News/Events

Arkansas to receive $20,514.17

LITTLE ROCK – Arkansas Attorney General Leslie Rutledge today announced that she, along with 42 other states and the District of Columbia, have agreed to a $1.5 million settlement with the Neiman Marcus Group LLC to resolve allegations of a 2013 data breach that included credit card information of customers used at 77 Neiman Marcus stores, impacting 514 payment cards associated with known addresses in Arkansas. Arkansas’s share of the settlement funds is $20,514.17.

“Data breaches continue to impact Arkansans, but settlements like this are an opportunity to urge the private sector to make protecting consumers a priority,” said Attorney General Rutledge. “The actions taken by Neiman Marcus in this agreement will help to prevent future breaches of their customers’ personal and financial information.”

In January 2014, Neiman Marcus disclosed that payment card data collected at certain stores had been compromised by an unknown third party. The investigation determined that approximately 370,000 payment cards were compromised in the breach, which took place over the course of several months in 2013. At least 9,200 of the cards that were compromised in the breach were used fraudulently.

In addition to the monetary settlement, Neiman Marcus has agreed to a number of injunctive provisions aimed at preventing similar breaches in the future, including:

• Complying with Payment Card Industry Data Security Standard requirements;
• Maintaining an appropriate system to collect and monitor its network activity and ensuring logs are regularly reviewed and monitored;
• Maintaining working agreements with two, separate, qualified payment card industry forensic investigators;
• Updating all software associated with maintaining and safeguarding personal information and creating written plans for replacement or maintenance of software that is reaching its end-of-life or end-of-support date;
• Implementing appropriate steps to review industry-accepted payment security technologies relevant to the company's business; and
• Devaluing payment card information, using technologies like encryption and tokenization, to obfuscate payment card data.

Under the settlement, Neiman Marcus is also required to retain a third-party professional to conduct an information security assessment and report and detail any corrective actions that the company may have taken or plans to take as a result of the third-party report.

Says, ‘Wells Fargo is being held accountable for the harm caused to consumers by its improper business practices’

LITTLE ROCK – Arkansas Attorney General Leslie Rutledge today announced that Wells Fargo Bank N.A. will pay $575 million to resolve claims that the bank violated state consumer-protection laws. The settlement is the result of multiple investigations by all 50 states and the District of Columbia of allegations that Wells Fargo was engaging in a number of unfair and deceptive business practices. The State of Arkansas will receive $1,298,019.

“We must be able to trust banks to conduct business honestly,” said Attorney General Rutledge. “Wells Fargo betrayed that trust for thousands of consumers, including many Arkansans. Wells Fargo is being held accountable for the harm caused to consumers by its improper business practices.”

The settlement resolves claims the bank violated state consumer protection laws by opening millions of unauthorized accounts and enrolling customers into online banking services without their knowledge or consent, improperly referring customers for enrollment in third-party renters and life insurance policies, improperly charging auto loan customers for force-placed and unnecessary collateral protection insurance, failing to ensure that customers received refunds of unearned premiums on certain optional auto finance products, and incorrectly charging customers for mortgage rate lock extension fees.

Wells Fargo identified more than 3.5 million accounts where customer accounts were opened, funds were transferred, credit card applications were filed and debit cards were issued without the customers’ knowledge or consent. The bank has also identified 528,000 online bill pay enrollments nationwide that may have resulted from improper sales practices at the bank. In addition, Wells Fargo improperly submitted more than 6,500 renters insurance or simplified term life insurance policy applications and payments from customer accounts without the customers’ knowledge or consent.

Through this settlement, Wells Fargo will also create a consumer redress review program which consumers who have not been made whole through other restitution programs already in place can seek review of their inquiries or complaints by a bank escalation team for possible relief. To date, this settlement represents the most significant engagement involving a national bank by state attorneys general acting without a federal law enforcement partner.

The states alleged that Wells Fargo imposed aggressive and unrealistic sales goals on bank employees and implemented an incentive compensation program where employees could qualify for credit by selling certain products to customers. The states further alleged that the bank's sales goals and the incentive compensation program created an impetus for employees to engage in improper sales practices in order to satisfy such sales goals and earn financial rewards. Those sales goals became increasingly harder to achieve over time, the states alleged, and employees who failed to meet them faced potential termination and career-hindering criticism from their supervisors.

The states also alleged that Wells Fargo improperly charged premiums, interest, and fees for force-placed collateral protection insurance to more than two million auto financing customers, despite evidence that the customers’ regular auto insurance policy was in effect, and despite numerous customer complaints about such unnecessary placements. Wells Fargo has agreed to provide remediation of more than $385 million to approximately 850,000 auto finance customers. The remediation will include payments to over 51,000 customers whose cars were repossessed.

Additionally, the states alleged that Wells Fargo failed to ensure that customers received proper refunds of unearned portions of optional Guaranteed Asset/Auto Protection (GAP) products sold as part of motor vehicle financing agreements. As a result, the bank has agreed to provide refunds totaling more than $37 million to certain auto finance customers.

Finally, the states alleged that Wells Fargo improperly charged residential mortgage loan consumers for rate lock extension fees even when the delay was caused by Wells Fargo, a practice contrary to the bank’s policy. Wells Fargo has identified and contacted affected consumers and has refunded or agreed to refund over $100 million of such fees.

Wells Fargo has previously entered consent orders with federal authorities – including the Office of the Comptroller of the Currency (OCC) and the Consumer Financial Protection Bureau (CFPB) – related to its alleged conduct. Wells Fargo has committed to or already provided restitution to consumers in excess of $600 million through its agreements with the OCC and CFPB as well as through settlement of a related consumer class-action lawsuit and will pay over $1 billion in civil penalties to the federal government. Additionally, under an order from the Federal Reserve, the bank is required to strengthen its corporate governance and controls, and is currently restricted from exceeding its total asset size.

As part of its settlement with the states, Wells Fargo has agreed to implement, within 60 days, a program through which consumers who believe they were affected by the bank's conduct, but fell outside the prior restitution programs, can contact Wells Fargo to be reviewed for potential redress. Wells Fargo will create and maintain a website for consumers to use to access the program and will provide periodic reports to the states about ongoing restitution efforts.

More information on the redress review program, including Wells Fargo escalation phone numbers and the Wells Fargo dedicated website address for the program will be available on or before February 26, 2019.

Says, ‘I have made it a priority to increase the accessibility of the office’

LITTLE ROCK – Arkansas Attorney General Leslie Rutledge is closing out her first term as the state’s chief legal officer with the announcement she has reached almost 90,000 Arkansans in person since taking office in January 2015, including over 21,000 in 2018.

“As Attorney General, I have made it a priority to increase the accessibility of the office through roundtable meetings, mobile office hours and educational programs for everyone age 9 to 90,” said Attorney General Rutledge. “Each year I personally host a meeting in each of our 75 counties to hear directly from Arkansans in their hometowns about issues they are facing and discussing real solutions, and in 2015, I began holding office hours in every county yearly to allow consumers to have face-to-face conversations to file complaints, receive information to avoid scams and dispose of unneeded prescription medications. Too many in our State are not aware of the scope of this office and services provided, and I want to do the fighting for them when they need help.”

Rutledge had hosted 306 roundtable meetings and 313 mobile offices to meet face-to-face with thousands of Arkansans. In 2016, Rutledge began partnering with local law enforcement to collect unused and expired prescription medications at mobile offices.

Rutledge also hosts numerous outreach and training events, including the annual Law Enforcement Summit, Prescription Drug Abuse Prevention Summit and the Never Forgotten – Arkansas Takes Action event to recognize Arkansas’s missing persons. In addition to annual events, the Attorney General’s Office increased outreach efforts by hosting webcasts on topics including avoiding common scams, the Freedom of Information Act and teen dating violence prevention. During her first four-year term, Rutledge hosted 68 large training events and the Attorney General’s staff has presented to 1,291 groups.