News & Insights

Priorities and Trends Discussed at NAAG Consumer Protection Spring 2021 Conference

On May 11, 2021, the National Association of Attorneys General (NAAG) held its Spring Consumer Protection Conference virtually with more than 500 attendees. The conference comprised a series of panel discussions with state attorneys general (AGs), industry professionals, and the acting heads of the Federal Trade Commission (FTC), the Consumer Financial Protection Bureau (CFPB) and the Federal Communications Commission (FCC), focusing on key priorities for both the AGs and their federal colleagues. The following are our key takeaways from the presentations:

Panel of Attorneys General: Consumer Protection Priorities

  • AGs continue to dedicate significant resources to protecting consumers from COVID-19-related scams and price gouging. In particular, AGs have seen a significant increase in fake COVID-19-related products, misrepresentations regarding solutions to treat COVID-19 as well as phishing scams and cyber scams targeting those seeking federal or state assistance.
  • The AGs acknowledged that effectively addressing these cases often requires close collaboration between the criminal and civil prosecutors within their own offices, but also among the AGs, local governments and their federal law enforcement colleagues. Educating consumers on how to avoid victimization remains a top priority for the AGs.
  • The AGs emphasized that the recent Supreme Court decision in AMG Capital makes partnerships between the AGs and the FTC more important and more likely (see our analysis here). Several AGs openly welcomed the opportunity to work more closely with the FTC.
  • States will, in all likelihood, continue to propose their own data privacy legislation in the absence of action by Congress. At least one AG recognized the challenges this patchwork of state laws creates for businesses.

Final IRS Regulations Impacting Consumer Protection Settlement Negotiations

  • As part of the Tax Cuts and Jobs Act, the IRS promulgated regulations in January 2021 affecting the tax deductibility of certain settlements valued at $50,000 or more. The new rules apply to settlements in effect on or after January 1, 2022.
  • Under the new rules, restitution, remediation, and costs incurred to come into compliance with the law are tax-deductible. This will likely compel both AGs and businesses to craft settlement language in a way that preserves these tax deductions and allows them to meet their reporting obligations to the IRS. The panelists discussed that the costs incurred in order to comply with a settlement’s injunctive terms would likely fall under the umbrella of “costs incurred to come into compliance with the law.”
  • While the IRS regulations are now final, a number of questions remain, including the extent to which AGs will want to verify any cost assertions being made by the business (although there is no mandate that they do so) and how the states will meet their reporting obligations – both to the taxpayer and the IRS – in multistate investigations.

Discussion with Federal Consumer Protection Partners

  • The FTC remains hopeful that Congress will pass legislation restoring the agency’s ability to seek restitution under Section 13(b), but in the meantime, Acting Chairwoman Slaughter confirmed that the FTC will be looking to partner “more frequently and more enthusiastically” with AGs. At the same time, businesses should expect to see the FTC bring more administrative actions and to seek civil penalties by pleading rule violations.
  • Acting Chairwoman Slaughter indicated that COVID-19 response broadly –deceptive health claims, business opportunities, and fake products, as well as the associated fall out across the economy –  remains the FTC’s top enforcement priority.
  • The CFPB also plans to continue cooperating with  AGs, which Acting Director Uejio stated makes investigations more efficient and effective. The CFPB continues to focus on addressing racial inequities in financial markets and lending and prioritizing relief for consumers affected by the pandemic. For example, the agency will be monitoring mortgage servicers closely, especially with respect to loss mitigation assistance.
  • Acting Director Uejio indicated the agency will be using its authority to address the harms identified in the agency’s 2017 payday lending rule.
  • For the FCC, robocalls remain the number one source of complaints. Like her fellow panelists, Acting Chairwoman Rosenworcel emphasized that coordination with AGs is key in addressing the robocall problem. The FCC will vote on rules next week to accelerate implementation of STIR/SHAKEN.
  • Acting Chairman Rosenworcel commented that because the FCC is currently divided on net neutrality it will not be taken up by the agency in the near term, but expressed her hope that net neutrality would become law through congressional or other action.