The past year has been one of tremendous social and political upheaval. While changes in the world of consumer protection may not have made headlines, they signaled a significant departure from the consumer protection climate during the Obama Administration. What will the consumer protection landscape look like in 2018?
Shifting Priorities at the FTC
The year began with President Trump naming Federal Trade Commission (FTC) Commissioner Maureen Ohlhausen as acting chair. In February, Ohlhausen outlined her priorities in her keynote address to the bi-annual Consumer Protection Conference of the American Bar Association’s Antitrust Section. Her three priorities were:
Refocusing the FTC’s Consumer Protection Bureau on fighting hardcore fraud.
Backing the FTC away from the aggressive redress it has often sought in enforcement actions. Ohlhausen said she intended to move the redress discussion away from revenue and to demonstrable consumer harm, and that she was in favor of limiting redress to situations of hardcore fraud instead of seeking redress in cases where the issue relates to the quantity and quality of support for advertising claims.
Focusing on transparency and business education. Ohlhausen said she would seek to reduce unnecessary regulation and to increase use of alternative tools available to the FTC, such as business education. She expressed a desire to provide more transparency into what companies should be doing rather than only providing information as to what companies should not be doing.
In 2018, expect the FTC to increase its focus on economic analysis — which traditionally has played a key role in consumer protection enforcement, though it’s been relegated to the sideline in recent years. Under Ohlhausen, the FTC already has pivoted toward greater explicit economic analysis when it comes to things like valuing data breaches and imposing consumer redress.
Despite President Trump nominating Joseph Simons as FTC chairman in October, there is very little reason to believe that the new chairman, if confirmed by the Senate, would shift radically from the course charted by Ohlhausen.
A Larger Role for State Attorneys General
Because the FTC is likely to move towards Ohlhausen’s stated priorities, many observers believe activist — mostly Democratic — state attorneys general will engage in more aggressive consumer protection enforcement.
State AGs have already been more aggressive than the FTC when it comes to consumer protection. However, many of those enforcement actions were conducted in tandem with the Commission. To what extent are the states willing to go it alone? Here are a couple of things to watch for in 2018:
During the Obama Administration, many Republican AGs complained they were so busy fighting various administration initiatives that affected their state that they did not have sufficient resources for their consumer protection missions. Will that hold true for their Democratic colleagues now engaged in multiple battles with the Trump Administration? Conversely, will we see some Republican AGs taking more action against traditional consumer fraud?
Many state consumer protection laws expressly or implicitly direct courts to look to Section 5 of the FTC Act for guidance. If state AGs become excessively aggressive, embattled companies might point to a less-enforcement-minded FTC as a guidepost for interpreting state consumer protection statutes.
The Future of the CFPB?
In its brief history, the Consumer Financial Protection Bureau (CFPB) has left a mark on the financial services industry that’s not likely to be completely undone. However, the recent departure of its director, Richard Cordray, only adds to the list of questions about how the agency will function during the Trump Administration, including:
How will the legal issues regarding the CFPB’s structure be resolved? Will the DC Circuit impose a requirement that the director serves at the discretion of the president, or will Congress step in and create a multi-member commission structure?
How much of the Cordray legacy will be undone? Congress has already unwound some of the CFPB’s regulations. Will a new director go further? Will the administration hold true to its promise to roll back regulation but severely sanction companies that violate the rules and regulations that remain?