On September 19, Sam Levine, the director of the Federal Trade Commission’s Bureau of Consumer Protection, outlined the agency’s priorities at the annual conference of the National Advertising Division. Here are the highlights:
Levine outlined three pillars of the enforcement agenda:
- Focus on the practices that cause the most consumer harm
- Obtain relief that not only halts the violative conduct but also changes incentives to engage in such conduct in the future
- Use tools beyond case-by-case enforcement to change behavior (think rule making)
After also noting that the pace of enforcement at the FTC had increased, Levine then focused on some substantive areas of concern, starting with junk fees and dark patterns.
Levine tied the FTC’s focus on junk fees to President Biden’s whole-of-government effort to stop such fees. According to the FTC, junk fees are unnecessary, unavoidable, or surprise charges that inflate costs while adding little to no value. Levine said such fees injure consumers and distort competition, harming honest business. Similarly, other pricing practices that hide or distort the true price remain a focus of the FTC, such as bait and switch pricing. Levine noted that in addition to enforcement, the FTC has promulgated a proposal for a rule prohibiting hidden fees.
Regarding dark patterns, Levine clarified that the FTC will use its existing legal arsenal, primarily its UDAP authority under Section 5 of the FTC Act and ROSCA, to challenge dark patterns. Put differently, while “dark patterns” may be a new way of thinking about consumer interaction, the FTC will need to prove that that conduct violates existing law. In examining dark patterns, Levine noted that the FTC is focused on digital tools that manipulate consumers and use a consumer’s experience with those tools to personalize the manipulation so that it is most effective.
Levine also reiterated that the FTC remains focused on trying to stop consumer fraud. He noted, however, that the U.S. Supreme Court’s decision in AMG has made obtaining recovery for consumers more challenging. To compensate, Levine said the FTC uses its authority under the TSR, Penalty Offenses, ROSCA, and the COVID Consumer Protection Act to try and obtain redress for consumers. In addition, he said that the FTC remains focused on “money making” schemes and conduct that takes advantage of consumers who have limited fluency with English.
Levine concluded his remarks by discussing AI and new technologies, noting that self-regulation and market self-correction are unlikely to be effective in regulating AI. He pointed to what he perceives as a failure of self-regulation and market forces in the privacy sphere.
Levine then outlined three principles that should guide the FTC’s approach to AI:
- Markets must be fair, open, and competitive
- The FTC should use its tools to challenge unfair and deceptive practices involving claims based on AI, including the use of AI to discriminate
- The FTC should promulgate market-wide rules to address harms from AI, including the Fake Review rule, the Impersonator Rule, and others
At several points Levine noted the broad scope of the agency’s agenda and its need for both more resources and restored remedial authority. He also seemed to recognize that the FTC was not likely to get either anytime soon.