Ramirez Leaves FTC Urging Continued Tech Focus

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By Alexei Alexis

The Federal Trade Commission needs more resources to meet challenges such as keeping up with emerging technologies, departing commissioner and former chairwoman Edith Ramirez told Bloomberg BNA.

Last year, the FTC requested $342 million for fiscal year 2017, including $306,000 for research and development related to emerging technologies. But Congress didn’t act on the request, which would have provided a 10 percent hike. The FTC, like other agencies, is currently funded at 2016 levels under a “continuing resolution.”

“Our annual budget is just over $300 million, which is a very good return on taxpayers’ investment, given the impact that we have,” Ramirez said in an interview. “Do we need more resources? Yes. Obviously, it’s going to be up to Congress to make a determination on that.”

Hiring tech-savvy staff has becoming increasingly critical to the FTC’s ability to stay effective, according to Ramirez, who has resigned, effective Feb. 10. Areas like data security and privacy have grown tremendously and will likely continue to expand, she said.

Tech Initiatives

Under Ramirez, the FTC created an Office of Technology Research and Investigation to replace the Mobile Technology Unit and convened workshops on the internet of things, big data, drones and smart TVs, among other cutting-edge topics.

Such initiatives inform the commission’s enforcement work as well as agency best practices designed to guide the business community in staying on the “right side of the law,” Ramirez said. It also helps the agency in its role as a “thought leader,” which includes making recommendations to Congress, she said.

The departure of Ramirez, a Democratic appointee of former President Barack Obama, will leave FTC with only two commissioners: Maureen Ohlhausen, a Republican, and Terrell McSweeny, another Democrat. Ohlhausen has been named the agency’s acting chairwoman.

Joshua Wright, a Republican, and Julie Brill, a Democrat, have left seats that remain empty.

Jessica Rich, the FTC’s consumer protection chief, announced her resignation Feb. 7. She was appointed to the post by Ramirez in 2013. Her last day will be Feb. 17.

Ramirez has been serving long beyond her term, which expired in September 2015. She began as a commissioner in April 2010 and was elevated to chairwoman in March 2013, after Jon Leibowitz resigned.

Her main advice to the agency she’ll soon be leaving: “Keep an eye on the future, and be prepared to make investments that will yield results down the line, rather than being focused on short-term successes.” Similar advice was given to her when she became chairwoman, she said.

‘Illusion of Activity’?

Claire Gartland, consumer protection counsel for the Electronic Privacy Information Center, a Washington-based advocacy group, said it’s often hard to see the fruit of the FTC’s technology workshops, beyond reports with recommendations that can be easily ignored.

“I do think these efforts are important, but I also worry about creating the illusion of consumer protection activity without real substance,” she told Bloomberg BNA.

The FTC’s technology research staff is still relatively small but is already having an impact, according to Lorrie Cranor, a computer science professor at Carnegie Mellon University and a former chief technologist at the agency.

“A lot of the impact is behind the scenes in terms of being able to more quickly understand and investigate cases that relate to emerging technology,” Cranor told Bloomberg BNA.

The FTC has pursued a number of tech-related consumer protection cases, relying largely on its ability to prohibit unfair and deceptive practices under Section 5 of the FTC Act, which is more than a century old.

On Feb. 6, the commission announced its first action involving smart TVs. Vizio Inc. agreed to pay $2.2 million to settle charges that it installed software on 11 million of its smart TVs to collect consumers’ viewing data without their knowledge or consent. The case was initiated during Ramirez’s tenure as chairwoman, although the settlement announcement came afterwards.

Internet of Things

The agency’s first Internet of Things case was announced in 2013. TRENDnet Inc., which markets video cameras designed to allow consumers to monitor their homes remotely, settled charges that its lax security practices exposed the private lives of hundreds of individuals to public viewing on the Internet.

In 2014, Apple Inc. and Google Inc. settled separate complaints alleging they unfairly billed parents for their children’s unauthorized “in-app” charges. Apple agreed to pay $32.5 million and Google agreed to pay at least $19 million.

‘Unfairness’ Undefined

While the commission has a long history of successfully enforcing Section 5--mostly through settlements--some companies have pushed back in recent years. The scope of “unfairness” has been a particularly contentious area.

In November, Amazon.com Inc. was ordered by a Seattle district court to pay consumer redress in an in-app billing case similar to the ones that were settled by Apple and Google. The court agreed with the FTC that Amazon committed an unfair practice that “substantially harmed” consumers. The company has appealed the ruling to the Ninth Circuit Court of Appeals.

Medical testing laboratory LabMD Inc. is challenging the FTC’s ability bring data security cases under the unfairness prong of Section 5. The case is pending before the Eleventh Circuit. In 2015, the Third Circuit held that the FTC was authorized to bring such an action against hotelier Wyndham Worldwide Corp. That case was later settled.

Legislative Action Urged

Ramirez said Congress should revisit efforts to pass data security legislation, although Section 5 provides the FTC with sufficiently broad authority in the meantime.

“I think of us as being a very nimble and modern agency, notwithstanding that we’re more than 100 years old at this juncture,” she said. “We’re always thinking about what’s likely to happen in the future, because that’s the only we can be effective.”

To contact the reporter on this story: Alexei Alexis in Washington at aalexis@bna.com

To contact the editor responsible for this story: Tiffany Friesen Milone at tmilone@bna.com

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