Earlier this week, District of Columbia Attorney General Brian Schwalb settled one of two outstanding lawsuits against the Washington Commanders – this time over allegedly deceptive practices related to security deposits paid by season ticket holders. These deposits, which averaged $1,200, were supposed to be returned by the team thirty days after the expiration of ticket holders’ contracts, but the AG alleged they were instead retained by the team for years. Moreover, the AG alleged that the team created additional hurdles for consumers who did seek their deposits back, including requiring a signed, written request, which was never disclosed to consumers as a requirement for a refund. Former AG Karl Racine originally brought the case in 2022 alleging that this conduct violated the District of Columbia Consumer Protection Procedures Act (“CPPA”).
The settlement requires the team to pay back all outstanding security deposits to affected District residents, totaling approximately $200,000. In addition, the team will pay $425,000 to the District for restitution, attorneys’ fees, costs, and contributions to the District’s litigation support fund (as determined in the sole discretion of the AG). The agreement also includes a broad permanent injunction that not only prohibits future misrepresentations about the process of obtaining a refund of a security deposit, but also that prohibits “any act or practice that violates the CPPA.”
Apart from a reminder that the D.C. AG continues to use his consumer protection authority to battle the Commanders (see here and here for info on D.C.’s ongoing suit related to allegations of a toxic work environment and its impact on District consumers), this settlement is also a reminder that creating unnecessary and undisclosed steps for your customers to obtain refunds or assert other contractual rights will likely attract the ire of state and federal enforcers. This is increasingly true as more attention is brought to the concept of “dark patterns” – a phrase that we have previously called a “catchy” name for historically deceptive practices (see our two part post here and here), but that enforcers continue focus on in recent enforcement priorities and business guidance.
This settlement also serves as a reminder of the rather broad ability to seek significant monetary relief in AG-brought consumer protection actions. It is not uncommon in consumer protection matters for AGs to characterize settlement payments broadly to give the AG discretion on the allocation of those amounts (depending on the state and it’s unique state consumer protection authority). Given the range of penalties, redress, costs, fees, and other relief authorized by law it is easy to imagine how significant those potential recoveries may be in any given matter. As a result it is critical to have a complete understanding of the AG’s authority wherever you do business.
Join our Kelley Drye State AG team for our free monthly State Attorney General webinar series, featuring Attorneys General, front office staff, and consumer protection chiefs from around the country as they discuss their consumer protection authority and various hot topics in consumer protection.