Federal Trade Commission Seeks Expanded Enforcement Authority

This article is co-authored by guest contributor Shane Kelly and Megan Brown. 

On July 18, 2018, the Commissioners of the Federal Trade Commission appeared before the Oversight Subcommittee of the House Energy and Commerce Committee.  Although the hearing involved a comprehensive review of the FTC’s work, there was particular attention paid to the current limits of the FTC’s authority and ways in which it could or should be expanded.  Both the Commissioners and the members of the subcommittee agreed on the need for more oversight by the FTC, not less, in areas such as data protection and privacy. 

Specifically, the Commissioners noted the following.

• Three of the Commissioners said that the current enforcement tools at the FTC’s disposal were not enough to effectively deter misconduct. Now, the FTC does not have broad authority to impose civil penalties for first-time violators found to have engaged in unfair or deceptive acts or practices under Section 5 of the FTC Act. Rather, enforcement actions typically result in an injunction to refrain from the prohibited practice or a consent decree, and only when a consent decree is violated can monetary penalties be imposed. This results in a mere “slap on the wrist” for many violators, according to the Commissioners, and does not provide enough of a deterrent.

• The FTC Commissioners requested full-fledged APA rulemaking authority. As noted during the hearing, the FTC can only issue regulations under the more cumbersome set of processes outlined in the Magnuson-Moss Act. The Commissioners explicitly expressed support for giving the FTC APA rulemaking authority over areas such as data security and breach notification.

• Chairman Joseph Simons said that the FTC needs civil penalty authority for violations of the SafeGuards rule, which concerns data security for financial institutions.

• Commissioner Rebecca Slaughter noted that the FTC’s current work to combat robo-calls was hindered by the common-carrier exemption under the FTC Act. Commissioner Slaughter said that this exemption should be repealed, as implementing technologies to control the flood of nuisance robocalls would require greater coordination of industries over which the FTC does not currently have jurisdiction.

To be sure, merely requesting authority does not equate to receiving that authority from Congress.  But without a doubt, the FTC sees itself as having a greater role in emerging issues in the modern economy, and it appears that perspective is finding sympathy in Congress.