On February 2, Acting Chairman of the Federal Trade Commission, Maureen Ohlhausen, addressed the ABA 2017 Consumer Protection Conference in Atlanta and highlighted her consumer protection goals. If there is a theme to her vision, it is that regulatory humility is integral to creating a better environment for consumers. She began her speech by discussing the FTC's role in consumer protection, and stated, "At a fundamental level, we are seeking to ensure that consumers are better off." She then highlighted three areas where she plans to address unfair and deceptive practices "..in a way that avoids hindering market-generated consumer benefits."
Priority 1: Bread and Butter Fraud. First, Acting Chairman Ohlhausen said, "I will re-focus the agency on our bread-and-butter fraud enforcement mission," which has been the Commission's core objective since its inception. To accomplish this goal, the agency must prioritize the harms to make the most effective use of its limited assets. She singled out fraud against active and retired service members and small businesses as areas of particular concern.
Priority 2: Concrete Consumer Injury and the Economics of Privacy. Her next priority is to ensure that enforcement actions address concrete consumer injury. While emphasizing that monetary, health and safety issues are the kinds of harm the Commission should prioritize, she noted, ". . . we have seen substantial injury arise from the exposure of more than just financial information," citing a case where several people committed suicide after their names and other data were exposed. This comment suggests that a breach of any sensitive data—beyond mere health and financial information—will be sufficient to support a Section 5 action. She expressed concerns "that a notice-and-choice approach to privacy may not adequately protect consumers from misuse by companies that assemble bits of non-sensitive consumer information into a potentially sensitive mosaic of a consumer."
In some of her strongest comments about prior FTC practices, Acting Chairman Ohlhausen asserted that the Commission would focus more on financial remedies in enforcement actions that are tied to consumer harm, rather than "untethered" disgorgement theories. Noting her dissent in the recent Uber decision, she stated:
Focusing on consumer injury is important when deciding what cases to bring. It is also important when determining what remedy to seek. In every consumer protection case we bring, we must ensure that we seek and obtain for consumers relief that is tied to consumer injury. Unfortunately, the FTC has deviated from this principle. In several recent cases, rather than seek to remedy consumer injury, the FTC has pursued disgorgement. That is, staff has sought a company's total revenues as monetary relief, even though the behavior at issue was not fraudulent. This departs from prior Commission practice. It has subjected parties to threats of huge payments that are disproportionate to any consumer harm. The latest example is the Uber settlement, from which I dissented. As my dissent explains, the $20 million dollar monetary settlement was untethered from consumer harm. In fact, it was an order of magnitude higher than our best evidence of consumer harm. Such disproportionate settlements harm businesses without making consumers better off. Instead, remedies ought to be carefully calibrated to the harm consumers suffered.
Channeling her initial statements about avoiding actions that curtail market-generated consumer benefits, she noted that "fencing in" injunctive relief in some claims substantiation settlements went too far in limiting companies from providing worthwhile information to consumers.
Priority 3: Balancing Burdens and Improving Transparency. With respect to regulatory burdens, Acting Chairman Ohlhausen noted that the Commission would focus on requests for information. Referencing complaints in a recent ABA-commissioned study of the FTC regarding the breadth and generic nature of certain information requests, she stated that such requests cause tremendous burdens and can chill innovative business practices. She said that under her leadership, the need for data to conduct investigations will be balanced against the inherent and costly burdens placed on businesses that are required to comply with these requests.
Regarding transparency, she focused on the FTC's privacy efforts. In particular, she observed that two thirds of the Commission's investigations are closed, and stated that "cases provide instructive examples of what not to do. But we can do better. I will direct FTC staff to distill key lessons from closed data security investigations so that businesses have more information about what they should do."
Why it matters: Acting Chairman Ohlhausen made it clear that enforcement actions should be harm based, and that redress for consumer harm, rather than disgorgement, should be emphasized. The Commission will also remain cost conscious when it makes information requests to minimize the burden of legitimate companies.