As the name suggests, the “executive branch” of the federal government is meant to execute the laws already on the books. They are not meant to create and enact them themselves. Sadly, however, a number of agencies are going beyond their mandate in attempts to become lawmakers. Perhaps nowhere is this more evident today than at the Federal Trade Commission (FTC). The agency, under the leadership of Chair Lina Khan, has taken to harassing American companies with lawsuits in an effort to move forward public policy beyond existing law.
In fact, this overreach has gotten so egregious and blatant, FTC Commissioner Christine Wilson recently resigned over the abuses. “Khan's focus on arbitrary social goals instead of consumer welfare 'will result in higher prices, suppressed production, fewer choices, and dampened innovation,” she stated. She went on, “I have failed repeatedly to persuade Ms. Khan and her enablers to do the right thing, and I refuse to give their endeavor any further hint of legitimacy by remaining."
Khan and the FTC have lately been focused on initiating antitrust lawsuits based on little to no evidence. However, their recent ventures into data privacy regulation have raised a number of eyebrows and have the potential to cause even more uncertainty for American businesses.
In August of last year, the Biden administration’s FTC filed a lawsuit against an Idaho-based tech company, Kochava. The administration’s complaint rests on the notion that Kochava was selling “sensitive geolocation data.” Notably, the FTC failed to provide a clear definition of “sensitive locations” that would have helped Kochava – or other companies in the industry – fix any mistakes or avoid the wrath of the FTC in the future.
Certainly, data privacy is a complex public policy subject to tackle. However, the regulatory landscape is a limited, mixed-bag. As The New York Times notes, “The United States […] doesn’t have a singular law that covers the privacy of all types of data. Instead, it has a mix of laws that go by acronyms like HIPAA, FCRA, FERPA, GLBA, ECPA, COPPA, and VPPA, designed to target only specific types of data in special (often outdated) circumstances.” There is no comprehensive benchmark with which the industry can comply. It is up to companies to meet the needs of their consumers as demanded by the collective power of the market. This equilibrium has functioned rather well to this point.
Initiating lawsuits based on definitions that objectively do not exist in American law will have disastrous consequences. Many companies tailor their services based on the data they innocuously collect from their customers. It is an important part of their business model. If there is no standard for compliance on which American companies can reasonably rely, smaller businesses will be buried in uncertainty and compliance costs that may not even have been necessary.
The administration’s nebulous fight against “sensitive” data collection took another turn in light of the Supreme Court’s overturning of Roe v. Wade last year. President Biden issued an executive order, leading to a more stringent crackdown on data privacy in “sensitive locations,” adding reproductive health organizations to that list.
While, at face value, the desire to safeguard sensitive data is a noble one, using vague definitions and tackling the issue on an ad hoc basis, offers the American economy no surety. There is very little in the way of rules changing on a whim the next time there is a newsworthy event, or public policy pressure mounting on a certain issue.
It has become apparent in all this that Congress needs to step in in a number of meaningful ways. The first is to provide significant oversight of the FTC. The FTC is one of many agencies tasked with carrying out the laws enacted by Congress. For the FTC to craft new ones is to overstep their authority and it is incumbent upon the legislative branch to rein that in. While the Congress has just set up a new select committee on the weaponization of government, the FTC ought to be a part of those investigations and inquiries.
Secondly, Congress needs to settle the issue of data privacy itself. The FTC is trying to fill a void left by Congress. With the lack of clear definitions or rules of the road, unelected bureaucrats have stepped in to provide their own, regardless of the consequences for America’s business community. Congress can solve that quickly by implementing rules that are not subject to bureaucratic whims.
The resignation of Commissioner Wilson should be a long-overdue wake up call to many in the federal government. The FTC has reached a tipping point. If they are not restrained now, it may become too late to do so.
Dan Savickas is Director of Policy for the Taxpayers Protection Alliance.