Executive Summary
- What’s new: State attorneys general are increasingly acting as the primary regulators of consumer-facing business practices, targeting pricing transparency, algorithmic pricing, junk fees, retail pricing accuracy and subscription practices through investigations, settlements and coordinated multistate actions.
- Why it matters: Federal regulations have been delayed, narrowed or challenged in court, leaving key consumer protection areas without clear standards and creating a fragmented enforcement landscape with dual exposure risk from both regulatory enforcement and private litigation.
- What to do next: Companies should consider ensuring pricing transparency across all channels, evaluating algorithmic pricing tools for disclosure compliance, aligning subscription practices with emerging state standards and strengthening operational compliance systems to prevent pricing inaccuracies.
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As we have seen a shift in recent years of the federal government’s enforcement priorities regarding consumer protection issues, state attorneys general are increasingly acting as the primary regulators of consumer-facing business practices. Federal policy changes, including Executive Order 14267, which directs agencies to identify and reconsider regulations that may hinder competition, have reduced regulatory burdens, while several high-profile federal regulations, particularly at the Federal Trade Commission (FTC), have been delayed, narrowed or challenged in court, leaving key consumer protection areas without clear standards.
State investigations and settlements show that state attorneys general are not simply filling gaps, they are actively shaping compliance expectations. Enforcement at the state level has targeted pricing transparency and consumer fairness, including algorithmic and surveillance pricing, junk fees and drip pricing, retail pricing accuracy, and negative option marketing. State attorneys general are also coordinating through multistate investigations, allowing them to pool resources, align enforcement strategies and pursue consistent remedies across jurisdictions.
The result is a fragmented enforcement landscape, with compliance obligations shaped at the state level rather than through uniform federal rulemaking. In addition, actions by state attorneys general often precede private litigation, as plaintiffs’ firms rely on regulatory findings to support class actions. This creates dual exposure risk for companies, with regulatory enforcement potentially followed by civil suits based on the same conduct.
This alert highlights key business practices under scrutiny, recent state enforcement developments in the context of current federal activity or inaction, and the implications for companies operating across multiple jurisdictions.
Algorithmic Pricing: Active Investigations, No Clear Rules
One of the most significant emerging areas in state enforcement of consumer protection issues is algorithmic or “surveillance” pricing, where companies use consumer data such as browsing history, location, or purchasing behavior to tailor prices to a specific consumer. Although the FTC has been actively studying these practices, it has not issued a specific rule or clearly defined what conduct violates existing law. This lack of federal clarity has prompted states to take the lead in regulating the space.
For example, in January 2026, the New York attorney general launched an investigation into an online grocery delivery service following reports that identical products were priced differently across cities. The investigation concerns New York’s Algorithmic Pricing Disclosure Act, which became effective in November 2025 and requires companies that use algorithmic pricing to provide clear disclosures to consumers. The inquiry focuses on whether the delivery service failed to disclose its use of personal data in setting prices, potentially violating state disclosure requirements. The investigation remains ongoing, with regulators requesting detailed information on the company’s pricing algorithms, among other things.
At the same time, California’s attorney general has initiated a broad industrywide investigation into similar practices, targeting grocers, hotels and major retailers with a “significant online presence.” The inquiry is centered on whether companies’ use of consumer data complies with the California Consumer Privacy Act, which requires clear notice of data collection and provides consumers with rights to access, delete and opt-out of the sale or sharing of their personal information.
Implications for companies: These developments underscore that companies should clearly disclose how personal data informs pricing and ensure compliance with applicable state privacy laws. In the absence of clear federal standards, firms that rely on algorithmic pricing face increased scrutiny from state regulators. Businesses should therefore prioritize transparency, assess pricing models for fairness and maintain robust documentation of algorithmic decision making to mitigate legal risk.
‘Junk Fees’ and Drip Pricing: Settlements Driving Industry Change
This focus on transparency is not limited to emerging practices like algorithmic pricing. States are applying the same aggressive approach to more traditional pricing issues, including alleged “junk fees” (adding unexpected or misleading charges) and drip pricing (adding incremental costs to purportedly obscure the full price). These cases can result in significant settlements and reflect a broader push for clear, upfront and transparent pricing across industries.
For example, a multistate investigation led by Pennsylvania’s attorney general into Choice Hotels International, a hotel franchise company, illustrates this trend. The states alleged that the company engaged in drip pricing by advertising room rates that excluded mandatory fees. The matter was resolved through a settlement requiring upfront disclosure of total prices at the start of the booking process. Although the settlement did not impose monetary penalties, it included significant injunctive relief that effectively reshaped the company’s pricing practices.
Other recent actions include a Massachusetts case involving crypto ATMs and alleged overcharges, a Texas settlement with travel booking platforms over alleged hidden fees and a District of Columbia action involving drip pricing by an online ticket exchange and resale platform.
These state enforcement actions are occurring alongside the FTC’s decision to issue a scaled-down version of its Junk Fees Rule. The FTC had initially proposed a rule that would have expanded across nearly all industries but the final rule was limited only to live-event ticketing and short-term lodging. Because the rule applies only to limited industries, state enforcement continues to play the primary role in shaping broader pricing transparency standards.
Implications for companies: Taken together, these actions underscore the importance for businesses to proactively review pricing structures, ensure clear and upfront disclosure of total costs, and align practices with evolving state expectations to mitigate enforcement and reputational risk.
Retail Pricing Accuracy: Operational Failures Under Scrutiny
Alongside these broader pricing concerns, regulators are also intensifying scrutiny of traditional retail pricing accuracy. This area focuses on ensuring that consumers are charged the correct price as advertised, whether on shelves, signage or online listings.
A notable example is the recent investigation into a large retailer by the Pennsylvania attorney general which resulted in a $1.55 million settlement after alleging that customers were routinely charged more at the register than the advertised shelf price across hundreds of stores. The settlement mandated operational reforms, including audits, employee training and commitments to honor the lowest advertised price. Other retailers — including supermarket chain Kroger, which has faced widespread reporting and regulatory attention over pricing discrepancies — are drawing scrutiny for similar pricing issues.
Implications for companies: Retail price accuracy issues often arise from operational breakdowns, such as inaccurate shelf tags and understaffing. Retailers should proactively ensure pricing accuracy across all channels, implement regular audits and maintain sufficient staffing to prevent errors. Failure to do so can result in significant financial penalties, mandated operational reforms and reputational damage, as regulators target systemic pricing failures.
Subscription Practices: Penalties and Structural Reform
Another area seeing significant state-level enforcement activity is negative option marketing, where a company treats a consumer’s silence or inaction as consent to ongoing charges, typically through subscriptions or automatic renewals.
This focus is reflected in recent enforcement actions. In 2025, California prosecutors reached a $7.5 million settlement with HelloFresh, the largest online meal kit delivery company in the U.S., over allegations that it enrolled consumers without clear consent, failed to adequately disclose recurring charges, and made cancellation difficult. The settlement included both monetary penalties and operational reforms, such as enhanced disclosures and simplified cancellation processes. Similarly, Pennsylvania settled with collectibles company American Mint over deceptive subscription practices, securing approximately $750,000 in penalties and requiring the company to revise its enrollment and cancellation mechanisms.
These actions coincide with a wave of new and updated state auto-renewal laws, which require express, informed consent, advance renewal reminders and easy-to-use cancellation systems. At the federal level, efforts to establish a uniform “click-to-cancel” rule stalled after a court vacated the FTC’s 2024 amendments to its Negative Option Rule, although the FTC recently indicated it is considering additional rulemaking.
Implications for companies: Against this backdrop, companies should ensure that subscription practices are built around clear and conspicuous disclosures, affirmative consumer consent and frictionless cancellation. Aligning with evolving state requirements will be critical to mitigating enforcement and reputational risk in the absence of a comprehensive federal standard.
Key Takeaways for Businesses
In this environment, companies should anticipate continued state-led enforcement and consider taking proactive steps to mitigate risk:
- Ensure pricing transparency across all channels.
- Evaluate algorithmic pricing tools for data use and disclosure compliance.
- Align subscription practices with emerging state standards on consent and cancellation.
- Strengthen operational compliance systems to prevent pricing inaccuracies.
Conclusion
State attorneys general are no longer acting as secondary enforcers in consumer protection. They are now often defining the rules. Through investigations, settlements and coordinated actions, states are establishing a de facto regulatory framework in areas where federal guidance remains limited or unsettled. For companies, the message is clear: Compliance strategies must adapt to a decentralized enforcement regime often operating a patchwork of overlapping and occasionally contradictory statutes, where expectations are evolving rapidly and often enforced before they are formally articulated.
This memorandum is provided by Skadden, Arps, Slate, Meagher & Flom LLP and its affiliates for educational and informational purposes only and is not intended and should not be construed as legal advice. This memorandum is considered advertising under applicable state laws.
For further information, please contact:
Margaret E. Krawiec, Partner, Skadden
margaret.krawiec@skadden.com
