After months of speculation, we now know what rules the FTC will launch or possibly change in 2022, thanks to a regulatory priority statement the FTC released on December 9.
Header lines? In addition to reviewing or taking action on nearly 20 existing rules and guides, the FTC plans to develop several New supervisory rules, unfair competition methods and potentially a host of other issues. And the Republican commissioners are crying scandal.
The new rules highlighted in the FTC statement pack a lot of punch, as they encompass multiple issues and could lead to multiple separate rules. They include:
- Rule (s) to end ‘abuses arising from surveillance-based business models’, which could curb’ lax security practices’ and ‘intrusive surveillance’ and ‘ensure[e] that algorithmic decision-making does not lead to illegal discrimination. The FTC statement signals that these rules will address both consumer protection and competition concerns.
- Rules defining “unfair competition methods”, which could include (citing the Presidential Decree on Competition) rules relating to “non-competition clauses, surveillance, right of redress, pharmaceutical late payment agreements, unfair competition in online marketplaces, professional licensing, real estate registration and brokerage, and industry-specific practices that significantly inhibit competition. “
- Rules for âprecisely defining unfair or deceptive acts or practicesâ – a potentially endless category of issues and regulations.
As the FTC explains, the agency’s renewed focus on rule-making is a response to “changing circumstances” including the Supreme Court ruling AMG decision (limiting the FTC’s recourse power), the inadequacy of the âcase-by-caseâ approach to competition, and the FTC’s removal of steps in its section 18 rule-making process (Mag-Moss). Notably, when the FTC enforces a rule, it can seek consumer redress and / or civil penalties; this authority has not been affected by AMG.
Equally ambitious is the list of existing rules and guides to review or change in the coming year and include: Business Opportunity Rule, Amplifier Rule, HSR Rules, Misleading Pricing Guides, Guides regarding the word Children’s online privacy rule, approval guides, franchise rule, funeral rule, health breach notification rule, FACTA identity theft rules (including including Red Flags and Card Issuer Rules), Leather Guides, Negative Option Rule, Telemarketing Selling Rule, Care Labeling Rule, Energy Labeling Rule, Glasses Rule, and Backup Rule (breach notification requirements).
Analyzing the significance of each of these rule revisions would require pages of commentary. Suffice it to say, the list is very long and includes some high profile, high impact rules. Recall also that some of these rules have already been addressed in policy statements issued since Khan became president. (See, for example, our blog post on the FTC’s “clarification” that the health breach notification rule applies to a wide range of health applications, despite the contrary in the current rule. Presumably, the FTC intends to implement such policy statements more formally and possibly add additional requirements.
The two Republican commissioners blasted the regulatory plan in strong dissent. Phillips’ dissent is short and sweet, stating that the FTC plan would impose “substantial and counterproductive regulatory burdens across the economy” and “reformulate the FTC as a mini-Congress” without the accountability that comes with it. . He concludes that it “won’t end well” for consumers, the competition, businesses or the FTC.
Wilson argues that the plan “extends well beyond a systemic review of existing rules (many of which should be scrapped anyway) and instead lays the groundwork for an avalanche of problematic regulations.” It attacks the âfast-track regulationâ made possible by the revised FTC regulatory procedures; the decision to launch this effort even when the FTC cannot meet its merger review obligations; and the failure to learn from past failed regulatory experiences (affecting railways and airlines) that stifled innovation, raised prices and limited choice.
Questions and problems
- Other rules can be added. The FTC’s list is long as it stands, but it could grow even longer in the months to come. As noted above, the Declaration refers to a potentially endless category of rules for defining unfair or deceptive practices with specificity. Additionally, the day the FTC released its regulatory agenda, it also announced that it was considering a new rule to tackle identity theft fraud in government and businesses. Clearly, the FTC is actively exploring several rules to lay the groundwork for consumer remedies and civil penalties.
- Resources and timeline. The FTC’s long plan will require many resources to continue and complete. Among other things, the revised Article 18 procedures (salty or ridiculed as ‘simplified’, depending on one’s perspective) are still long and cumbersome – requiring multiple requests for comment, demanding legal analysis, and many opportunities. for opponents to slow down the process. Additionally, if the FTC attempts to use Section 6 (g) to define âunfair competitive methods,â as some have suggested, protracted legal challenges appear likely. As a result, even if the FTC receives the $ 500 million proposed in the Build Back Better bill, crafting the proposed rules could take years, with uncertain results.
- “Important regulatory action.The FTC says none of its rules would meet the definition of a “significant regulatory action” warranting further consideration by the OMB – meaning none would impose annual costs of $ 100 million or more, or would have a significant negative impact on the economy or various sectors. Oh good? I suspect that stakeholders will challenge this claim in many of the regulations the FTC plans to undertake.
- Khan needs a majority. President Khan was able to publish this agenda because it does not require a 2-2 split Commission vote. However, it will need a majority to solicit public comment and take other critical action in the rule-making process. With Alvaro Bedoya’s confirmation still stuck in the Senate, it could be several months (at least) before many of these regulations actually take off.
Message to companies
So what are the main takeaways for businesses likely to be affected by this regulatory blitz?
- Continue to advance your compliance plans, documentation, and best practice implementation, especially in the areas of data privacy and security, clear and specific marketing claims, and responsible use of algorithms.
- Prepare to comment on potentially multiple rules affecting your business and customers.
- Fasten your seat belts and contact us for assistance anytime you have any questions or concerns about the FTC’s statements or actions.
We will continue to monitor these issues closely and release updates as they arise.