MAY 2019 | AROUND THE ABA

FTC bureau directors: The latest on their areas of focus

During the Section of ABA Antitrust Law Spring Meeting held in March in Washington, D.C., the three Federal Trade Commission directors gave updates on their respective agencies and what they see ahead for the regulatory agency. All agreed that the agency, under Chairman Joe Simons, is focused on law enforcement. What follows is a capsule look at the three bureaus and their work:

Andrew M. Smith, Bureau of Consumer Protection

Smith talked about consumer protection accomplishments in the past year, with enforcement focused on what he called the bureau’s “five substantive verticals” — Marketing, Financial, Advertising, Privacy and Enforcement.

  • Marketing practices: Smith said the focus is on fraud cases where products can’t be sold without deception. He noted several high-profile settlement cases in the last year, including $586 million against Western Union, $125 million against MoneyGram, $35 million against Office Depot and settlements against four companies in what he called a “mini robo sweep.”
  • Financial practices: In its focus on businesses offering financial services to consumers or small businesses using mobile devices, the bureau brought action against a student loan consolidating company and is currently litigating against the Lending Club for it loan application process. It also returned $505 million to consumer victims of AMG Services’ payday lending scam.
  • Advertising practices: The bureau is currently in litigation against AT&T over its throttling of unlimited mobile data plans; and against Gerber for falsely advertising that its formula protects infants from developing allergies; and is prosecuting a company that is marketing intravenously injected therapy products for deceptive and unsupported health claims about their ability to treat serious diseases. They are also looking at fake paid reviews on retail websites.
  • Privacy Division: Cases included a $5.7 million settlement against TikTok in a children’s online privacy case; and a $3 million penalty against a company called RealPage for failing to meet accuracy requirements for its tenant-screening reports relating to apartment rental issues.
  • Enforcement Division: Smith noted the bureau has open investigations of Facebook and one against “Sanctuary Belize” in a $100 million real estate investment scam of deceptively marketing property.

“I think you can see from these cases where our priorities lie and that is in enforcement,’’ Smith said.

Bruce Hoffman, Bureau of Competition

Hoffman said the bureau, with offices in Washington, New York, Seattle and San Francisco, had a busy year. He noted that there were 19 mergers, seven trials and a number of appeals. He highlighted the creation of a Technology Task Force that is dedicated to monitoring technology markets, investigating any potential anti-competitive conduct in those markets and taking enforcement actions when warranted. The task force will draw upon existing staff and expertise to enhance the bureau’s focus on technology-related sectors of the economy, including markets in which online platforms compete. “What we hope to gain is the ability of lawyers to really spend a great deal of time applying their knowledge about how these businesses work with support from our lawyers and technology experts,” Hoffman said.

Hoffman also said the bureau is always interested in mergers, especially those that can be problematic, and conduct cases. On investigations that have come up over the last year, he said there have been lots of questions about the bureau’s use of timing agreements.

“Let me make two points about timing agreements,” he explained. “First, you don’t have to enter into a timing agreement. We do not condition negotiations and modifications, for example, on timing agreements. But I strongly suggest you do. And here’s why. The reason we ask for timing agreements is because they track the action, duration and internal duration of the internal commission process. What they do is they explain the time that we anticipate needing for a careful, thorough review of your issues, identify and hopefully solve problems and then vet those problems and then commission them.

“Second is this notion of ‘you don’t need to see our documents.’ We need evidence. To borrow that old phrase from President Reagan, ‘Trust but verify.’ We need to be able to test propositions that are made to us.”

Hoffman also encouraged in-house lawyers, in particular, to provide opportunities for their more junior lawyers to present before the bureau in order to gain experience. “The antitrust bar has become a more diverse place. It has a lot more junior lawyers. We see it reflected in people who come to meet with us. But we also see who gets to talk at those meetings,” he said. “I want to encourage you to think hard when you are making presentations before the bureau about giving opportunity to the more junior lawyers on your teams to make parts of the presentation. We will try to give extra room to the junior lawyers to have their say and to develop the skills that they are going to need as they advance in their careers.”

Bruce H. Kobayashi, Bureau of Economics

Kobayashi, who has been with the FTC since last May, oversees the smallest of the bureaus with 107 full-time employees, including about 75 economists. However, he said two-thirds of those economists are allocated to assisting the Bureau of Competition and one-third to Consumer Protection. “Really a lot of the more interesting things that we are doing are on the competition side of things,” he said, noting that much of what they deal with is fraud.

He said a lot of the research his section is doing involves merger retrospectives. In fact, the agency hosted a full day of hearings in April  on merger retrospectives to gather information from experts to help guide the FTC’s future merger retrospective research program. “Merger retrospectives are important because we not only want to have the ability to make predictions about a case but, after the fact, look to see how well the predictions do. And that is the research function.’’

Kobayashi said one of biggest worries going forward is stemming the tide of decline in staff to ensure that research remains a priority. “If you look at a five-year history of the time billed to research by the Bureau of Economics, it is falling and the trend is negative” he said. “It’s not because anybody is downgrading the importance of research, but it’s because we’ve been going from about 115 FTEs to about 107. Staffing the cases are really our priority. But on the other hand, we have to sort of make sure that the research is going to allow us to not only do things that we do but do them better and more efficient in the future.”  

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