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ICLE Executive Director Geoffrey Manne appointed to FCC Consumer Advisory Committee PDF Print E-mail

The International Center for Law and Economics (ICLE) is pleased to announce that its founder and Executive Director, Geoffrey A. Manne, has been appointed by Federal Communications Commission Chairman Tom Wheeler to serve on the FCC's Consumer Advisory Committee.

The appointment is for a term of two years, and the Committee will meet a few times a year in Washington, DC. ICLE, and Mr. Manne's role at ICLE, will be unaffected by his participation on the Committee.

The Consumer Advisory Committee's mission is:

[T]o make recommendations to the Commission regarding consumer issues within the jurisdiction of the Commission and to facilitate the participation of consumers...

The Committee may consider issues including, but not limited to, the following topics:

  • Consumer protection and education
  • Implementation of Commission rules and consumer participation in the FCC rulemaking process; and,
  • The impact of new and emerging communication technologies...

In particular, as directed by the FCC’s 2015 Open Internet Order, the CAC will “formulate and submit to the Commission a proposed Open Internet enhanced transparency rule disclosure format.”

A nationally recognized expert in the law and economics of telecommunications, antitrust, consumer protection, intellectual property, and international economic regulation, Geoffrey Manne is the editor, with FTC Commissioner Joshua Wright, of Competition Policy and Intellectual Property Law Under Uncertainty: Regulating Innovation, a volume from Cambridge University Press. His other publications have appeared in the Journal of Competition Law and Economics, the Harvard Journal of Law and Public Policy and the Columbia Business Law Journal, among many other law reviews and popular media outlets.

Mr. Manne has written extensively on consumer protection issues, including the regulation of corporate disclosures, privacy and data security. He is regularly invited to speak on the economic impacts of public policy issues and to provide oral and written testimony on these issues to the United States Congress. Mr. Manne recently participated in the FCC's Open Internet Roundtable on transparency, and he has filed numerous comments before the FCC and the FTC, as well as amicus briefs in the Supreme Court and several federal appeals courts.

Prior to founding ICLE, Geoffrey Manne was a law professor specializing in antitrust law and economics, intellectual property, corporate governance and international economic regulation at Lewis & Clark Law School in Portland, OR. From 2006-2008, while on leave from teaching, he directed Microsoft’s law and economics academic outreach program.

Mr. Manne practiced antitrust and appellate law at Latham & Watkins LLP, and served as a lecturer in law at the University of Chicago and the University of Virginia law schools. His father, Henry G. Manne, was Dean Emeritus at George Mason University and one of the four founders of the Law and Economics movement.

The FCC announcement can be found here.

New ICLE White Paper on the Dark Side of the FTC’s Latest Privacy Case PDF Print E-mail

Last week, the FTC announced its complaint and consent decree with Nomi Technologies for failing to allow consumers to opt-out of cell phone tracking while shopping in retail stores. Whatever one thinks about Nomi itself, the FTC’s enforcement action represents another step in the dubious application of its enforcement authority against deceptive statements.

In response, Geoffrey Manne, Ben Sperry, and Berin Szoka have written a new ICLE White Paper, titled, In the Matter of Nomi, Technologies, Inc.: The Dark Side of the FTC’s Latest Feel-Good Case.

Nomi Technologies offers retailers an innovative way to observe how customers move through their stores, how often they return, what products they browse and for how long (among other things) by tracking the Wi-Fi addresses broadcast by customers’ mobile phones. This allows stores to do what websites do all the time: tweak their configuration, pricing, purchasing and the like in response to real-time analytics — instead of just eyeballing what works. Nomi anonymized the data it collected so that retailers couldn’t track specific individuals. Recognizing that some customers might still object, even to “anonymized” tracking, Nomi allowed anyone to opt-out of all Nomi tracking on its website.

The FTC, though, seized upon a promise made within Nomi’s privacy policy to provide an additional, in-store opt out and argued that Nomi’s failure to make good on this promise — and/or notify customers of which stores used the technology — made its privacy policy deceptive. Commissioner Wright dissented, noting that the majority failed to consider evidence that showed the promise was not material, arguing that the inaccurate statement was not important enough to actually affect consumers’ behavior because they could opt-out on the website anyway. Both Commissioners Wright’s and Commissioner Ohlhausen’s dissents argued that the FTC majority’s enforcement decision in Nomi amounted to prosecutorial overreach, imposing an overly stringent standard of review without any actual indication of consumer harm.

The FTC’s deception authority is supposed to provide the agency with the authority to remedy consumer harms not effectively handled by common law torts and contracts — but it’s not a blank check. The 1983 Deception Policy Statement requires the FTC to demonstrate:

  1. There is a representation, omission or practice that is likely to mislead the consumer;
  2. A consumer’s interpretation of the representation, omission, or practice is considered reasonable under the circumstances; and
  3. The misleading representation, omission, or practice is material (meaning the inaccurate statement was important enough to actually affect consumers’ behavior).

Under the DPS, certain types of claims are treated as presumptively material, although the FTC is always supposed to “consider relevant and competent evidence offered to rebut presumptions of materiality.” The Nomi majority failed to do exactly that in its analysis of the company’s claims, as Commissioner Wright noted in his dissent:

the Commission failed to discharge its commitment to duly consider relevant and competent evidence that squarely rebuts the presumption that Nomi’s failure to implement an additional, retail-level opt out was material to consumers. In other words, the Commission neglects to take into account evidence demonstrating consumers would not “have chosen differently” but for the allegedly deceptive representation.

As we discuss in detail in the white paper, we believe that the Commission committed several additional legal errors in its application of the Deception Policy Statement in Nomi, over and above its failure to adequately weigh exculpatory evidence. Exceeding the legal constraints of the DPS isn’t just a legal problem: in this case, it’s led the FTC to bring an enforcement action that will likely have the very opposite of its intended result, discouraging rather than encouraging further disclosure.

Moreover, as we write in the white paper:

Nomi is the latest in a long string of recent cases in which the FTC has pushed back against both legislative and self-imposed constraints on its discretion. By small increments (unadjudicated consent decrees), but consistently and with apparent purpose, the FTC seems to be reverting to the sweeping conception of its power to police deception and unfairness that led the FTC to a titanic clash with Congress back in 1980.

The Nomi case presents yet another example of the need for FTC process reforms. Those reforms could ensure the FTC focuses on cases that actually make consumers better off. But given the FTC majority’s unwavering dedication to maximizing its discretion, such reforms will likely have to come from Congress.

Find the full white paper here.

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