Coalition Comments to the FTC on “Commercial Surveillance” and “Lax Security Practices”

By SBE Council at 21 November, 2022, 10:56 pm

Federal Trade Commission
Office of the Secretary
600 Pennsylvania Avenue, NW
Suite CC-5610 (Annex B)
Washington, DC 20580

Re: Proposed Rule, Federal Trade Commission; Commercial Surveillance (87 Fed. Reg.
51,273-51,299, August 22, 2022)

Dear Commissioners:

We, the undersigned organizations, representing a diverse set of industries as well as
organizations advocating for the promotion of innovation, write to express our concerns with the
Federal Trade Commission’s Advanced Notice of Proposed Rulemaking pertaining to so-called
“commercial surveillance” and “lax security practices.” Given the importance of the data-driven
economy and the need to protect consumers, Congress should pass a national privacy law that
protects all Americans. We urge the Federal Trade Commission to allow Congress to clearly
speak to authorize the data privacy regulation and halt its current rulemaking.

Every company in America, small and large, is using data to help them solve everyday
business decisions and more efficiently deal with economic challenges like inflation and supply
chain shortages. The Internet economy was estimated to have contributed $2.45 trillion to U.S.
GDP.1 Artificial Intelligence alone will have a $3.7 trillion positive impact on North American
GDP by 2030.2 Small businesses that utilize technology platforms like business software, social
media, delivery apps, and payment support the jobs of nearly 100 million Americans and $17.7
trillion in economic value.3 On a practical level, the data-driven economy is enhancing public
safety by stopping violent crime, preventing and detecting fraud, promoting financial inclusion
by using expanded datasets, and improving health outcomes.

Given the critical importance of data to societal welfare and global economic
competitiveness, it is imperative that policymakers create an environment of certainty for the
business community and consumers alike. The current Advanced Notice of Proposed
Rulemaking fails to provide that certainty in the following ways:

• FTC Lacks Authority to Promulgate a National Privacy Standard. The Supreme
Court in West Virginia v. EPA this year affirmed the Major Questions Doctrine and
the legal principle that in cases of vast economic and political significance federal
agencies must have clear authorization from Congress to make rules. Writing for a 6-
3 majority, Chief Justice Roberts reminded administrative agencies that they “have
only those powers given to them by Congress and ‘enabling legislation’ is generally
not an ‘open book to which the agency [may] add pages and change the plot line.” In
their concurring opinion, Justices Gorsuch and Alito added that the Major Questions
Doctrine “applies when an agency claims the power to resolve a matter of great
‘political significance.’” We believe there is not better current example of “Great
political significance” that the economywide regulation of data. As noted, data is
critical to the basic business decisions of all American companies, and it is clear a
national privacy rule would have major economic and political consequences.

California’s first set of privacy regulations alone was estimated to cost companies a
total of $55 billion in compliance costs.4 A national privacy rule would have a much
larger effect. A comprehensive privacy regulation would likely run afoul of the Major
Questions Doctrine because Congress has not specifically authorized a nationwide
data protection rule.

• A Privacy Rule Would Further a Burdensome National Privacy Patchwork. A
comprehensive privacy and algorithmic rule would complicate the existing patchwork
of state privacy laws. Because the FTC’s authorities under Section 5 likely would not
be preemptive, a new national rule would add a new layer of regulation that would
further confuse consumers and make compliance even more difficult for companies,
particularly small businesses. A new national layer of regulation to a state patchwork
would disproportionately impact small businesses as they would not have the same
resources for compliance as larger firms According to a report by ITI, a 50-state
patchwork of laws could cost the economy one trillion dollars over ten years, with
small businesses alone taking a $200 billion hit.5

• The FTC Gives the Public No Meaningful Notice and its ANPR amounts to a
Fishing Expedition. The FTC’s notice of proposed rulemaking asks 95 questions to
the public starting with effectively how all business are using data and how that
harms consumers. The FTC is on a fishing expedition and not meeting the FTC’s
statutory requirements to provide the public meaningful notice of what it plans to
regulate. We agree with former Commissioner Noah Phillips that “[t]his scattershot
approach creates two obvious problems: stakeholders cannot discern how to engage
meaningfully and provide comment, and the lack of focus for their comments will
give the Commission a corollary ability to proceed in any direction it chooses.”6 We
also share the same concerns of Commissioner Christine Wilson that “the ANPRM
wanders far afield of areas for which we have clear evidence of a widespread pattern
of unfair or deceptive practices.”7

Given the importance of providing certainty for both consumers and business, the many
deficiencies with the Commission’s advanced notice of rulemaking, and the need for Congress to
clearly authorize an economywide data protection standard, we urge the Commission to halt its
rulemaking and work to help pass national privacy legislation.

Sincerely,

American Consumer Institute for Citizen Research
American Escrow Association
Association of Test Publishers
Citizens Against Government Waste
Consumer Data Industry Association
Insights Association
Interactive Advertising Bureau
National Business Coalition on E-Commerce & Privacy
Privacy for America
R Street Institute
Real Estate Services Providers Council
Small Business & Entrepreneurship Council
Taxpayers Protection Alliance
U.S. Chamber of Commerce

1 https://www.iab.com/news/study-finds-internet-economy-grew-seven-times-faster/

2 https://www.pwc.com/gx/en/issues/analytics/assets/pwc-ai-analysis-sizing-the-prize-report.pdf

3 https://americaninnovators.com/wp-content/uploads/2022/08/Empowering-Small-Business-The-Impact-of-Technology-on-U.S.-Small-Business.pdf

4 https://www.cnbc.com/2019/10/05/california-consumer-privacy-act-ccpa-could-cost-companies-55-billion.html

5 https://itif.org/publications/2022/01/24/50-state-patchwork-privacy-laws-could-cost-1-trillion-more-singlefederal/

6 https://www.ftc.gov/system/files/ftc_gov/pdf/Commissioner%20Phillips%20Dissent%20to%20Commercial%20Sur
veillance%20ANPR%2008112022.pdf

7 https://www.ftc.gov/system/files/ftc_gov/pdf/Commissioner%20Wilson%20Dissent%20ANPRM%20FINAL%2008112022.pdf