesses to charge less, the law does not require businesses to charge more. The Honest Pricing Law works to empower consumers by arming them with accurate information upfront, so that they can compare prices between merchants, and creates an equitable marketplace for businesses to compete. 

“Our price transparency law is about clear and honest communication with consumers, so consumers can make the financial choices that are best for them and their families. This new guidance provides information for businesses across California to ensure that clear answers are available, particularly for small businesses,” said Attorney General Rob Bonta. “The law is simple: the price you see is the price you pay. Laws work when everyone can comply. I am pleased that we can offer this guidance to help facilitate compliance with the law and make a more fair and level marketplace for businesses and consumers."

“Every consumer deserves honest, up-front pricing, and I’m proud to have worked with Attorney General Bonta and Senator Skinner to pass a law to help do just that,” said Senator Bill Dodd, D-Napa. “A consumer shouldn’t discover hidden fees made up by a business when they pay their bill.”

 “On July 1, Californians from Yreka to Calexico will be able to tell how much a product or service will actually cost right from the start,” said Ted Mermin, Director of the California Low-Income Consumer Coalition, which co-sponsored the bill. “No more getting drawn in by a falsely low advertised price only to find that the cost has doubled by the time you check out. The people of California have been played for too long. This summer, it’s game over.” 

Coauthored by Senator Bill Dodd (D-Napa) and Senator Nancy Skinner (D-Berkeley), and co-sponsored by the California Low-Income Consumer Coalition, SB 478 prohibits hidden fees in California beginning on July 1, 2024. Hidden fees are fees in which a seller uses an artificially low headline price to attract a customer and usually either discloses additional required fees in smaller print or reveals additional unavoidable charges later in the buying process.

SB 478 is a transparency law. A business can generally charge whatever amount it wants for a good or service, but the posted price must include the full amount that a consumer will pay for that good or service. The statute does not change what price a business can charge or what may be included in that cost. It simply requires that the price listed include all mandatory charges consumers will pay. 

SB 478 applies to the sale or lease of most goods and services that are for a consumer’s personal use including event tickets, hotels and other lodging, restaurants, and food delivery. SB 478 eliminates bait and switch tactics and demands transparency, so that consumers know what they are paying for and the total cost of a good or service upfront. 

California is at the forefront of a national movement against hidden and deceptive fees. Combating hidden and deceptive fees has been a top priority of the Biden-Harris Administration's economic agenda. In February, Attorney General Bonta supported the Federal Trade Commission’s (FTC) new “Rule on Unfair or Deceptive Fees,” which would ban hidden fees nationwide. The FTC’s proposed rule would prohibit unfair or deceptive practices relating to fees for goods or services, including misrepresenting the total costs of goods and services by omitting mandatory fees from advertised prices and misrepresenting the nature and purpose of fees.  

A copy of the FAQ’s can be found here.  The text of the legislation is available here.   

OAKLAND — California Attorney General Rob Bonta, along with the District Attorneys of Alameda and Marin counties, and city and county of San Francisco, announced a settlement with Service Corporation International (SCI), the nation’s largest funeral service provider, which does business in California as the Neptune Society and the Trident Society. The settlement, which is subject to court approval, resolves the People’s enforcement action alleging that Texas-based SCI violated the Unfair Competition Law (UCL) and False Advertising Law (FAL) by engaging in false advertising and unlawful and deceptive acts in its marketing and sale of pre-need cremation packages. The proposed settlement, in the form of a stipulated judgment, provides full restitution to consumers, comprehensive injunctive relief, and $23 million in civil penalties.

“California's robust consumer protection laws protect all Californians from unlawful, unfair, and fraudulent business and marketing practices,” said Attorney General Rob Bonta. “Whether in higher education, home insurance, or the funeral service industry, deceptive business practices will not be tolerated. When consumers purchase pre-need funeral services, they expect — and the law requires — their funds to be safe and protected until those services are utilized."

“Neptune Society’s and Trident Society’s pervasive price manipulation and deceptive marketing affected all their consumer negotiations and contracts for pre-need services, demonstrating how their unlawful business practices were a result of decisions made at the highest levels of the companies,” said Alameda County District Attorney Pamela Price. “Thanks to the collaborative hard work of fellow District Attorney Offices and the Department of Justice, defrauded consumers will be made whole, and the companies will be required to pay $23 million in civil penalties and, more importantly, comply with the law requiring them to place pre-need funds in trust.”   

“Today’s settlement brings long overdue relief to the many concerned California consumers who purchased pre-need cremation products and services from the Neptune Society companies,” said Marin County Deputy District Attorney Andres Perez. “Our action further sends a clear message to the funeral industry that California laws that protect customers of these products will be strictly enforced.” 

“The pre-need cremation industry has historically been prone to abuse, which is why California law provides robust protection to consumers, many of whom are elderly,” said San Francisco District Attorney Brooke Jenkins. “I am proud that my office initiated the investigation into the unlawful practices alleged here and am pleased to have worked in partnership with the Attorney General and the other district attorneys on resolving them. This multi-million-dollar settlement should send an unmistakable message to businesses that offer cremation or funeral services: Consumer protection statutes must be strictly followed. When they are not, we will not hesitate to take action.” 

Pre-need cremation packages are a way for people to pre-pay for their cremation services while they are still alive. California law requires that all money paid for pre-need funeral arrangements be placed in trust until either the beneficiary dies and services are provided, or the consumer cancels the contract, at which point the consumer is entitled to a full refund. 

The lawsuit alleges that SCI deceptively marketed its products in a variety of ways, including by misleading consumers about its trusting practices, refund policy, and veterans’ burial benefits and cremation. Among other things, SCI routinely informed customers that they had 30 days to cancel their plans and receive a full refund, which is deceptive because pre-need customers are entitled to cancel and receive a full refund at any time before services are provided.

Sold through its Neptune and Trident locations in California, SCI’s highest-selling pre-need cremation package is one that the company marketed as the “Standard Plan.” The Standard Plan includes both cremation services and merchandise but was marketed and sold to customers as a single plan with a single price. Importantly, the Standard Plan was strategically priced to be cheaper than (or comparably priced to) stand-alone cremation services in order to induce consumers into purchasing the Standard Plan. However, when it came time to sign, SCI presented consumers with two contracts, one for heavily marked up merchandise, and one for deeply discounted cremation services. SCI then placed into trust only the discounted funds it allocated to the cremation services, keeping out of trust the funds it allocated to merchandise. Through this practice, SCI withheld from trust more than half of the total price of the Standard Plan. 

Further, when a Standard Plan purchaser requested a refund, SCI only refunded the portion it had allocated to cremation services and not any of the money allocated to merchandise. In other words, SCI typically refunded less than half of a consumer’s money. The complaint alleges that these practices violate California law, which requires funeral service providers to provide a full refund of the amount paid for the entire pre-need cremation package at any time before services are rendered.  This hurt consumers and their families, and allowed the company to artificially inflate its profitability.

Under today’s settlement, SCI will pay a $23 million civil penalty, pay full consumer restitution to the consumers who cancelled their plans but did not get a full refund, and be subject to strong injunctive terms which provide meaningful protections for California consumers. Among other things, SCI and its California locations Neptune Society and Trident Society must:

• Cease selling the Standard Plan or any similar package unless all money paid for the plan or package, as well as money paid for any collateral agreements, is placed into trust.
• Provide clear written disclosures informing consumers of their rights under California law and that consumers are not required to purchase additional products or services in order to purchase pre-need cremation services.
• Provide a full refund upon request to any consumer who cancels a pre-need funeral agreement.
• Comply with California law when advertising events or presentations regarding veterans’ benefits.

Information for Consumers Considering the Purchase of Funeral or Cemetery Arrangements:

Consumers have choices when making funeral or cemetery arrangements. While it is helpful to let your loved ones know your desires regarding burial or cremation, you are not required to prepay for funeral or cemetery services, or to buy a pre-need plan like the Standard Plan from a funeral provider. Providers must be licensed by the state, and both state and federal law provide important protections to consumers shopping for funeral and cemetery arrangements, including pre-need funeral arrangements. For example, providers are required to provide consumers with a General Price List so that they can shop around and make informed decisions, and they must provide consumers with an itemized statement of their choices upon agreeing to a contract. Pre-need plans must also come with a cancellation and refund option. For more information, please consult the Cemetery and Funeral Bureau’s guide for consumers considering the purchase of funeral or cemetery arrangements, the guide can be found here. 

Attorney General Bonta is committed to protecting California consumers and their rights across marketplaces:

• In April, Attorney General Bonta filed an amicus brief in Rosenberg-Wohl v. State Farm Fire and Casualty Co., in an effort to protect consumers’ right to challenge abusive business practices by insurance companies under the UCL.
• Also in April, Attorney General Bonta submitted a comment letter supporting the Consumer Financial Protection Bureau’s proposed rule which would close a regulatory loophole that enables banks to extract billions of dollars from consumers by charging overdraft fees without adequately disclosing basic credit terms.
• In February, Attorney General Bonta sent a letter small banks and credit unions warning that overdraft and returned deposited item fees may violate California’s Unfair Competition Law and the federal Consumer Financial Protection Act, and urged small financial institutions to eliminate these fees. 
• In February, Attorney General Bonta announced a settlement with two separate local Bakersfield landlords and their property management company, for multiple violations of the Tenant Protection Act, including unlawful rent increases, unlawful evictions, and failure to return security deposits on time.

A copy of the complaint and stipulated judgment can be found here and here, respectively.