United States: Four State AGs Launch Consumer Protection Investigation Of Major Republican And Democratic Fundraising Platforms, Congressional Effort Underway To Head Off Future Related Incidents

Major national media sources including The Hill, New York Times, Washington Post, and others, recently reported that four attorneys general have launched a consumer protection investigation of two popular political fundraising websites, WinRed and ActBlue. WinRed and ActBlue are primary fundraising platforms used by the Republican and Democratic parties, respectively.

The investigations are being led by Connecticut Attorney General William Tong, Maryland Attorney General Brian Frosh, Minnesota Attorney General Keith Ellison, and New York Attorney General Letitia James.

The scope of the investigations relates to a practice used by WinRed and ActBlue to generate recurring donations through their online donation platforms. The platforms featured a pre-checked box on their donation forms that automatically authorized recurring contributions. The attorneys' general state that the use of pre-checked boxes in these circumstances "can be inherently misleading, and result in consumers making unwanted and unintended purchases."

According to the New York Times, the practice resulted in a surge of credit card fraud complaints. The practice also led the Trump operation to refund 10% of what it raised through WinRed in 2020-more than $120 million-and the Biden operation to refund 2.2% of what it raised through ActBlue.

In matching letters sent to the two platforms in April, the attorneys general requested documentation relating to complaints received from donors in Connecticut, Maryland, Minnesota, and New York.

ActBlue provided documentation in response to the attorneys' general letter and began phasing out the practice on July 1, according to the New York Times. WinRed's response was not so cooperative, as discussed in a recent companion post shared on our State AG Insights Blog.

The use of pre-checked boxes caught the attention of the bipartisan Federal Elections Commission (FEC), which, earlier this summer, voted to recommend that Congress ban pre-checked recurring donation boxes. The recommendation calls for an amendment to the Federal Election Campaign Act of 19741 (FECA), requiring "those soliciting recurring contributions to receive the affirmative consent of the contributors, to disclose additional information to their financial supporters and to immediately cancel recurring contributions upon request."

Legislation has been introduced in both the U.S. Senate and House, consistent with the FEC's recommendation, to ban the practice of using pre-checked boxes to authorize recurring donations. Both bills would amend the FECA to require disclosures to contributors regarding recurring contributions or donations and directs the FEC to promulgate rules within 180 days of the bills passage.

S. 1786, the senate bill, was introduced by Senator Amy Klobuchar (D-MN) and is cosponsored by seven other Democrats and an independent. Apart from referring the bill to the Committee on Rules and Administration, no action has been taken since the bill was introduced in May 2021.

H.R. 3823, the house bill, was introduced by Representative Mike Levin (D-CA) and is cosponsored by three other democrats. Apart from referring the bill to the House Committee on House Administration, no action has been taken since the bill was introduced in June 2021.

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