Antitrust Law Daily Wrap Up, CONSUMER PROTECTION NEWS: Reclassification of Internet services could stifle FTC’s ability to address deception: Ohlhausen , (Oct 23, 2014)

By Lynn Stanton,TRDaily

Reclassification of broadband Internet access services as telecommunications services subject to Title II of the Communications Act would put the FTC’s authority over such services “in doubt,” FTC Commissioner Maureen Ohlhausen warned yesterday.

Under the current information service regulatory classification of such services, the FTC could take action against a company that did not adhere to its own statements about how it manages traffic, Commissioner Ohlhausen said at the Winnik International Telecoms & Internet Forum hosted by Hogan Lovells. “That would be a pretty clear cut deception case,” she added.

Asked whether the FTC has advantages over the FCC in overseeing providers’ transparency about their network management, Commissioner Ohlhausen said, “We have staff who are very well trained in conducting investigations and obtaining redress for consumers.”

Moderator Chris Wolf, who heads Hogan Lovells’s privacy and information management practice, asked how companies can determine whether their actions will trigger enforcement efforts by the FTC, which generally operates by enforcing broad proscriptions of deceptions and unfair business practices.

Commissioner Ohlhausen noted that the agency works within a framework that looks at issues such as whether consumers are harmed, whether they could easily avoid the harm, and whether the harm is outweighed by a benefit of the business practices in question.

Specifically with regard to data security, she said that while the FTC requires companies to take “reasonable precautions” to secure consumer data, it determines what is reasonable with reference to the size of the company and the sensitivity of the data, as well as changes in technology that might make a solution once viewed as too costly to be more affordable.

Commissioner Ohlhausen emphasized that the FTC does “not investigate every data breach.”She added, “For every case we bring forward, we close between two and a half and three.”

Wolf asked how companies that collect data from consumers can deal with the requirement to provide notice about data use when they only discover its potential long after it’s been collected.

Commissioner Ohlhausen emphasized that companies must “at least give notice that data is being collected,” then, “for truly unknown, unforeseeable uses, that’s where I think the harms-based approach comes in.”She said that she thought it was permissible to use data years later for purposes not identified to consumers if the use does not harm consumers, such as denying them access to credit. She also said that whether such use would be acceptable “depends what promises were made at collection.”

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