Federal Trade Commission

Federal Trade Commission

Presidential advisor Steve Bannon famously told the Conservative Political Action Conference (CPAC) that the Trump Administration seeks to “deconstruct” the regulatory state. The President has issued several Executive Orders (EOs) on regulations designed to implement this policy, including the “two for one” EO, an EO on enforcing the regulatory agenda, and an EO on reorganizing the executive branch.  The three orders collectively promote a policy of deregulation and wholesale elimination of administrative functions deemed overly burdensome to business, redundant, or outdated.

This week, the White House followed through on that agenda by publishing a proposed budget that would impose sweeping budget reductions on almost every federal agency, with the exception of the Departments of Defense and Homeland Security.

The key consumer protection agencies—the Federal Trade Commission, Federal Communications Commission, and Consumer Financial Protection Bureau—are not directly subject to any of these EOs or addressed in the President’s Budget Request. But that does not mean these agencies are in the clear in terms of budget-cutting or deregulatory efforts.  Rather, it seems more likely that the administration is preoccupied with bigger fish at the moment; in the meantime, they are treading carefully.  Which raises the question:  what else is in store for these agencies once they regain the Trump Administration’s focus?

For the moment, the FTC, FCC, and CFPB all press forward with their work in a period of limbo. The FTC has been operating with just two Commissioners since Chairman Edith Ramirez stepped down in February.  President Trump has since named Republican Commissioner Maureen Ohlhausen Acting Chairman, while Commissioner Terrell McSweeny remains the lone Democrat.  That puts the FTC in the position of having to secure unanimous votes in order to bring new complaints or settle cases.  The FTC has already had difficulty settling cases where the two Commissioners could not agree on terms to impose, which proved a complicating factor in litigation during the Obama Administration.

Acting Chairman Ohlhausen has made her desire to be permanent Chairman obvious, going so far as to say that President Trump’s famous book, The Art of the Deal, will guide her policy negotiations, and advocating for a recalibration of the standards for bringing consumer protection cases and seeking restitution.  During the Ramirez years, the Commission had routinely demanded major monetary penalties, a practice that began under David Vladeck’s tenure as Director of the Bureau of Consumer Protection.  It seems quite clear that this kind of pressure will subside as the Commission is gradually reconstituted.  Since Chairman Ohlhausen has also spoken of limiting enforcement to cases in which clear-cut harm can be demonstrated, the Commission may well pull back from bringing certain kinds of privacy and data security cases in which hacks may have occurred, but no demonstrated harm to consumers arose.

At the same time, however, there is a good chance that a chunk of jurisdiction lost to the FCC during the Obama Administration may ultimately find its way back in the next two years. During Chairman Tom Wheeler’s tenure the FCC had been in the process of massively expanding its consumer protection authority over the internet service economy through Title II reclassification, the Open Internet Order, and the Broadband Privacy Rules; now, by contrast, the Commission appears to be rapidly unwinding all three of these actions under new Chairman Ajit Pai.  If that continues, and the FTC ultimately prevails in litigation over the scope of the common carrier exemption, it is possible that oversight over broadband providers could once again vest with the FTC.  Similarly, given ongoing uncertainty surrounding the constitutionality of the CFPB’s structure, and widespread Republican antipathy to that agency, the FTC may also reclaim oversight of consumer financial services products.

The FTC could thus find itself by the end of 2017 with a broader scope of consumer protection authority than it had at the end of the Obama Administration, but wielding such authority in a less aggressive fashion. For the time being, the Commission continues to roll out consumer protection enforcement of the “low hanging fruit” variety, such as unsubstantiated Made in USA claims, fake weight loss products, and other matters of routine fraud.  These are the kinds of cases that FTC Staff has long brought and will easily secure the agreement of both Commissioners.  As the new Commissioners are nominated and a permanent Chairman named, a revised enforcement agenda will more fully take shape.  Because the new majority will be Republican, if the FTC stakes out new ground, it will most likely be in areas where actions will promote competition and unburden consumers and legitimate businesses from the impacts of deceptive and unfair advertising.

Photo credit: Robert Lyle Bolton