FTC Gears Up To Tackle 'Novel Harms Of The Digital Economy'

Signaling a more aggressive approach to enforcement, the Federal Trade Commission on Thursday said it is poised to begin the process of issuing binding regulations, as opposed to merely issuing recommendations.

“I believe that we can and must use our rulemaking authority to deliver effective deterrence for the novel harms of the digital economy and persistent old scams alike,” Acting Chairwoman Rebecca Kelly Slaughter stated Thursday.

“It is also time for the Commission to activate its unfair methods of competition rulemaking authority in our increasingly concentrated economy.”

Slaughter made the statement as part of an announcement about the launch of a new rulemaking group within the agency.

“With this new group in place, the FTC is poised to strengthen existing rules and to undertake new rulemakings to prohibit unfair or deceptive practices and unfair methods of competition,” the agency said.

While the FTC has the authority to issue enforceable regulations, the agency must first go through cumbersome procedural hurdles to do so.

The FTC has often avoided those procedural obstacles by issuing guidance as to what types of activities it deems deceptive or unfair. For instance, the agency has repeatedly issued guidance regarding online endorsements and influencers.

But that guidance doesn't carry the same weight as official regulations. Significantly, the FTC typically doesn't have the power to fine companies the first time they act in a manner contrary to the agency's guidance.

Jeffrey Greenbaum, an advertising lawyer with the law firm Frankfurt Kurnit Klein and Selz, says the FTC's announcement conveys the message, “We want to give our enforcement more teeth.”

“The FTC has pretty consistently shied away from rulemaking over the last several decades,” Greenbaum says. “This is a major new change.”

While Slaughter did not specify which specific areas of the digital economy are raising concerns, others have urged the FTC to pass regulations that could affect a variety of practices by tech companies, including their use of default settings.

Christine Bannan, policy counsel at New America’s Open Technology Institute, opined in Slate last year that the FTC should pass regulations that would prohibit companies from giving themselves a competitive advantage with default settings that require numerous steps to reconfigure.

“For example,” Bannon wrote, “Google makes the Android mobile operating system -- and so Google is the default search engine on Android devices. It takes users 15 steps to change it.”

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