FTC Enforcement Priorities Take Shape With Resource Cuts In Mind

In balancing enforcement with fewer anticipated resources, the Federal Trade Commission is expected to crack down on inflated advertising claims about artificial intelligence, children’s privacy and online safety, auto-renewal subscription issues, and deceptive consumer reviews and other endorsements.

Companies should closely monitor government activity in these areas and consult with legal counsel as necessary.

These Trump administration consumer protection enforcement priorities are coming into view, as former FTC officials, FTC practitioners, and state enforcers explained earlier this month at the American Bar Association’s 73rd Antitrust Law Spring Meeting in Washington, DC.

Artificial Intelligence

Panelists predicted that under Chairman Andrew Ferguson, the FTC will take an approach toward AI that more fully recognizes its opportunity and potential benefits than under former Chair Lina Khan.

The agency is expected to continue strong enforcement of “AI washing,” in which a company exaggerates or makes unsubstantiated claims about the capabilities of an AI product or service, and the use of AI to perpetuate fraud such as through deepfakes.

Panelists warned that the FTC may keep seeking the draconian remedy of “algorithmic disgorgement,” which requires destroying AI models in some cases where the FTC alleges businesses have unlawfully collected or used personal information in connection with AI systems.

The current FTC is likely to diverge from the previous administration with respect to AI enforcement. Panelists said the commission is unlikely to bring cases alleging that AI systems perpetuate discriminatory outcomes based on protected classes or relying on “means and instrumentalities” theories under Section 5 of the FTC Act as a way of making software providers and others responsible for the wrongful acts of third parties.

Conversely, content moderation by online platforms using AI or other tools to disfavor certain viewpoints has emerged as an FTC priority.

Privacy

Panelists anticipated the online privacy and safety of teens and children would continue to be an area of federal and bipartisan state activity under the Children’s Online Privacy Protection Act, Section 5 of the FTC Act, state unfair and deceptive practices acts and statutes, and a growing number of state laws aimed at protecting youth online.

Sensitive data of various types—such as health, genetic, and geolocation data—is expected to remain an FTC priority. For example, panelists noted that the FTC has continued litigating FTC v. Kochava Inc., which alleges the unfair collection and sale of precise location data.

Commissioner Melissa Holyoak wrote in support of the amendment of the FTC’s Kochava complaint in 2024, and both she and then-Commissioner Ferguson largely supported the enforcement actions concerning location information brought by the FTC in fall 2024.

Auto-Renewals and Reviews

Enforcement with respect to auto-renewals and other so-called “negative option” subscriptions is expected to be a priority at the federal and state levels. In March, the FTC defended its Negative Option Rule before the US Court of Appeals for the Eighth Circuit despite opposition to the rule’s adoption by Ferguson and Holyoak.

Whatever the outcome of the court challenge to the Negative Option Rule, which is scheduled to go into full effect on May 14, the FTC can continue to address misleading auto-renewals under other authority, such as Section 5 of the FTC Act and the Restore Online Shoppers’ Confidence Act. California and many other states have statutes that address recurring subscriptions.

Panelists also expected the FTC’s steady enforcement with respect to deceptive endorsements and consumer reviews to continue, under Section 5 as well as the FTC’s “Fake Reviews” rule, which was adopted with the support of Ferguson and Holyoak.

Takeaways

Despite the Trump administration’s deregulatory agenda and the expected reductions in FTC resources, the FTC is likely to use its authority vigorously in the above anticipated priority areas while jettisoning some of the more novel enforcement tools used by the FTC under Khan, such as notices of penalty offenses.

Whatever the shift in FTC activity—and it’s unclear how pronounced the shift will be—state enforcers emphasized they are poised to enforce consumer protection laws rigorously. They stressed that they stand ready to fill in any gaps left by the FTC, such as by advancing theories disfavored by the current FTC or that receive less attention than they did under the prior administration.

A number of states appear well-positioned to make good on that commitment. Over the past few years, many states have expanded their consumer protection capabilities, particularly with respect to privacy, as reflected by the enforcement and rulemaking activity in recent years from California, Colorado, and Texas.

The recent announcement of a bipartisan Consortium of Privacy Regulators to share expertise and resources and coordinate investigations suggests states are gearing up for further activity. In doing so, they can, in many cases, use broadened consumer protection laws, such as those addressing privacy generally or focused on youth privacy and online safety, AI, auto-renewals, and so-called “junk fees.”

Many legislatures are also considering further expanding consumer protections in these areas. Consequently, whatever may shift at the federal level, substantial continuity in consumer protection enforcement is likely.

This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law and Bloomberg Tax, or its owners.

Author Information

Janis Kestenbaum is partner at Perkins Coie and represents businesses in investigations by the Federal Trade Commission.

Ryan Maddock and Jeremy Keeney contributed to this article.

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