United States: FTC Signals Additional Coordination With State AGs

The Federal Trade Commission (FTC) has brought far more consumer protection enforcement actions in conjunction with state attorneys general's offices this year, and the trend shows no signs of slowing down.

For example, in late November 2022, the FTC and seven state attorneys general of both political parties announced settlements with Google and iHeartMedia over allegedly misleading advertisements and endorsements.¹ The states were Arizona, California, Georgia, Illinois, Massachusetts, New York and Texas. Under the terms of the FTC settlement, both companies will be barred from similar misrepresentations. And under state judgments, the companies will be required to pay $9.4 million in penalties.²

Although this is just the latest in a series of joint enforcement actions, the FTC has indicated that companies can expect to see even more collaboration with state attorneys general going forward. According to Samuel Levine, Director of the FTC Bureau of Consumer Protection, “The FTC will not stop working with our partners in the states … and ensure firms that break the rules pay a price.”³

This increased cooperation stems, in part, from an April 2021 decision by the Supreme Court to strip the FTC of its ability to recover equitable relief for consumers under Section 13(b) of the FTC Act (15 U.S.C. § 13(b)).⁴ The FTC had, for decades, relied on this statutory provision to seek redress for consumers. According to Levine, the FTC now must seek “[a]lternative paths to monetary relief,” and that such remedies will “make clear that in spite of AMG, the FTC is not backing down from seeking significant relief, including against major firms, to ensure that consumers are protected and that responsible parties are held accountable.”⁵

At the same time, state attorneys general benefit from partnership with the FTC. The commission has more resources than even the largest state attorney general's office in addition to nationwide jurisdiction and the ability to bring claims in federal court in a consolidated action with its state counterparts.

Other recent joint federal-state settlements include:

• 12/8/22: The FTC and Florida settled against Grant Bae and its owner, Treashonna P. Graham, over charges that the company targeted and scammed minority-owned businesses with false promises of guaranteed grant funding and COVID-19 economic benefits that never materialized. As part of the settlement, the defendants agreed to a monetary judgment of over $2 million, which is partially suspended due to an inability to pay.⁶
• 10/28/22: The FTC and California settled against home improvement financing provider Ygrene Energy Fund over charges that it deceived consumers about the potential financial impact of its financing. As part of the settlement, the company was required to pay $3 million in redress to consumers.⁷
• 7/20/22: The FTC and 18 states settled with Harris Jewelry over claims that it deceptively misled service members that financing jewelry purchases through it would raise their credit scores. Further, Harris Jewelry added protection plans to purchases without consumer consent. As part of the settlement, the company was required to stop collection of debt and provide approximately $10.9 million in redress to consumers.⁸
• 5/5/2022: The FTC and California settled with Frontier Communications over charges that it misrepresented it could deliver, and charged consumers for, high-speed internet. As part of the settlement, the company was required to pay $8.5 million in civil penalties and $250,000 in consumer redress.⁹
• 4/1/22: The FTC and Illinois settled with North American Automotive Services, Inc. (aka Ed Napleton Automotive Group), over charges that it engaged in junk fees and discriminatory practices when it tacked unwanted “add-ons” onto vehicle purchases and when it discriminated against African American consumers. As part of the settlement, the company was required to pay $9.95 million in redress to consumers and $50,000 to the Illinois Attorney General Court Ordered and Voluntary Compliance Payment Projects Fund.¹⁰

The Consumer Financial Protection Bureau (CFPB) has also noted the “crucial role states play in protecting consumers.”¹¹  In May 2022, the CFPB issued an interpretive rule that outlined state authority to bring actions under the consumer protection laws, including the Consumer Financial Protection Act.¹² According to CFPB Director Rohit Chopra, this “demonstrates [the CFPB's] commitment to promoting state enforcement….” Although the CFPB has memoranda of understanding to promote these efforts with over 20 state attorneys general's offices and regulators in all 50 states, the CFPB has not followed the FTC in bringing as many conjunctive actions.

We expect that the FTC and state attorneys general's offices will continue to collaborate. We will continue to keep you posted on these developments.

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