Reed Smith Client Alerts

As state attorneys general (AGs) plan their policy and enforcement priorities for 2022, it is clear that consumer protection and technology issues will be of primary focus. At the National Association of Attorneys General (NAAG)’s recent Capital Forum meeting, top state and federal officials voiced deep concern about the increasing role artificial intelligence plays in scamming, fraud, and price gouging, among other harmful business practices. The Biden Administration and state AGs intend to collaborate to combat these anticompetitive threats through increased enforcement activity in the new year, and companies in various industries need to be mindful of—and prepared for—the changes that lie ahead. Businesses should also be aware that AGs are keenly focused on algorithms and issues of social justice. Following the AG meeting, DC AG Karl Racine announced a cutting edge bill seeking to curb the discriminatory impacts of algorithms. This bill is likely to be the first of many in the states.

Each year, the National Association of Attorneys General (NAAG) hosts a bipartisan group of state attorneys general (AGs) in Washington, D.C. for the group’s Capital Forum meeting, where the AGs set forth NAAG’s agenda and policy focus for the coming year. At this year’s Capital Forum, held last week, Iowa AG Tom Miller took the reigns as NAAG’s president and introduced his presidential initiative: "Consumer Protection 2.0: Tech Threats and Tools."

Top Biden administration officials, including Federal Trade Commission (FTC) Chair Lina Khan and Consumer Financial Protection Bureau (CFPB) Chair Rohit Chopra, presented at the meeting, saying outright that collaboration with the states on corporate consumer enforcement is a top priority. The AGs and federal officials emphasized specific concerns about the role of algorithms, business consolidation, and “corporate recidivism.” Businesses should be aware that the Biden administration intends to share substantial resources with the states in a manner that will lead to a significant increase in enforcement. The thread connecting all of these topics is consumer protection – ranging from enforcement involving conventional consumer scams to complex fraud involving intricate multi-jurisdictional frauds – and likely will touch on nearly every industry sector.

Of note, AG engagement on algorithm-related policy is already occurring. Late last week, on the heels of the NAAG Capital Forum, D.C. Attorney General Karl Racine worked with a city council member to introduce legislation aimed at addressing algorithmically-generated discriminatory practices. This legislation would implement stringent notice and consent requirements and would require companies to undertake annual audits and enter into agreements with algorithm service providers to ensure compliance with the law. Further, in addition to empowering the AG to bring enforcement actions under the law (as well as audit authority), the bill also introduces a private right of action. AG Racine has expressed his fervent hope that his efforts will encourage other states to take similarly aggressive actions to reshape the entire tech ecosystem.