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Home | BakerHostetler

Randal Shaheen Quoted in National Law Journal on FTC’s Regulatory Approach

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<figure class="wp-block-image alignright size-large is-resized"><img decoding="async" src="https://adttorneys.bakerhostetlerblogs.com/wp-content/uploads/sites/33/2022/08/Investment-graph-with-abstract-data-GettyImages-1132660268_1200x630-650x341.jpg" alt="financial stock market graph illustration ,concept of business investment and stock future trading." class="wp-image-5956" width="428"/></figure>



Because I’m someone who is inherently suspicious, my antennae perked up the other Friday when the Federal Trade Commission (FTC) released its <a href="https://www.ftc.gov/news-events/news/press-releases/2022/08/ftc-publishes-new-strategic-plan-performance-plan-performance-report">annual </a><a href="https://www.ftc.gov/news-events/news/press-releases/2022/08/ftc-publishes-new-strategic-plan-performance-plan-performance-report" target="_blank" rel="noreferrer noopener">strategic </a><a href="https://www.ftc.gov/news-events/news/press-releases/2022/08/ftc-publishes-new-strategic-plan-performance-plan-performance-report">planning documents</a>. Friday releases in the summer always make me suspicious (what are you trying to bury on this Friday afternoon when I am pondering the weekend?); further, these documents included one Republican commissioner’s (<a href="https://www.ftc.gov/legal-library/browse/cases-proceedings/public-statements/dissenting-statement-commissioner-christine-s-wilson-regarding-federal-trade-commission-strategic" target="_blank" rel="noreferrer noopener">Christine Wilson</a>) dissent and one Republican commissioner not participating (Noah Phillips). These reports are usually pretty noncontroversial, but not this time around.



So what are these documents anyway? In short, these documents relate to the complicated and challenging issue of measuring an agency’s success or lack thereof. What are the goals that an agency has established to measure its performance, and how does the agency want to modify those goals going forward? The documents are painfully long (39 and 87 pages), and they painstakingly detail the agency’s accomplishments for the past year and metrics going forward. One of the documents focuses on fiscal year 2021 performance and the goals for the next two years. The second document is a broader <a href="https://www.ftc.gov/system/files/ftc_gov/pdf/fy-2022-2026-ftc-strategic-plan.pdf" target="_blank" rel="noreferrer noopener">five-year plan</a> document.



With a combined 126 pages of far too many words, there is a great deal we could write about, but we will start with some broader language changes. The strategic goal for consumer protection was previously described as to “protect consumers from unfair and deceptive practices in the marketplace” but is now described as to “protect the public from unfair or deceptive acts or practices in the marketplace.” Changing the mission from a “consumer” focus to a “public” focus seems trivial but is perhaps indicative of the generally broader mission view beyond commercial transactions that we are seeing under Chair Lina Khan’s FTC. Perhaps more significant is the modification of the agency’s mission statement, which has the same change described above but also gets rid of the earlier version’s reference to not “unduly burdening legitimate business activity.” Many of us thought that phrase was actually – and should be – an important consideration for the agency, but it’s gone. 



As a former FTCer who often was involved in reviewing and evaluating these reports, I can tell you that one of the most challenging things to determine is what metrics the agency should use to evaluate its consumer protection mission, though for now, we will ignore the fact that technically and annoyingly, that mission no longer uses the word “consumers.” If you have a factory producing widgets, you can come up with some metrics to help give you a sense of success – widgets produced or perhaps profit per widget. But for a law enforcement agency that purportedly protects consumers, it’s a bit more challenging.



For many years, one of the key metrics was money that the agency gives back to consumers, and that remains a metric going forward, though the reports make it clear that the Supreme Court’s AMG decision will reduce this number going forward. And the agency continues with a few other established metrics, such as website and call center satisfaction rates. But the latest report comes up with a few new metrics that confirm some recent priorities that readers should be concerned about.



First, the FTC now will measure the percentage of cases that involve cross-Bureau collaboration. It’s unclear exactly how that will be measured, but it serves as a good reminder that if you are being investigated for a consumer protection issue, there is a high likelihood that you also will receive some inquiries about competition issues, and vice versa. Investigations will be broader and more complex.



A second new metric consists of “matters following up on Commission market-wide policy initiatives, e.g., Notices of Penalty Offenses, Policy Statement on Negative Option Marketing, workshops, and reports.” The details of this will matter, but remember the 1,800 <a href="https://www.ftc.gov/enforcement/penalty-offenses" target="_blank" rel="noreferrer noopener">penalty offense letters</a> that the agency sent out last fall? We have not seen any public follow-up from those letters, but now there is a measure that could, perhaps, incentivize the agency to try to bring cases following up on those letters. Or relatedly, the FTC had issued a <a href="https://www.ftc.gov/system/files/documents/reports/nixing-fix-ftc-report-congress-repair-restrictions/nixing_the_fix_report_final_5521_630pm-508_002.pdf" target="_blank" rel="noreferrer noopener">right-to-repair report</a> a while back and recently brought three <a href="https://www.adventures-in-law.com/ftc/flurry-right-to-repair-activity-ftc-what-you-need-to-know/">right-to-repair cases</a>. Expect more of that.



And a third new metric, “percentage of matters seeking significant remedial, precedential, or deterrent effects across the marketplace,” is perhaps even more ominous. I am a bit perplexed as to how this will be measured. If rulemakings are considered “matters,” then I can certainly see a completed rulemaking count. But it is difficult to see how one could look at a single enforcement case against one target and objectively deem that case (and not other cases) as having had a precedential or deterrent effect on an industry. It also raises the prospect of implicit rulemaking through enforcement, which raises a range of other issues.



There is a lot to review and digest in these reports, and we are barely scratching the surface. But I do believe it’s really important to look at the metrics. The words and language are important, but if you really want to understand an agency, it helps to understand how they define success, and we are seeing some clear changes regarding how this agency will do that. Every chair wants to succeed, and the metrics that are set forth help create the path to success, or at least to bureaucratic success.



And finally, because I sometimes can’t help myself, I was curious to see how the report on 2021 performance addressed the tremendous drop in staff morale that was recently the subject of a lot of <a href="https://www.washingtonpost.com/technology/2022/07/13/ftc-lina-khan-rankings/" target="_blank" rel="noreferrer noopener">news articles</a>. Well, the report acknowledged the sharp decline, but to put it mildly, it didn’t really offer any sort of concrete plan beyond “The FTC is aware of the large drop in results for this metric and is working with staff to better understand what is going on and what we can do to improve.” I’m pretty sure that is the report equivalent of “Let’s have a meeting to plan future meetings.”

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So Many Words – The FTC’s Recent Strategic Planning Reports Do Actually Matter

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