AGs In A Pandemic: James Talks NY Response

By Letitia James
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Law360 (September 15, 2020, 1:28 PM EDT) -- The COVID-19 pandemic has brought new compliance risks and considerations for companies and individuals. In this Expert Analysis series, state attorneys general share their enforcement priorities.

Letitia James

The coronavirus pandemic has taken an unprecedented toll on our economy and New York state has been hit particularly hard.

Thousands of front-line workers are risking their lives every day to save others and too many New Yorkers are struggling to make ends meet. Many are having trouble putting food on the table or making rent or mortgage payments, and some are even facing barriers to accessing their stimulus payments.

As New York's attorney general, my focus during these difficult times has been on using the legal tools at my disposal to ease financial burdens for all New Yorkers.

At the beginning of the outbreak, we became aware of a number of scams across the state preying on consumer vulnerability. I issued guidance encouraging people to file complaints with my office if they believed they were victims of a scam or predatory action, and we have, as a result, received more than 8,000 complaints about price-gouging, fake medical products and other fraudulent practices.

In response, we have sent cease-and-desist orders to those seeking to illicitly profit off the pandemic, as well as to fraudsters marketing fake COVID-19 cures and remedies. In extreme cases, we have filed lawsuits against those aiming to unlawfully profit off of the coronavirus.

For example, in June, we sued a purported broker of personal protective equipment and other medical supplies in the Buffalo area for attempting to charge the state of New York, hospitals and health care systems exorbitant prices for items or products they could never deliver. In July, we were able to ink an agreement that stopped this company dead in its tracks.

We have also kept a close eye on the behavior of employers at this time, urging employees to report any violations of labor laws or New York state executive orders related to safe workspaces. My office has already received thousands of inquiries, ranging from employers mandating that individuals continue to work in-person at nonessential sites to essential employers refusing to follow proper health and safety protocols.

When businesses have failed to comply with state mandates or have otherwise wronged workers for reasons related to COVID-19, we have acted swiftly on the workers' behalf. That's why we are looking into potential workplace violations at Inc. and whether the company violated our state's whistleblower protection laws.

In March, at the very beginning of this pandemic, we took action to assist New Yorkers struggling with debt. We issued an order to suspend the collection of medical and student debt owed to the state and referred to my office for a 30-day period. We have since renewed that initial order five times in an effort to provide continued support for those impacted economically by this crisis.

Moreover, recognizing the need for assistance for homeowners struggling to pay rent, I issued guidance highlighting how to navigate tenant issues related to COVID-19. The guidance included clarifications on state executive orders concerning tenants' rights, such as moratoriums on mortgage payments and evictions.

My office has also helped inform and protect consumers related to federal actions taken during the pandemic. In April, after intense negotiations, the federal government passed the Coronavirus Aid, Relief and Economic Security Act to provide emergency stimulus payments to individuals and businesses affected by the coronavirus.

However, when Congress passed this law, it did not designate CARES Act payments as exempt from garnishment — allowing creditors or debt collectors to potentially benefit from what were intended to be life-saving payments for some consumers.

To resolve this issue, I led a coalition of 25 states calling on U.S. Treasury Secretary Steven Mnuchin and the Trump administration to take action to explicitly designate the payments as exempt. When the Treasury refused to act, we took matters into our own hands, issuing guidance to New York state banks and debt collectors, clarifying that any attempt to garnish stimulus funds would be treated as illegal in New York.

We also encouraged New Yorkers to report instances of unlawful garnishment, and when we received complaints we immediately investigated and fought to get their money back. These actions ensured that stimulus payments successfully made it to the individuals and businesses that deserved them.

In addition to the CARES Act, Congress initiated the Paycheck Protection Program, or PPP, to provide emergency economic relief specifically to small businesses. In New York, more than 98% of companies are small businesses with 100 employees or less. These businesses are the backbone of our economy, and ensuring that they receive the resources they need to stay afloat is an essential part of our broader economic recovery.

Accordingly, my office issued guidance to help small businesses obtain PPP loans and provided warnings and tips to protect them from lenders and agents fraudulently marketing these loans. We have also issued cease-and-desist orders to companies that have engaged in deceptive practices.

As data surfaced on funding breakdowns of the first and second round of loans, my office has continued to call for more fairness and transparency in PPP implementation. Along with a coalition of attorneys general nationwide, we sent a letter to congressional leadership expressing concern that funds have been disproportionately allocated to larger businesses or borrowers.

We have also requested detailed information from 11 large financial institutions on their practices in marketing, issuing and servicing PPP loans. While the general aim of these federal programs may be to provide a lifeline, it is critical that they be implemented in secure and equitable ways in order to achieve material benefits.

Though New York has emerged as a national leader in containing the virus and protecting our people, there is still a need for federal action. We are hopeful that in addition to direct payments to individuals and families and an extension of the Paycheck Protection Program, the next stimulus package includes funding to help New York and other states whose budgets have been squeezed by the pandemic.  

As the coronavirus rages on, we face new and unprecedented challenges every day. These challenges often require quick and innovative legal solutions. Whether we are working on protecting those on the front lines or aiding those who are out of work, my office has remained and will remain vigilant in our mission to support New York's economy and to lessen the burden that families are facing.

Letitia James is the attorney general of New York.

The opinions expressed are those of the author and do not necessarily reflect the views of Portfolio​​ Media Inc. or any of its​​ respective affiliates. This article is for general information purposes an​​d is​​ ​​not ​​intended to be and​​ should not be taken as legal advice.

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