On December 10th, the Federal Trade Commission (FTC) published a Statement of Regulatory Priorities that announced the agency's intent to initiate rulemakings on issues such as privacy, security, algorithmic decision-making, and unfair methods of competition. The statement also addressed ongoing reviews on a myriad of topics, including the FTC's review of the COPPA Rule, the Negative Option Rule, and the Endorsement Guides. Several key topics covered in the Statement are discussed below:
- Privacy, security, and unlawful discrimination. The FTC stated that it is considering an additional rulemaking to address "abuses stemming from surveillance-based business models." Specifically, the FTC is "considering whether rulemaking in this area would be effective in curbing lax security practices, limiting intrusive surveillance, and ensuring that algorithmic decision-making does not result in unlawful discrimination." On Friday, the FTC also published a notice with the Office of Management and Budget indicating that the agency is contemplating launching its rulemaking on these issues in February 2022. This rulemaking would be conducted pursuant to the FTC's Trade Regulation Rulemaking procedures in Section 18 of the FTC Act and would entail multiple rounds of notices and public comment.
- Unfair methods of competition. The FTC also stated that it plans to explore defining certain "unfair methods of competition" prohibited by Section 5 of the FTC Act, noting that the agency will "explore the benefits and costs" of potential competition rulemakings related to non-compete clauses, surveillance, the right to repair, pay-for-delay pharmaceutical agreements, unfair competition in online marketplaces, occupational licensing, real-estate listing and brokerage, and industry-specific practices that substantially inhibit competition. The notice tied these subjects to a recent Executive Order encouraging the FTC to consider these issues.
- Children's Online Privacy Protection Act (COPPA). FTC staff are reviewing public comments submitted in response to the agency's 2019 request for comment on its COPPA Rule. The FTC had requested comment on "all major provisions of the COPPA Rule, including its definitions, notice and parental-consent requirements, exceptions to verifiable parental consent, and safe-harbor provision."
- Negative Option Rule. The FTC provided an update on the Negative Option Rule, for which it issued an Advance Notice of Proposed Rulemaking in October 2019. The FTC had requested comments on the effectiveness and impact of the Rule, which the FTC stated was intended to help consumers avoid and halt ongoing payments for goods or services that they did not intend to purchase. The FTC stated that it was studying different options but that its next expected action is undetermined.
- Endorsement Guides. The FTC also stated that it is currently reviewing comments received in response to its 2020 review of the Endorsement Guides. These Guides "are designed to assist businesses and others in conforming their endorsement and testimonial advertising practices to the requirements of the FTC Act."
Commissioners Christine Wilson and Noah Joshua Phillips also filed dissenting statements to the Statement on Regulatory Priorities. Commissioner Wilson stated that the Commission's regulatory plan "lays the foundation for an avalanche of problematic rulemakings." She specifically noted her concern that "competition rulemaking will hinder the rational development and refinement of economic and legal analysis" and risk inhibiting innovation because the lengthy rulemaking process "is unable to adapt quickly to market changes." Commissioner Phillips' dissent criticized the Statement for its reliance on "unsupported assumptions" and raised concerns that this "anti-growth scheme involves regulation after regulation that exceed [the FTC's] legal authority and would recast the FTC as a mini-Congress, without any of the accountability that comes with it."
The FTC's Statement on Regulatory Priorities signal that the FTC anticipates initiating significant changes to the data privacy, competition, and consumer protection landscape in 2022. These new rulemaking initiatives add to the complexity of the privacy landscape, with the California Privacy Rights Act, Virginia's Consumer Data Protection Act and the Colorado Privacy Act taking effect in 2023. Lawmakers also have continued to signal their interest in further regulation of the online ecosystem, with several legislative proposals in the last few weeks alone on data privacy, free trials and automatic renewals, and "dark patterns." We will continue to monitor these various regulatory developments and keep you apprised here on Inside Privacy.
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