FTC Chair Lina Khan sent a memo this week to the other FTC Commissioners and FTC staff outlining her “vision and priorities” for the agency.

The key statements in her memo relevant for consumer financial services are:

• Use of authorities. In light of the U.S. Supreme Court’s AMG decision, it is particularly critical for the FTC to use its “full set of tools and authorities,” including rulemaking and research in addition to enforcement.  (In AMG, the Supreme Court ruled that Section 13(b) of the FTC Act does not authorize the FTC to seek monetary relief such as restitution or disgorgement.)
• Strategic approach. To ensure that the FTC’s efforts are directed at the most significant harms across markets, including those involving marginalized communities, the agency should focus on “power asymmetries” and the unlawful practices that such imbalances enable.  Enforcement efforts should be oriented around targeting root causes rather than looking at one-off effects, which means focusing on structural incentives that enable unlawful conduct (i.e., conflicts of interest, business models, or structural dominance) as well as looking upstream at the firms that are enabling and profiting from this conduct.  The FTC should be particularly attentive to next-generation technologies, innovations, and nascent industries so that the FTC can quickly target unfair practices.
• Policy priorities. The FTC will take aim at how certain contract terms, particularly those that are imposed in “take-it-or-leave-it” contracts, constitute unfair or deceptive practices.
• Operational objectives. The FTC should move away from existing “siloes” between competition and consumer protection and take an integrated approach to its cases, rules, research, and other policy tools.  This approach can reveal interconnections between conditions that give rise to antitrust and consumer protection violations.

It is not surprising that Chair Khan would want to pursue greater use of the FTC’s rulemaking authority in the wake of AMG.  For violations of consumer protection rules issued under Section 18 of the FTC Act, the FTC can file actions in federal district court seeking either consumer redress under Section 19 or civil penalties under Section 5(m)(1)(A) of the FTC Act.

At her first FTC meeting in July 2021, Chair Lina Khan paved the way for increased use of the FTC’s rulemaking authority with the Commission’s approval (by a 3-2 vote) of changes to the FTC’s rulemaking process.  Pursuant to the 1975 Magnuson-Moss Warranty Act, instead of using the Administrative Procedure Act rulemaking process, the FTC must follow specific procedures for the promulgation of trade regulation rules under Section 18 of the FTC Act.  Section 18 authorizes the FTC to prescribe “rules which define with specificity acts or practices which are unfair or deceptive acts or practices in or affecting commerce.”  Further procedural requirements were imposed on the FTC’s Section 18 rulemaking by the Federal Trade Commission Improvement Act of 1980 and Rules of Practice adopted by the FTC.

Among other changes, under the agency’s revised Rules of Practice approved in July, the FTC Chair, instead of the Chief Administrative Law Judge, serves as or designates the Presiding Officer for rulemaking proceedings and the Commission is given more control over the hearing process.

In her memo, Chair Khan also announced her intention to name Samuel Levine as Director of the Bureau of Consumer Protection and she officially did so this week.  Mr. Levine had been serving as Director in an acting capacity since June 2021.  He first worked in the FTC’s Midwest Regional office and then became an attorney advisor to Commissioner Rohit Chopra in the FTC’s D.C. office.  Before joining the FTC, Mr. Levine worked for the Illinois Attorney General.