The FTC Collaboration Act of 2021: The Relationship Between the FTC and State Attorneys General (Part 3)

On October 10, 2022, the FTC Collaboration Act of 2021 (Act) became law. The Act’s purpose is to enhance cooperation between the Federal Trade Commission (FTC) and state attorneys general (AGs) in combatting unfair and deceptive practices, requires the FTC to complete a study, and requires the FTC to issue a public report based on the study. In part one of this series, we explored the history of collaboration between the FTC and AGs, which has deep roots in enforcement and education. In part two, we discussed why the Act was introduced, and recommendations and barriers to collaboration in the future. This installment focuses on best practices, quantifiable metrics, and legislative recommendations that should be addressed through the study and included in the report.

This article highlights important topics and is not meant to be all-inclusive. Rather, it focuses on recommendations based upon the authors’ decades of experience working for state attorneys general in key consumer protection roles, where we frequently worked with the FTC on a variety of investigations, litigation, and consumer and business outreach and education. From our experience, collaboration among the states and FTC not only benefits enforcers who all have limited resources, but is extremely valuable to the business community. For instance, for companies with a regional or national presence who have allegedly violated consumer protection laws, there is a likelihood that multiple AGs and the FTC may investigate the matter. Enforcer collaboration may cause a business to receive one subpoena/civil investigative demand instead of many, saving time and the expense of reviewing and responding to multiple information requests. It also offers the business an opportunity to reach a resolution with many enforcers simultaneously, with injunctive terms that are generally consistent; conflicting or inconsistent terms in different jurisdictions can be highly problematic to a company. That being said, businesses should keep mind that every state is a sovereign and the ultimate decision maker for whether or not to join a settlement. So even if a resolution is reached with a group of enforcers, a state may determine it is in their best interest not to join. Our approach in this article is to focus on ways to encourage additional collaboration, to minimize such situations where enforcers may take differing approaches.

Study and Report: Best Practices, Quantifiable Metrics, and Legislative Recommendations

The Act requires the FTC to conduct “a study on facilitating and refining existing efforts with State Attorneys General to prevent, publicize, and penalize frauds and scams being perpetrated on individuals in the United States.” This study must be completed not later than one year after the date of enactment of the Act, which puts the deadline in October 2023. The Act further outlines specific requirements of the study, including examining “the roles and responsibilities of the Commission and State Attorneys General that best advance collaboration and consumer protection” along with how policies can “facilitate cooperation and communications across the Commission” and how to best allocate resources and create “accountability.” In doing so, the FTC must consult with the National Association of [State] Attorneys General (NAAG), along with consumer protection organizations and the private sector, and provide opportunity for comment. The FTC must follow the study with a report including “best practices,” “quantifiable metrics,” and “legislative recommendations.”

First of all, communication is key and should be a focus of the FTC Collaboration Act study. As evidenced by the multitude of collaborative efforts between the FTC and AGs, communication has generally been easy and frequent throughout the years, but can always be improved. It would be beneficial if the FTC selected a specific person(s) to act as a liaison with the AGs. AG staff communicates with FTC staff often, but having a liaison should cut down on both a lack of clarity as to who should be contacted and inconsistent information which inherently occurs when communicating with different people. This already occurs on the competition side for the FTC, as there is a liaison for state AGs. Because the 56 AGs are all sovereigns with different resources and laws, proposing a similar “AG liaison” from the states is likely untenable. As noted in this series, AGs are seldom perfectly aligned, hence why a central organization such as NAAG or the Attorney General Alliance is so critical. In addition to a specific FTC liaison with the states, a centralized email address or portal to receive notices from the states would be beneficial.

The FTC could perform a comprehensive review of the FTC and AG joint educational initiatives - see part one of this series for some historical details. It would be helpful to show the extent to which this collaboration occurs by including statistics about the types and number of initiatives, the audience, and possibly contain granular details such as listing each time an FTC representative spoke at an AG event and vice versa, the events hosted together, and more. The report should support the continuation of these initiatives, possibly suggesting that even more resources be committed, as education for consumers and businesses is key in ensuring a fair marketplace.

AGs and the FTC have often worked together on consumer enforcement matters. AGs have the authority to bring cases using some of the same federal laws in which the FTC has jurisdiction, and at a minimum, have enforcement authority over similar activities even when not using the same law(s). The FTC should also study the number of investigations (if public), lawsuits, and settlements joined by both the FTC and AGs, or coordinated jointly. This study should include the benefits and drawbacks to businesses and consumers when the FTC and AGs work together. In addition, a well-informed enforcement community is helpful to businesses and consumers. Therefore, part of the study should include whether there is value in a training program for AGs and the FTC on the enforcement of laws where jurisdiction overlaps.

Consumer Sentinel is a valuable resource wherein the FTC receives complaints directly from consumers and through third parties such as the BBB and some AGs on consumer protection issues including identity theft, Do-Not-Call Registry violations, and robocall scams. Both the FTC and AGs that have agreed to terms of use may access this database. This information sharing is based on the premise that collaboration can make law enforcement even more effective. The report should include data on consumer and law enforcement use of Consumer Sentinel and furthermore, include suggestions on how to enhance its effectiveness by continuing to improve usability. The FTC should further study whether additional consumer and law enforcement education about its availability is needed. For instance, while many enforcers in the consumer protection arena are aware of the tool, there are other enforcers who could benefit but may be unaware of its existence or contents. The FTC should study opportunities to increase the number of entities contributing complaints to the database so that law enforcement can get a more complete picture of consumer issues throughout the nation and in specific jurisdictions.

As for legislative recommendations, as previously mentioned, AGs have the authority to bring consumer protection actions pursuant to certain federal laws. However, there is a lack of consistency and specificity in those laws when it comes to describing AG authority and how they must provide notice to the FTC when enforcing those laws. The report can include a recommendation to remedy inconsistencies when possible and create awareness of the issue so it is considered when future legislation is being drafted. As stated above, an official FTC liaison with the AGs is recommended and may be helpful in these efforts.

The aforementioned recommendations about the study and report are made under the premise that a level playing field with efficient enforcement is in everyone’s interest. Based on our experience, implementing these recommendations will be helpful in the quest to ensure a fair marketplace for both businesses and consumers.

Series Conclusion

As we have come to the end of our three-part series, the FTC is seeking public comments on the Act which are due August 14, 2023, and the study and report are just around the corner. The FTC and AGs have historically had a good relationship, working together through the years on both educational initiatives and enforcement efforts. As noted, we believe collaboration can benefit enforcers and businesses alike. But the Act was enacted at a polarizing political time, which will likely affect the study/report, and may affect how the FTC and AGs work together in the future. As was stated earlier, collaboration will depend on the leadership of the FTC and the particular AGs in question. How leadership priorities will affect FTC/AG collaboration seems to be a very fluid question, and the next year or two will be telling.