This morning Judge Eric Tostrud in the District of Minnesota issued an order in the case captioned Minnesota Chamber of Commerce v. John Choi, et al permanently enjoining certain provisions found in Minnesota Statute 211B.15 (“statute”).

The enjoined statute was passed by the Minnesota legislature in 2023 and prevented entities who had a single foreign investor with a 1% interest or an aggregate of foreign investors holding 5% interest from making any independent expenditures or contributions. Minn. Stat. 211B.15, subd. 4a. The enjoined statute had the effect of preventing numerous corporations and limited liability companies from engaging in political speech through independent expenditures or contributions.

The Minnesota Chamber of Commerce brought a legal action challenging the statute as unconstitutional alongside a motion for a preliminary injunction. The Court granted the preliminary injunction in December 2023. Now over a year later, on motions for summary judgment the Court has permanently enjoined the statute. In doing so, the Court determined that the statute violated the First Amendment right to free speech. Specifically, the Court acknowledged that the State has a compelling interest to prevent foreign influence in its elections but concluded that the statute was not narrowly tailored to accomplish that interest. The Court relied on the State’s lack of any evidence demonstrating an instance where an entity was influenced by a foreign investor to make a political expenditure or contribution.

The Court’s order permanently enjoins enforcement of Minnesota Statutes 211B.15 subdivisions 1(b), 1(d), 1(e), 4a, 4b, the reference to “4a” in subdivision 7b(2), and any related rules and regulations. The Court’s order also enjoins Minnesota’s Campaign Finance and Public Disclosure Board and Ramsey County Attorney John Choi from pursuing civil or criminal liability for violations of the statute.

House Organizes (Finally!)

After more than three weeks of Democrat members boycotting session to deny quorum and multiple lawsuits playing out in the Court system, the DFL and GOP leaders of the Minnesota House of Representatives penned an agreement on Wednesday night regarding organization of the House. Key points of the agreement, which was approved by the entire body (during the first official session with a quorum!), include:

• Lisa Demuth (R-Cold Spring) will be Speaker for the entire biennium (no co-Speaker);
• Representative Brad Tabke (DFL-Shakopee) will be seated, but his election will be reviewed by the House Ethics Committee;
• Republicans will chair committees until the House reaches a 67-67 tie (expected by approximately March 17), at which point committees will have co-chairs;
• All committees will have equal party representation, but the DFL will designate one member of each committee as a non-voting member until the House is tied, at which point they will be able to vote; and
• The one exception to the above committee structure is a newly created committee on fraud, which will have a 5-3 Republican majority and a Republican Chair for the duration of the biennium.

The House officially gaveled in at 3:30 p.m. on Thursday (2/6), with committees set to begin holding hearings as early as 8:15 a.m. on Monday morning.

Senate Reorganizes

 As we mentioned last week, the Senate has a new member, Doron Clark (DFL-Minneapolis), who was sworn in on Monday, returning the Senate DFL to a 34-33 majority. As expected, that same day the Senate voted to end its power-sharing agreement with Senate Republicans, and Erin Murphy (DFL-St. Paul) was re-elected as Majority Leader. Additionally, committees were re-structured to provide a DFL majority and a DFL chair for each. Despite the formal change, many DFL chairs continued to allow Republicans to lead committee work.

House Special Election Scheduled

A special election to fill the vacant seat in the House of Representatives has been set for Tuesday, March 11. If needed, a primary election will be held on Tuesday, February 25. This vacancy was created when newly-elected Curtis Johnson was declared ineligible to represent District 40B (located primarily in the Roseville/Shoreview area) due to residency concerns. The winner of the special election will likely be sworn in on Monday, March 17.

February Forecast Date Set

Each biennium, the Legislature anxiously awaits the release of the state’s February Budget Forecast. The office of Minnesota Management and Budget (MMB) releases two economic forecasts each year, one in February and one in November. The November forecast serves as a preview to the February forecast and provides parameters for the Governor’s administration to make initial budget recommendations for the coming year. The February Forecast is the document that the Legislature must use to craft a balanced budget. The February Forecast is scheduled to be released on Thursday, March 6. According to MMB, “the February forecast announcement is scheduled about a week later than usual this year due to a later-than-usual release of key federal employment data.”

Sports Betting is Back

A bipartisan proposal to legalize sports betting has returned, and advocates are hopeful that this is the year it will finally pass. While the issue has been at the forefront of many voter’s minds for years, finding agreement among a diverse group of stakeholders has proven difficult. In the waning days of last year’s legislative session, it seemed that an agreement may have been reached, but the legislation still did not pass. S.F. 757, authored by Sen. Matt Klein, picks up where that bill left off. Along with introducing the bill, Sen. Klein had an opinion piece published in The Minnesota Star Tribune in which he stated: “[m]y bill is the only one that brings together all stakeholders; tribes, tracks, sports teams, legislators and the public.”

Impact of Minnesota Supreme Court Quorum Decision

Last Friday, the Minnesota Supreme Court weighed in on the question of whether 67 or 68 members of the House of Representatives are needed to constitute a quorum, deciding that 68 members must be present for official actions to take place. That decision invalidated all activity that House Republicans had taken since session started on January 14. This week, Secretary of State Steve Simon has returned to preside over the House each day at 3:30. Republicans have been in attendance, but Democrats have continued to stay away to deny quorum. Though House leaders continue to meet for negotiations, it remains very uncertain when the House will finally organize and begin functioning.

Perhaps the biggest question that many have had related to the invalidation of previous House activity relates to the hundreds of bills that had been introduced. According to the head of the Revisor’s Office, Ryan Inman, that office will automatically generate new jackets for each of those bills. Authors will have to re-sign and re-introduce new copies of the bills.

Senate Special Election

A special election was held earlier this week to fill the vacancy left following the death of Senator Kari Dziedzic (DFL). Senate district 60 is in the heart of Minneapolis, and not surprisingly, the DFL candidate, Doron Clark, won with a significant majority of the votes. Senator-elect Clark could be sworn in as early as Monday, restoring the DFL caucus’s majority. It is likely that the power-sharing agreement that the Senate is currently operating under will end next week, with Sen. Erin Murphy being named Majority Leader and committees being restructured with DFL chairs and majorities.

Another Court Case

Yesterday, Minnesota House Republicans initiated a lawsuit against Secretary of State Steve Simon. They claim that he is overstepping the authority granted to him as presiding officer by refusing to recognize Republican members for motions to compel their DFL colleagues to return to St. Paul. It is unknown when we may hear from the Court on this issue.

More on the Governor’s Budget

Governor Tim Walz unveiled his FY 2026-2027 Biennial Budget on Thursday, January 16. While the FY 2026-2027 biennium is expected to have a $616 million surplus, the FY 2028-2029 biennium has a projected deficit of $5.1 billion. The Governor solves this deficit by proposing:

• $907.5 million in budget cuts and reductions in program spending growth;
• $414.5 million in net revenue increases; and
• $748.4 million in new spending.

In combination with $3.7 billion of carryover dollars from FY 2024-2025, the Governor’s Budget will have $2.12 billion remaining at the conclusion of FY 2026-2027. Due to the budget cuts and revenue increases that would be enacted for FY 2026-2027, the $5.1 billion projected deficit turns into a $354 million surplus at the end of FY 2026-2027.

What’s Next on the Budget

In the week to come, Senate Committees will continue to hold hearings on the Governor’s budget proposals, and Minnesota Management and Budget (MMB) will begin preparing the next Economic Forecast, which is due at the end of February. After this forecast, the Governor will revise his budget proposals to match the new revenue and expenditure numbers. There are signals that provide insight into what the next forecast will look like. First the good news, MMB announced on January 10 that revenue receipts for November and December of 2024 totaled $380 million more than forecast in the November 2024 Forecast. This good news is balanced by Minnesota’s macroeconomic consultant expressing concerns that ongoing economic growth, inflation, unemployment, and interest rates will adversely impact Minnesota’s economy.

Starting this year, there are a swath of new state and federal consumer protection laws that have already or will soon go into effect, impacting a broad range of businesses across industry types. Whether you are an established multi-million-dollar company or a small mom-and-pop shop, these new laws are far-reaching, and businesses must review their contracts, policies, and practices to ensure compliance.

Minnesota’s New Junk Fee Law

Question: What is Minnesota’s new “Junk Fee” Law?

Answer: Minnesota’s Junk Fee Law makes it a deceptive trade practice to advertise a price for a good or service that does not include all “mandatory fees.” Mandatory fees generally mean any fee that the customer cannot reasonably avoid. The law is far-reaching and affects a variety of industries where these fees are commonplace. Most notably, the law targets the hospitality industry, including hotels, restaurants, and app-based food delivery services, where things like resort fees, service charges, and health and wellness charges were often listed on customer receipts alongside state and local taxes, but were not included in the advertised price for goods or services. These industries have pushed back on the designation of these fees as “junk fees,” arguing that the fees are a direct response to increasing burdens on employers, such as rising costs to provide healthcare for employees. Trade associations for many of these industries have indicated that they will be seeking clarification from lawmakers during the 2025 legislative session. This new language will be incorporated into Minnesota’s existing Deceptive Trade Practices Act, Minnesota Statutes section 325D.44.

Question: When must businesses become compliant with the new Junk Fee Law?

Answer: The law went into effect on January 1, 2025, so most businesses are expected to already be in compliance with the law’s requirements (unless in an industry regulated by the Metropolitan Airports Commission, which becomes effective June 1, 2025).

Question: What about taxes? Does the price advertised for goods and services need to be the post-tax amount?

Answer: No. “Mandatory Fees” does not include any governmental taxes on the sale, use, purchase, receipt, or delivery of such goods and services.

Question: What if the price of a good or service is dependent on the consumer’s selection and preferences?

Answer: In those circumstances, if the business wants to advertise a price, then the business should disclose: (i) the factors that determine the total price, (ii) any mandatory fees associated with the transaction, and (iii) that the total costs of the services may vary.

2. Minnesota’s “Taylor Swift Bill”

Question: What is Minnesota’s so-called “Taylor Swift Bill”?

Answer: As Taylor Swift fans battled for their tickets to the popular Eras Tour in Minneapolis (and around the world), the checkout process sparked an outcry: the online ticket platforms had advertised one price for the tickets, only to surprise fans with upwards of hundreds of dollars of various fees at checkout. This consumer frustration was echoed coast-to-coast, prompting many states, including Minnesota, to introduce prohibitions on advertising ticket prices that were not reflected in the ticket’s total actual cost. Minnesota’s law requires online ticket retailers (including resellers) to disclose “at all times during the ticket listing and purchase process” the total cost of the ticket, including fees and surcharges, and a breakdown of the service charge and any other fees or surcharges. The law also contains several provisions regulating general business practices, such as prohibitions on selling more than one copy of the same ticket, and additional required disclosures for ticket resellers. The legislature delegated the Minnesota Department of Commerce with the authority to administer and enforce the new law.

Question: When must ticket retailers become compliant with the new Law?

Answer: This law went into effect on January 1, 2025, and applies to tickets sold on or after that date.

Bonus Question: Isn’t the Federal Trade Commission (“FTC”) proposing a similar rule?

Answer: Yes. On December 17, 2024, the FTC finalized its own Rule on Unfair or Deceptive Fees, which targets the live-event ticketing and short-term lodging industries. The rule serves a dual purpose of: (i) preventing bait-and-switch pricing that hides the total price of live-event tickets and short-term lodging by omitting mandatory fees and charges from advertised prices, including through drip pricing, and (ii) prohibiting the misrepresentation of the nature, purpose, amount, and refundability of fees or charges. This law goes into effect 120 days after publication in the Federal Register. However, as with many FTC rules, it would not be a surprise to see legal challenges attempting to delay or halt its implementation.

3. The Federal Negative Option Rule

Question: What is the Federal Negative Option Rule?

Answer: In response to the widespread surge of businesses moving to subscription-based auto-renewal contracts (e.g., Netflix, Spotify, etc.), whereby the businesses treat a consumer’s silence or failure to take affirmative action as an acceptance of an offer to purchase (or continue to purchase) goods or services (defined as a “Negative Option Feature”), the FTC enacted the Negative Option Rule. At a high level, the Negative Option Rule: (i) prohibits any material misrepresentations of material facts in connection with the offering of contract with a Negative Option Feature, (ii) requires certain disclosures to be made in connection with the offering of a contract with a Negative Option Feature, (iii) requires businesses to obtain the customer’s unambiguously informed consent to the Negative Option Feature, and (iv) requires there to be a simple mechanism for the customer to cancel the Negative Option Feature and stop incurring any associated, recurring fees.

Question: When must businesses become compliant with the new Federal Negative Option Rule?

Answer: The prohibition against material misrepresentation of material facts in connection with the offering of a contract with a Negative Option Feature became effective January 14, 2025, while the remaining requirements of the Negative Option Rule become effective on May 14, 2025.

Question: What are the disclosure requirements of the Negative Option Rule?

Answer: Prior to obtaining the billing information of a customer, all material terms relating to the sale of the good or service must be disclosed. Any misrepresentation (whether expressly or by implication) of the material terms is prohibited. At a minimum, businesses must disclose: (i) that consumers will be charged for the good or service, or that the fees will increase after a trial period ends, and if applicable, that the fees will be charged on a recurring basis, unless the consumer takes timely steps to prevent or stop such charges, (2) each deadline by which the consumer must act to prevent or stop the fees, (3) the amount the consumer will be charged, and, if applicable, the frequency of the fees the consumer will incur unless timely steps are taken, and (4) the information necessary for the consumer to easily cancel the feature.

Question: What are the informed consent requirements of the Negative Option Rule?

Answer: Before charging a customer in connection with a contract that has a Negative Option Feature, businesses must obtain the customer’s unambiguous affirmative consent to the feature separately from any other portion of the transaction, and businesses generally must keep a record of such consent for a period of three years (unless able to show that processes used ensure no customer can technologically compete the transaction without giving such consent).

Question: What are the simple cancellation requirements of the Negative Option Rule?

Answer: At a high level, businesses must provide a simple mechanism for a consumer to: (1) cancel the Negative Option Feature, (2) avoid being charged (or being charged a higher amount), and (3) immediately stop any recurring fees. Such mechanism must be at least as easy as the mechanism the consumer used to consent to the Negative Option Feature (e.g., simple check box, signature).

This Q & A answers what is anticipated to be the most common questions involving these new laws. This Q & A is not meant to be exhaustive or complete, but a starting point intended to give an introduction on the applicability and requirements of these laws. If you have specific questions about these new laws or their potential impact on your business, please feel free to reach out to the attorneys listed below.

Courts Alter Political Landscape

Just before close of business last Friday (January 16), two separate courts handed down opinions that will impact the 2025 legislative session. One decision, by a District Court in Becker County, granted the request of Senator Nicole Mitchell to postpone her trial for felony burglary charges until after the legislative session. It had been scheduled to begin next week. The second decision, by the Minnesota Supreme Court, determined that a special election to fill a House seat vacated by a newly-elected candidate had been scheduled prematurely. The winner of the general election (DFL – Curtis Johnson) was disqualified by a judge over residency concerns. While there will be a special election on January 28 for the open Senate seat, following Senator Dziedzic’s passing, the previously scheduled House special election has been cancelled and is expected to take place in early March.

The Republican members of the House of Representatives continued to meet in floor session and attend committee hearings this week, while the DFL members called the actions a “sham.” Boycotting the start of the legislative session with the intention of preventing a quorum, DFL members continue to insist that the House is not duly organized. On Thursday, the Minnesota Supreme Court heard oral arguments in a case brought against the Republicans by the DFL members. While it is unknown how long the Court will take to consider and decide the case, many are hoping that they will weigh in yet today (Friday).

Permanent House Rules?

While we wait for the Minnesota Supreme Court decision on the legitimacy of the House’s official actions, House Republicans continue to apply pressure for their DFL colleagues to return to the Capitol. On Monday of next week (January 27), the House is expected to pass permanent Rules of the House, which among other things, would deny per diem payments to members who are absent from session. The full, proposed Rules of the House, along with additional amendments that were also included in the final version, can be found here.

Campaign Finance Board Releases Lobbyist Report

Following significant changes passed in 2023 to laws regarding what constitutes lobbying and who is considered a lobbyist, the 2024 Legislature delayed implementation of many of the changes. At the same time, the legislature requested a report from the Campaign Finance and Public Disclosure Board, seeking recommendations from the Board. Last week, the Board published their final report, though in some instances declined to make recommendations on the most controversial issues. Instead they laid out the differing opinions they found while studying the issues. The full report is linked to on their homepage.

Governor Releases Capital Investment Recommendations

On Thursday, Governor Tim Walz released recommendations for state investment in capital projects. The projected plan is just shy of $900 million, and includes $790 million in general obligations bonds and $97 million in trunk highway cash. Along with a list of specific projects, the plan identifies $40 million for local projects to be determined by the legislature. The full recommendations can be found on the Minnesota Management and Budget website.

Key Upcoming Dates Relating to the 2025 Legislative Session

• Unknown, but possibly as early as today: Minnesota Supreme Court to rule on issue of quorum and whether House is duly organized
• January 28: Special Election for SD60
• February 3: Anticipated swearing in of winner of SD60 Special Election, at which point Senate power sharing agreement may end
• February 28: MMB February Budget Forecast released
• March TBD: Special Election for HD40B
• March or April TBD: Legislative Deadlines
• April TBD: Traditional Legislative Break
• May 19: Last day of the legislative session
• July 1: Government shutdown begins if new budget isn’t passed

What’s a Quorum?

When Secretary of State Steve Simon convened the Minnesota House of Representatives at Noon on Tuesday, January 14, 67 Republicans were in attendance but the 66 DFLers were notably absent. DFLers boycotted the first day over concerns that Republicans would not abide by a previously agreed upon power sharing agreement and that they would reject the election certificate of DFLer Brad Tabke (see below). Secretary Simon ruled that a quorum of 68 members was not present and adjourned the House. Republicans, overruling Secretary Simon, declared that 67 members constituted a quorum, elected Lisa Demuth as Speaker of the House, and proceeded to organize the House for 2025-2026. House DFLers, arguing that these actions were improper, promptly filed suit in the Minnesota Supreme Court.  The Supreme Court is expected to rule in the next few weeks.

House DFLers Sworn in Before Session Start Date

In a first ever move, House DFL members gathered behind closed doors at the Minnesota History Center on Sunday, January 12, and held their own swearing in ceremony.  Republicans are questioning the legality of this ceremony and claim that the DFLers had to be present on the opening of session to be sworn in. Conversely, DFLers argue that the swearing in ceremony was legal. The Supreme Court will be called in to sort this issue out as well.

Judge Rules in Contested House Seat

Just a few hours before the start of the session on Tuesday, a district court judge ruled on the contested election in House District 54B, finding in favor of DFL candidate Brad Tabke, who won the election by 14 votes. While the GOP suit acknowledged the 14-vote margin, it noted that 20 absentee ballots had been lost before they were counted, thereby requiring a new election (and requesting the judge to order the same). Republicans have yet to appeal this ruling; we anticipate they will do so, arguing that the House of Representatives is the final arbiter of membership in the body.

Senate First Day was Uneventful

With the recent passing of Senator Kari Dziedzic (DFL-Minneapolis), the Senate is tied at 33-33. Prior to the first day of session, Senate DFLers and Republicans came to a power-sharing agreement. Under this agreement, there will be two co-presidents of the Senate, and each committee will have co-chairs. Governor Walz has also called a special election on January 28 for the open Senate seat. The DFL is expected to win this northeast Minneapolis seat and return the Senate to a 34-33 majority.

Governor Unveils 2026-2027 Budget

Governor Tim Walz unveiled his Fiscal Year 2026-2027 Biennial Budget on Thursday. The actual budget is comprised of thousands of pages of text and spreadsheets and is the first step in the budget adoption process. The Governor proposed a $66.9 billion budget which grows to $71.1 billion in Fiscal Years 2028-2029, which reflects a reduction from the current 2024-2025 Biennial Budget. The Minnesota Management Budget website has more details here.

On Monday, January 6, 2025, Governor Walz issued the first Executive Order of 2025, EO 25-01, which creates a centralized state fraud investigations unit administered and overseen by the Minnesota Bureau of Criminal Apprehension (“BCA”). The BCA’s new Financial Crimes and Fraud Section (“Fraud Section”) will focus on financial crimes, insurance fraud, and state government program fraud.

Governor Walz’s administration has faced intense criticism over the past few years for not doing enough to combat the rampant fraud that has taken place in Minnesota state government programs, especially with respect to the matter that has received national attention – the Feeding Our Future scandal, which has dogged the administration for almost his entire time as Governor.

Even Biden appointee, U.S. Attorney Andy Luger, has declared that “Minnesota has a fraud problem.” In an interview last month, Luger stated that “a lot more needs to be done, and people need to have serious conversations and getting to the root of this and stopping it before it happens.”  Luger went on to say that “no other state had a Feeding Our Future….[And] no other states have had the kinds of problems we’ve had with government fraud….” Not surprisingly, Governor Walz’s administration has been under attack by House and Senate Republicans for many years over what they believe has been lackluster investigation and enforcement of obvious financial fraud taking place throughout Minnesota government programs.

Under EO 25-01, the Minnesota Department of Commerce Fraud Bureau, which conducts investigations into insurance fraud and financial crimes, will enter into an interagency agreement with the BCA until a formal reorganization order is issued next month by the Minnesota Department of Administration. Under the reorganization order, Commerce Fraud Bureau personnel, funding, and responsibilities will move to the BCA.

In addition to the other directives contained in the EO, all state agencies and departments are required to ensure that all government employees will understand their obligations to prevent fraud and know how to report suspected fraud, including reporting to the BCA Fraud Section, and cooperating with any investigation it undertakes. Astonishingly, these duties and responsibilities did not already exist as part of every State employee’s onboarding and annual training.

The Governor also intends to introduce a legislative package to strengthen state program fraud investigation and enforcement, including adding nine staff members to the Minnesota Attorney General’s Medicaid Fraud Control Unit; giving agencies expanded authority to stop payments from going to people and entities suspected, charged, or convicted of fraud or financial crimes, including using artificial intelligence (“AI”) to detect suspected fraud; and adding staff across a number of agencies, including Department of Human Services to expand its fraud unit, among other changes.

Minnesota Republicans are sure to have their own strong anti-fraud legislative package, which Governor Walz stated, he welcomed.

Although much remains to be seen about the future workings of the Fraud Section, there is no question that Minnesota providers who receive payment from Minnesota government programs will be subject to significantly greater investigation and enforcement efforts by the State.

Please stay tuned for further regulatory and legislative updates from our group.

As discussed in our recent Employment Law Update Webinar, the Minnesota Legislature passed and amended several statutes significantly impacting employment laws in Minnesota during the 2024 session.

Many of these changes have already gone into effect, but one specific change to the Earned Sick and Safe Time (ESST) law becomes effective January 1, 2025.  Employers should understand this change as they evaluate their earned sick and safe time and paid time off policies for 2025.

What changed in the Earned Sick and Safe Time law?

Among other changes to details such as earnings statements, increments of time used, payment rates, and other details, the Legislature amended the ESST law as it applies to paid time off (PTO).  If an employer provides employees with PTO or other paid leave beyond the amount required by the ESST law and such PTO time can be used for personal illness or injury, the additional PTO must meet the same requirements as the ESST hours (other than the ESST accrual requirements), when the time is used for an ESST-qualifying purpose.

Will this affect my PTO / attendance policy?

Perhaps.  If an employer’s PTO or attendance policy has different requirements regarding notice, documentation, anti-retaliation, replacement workers or other requirements for an employee’s PTO use beyond the amount of required ESST time, the employer may need to change their policy to comply with the ESST law with respect to such terms. Some employers may consider separating out ESST from other paid time off.

Do these provisions apply to all use of PTO?

No, the provisions only apply to an employee’s use of PTO for ESST-qualifying purposes (including for illness or injury).  If an employee uses PTO for a non-ESST reason, including vacation time, an employer can apply its own policies regarding notice and use.

When is this change effective?

The effective date of this provision is January 1, 2025.

For more information about how the legislative changes affect your company’s paid time off policy, please feel free to reach out to any member of our Employment team.

Minnesota Management and Budget (MMB) issued the November Budget and Economic Forecast this morning and has projected that the State of Minnesota will have a $616 million surplus for the upcoming FY 2026-2027 biennium. This estimate represents a $1.1 billion reduction from previous estimates. MMB cites projected reductions in income and sales tax revenue along with higher long-term care and special education spending as reasons for the reduction in the surplus.

For more details on the forecast announcement, Minnesota Public Radio (MPR) interviewed Winthrop shareholder, Tom Hanson, former MMB Commissioner, and you can find a link to the story here.  Also, Tom will be joining Nina Moini on MPR’s Minnesota Now program during the 12:00 pm to 12:15 pm segment today to discuss the forecast.

Many banks and credit unions are well-aware that they are the targets of an industry of plaintiff’s law firms. For over a decade, plaintiff’s class action law firms have been targeting financial institutions that impose multiple non-sufficient funds (“NSF”) charges on a single “item” and/or that assess overdraft (“OD”) fees on certain debit card transactions. These cases were first filed against some of the nation’s largest banks and financial institutions.  However, as time has passed, and the big banks had all been hit, vulture plaintiff’s firms have turned their attention to small to mid-size banks and community institutions. For smaller institutions, the adage of “flying under the radar” does not appear to count for much.

In order to solicit representative class plaintiffs, some law firms have turned to social media to target individual banks. For example, some social media advertisements that we have seen include a picture of the bank and say:

• Are you a customer of [Named Bank]? You may be owed money, find out if you qualify.
• Did [Named Bank] charge you overdraft fees? Find out if you are owed money.

So What Can You Do?

• Reach out to legal counsel before one of these law firms target your bank; your attorney can review your deposit agreements and notice provisions to ensure they are compliant going forward. Remember, form agreements provided by vendors often aren’t litigation proof.
• Monitor social media accounts to ensure you are not the victim of one of these targeted attacks.
• If you learn of postings on social media targeting your bank, don’t be afraid to contact the social media provider and demand the ads be taken down.  There may be a number of grounds to make such a demand, including improper use of the bank’s trademarks. Legal counsel can help provide guidance on your chosen course of action.
• Finally, if your bank is already being targeted by these ads, connect with legal counsel who can help you prepare for a lawsuit that may be on its way.

Winthrop & Weinstine continues to actively monitor developments relating to NSF and OD litigation. If you have questions or concerns regarding the above, please do not hesitate to contact a member of our Banking & Finance team.