FTC Policy Statements, Reports and Warning Letters: Why Are There So Many?  |  JD Supra

FTC Policy Statements, Reports and Warning Letters: Why Are There So Many? | JD Supra

The FTC has a long history of using policy statements, public workshops, reports, and warning letters to influence the market and communicate its thinking on key issues and aspects of its mission. Examples of my tenure at the FTC include workshops and reports on big data, data brokers, mobile payments, and the Internet of Things; policy statements on the misleading formatting of homeopathic medicine advertisements and claims; and warning letters to a range of companies making health claims (see here, here and here, for example).

The current FTC has embraced this strategy with enthusiasm, issuing multiple statements, reports and letters announcing new policies and priorities, as well as police “crackdowns” it has launched or is planning. While some of these statements come from the Commission and some from staff, the effect is largely the same – companies subject to FTC jurisdiction pay attention (or should).

It is worth pausing for a moment to recall some of these most significant statements since Lina Khan became president. (I’m focusing here on the FTC’s consumer protection mission, though there are plenty of antitrust examples as well.) Consider this:

  • Tech@FTC Blogpost on Breach Disclosures (emphasizing the importance of breach notification and stating that the FTC precedent shows that companies have a legal obligation to provide it under FTC law) (May 20, 2022)
  • Commission Policy Statement on EdTech and COPPA (emphasizing COPPA’s substantial limitations on the use of EdTech in schools and the FTC’s commitment to cracking down on illegal surveillance of children in this area) (May 19, 2022)
  • Commission’s Enforcement Policy Statement Regarding Negative Option Marketing (warning companies that the FTC is stepping up enforcement against illegal tactics that induce or trick consumers into purchasing subscription services – aka “dark patterns “) (October 28, 2021)
  • Criminal Violation Letters for False Tax Reporting (announcing that the FTC has sent warning letters to more than 1,100 companies, setting the stage for stiff 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 6(b) Staff Report on Internet Service Providers (finding that ISPs collect significant amounts of personal data while giving consumers few options to stop it) (October 21, 2021).
  • Criminal Violation Letters for False Reviews and Other Deceptive Approvals (announcing warning letters to over 700 companies, laying the groundwork for future penalties for deceptive approvals) (October 13, 2021)
  • Penalty Offense Letters for False Claims by For-Profit Colleges (announcing warning letters to 70 for-profit colleges, laying the groundwork for future penalties for false promises regarding job and income prospects) (October 6, 2021)
  • Commission statement on breaches by health apps and other connected devices (“clarifying” that health apps and connected devices are “health care providers”, subject to the PHR health breach notification rule of the FTC) (September 15, 2021)

More such statements and advice are in the queue. For example, on October 19, 2022, the FTC is hosting a virtual event on protecting children from “stealth advertising” in digital media, which could lead to the development of new policies, or even the development of rules or regulations. to the application (see our disclaimer on an FTC regulation of advertising to children here). The FTC is also in the process of updating its dot.com approval guides and disclosure guidelines and (presumably) completing the 6(b) study it launched in 2020 regarding social media and services. video streaming.

Why does the FTC use these tools so much? These statements are making headlines. They can change corporate behavior faster than a consent order (or certainly a lengthy trial). The FTC may be concerned about the lack of time before the midterm elections or the next presidential election. Further, policy statements, reports, and warning letters allow the FTC to articulate the principles exactly as it wishes – without being tied to the particular facts of a case.

However, it is important to recognize that these statements and warnings do not themselves constitute law enforcement (despite the FTC’s repeated use of terms such as “suppression” and “acceleration”), and do not provide the previous effort of a contentious case, or even the “soft” precedent of a consent order. Additionally, the FTC’s enforcement follow-up here (even with respect to statements and warnings from a year ago) has so far been thin. I also can’t help mentioning that some of the FTC’s statements advance dubious legal theories that may not survive if tested in court or when new management takes over – such as the assertion of the FTC that the FTC’s breach notification rule covers virtually all health apps (see our previous article here) and the assertion that the FTC’s precedent establishes breach notification obligations under the law on the FTC.

Yet these announcements tell us a lot about how the current FTC analyzes issues, how it views its priorities, and how it wants to be perceived by the public. Statements can also help us predict the legal theories, claims, and remedies that the FTC will seek to include in cases it brings.

Time will tell if these policy statements will have any lasting impact on consumer protection law or even guide the FTC’s efforts beyond the next few months. For now, however, companies would be wise to review their business practices with these statements and caveats in mind, and be prepared to do their best and/or mount their best defenses, should the FTC come to a decision. call them.

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