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Home | BakerHostetler

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It has been just over two years since Lina Khan was appointed FTC Chair, and a hallmark of her tenure on the consumer protection side has been the enormous amount of rulemaking initiated by the agency. For a while, the agency seemed to be announcing some new rulemaking nearly every month. Well, the new rule initiations seem to have slowed down a bit, and we thought it might be a good time to recap where things are with respect to the more significant rulemaking undertakings. Bottom line – things are overall moving slowly, with a few notable exceptions — but that is not unexpected.



First, let’s focus on the five brand-new Mag Moss rulemakings. For those who are new to FTC rulemaking, Mag Moss rulemaking is a <a href="https://www.adventures-in-law.com/ftc/you-do-have-time-for-this-the-new-wave-of-ftc-rulemaking/">cumbersome and lengthy form of rulemaking</a> that allows the FTC to issue rules regarding practices that are deceptive or unfair and prevalent in the marketplace. It is a time-consuming process.



The Mag Moss Rule that has progressed the most so far is the <a href="https://www.ftc.gov/news-events/news/press-releases/2022/09/ftc-proposes-new-rule-combat-government-business-impersonation-scams">Proposed Rule on Impersonation of Government and Business</a>, which is generally viewed as perhaps the least controversial of the rules initiated in the past two years. An actual proposed rule was announced this year, and in May, the agency held an informal hearing on the proposal. As described in the <a href="https://www.ftc.gov/system/files/ftc_gov/pdf/impersonationruleinformalhearingtranscript.pdf">transcript</a>, an informal hearing is a part of the FTC Mag Moss rulemaking process that allows interested parties to present their views orally on the proposed rule. The transcript for this hearing discusses some technical snafus that apparently occurred at the hearing and observes that the Commission had previously found that there were no disputed issues of fact with respect to the proposed rule. Because of that finding, the Presiding Officer observed that “this informal hearing will include no cross-examination and no rebuttal submissions.” In short, 14 persons spoke at the hearing, expressing differing views on the proposal. Now we wait for the agency to review the record and likely issue a Final Rule (which can then be challenged by interested parties in a court of appeals). And keep in mind that for future more hotly contested rulemakings, the informal hearings will be noticeably different and far more involved.



Next in line is the Rulemaking on <a href="https://www.ftc.gov/news-events/news/press-releases/2022/10/ftc-explore-rulemaking-combat-fake-reviews-other-deceptive-endorsements">Reviews and Testimonials</a>. Just recently, the agency issued a Notice of Proposed Rulemaking that set forth a new rule that if finalized, would allow the agency to better crack down on the use and sale of, among other things, fake online reviews and the practice of suppressing negative reviews.  You can find a discussion of this new proposal <a href="https://www.adventures-in-law.com/ftc/five-stars-for-speedy-delivery-ftc-takes-a-quick-and-major-step-toward-regulating-online-review-practices/">here</a>. We anticipate that the next step here will be informal hearings on the proposal late this year or in early 2024.



Three other new Mag Moss rulemakings have been initiated: <a href="https://www.ftc.gov/news-events/news/press-releases/2022/02/ftc-takes-action-combat-bogus-money-making-claims-used-lure-people-dead-end-debt-traps">Earnings Claims</a>, <a href="https://www.ftc.gov/news-events/news/press-releases/2022/10/federal-trade-commission-explores-rule-cracking-down-junk-fees">Junk Fees</a>, and<a href="https://www.ftc.gov/news-events/news/press-releases/2022/08/ftc-explores-rules-cracking-down-commercial-surveillance-lax-data-security-practices">Commercial Surveillance and Data Security</a>. For all three of these rulemakings, there has been quite limited public activity. We have seen an Advance Notice of Proposed Rulemaking (ANPR) issued for each, which kicks off the process, but we have not yet seen an actual proposed rule for any of these. The Earnings Claims proposal has been pending for well over a year, and if we were betting folk, we would anticipate that of the three, we will most likely see a proposed Earnings Claims Rule first. We know that this is a high priority for the FTC, and it is an area where the Supreme Court’s decision in the AMG case has arguably had a real impact on the agency’s ability to get money in some cases.



The FTC has also announced some significant rulemaking relating to existing Mag Moss rules. Most notably, in March, the agency announced a Notice of Proposed Rulemaking that would basically replace its existing <a href="https://www.ftc.gov/news-events/news/press-releases/2023/03/federal-trade-commission-proposes-rule-provision-making-it-easier-consumers-click-cancel-recurring">Negative Option Rule</a> with a dramatically new and different Rule. The comment period for this proposal just recently closed with well <a href="https://www.regulations.gov/docket/FTC-2023-0033">over 16,000 comments filed</a>. Earlier this year, changes to the Eyeglass Rule were announced and the proposal was discussed at a <a href="https://www.ftc.gov/system/files/ftc_gov/pdf/ftc-a-clear-look-at-the-eyeglass-rule-may-18th-23.pdf">recent workshop</a>.



Last year the agency issued an <a href="https://www.ftc.gov/news-events/news/press-releases/2022/10/ftc-seeks-improve-american-publics-access-funeral-service-prices-online">ANPR in connection with the Funeral Rule</a> that asked an array of questions regarding the Rule, and in September 2023, the agency will host a <a href="https://www.ftc.gov/business-guidance/blog/2023/05/proposed-funeral-rule-changes-under-consideration-september-workshop">workshop to consider issues</a> raised by that ANPR. Similarly, last year, the agency issued an ANPR with respect to the existing <a href="https://www.ftc.gov/system/files/ftc_gov/pdf/Business%20Opportunity%20%28ANPR%29_0.pdf">Business Opportunity Rule</a> that asked a range of questions on whether the agency should propose changes to that Rule; <a href="https://www.regulations.gov/docket/FTC-2022-0072/comments">thirty-two comments were filed</a> and we have seen no further activity.



Of course, not every FTC rule is focused on consumer protection. In January, the agency – using a different authority – announced a <a href="https://www.ftc.gov/news-events/news/press-releases/2023/01/ftc-proposes-rule-ban-noncompete-clauses-which-hurt-workers-harm-competition">proposed rule to ban noncompete clauses</a> in employment. This proposal was discussed extensively in the media and generated well over 20,000 comments.



But that’s not all – there are also some additional significant rulemakings that are underway that utilize Administrative Procedures Act (APA) rulemaking procedures, which is a more expedited way to conduct rulemaking. Last year, the FTC proposed some new changes to the <a href="https://www.ftc.gov/news-events/news/press-releases/2022/04/federal-trade-commission-proposes-small-business-protections-against-telemarketing-tricks-traps">Telemarketing Sales Rule</a> that would expand aspects of the Rule. And most significantly, in January 2022, the agency announced proposed new rules that would address <a href="https://www.ftc.gov/news-events/news/press-releases/2022/06/ftc-proposes-rule-ban-junk-fees-bait-switch-tactics-plaguing-car-buyers">deceptive or unfair practices by auto dealers</a>. And in 2021, on the data security side, the agency issued a supplemental rulemaking asking whether it should impose a notice requirement in connection with the <a href="https://www.ftc.gov/news-events/news/press-releases/2021/10/ftc-strengthens-security-safeguards-consumer-financial-information-following-widespread-data">Gramm-Leach-Bliley Safeguards Rule</a>.



And we would be remiss if we didn’t mention the FTC <a href="https://www.federalregister.gov/documents/2019/07/25/2019-15754/request-for-public-comment-on-the-federal-trade-commissions-implementation-of-the-childrens-online">rulemaking on COPPA</a>, which has been pending since 2019. Well at least not much has changed since then.



That is – to put it mildly – an ambitious rulemaking agenda that is almost certainly consuming a lot of agency resources. Will some of these lead to proposed final rules? Almost certainly. Will any final rules be eventually challenged in court? Almost certainly. When will it happen? Rulemaking is a time-consuming process, but it is safe to assume that some of these rulemakings are high priorities for the Commission.



We will keep you up to date as we learn of new developments on FTC rulemakings. There will almost certainly be many developments between now and the end of the year.



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Recapping the FTC Rulemakings Initiated Since 2021 – A Lot of Announcements and Just a Few Developments

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