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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Photo of Laura Kim Laura Kim

Laura Kim draws upon her experience in senior positions at the Federal Trade Commission to advise clients across industries on complex advertising, privacy, and data security matters. She provides practical compliance advice and represents clients in FTC and State AG investigations. Ms. Kim…

Laura Kim draws upon her experience in senior positions at the Federal Trade Commission to advise clients across industries on complex advertising, privacy, and data security matters. She provides practical compliance advice and represents clients in FTC and State AG investigations. Ms. Kim advises on a wide range of consumer protection issues, including green claims, influencers, native advertising, claim substantiation, Made in USA claims, children’s privacy, subscription auto-renewal marketing, and other digital advertising matters. In addition, Ms. Kim actively practices before the NAD, including recent successful resolution of matters for both challengers and advertisers. She co-chairs Covington’s Advertising and Consumer Protection Practice Group and participates in the firm’s Internet of Things Initiative.

Ms. Kim re-joined Covington after a twelve-year tenure at the FTC, where she served as Assistant Director in two divisions of the Bureau of Consumer Protection, as well as Chief of Staff in the Bureau of Consumer Protection and Attorney Advisor to former Chairman William E. Kovacic. She worked on key FTC Rules and Guides such as the Green Guides, Jewelry Guides, and the Telemarketing Sales Rule. She supervised these and other rule making proceedings and oversaw dozens of the Commission’s investigations and enforcement actions involving compliance with these rules. Ms. Kim also supervised compliance monitoring for companies under federal court or Commission order.

Ms. Kim also served as Deputy Chief Enforcement Officer at the U.S. Department of Education, where she helped establish a new Enforcement Office within Federal Student Aid. In this role, she managed investigations of higher education institutions and oversaw issuance of fines and adverse actions for institutions in violation of federal student aid regulations. Ms. Kim also supervised the borrower defense to repayment division and the Clery campus safety and security division.

Photo of Terrell McSweeny Terrell McSweeny

Terrell McSweeny, former Commissioner of the Federal Trade Commission (FTC), has held senior appointments in the White House, Department of Justice (DOJ), and the U.S. Senate. At the FTC and DOJ Antitrust Division, she played key roles on significant antitrust and consumer protection…

Terrell McSweeny, former Commissioner of the Federal Trade Commission (FTC), has held senior appointments in the White House, Department of Justice (DOJ), and the U.S. Senate. At the FTC and DOJ Antitrust Division, she played key roles on significant antitrust and consumer protection enforcement matters. She brings to bear deep experience with regulations governing mergers and non-criminal, anti-competitive conduct, as well as issues relating to cybersecurity and privacy facing high-tech, financial, health care, pharmaceutical, automotive, media, and other industries. Terrell is internationally recognized for her work at the intersection of law and policy with cutting edge technologies including Artificial intelligence (“AI”), Digital Health, Fintech, and the Internet of Things (“IoT”). Clients benefit considerably from her extensive relationships with other enforcement agencies around the world.

Prior to joining the Commission, Terrell served as Chief Counsel for Competition Policy and Intergovernmental Relations for the U.S. Department of Justice, Antitrust Division. She joined the Antitrust Division after serving as Deputy Assistant to the President and Domestic Policy Advisor to the Vice President from January 2009 until February 2012, advising President Obama and Vice President Biden on policy in a variety of areas.

Terrell’s government service also includes her work as Senator Joe Biden’s Deputy Chief of Staff and Policy Director in the U.S. Senate, where she managed domestic and economic policy development and legislative initiatives, and as Counsel on the Senate Judiciary Committee, where she worked on issues such as criminal justice, innovation, women’s rights, domestic violence, judicial nominations, immigration, and civil rights.

Photo of Madeline Salinas Madeline Salinas

Madeline Salinas is an associate in the firm’s Washington, DC office and a member of the Data Privacy and Cybersecurity and Communications and Media Practice Groups.