FTC Consumer Protection Priorities In 2015

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1 Portfolio Media. Inc. 860 Broadway, 6th Floor New York, NY Phone: Fax: FTC Consumer Protection Priorities In 2015 Law360, New York (January 20, 2015, 1:10 PM ET) was a big year for the Federal Trade Commission, with the agency celebrating its centennial anniversary and Commissioner Terrell McSweeny beginning her term in April, giving us a full complement of five commissioners for the first time in awhile. Over the course of the year, the FTC brought a series of high-profile cases that provide a clear picture of its consumer protection priorities. In addition, each of the commissioners made a number of statements that provide insight into their individual priorities with respect to consumer protection issues. This article will provide a brief overview of those individual priorities. Chairwoman Edith Ramirez Edith Ramirez, a Democratic appointee, was sworn in to the FTC on April 5, 2010, and has served as chairwoman since March 4, In her public statements, she has indicated that her primary concerns in the consumer protection area center on data security generally, and big data and data brokers specifically. John E. Villafranco In a May 2014 speech before the Media Institute, Chairwoman Ramirez stated that companies should limit the amount of consumer data they collect, not just how they use such data.[1] She further commented that consumers should be given a say in how their data is used and proposed a number of steps that industry stakeholders and policymakers could take to reduce security risks associated with big data, including data deidentification (i.e., removal of unique identifiers) and development of new consumer privacy tools.[2] In September 2014, the FTC hosted a workshop to discuss whether big data could be used as a means to exclude certain consumers from full opportunity in the marketplace. [3] During her opening remarks for the workshop, Chairwoman Ramirez stated that the FTC and its law enforcement and community partners should do three things to reduce the risk of disparate impacts resulting from the collection and use of big data: (1) identify areas where big data practices might violate existing law ; (2) build awareness of the potential for big data practices to have a detrimental impact on low-income and underserved populations ; and (3) encourage businesses to guard against bias or disparate impact on low-income and vulnerable populations when designing their analytics systems, algorithms, and predictive products. [4]

2 Finally, during her remarks at one of the several congressional committee hearings for which she provided testimony in 2014, Chairwoman Ramirez called upon Congress to enact legislation to help the FTC achieve its consumer protection goals with respect to data security issues.[5] Commissioner Julie Brill Julie Brill, also a Democrat, has served as a commissioner since April 6, Like Chairwoman Ramirez, her consumer protection priorities focus, in part, on big data issues; she is also keenly interested in domestic and international privacy issues. During a February 2014 speech at Princeton University, Commissioner Brill said that, with respect to big data analytics, one of the most troubling practices we need to address is the collection and use of data whether generated online or offline to make sensitive predictions about consumers, such as those involving their sexual orientation, health conditions, financial condition, and race. [6] She further highlighted her concerns about data usage in an interview for 60 Minutes about data brokers.[7] During the interview, she noted that most consumers are unaware that data brokers exist and that she hopes to see more oversight and transparency in the data broker industry so that consumers can determine what information is being collected about them and opt out of such collection if they so choose.[8] She later supported the FTC s recommendation for new legislation to regulate data brokers.[9] Commissioner Brill is also focused on international collaboration on consumer protection issues. For instance, in June 2014, she spoke at a workshop hosted by the European Data Protection Supervisor and gave a general overview of issues related to consumer protection, competition, big data and the Internet of Things.[10] She also gave a speech in Vienna, Austria, highlighting examples of U.S. and European efforts to protect consumer privacy in the era of big data[11] and wrote an article about the commonalities between privacy protection efforts in the U.S. and the European Union.[12] In that article, she commented that the U.S. and EU should work together to preserve existing mechanisms and develop new ways that allow our different privacy frameworks to coexist while facilitating the flow of data across borders. [13] Commissioner Maureen Ohlhausen Republican Commissioner Maureen Ohlhausen was sworn in on April 4, In her public statements throughout 2014, she suggested that her consumer protection priorities lie mostly with big data issues and the Internet of Things, although not surprisingly, she seems to favor a more hands off approach to regulation.[14] She also continued to take issue with the FTC s relatively new standard for competent and reliable scientific evidence for health-related claims for consumer products. Commissioner Ohlhausen appears to take a slightly different view on the importance of big data and its implications than some of her fellow commissioners. For example, she submitted comments to the National Telecommunications and Information Administration in August 2014 in which she suggested that many of the concerns about big data are not unique to big data.[15] She went on to say, however, that newer issues merit further research so that the FTC and other government agencies can have a better understanding of potential impacts on consumers.[16] Interestingly, she seems to support specifically prohibiting certain clearly impermissible uses of data rather than imposing limits on what data can be gathered[17], which contrasts with viewpoints expressed by Chairwoman Ramirez and Commissioner Brill.

3 During a speech at the Consumer Electronics Show in January 2014, Commissioner Ohlhausen took a similar position with respect to the Internet of Things, stating that the FTC should approach regulation of the Internet of Things with a dose of regulatory humility and encouraged companies that manufacture relevant products to safeguard the privacy of users to avoid giving the technology a bad name while it is still in its infancy. [18] When asked during an October 2014 interview about the appropriate role for the FTC with respect to consumer privacy issues, Commissioner Ohlhausen responded that she would prefer to provide baseline protections for [consumers ] most sensitive information and then make sure privacy promises are followed rather than taking choices away from consumers. She also commented that as a general matter, the FTC's consumer protection efforts during the next decade should be focused on hardcore fraud to consumers, [19] privacy and data security issues and defining appropriate levels of advertising substantiation.[20] Finally, Commissioner Ohlhausen continued to disagree with the recent policy shift regarding the amount of competent and reliable scientific evidence required to substantiate health-related claims. In January 2014, she dissented from a FTC decision to mandate two randomized controlled trials before the company involved in the matter could make disease prevention, treatment, and diagnosis claims about its products.[21] In her dissent, she explained that the standard imposed was unduly high and that [a]dopting a one-size-fits-all approach to substantiation by imposing such rigorous and possibly costly requirements for such a broad category of health-related and disease-related claims may, in many instances, prevent useful information from reaching consumers in the marketplace and ultimately make consumers worse off. [22] Later, in another case in which she ultimately concurred with the final decision, she noted in a separate statement my hope [is] that as we consider future cases involving health-related and disease-related claims, the FTC will engage in a further dialogue about our substantiation requirements to discern how best to assess the potential costs and benefits of allowing different types of evidence that may provide a reasonable basis to substantiate such claims. [23] Commissioner Joshua Wright Joshua Wright, the second Republican commissioner, sworn in on Jan. 11, 2013, has been relatively quiet on consumer protection issues compared to his fellow commissioners. While he has not suggested any particular area within consumer protection with which he is particularly concerned, he has, however, made clear that one of his priorities is to ensure that economic analysis plays a greater role in the FTC's consumer protection investigations and enforcement actions. For example, as the sole dissenter in the FTC s decision in the Apple case in which the commission claimed that Apple Inc. violated the FTC Act when it failed to warn consumers about the 15-minute window for in-app purchases after entering a password Commissioner Wright stated that [g]iven the apparent benefits to some consumers and to competition from Apple s allegedly unfair practices, I believe the commission should have conducted a much more robust analysis to determine whether the injury to this small group of consumers justifies the finding of unfairness and the imposition of a remedy. [24] In speeches before the U.S. Chamber of Commerce and TechFreedom, he noted that one of his priorities when evaluating matters like the Apple case has been to engage the FTC s Bureau of Economics to better understand the cost-benefit analysis of such an action.[25] Commissioner Terrell McSweeny Terrell McSweeny, a Democrat, was sworn in as the fifth commissioner on April 9, Despite her short

4 tenure at the FTC, she has made a number of public statements that suggest she is interested in a wide variety of consumer protection issues, as well as consumer and industry outreach and education efforts. For example, when testifying before the Senate Commerce Committee in July 2014, Commissioner McSweeny highlighted the FTC s efforts to combat cramming on wireless phone bills, and stated that [i]n the past few years the commission has focused on mobile cramming as a key consumer protection issue. [26] She also explained that the FTC has developed a number of practices that it has encouraged mobile providers to adopt, including options to block third-party charges, adequate disclosure of thirdparty charges, and implementation of a clear dispute resolution process.[27] In October 2014, Commissioner McSweeny was the keynote speaker at the Children s Advertising Review Unit s annual conference and noted that as a mother of two young children, she has a personal interest in the FTC s efforts to protect children who use high-tech devices through enforcement actions such as the Apple and Googlecases and the Children's Online Privacy Protection Act rule.[28] Finally, Commissioner McSweeny spoke at the Identity Theft Resource Center in October 2014 and assured the audience that the FTC remains committed to fighting identity theft, particularly in light of the mandate from President Obama for the FTC to work closely with other government agencies to pool identity theft protection resources as part of his Buy Secure initiative.[29] By John E. Villafranco and Jennifer M. Rodden, Kelley Drye & Warren LLP John Villafranco is a partner and Jennifer Rodden is a telecommunications paralegal in Kelley Drye & Warren's Washington, D.C., office. The opinions expressed are those of the author(s) and do not necessarily reflect the views of the firm, its clients, or Portfolio Media Inc., or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice. [1] Edith Ramirez, Chairwoman, FTC, Protecting Consumer Privacy in a Big Data Age, The Media Institute, at 6-7 (May 8, 2014). [2] Id. at 7. [3] Edith Ramirez, Chairwoman, FTC, Opening Remarks at the Fed. Trade Comm n Workshop: Big Data: A Tool for Inclusion or Exclusion?, at 5 (Sept. 15, 2014). [4] Id. at 7-8. [5] Protecting Personal Consumer Information from Cyber Attacks and Data Breaches: Hearing Before the Senate Committee on Commerce, Science and Transportation, 113th Congress (2014) (statement of Edith Ramirez, Chairwoman, FTC). [6] Julie Brill, Commissioner, FTC, Big Data and Consumer Privacy: Identifying Challenges, Finding Solutions, Address at the Woodrow Wilson School of Public and International Affairs, Princeton University, at 3 (Feb. 20, 2014). [7] 60 Minutes: The Data Brokers: Selling Your Personal Information (CBS Television Broadcast March 9, 2014).

5 [8] Id. [9] Statement of Commissioner Brill, Data Brokers: A Call for Transparency and Accountability, Matter No. P125404, at 2 (May 27, 2014). [10] Julie Brill, Commissioner, FTC, Weaving a Tapestry to Protect Privacy and Competition in the Age of Big Data, European Data Protection Supervisor s Workshop on Privacy, Consumer Protection and Competition in the Digital Age (June 2, 2014). [11] Julie Brill, Commissioner, FTC, Privacy in the Age of Omniscience: Approaches in the United States and Europe, Mentor Group Vienna Forum (Sept. 11, 2014). [12] Julie Brill, Bridging the Divide: A Perspective on U.S.-EU Commercial Privacy Issues and Transatlantic Enforcement Cooperation, Intersentia (Jan. 2014), available at [13] Id. at 7. [14] For example, in a speech before the Better Business Bureau, she praised self-regulatory efforts in the private industry. See Maureen K. Ohlhausen, Commissioner, FTC, Success in Self-Regulation: Strategies to Bring to the Mobile and Global Era, BBB Self-Regulation Conference (June 24, 2014). [15] See Letter from Maureen K. Ohlhausen, Commissioner, FTC, to the National Telecommunications and Information Administration (Aug. 5, 2014), available at [16] Id. at 6. [17] Id. at 10. [18] Maureen K. Ohlhausen, Commissioner, FTC, Promoting an Internet of Inclusion: More Things AND More People, Consumer Electronics Show (Jan. 8, 2014). [19] Interview by Joe Tipograph with Maureen K. Ohlhausen, Commissioner, FTC, in Washington, D.C., (Oct. 1, 2014). [20] Id. [21] Statement of Commissioner Ohlhausen, GeneLink Inc., FTC v. Sensa, FTC v. HCG Diet Direct LLC, L Occitane, FTC v. LeanSpa, at 2 (Jan. 7, 2014). [22] Id. [23] Statement of Commissioner Ohlhausen, FTC v. Kevin Wright; HCG Platinum LLC; and Right Way Nutrition LLC, at 1 (Dec. 11, 2014). [24] Statement of Joshua D. Wright, FTC v. Apple, FTC File No , at 1-2 (Jan. 15, 2014).

6 [25] See Joshua D.Wright, The Economics of Digital Consumer Protection: One Commissioner s View, TechFreedom and International Center for Law and Economics (July 31, 2014); Joshua D. Wright, The View from 600 Pennsylvania Avenue: Recent Developments in Law Enforcement and Policy at the Federal Trade Commission, U.S. Chamber of Commerce (May 16, 2014). Commissioner Wright previously praised the Bureau of Economics during testimony before the Subcommittee on Commerce, Manufacturing, and Trade for the Committee on Energy and Commerce in the U.S. House of Representatives by saying that the bureau s work plays a vital although in his view often overlooked role within the FTC. The FTC at 100: Where Do We Go From Here?: Hearing Before the Subcommittee on Commerce, Manufacturing, and Trade of the House Committee on Energy and Commerce, 113th Congress 1-2 (2013) (statement of Joshua D. Wright, Commissioner, FTC). [26] Cramming on Wireless Phone Bills: A Review of Consumer Protection Practices and Gaps: Hearing Before the Senate Committee on Commerce, Science, and Transportation, 113th Congress 2 (2014) (statement of Terrell McSweeny, Commissioner, FTC). [27] Id. at [28] Terrell McSweeny, Commissioner, FTC, Protecting Children Online and On Mobile, Keynote Speech at the CARU Annual Conference (Oct. 1, 2014). [29] Terrell McSweeny, Commissioner, FTC, Remarks for the Identity Theft Resource Center (Oct. 29, 2014). All Content , Portfolio Media, Inc.

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