YourABA December 2012 Masthead

FTC commissioner shares her views on consumer protection and much more

Maureen Ohlhausen was sworn in as commissioner of the Federal Trade Commission this spring and serves a term through September 2018. She joined the FTC from Wilkinson Barker Knauer LLP, where she was a partner focused on privacy, data protection and cybersecurity issues. She has also served in various roles at the FTC, including director of the Office of Policy Planning, an attorney adviser for former Commissioner Orson Swindle, and a staff lawyer in the Office of General Counsel.

The Antitrust Source, a publication of the Section of Antitrust Law, recently interviewed Ohlhausen, who discussed the importance of transparency in FTC decision making, her consumer protection and privacy priorities, the role of industry self-regulation, the state action doctrine, enforcement in technology markets and relations with other agencies. Following are highlights from the interview, which took place earlier this fall.

In between your current role as commissioner and your prior roles at the FTC, you spent several years at a law firm. Did representing companies before the FTC give you a different perspective on the agency?

Private practice was a very valuable part of my experience. I was at Wilkinson Barker Knauer, a telecommunication boutique law firm, and I headed up the firm’s FTC practice. I worked mainly on the consumer protection side, but I did some antitrust counseling as well.

One of the top priorities of the FTC should always be fraud.

My experience at the firm was very useful to see from the outside the effects of the FTC’s pronouncements and enforcement efforts on businesses. We may say, “Give us this information,” but may not realize the burden that the request imposes on a company to provide that information. So it was very useful to me to have seen the world from both sides.

What is your view on what the commission’s consumer protection priorities should be going forward?

One of the top priorities of the FTC should always be fraud and, particularly in this kind of economy, last dollar fraud that preys upon financially depressed consumers. Fraud of any kind is a big problem for consumers.

It’s also a problem for the market overall and for legitimate competitors who may be disadvantaged because consumers are choosing the fraudulent provider, based on erroneous information. In addition to the loss of business, the legitimate competitor often has to spend more in marketing and advertising to overcome consumers’ mistrust after they’ve been defrauded.

Privacy is another important area. What do you view as the most pressing privacy issues that the FTC needs to address?

It is very important
for the commission
to dedicate resources for studying market dynamics, technology changes and the accompanying legal and economic issues.

The FTC has done a very good job in choosing its enforcement targets in the privacy area, focusing on the traditional areas of deception and unfairness in addressing types of harm that have been well recognized under FTC precedent as being appropriate areas, such as financial and medical harm.

There’s actually a recent case I want to mention, which involves rent-to-own stores that rented laptops to people, as well as the software company that helped design monitoring programs for the stores. At the request of the stores, but unbeknownst to consumers, the software company collected information from those laptops, including consumers’ financial and medical information. The software could also activate the computer’s webcam and take pictures of people, including pictures of them in the privacy of their bedrooms. The FTC brought the case against the software design company, not just the rent-to-own stores, because it played an active role in collecting the sensitive information and sent a deceptive software registration form to collect additional information. I think this case is a very good example of the kind of deception and unfairness enforcement that the FTC should continue to pursue.

One area that is generating a lot of discussion is disclosures on mobile devices. How much leeway do you think the FTC should give advertisers when they are working with platforms with some inherent limitations?

Mobile devices may take disclosure or wording that was developed for a desktop monitor and push it down to a small screen on the handset, and that’s a challenge. But technology is moving to meet consumer demands, so industry must develop appropriate new models that will provide the information consumers need. The FTC’s role is using our outreach and other tools to help meet this challenge.

Consumers need to have an understandable disclosure that can be viewed on the small screen, which is clear about what information is being collected and how it’s being used. There may be a variety of ways that can be achieved, perhaps through an icon system … or some other way to condense that information and convey it to consumers on their handsets.

Some have argued that antitrust agencies and antitrust law generally are not well suited for evaluating transactions and conduct that occur in rapidly changing markets, such as technology markets. What are your thoughts on this?

Obviously, technology markets move quickly and often. As a result, the agency needs to stay informed about what’s going on, and that’s one of the benefits of our policy function. When I was the head of the Office of Policy Planning — and I think this continues today — one of its roles was to ask what is over the horizon, what do we need to know about so that the commission is sufficiently informed to be able to address problems when they arise.

I think it is very important for the commission to dedicate resources for studying market dynamics, technology changes and the accompanying legal and economic issues. Having a chief technologist on staff now is a very good resource for doing that.

But I think we’ve actually done a pretty good job of enforcement in technology markets and recognizing the competitive importance of changes in technologies or market dynamics. Of course, a change can occur even while we’re looking at a transaction, as evidenced in the closing of the Google/Admob investigation in 2010. So we need to be sensitive to these dynamics, and I think we need to keep our knowledge up to date, but I think antitrust is still a very effective tool.

You are the first commissioner after passage of Dodd-Frank and after the birth of the Consumer Financial Protection Bureau. As a commissioner, how does the presence of the CFPB and your shared jurisdiction with them on a number of issues inform your perspective on consumer protection issues involving financial products?

Dodd-Frank preserved the FTC’s enforcement authority, although rulemaking in the financial arena was generally transferred to the CFPB.

It makes sense for us to coordinate with the CFPB to share some of our expertise, and the evidence I’ve seen is that both agencies are committed to doing that. For example, we just filed comments with the CFPB providing them advice on their work on mortgage disclosure statements. The FTC’s Bureau of Economics has done studies in this area, and those efforts can significantly benefit the CFPB’s work. We have several joint agency working groups and joint investigations under way.

It’s common knowledge that the FTC doesn’t have — and has never had — jurisdiction over banks. But it makes sense for us to continue to focus on nonbank lenders. For the CFPB to have the authority in areas where the FTC does not makes a lot of sense. The memorandum of understanding between the two agencies spells out the parameters of how the coordination will work. We want to avoid, for example, conflicts where there are two different standards applied or duplication of effort or double burdens on industry. It will take careful coordination between the CFPB and the FTC to make sure those don’t happen, but I think that commitment is there.

To read the full interview, click here.

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