Looking Into The Crystal Ball: The Future Of Consumer Protection Law Enforcement (Podcast )

In this episode of "Clearly Conspicuous," consumer protection attorney Anthony DiResta delves into the shifting landscape of consumer protection regulation amid significant policy and administrative changes at federal agencies such as the Federal Trade Commission (FTC) and Consumer Financial Protection Bureau (CFPB). Mr. DiResta explores how these changes affect the enforcement of consumer protection laws and discusses the growing roles of state attorneys general and the media in shining a spotlight on corporate misconduct. Additionally, the podcast highlights the National Advertising Division (NAD), a division of BBB National Programs, of the Better Business Bureau's role in overseeing deceptive advertising as businesses shift toward online marketing.

Podcast Transcript

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 environment, make you aware of what's going on with the federal and state consumer protection agencies and give you practical tips for success. As always, it's a privilege to be with you today.

Current Policy, Staff and Administrative Changes at The Federal Governmental Agencies

Lately, we've become aware of the many substantive policy, staff and administrative changes being made at the federal governmental agencies. We've seen changes to impending rulemaking. We're seeing changes to the legal and regulatory landscape, as well as the players who enforce these laws and regulations. Thus, this is a good time to step back, reflect and look into the crystal ball. So today we discuss the future of consumer protection law enforcement.

As we are all aware, the regulatory environment governing consumer protection is undergoing a period of significant change, particularly with respect to the Federal Trade Commission, the Consumer Financial Protection Bureau and the role of the state attorneys general. These shifts in both federal oversight and state-level enforcement are happening at a time when businesses are facing increased scrutiny from the media, consumer groups and consumers alike, creating a complex landscape in which business leaders must navigate risk and compliance management matters. And then there's AI intelligence and technology.

Recalibration of the FTC's Enforcement Approach

Let's begin with the focus on the Federal Trade Commission. Under Chairman Andrew Ferguson, we are witnessing a recalibration of the agency's mission. Historically, the FTC has served as the primary federal agency overseeing not only deceptive and unfair trade practices, but safeguarding consumer rights. However, with the evolving political landscape and changing identity of the commission, the FTC's approach is now more focused on ensuring that businesses operate transparently and that consumers are adequately protected against fraud and market disruption.

FTC and Advertising Practices

One area where we are likely to see continued, if not increased, enforcement is advertising practices. The FTC has long been vigilant in policing deceptive advertising claims, and this will likely continue under Chairman Ferguson's leadership. In an age where digital advertising is omnipresent, the FTC will need to maintain a careful balance between fostering innovation and ensuring that consumers are not misled by false claims. Companies involved in digital advertising and e-commerce need to be particularly mindful of the FTC guidelines around online ads, testimonials and endorsements, sponsored advertising and, yes, online transactions to be clear and conspicuous.

FTC and Data Privacy

In addition, the FTC's role in privacy and data security will become even more critical as the digital landscape and AI technologies continue to evolve. As we all know, the rise of digital platforms, smartphones and cloud computing has created an explosion of data, personal data that businesses are increasingly collecting, storing and monetizing. This data-driven business model has led to significant privacy concerns. And as such, we can expect that the FTC will focus more on privacy violations, especially those that involve sensitive consumer information. I anticipate that the FTC's focus on data security will likely intensify, especially as the number of high-profile data breaches continues to rise. The agency will need to ensure that businesses take adequate steps to secure personal data and avoid exposing consumers to harm through lax security practices. As we saw with several high-profile data breaches, the consequences of poor data security can be catastrophic, both for consumers and the companies involved. Expect to see the FTC ramp up investigations into businesses that fail to implement sufficient data protection measures, particularly those that result in significant harm to consumers.

FTC and Fraud Prevention

Another area the FTC will likely take a more active role in is fraud prevention. We've seen already an uptick in investigations and actions taken against companies or organizations involved in fraudulent business practices, especially those targeting vulnerable populations. As fraud schemes become more sophisticated, whether in the form of financial scams, identity theft or misleading subscription models, the FTC will continue to serve as a key enforcer in consumer protection law. Given the growing concern around online fraud and scams, the FTC's investigative capacity will be expanded to better understand and respond to these emerging threats. We could see much more coordinated efforts between the FTC and other law enforcement agencies, such as the Department of Justice and state attorneys general, to combat fraudulent activity across state and national borders. The increasing number of international fraud operations could also push the FTC to collaborate more with global counterparts to tackle fraud and deception on a larger scale.

CFPB Scales Back, Stage AGs Ramp Up

Now, while the FTC remains a critical player in federal enforcement, the CFPB, the Consumer Financial Protection Bureau, has also seen a significant change. We have already observed a shift in the political and regulatory dynamics surrounding the CFPB, particularly with recent attempts to reduce its influence and its output. This could have profound implications for consumer protection, especially in the financial services sector, since the CFPB is scaled back. Indeed, the FTC may take on more responsibility for overseeing consumer financial issues, particularly in areas like credit reporting, mortgages, student loans, debt collection and payday lending. As a result, businesses involved in the financial services sector may see increased scrutiny from the FTC in areas traditionally handled by the CFPB. This could lead to a more fragmented enforcement landscape where certain aspects of consumer financial protection are addressed by the FTC, while others may fall under the purview of state attorneys general.

And speaking of state attorneys general, their role in consumer protection law enforcement is only likely to grow in the coming years. If the federal agencies, like the FTC and the CFPB, face limitations in enforcement, state AGs will become a crucial player in holding businesses accountable. The ability of state AGs to bring legal action against companies for unfair or deceptive trade practices is likely to expand. This could result in more aggressive state-level litigation, and businesses may have to contend with multiple jurisdictions and differing state laws on consumer protection. One notable development we've seen in recent years is the rise of multistate enforcement actions where several state attorneys general band together to pursue large-scale investigations against businesses. We've already seen this in sectors like privacy where states like California and New York have taken the lead on implementing robust consumer privacy protections.

Increased Media Attention on Corporate Misconduct

Now, let's shift focus to talk about the media. As federal agencies may become less proactive or active in consumer protection, we can expect the media to take a more prominent role in bringing attention to corporate misconduct. The 24-hour news cycle and the rise of social media means that any company mishandling consumer data or engaging in deceptive practices is likely to face public backlash almost immediately. The media's role could potentially create additional pressures for businesses to avoid the spotlight for all the wrong reasons. We're already seeing this with companies that face negative media coverage regarding their handling of consumer complaints, security breaches or fraudulent advertising. This public outcry, combined with potential legal action, may prompt businesses to engage in more proactive self-regulation, essentially tightening up their internal compliance programs and corporate governance structures.

National Advertising Division Expected to Play a More Active Role in Enforcement

Lastly, the National Advertising Division, the NAD of the Better Business Bureau, is another critical player in the future of consumer protection law enforcement. As the FTC and the CFPB focus on broader regulatory issues, the NAD will likely become even more active in addressing deceptive advertising, particularly in the context of digital advertising. The NAD's ability to resolve disputes quickly and at relatively low cost makes it an attractive option for businesses looking to avoid the more significant enforcement actions that could come from the FTC or state attorneys general. The NAD will likely become more involved in investigating the accuracy of advertising claims, especially in industries where there is a high potential for deception, such as wellness, health, technology and financial services. As consumer expectations shift and more businesses move toward online advertising, the NAD will likely focus on ensuring that companies adhere to advertising guidelines.

Concluding Thoughts

So, here's the key takeaway, ladies and gentlemen. The landscape of consumer protection law enforcement is at a crossroads. As federal agencies like the FTC and the CFPB experience leadership changes, philosophical changes to their missions and shifting priorities, state attorneys general are likely to fill the gap and take a more active role in regulating consumer protection. We also see the media increasingly playing a role in exposing corporate misconduct, further raising the stakes for businesses. And as the FTC ramps up investigations into privacy, data security and fraud, businesses must remain vigilant and proactive in ensuring compliance with both federal and state laws. So here's the bottom line. Because of changes in the federal agencies, this is not a time for businesses to relax and just pop open the champagne bottle. This evolving environment provides both challenges and opportunities. Staying alert to legal and regulatory developments is needed now more than ever. Compliance management and attention to consumer complaints, for example, needs to be a priority. The impact of AI technologies and online marketing initiatives require prudent care. So ladies and gentlemen, stay tuned for further programs as we identify and address the key issues of developments and provide strategies for success. I wish you continued success and a meaningful day. Thank you.