The FTC has long used policy statements, public workshops, reports and warning letters to influence the market and communicate its thoughts on key issues and aspects of its mission. Examples from my tenure at the FTC include workshops and reports on big dataAnd the data brokersAnd the mobile paymentsand the The Internet of things; Policy data on Misleading format ads And the Homeopathic Medicine Claims; and warning letters for group companies submitting health claims (see over hereAnd the over hereAnd the over herefor example).
The current Federal Trade Commission has enthusiastically embraced this strategy, releasing numerous statements, reports, and letters announcing new policies and priorities, as well as the law enforcement “drastic actions” it has launched or planned. While some of this data comes from the commission and some comes from employees, the effect is pretty much the same—companies under the jurisdiction of the FTC pay attention (or should).
It’s worth taking a moment to remember some of the most notable of these statements since Lina Khan became president. (I focus here on the FTC’s consumer protection mission, though there are plenty of examples in antitrust as well.) Consider these:
- Tech @ FTC blog on disclosure of the breach (emphasizing the importance of notification of the breach and noting that FTC precedent shows companies are legally obligated to file it under the FTC) (May 20, 2022)
- Committee Policy Statement on EdTech and COPPA (Emphasizing COPPA’s substantive restrictions on the use of educational technology in schools, and the FTC’s commitment to suppress illegal surveillance of children in this region) (May 19, 2022)
- Commission enforcement policy statement regarding the marketing of negative options (Corporate warning that the FTC is ramping up law enforcement against illegal methods that trick or corner consumers into purchasing subscription services – also known as “dark patterns”) (October 28, 2021)
- Penalty letters for false claims to make money (Declaring that the FTC has sent warning letters to more than 1,100 companies, laying the groundwork for severe penalties under Section 5(m)(1)(b) of the FTC Act if any of these companies make deceptive claims to make money in the future) (October 28, 2021)
- FTC Staff 6(b) Report on Internet Service Providers (Finding that ISPs collect a wealth of personal data while giving consumers few options to turn it off) (October 21, 2021).
- Wrongdoing Penalty Letters for Fake Reviews and Other Misleading Endorsements (Announcing warning letters to more than 700 companies, laying the groundwork for future penalties for misleading endorsement) (October 13, 2021)
- Penal infraction letters of false claims by for-profit colleges (Announcing warning letters to 70 for-profit colleges, laying the groundwork for future penalties for false promises about job opportunities and earnings) (October 6, 2021)
- Statement of commission for violations by health apps and other connected devices (“clarify” that health apps and connected devices are “healthcare providers,” according to the FTC’s PHR Notification Rule) (September 15, 2021)
Other data and instructions are in the queue. For example, on October 19, 2022, the Federal Trade Commission will hold a virtual event to protect children from “Hidden propaganda” in digital media, which could lead to more policy-making, if not rule-making or enforcement (though see our cautionary note on FTC child advertising rule-making over here). The Federal Trade Commission is also in the process of updating Authentication guides And the dot.com detection Orientation and (most likely) completion of Study 6(b) you launched in 2020 regarding Social media and video streaming services.
Why does the FTC use these tools so often? These statements made headlines. They can change a company’s behavior faster than a single consent order (or certainly a lengthy lawsuit). The Federal Trade Commission may be concerned about running out of time before the upcoming midterm or presidential elections. Also, policy statements, reports, and warning letters allow the Federal Trade Commission (FTC) to articulate the principles exactly the way you want them to—not tie them to the specific facts of the case.
However, it is important to realize that these statements and warnings do not in themselves constitute law enforcement (despite the FTC’s frequent use of terms such as “repression” and “intensification”), and do not provide the advance effort of a litigation case, or even prior “Soft” for the approval order. Furthermore, the FTC’s law enforcement follow-up here (even on data and warnings from last year) has been scant thus far. I also can’t mention that some FTC statements offer questionable legal theories that may not survive if tested in court, or when they take on new leadership – such as the FTC’s assertion that the FTC’s FTC Notification Notification Rule covers nearly all health applications (see our previous posts over here) and the claim that the FTC precedent sets out the breach notification duties under the FTC Act.
However, these announcements tell us a lot about how the current FTC analyzes issues, how it views its priorities, and how it wants the public to view it. The data can also help us predict the theories, claims, and remedies the FTC will seek to include in your cases.
Time will tell whether these policy statements will have a lasting impact on consumer law or guide the efforts of the FTC beyond the next few months. However, for now, it would be wise for companies to take a fresh look at their business practices with these statements and warnings in mind, and prepare to do their best, and/or set up their best defenses, if the FTC comes along.