Proposals Aim to Improve the Effectiveness of the FTC while Preserving Consumer Protection

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In 2014, the Federal Trade Commission (FTC) celebrated its 100-year anniversary, marking over a century as the lead consumer watchdog based on its broad authority established by Sec. 5 of the Federal Trade Commission Act, which prohibits “unfair or deceptive acts or practices in or affecting commerce.”

The Commission has demonstrated that after a century, their Section 5 authority is flexible enough to keep pace with rapid technological evolution.  For instance, as SIIA has highlighted in a recent policy paper, the FTC settlement with TRENDnet demonstrated that the FTC’s regulatory authority is indeed applicable to the Internet of Things (IoT).  The FTC v. Wyndham demonstrated that while data security is not explicitly identified in Section 5, the FTC’s unfairness authority includes the ability to protect consumer data from data breaches.

While there
is little question of the critical value of the FTC as the lead regulator and enforcer of consumer protection into the 21st Century, there are also opportunities to improve how the agency operates and exercises its discretion, particularly in a hyper-innovative IoT environment, without hamstringing the agency’s ability to protect consumers.

For instance, as noted by former Commissioner Joshua Wright, the FTC should always consider, “how much consumer welfare is derived from new product introductions enabled by the IoT or the increased value consumer derive from existing goods and services that are improved?”  And as Commissioner Ohlhausen has frequently opined, the Commission should always apply “regulatory humility,” in the modern era of big data and the IoT.  These perspectives both represent a call to tweak the processes within the Commission to help it keep pace with the rapid and profound technological and business changes in today’s global economy.

With this spirit in mind, and the goal to maintain the FTC’s strong Section 5 enforcement authority but streamline it with greater emphasis on economic outcomes, the House Energy and Commerce Committee today released a welcome set of targeted process and industry-specific FTC reforms.  SIIA supports this effort and looks forward to working with Committee members as they assess these important proposals.

David David LeDuc is Senior Director, Public Policy at SIIA. He focuses on e-commerce, privacy, cyber security, cloud computing, open standards, e-government and information policy. Follow the SIIA public policy team on Twitter at @SIIAPolicy.