Podcast - FTC Regulatory and Enforcement Shifts Under New Leadership

Welcome to another podcast of Clearly Conspicuous. As we've noted in previous sessions, our goal in these podcasts is to make you succeed in this current environment, make you aware of what's going on with the federal and state consumer protection agencies and give you practical tips for success. It's a privilege to be with you today.

Introducing New FTC Andrew Ferguson and Exploring His Approach to Key Issues

Today we discuss what course the new Federal Trade Commission will chart when it comes to advertising and the broader consumer protection agenda. So let's begin by examining Chairman Andrew Ferguson's history. Andrew Ferguson has a history with the commission as a commissioner, and he has provided his priorities and policies through his dissents and concurrences. In his statements, Chairman Ferguson has made it clear that the commission should focus exclusively on its jurisdictional mandate and should narrowly interpret the statutes that Congress authorized it to enforce. He has stated that "The commission under President Trump will focus primarily on our traditional role as cop on the beat." Under Ferguson's leadership, we can anticipate an FTC consumer protection agenda that is less regulatory, more business-friendly and more advertiser-friendly in its approach to ad interpretation.

Artificial Intelligence

Let's now look at artificial intelligence issues. Ferguson has made clear that he views AI as a neutral tool that can be used for good or ill, like any other tool, and that it can be regulated under existing authority and does not require special legislation. Dissenting from the commission's issuance of a complaint against a company that provided the means to mass create AI-generated product reviews, Ferguson stated, and I quote, "When people use generative AI technology to lie, cheat and steal, the law should punish them no differently than if they use quill and parchment." Ferguson has also cautioned against overly aggressive regulation of AI technologies, noting concerns about showing the United States' world-leading track record of innovation. At the same time, Ferguson supports action against advertisers that misleadingly tout their use of AI or use it to deceive consumers: "Businesses that exploit media hype and consumer unfamiliarity with this new technology, that cheat people out of their hard-earned money, should expect a knock on the door from the commission and other law enforcement agencies."

Targeted Advertising and Data Collection

Let's now move to consumer privacy and targeted advertising. Ferguson supports the commission's vigorous enforcement of existing rules and laws protecting consumer privacy, but he opposes the commission's own rulemaking activities in the area. In a recent dissent, Ferguson wrote, "We will vigorously and faithfully enforce the laws that Congress has passed, rather than writing them." As some have noted, advertisers may be relieved that Ferguson recognizes the role that targeted advertising plays in facilitating online content. And he has repudiated the current FTC majority's treatment of targeted advertising as inherently harmful. But that doesn't mean that the ad industry can fully relax. Ferguson has stated: "In my view, the pressing policy question is not targeted advertising itself. Targeted advertising can have many pro-competitive justifications and should not itself be the object of regulatory ire. The correct regulatory focus is one step earlier in the supply chain: the largely unregulated collection, aggregation, sale and retention of consumers' data that makes the targeted advertising possible." And when it comes to sensitive data such as precise geolocation data, Ferguson agrees that advertisers, data brokers and others must obtain consumers' affirmative express consent before collecting, using or selling this data. Moreover, in the case of children and teens, he agrees, targeted advertising is harmful.

Monetary Penalties

Finally, let's look at monetary penalties. The current commission has served notices of deceptive practices on a who's who list of advertisers with the goal of enabling the FTC to seek monetary penalties if the advertiser engages in the type of practice described in the notice. These notices have covered topics such as deceptive endorsements, false earning claims and unsubstantiated ad claims more generally. Ferguson has expressed doubt about the legal foundation for these efforts, stating that advertisers were not given sufficient specific notice of the types of practices the commission has found to be deceptive. Accordingly, a Ferguson-led commission seems unlikely to rely on those types of notices to assess monetary penalties.

Key Takeaway

So here's the key takeaway. Businesses can look forward to an FTC that, as Ferguson has characterized, "stays in its lane," focusing more on law enforcement through textual readings of the law rather than on regulation and regulation through enforcement.

So stay tuned for further programs as we identify and address the key issues and developments and provide strategies for success. I wish you continued success and a meaningful day. Thank you.