Newsletter
MoFo’s State + Local Government Enforcement Newsletter
06 May 2026
Keep up with the latest legal and industry insights, news, and events from MoFo
Estimated reading time: 9 minutes
Morrison Foerster’s State and Local Government Task Force is pleased to provide our quarterly newsletter summarizing noteworthy developments from state attorneys general (“State AGs”) across the country and local government agencies and legislative bodies, with links to primary sources. This quarter’s topics include the following:
Multistate Matters
- State AGs Urge Congress to Pass the Senate Version of the Kids Online Safety Act
- Multistate AG Coalition Files Suit Against OneMain Financial over Add-On Products
U.S. DOJ and State AG Actions
New York, Texas, and Washington AG Developments
Multi-State Matters
1. State AGs Urge Congress to Pass the Senate Version of the Kids Online Safety Act
On February 10, 2026, the National Association of Attorneys General (NAAG) sent a letter on behalf of a bipartisan coalition of 40 State AGs to congressional leadership urging them to pass the Senate version of the Kids Online Safety Act.[1] The State AGs claim that the legislation is necessary as social media companies are aware of the adverse health consequences to minors from use of social media platforms but fail to adequately disclose such harms. The letter also noted that several State AGs have initiated investigations and filed lawsuits against social media platforms for their alleged role in harming minors.
The State AGs emphasized that the Senate bill has “broad bipartisan sponsorship and addresses [their] concerns regarding preemption and Duty of Care.” A Duty of Care would require social media platforms to act in the best interests of users by taking reasonable steps to prevent and mitigate foreseeable harms. In contrast, the State AGs argued against the House of Representatives’ version of the bill, noting that it has “expansive preemption language” that “would expressly limit the states’ ability to address evolving online harms in the future.” The State AGs also cautioned that the House version lacks a Duty of Care, which they believe is necessary to deliver meaningful change.
The NAAG letter was sent to the Senate Majority Leader and Minority Leader, the Speaker of the House and House Minority Leader, and the chairs and ranking members of the Senate Committee on Commerce, Science, and Transportation and the House Committee on Energy and Commerce.
This development signals continued bipartisan support for regulation of social media platforms to promote online safety, especially with respect to minors, with parallel interest from Congress and State AGs. See MoFo’s Congressional Investigations Quarterly, which discussed congressional interest in online safety in April 2026 and December 2025. Social media platforms should prepare for heightened scrutiny of their disclosures related to use of their platform.
2. Multistate AG Coalition Files Suit Against OneMain Financial over Add-On Products
On March 16, 2026, a bipartisan coalition of 13 State AGs, led by the New York AG and Pennsylvania AG, filed suit against subprime lender OneMain Financial in the U.S. District Court for the Southern District of New York, alleging that certain add-on products associated with its consumer loans were marketed and sold in a manner that violated federal and state consumer protection law.
The complaint focuses on OneMain’s sale of optional products, such as credit insurance and other membership-based offerings, alongside its loan products. The State AGs allege that these products were not always clearly disclosed or fully understood by borrowers, and that sales practices may have contributed to consumers incurring additional costs, resulting in higher total loan balances and increased borrowing costs over the life of the loan. The complaint also raises concerns about the timing and structure of loan closings, including whether borrowers were provided sufficient opportunity to review terms.
OneMain has denied the allegations, stating that it operates in compliance with applicable laws and intends to defend the case. The company also noted that it previously resolved similar issues in a 2023 settlement with the Consumer Financial Protection Bureau, without admitting liability.
The case reflects ongoing scrutiny by State AGs of add-on products and sales practices in consumer lending, particularly in the subprime market. Multi-state coordination continues to play a growing role in consumer protection-related enforcement, including in areas that have been the subject of prior federal action. Lenders should review disclosure practices, sales incentives, and closing procedures associated with optional products to mitigate potential enforcement risk.
U.S. DOJ and State AG Engagement
3. State AGs Secure Antitrust Verdict Against Live Nation Following DOJ Settlement
On April 15, 2026, following continued litigation by certain non-settling state AGs, a federal jury found that Live Nation maintained an unlawful monopoly in violation of antitrust laws, agreeing with key allegations advanced by the State AG coalition and further underscoring the impact of multistate AG investigations. The Court will determine remedies at a later proceeding.
The case was originally brought by the U.S. Department of Justice (DOJ), together with a coalition of State AGs that ultimately grew to 40 states, alleging that Ticketmaster and its parent company Live Nation engaged in anticompetitive conduct that resulted in higher live entertainment fees for consumers.[2]
During trial, DOJ reached a proposed settlement with Live Nation, joined by a subset of the states that included the State AGs for Arkansas, Iowa, Mississippi, Nebraska, Oklahoma, and South Dakota. The proposed settlement between DOJ (and certain states) and Live Nation has not yet been approved by the court[3] but would provide for a $280 million fund to settle claims or pay civil penalties to states.[4] It also would require Ticketmaster to cap its service fees at 15% and to divest ownership of 13 amphitheaters. The remaining bipartisan coalition of 33 State AGs and the Washington, D.C. AG rejected the settlement as providing insufficient relief to consumers and opted to continue the litigation. The trial was led by the New York AG, resulting in the jury verdict against Live Nation rendered on April 15, 2026.
This development reflects the willingness of State AGs to proceed to trial without federal counterparts, when they believe a negotiated resolution insufficiently protects their consumers.
New York, Texas, and Washington AG Developments
4. New York AG Files Lawsuit Against Video Game Company Alleged to Promote Illegal Gambling
On February 25, 2026, the New York AG sued Valve Corporation, a video game developer, for allegedly promoting illegal gambling in video games. The lawsuit, filed in the Supreme Court of the State of New York, New York County, alleges that Valve’s video games enable gambling by enticing users to pay for a key that “opens” a loot box and awards the user one of several dozen virtual items. The virtual items can be worth thousands of dollars. Valve also enables users to sell the virtual items they have won, either on its own virtual marketplace or through third-party marketplaces. According to the complaint, the loot box model is “quintessential gambling,” because it involves charging for a chance to win something of value based on luck alone.
The New York AG alleges that Valve’s loot box model can lead to addiction problems and is especially harmful to children. This lawsuit reflects an increasing trend of New York AG enforcement against gambling companies. For example, in February 2026, the New York AG warned consumers of the risks posed by sports betting and prediction markets ahead of the Super Bowl. Last year, the New York AG also issued cease-and-desist letters to 26 online gaming platforms allegedly engaged in gambling activities.
Companies that offer betting and gambling services should carefully assess their products for potential exposure under evolving state consumer protection and anti-gambling laws, particularly where features could appeal to minors.
5. New York AG Continues to Leverage False Claims Acts in Tax Enforcement
On February 10, 2026, the New York AG announced a settlement recovering more than $4.7 million from the owners of Able Rentals, Inc. (“Able”), Abarn Equipment Corp. (“Abarn”), and their accountant, Howard Zapken, to resolve allegations under the New York False Claims Act.
The whistleblower lawsuit alleged that Able Rentals and Abarn Equipment understated more than $15 million in taxable sales from 2014 to 2024, resulting in significant unpaid tax liabilities owed to New York State and New York City. The scheme allegedly involved calculating tax liability based only on select cash deposits while excluding most credit card transactions, which constituted the bulk of sales. Pursuant to the settlement agreement, the companies must retain an independent accountant to certify accurate sales tax reporting for the next five years.
This matter highlights the continued use of the New York False Claims Act to pursue tax enforcement actions, particularly through whistleblower suits. It also reflects the important role that private relators play in identifying alleged fraud against state and local governments. Of the total recovery amount, about $3.9 million was paid by the company owners, with the remainder paid by the company’s accountant, and roughly $794,000 of the total recovery amount paid out by the government as the whistleblower’s share of the recovery.
Particularly in jurisdictions like New York, where False Claims Act liability expressly extends to tax violations, companies need to be vigilant to ensure accurate reporting and maintain robust internal controls. This case is part of a broader trend of State AGs increasingly leveraging state statutes to pursue regulatory enforcement actions that traditionally fell outside classic fraud contexts.
6. Texas AG Sues Five Companies with Alleged Ties to Chinese Communist Party
Between February 17 and 20, 2026, the Texas AG sued five companies, alleging ties to the Chinese Communist Party (CCP). The defendants include companies that provide Wi-Fi and smart home technology, drones, cameras, an online marketplace, and fast fashion products. The Texas AG alleges the following:
- A Wi-Fi and smart home technology company deceptively marketed its networking devices and allowed the CCP to access American consumers’ devices in their homes.
- A drone company misled Texas consumers about the origin, data practices, and security risks of its drones, which are rebranded products of a Chinese drone manufacturer.
- A camera company sold products such as baby monitors and home security devices that were manufactured by a military company associated with the CCP.
- An online marketplace unlawfully deceived consumers while harvesting Texans’ personal data and exposing it to the CCP.
- A fast fashion retailer unlawfully sold toxic products to consumers and exposed sensitive personal data to the CCP.
These lawsuits reflect the recent trend of State AGs seeking to bring lawsuits that target national security risks and data privacy concerns associated with foreign-owned or foreign-affiliated companies. The Texas AG’s focus on consumer protection, data security, and supply chain transparency signals that companies with global operations, particularly in China, face heightened scrutiny and risks not just as a matter of federal law but also increasingly under state law as well. Businesses should ensure that their disclosures regarding product origin, data practices, and security safeguards are accurate and substantiated, and prepare for increased investigative and enforcement activity from State AGs into such areas. While China is a current focus, this trend could extend to other geopolitical controversies with salience at the state level.
7. Washington Expands Attorney General Investigatory and Enforcement Authority
Washington State recently enacted legislation aimed at strengthening the Washington AG’s investigatory and enforcement powers, reflecting the continued interest amongst states to expand the authority of their State AGs.
Washington Governor Bob Ferguson recently signed two bills requested by the State AG’s office, including S.B. 5925, which enhances the State AG’s ability to compel document production and testimony in civil investigations. The law allows the Washington AG to seek information from a broader range of entities, including elected officials and law enforcement agencies, a notable expansion of prior authority.
According to the Washington governor, the legislation will enable the Washington AG’s office to enforce state laws in ways that were previously unavailable, including in areas such as state constitutional violations, wage theft, and violations of the Washington Law Against Discrimination.
This development reflects a broader trend of states equipping their attorneys general with expanded investigative tools and jurisdiction. Companies operating in Washington, and increasingly in other states adopting similar measures, should anticipate more robust civil investigations and ensure preparedness to respond to expanded subpoena and investigative demands.
[1] The coalition of State AGs includes American Samoa, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, District of Columbia, Georgia, Hawaii, Illinois, Indiana, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, U.S. Virgin Islands, Utah, Vermont, and Wyoming.
[2] Amended Complaint, U.S. v. Live Nation Entertainment, Inc., No. 1:24-cv-03973-AS (Aug. 30, 2024), Dkt. No. 257.
[3] Letter to the Court, U.S. v. Live Nation Entertainment, Inc., No. 1:24-cv-03973-AS (Mar. 16, 2026), Dkt. No. 1236.
[4] Settlement Term Sheet, U.S. v. Live Nation Entertainment, Inc., No. 1:24-cv-03973-AS (Mar. 9, 2026), Dkt. No. 1172.
