State AGs and Legislatures Aren’t Taking a Summer Break From Consumer Protection and Financial Services Regulation

As the federal government scales back certain consumer protection and enforcement initiatives, state attorneys general and legislatures are rapidly filling the void¹ — introducing new legislation, launching enforcement actions and setting aggressive consumer protection agendas. This shift has created a more complex and fragmented compliance environment.

We are actively monitoring these state-level developments. Below are some highlights from states leading this trend:

• New York 
  • The state enacted a comprehensive Buy Now, Pay Later law² requiring providers to obtain a license or DFS approval, setting caps on interest rates and fees, and adding new disclosure and recordkeeping rules.
  • FY 2026 budget proposals³ target subscription cancellation barriers, overdraft fees and “surveillance pricing,” among other consumer protection measures. 
  • Attorney General Letitia James obtained a $200 million settlement⁴ from Galaxy Digital Holdings arising out of a market manipulation scheme involving the purchase and sale of Luna, a cryptocurrency.
     
• Illinois
  • Both legislative chambers passed the Digital Assets and Consumer Protection Act,⁵ which provides that the Department of Financial and Professional Regulation shall regulate digital asset business activity in the State.
  • Legislators filed a bill proposing the creation of a state-level Consumer Financial Protection Bureau (CFPB) in Illinois.⁶
  • Additional bills would ban interchange fees⁷ and prevent the collection of coerced debt.⁸
     
• Massachusetts 
  • State securities regulator fined five major brokerages nearly $10 million for excessive commissions charged to investors.⁹
     
•  North Carolina 
  • The North Carolina Department of Justice (NCDOJ) launched enforcement actions¹⁰ targeting predatory real estate agreements designed to exploit homeowners.

What does this mean for the financial services industry? For one, the risk landscape is shifting — and fast. Compliance teams will need to adapt to a growing set of state-specific requirements. The proliferation of differing laws across jurisdictions will add cost and complexity to compliance operations. Note that though some of this legislation is still pending, much of it reflects a clear intention to expand consumer protections and enforcement tools at the state level.

It’s also important to recognize that this is just the beginning. Many states have already laid the groundwork through new legislation and policy proposals — and enforcement activity may pick up further in the months ahead.

Bottom line: With federal enforcement easing, the regulatory heat is shifting to the states — the financial industry should prepare for a dynamic state enforcement landscape.

¹https://katten.com/state-regulators-poised-to-increase-enforcement-efforts-as-trump-administration-executes-deregulation-agenda

²https://www.nysenate.gov/legislation/bills/2025/S3008/amendment/original

³https://www.dfs.ny.gov/reports_and_publications/press_releases/pr20250509_2

⁴https://ag.ny.gov/sites/default/files/settlements-agreements/galaxy-digital-holding-ltd-et-al-assurance-of-discontinuance-2025.pdf

⁵https://www.ilga.gov/legislation/BillStatus.asp?GA=104&DocTypeID=SB&DocNum=1797&GAID=18&SessionID=114&LegID=160946

⁶http://ilga.gov/legislation/BillStatus.asp?DocNum=1512&GAID=18&DocTypeID=SB&SessionID=114&GA=104

⁷https://www.americascreditunions.org/news-media/news/illinois-general-assembly-passes-extension-interchange-bill-implementation-date

⁸https://www.ilga.gov/legislation/BillStatus.asp?DocTypeID=HB&DocNum=3352&GAID=18&SessionID=114&LegID=161859

⁹https://www.nasaa.org/76033/nasaa-announces-multimillion-settlement-with-five-firms/

¹⁰https://ncdoj.gov/attorney-general-jeff-jackson-frees-north-carolinians-from-predatory-real-estate-agreements/