Feds + State Attorneys General = a new application landscape | Kelley Drye & Warren LLP
the National Association of Attorneys General just concluded one of its flagship events of the year, the Capital Forum, in Washington DC. With the presence of many Attorneys General, staff and members of the private sector, it was a great opportunity to exchange ideas and hear from the MGA community about their concerns and priorities. As we provide our readers with updates on some of the important topics discussed this week, we wanted to highlight two substantive sessions focused on partnering with federal regulators.
The first brought together New York Attorney General Letitia James, Nebraska Attorney General Doug Peterson, FTC President Lina Khan and DOJ Deputy Attorney General for Antitrust Jonathan Kanter. Khan and Kanter both made opening remarks emphasizing their view that we are at a “critical juncture” in the application of competition and that an “all players on bridge” approach is needed to address this. . As such, most of the discussion described how the FTC and DOJ would work to implement President Biden’s Executive Order on Promoting Competition in the U.S. Economy, which includes a “whole-of-government approach” to maintaining fair competition. Khan and Kanter both discussed the intersection of antitrust and consumer protection laws in implementing the ordinance – noting that increased consolidation of a market allows more consumer protection violations and conversely, an increase in consumer protection violations may allow a business to gain an unfair advantage in the marketplace.
The two enforcement officials discussed the critical role state attorneys general play and the need to strengthen partnerships between federal and state authorities. President Khan has been fairly straightforward in some of the justifications – she noted that in the area of consumer protection, it has become important for the FTC to work closely with AGs recently, as this allows the FTC and regulatory partners to collect monetary redress with authority. that the FTC alone does not have, as the United States Supreme Court confirmed in AMG Capital management c. FTC. Based on an anecdote from his youth, Attorney General Peterson asked if the states would be treated like a little brother in this partnership, and told him to shut up and sit in a corner. Khan and Kanter disagreed that states have been seen this way before or be treated that way in the future, noting that states are pioneers and equal to federal authorities. President Khan also described her intention to allocate more resources to the regional offices of the FTC, in part to be able to engage more directly with states.
While the sense of equality was welcomed by attorneys general, in a subsequent session Rohit Chopra, the new director of the Consumer Financial Protection Bureau, acknowledged that historically some federal agencies have seen it differently. Citing past dealings with the Office of the Comptroller of the Currency and the pre-emption of state laws he cited as the reason for the subprime lending crisis, Chopra promised a different approach to his CFPB. He asked his office to find ways to expand the state’s power of federal law enforcement, including clarifying the rights of states to prosecute a number of violations directly under the CFPB law. In addition, he called on his office to find ways to allow states direct access to the CFPB Victims Fund (and its balance of over $ 400 million) to provide redress to consumers in state actions, even without any involvement of the CFPB in the case.
Unpacking it all, these three federal consumer protection agencies at the federal level seem to point to a new kind of enforcement landscape (and quite unlike anything I’ve experienced in my 20 years of working for one. State Attorney General). All three have fully embraced the concept that states are the “laboratories of democracy” – they are closer to the ground and able to identify more quickly and easily the issues that affect consumers, and are often the ones who adopt policies. innovative laws and regulations to address these issues. Putting it all together, we end up with a few takeaways:
Federal authorities intend to use state power, tools and resources. Federal authorities have all recognized that states are able to spot problems first, can act faster, and may have tools they don’t have. This unprecedented push for stronger state-federal partnerships reflects their recognition of this fact and will undoubtedly lead to further involvement of the federal government in investigations which may be largely governed by state law. It will be instructive to see how Attorney General Peterson’s concern about the silence of the state’s contribution plays out in this relationship.
This joint approach will be used to tackle the perceived gaps in big tech and privacy enforcement. In addition to the possibility of seeking redress as noted by President Khan, she and AAG Kanter also described the need for an updated ‘toolbox’ – noting their view that current laws are not not sufficient to face today’s economic realities and the digital market. . Both also discussed privacy concerns regarding the accumulation and use of consumer data, calling for moving away from the notification and consent framework. As states pass new legislation, including comprehensive privacy laws, expect joint investigations to involve greater collaboration from federal authorities on how these new laws are used.
The role of state attorneys general in consumer protection will be fully on display this coming year. Not only will the enhanced state / federal partnership put even more emphasis on the already important role state attorneys general play in consumer protection, but as we have already done reported, Iowa Attorney General and NAAG Chairman Tom Miller made consumer protection his presidential initiative this year, especially in the tech sector. We’ll be reporting more on this initiative – but expect to see state attorneys general leading the conversation on enforcement priorities and, most importantly, how businesses and attorneys general can form partnerships to help educate consumers about widespread fraud.