5 minute read | March.05.2026
Recent state AG actions are no longer regulatory background noise, they are shaping how companies can use data, roll out AI, set prices, and structure ESG and DEI programs. Our latest newsletter highlights a series of high-profile state AG actions and comment letters, spanning investigations into “surveillance pricing,” lawsuits against global e-commerce and pharmaceutical companies, multistate settlements over alleged price-fixing, challenges to federal regulatory proposals and scrutiny of AI-generated deepfakes and DEI initiatives.
Together, these developments reflect a dynamic and often bipartisan landscape in which state AGs are leveraging litigation, enforcement authority, and coordinated advocacy to influence national debates, protect consumers, and define the boundaries of corporate and governmental accountability.
On January 27, 2026, California Attorney General Rob Bonta marked “Data Privacy Day” by announcing a new investigative sweep into “surveillance pricing,” a practice where businesses use consumers’ personal information—such as browsing history, location data or demographic details—to set individualized prices for goods and services. Under the California Consumer Privacy Act (CCPA), businesses must use personal data in ways consistent with consumers’ reasonable expectations and disclose how they use such data. As part of this initiative, Attorney General Bonta is sending information requests to companies that have a significant online presence in the retail, grocery and hotel sectors to learn how they use consumer data in pricing decisions and whether their practices comply with state privacy requirements.
AG Bonta emphasized that Californians have the right to understand how their personal information is used and to ensure they are not being charged different prices without clear disclosure. The sweep is intended both to assess compliance with the CCPA’s transparency and purpose-limitation principles and to hold businesses accountable where consumer privacy rights might be undermined by undisclosed surveillance pricing. According to AG Bonta, the broader effort reflects the state’s ongoing commitment to enforcing its nation-leading privacy law and protecting consumers from opaque data practices that could unfairly impact how much they pay for everyday products and services.
In rapid succession over a few days in mid-February 2026, Texas Attorney General Ken Paxton filed high-profile lawsuits targeting two major global e-commerce companies—PDD Holdings/WhaleCo, doing business as Temu, and Shein US Services LLC—accusing them of engaging in deceptive practices and exposing Texans’ personal information to the Chinese Communist Party (CCP).
In the complaint filed against Temu, Paxton alleges the shopping platform used “dangerous software functions” that covertly harvest Texans’ personal data while marketing itself as a provider of cheap products, effectively turning consumers into the product by funneling their data to servers in China. The state claims these practices violate the Texas Deceptive Trade Practices Act (DTPA)and seeks statutory damages of up to $10,000 per violation, with heightened penalties when older Texans are targeted.
Similarly, in a separate complaint against Shein, a global fast-fashion retailer that generated more than $30 billion in 2023 revenue, Paxton accuses the company of selling clothing and toys that contain toxic chemicals exceeding safety standards and of improperly exposing consumers’ sensitive personal data to the CCP due to its business operations and ties to China. The Shein complaint also invokes the DTPA, seeking monetary penalties and asserting that the defendant’s rapid online growth rests on a foundation of omission and deception, jeopardizing Texans’ health and privacy. This lawsuit is the latest in of several lawsuits filed by AG Paxton against companies allegedly linked to the CCP under Paxton’s “America First” consumer protection campaign.
A bipartisan coalition of 35 state attorneys general sent a letter expressing deep concern about xAI’s Grok artificial intelligence chatbot producing and facilitating widespread nonconsensual intimate images (NCII) of real people, including minors, through AI-generated deepfakes. The state AGs contend that while xAI has taken some steps, such as technical safeguards and meetings with state officials, to limit Grok’s ability to generate such content, these efforts may not fully address the harm. The state AGs state that Grok has not only enabled but in some ways promoted the creation and public dissemination of sexually explicit AI images without consent, including altering images of women and children into suggestive or nude depictions. They emphasize the serious legal and social harms of such content, including potential violations of state and federal laws governing child sexual abuse material and nonconsensual intimate images, and call on xAI to take stronger action.
The coalition urges xAI to outline specific plans for preventing Grok from generating any form of nonconsensual intimate imagery, including images showing people in revealing clothing, eliminating all such content already produced, suspending or reporting users who generate harmful content, and giving users control over whether their images can be edited by Grok. They also demand that recent safeguards not simply shift harmful capabilities behind a paywall but meaningfully reduce NCII production across both Grok and the broader X platform. The states underscore that as a major AI developer with wide reach, xAI has a responsibility to lead industry efforts to protect adults and children from exploitative AI deepfakes, calling for transparency and stronger safeguards to mitigate these harms.
Democratic Attorneys General filed a comment letter with the National Highway Traffic Safety Administration (NHTSA) strongly criticizing its Resetting Rule approach to revising Corporate Average Fuel Economy (CAFÉ) standards. The letter argues that the agency has misinterpreted statutory requirements under the Energy Policy and Conservation Act (EPCA) by excluding electric vehicles (EVs) and related real-world data from its feasibility analysis. The comment letter further asserts that EPCA requires fuel economy standards to be set at the maximum feasible average fuel economy that manufacturers can achieve, considering technological feasibility, economic practicability and the national need to conserve energy. By focusing only on gasoline and diesel-fueled vehicles and omitting EV models and sales from its modeling inputs, the letter contends NHTSA has produced revised standards that are far below what the statute demands and thus distort the feasibility assessment. It also claims the agency’s cost-benefit analysis is flawed, potentially making new vehicles less affordable while undermining the statutory goals of energy conservation and accurate representation of automakers’ capabilities.
A coalition of Republican AGs sent a letter urging the U.S. Department of Justice to investigate more than 150 U.S.-based organizations that have received nearly $2 billion in foreign funding from five large foreign philanthropic entities — Oak Foundation, Children’s Investment Fund Foundation (CIFF), Quadrature Climate Foundation, KR Foundation, and Laudes Foundation. According to the letter, these funders direct significant resources to U.S. climate and energy policy advocacy groups and activist organizations, which then engage in policy advocacy, litigation, research, media campaigns, grassroots organizing, and lobbying — activities the signatories of the letter describe as advancing a foreign activist agenda on energy and climate issues. The signatories assert that at least one of these foreign funders (CIFF) has documented ties to the Chinese Communist Party and that many of the U.S. recipient organizations could be acting as unregistered agents of foreign principals under the Foreign Agents Registration Act (FARA).
To support the request for investigation, the letter outlines how the five foreign funding organizations funnel large sums into U.S. nonprofits, lists examples of prominent U.S. groups receiving such funds (e.g., ClimateWorks Foundation, New Venture Fund, Windward Fund), and emphasizes that FARA requires registration for entities acting as agents of foreign principals in certain political or advocacy capacities. It argues that the relationships between the foreign funders and U.S. recipients — including ongoing grants, oversight, and strategic direction — suggest agency relationships that should trigger FARA compliance and therefore justify a DOJ investigation.
A bipartisan coalition of 47 state attorneys general, secured $17.85 million in settlements with drug manufacturers Bausch Health US, LLC, Bausch Health Americas, Inc., and Lannett Company, Inc. to resolve allegations that the companies engaged in a long-running conspiracy to inflate prices and limit competition for numerous generic prescription drugs. The settlements stem from multistate litigation alleging that the companies participated in coordinated agreements and communications designed to rig prices, avoid competition, and restrain trade in the market for essential medications used to treat conditions ranging from diabetes and cancer to ADHD and infections.
Under the terms of the agreements, Lannett will pay approximately $13.77 million, and Bausch will pay about $4.08 million, with funds slated for distribution to affected consumers across the participating states. Under the settlement, consumers who purchased certain generic drugs between May 2009 and December 2019 may be eligible to register for compensation through the settlement process. As part of the resolution, the companies also agreed to internal reforms aimed at ensuring future compliance with antitrust laws, including establishing antitrust compliance programs with annual training for sales and management staff. The action is part of ongoing efforts by the coalition to combat price-fixing in the generic drug industry, following earlier settlements with other manufacturers, and reflects continued multistate litigation targeting similar conduct by additional pharmaceutical companies.
A bipartisan coalition of 23 state attorneys general and a group of state bank regulators issued a comment letter formally opposing proposed rules from the Office of the Comptroller of the Currency (OCC) that would preempt state laws requiring national banks to pay minimum interest on mortgage escrow accounts. These state laws, present in California and at least 13 other states, provide that banks cannot profit from holding borrowers’ escrow funds without paying fair interest. The AGs argue that the federal proposals would undermine these long-standing consumer protections, contradict Congressional intent, and strip states of their ability to enforce laws.
The AGs emphasized that states play a crucial role in safeguarding consumers from financial exploitation, arguing that the federal rules would limit borrowers’ rights and reduce accountability for national banks. The coalition’s letter asserts that maintaining robust escrow interest requirements helps prevent lenders from using borrower funds interest-free and promotes fairness in mortgage lending.
A Missouri federal court recently dismissed a lawsuit brought by former Missouri Attorney General Andrew Bailey against Starbucks alleging that various diversity, equity, and inclusion (DEI) initiatives at the company unlawfully discriminated against certain workers and job applicants by giving preferential treatment to others based on race, gender, or sexual orientation.
The complaint contended that programs such as internal mentorship initiatives, affinity Partner Networks, demographic hiring goals tied to executive compensation, and other policies created unlawful advantages for “preferred minorities” and disadvantaged non-minority or non-female employees in violation of Title VII, Section 1981, and the Missouri Human Rights Act. Starbucks moved to dismiss the case, challenging personal jurisdiction, subject-matter jurisdiction (including Missouri’s standing to bring federal claims), and the sufficiency of the complaint’s allegations.
In its February 5, 2026 decision, the district court granted Starbucks’s motion to dismiss. The court found that Starbucks’s contacts with Missouri were sufficient for specific personal jurisdiction but concluded that Missouri lacked Article III standing to assert the federal discrimination claims as pleaded because the state failed to establish a concrete injury or the requisite quasi-sovereign interest under parens patriae doctrine. The order emphasized that Missouri did not allege particularized injuries suffered by its citizens traceable to Starbucks’s policies, nor administrative exhaustion with the Equal Employment Opportunity Commission for Title VII claims. Because of these jurisdictional shortcomings, the court dismissed the federal counts against Starbucks even before reaching the merits of whether the DEI initiatives were lawful or discriminatory.