Recently, Graham Dufault, senior director of public policy, shared perspectives from ACT | The App Association and its members in a U.S. House of Representatives hearing before the Energy and Commerce Committee’s Consumer Protection and Commerce Subcommittee on Federal Trade Commission (FTC) oversight. The Subcommittee held this hearing to discuss legislative proposals for modernizing the FTC’s oversight and any resources needed by the agency.
While many recent FTC actions focused on social media giants or other high profile tech companies, any new legislative proposals related to the Commission affect our member companies and the consumers/clients they serve. On the consumer protection side of the FTC, establishing strong, national privacy rules is especially important to App Association members. Graham stated our members want to help Congress work toward a bipartisan agreement. For example, the App Association sent a letter to the House Energy and Commerce Committee this past February urging action on privacy in the wake of the FTC’s settlement with Flo, a fertility and period tracking app. The settlement highlighted the lack of available tools at the FTC’s disposal to stop and prevent privacy harm. As the creation and transfer of health data outside the HIPAA “umbrella” proliferate, the FTC needs better privacy tools—based on the risks data processing activities pose to consumers. In doing so, Congress should set forth the overarching purposes and specify the limits of FTC rules.
On the competition side of the FTC, withdrawal of the 2015 Unfair Methods of Competition (UMC) statement sparked understandable concerns among several agency watchers. But there is an opportunity for the Commission to clarify the applicability of its UMC authority to standard-essential patents (SEPs). Anticompetitive SEP abuse harms consumers and competition alike and this is an example of where FTC guidance can help App Association members.
Below are three key takeaways from Graham’s testimony:
Expanding the FTC’s enforcement and regulatory capabilities
The App Association agrees with the intent behind these measures to enhance the FTC’s ability to punish and deter consumer protection harms. However, we recommend that rulemaking authority and civil penalties be tied to clearly defined privacy and data security requirements. Congress needs to set guardrails in order to avoid 180-degree shifts from administration to administration, and to ensure the agency carries out Congress’ intent.
Clarifying the contours of FTC authority
The Statement on Unfairness Reinforcement and Emphasis Act or SURE Act (H.R. 2702) for example, would codify more of the FTC’s own “unfairness statement” and require the Bureau of Economics to be consulted in cases brought under the FTC’s “unfairness” prong. Although economic considerations are never the only relevant ones, they’re important, especially for small companies with small compliance and legal budgets. The Clarifying Legality and Enforcement Action Reasoning Act or CLEAR Act (H.R. 2690) could also help covered entities better understand what the FTC views as legal conduct under an otherwise intentionally vague statute. Bills like these should be coupled with more authority and better enforcement tools for the FTC to pursue privacy and data security harms with direction from Congress.
Reporting requirements
Many of the proposed recommendations are welcome measures to enhance the Subcommittee’s oversight efforts and the FTC’s own enforcement planning. The Consumer Equity Protection Act (H.R. 4660) would help ensure the Commission develops a meaningful record on harmful activities targeting protected characteristics—like sexual orientation, race, disability, and others. The FTC Robust Elderly Protections and Organizational Requirements to Track Scams Act or FTC REPORTS Act (H.R. 2672) would also give the Subcommittee a better sense of the Commission’s plans and would help the Commission make informed decisions on how to prioritize enforcement against schemes targeting older Americans. The Subcommittee should provide more resources for the FTC to fund these reporting requirements.
The App Association will keep members posted on any legislative proposals to modernize the FTC that advance out of the Subcommittee. You can read the full text of our written testimony and watch a video of the hearing in full here.