Yesterday, TechFreedom filed comments in response to the Federal Trade Commission’s (FTC) Advance Notice of Proposed Rulemaking (ANPR) on whether it should regulate how companies collect, aggregate, protect, use, analyze, and retain consumer data, as well as transfer, share, sell, or otherwise monetize that data in ways that are “unfair” or “deceptive.” Our comments stress the need to issue several shorter and simpler ANPRs focused on discrete issues, like data security, before proposing draft rules. A properly focused ANPR would resemble the more focused inquiries the Commission has issued in the past. We also addressed the constitutional, economic, and administrative implications of rulemaking in this area.

“The Constitution bars the FTC from making essentially legislative judgments,” said Berin Szóka, President of TechFreedom. “Courts expect Congress to speak clearly when assigning decisions of vast economic and political significance to an agency. Section 5’s broad language offers no clear statement that the FTC should decide major questions of policy. If it were interpreted to do so, courts might well find Section 5’s unfairness language an unconstitutional delegation of legislative power—the worst case scenario for the FTC. Reviving the nondelegation doctrine, which a majority has already signaled it might support, could be just one decision away. The Commission should leave ‘major questions’ about how data may be collected, used, and processed to the democratically elected representatives of the American people, who are closer than ever before to enacting comprehensive baseline privacy legislation.” 

“The FTC should be cautious in writing any rules based on unfairness,” continued Szóka. “The last time the Commission went on an unfairness rulemaking spree, in the late 1970s, it provoked a Congressional backlash so severe, it wasn’t clear the agency would survive. Today, more than forty years after the FTC proposed limiting principles for unfairness, how to apply those principles to privacy and data security remains hazy—mainly because the Commission has avoided litigating almost any of its enforcement actions. If the Commission writes any unfairness rules, it should target only the clearest objective harms where the tradeoffs are easily resolved. Otherwise, the FTC should focus its attention on developing the principles of unfairness and formulating, with public input, a policy statement to guide case by case enforcement in this area.”

“This ANPR is hopelessly unfocused,” concluded Szóka. “Former Commissioner Phillips put it best in his dissent: this inquiry ‘recast[s] the Commission as a legislature, with virtually limitless rulemaking authority where personal data are concerned.’ By failing to make clear where the Commission is heading, the ANPR denies regulated parties a meaningful opportunity to shape proposed rules—exactly why Congress required ANPRs back in 1980. The FTC should break this ANPR into several smaller inquiries focused on discrete issues, such as data security. Public workshops could also be helpful.”


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About TechFreedom:TechFreedom is a nonprofit, nonpartisan technology policy think tank. We work to chart a path forward for policymakers towards a bright future where technology enhances freedom, and freedom enhances technology.