Senior Vice President, C_TEC, U.S. Chamber of Commerce
May 16, 2023
In the midst of recent oversight hearings by subcommittees for the House Appropriations Committee and the Energy & Commerce Committee regarding the Federal Trade Commission’s request for a $160 million budget increase, the agency is sustaining its attempts to overstep its authority granted by Congress to advance its own political agenda.
A recent court decision and the Commission’s attempt to modify privacy consent orders are the latest actions that further justify the need to fence in the agency and not provide it more funding. Here’s why:
Federal Court Puts Breaks on Theoretical Harms
On May 4th, a Clinton-appointed federal judge in Idaho dismissed a privacy case brought on by the FTC targeting data analytics company, Kochava, over the handling of personal data. The court rejected the FTC's arguments, as they failed to adequately convey how a company that shared data about device movement in sensitive locations was what the Commission deemed a violation of the FTC Act’s prohibition on unfair trade practices. In actuality, in order for activity to be classified as an unfair trade practice, the Commission must find that there is likely “substantial injury” to consumers.
In the FTC v. Kochava case, the court found that the FTC could not solely claim “theoretical harms” were possible to show a likelihood of injury. While the Court has provided the Commission the opportunity to amend its complaint in line with the ruling, this case shows the FTC’s willingness to go beyond the limits of its authority in privacy enforcement matters.
Eroding Certainty in Consent Decrees
The Commission’s proposal to mandate new privacy requirements for Meta under a modification of their previous consent decree—a legally binding settlement—is also cause for concern.
In this instance, the Commission is proposing that the consent order it has with Meta be unilaterally modified to impose sweeping new mandatory pauses of launching new products and services—the precedent of which could have a chilling effect on innovation.
Although Democratic Commissioner Alvaro Bedoya voted to move forward with the proceeding he noted, “when the Commission determines how to modify an order, it must identify a nexus between the original order, the intervening violations, and the modified order. Based on the record before me today, I have concerns about whether such a nexus exists.” He also noted that some of the alleged violations used to justify changing the order were actually resolved before the previous consent order in 2020 was issued.
If the Commission can unilaterally rewrite the terms of its consent decrees without showing a connection between violations and the terms of those decrees, companies are deprived of certainty and due process between administrations.
What’s At Stake?
The Federal Trade Commission has shown its willingness to exceed its authority in consumer protection matters. In 2021, the Supreme Court unanimously held that the FTC went above its authority to seek equitable remedies under its Section13(b) authority. In addition to its actions in the Kochava and Meta matters, the agency has announced it is considering economy-wide regulations on data that would have a significant impact across industries.
Congress needs to rein in this out-of-control agency that is deviating from its core mission of safeguarding consumers and ensuring fair competition in the marketplace. Until the agency can be held accountable, it should deny it further funding or rulemaking authority.
About the authors
Crenshaw is Vice President of the Chamber Technology Engagement Center (C_TEC).