By Dee Pridgen
The ABA Consumer Protection Conference held February 12 on the campus of the George Washington University in Washington, D.C., focused on the work of the Federal Trade Commission (FTC), as well as the work of advertising self-regulatory bodies, especially in the areas of big data and the “Internet of Things.” FTC Chair Edith Ramirez kicked things off by summarizing the FTC’s consumer protection agenda. She praised the recent DC Circuit Court opinion in the POM Wonderful case, stating that the decision shows that health claims need to be backed by “strong science.” She also said that the FTC will focus on the growing sector of mobile payments, especially unauthorized billings, as well as privacy and data security issues. She stated that the FTC wants to eliminate the common carrier exemption from the FTC Act so that it can better pursue issues like billing practices and “cramming” of unauthorized charges onto telephone bills.
This conference featured two “interactive oxford style debate” sessions, one of which was on the proper standards for advertising substantiation. I debated Howard Beales (photo below), former FTC Bureau of Consumer Protection Director and currently an economics professor at George Washington. The proposition to be debated was: “Even in a world of evolving science and new products, the FTC’s traditional advertising substantiation standard of competent and reliable scientific evidence best maximizes consumer welfare.” Beales argued in favor, stating among other things that requiring anything more than competent and reliable evidence would deter advertisers from disseminating truthful health and nutrition claims, and that otherwise safe food products did not need to be tested in the same way as drugs. I argued against the resolution, saying that the traditional standard, while necessary, is not sufficient to protect consumers who pay more for certain products based on specific disease related claims that are said to be “proven.” For these specific claims, as was the case in POM Wonderful, a higher level of substantiation may be required. Before the debate, 79% of the audience was in favor of the resolution and 21% were against. After the debate, 55% were in favor and 45% were against.
Several sessions dealt with privacy. Ilana Westerman, CEO of Create with Context, suggested that marketers persuade customers to want to give their data, due to the convenience and benefits, rather than just taking it for the marketer’s benefit. An example was consumers who share a “wish list” of gifts they desire for special occasions with friends and relatives, and an app that alerts the consumer when he or she is in a store that has an item on their friend’s wish list. This was well received by consumers, whereas an app that tells you in the store that you need to buy milk (because of prior buying patterns) would
Another panel discussed the “Internet of Things,” the subject of a just released FTC staff report, available here. There are now over 25 billion devices that are interconnected and that collect personal information, such as in cars, “wearable” technology, and “smart” appliances. The consensus at the FTC seems to be that there should be “privacy by design” incorporated into such devices to avoid security breaches and unauthorized access and misuse of personal information, and that consumers should have some notice and choice with regard to sharing their data. No one advocated special regulations for this aspect of data sharing, but the FTC wants to have a general federal privacy statute that would be broad, flexible and not technology specific, that would allow the FTC to give guidance on data security and online tracking, among other things.
The packed agenda also featured a discussion of third party liability for fraud (e.g., payment processors), globalized privacy norms, and consumer protection in the direct selling industry. The conference closed with a panel on the advertising industry’s premier self-regulation body, the National Advertising Division of the Better Business Bureau.