Investigations and enforcement trends: Top takeaways for Q2 2025

State AG consumer-protection enforcement trends

1. Although state consumer-protection enforcement is expected to soar, state agencies face tightening resource constraints in light of recent developments federally, so there may be meaningful opportunities to persuade regulators to walk away from an investigation or dismiss an enforcement action.
2. We expect state agencies to remain focused on bread-and-butter issues such as deceptive advertising and inadequate disclosures – mainstays that cut across the full spectrum of commerce.
3. Companies should review their advertisements and disclosures in view of generally and specifically applicable consumer-protection laws, as well as adjoining legal doctrines that bear directly on the requisite analysis.

DEI and government contracts

1. The current administration has clearly established an anti-DEI policy position with respect to federal funding and government contracting considerations.
2. Moving forward, government contractors will need to navigate evolving regulations and heightened scrutiny.
3. Ultimately, understanding and adapting to these changes will be critical for government contractors’ successful operations and compliance.

False Claims Act enforcement trends

1. The Administrative False Claims Act gives federal executive branch agencies broader authority to pursue fraud claims administratively, without DOJ involvement. The threshold has increased from $150,000 to $1 million. It allows for double damages and recovery of costs, but does not contain a qui tam provision. We expect more direct agency investigations, which may be resolved more quickly than traditional FCA investigations.
2. We expect significant enforcement action in the areas of DEI, tariffs, cybersecurity, and health care fraud.
3. Relators filed more new FCA qui tam cases in 2024 than in any previous year, and recoveries in qui tam cases represent a disproportionate amount of total FCA recoveries. A ruling declaring the qui tam provisions unconstitutional would have a dramatic impact on FCA enforcement activity. Close attention should be paid to the United States ex rel. Zafirov v. Fla. Med. Assocs., LLC (Case No. 24-13581) case in the Eleventh Circuit, where this issue is next teed up. The United States intervened to defend the constitutionality of the qui tam provisions in this case and has continued to do so at the Eleventh Circuit. Notably the DOJ’s initial appellate brief was filed on January 6, 2025, under the prior administration. Thus, keep a close eye on the DOJ’s next filing – a reply brief due on April 30, 2025.

Trump’s executive orders on harassment and focus on immigration enforcement

1. EO 14173 rescinds affirmative action requirements for federal contractors and discourages private employers from engaging in unlawful DEI practices. EO 14168 defines sex as binary, and while focused primarily on Title IX and educational institutions, has had a broad effect, including the EEOC announcing that it is looking at changing gender identity harassment guidance. Stay tuned as we expect EEOC guidance to be updated soon.
2. The EEOC and DOJ have both already issued guidance on “DEI-Related Discrimination at Work,” which indicates that certain DEI practices may create a hostile work environment or be considered harassment.
3. Keep an eye on increased immigration enforcement actions. In the first 50 days of the Trump administration, ICE made 32,809 enforcement arrests. Official statistics on Form I-9 audits are not yet available, but at the end of the last Trump administration there were 6,456 audits in 2019, with an expectation of 15,000+ in President Trump’s second term.

State of sanctions enforcement

1. Russia sanctions remain, while the United States has intensified sanctions enforcement targeting Iran’s oil exports and its financial channels, as well as Venezuela oil products, including “secondary tariffs” on countries purchasing Venezuela crude.
2. U.S.-China competition has deepened with additional export controls on emerging technologies like AI chips and quantum computing, alongside ongoing investigations into tech exports/re-exports via third countries.
3. New rules curb U.S. outbound investments in sensitive Chinese sectors such as chips, AI, quantum computing, and other emerging technologies.

Tariffs and counter-tariffs

1. The United States has now imposed a 10% ad valorem baseline tariff on imports of foreign-origin goods. With the exception of China, the country-specific reciprocal tariff rates that went into effect on April 9 have been paused for 90 days. China’s reciprocal tariff rate is now 125%. The reciprocal tariffs do not apply to steel and aluminum articles and derivatives that are already subject to Section 232 tariffs; automobiles and automobile parts that are subject to Section 232 tariffs; Canadian- and Mexican-origin goods, which remain subject to President Trump’s previous EOs targeting imports from those countries; and additional articles listed in Annex II to the reciprocal tariff EO.
2. The Trump administration has signaled a willingness to negotiate with other countries to lower their reciprocal tariff rates. At the same time, trading partners are considering counter-tariffs and other non-tariff measures. When assessing how best to respond, companies should think long-term and engage stakeholders across the enterprise – legal, compliance, procurement, government relations, etc. – to assess opportunities to minimize the tariffs’ impact.
3. In February, President Trump directed U.S. Customs and Border Protection to “dramatically increase” its enforcement efforts to prevent tariff circumvention. Other jurisdictions, including the EU, are also expected to remain focused on enforcement. Although internal procurement and compliance professionals may routinely respond to customs inquiries, companies should also consider having these types of inquiries escalated for legal review given the potential for customs actions to have broader impacts across the business.

Shutdown of the Consumer Financial Protection Bureau

1. The CFPB’s traditional role in consumer financial oversight is currently on pause, though legal and statutory challenges stand in the way of a complete shutdown.
2. Expect state regulators and AGs to fill the void, and if the CFPB is eliminated, expect federal bank regulators and the FTC to reassume their role of enforcing consumer finance law at a federal level.
3. Despite the current slowdown, existing CFPB rules and consent orders remain in force. Financial institutions must continue to comply with consumer finance law, adhere to outstanding enforcement actions, stay vigilant about shifting state-level enforcement, and prepare for potential legal or regulatory pivots.

SEC priorities

1. The SEC is shifting toward a much more business-friendly approach.
2. The Commission will have to approve formal orders of investigation and Wells meetings for companies in the crosshairs are back.
3. Expect enforcement focus on traditional areas like accounting fraud and insider trading, and emerging risk areas including cybersecurity and AI.

CFTC priorities

1. CFTC Acting Chair Pham announced a reorganization of the CFTC’s Division of Enforcement and has stated that the division will focus on combating fraud and helping victims, while ending the practice of regulation by enforcement.
2. The Division of Enforcement issued a new Advisory on Self-reporting, Cooperation and Remediation. Under the new advisory, self-reporting to the Operating Divisions will count toward self-reporting credit, and the Operating Divisions will be involved in assessing whether a respondent’s remediation plans are effective.
3. The advisory also states that the Division of Enforcement will consider a respondent “uncooperative” if it does not self-report a material violation that involves willful misconduct, harm to counterparties, or significant financial losses.

Antitrust and AI: Algorithmic collusion

1. The use of algorithmic pricing tools creates antitrust risk in both the United States and the European Union to the extent the tools facilitate collusion in setting prices and/or illicit information sharing among competitors.
2. In light of increased enforcement activity and private lawsuits in this space, users of algorithmic pricing tools should take steps to minimize antitrust risk by ensuring that their use of pricing algorithms is consistent with independent decision making.
3. These steps may include, among other things, employing algorithms that only rely on publicly available data and choosing providers that guarantee appropriate safeguards that prevent the sharing of sensitive information between users.