Looking Back, Looking Forward: Enforcement by State Attorneys General – Part Two


Last month, as part of BakerHostetler’s “Looking Back, Looking Forward: Advertising and Marketing Law in 2021 and 2022” webinar series, partners Craig A. Hoffman and Victoria Weatherford presented recent trends and predictions on state attorney general enforcement. The following summarizes our 10 predictions for attorney general enforcement in 2022.

Prediction #1: Upcoming Attorney General Elections Will Lead to High-Profile Investigations

In 2022, 30 states and one U.S. territory will hold elections for attorney general. We expect the large number of elections to raise the public profile of state attorneys general in 2022, and we expect state attorneys general seeking re-election to use their offices as a pulpit from which increase their visibility in the press and media. We expect to see an increase in the number of state AGs using the media to showcase “victories” as a way to reinvigorate campaign efforts. Likewise, attorneys general — especially those elected this year — are expected to engage in more high-profile enforcement and litigation against well-known companies and tackle more “hot” issues. Companies facing scrutiny from the state attorney general in 2022 will want to carefully consider the potential public relations implications and opportunities to work with state AGs to craft the public narrative in any resolution or bylaw.

Prediction #2: More Federal-State Partnerships

FTC Chairman Lina Khan and CFPB Chairman Rohit Chopra recently highlighted in public comments the importance of state attorneys general in enforcing federal consumer protection and consumer finance laws. and their intention to share more resources with state attorneys general in 2022. Khan and Chopra also stated their intention to partner more with state AGs; we expect this partnership to occur with Democratic-led AG offices and bipartisan coalitions of state AG offices.

Chopra, in late 2021, also encouraged direct enforcement by state MGAs of the Federal Consumer Financial Protection Act (CFPA), which would allow state MGAs to levy civil penalties of $5,000 to $1 million per day for certain violations. We expect state AGs to act on the green light provided by Chopra to file new CFPA enforcement actions in 2022. Recent history suggests that state attorneys general will use federal financial laws on consumers to pursue deceptive marketing and advertising claims against companies that provide banking, student support services, mortgages, and reverse mortgages, among other services.

Prediction #3: Republican-led attorneys general go it alone

Republican-led attorneys general will lead a robust new enforcement both as independent states and with partisan, bipartisan coalitions. These attorneys general will continue to challenge the Biden administration, pointing out what they perceive to be its excess in the fight against COVID-19 and its inadequacy in the fight against illegal immigration.

The state of Texas, for example, has already filed several high-profile enforcement cases in 2022. Notably, in January, Texas independently sued Google for allegedly false and misleading endorsements of its Pixel phone. Texas filed the first lawsuit in the country before a coalition of federal or multistate attorneys general could take similar action. Texas also led a bipartisan coalition of state AGs in another lawsuit against Google over alleged “dark patterns” and misleading features to trick consumers into allowing location tracking. Both lawsuits are ongoing and, as they unfold, will inform how Republican-led AG offices approach law enforcement in 2022.

Prediction #4: Connecting Consumer Marketing to Antitrust

Khan and the head of the Justice Department’s antitrust division discussed recently the link between consumer marketing violations and antitrust harm. Khan expressed his view that false and misleading advertising leads to inappropriate market consolidation and antitrust issues, and vice versa. Khan’s new views on marketing harms may foreshadow how federal and state attorneys general will work together in 2022 to pursue new types of consumer marketing laws and antitrust violations.

With or without federal cooperation, states have direct federal antitrust enforcement authority as well as state antitrust enforcement authority. We predict that new iterations of antitrust and marketing harm will likely begin with enforcement against large market players and companies with a history of antitrust scrutiny.

Prediction #5: Focus on technology and platforms

We expect state attorneys general across the country to focus on allegedly deceptive uses of technology. Not only do we expect to see investigations and sanctions against well-known tech companies, but we also expect state AGs to look beyond search and social media to also target smaller and less known.

We anticipate that online platforms that facilitate sales to third parties will also see increased enforcement of state GA with respect to allegedly false or misleading sales that are facilitated by these platforms. Several state attorneys general have highlighted consumer protection concerns in a recent letter at the CFPB in which they insisted on strengthening consumer guarantees for electronic payment applications.

Prediction #6: The use of artificial intelligence and algorithms highlights dark patterns

Many state attorneys general across the country have expressed concern and advocated for scrutiny of companies that use artificial intelligence and algorithms to inform their consumer marketing and advertising practices.

Without brushing aside federal laws on this topic, we expect states to pass laws in the coming years that restrict the use of these algorithms, creating another patchwork of regulations that companies must comply with. We may also see state MGAs taking more direct CFPA enforcement actions related to consumer financial products that allegedly offer different financial terms to consumers based exclusively on credit risk.

Areas likely to investigate and apply to potential state attorneys general include the insurance, banking, and consumer goods and services sectors.

Prediction #7: Robocalls and Auto-Renewals

State attorneys general have been pursuing lawsuits under the Telephone Consumer Protection Act (TCPA) for many years now. Indeed, state AGs hosted a virtual Robocall summit in 2021, and this business practice is said to be the #1 consumer complaint to state AG offices. Given the strong public support for enforcement, we expect to continue to see aggressive enforcement of the TCPA in 2022 and beyond.

A similar but new trend may receive increased investigation and attention in 2022: automatic subscription renewals (i.e. negative option marketing). Indeed, Delaware and Colorado recently passed laws prohibiting companies from automatically renewing subscriptions without consumer consent. Expect to see more states pass similar laws in the future.

Prediction #8: Online account takeovers will continue

Unauthorized access to a customer’s online account – or ATO – is often motivated by credential stuffing (a botnet using credentials stolen from other companies to test them against company account login page). Access to the account is then sometimes monetized.

The New York Attorney General’s Office (NY OAG) in 2021 investigated 17 companies after those companies’ customers’ online account credentials were identified as available through online forums. The NY OAG, recognizing that ATOs are prevalent and unavoidable, released its Business Guide for Credential Stuffing Attacks in January 2022, which identified four areas of protection to protect customers.

Prediction #9: Data Breach Enforcement

This is a relatively safe prediction: security incidents will continue to be disclosed, and state and federal regulators will continue to enforce them.

Prediction #10: Continued Privacy Patchwork

Expect to see more states enact privacy laws, each combining a mix of provisions based on its unique approach, other state laws, and international laws like the European General Privacy Regulation. Data protection. Practitioners will continue to lament the challenges of complying with laws that aren’t easy to harmonize and talk about how a comprehensive federal law would fix that (while saying they’ve been saying the same thing for years).

As states have the opportunity to observe the successes and shortcomings of other states’ privacy laws, we expect to see new national privacy laws extend beyond- beyond the commonly implemented “notice and consent” regime. Indeed, some state law enforcement authorities have already criticized this legal framework for the right to privacy as inadequate. We expect states to discuss possible new privacy paradigms, such as laws covering the collection and use of data to address perceived negative consequences of artificial intelligence and algorithms.


Comments are closed.