For those who haven’t been following Federal Trade Commission (FTC or Commission) news too closely for the past few weeks, there has been lots of turmoil and drama. A few weeks ago – on Valentine’s Day, no less – Commissioner Christine Wilson issued a statement in the Wall Street Journal that, let’s just say, was a less-than-flattering portrayal of the leadership, ethics and policies of FTC Chair Lina Khan. To be clear, our texts exploded that day, and it wasn’t because we were receiving loads of (or any) Valentine’s Day messages.
Perhaps coincidentally, the agency did not announce any sort of public meeting that month, much to our suspicious chagrin. Commissioner Wilson then let it be known that March 31 would be her final day as a commissioner. So we are safely predicting that this Commission meeting will be the last time we see the two of them on the same screen for quite some time. And of course, Commissioner Wilson’s departure will mean that, as of April 1, all the commissioners will be Democrats. That is highly unusual given the fundamental nature of the Commission structure, and we have thoughts about that.
But turning to the meeting: Did it have the drama we were so hoping for? Would there be any discussion of the Wall Street Journal statement? And what would Commissioner Wilson say at her final (for now) public Commission meeting?
First, the dish (because we do know our audience)
Well, there was drama of a somewhat political nature. And Commissioner Wilson clearly surprised her colleagues. Commissioner Wilson has been quite vocal about her recent dissenting statement in a competition matter that was required to be partially redacted by the Commission. Commissioner Wilson was quite concerned that the unredacted version of her statement had not been provided to members of Congress who have requested it, and she made a surprise motion that the unredacted statement be produced to Congress. The motion was not seconded, but the issue prompted some very real and spontaneous back-and-forth among the commissioners, which was tense and a bit uncomfortable but, at its core, reflected quite clearly the dramatic changes we have seen of late, with the agency becoming far more partisan and far more political. We anticipate that this is not the last we will hear about the specific issue raised by Commissioner Wilson.
Second, the substance
Two items were on the agenda today, and they both involve FTC 6(b) studies. Over the years, the FTC has issued many 6(b) studies, ranging from the annual studies of cigarette and tobacco marketing to a 2021 study on internet service provider privacy issues to a 2018 study on mobile security issues. Doing studies and reporting to the public is an important FTC function, and indeed, the FTC’s latest over-the-top budget request to Congress indicates an interest in doing more of these studies.
So, what is a 6(b) study, and why does it have such an odd name? In the FTC’s statute, 6(b) is simply the provision that gives the agency the authority to get information from outside entities and compile that information into anonymized reports for the public. And these studies will almost always involve nine or fewer subjects, given the challenges of the Paperwork Reduction Act, which come into play if the agency wants to study more than nine companies. In order to conduct such a study, 6(b) orders are issued to companies requesting information. These orders are similar in form to subpoenas, but they are specifically not for law enforcement purposes.
The first study is described as examining whether and how eight social media and video streaming platforms “monitor and review deceptive advertising on their platforms. Specifically, the Orders will examine the companies’ ad review practices and what, if any, measures they have taken to detect, prevent, and reduce deceptive advertising on their platforms, including advertising related to fraudulent health-care products, financial scams, and fake goods.”
As a legal matter, this of course raises some very real questions about the actual legal obligations that require such companies to screen ads that are placed on their platforms. As far as we know, all legitimate platforms do engage in intense ad screening, but our understanding has been that it falls much more clearly into the category of platforms doing the right thing as opposed to clear legal requirements that can lead to liability (based on laws as they currently stand). But that is a broader topic for another day and was not discussed at the meeting.
An FTC staffer provided an overview of the information being requested from eight social media and video streaming platforms. She explained that such platforms can provide unique opportunities for fraudulent marketers to reach consumers and raised concerns about the potential blurring of commercial and noncommercial messages. The study will look at how platforms scrutinize and limit ads regarding fraudulent products and scams as well as at means that platforms use to distinguish ads from other content. Other areas of focus included whether the same processes are used for Spanish language ads as well as some ads of particular concern, including ads for cryptocurrency, substance use disorder and weight loss.
As for the commissioners, Chair Khan expressed her strong support for the study and is concerned about frauds proliferating on social media. She also indicated an interest in better understanding personalization and targeting tools that may allow for more precise targeting by bad actors on the platform. Commissioner Rebecca Slaughter said there are far too many “scammy” ads out there that pose real dangers to real people, including through misinformation. Commissioner Wilson emphasized the importance of these studies and said the topic of this study was beneficial for consumers. She expressed concerns about the resources needed here, particularly given the other studies and rulemakings that are already underway. Commissioner Alvaro Bedoya expressed his support of the study as well.
And of course, if you are not at one of the eight companies that will receive one of the 6(b) Orders, don’t breathe too big a sigh of relief. This issue of platforms and ad screening is an important one and we are confident the agency will continue to look closely at company practices here.
One additional thing to note: Back in 2020, the FTC commenced a 6(b) study of nine social media and streaming services to study what information they collect and how they use such data. That study – which involves many of the same companies — has been going on for more than two years now, with no word yet on a completion date. So do not expect reports on the new topics for quite a long time.
The second study is smaller in scale and is seeking information from five “small business credit reporting agencies.” This study is designed to better understand “how they collect and report data about small businesses, and how they market their business credit reporting products.”
In discussion, Commissioner Slaughter emphasized the importance of this issue and that this study is good follow-up from a recent FTC enforcement action regarding the issue of small-business credit reporting. Commissioner Wilson expressed her support for this study as well but also flagged her resource concerns. Commissioner Bedoya also expressed his support.
And finally, for the consumer portion of the meeting, we heard from some of the same participants we hear from most months as well as a few others. Issues raised included undisclosed influencer marketing, the proposed noncompete rulemaking (and in particular, the opportunity to file reply comments), pending mergers and the FTC’s recent request for information on franchise issues. Commissioner Wilson did respond to the franchise issue and expressed her concerns about the press release that the agency issued and the decidedly non-neutral approach that the agency is taking in this area. (For what it’s worth, we had raised some similar concerns in a recent blog post here.) She also indicated that reply comments would be a good idea in the noncompete rulemaking.