Berin Szoka, a self-described “cyber-libertarian” attorney who works for the DC-based Progress and Freedom Foundation, felt it necessary to backpedal recently on his criticism of the Federal Trade Commission. Szoka wrote on July 13 that he and his PFF colleagues are “actually big fans of the FTC’s core consumer protection mission: holding companies to their promises” (italics his). Szoka said the FTC needs “increased funding”—though not necessarily “increased powers”—to stay true to this core mission. As an example of the good the FTC does, Szoka noted,
the FTC sent a stern letter earlier this month to the company that is seeking to buy the subscriber info and photos and other assets of the now-defunct XY Magazine, which served primarily gay U.S. teens, warning them that the FTC would hold them to the terms of the privacy policy under which XY collected information from its subscribers.”
This is a great example of how the FTC can effectively use its existing authority to protect consumers against clear harms involved in the disclosure of truly sensitive data, sometimes even prophylactically—in this case, outing around 100,000 gay youths and young adults—collected by companies that make unambiguous promises to protect users’ data. This incident also illustrates how privacy law can evolve in an organic fashion from a growing body of such well-justified preemptive warnings, enforcement actions brought against truly bad actors, and ultimately court decisions that decide whether the FTC has properly weighed the interests at stake.
So we need the FTC to…keep the lifestyles of gay teens private? Um, okay.
What Szoka describes is a straightforward contract issue. Sure, if a company promised not to disclose certain information and did, there may be a breach that requires a remedy. That still doesn’t explain why the FTC is involved. Szoka—who certainly knows better, based on my conversations with him—paints a misleading picture of the FTC’s “core consumer protection mission.” It sure isn’t “holding companies to their promises.” The overwhelming majority of FTC resources is directed against the freedom of contract. Just look at any merger case. Or the thirty-plus orders ripping up physician contracts with insurance companies. Or the FTC’s seven-year case against Rambus, which attempted to interpret a contract to say something that four independent tribunals said it did not.
The FTC fundamentally believes in status, not contract. Since the FTC defines itself as a “consumer” protection agency, that means it decides what is best for consumers—even if consumers have signed contracts that provide otherwise. A contract exists between parties of equal status. In FTC rules, producers and sellers are at a decided disadvantage.
Szoka also invokes a fantasy land where “court decisions…decide whether the FTC has properly weighted the interests at stake.” That’s an exceptionally rare occurrence. As I’ve documented for years, over 95% of FTC matters are decided by “consent orders,” where the agency imposes its will without any judicial or public scrutiny. And even when courts are involved, they often defer to the FTC’s “expertise.”
Amazingly, Szoka not only endorses the FTC’s governing-by-decree, he suggests that such an approach is endorsed by Hayek! Szoka said the FTC ideally works “to find the law of privacy over time in an iterative, case-by-case process,” and matches that to this statement from Hayek:
Until the discovery of Aristotle’s Politics in the thirteenth century and the reception of Justinian’s code in the fifteenth… Western Europe passed through… [an] epoch of nearly a thousand years when law was… regarded as something given independently of human will, something to be discovered, not made, and when the conception that law could be deliberately made or altered seemed almost sacrilegious.
This is precisely the opposite of the FTC approach to law. The FTC is nothing but arbitrary “human will” completely untethered to any moral foundation of individual rights. The FTC doesn’t “discover” law; it sure as hell doesn’t protect privacy, for it is one of the greatest violators of individual privacy in the United States.
Szoka advocates more funding for the FTC but not more accountability. He acknowledges, “The FTC may over- or under- enforce in any particular case, but as long as they stick to that noble path, I’ll cheer them on from the sidelines.” In other words, if the FTC falsely prosecutes an 85-year-old man and destroys his life savings, that’s just the price we pay as a society for protecting gay teens from being outed by a mailing list.
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But Mr. Oliva! The corporations are big, powerful, and evil, and the consumers are weak and helpless! If the Government can’t protect them, nobody will!
/wrist
That magazine was loaded with barely legal twinks and was wank-fodder to many. In other words, there are more than teens on that mailing list. Hmmm….
For the love of God, don’t give them any ideas.
There’s so much legalise in contracts, half the time you don’t know what you’re agreeing/consenting to which is unfortunate because businesses can easily mislead people as to what’s in a contract, and oftentimes they do.
Not to say that the FTC doesn’t abuse it’s powers because they do, but businesses do as well as we’ve been seeing quite a bit of lately. I for one, am glad that the FTC exists not just because I’m a consumer but because I run a small business and I just think it’s bad business for companies to intentionally take advantage of consumers via contracts they know full well that the average consumer will not understand.
Miss the days when contracts were very simple to understand and interpret without having to rely on lawyers to disseminate the information for you, but those days were before my time (lol) and are long gone.
9/11 was CLEARLY AN INSIDE JOB. On an unrelated note, I was wondering earlier how can I cheat on my wife more and not get caught? Does anyone agree that its more wrong if she is pregnant (again)? bradong@mac.com
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