The National Advertising Division’s (NAD) annual conference continued on Wednesday with further insights from the Federal Trade Commission (FTC) on its priorities under the Trump administration. Following Commissioner Mark Meador’s keynote earlier in the conference, we also had the opportunity to hear from Christopher Mufarrige, the Director of the Bureau of Consumer Protection. If you missed our blog post on Commissioner Meador’s remarks, make sure to check that out here.
Mr. Mufarrige’s remarks focused on privacy and artificial intelligence (AI). In summarizing how the FTC will approach these critical areas, he emphasized that the remit of the Commission is to facilitate the market process. Pursuant to this authority, Mr. Mufarrige identified three priorities driving how the FTC takes action:
- Enforce the law as directed by Congress.
- Enforcement and regulation driven by rigorous economic analysis.
- Stay in its lane to avoid unnecessary regulatory burdens on American businesses.
As you can gather from the above, Mr. Mufarrige described the FTC’s current approach as getting out of the way of business. The Commission will enforce the law as directed by Congress and utilize its broad authority under Section 5 of the FTC Act against fraud and scams that are clearly and directly harming consumers. Here’s some more detail on what that looks like for privacy and AI.
Privacy. Mr. Mufarrige directly rebuked the prior administration for using Section 5 as a broad privacy enforcement statute. This speaks to the current priority of enforcing laws as written and not creating new requirements through enforcement or guidance. Mr. Mufarrige noted, however, that while there is not a comprehensive federal privacy statute, there are certain laws on the books it will enforce, most notably the Children’s Online Privacy Protection Act (COPPA). Furthermore, Section 5 enforcement is appropriate if a company’s failure to adequately disclose how it will collect or use information is material to the consumer’s choice in that circumstance. There is a focus on materiality here – the consumer harm of the practice must outweigh any benefit. And as Commissioner, Meador also emphasized, there’s a particular focus on potential harm to children.
AI. On this topic, Mr. Mufarrige’s repeated message was that the FTC should not create requirements that add bureaucratic red tape to the growth and adoption of AI. He specifically cautioned that misguided law enforcement could undermine the exceptional nature of the American economy. Instead, the Commission will follow its remit to facilitate the market process by targeting bad actors who use AI for fraud and scams. In other words, AI enforcement will target bread-and-butter deception cases – marketers promising outcomes from AI that simply aren’t there. Mr. Mufarrige pointed to recent cases demonstrating this, including examples of unsupported claims about earnings, AI detection and the ability of an AI product to provide customer service functionality. This focus on easing regulatory burdens will be welcomed by industry.
And, separate from the above, NAD and its stakeholders will welcome Mr. Mufarrige’s comment that the FTC intends to continue its long-standing relationship with NAD, specifically its practice of reviewing a company’s advertising for potential enforcement when it fails to comply with a NAD decision.