Judge Says States Can Investigate WinRed’s Fund-Raising Tactics

A federal judge in Minnesota on Wednesday dismissed a lawsuit filed by WinRed, a company that processes online donations for Republicans, that sought to block state attorneys general from investigating fund-raising tactics that have triggered complaints of fraud.

The attorneys general from four states — New York, Minnesota, Maryland and Connecticut — first sent letters to WinRed last April, asking for documents after a New York Times investigation revealed the company’s use of prechecked boxes to automatically enroll donors in recurring contribution programs. The boxes resulted in a surge in demands for refunds from supporters of former President Donald J. Trump.

WinRed declined to provide the documents and instead went to federal court to argue that federal law should pre-empt any state-level consumer investigations. Chief Judge John R. Tunheim of the US District Court in Minnesota ruled against the company on Wednesday.

Judge Tunheim dismissed WinRed’s attempt to stop the attorneys general investigating outside Minnesota, ruling that he did not have jurisdiction. He ruled in favor of the Minnesota attorney general, Keith Ellison, writing that federal law would not pre-empt a state inquiry.

“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,” Mr. Ellison said.

Judge Tunheim also denied a request to block a subpoena from the attorneys general, which was issued last July 16, shortly after WinRed went to federal court, according to the ruling issued on Wednesday.

“WinRed will appeal,” the company said in an emailed statement.

WinRed has argued that the attorneys general, all Democrats, are politically motivated. However, the four also sent a similar request for documents last year to ActBlue, the leading Democratic donation-processing platform. ActBlue said on Wednesday that it had also received a subpoena and that it had shared the requested information.

After the ruling Wednesday, Attorney General Brian Frosh of Maryland urged WinRed to cooperate with the inquiry.

“Now that its case has been dismissed, it is our 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,” he said in a statement.

New York’s attorney general, Letitia James, said, “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.”

In the fall of 2020, the Trump campaign used prechecked boxes to get a donor’s permission to withdraw extra donations every week — then obscured that fact below extra text unrelated to the additional withdrawals. In the following weeks and months, demands for refunds increased sharply as supporters said they were duped into unwitting contributions.

All told, the Trump operation, working with the Republican Party, refunded more than 10 percent of every dollar raised through WinRed in the 2020 campaign — a rate more than four times that of the Democrat Joseph R. Biden Jr.’s operation.

The bipartisan Federal Election Commission voted unanimously last year to recommend that Congress outlaw the practice of prechecked recurring donation boxes. Legislation has since been introduced in both the House and the Senate.

Kitty Bennett contributed research.