John Tunheim, a federal judge in Minnesota
Stormi Greener | Star Tribune via Getty Images
A lawsuit brought by Republican fundraising platform WinRed seeking to block attorneys general in four states from investigating the company’s fundraising tactics was dismissed by a federal judge in Minnesota.
The New York Times previously reported on the ruling. A Times investigation from last April revealed WinRed’s use of prechecked boxes to automatically enroll supporters of former President Donald Trump into recurring charges, resulting in high demand for refunds and allegations of fraud.
The news prompted attorneys general from Minnesota, Maryland, New York and Connecticut to to send letters to WinRed seeking documents. Instead of providing them, the fundraising platform filed a lawsuit with federal court in Minnesota, arguing that federal law should preempt any state-level consumer investigations.
Chief Judge John Tunheim of the U.S. District Court in Minnesota on Wednesday dismissed WinRed’s attempt to stop the investigations, saying he did not have jurisdiction outside of Minnesota. He ruled in favor of the Minnesota attorney general, Keith Ellison, noting that federal law would not preempt a state investigation.
“The court has confirmed an important principle that has nothing to do with politics: State attorneys general can use the laws and investigatory tools of their states to protect the consumers of their states from harm, deception, and abuse,” Ellison said in a statement emailed to CNBC.
The judge also denied a request from WinRed to block a subpoena from the attorneys general that was issued in July, according the Times’ report.
Connecticut’s Attorney General William Tong said in a statement to CNBC, “We initiated our investigation into WinRed to protect consumers, regardless of their political affiliation, from deceptive and unfair marketing practices.”
He added he would continue to defend consumers from “unscrupulous and misleading business practices.”
Following the judge’s ruling, Maryland Attorney General Brian Frosh tweeted, “Now that its case has been dismissed, it is my hope that WinRed moves from a strategy of attack, attack, attack and cooperates in the investigation of allegations that it deceived consumers around the nation.”
New York Attorney General Letitia James released statement on her website on Wednesday saying: “No company has the right to use politics as an excuse for misleading consumers. It’s their responsibility to be honest and transparent with their services, and it’s the responsibility of the states to fight back against deceptive behavior in all its forms.”
She went onto say the court’s ruling affirms the states’ right to investigate WinRed.
“I am proud to stand with my fellow attorneys general to protect all consumers from predatory businesses,” the statement continued.
WinRed told the Times it plans to appeal the ruling. The platform did not immediately respond to CNBC’s request for comment.
