Notes from the FTC Conference on Marketing and Public Policy

Every few years, the Federal Trade Commission convenes a consumer protection-focused conference that features academic research regarding consumer protection issues of interest to the FTC.   Last week, I attended the third such conference, which has not been held since before COVID.  

The conference has a heavy economic focus and is well attended by employees of the Bureau of Economics.  It is structured academically, with participants (typically junior professors and post-doctoral students) presenting research papers and receiving comments from full professors and also fielding audience questions.

Although some of the papers reflect work already completed by the FTC, such as studies on influencers, other papers provided signals about areas of emerging enforcement interest.  For that reason, attendance provided some vital clues about where FTC enforcement may focus in the future.  Rather than recapping every presentation, I discuss below some major takeaways from the two day conference.

1.  Because most sales are now digital, companies are routinely collecting reams of data in the ordinary course of business that the FTC might use against them in the future. Many research papers presented relied on huge and easily-accessed data sets for analysis, often made available freely to the researchers.  Such data might include usability studies, A/B testing of consumer reactions to design changes, and of course, e-mails. Although some of the types of studies done in the past, often by third-party vendors,  were captured in hard copy and later discarded, digital data are more easily collected by companies and tend to persist.  One can expect that the FTC will ask for this evidence during an investigation.  
2. The FTC remains focused on big players in the tech industry.  There appear to be plenty of practices that concern the agency that are conducted by some of the largest and most well--respected companies in the world.
3. The agency is focused on artificial intelligence (“AI”).  For example, what impact will AI have on consumer search behavior?  Will it harm smaller players and, if so, will ad revenue gravitate more to larger publishers?  Also, do AI summaries of consumer reviews accurately reflect comments or are they unfairly complimentary?  If they are systematically inaccurate, how does that affect consumer choice?
4. The FTC continues to look at the impact of influencers, although research presented seemed to show they have less of an effect on sales than may have been previously believed.
5. One paper that raised eyebrows was about data brokers.  Researchers at Stanford and the University of California at Davis provided a hair-raising look into the practices of common data brokerage schemes. Their research showed that filling out an online form, say for a loan, could generate hundreds of spam calls, all from spoofed numbers, over a period beginning minutes later and persisting for up to a year.  One researcher explained that some data brokers collect key-logging data from consumers data before they even click “submit”.  They swiftly sell such data (sometimes augmented with fictitious information), where it typically triggers aggressive sales tactics that often continue despite consumers' repeated efforts to cancel or to opt out.  Given the reaction of the room, I would expect that the FTC will focus on this area in the future.
6. The FTC is watching the gaming industry and  marketing behavior such as embargoing of influencer reviews.  
7. The Bureau of Consumer Protection Staff touted their planned work on Advanced Notice of Proposed Rulemakings regarding fee disclosures in the rental housing industry and Negative Option rules refinements.  The FTC will almost certainly seek to have both proposals go into effect, despite  the Chairman having previously touted the cessation of rulemaking, which had become more popular during the last administration.  As one economist stated at the conference, no rule has generated as much positive feedback as the one regarding so-called “junk fees.”  Extension of that rule to other unpopular industries seems very likely.
8. The FTC remains concerned about limitations on its jurisdiction and its inability to obtain monetary relief in many cases.  Nevertheless, it touted that it is using workarounds, such as lawsuits in which the FTC pairs up with State Attorneys General, to achieve restitution.  In the absence of legislation, one would expect this trend to continue.
9. The pipeline of consumer research continues to flow.  The FTC Bureau of Economics appears to have strong relationships with major academic institutions, despite today's political winds.  An implicit understanding in this conference, which highlighted the work of many fine young researchers, is that the FTC remains a destination of choice for young economists.  So long as that linkage persists, the FTC will be privy to ongoing and emerging academic research into various consumer harms.