Elections do matter. On January 25, President Trump named Republican Federal Trade Commissioner Maureen Ohlhausen as acting chair of the agency, bringing to an end eight years of hyperactive and, some might say, overly aggressive, consumer protection enforcement under President Obama. Ohlhausen takes over the reins of a bureaucracy very much in transition, with only two sitting members and three vacancies on the Commission and a new acting Director of the Bureau of Consumer Protection (“BCP”) appointed by Olhausen to implement her agenda.
In a recent speech to the American Bar Association Consumer Protection Conference, Ohlhausen outlined these goals:
* intensified continuation of traditional, bipartisan consumer fraud enforcement;
* intensified focus on actual consumer harm as a determinant in case selection and remedies;
* rollback of unnecesary regulation coupled with a greater emphasis on positive compliance guidance to business.
This moderate, common sense approach to the FTC’s consumer protection mission is entirely consistent with Ohlhausen’s tenure on the FTC, where she quite often found herself openly dissenting from decisions of the Obama Democratic majority. While she has generally supported anti-fraud initiatives (examples being asset freeze actions against marketers of fraudulent consumer financial services or highly deceptive free trials and negative option offers for dietary supplements), she did not hesitate to voice disagreement when she felt the Commission was taking actions that were too harsh, imposed excessive burdens on advertisers, or chilled innovation or non- commercial speech. Illustrative of these positions were her:
(a) opposition to an FTC requirement of not just one but two randomized clinical trials (“RCTs”) to support health claims, a view adopted in the appellate decision reversing the Commission on the question in FTC v. POM Wonderful, the most significant FTC advertising case of the Obama era;
(b) dissent from a settlement which in her opinion would chill public discussion of emerging areas of health science in disservice of the First Amendment, by treating as advertising, rather than as constitutionally protected non-commercial speech, non-brand- specific endorsement of a natural weight loss remedy on Dr. Oz, and which required redress for sales purportedly attributable to the so-called “Dr. Oz effect” rather than to the defendant’s own advertising;
(c) dissents from multiple settlements which in her view found implied claims which didn’t exist, created excessively high claim substantiation burdens, redressed consumer harm that hadn’t occurred, and through overregulation would deter development of new consumer technologies, such as health apps, and useful consumer information about those devices.
President Trump still has to name a permanent FTC chair, who in turn will appoint a permanent BCP Director and other senior staff who share his or her regulatory philosophy. While it could be Ohlhausen, even if it isn’t it will be another Republican who likely is committed to President Trump’s deregulatory agenda and would have joined Ohlhausen’s dissents, as did FTC Transition Chair Joshua Wright when he served on the FTC. It is also reasonable to expect that the individuals appointed by the President to the two other FTC vacancies (one Republican, one Democrat, as required by law to form a 3-2 majority of the President’s party) will hold views similar to Ohlhausen’s and far to the right of the now departed Obama majority.
What this probably means are more cases focusing on redress of concrete consumer harm and fewer cases testing the outer limits of the FTC’s authority and enforcement standards, such as the 2-RCT requirement in POM Wonderful; challenges to murky implied claims on the basis of the FTC’s purported claim interpretation expertise without corroborating empirical evidence; and challenges to the adequacy of affirmative disclosures (such as the terms of negative option offers) under an ever-evolving and expanding definition of the FTC’s “clear and conspicuous” test for disclosures. It also likely means an FTC that is more willing to compromise in monetary settlement negotiations (and actually consider a defendant’s liabilities as well as its assets in assessing “ability to pay,” as it once did) and not be so quick to impose industry and conduct bans, except in cases of clear cut fraud or deception.
After eight years of turbo-charged enforcement and “all or nothing” settlement demands, the new Trump Administration, while a never-ending drama on other fronts in its early days, holds out the hope of a much welcomed return to normalcy and common sense regulation at the FTC. Con artists should expect no reprieve, but compliance-conscious marketers, like some who had to pay a heavy price for unintentional or questionable transgressions in the past administration, have reason to expect they will get a fairer shake from the Trump FTC.