MoFo’s State + Local Government Enforcement Newsletter

Morrison Foerster’s State and Local Government Task Force is pleased to provide our bimonthly newsletter summarizing some of the most important and interesting developments from state attorneys general (“State AGs”) across the country and local government agencies and legislative bodies, with links to primary resources. This month’s topics include the following:

• State AGs Press AI Companies on Deepfake Risks and Child Safety
• State AGs Focus on Consumer Fraud in the Electronic Payment and Robocalls Spaces
• State AGs Continue to Target Auto-Renewing Subscriptions
• State AGs Target Healthcare Fraud Through False Claims Settlements
• State AGs Focus on Environmental Reporting and Climate-Related Conduct

1. State AGs Press AI Companies on Deepfake Risks and Child Safety

On August 22, 2025, all State AGs—except those from Alabama, Florida, Indiana, Kansas, Montana, and Texas—sent a letter to major search engines calling on them to strengthen measures against the spread of “deepfake pornography.”[1] The State AGs pointed to existing safeguards that redirect potentially dangerous searches—such as queries about building explosives or self-harm—toward safer resources and recommended similar guardrails for terms like “deepfake porn,” “nudify apps,” and “undress apps.” On the same day, all State AGs—except those from Alabama, Florida, Indiana, Kansas, Montana, South Carolina, South Dakota, Tennessee, Texas, Virginia, Washington, West Virginia, Wisconsin, and Wyoming—sent a similar letter to payment platforms asking them to block transactions tied to deepfake content, citing terms of service models that already restrict other prohibited activities.

On August 25, 2025, all State AGs—except those from Alabama, Kansas, Maryland, Michigan, Montana, Oregon, Texas, and Wisconsin—sent a letter to major AI developers urging them to make child safety a priority in the design and rollout of chatbot technologies. The State AGs cited investigations showing AI-driven chatbots engaging in sexually suggestive or emotionally manipulative conversations with minors and cautioned that these incidents reflect broader systemic vulnerabilities. The AGs noted that they stand ready to use their enforcement authority to prevent the exploitation of minors.

Together, these letters highlight the State AGs’ growing focus on AI-related risks. Child safety and intimate image abuse are bipartisan enforcement priorities, with parallel federal interest in the executive and legislative branches. Companies in the technology sector should expect continued scrutiny, and service providers, such as payment platforms, also may face expanding obligations to address these concerns.

2. State AGs Focus on Consumer Fraud in the Electronic Payment and Robocall Spaces

We note two focus areas for recent AG activity in the consumer fraud space: (1) pursuing matters that have been abandoned by federal regulators; and (2) targeting companies that are allegedly providing platforms for fraud.

A prime example of the first area of focus is the lawsuit filed by the New York Attorney General (NYAG) alleging fraud against Early Warning Services, LLC (EWS), the company that developed and operates the electronic payment platform Zelle. The NYAG brought this lawsuit after the federal Consumer Financial Protection Bureau abandoned a similar lawsuit.

Although EWS did not directly engage in the type of scams alleged in the complaint, the NYAG seeks to impose liability on EWS for allegedly “creat[ing] an atmosphere conducive to fraud” by designing Zelle without critical safety features, allowing scammers to easily target users and steal more than $1 billion between 2017 and 2023. The NYAG further alleges that EWS and its partner banks knew for years that fraud was spreading on Zelle, failed to adopt safeguards or enforce meaningful anti-fraud rules on its partner banks, and fraudulently promoted and marketed the safety and security of the Zelle network. 

Regarding the second area of focus, State AGs are sending warning letters to phone providers that are associated with a high volume of illegal and/or suspicious robocall campaigns even though the providers themselves are not making the robocalls. The Anti-Robocall Litigation Task Force, comprised of State AGs from all 50 states plus the District of Columbia, sent notice letters to 37 phone providers warning them that their transmission of calls associated with high-volume illegal and/or suspicious robocall campaigns may violate state and federal law. These 37 notices follow five rounds of warning letters sent to 23 companies between November 2023 and April 2025. The Task Force is also sending notice letters to 99 downstream providers that accept call traffic from the 37 phone providers.

Businesses should anticipate heightened state-level enforcement, as State AGs are increasingly pursuing focus areas that they believe federal regulators will no longer focus on and targeting companies with platforms they believe may enable fraud. Risks extend to vendors and third parties and thus companies should strengthen fraud-prevention and monitoring systems, enforce clear compliance obligations with partners and other third parties, align marketing claims with actual security measures, and consider prompt engagement with regulators when issues arise. 

3. Auto-Renewing Subscriptions Continue to Be Targeted by District Attorneys

On August 14, 2025, HelloFresh, the world’s largest meal kit delivery company, agreed to pay $7.5 million to settle a lawsuit brought jointly by the Los Angeles County District Attorney’s Consumer Protection Division and the Santa Clara County District Attorney’s Office. The case grew out of investigations conducted by the California Automatic Renewal Task Force, which was established by the Los Angeles County District Attorney’s Office in 2015 to address rising consumer complaints about subscription-based traps.

The lawsuit alleged that HelloFresh violated California’s Automatic Renewal Law by deceptively enrolling consumers in auto-renewing subscription plans without proper disclosure or consent. It also alleged that HelloFresh violated California’s False Advertising Law by failing to disclose the material terms and conditions of advertised free meals, surprise gifts, and free shipping offers. As part of the settlement, HelloFresh agreed to pay $6.38 million in civil penalties, $120,000 in investigative costs, and $1 million in restitution to eligible California consumers.

Other state regulators have sued and secured settlements with companies offering automatically renewing subscriptions. For example, the NYAG initiated a lawsuit against an audio entertainment company and the Massachusetts Attorney General secured a $6.5 million settlement with a home security services company. This trend highlights the importance of clearly disclosing subscription terms, obtaining each consumer’s affirmative consent before charging their credit card, providing a post-transaction acknowledgment of the material terms of the transaction, and offering an easy-to-use mechanism for cancellation.

4. State AGs Target Healthcare Fraud Through False Claims Settlements

State AGs have been harnessing the federal False Claims Act and their own state false claims statutes to target fraud in the healthcare sector. The federal False Claims Act imposes liability on persons and companies that knowingly submit false claims to the federal government. Most states have their own versions of the False Claims Act. Recently, AGs in Connecticut, Oklahoma, and Massachusetts have reached settlements with medical providers and companies for violating state and federal False Claims Act statutes often in partnership with federal prosecutors and agencies.

The Connecticut Attorney General reached a $150,000 settlement with a dentist, resolving allegations that she submitted false claims to Connecticut Medicaid through prohibited fees paid to a third-party patient recruiting company in violation of state and federal False Claims Act statutes. The Connecticut Attorney General alleged that the dentist paid the third-party patient recruiting company a fee for each Connecticut Medicaid patient it referred to her, whenever a patient received dental services over and above routine preventative care. This is the fifth settlement[2] arising from the Connecticut Attorney General’s joint investigations with the U.S. Attorney’s Office, the U.S. Department of Health and Human Services – Office of Inspector General, and the Federal Bureau of Investigation into paying kickbacks for patient recruitment.

The Oklahoma Attorney General reached a $173,143 settlement with a psychiatrist, resolving allegations that he knowingly submitted false claims to the Oklahoma Medicaid program and then caused his agents and employees to fabricate records when the Oklahoma Health Care Authority notified him of the intention to audit his patient records. The Oklahoma Attorney General alleged that the psychiatrist “upcoded” claims for evaluating and managing patients and then submitted those false claims to the Oklahoma Medicaid program in violation of the Oklahoma Medicaid False Claims Act.

The Massachusetts Attorney General reached a $6 million settlement with two ambulance companies for violations of the Massachusetts False Claims Act. The settlement resolved allegations that the ambulance companies submitted false claims to MassHealth for more expensive services than were provided, violated MassHealth medical necessity requirements, and failed to disclose relevant information when submitting the companies’ applications to serve as MassHealth providers. As part of the settlement, the ambulance companies will implement a three-year independent compliance monitoring program.

These settlements demonstrate that State AGs, who often work closely with their federal counterparts, continue to aggressively enforce false claims violations to protect against defrauding state Medicaid programs, making compliance programs and accurate billing practices essential for providers.

5. State AGs Focus on Environmental Reporting and Climate-Related Conduct

On August 7, 2025, 22 State AGs, joined by several major cities and local governments,[3] submitted comments urging the U.S. Environmental Protection Agency (EPA) to withdraw its proposal to repeal federal greenhouse gas reporting rules for the oil and gas sector. The coalition warned that eliminating the rules would undermine transparency and hinder states’ ability to track emissions, particularly methane, a potent greenhouse gas. The State AGs emphasized that reliable emissions data is critical for enforcement and policymaking and argued that the EPA has both a statutory duty and scientific basis to maintain strong reporting requirements. By highlighting the risks of regulatory rollback, the coalition signaled that environmental reporting and accountability remain an enforcement priority for certain states and localities.

Separately, on July 28, 2025, the Florida Attorney General announced an investigation into what that office described as a potential “climate cartel,” targeting major financial institutions and other entities that coordinate to restrict investment in fossil fuel industries. The investigation will examine whether such activities violate state and federal antitrust laws by limiting competition under the banner of environmental, social, and governance goals.  

While the Florida Attorney General investigation is at an early stage, it reflects a contrasting trend in state enforcement, with some State AGs framing climate-focused initiatives as potential threats to market fairness. The investigation illustrates that environmental issues are not only a regulatory matter and increasing partisan matter but also an emerging battleground for antitrust enforcement. 

[1] The letters define “deepfake pornography” as computer-generated nonconsensual intimate imagery.

[2] See also the fourth, third, second, and first settlements resulting from these investigations.

[3] The 22 State AGs include Arizona, California, Colorado, Connecticut, Delaware, District of Columbia, Hawaii, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, New Jersey, New Mexico, New York, North Carolina, Oregon, Rhode Island, Vermont, Washington, and Wisconsin. The cities and local governments include the California Air Resources Board, City and County of Denver, City of Boulder, City of Chicago, and City of New York.