FTC Faces Renewed Criticism Both from Within and from Congress

As we rapidly approach the November election, important legal and political questions are resurfacing at the FTC—with new criticism coming from both within the Commissioner ranks and from Congress. On Tuesday, September 17, Republican FTC Commissioner Melissa Holyoak questioned the agency’s aggressive rulemaking and enforcement positions in remarks at the National Advertising Division (NAD) conference in New York. And on Thursday, September 19, House representatives during an Energy and Commerce Committee hearing opined that the ​“the FTC’s departure from its traditional standards is affecting Americans in their daily lives.”

The criticism generally focused on similar themes, taking agency leadership to task for various policy initiatives and efforts that were alleged to exceed the agency’s authority, including threatened application of the seldom-used penalty offense authority.

Commissioner Melissa Holyoak’s Remarks to NAD Highlight Internal Divisions

In addressing attendees of the National Advertising Division’s annual conference, Commissioner Holyoak offered three examples of the agency exceeding its statutory authority:

  • Amendment to the Health Breach Notification Rule (HBNR): Holyoak suggested that the FTC’s recent amendment to the HBNR is irreconcilable with the text of the underlying statute and sends a message to Congress that the agency can’t be trusted to follow the law.
  • Penalty Offense Authority Under Section 5(m)(1)(B): Holyoak stated that, in her view, the FTC’s notice of penalty offense letters don’t give companies actual notice that their conduct is unlawful. She criticized the agency for trying to impose civil penalties on conduct that is dissimilar to conduct previously found to be unlawful in Commission orders.
  • Section 18 Rulemaking: Holyoak also took issue with the Commission’s issuance of multiple notices of proposed rulemaking without showing that the practices at issue are ​“prevalent” under Section 18. Holyoak warned that this may lead the FTC to engage in ​“premature regulation.”

Commissioner Holyoak also criticized several of the Commission’s privacy initiatives, including its use of the ominous-sounding term ​“surveillance” to describe certain data collection practices, and offered suggestions for reasonable approaches to address AI-related challenges.

Energy and Commerce Committee Members Criticize FTC for ​“Heading in the Wrong Direction”

Many of Holyoak’s broader concerns were echoed by Republican members of the House Energy and Commerce Committee during a September 19 hearing on the FTC, including:

  • Exceeding Authority: Multiple members chastised the FTC for exceeding its statutory authority. As examples, they cited the FTC’s expansive rulemakings (including the junk fee and autorenewal rules), alleged failure to faithfully execute the law, and its advancement of its own policy and political preferences.
  • Penalty Offense Authority: Like Holyoak, Chair Gus Bilirakis (R-FL) rebuked the Commission’s use of civil penalties, noting that ​“sending warning letters” is ​“inappropriate and predatory and must be abandoned.”
  • Need for Empirical Research: Republican representatives also argued that the FTC should engage in more empirical, cost-benefit analyses, expand its cooperation with the Bureau of Economics, and engage with the industries and businesses it regulates to better understand the effects of its actions.

The current FTC has faced multiple waves of criticism throughout its tenure, for example detailed here and here, yet has appeared undeterred—and we would not expect the result to be any different here. Just last month, we saw the FTC use its unfairness authority to address racial discrimination in an action against Coulter Motor, resulting in lengthy, separate dissents from Commissioners Holyoak and Ferguson. And the FTC’s most recent report on ​“surveillance pricing” has elicited strong criticism from the agency’s Republican commissioners for purporting to set industry requirements even though the FTC has not engaged in rulemaking procedures.