Check your spam filters, as it is quite possible that they may have filtered out some Federal Trade Commission (FTC or the Commission) emails last week because of the literal deluge of emails spewing forth from the agency. The emails were actually legit – but the flood of activity in the last week of then Chair Lina Khan FTC was far from normal. In the final week of the Khan FTC, announcements were made about numerous cases filed, rules proposed and even rules finalized. We will be doing a deep dive into some of the matters announced that are likely of particular interest to our readers, but for today, we will provide an overview of much of what happened last week and thoughts on how unusual this was.
For starters – is it normal to have a deluge of matters at the end of an FTC administration? The short answer is no – this is certainly not what we have seen in the past few decades. In general, there might be a handful of matters that are prioritized to resolve before the change in administration, but it is a select few matters, not close to the entire pipeline of pending matters. In fact, the Commission had a nonpublic meeting last week to discuss and vote on a large number of such matters. Both Republican commissioners objected to this meeting and did not attend. Again, this was not a typical meeting to have at the end of an administration. However, it is worth noting that the Republican commissioners did vote for and support several of the matters that were voted on last week (but not the ones that were put to a vote at the special meeting).
Commissioners Andrew Ferguson and Melissa Holyoak were quite vocal about their deep concern with the unusual flurry of activity. Now Chair Ferguson noted, “Given the zeal with which my Democrat colleagues have rammed through their agenda in the final hours of the Biden-Harris Administration, none of them should be surprised or outraged when the incoming majority implements President Trump’s vision with equal vigor.” Holyoak observed:
Four days before the Trump-Vance administration takes office, Chair Khan presided over a closed Commission meeting to consider and vote on multiple nonpublic law-enforcement matters. I voted against holding this closed Commission meeting. And I abstained from all Commission deliberations and votes on nonpublic law-enforcement matters raised at this meeting today. The reason is simple—Chair Khan and the Biden-Harris Commission should be focused on facilitating an orderly transition to the Trump-Vance administration, not furthering their misguided policy objectives.
Given the volume of matters announced, and with several of them being voted out on partisan lines, one thing to ponder is what will happen to these cases going forward, particularly once the Republican commissioners have a third Republican commissioner in place. (Mark Meador has been announced as the nominee for that position and will be subject to Senate confirmation.) It is safe to assume that the new FTC leadership will spend a good deal of time in early 2025 closely reviewing the past few weeks and evaluating whether and how to proceed with each matter that was rushed to a vote or voted out on partisan lines.
Just in case a few of the email announcements did indeed get trapped in your spam filter, let’s take a look at some of the key consumer protection matters that were announced in the final days of the Khan administration.
Children’s Online Privacy Protection Act (COPPA) Rule –A unanimous Commission voted out changes to COPPA that will become effective likely in March or April (depending on the Federal Register publication date). The changes will require opt-in consent for targeted advertising to kids, limit retention of kids’ data, and require COPPA safe harbors to disclose memberships and increase transparency. Some of the proposals that were raised for consideration in 2024 were not adopted. Ferguson noted that although he voted for the rule amendments, there were some changes that would require additional modifications in the future.
Earnings Rule and Business Opportunities – The FTC initiated a rulemaking related to earnings claims back in 2022 and we then had radio silence until last week when the FTC issued a trilogy of related Federal Register Notices (FRNs). FRN 1 proposes a new rule that would address false or misleading earnings claims in the multi-network-marketing (MLM) industry. FRN 2 would expand the Business Opportunity Rule to cover moneymaking opportunities such as business coaching and investment opportunities. And FRN 3 asks additional questions relating to the proposed new MLM earnings rule. Holyoak and Ferguson dissented on all three, with Ferguson noting, “Some of these proposed rules may be in the public interest and within our legal authority. But whether they are lawful, and whether they are prudent and sound policy choices, are decisions that belong to the incoming Trump Administration and not to lame-duck Biden functionaries. Fortunately, because these are notices of future rulemaking, the Trump Administration will decide whether they will ever become final rules.”
Greystar – In a case that has some similarities to the recent Invitation Homes case, the FTC and the state of Colorado filed a complaint alleging that the company failed to include certain mandatory fees when advertising apartment rental prices. This was a unanimous vote by the Commission.
Evoke Wellness –A unanimous Commission voted out a complaint alleging that Evoke Wellness had used deceptive online ads to target consumers who were looking for substance abuse treatment centers.
Genshin Impact – This was another unanimous Commission matter against a gaming company that allegedly violated COPPA and deceived consumers about the odds of winning sought-after “loot box prizes.” The case settled for $20 million. Ferguson issued a statement indicating his support for only portions of the action, and he disagreed with counts that “infantilize[] the American consumer” and that did not meet the requirements of unfairness.
Interim Pricing Surveillance Study – In a 3-2 vote, the Commission issued “interim insights” from its study into how companies may track consumers to determine pricing. The study continues and the agency issued an additional request for information seeking public comment on consumer experiences with this type of pricing. A dissenting statement appears here.
Additional Cases Voted Out
Right to Repair – In a case focused on competition issues, the FTC and two states commenced litigation relating to limits on the ability of farmers to repair certain farming equipment. (The Ferguson and Holyoak dissent appears here.)
Autos and Geolocation Data – The FTC brought an action against an auto manufacturer and settled allegations regarding the collection and selling of geolocation data without obtaining affirmative consent. (Holyoak and Ferguson are recorded as not participating.)
DOJ AI Referral– The agency made the unusual announcement that it had forwarded a civil penalty complaint to the Department of Justice regarding the deployment of an AI chatbot. Ferguson noted, “Because the complaint itself remains non-public, I cannot at this time release a detailed analysis of its many problems. But for now, I can say that the complaint’s application of Section 5 of the Federal Trade Commission Act is not only wrong as a matter of statutory interpretation, but is also in direct conflict with the guarantees of the First Amendment. If the Department of Justice files this complaint, I will release a more detailed statement about this affront to the Constitution and the rule of law.”
We will do a deeper dive on some of these important matters as well as what we learn about the new Ferguson FTC.
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