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Consumer Protection: Preparing for Evolution under President Trump

by kbhilfer on January 23, 2017

With the inauguration of President Trump, I have four broad predictions about consumer protection under the new administration.

1. Federal agencies will narrow their scrutiny of businesses.

Chairwoman Edith Ramirez resigned from the Federal Trade Commission (FTC), effective February 10, 2017. Ramirez was an Obama appointee, and under her leadership, the FTC stepped up its enforcement activity to protect consumers. On January 25, 2017, President Trump announced that he was appointing Maureen K. Ohlhausen as acting Chair. Ohlhausen has objected to FTC investigations that impede business with “overreaching” discovery. In accepting her designation by President Trump, she said, ” I will ensure the commission minimizes the burdens on legitimate business as we carry out this vital work.” Ohlhausen’s appointment suggests we may see the FTC narrowing its interest in consumer protection. The FTC may limit its focus to those campaigns that have dramatic economic impact. In addition, in pursuing “unfair” commercial speech, Trump’s FTC may re-examine the definition of what is unfair. President Obama’s FTC constantly balanced innovation with its negative impact on the consumer. President Trump’s FTC may be less interested in finding that tipping point.  In short, FTC enforcement priorities may change.

Other federal consumer protection agencies may also switch to a pro-business stance.

  • First, due to pending litigation (PHH Corp. v. CFPB (D.C. Cir. Court of Appeals October 2016), President Trump may be able to remove the current director of the Consumer Financial Protection Bureau before his term ends in 2018. We can expect a less aggressive consumer protection agency under a Trump appointee. Furthermore, the current CFPB had proposed a prohibition on arbitration clauses containing class action waivers. This regulation seems less likely to be enacted in the Trump administration.
  • Second, the Federal Communications Commission (FCC), which had worked to strengthen consumer privacy under President Obama, may reverse or change course. ISP’s may find themselves with increased ability to monetize their access to consumer/user data. In addition, whereas President Obama’s FCC focused on net neutrality, the pendulum may swing the other way.
  •  Third, The Consumer Products Safety Commission (CPSC) receives bi-partisan support in its efforts to protect children. It is unlikely, therefore, to shift its priorities. At the same time, we may see new appointees, lower financial fines, and perhaps even less federal funding for the CPSC’s efforts. On January 19, 2017, Commissioners at the CPSC elected Anne Marie Buerkle to be the next vice chair. She would take over as Acting Chair should current CPSC Chair Kaye step down or is asked to leave. Buerkle has opposed openly the CPSC’s proposals to increase civil penalties and modify the voluntary recall program, among other initiatives.

2. State AG’s will broaden their approaches to consumer protection.

At the same time, state attorneys-general will pick up the regulatory baton that Ramirez’ FTC and other federal agencies threw to them under President Obama. In particularly progressive states, for example NY, California, or Massachusetts, we are likely to see an increase in regulatory attention to commercial speech that dupes consumers. The result may be a hodge-podge of regulatory activity that is more fragmented than it was under President Obama.

3. The NAD will take an activist role in policing commercial speech.

The National Advertising Division of the Council of Better Business Bureaus (NAD) is part of the advertising industry’s self-regulatory system. Advertisers may challenge their competitors’ campaigns before the NAD, or the NAD may bring its own independent investigations. Historically, the NAD has taken an active role in curtailing advertising that may confuse or deceive consumers. Industry members frequently comply with the NAD’s recommendations, even if they do not have rule of law, either because the NAD may refer matters to the FTC, to avoid further litigation, or to preserve their reputations with their customers.

Under a Trump administration, the NAD is likely to re-commit to protecting consumers. Given their desire to promote “an honest and open playing field in advertising,” NAD will continue its work to demand proper claim substantiation from advertisers and ensure that consumers understand that they are interacting with advertising materials. Native advertising will continue to be a point of interest for NAD, and consumer products will remain high on their watch list.

4. Change Takes Time, but smart marketers will use their time wisely.

Even with a Republican dominated Congress, the Trump administration can only move so fast to change courses. Agency rule-making commonly takes years. It is unlikely that President Trump will be able to make the bureaucracies move much faster. If President Trump only serves one term with a Democratic successor or if the Democrats prevail in the midterm elections, his effect on consumer protection may be short-lived. Nonetheless, businesses that want to stay ahead of the curve will  prepare. They will consider the possibility that their marketing campaigns may remain under scrutiny. For national advertisers, the trend towards more local enforcement will likely require more significant legal vetting of campaigns. Local business owners also should be watching the political landscape in their states to determine what resources they need to ensure their advertising and marketing campaigns do not invite regulatory scrutiny.

 

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