State AGs and Consumer Protection: What We Learned from….Tennessee
While seventeen new state attorneys general are now sworn in and getting settled into their offices across the country, consumer protection continues to be the top of their agenda. Enforcement continues to take shape in different forms including individual actions, multistate investigations, and partnering with the Federal Trade Commission (FTC). This year we expect states to target particularly salient issues such as dark patterns, autorenewal concerns, and/or data security and privacy, but those priorities will continue to evolve through discussions at the forums of their main national organizations.
For our first State AG webinar of the year, we dove into consumer protection in the Tennessee attorney general office with our guests, Chief Deputy Lacey Mase and Executive Counsel Jeff Hill. If you missed it, we’ve recapped what we learned.
Background of the Office
Unlike other states, Tennessee is the only state where the AG is appointed by the state Supreme Court, with the AG serving for an eight year term. Qualified attorneys submit applications to the Supreme Court and are interviewed publicly before being selected to serve as AG.
Within the AG’s office, the Consumer Protection Division handles both consumer protection and antitrust work. The AG’s consumer protection priorities are constantly shifting in order to respond to consumer needs. The office evaluates whether resources should be allocated to large scale litigation needs such as multistate actions or whether there are smaller consumer concerns that need to be addressed within the state.
The Consumer Protection Division now houses the Division of Consumer Affairs which serves as the point of contact for consumer complaints about unfair or deceptive acts conducted within the state (until a few years ago, the Division was a separate agency). Tennessee does provide complaint mediation for consumers, where the office will routinely ask businesses for a response.
Tennessee’s “UDAP” (unfair and deceptive acts and practices) law is the Tennessee Consumer Protection Act. Like most UDAP statutes, its law grants the AG’s office the authority to conduct pre-suit investigations, including what is commonly known as civil investigative demands “CIDs” where they may request documents and interrogatories, and also obtain statements and sample products to obtain information about parties under review. Under the law, responses provided to the AG’s office are confidential; however, it is unclear whether the CID itself also can be treated as confidential.
Parties may object to a request within ten days or the return date, whichever is shorter. If a party refuses to comply with the office’s request, the AG may file a motion to compel. If there is still no response, then the court may issue a penalty of $1,000 in addition to injunctive relief that prohibits the business from operating.
There is no statute of limitations for the Tennessee AG’s actions under its UDAP statute; however, there is a statute of limitation for a private right of action of one year.
The office is required to provide a pre-suit notice to the respondent 10-days before filing suit unless the AG determines in writing that the purpose of the lawsuit would be substantially impaired by delay in the legal proceeding. This may be waived if the purpose would be obstructed if the office gave notice. During this period, both parties may try to reach a resolution.
The AG may enter into two types of settlements with investigated parties: (1) filing a complaint and judgment simultaneously; or (2) filing an assurance of voluntary compliance “AVC” which must be filed in the court of the capital county of Tennessee.
The AG may issue a civil penalty of $1,000 per violation. A violation may be defined in many ways to capture different types of conduct. The AG may also obtain restitution, disgorgement, and injunctive relief. If parties do not comply with the terms of the settlement, then the office may pursue a new case against the party and use non-compliance as evidence for the lawsuit.
The AG may enforce several price gouging laws. Important to note that its primary price gouging act is no longer triggered by a state of emergency, but rather a more specific declaration from the governor of an “abnormal economic action” meaning a disruption or anticipated disruption to usual business conditions caused by a natural or man-made disaster or emergency resulting from a terrorist attack, war, strike, civil disturbance, tornado, earthquake, fire, flood, or any other natural disaster or man-made disaster. Price gouging laws extend to consumer food items, repair and construction services, medical supplies, among other items and services. Businesses are prohibited from charging “grossly different” prices from the prices prior to the governor’s declaration for at least fifteen days. These price gouging laws carry the same penalties as the Tennessee UDAP. Similar to other states, Tennessee also has a new, specific auto-renewal law effective in 2023, but does not have a statewide privacy law.
Consumer Protection Priorities
The Tennessee AG office has noted that social media and its impact on children will continue to be a high priority, along with big tech issues generally. The AG has also started looking into novel consumer matters such as ESGs and cryptocurrency.
Additionally, the office continues to use its “power of the pen,” collaborating with other states in bipartisan letters to parties such as the federal government and specific industries, urging for action in consumer-related matters. Though some priorities may be more partisan, the office plans to continue bipartisan collaboration where appropriate to protect consumers.
But the Tennessee staff also noted that priorities can change based upon the issues facing consumers. Nothing demonstrated this more than in November of last year, when Taylor Swift fans faced numerous issues with Ticketmaster, resulting in Tennessee leading a multistate investigation into Ticketmaster. Adapting to the changing issues of their constituents is critical to a state AG’s success, and we expect these priorities to continue to evolve in 2023.