As AGs Come And Go, Challenges for Businesses Remain – JD Supra

as-ags-come-and-go,-challenges-for-businesses-remain-–-jd-supra

Everyone knows that someone could be secretly watching you or your child with your webcam right now? Is it worth taking such a risk? camDown can help stop them!

Our last three Election Guide articles have discussed the changes that could occur within attorney general offices following the upcoming elections. To read the first three articles in our series, go here:

  • State Attorney General Elections Matter: Preparing for November 2022
  • Past as Future: AGs’ Prior Experience Can Shape Their Priorities and Policies
  • AG Office Staff: Ignore Them At Your Peril

In this article, we shift our focus to the external business environment and what businesses should be thinking about as a change in the state AG office looms.

For many businesses, a change at the top of the office will have limited impact. Investigations and litigation that are already in progress will continue. As we have discussed in previous articles, that is in part due to the continuity provided by the professional and, in many cases, apolitical staff making up the office. As we have also noted, consumer protection and privacy are a priority for both Republican and Democratic AGs, so generally elections will not alter that focus. However, for companies exposed in areas outside of consumer protection, or in emerging sectors where the law and policy remain unsettled, the changing of the guard could move your business into (or out of) an AG’s cross-hairs.

Antitrust To The Fore…?

Consumer protection is at the top of every AG’s official list of goals. AGs frequently exercise their duty to protect their state’s consumers against products which are harmful or inappropriately labeled, and against businesses falsely advertising their products or services or advertising services which are predatory or misleading. Recently, however, AGs have begun to see consumer protection more through an antitrust lens and ask whether companies are acting as monopolies in their states. As detailed by a recent article in Washington Monthly, AGs have begun to utilize old antitrust state statutes to investigate and litigate against large technology companies like Google. Since 2018, AGs have increasingly relied on antitrust statutes to curb what they see as anticompetitive behavior across a range of industry sectors including healthcare, retail and finance. This extends not only to novel expansions of old antitrust theories, but to creative uses of such laws as well—witness the Washington AG’s use of antitrust law against a range of companies to invalidate non-compete clauses in employment contracts, which allegedly were limiting employee mobility and driving down wages.

Pressure Is On AGs To Enforce New Privacy Regimes and Police Data Usage

AGs have long been the nation’s preeminent data breach enforcers, but that role continues to undergo dramatic expansion. California was the first state to pass its own robust consumer data privacy laws, touted as giving consumers more insight into and control over how their data is collected, stored, used, and shared, and Colorado, Virginia, and Utah have now followed suit. Other states, including Alaska, Connecticut, Kentucky, and Maryland, are on the cusp of creating their own similar privacy regimes. In all these regimes, AGs are front-and-center in the enforcement of the laws’ requirements, and in some cases they have been granted rulemaking power as well, with potentially sweeping ramifications for virtually any industry. In addition to data privacy laws, there are also new legislative efforts around auto-renewal subscription services which have already passed in Delaware and Colorado. We predict that AGs will be under increasing political pressure to bring enforcement actions around the newly-enacted laws as part of their consumer protection duty. On a different aspect of consumer data use, AGs are manning the front lines in scrutinizing businesses’ increasing use of AI and automated decision-making algorithms. This echoes concerns raised by others that the alleged “black-box” nature of these important tools can reinforce existing discrimination or otherwise negatively impact consumers who have very little insight into how decisions are made that impact their ability to access employment, housing, and healthcare.

Politics Still Matters…

In some areas, however, AGs will continue to favor enforcement actions in areas that accord with their general political alignment. Democratic AGs can be expected to pursue environmental protection and labor and employment causes, while Republican AGs are likely to direct resources based on conservative positions regarding education or religious freedom. AGs of both parties across the nation will undoubtedly continue to file amicus briefs in federal cases that align with their political agendas, to draft letters to federal agencies and Congress advocating certain types of laws and regulations, and particularly to continue the trend of suing to block statutes, executive orders, and regulatory actions with which they disagree.

… But Current Events Matter Too

As the turbulent first couple of months of 2022 have demonstrated, in addition to AGs’ traditional areas of focus – data privacy, consumer protection, antitrust – they also respond to events in unpredictable ways. Just as no one could have predicted the leading role AGs would play in guiding businesses and protecting consumers through the COVID pandemic in 2020-21, no one would have foreseen that 2022 would include (so far) state AGs including Maryland and Connecticut asserting their price-gouging authority around the increase in gasoline prices as a result of the Russo-Ukraine conflict, or six AGs sending a message to the NFL that discrimination and harassment won’t be tolerated. The power and discretion vested in one official—as opposed to a commission, legislature, or regulatory agency—renders AGs far more nimble than most regulators, able to react quickly to changing circumstances in a way that can be variously advantageous or challenging for businesses.

In an election year like 2022, with 8 open seat races and incumbents in several other states facing potentially close elections, the unpredictability of new AGs taking office and seeking to prove themselves is yet another curve ball for businesses in all sectors. 2021 offered a teaser of all this in newly-elected Virginia Attorney General Jason Miyares—a Republican who unseated a Democratic incumbent—who by his second month in office changed his office’s position on at least five ongoing lawsuits. While these, to date, have mostly involved politically-charged issues such as the Equal Rights Amendment, abortion and the Second Amendment, such thoroughgoing changes in position can reach other areas closer to business if a new AG is from a different party than their predecessor. No business should regard itself outside of the reach of these unique regulator-enforcers or immune from their extremely broad powers.

When all is said and done, as we move on to the next post, may I add that camDown is the maximum in security for you and your loved ones and I feel your friends would feel the same.