Consumer Protection

OAKLAND — California Attorney General Rob Bonta today announced a settlement with the University of Phoenix, and its parent company Apollo Education Group, Inc (Apollo), resolving an investigation into the University of Phoenix’s use of aggressive and unlawful military student recruitment tactics from 2012 through 2015. These recruitment tactics violated California’s Unfair Competition Law (UCL) and False Advertising Law (FAL). Under the settlement, the University of Phoenix must pay $4.5 million in penalties and other monetary relief and comply with strong injunctive terms.

“The University of Phoenix used deceptive and unlawful tactics to convince service members to use their hard-earned education benefits at its own institution, in place of any number of less expensive, high-quality schools, including California’s public colleges and universities. Part of the settlement today will be distributed to military relief organizations that provide interest-free emergency loans, financial counseling, and other critical services and supports to military members and their families,” said Attorney General Bonta. “Today’s settlement sends a strong message that schools who use predatory practices to recruit servicemembers and veterans will be held to account. California takes consumer protection seriously; we will vigorously protect those who have sacrificed so much to protect us.”

Over the past decade, for-profit schools have drawn scrutiny for using abusive tactics to recruit servicemembers and veterans. Their interest in this student population was, in part, an unintended consequence of certain provisions in the Higher Education Act of 1965, which required schools to receive at least 10% of their revenue from sources other than federal student aid. Because service-related education benefits, including Department of Defense tuition assistance and Post-9/11 GI Bill funds, counted toward the 10% revenue requirement, military students were highly sought after by for-profit institutions. For each servicemember or veteran a for-profit school enrolled, it could enroll up to nine more students whose tuition would be paid with federal student aid. In 2021, Congress and the Biden administration amended the Higher Education Act to close the “90/10” loophole.

In a complaint filed with the proposed stipulated judgment, Attorney General Bonta alleges that the University of Phoenix violated California consumer protection laws as well as directives issued by the Department of Defense to reign in aggressive and deceptive recruiting of servicemembers. Among other things, these directives require schools to obtain the permission of specified military officers before accessing a military installation, and limit how and where schools can market their programs to servicemembers. To increase their access to military bases and prospective students, University of Phoenix representatives routinely sidestepped these requirements. In addition, the complaint further alleges that University of Phoenix representatives lied in order to get access to career fairs — intended to help veterans and departing servicemembers find employment — for the purpose of soliciting prospective students, that they engaged in improper solicitation at “yellow ribbon” events designed to provide critical post-deployment resources and support to returning military personnel and their families, and that the University of Phoenix unlawfully displayed official military seals on specially made “challenge coins” that it used to promote its programs within the military community. 

In addition to paying $4.5 million in penalties and other monetary relief, including funds that will support the work of the military service relief organizations — the Navy-Marine Corps Relief Society, Army Emergency Relief, the Air Force Aid Society, and Coast Guard Mutual Assistance — to support the military community, Apollo and the University of Phoenix must comply with strong injunctive terms that aim to substantially address and curb its improper military-recruitment tactics.

Under the injunctive terms, the University of Phoenix is prohibited from:

• Violating the UCL or FAL in any entry upon or activities at military installations, or in the solicitation of service members, veterans, or their family members.
• Soliciting on-base, at career and hiring fairs, at Yellow Ribbon or other pre- or post-deployment events, at Morale, Welfare, and Recreation (MWR) events, and during on-base educational office hours.
• Attending mandatory events for service members, including training sessions and orientations.
• Attending career and hiring fairs, unless the University of Phoenix representative attending such events has duties primarily relating to the hiring of employees and is attending solely for the purpose of hiring employees.
• Unauthorized base access and the unauthorized use of military credentials to access bases.
• Unauthorized use of military seals. 

Attorney General Bonta is committed to protecting California students and military personnel.

In February, Attorney General Bonta and Senator Caroline Menjivar (D-San Fernando Valley) introduced SB 1124, essential legislation seeking to protect veterans from unaccredited claims representatives. California veterans who need assistance with filing an initial claim for benefits can receive assistance at no charge from their county veteran service office or from another U.S. Department of Veterans Affairs (VA) accredited representative. 

Also in February, Attorney General Bonta celebrated the decision by the California Court of Appeal affirming a lower court’s decision which found in the state’s favor in its lawsuit against Ashford University, an online, for-profit college, and its parent company Zovio, Inc. for violating California’s unfair competition and false advertising laws by giving students, including military veterans, false or misleading information about career outcomes, cost and financial aid, pace of degree programs, and transfer credits, in order to persuade them to enroll at Ashford. 

In September 2023, Attorney General Bonta announced the sentencing of Don Azul for defrauding the relatives of veterans as part of a fraudulent veterans educational benefits scheme. In August 2023, Attorney General Bonta joined a bipartisan collation of 44 attorneys general in a letter to Congress expressing his support for federal legislation to protect veterans from financial exploitation. In September 2022, SB 1311, a bill Attorney General Bonta sponsored to protect the rights of California service members and veterans, was signed into law. 

A copy of the complaint and stipulated judgment, which remains subject to court approval, can be found here and here.

The LA Times published an op-ed yesterday highlighting the urgent need for Senate Bill 976 (SB 976), The Protecting Our Kids from Social Media Addition Act. SB 976, authored by Senator Skinner (D-Berkeley) and sponsored by Attorney General Bonta, would limit the harms associated with social media addiction, and marks an important continuation of Attorney General Bonta’s commitment to improving child safety online.

The op-ed, excerpted below, can be read in its entirety here.

By The Times Editorial Board

From state capitols to Washington, D.C., lawmakers are scrambling to come up with regulations that can protect kids from the potential harms of social media, since the platforms have been unwilling to adopt reasonable safeguards themselves. A dozen other states, including California, are considering or have passed laws that would force companies to design their platforms to be safer for kids. 

This legislation is driven by a growing understanding that social media apps can be addictive and are dangerous to children’s mental health. The American Psychological Assn. urged again this month that policymakers require that tech companies reduce the risks embedded in the platforms.

Yet the drive for regulation is facing stiff pushback from the tech industry, which has lobbied against the bills and filed lawsuits to block new legislation from taking effect, arguing the laws are unconstitutional.  

Senate Bill 976 by Sen. Nancy Skinner (D-Berkeley) would require that social media platforms essentially turn off their algorithms for users under 18 and instead serve them content through a chronological feed from people they follow and information that they’ve searched for. The algorithms are designed to feed users a steady stream of content they didn’t necessarily ask for that keeps them on the app, which is why the algorithms have been called addictive.

The bill is sponsored by Atty. Gen. Rob Bonta, who sued Meta last year alleging the company used harmful and “psychologically manipulative product features,” such as “likes,” infinite scroll and constant alerts, to hook young people on Instagram and Facebook and keep them engaged for as much time as possible in order to boost profits.

These are reasonable safeguards and much less restrictive than proposals in other states, yet tech industry groups have opposed the bill. It’s likely that any law attempting to put guardrails on social media platforms will face legal challenges. This is complex legal and regulatory terrain, but that’s exactly why California lawmakers should keep pushing ahead with SB 976 and similar efforts. The tech industry has been unwilling to voluntarily change its practices to protect children. Lawmakers have to do it for them.

Agreement to make collaboration more efficient, effective

OAKLAND — California Attorney General Rob Bonta today announced signing a memorandum of understanding or agreement to create a new partnership with the U.S. Department of Transportation (DOT) to further air travel consumer protection efforts. The agreement formalizes collaboration between the California Department of Justice (DOJ) and DOT to more effectively and efficiently review and resolve consumer complaints and to hold airlines and ticket agents accountable when they treat consumers unfairly or deceptively. 

“In the past year, more than 200 million passengers traveled by air to and in California, these passengers deserve to be treated fairly, and if they are not, deserve to have their complaints carefully and quickly resolved,” said Attorney General Bonta. “At a time when consumer complaints over flight disruptions, lack of refunds, and lost or delayed baggage are at a record high, state and federal agencies must collaborate to address the problems consumers are facing. I thank the Department of Transportation for this partnership and celebrate today's important progress toward better accountability.”

The agreement creates a formal pathway for DOJ to elevate consumer complaints to the DOT, ensure DOT response to those complaints, and to empower DOJ to seek more information from air travel carriers or ticket agents when investigating complaints.

DOT and DOJ have shared interests regarding passengers traveling by air. DOT ensures that the rights of aviation consumers are protected by reviewing and responding to consumer complaints about air travel as well as monitoring compliance, conducting investigations, and taking enforcement action for violations of aviation consumer protection requirements. Attorney General Bonta is the chief consumer protection enforcer at the state level and enforces California’s unfair and deceptive practices statute against ticket agents. Establishing this MOU between DOT and DOJ will solidify the commitment of both parties to review and resolve consumer complaints against airlines and ticket agents, promote compliance with aviation consumer protection requirements, and to hold airlines and ticket agents accountable when they violate consumer protections.  

Attorney General Bonta is committed to ensuring robust consumer protection for air travel customers.

In March 2023, Attorney General Bonta, along with the U.S. Department of Justice and a bipartisan coalition of states, joined a lawsuit challenging the proposed merger of JetBlue and Spirit airlines, an anticompetitive combination that threatened competition in an industry already experiencing the negative impacts of market consolidation. In January 2024, Attorney General Bonta celebrated a federal district court order permanently blocking JetBlue Airways’ proposed $3.8 billion acquisition of Spirit Airlines.

In 2022, Attorney General Bonta urged Congress to pass legislation to enable states to better address consumer complaints against the airline industry. Also in 2022, Attorney General Bonta and a bipartisan coalition of attorneys general, urged the DOT to strengthen proposed regulations to increase transparency in airline ticket charges and offered specific recommendations to address drip pricing and hidden fees, reduce the rate of airline cancellations, and provide meaningful relief to airline consumers whose flights have been canceled or significantly delayed.

In 2021, Attorney General Bonta joined U.S. Department of Justice and six other attorneys general in filing a lawsuit against American Airlines and JetBlue challenging an anticompetitive joint venture between the companies that was expected to cost California consumers hundreds of millions of dollars. In 2023, Attorney General Bonta secured a decision blocking American Airlines and Jet Blue’s anticompetitive venture.

A copy of the agreement can be found here. 

OAKLAND — California Attorney General Rob Bonta today filed an amicus brief in Rosenberg-Wohl v. State Farm Fire and Casualty Co. (State Farm), a case that hinges on whether an Unfair Competition Law (UCL) action filed by a policyholder against their insurance company is subject to the UCL's four-year statute of limitations or the Insurance Code’s one-year limitations period for actions to recover on an insurance policy. The brief, filed in the California Supreme Court, argues that a UCL action is distinct from an action to recover policy benefits, therefore an insurance policy claims period cannot override the four-year statute of limitations that applies to all UCL actions. A contrary decision would hinder consumers’ ability to challenge unlawful, unfair, or fraudulent conduct by insurance companies. 

“We must protect consumers’ right to challenge abusive business practices by insurance companies,” said Attorney General Bonta. “California's Unfair Competition Law protects all 39 million Californians from unlawful, unfair, and fraudulent business practices by any industry, including insurance companies. The lower court got it wrong and if allowed to stand the decision threatens to undermine the broad protections afforded to Californians under the Unfair Competition Law. I urge the California Supreme Court to overturn the erroneous decision.”

California’s UCL prohibits businesses in California from engaging in illegal, unfair, or fraudulent practices in any aspect of their business, and allows California consumers injured by those practices to go to court to protect their rights. The UCL can also be enforced by the Attorney General and district attorneys, as well as by some city attorneys and county counsels.  

The plaintiff in this case filed an insurance claim under their homeowners’ insurance policy with State Farm, which the insurer denied. Roughly a year and a half later, the plaintiff filed a lawsuit against State Farm, alleging that it violated the UCL by engaging in unfair and misleading practices that included failing to properly investigate property insurance claims and failing to provide explanations for claim denials. The plaintiff sought injunctive relief that would require the company to reform its marketing practices and its process for investigating and resolving certain home-insurance claims. The Court of Appeal upheld the dismissal of the plaintiff’s action as untimely, holding that the plaintiff’s UCL claims were subject to the contractual one-year limitations period rather than the UCL’s four-year statute of limitations because they arose from parties’ contractual relationship.

In today’s brief Attorney General Bonta argues that the one-year limitations period set forth in the Insurance Code does not apply to a UCL action, regardless of whether the action relates to an insurance claim. The brief also notes that the Court of Appeal's decision departs from long-standing Supreme Court precedent holding that the UCL’s statute of limitations “admits no exceptions.” 

Attorney General Bonta is committed to upholding Californians’ protections under the UCL:

• In February, Attorney General Bonta sent a letter small banks and credit unions warning that overdraft and returned deposited item fees may violate state and federal consumer protection laws, and urged small financial institutions to eliminate these fees.

• Also in February, Attorney General Bonta filed an amicus brief in Capito v. San Jose Healthcare System, LP, urging the court to clarify when consumers can sue businesses for engaging in fraudulent acts or practices, and to adopt a standard for unfair acts or practices in UCL cases.

• In January 2023, Attorney General Bonta announced a lawsuit against the nation's largest insulin makers and pharmacy benefit managers for driving up the cost of the lifesaving drug through unlawful, unfair, and deceptive business practices in violation of California's consumer protection laws.

•  In September 2022, Attorney General Rob Bonta announced a lawsuit against Amazon alleging that the company stifled competition and caused increased prices across California through anticompetitive contracting practices in violation of California’s consumer protection and antitrust laws.

A copy of the amicus brief can be found here.

OAKLAND — California Attorney General Rob Bonta today issued the following statement applauding the Federal Communication Commission's (FCC) draft order proposing to reestablish federal net neutrality protections and concluding that California’s own net neutrality law is consistent with the proposed rules and should stay on the books. 

“Everyone deserves equal access to the internet,” said Attorney General Bonta. “California has led the way in protecting the open internet since 2018, when we passed Senate Bill 822, the nation’s strongest state net neutrality law. Since then, SB 822 has been instrumental in protecting internet access for California’s 39 million residents. I commend the federal government for moving to reestablish net neutrality rules nationwide and applaud the draft order for acknowledging the important role states like California play in protecting net neutrality.”

Last year, the FCC proposed to reestablish nationwide net neutrality protections, and issued a request for public comment. Attorney General Bonta filed a public comment letter expressing California’s support for strong net neutrality rules for all Americans, but also urging the FCC not to preempt parallel state net neutrality laws like SB 822. In the draft order, the FCC agrees, noting that “California law generally tracks the federal rules we restore today,” and finding “[no] reason at this time to preempt California from independently enforcing” federal or state net neutrality requirements. The FCC is scheduled to vote on the draft order at their next Open Commission Meeting on April 25, 2024.

Net neutrality rules protect consumers by allowing them to access online content without manipulative and anticompetitive interference from internet service providers. In 2018, under the Trump Administration, the FCC repealed federal net neutrality regulations. In response, California and other states enacted their own net neutrality laws to protect residents within their jurisdictions. California passed SB 822 to enshrine net neutrality rules into state law. 

In 2022, consumers paid over $7.7 billion in overdraft fees

OAKLAND — California Attorney General Rob Bonta joined 17 attorneys general in submitting a comment letter supporting the Consumer Financial Protection Bureau’s (CFPB) proposed overdraft fee rule, amending Truth in Lending Act (TILA) regulations. The proposed rule would require large banks to apply consumer protections, include interest rate disclosures, to overdraft fees. In doing so, the proposed rule would close a regulatory loophole that enables banks to extract billions of dollars from consumers by charging overdraft fees without adequately disclosing basic credit terms.

“Overdraft fees are a relic and should be left in the past. These fees harm low-income Californians the most, while lining the pockets of large financial institutions,” said Attorney General Bonta. “The Consumer Financial Protection Bureau's proposed rule would protect consumers' pocketbooks and create more transparency about how overdraft fees are handled in the places where they bank. By closing this archaic loophole, we work toward a California where consumers are treated more equitably and fairly by financial institutions.”

TILA was enacted in 1968 when many families used the mail to send and receive checks and had little certainty about when their deposits and withdrawals would clear. When a bank clears a check and the consumer doesn’t have funds in the account, the bank charges an overdraft fee and in doing so is issuing a loan to cover the difference. The Federal Reserve Board created an exemption to TILA protections if the bank was honoring a check when their depositor inadvertently overdrew their account. At the time, this was used infrequently and resulted in a small cost for consumers. It was not a major profit driver.

This exception no longer serves its original purpose given the automation of overdraft pay, prevalence of debit card transactions as an alternative to checks, and drastically increased amount of overdraft fees. Approximately 23 million households pay overdraft fees in any given year. Banks usually charge $35 for an overdraft, most of which are repaid within three days—representing an annual percentage rate (APR) of approximately 17,000%. An APR is the yearly rate charged for a loan or earned by an investment and includes interest and fees. Typically, personal loan APRs are from 6% to 36%. In 2022, consumers paid over $7.7 billion in overdraft and non sufficient fund fees.

In the letter, the attorneys general endorse the proposed rule and request that the CFPB set the benchmark overdraft fee at $3, which would not trigger TILA disclosures and reduce overdraft fees for consumers. The attorneys general also urge the CFPB to consider expanding the proposed rule to small financial institutions given that many are among the most frequent chargers of costly overdraft fees.

In submitting the letter, Attorney General Bonta joins the attorneys general of New York, Colorado, Connecticut, Delaware, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nevada, North Carolina, Oregon, Pennsylvania, Washington, and the District of Columbia.

Attorney General Bonta is committed to protecting consumers from hidden fees, and ensuring consumer financial protection though enforcement action, consumer outreach, and sponsoring legislation. 

• Earlier this month, Attorney General Bonta issued a consumer alert with tips on filing and preparing taxes safely. 
• Also this month, Attorney General Bonta joined Senator Monique Limón (D- Santa Barbara) and a coalition of prominent consumer advocacy organizations in unveiling Senate Bill 1061, legislation seeking to protect consumers from having their credit ruined by prohibiting medical debt from being reported on credit reports.
• In February, Attorney General Bonta sent a letter small banks and credit unions warning that overdraft and returned deposited item fees may violate California’s Unfair Competition Law and the federal Consumer Financial Protection Act, and urged small financial institutions to eliminate these fees. 
• Also in February, Attorney General Bonta supported the Federal Trade Commission’s new “Rule on Unfair or Deceptive Fees,” which would ban hidden fees nationwide.
• Last year, Attorney General Bonta and the California Low-Income Consumer Coalition co-sponsored Senate Bill 478 (SB 478), which combats hidden fees by requiring the advertised, displayed, or offered price of goods or services to include all mandatory fees, other than tax and shipping. SB 478 was signed by Governor Newsom in October and will take effect on July 1, 2024.

A copy of the letter is available here.

OAKLAND — California Attorney General Rob Bonta today issued a consumer alert with tips on filing and preparing taxes safely. As Tax Day approaches, many Californians may seek out assistance with filing their state and federal tax returns. To avoid falling victim to a tax-related scam, Attorney General Bonta advises Californians to file early, take actions to protect themselves online, and learn about free or low-cost tax filing opportunities. Through the IRS Direct File pilot program, eligible California taxpayers can file their 2023 federal taxes directly with the IRS for free.

“For working families, tax season serves as a long-awaited opportunity to get ahead on bills, make needed home repairs, or finally start planning a vacation,” said Attorney General Bonta. “This Tax Season, we want to make sure Californians don’t fall victim to tax-related fraud or scams. I encourage Californians to review our website for tools, tips, and resources to make filing taxes easier and safer at oag.ca.gov/consumers. And if you believe you are the victim of a tax-related scam, report it at oag.ca.gov/report.”

How to Protect Yourself from Tax Scams:

• File early — You are less vulnerable to scammers if you file early and have your refund in hand. Avoid putting yourself at risk of being the next victim and file your taxes as early as possible. 

• Hang up the phone! — IRS and FTB will only call a person who owes taxes if they have tried to contact you by mail. Legitimate IRS and FTB agents will not threaten jail time or seek payment over the phone or through a wire transfer. Consumers should not make any payments and should contact the agency directly by looking up government contact information online. Calls impersonating the IRS should be reported to the Treasury Inspector General for Tax Administration (TIGTA). Those impersonating the FTB should be reported here.  

• Do NOT open the email — Never open an email or text message that says it is from the IRS or the FTB. The IRS and FTB do not use email, text message, or social media to request personal or financial information or to send notice regarding audits or refunds. Replying to the email, opening attachments, or clicking on links may enable scammers to collect your personal information or infect your computer with viruses or other malware.

• Think beyond the password — For greater security, get an Identity Protection PIN (IP PIN) for your e-filing account with the IRS. A new PIN is provided each year by the IRS. 

• Use two-step authentication — Check on the availability of two-step authentication to protect your tax filing accounts (and other online accounts containing sensitive information, such as your email and social media accounts). Two-step authentication adds a second factor, such as a one-time use code that is sent to you by email, phone, or text. You enter that code, along with your username and password, to get access to your account.

Tax Preparation Resources:

You may qualify for free help! Many consumers turn to third-party tax preparation services for help filing their tax returns. Attorney General Bonta encourages consumers to find out if they qualify for free tax help.

• IRS Direct File pilot program — Using the first-of-its-kind pilot program, eligible California taxpayers can file their 2023 federal taxes directly with the IRS for free. To see if you qualify for this program, check here.

• FTB CalFile — The FTB’s CalFile program allows qualified individuals to quickly e-file their state tax return directly to the FTB, free of charge. To see if you qualify, check here.  

• VITA/TCE — The IRS Volunteer Income Tax Assistance program provides free tax help to people who make $64,000 or less annually, persons with disabilities, and people who do not understand English well. The Tax Counseling for the Elderly program offers free tax help for all taxpayers, particularly those over 60, specializing in questions about pensions and retirement-related issues. More information on these programs is available here.

Quick Tip! You may qualify for cash back or a reduction of the tax you owe under the Earned Income Tax Credit and the California Earned Income Tax Credit programs. Check to see if you qualify for one or both!

Need more time to prepare? You can also use IRS Free File to electronically request an automatic tax-filing extension, regardless of your income. You will then have until October 15 to file a return. More information on how to request an extension can be found on the IRS website.

Find a reputable tax preparer. Make sure your tax preparer is reputable and qualified to provide tax services. In California, only an attorney, certified public accountant (CPA), IRS-enrolled agent, or registered-tax preparer can prepare tax returns for a fee. To confirm whether a tax preparer is registered with the IRS, check here. 

If you believe you have been the victim of a tax-related scam or other misconduct, you can file a complaint with our office at oag.ca.gov/report or with the IRS. 

To learn about how to protect yourself and your loved ones against fraud, visit our website at oag.ca.gov/consumers.

LOS ANGELES — California Attorney General Rob Bonta today, alongside the U.S. Department of Justice (U.S. DOJ), and a bipartisan coalition of 16 states attorneys general, filed a lawsuit challenging Apple’s anticompetitive behavior related to iPhone smartphones. The lawsuit alleges Apple deliberately made it more difficult for third-party apps and products to operate with the iPhone, resulting in higher prices for consumers and harm to competition in the smartphone industry. Apple’s conduct has stifled innovation, limited consumer choice, and made switching to other smartphones — especially high-end performance smartphones — unnecessarily difficult and expensive for consumers.

“Apple’s anticompetitive conduct intentionally leaves consumers bearing the cost of sky-high smartphone prices at a time when smartphones are now essential to so much of our day-to-day lives. California’s economy thrives on entrepreneurship, serving as a driving force behind its innovation and growth. Consumers, innovation, and the competitive process — not Apple alone — should decide what options consumers should have,” said Attorney General Bonta. “In insulating itself from competition, Apple has caused harm to consumers and the market. This is illegal. I am proud to partner with the U.S. Department of Justice to send a clear message: We are committed to protecting consumers, holding industry accountable, and ensuring a fair and competitive market where the next generation of innovation can thrive.”

The lawsuit alleges Apple violated Section 2 of the Sherman Antitrust Act, which prohibits monopolization and attempted monopolization. Monopolization occurs when a single firm maintains a monopoly unlawfully, by using its control of the market to exclude rivals and harm competition. The complaint filed today alleges that Apple protects its monopoly by delaying, degrading, or outright blocking technologies that would bring competition by decreasing barriers to switching to another smartphone. 

Specifically, Apple:

• Degrades and undermines cross-platform messaging apps and rival smartphones, including introducing deliberate incompatibilities to prevent Android users from seamlessly sending messages to iPhone users.

• Makes it difficult for U.S. app developers to list “Super Apps”, which have a broad array of functions and make it easier for consumers to switch from one phone manufacturer to another 

• Blocks cloud gaming services on iPhones by historically refusing to list cloud gaming apps on the Apple App Store. Cloud gaming allows consumers to stream and play video games seamlessly across different devices independent of phone hardware.  

• Limits basic functionality when consumers try to use third party cross-platform smart watches with iPhones.

• Restricts digital wallet competitors by allowing only Apple Wallet access to the iPhone’s “tap-to-pay” functionality.

Apple suppresses or delays apps, innovations, and technologies that would reduce switching costs or simply allow users to discover, purchase, and use their own accessories, apps and content without having to rely on Apple. As a result, Apple faces less competition from rival smartphones and less competitive pressure from innovative, cross-platform technologies not because Apple makes its own products better but because it makes other products worse. With less competition, Apple extracts extraordinary profits and constrains innovation to serve its interests. This leaves all smartphone users worse off, with fewer choices, higher prices and fees, lower quality apps, and accessories, and less technological progress from Apple and others.

In filing the lawsuit, Attorney General Bonta joins the U.S. Department of Justice and the attorneys general of Arizona, Connecticut, Maine, Michigan, Minnesota, New Hampshire, New Jersey, New York, North Dakota, Oklahoma, Oregon, Tennessee, Vermont, Wisconsin, and the District of Columbia.

Attorney General Bonta is committed to enforcing anticompetitive laws to ensure fair prices, innovation, and consumer choice.

In February 2024, Attorney General Bonta, the Federal Trade Commission, and a bipartisan coalition of states, announced filing a lawsuit that challenges the proposed merger of Kroger and Albertsons; this merger presents a significant risk of reduced competition and higher food prices nationwide. In December 2023, Attorney General Bonta announced a $700 million multistate settlement with Google resolving allegations that the company violated state and federal laws by monopolizing the Android smartphone application market. In November 2023, Attorney General Bonta and three other attorneys general announced joining U.S. DOJ’s lawsuit against Agri Stats, Inc., a company that organizes and manages anticompetitive information exchanges for meat processors and facilitated the unlawful increase of chicken, pork, and turkey prices across the U.S.

A copy of the complaint is available here.

California Attorney General Rob Bonta and New York Attorney General Letitia James last week published an op-ed in USA Today, excerpted below, highlighting legislation sponsored by the California Department of Justice.

By Attorney General Rob Bonta and Attorney General Letitia James:

As state attorney generals, we have two primary duties: defending our states’ laws and interests, and protecting the rights and well-being of the people we were elected to serve. When Americans across the country faced urgent and powerful threats to their health, safety and prosperity, attorneys general across the nation have stood together to take them on. Now, as a mental health crisis exacerbated by social media giants seeking to addict and commodify the attention of children grows worse and worse each year, it’s time to take collective action again. 

We will not stand by and watch an arms race among social media mega-corporations over who can best profit from our children’s pain and addiction. That is why we are using every tool at our disposal to fight back against these pernicious practices: from the courthouse to the statehouse.  That is why we are also championing legislation in our respective states to crack down on addictive feeds and safeguard against the collection and sale of children’s personal information.

Curbing the excesses of some of the world’s most powerful and influential companies will not be easy. But the formative mental health of a generation is at stake, and we cannot afford to stand idly by and not respond. We’ve stepped up before as attorneys general to address a rising threat to the health and safety of our constituents. With the support and courage of our colleagues in our states’ legislatures, we know that we will succeed, and that children will finally be protected against the most insidious harms of social media. 

To read the op-ed in its entirety please see here.

To learn more about California’s legislation please see here.

Updates to COPPA need to go further to protect children’s online data 

OAKLAND — California Attorney General Rob Bonta today, in response to the Federal Trade Comission's (FTC) notice of proposed rulemaking, joined a bipartisan multistate letter to the FTC proposing updates to regulations implementing the Children’s Online Privacy Protection Act (COPPA). In the letter, the attorneys general express support for updates to COPPA and advocate for further clarity and specification for proposed rules.

“The Federal Trade Commission’s proposed rule would strengthen our ability to enforce restrictions on companies selling children’s data and protect consumers who seek to manage what information websites can collect from kids,” said Attorney General Bonta. “Together with a broad bipartisan coalition from across the country, I support this effort and look forward to working collaboratively with the FTC to keep protecting children’s privacy.”

COPPA requires operators of websites and online services that are either directed to children under 13, or that have actual knowledge that they are collecting personal information from children under 13, to provide notice to parents and obtain parental consent before collecting, using, or disclosing personal information from children. 

The proposed rule would update COPPA by:

• Requiring separate “opt-in” consent for targeted advertising: The proposed new rule would require separate notice and parental consent before an operator can disclose children’s information to third parties, including third-party advertisers.
• Clarifying the “mixed audience” category:  There currently is ambiguity about when child-directed websites must provide COPPA protections to all users and when they may screen users for age and only provide COPPA protections to users who self-identify as under 13 years old. The FTC proposes to clarify this distinction by providing a new definition of “mixed audience."
• Adding “biometric identifiers” to the definition of “personal information”: The FTC proposes to expand the definition of “personal information” under COPPA to include biometric identifiers, like fingerprints or handprints, retina and iris patterns, genetic data, or data derived from voice, gait, or facial data.
• Limits on the “support for the internal operations” exception: Operators may currently collect persistent identifiers without first obtaining parental consent under an exception that permits “support for the internal operations of the website or online service.” The FTC proposes adding new requirements and disclosures for operators who rely on this exception.
• New limits on nudging kids to stay online: The FTC proposes adding new limitations on operators’ use of personal information to prompt or encourage children to use their service more.
• COPPA and schools: The FTC seeks to permit schools and school districts to provide consent for the collection, use, and disclosure of children’s personal information, but limit that consent to use for educational rather than commercial purposes.
• Data security, retention, and deletion: The FTC proposes strengthening data security, retention, and deletion requirements. For example, the FTC proposes requiring disclosure of data retention policies, and prohibiting operators from using retained information for any secondary purpose.

In the letter, the attorneys general support proposed updates to the COPPA Rule and respond to certain issues raised by the FTC, including how to define “personal information” as it relates to children and how to obtain parental consent to use children’s personal information in connection with advertising. The letter also advocates for limiting potential exemptions being considered by the FTC and addresses proposals regarding limitations on the use of personal information in ways that could be harmful to children, such as nudging kids to stay online longer.

Attorney General Bonta is committed to protecting children online. In October 2023, Attorney General Bonta co-led a bipartisan coalition of 33 attorneys general in filing a federal lawsuit against Meta Platforms, alleging that Meta, among other things, designed and deployed harmful features on Instagram and Facebook that addict children and teens to their mental and physical detriment. In November 2023, Attorney General Bonta announced the public release of a largely unredacted copy of the federal complaint against Meta. The removal of the redactions provides additional context for the misconduct that the attorneys general allege.

In March 2023, Attorney General Bonta as part of a bipartisan multistate coalition, filed an amicus brief supporting efforts to compel TikTok to produce subpoenaed materials and evidence as part of ongoing nationwide investigations into the company’s role in the growing youth mental health crisis. In December 2023, Attorney General Bonta joined a multistate amicus brief in Murthy v. Missouri supporting the right of the federal government to communicate with social media companies about matters of public concern. In January 2024, Attorney General Rob Bonta, Senator Nancy Skinner, and Assemblymember Buffy Wicks introduced the Protecting Youth from Social Media Addiction Act (SB 976), and the California Children’s Data Privacy Act (AB 1949), landmark legislation seeking to protect youth online.

In submitting today’s letter, Attorney General Bonta is joined by the attorneys general of Oregon, Illinois, Mississippi, Tennessee, Colorado, Connecticut, Massachusetts, New Jersey, North Carolina, Alabama, Alaska, Arizona, Arkansas, Delaware, District of Columbia, Florida, Georgia, Hawaii, Indiana, Kentucky, Maine, Maryland, Michigan, Minnesota, Nebraska, Nevada, New Hampshire, New Mexico, New York, Ohio, Oklahoma, Pennsylvania, Puerto Rico, Rhode Island, South Carolina, South Dakota, Utah, Vermont, U.S. Virgin Islands, Virginia, Washington, and Wisconsin.

A copy of the multistate letter is available here.