FTC Announces Reorganization to Make Rules Against Deceptive Businesses

March 30, 2021 by Tom Ramstack
Acting FTC Chairwoman Rebecca Kelly Slaughter.

WASHINGTON — The Federal Trade Commission is organizing a new rulemaking office to coordinate its efforts against what it calls deceptive business practices.

The agency’s chairwoman described the reorganization as the start of a more aggressive campaign to protect consumers from corporations that use their market dominance to extract unfair profits.

“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 FTC Chairwoman Rebecca Kelly Slaughter said in a statement. “It is also time for the Commission to activate its unfair methods of competition rulemaking authority in our increasingly concentrated economy.”

Any FTC proposals for more rules have traditionally run into critics, such as former acting FTC Chair Maureen K. Ohlhausen.

She told Congress in 2016 that more rules could create confusion for businesses and their customers with uncertainties between consumer protection and competition enforcement.

Nevertheless, some Democrats were quick to praise the FTC’s announcement.

“For too long, the FTC has failed to use the full extent of its authority to protect American consumers and workers,” said Rep. Jerrold Nadler, D-N.Y., in a statement. “As a result, numerous sectors of the economy are highly concentrated and firms have engaged in widespread anticompetitive conduct, leading to higher prices, lower wages and fewer choices.”

The FTC’s rulemaking is now spread among different divisions that handle competition, consumer protection, economic analysis and other issues.

Slaughter said the reorganization under the general counsel’s office would help the FTC confront corporate wrongdoing more directly.

The expanded rulemaking appears to advance a campaign promise by President Joe Biden that he would aggressively seek to defend consumer rights. It also represents a change from the Trump administration, which relaxed regulation enforcement against businesses.

FTC officials said their renewed rulemaking campaign is becoming more urgent considering the Supreme Court might limit their ability to seek financial compensation for consumers.

The FTC interprets Section 13(b) of the FTC Act to authorize the agency to require businesses to compensate consumers who they have wronged. However, a group of businesses suing in the case of AMG Capital Management v. FTC argues the agency is exceeding its authority.

The FTC also seeks injunctions against corporations for deceptive or unfair businesses practices. The injunctions are court orders for the businesses to halt their offensive behavior.

The FTC would be able to continue its injunctions against businesses if it loses in the Supreme Court but not the forced compensation for consumers.

The Supreme Court heard oral arguments in the case in January. Its ruling is pending.

Traditionally, the FTC has invoked authority under the Sherman and Clayton Acts to enforce laws against antitrust, anticompetitive behavior or unfair business practices.

Slaughter said rulemakings are needed to supplement the federal laws with the broader authority they give the FTC.

She mentioned as examples the Funeral Rule, which spells out the rights of consumers while they make funeral arrangements; and the Eyeglass Rule, which requires doctors to give patients copies of their prescriptions after exams.

The FTC said digital technology has created new challenges that need to be addressed by rulemakings, such as fake online product reviews.

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