Getting a grip on consumer protection

David Vladeck first used a BlackBerry four months ago when he assumed his new post at the Federal Trade Commission (FTC).
Now he’s taking on advertising scammers who target mobile device users with a growing number of ads.
It’s part of a steep technology learning curve for the agency’s new director of consumer protection, who is also tackling scams that target in-debt and out-of-work consumers — the most vulnerable to fraud during the recession — and strengthening the FTC’s role in policing online data collection.
The consumer protection bureau has jurisdiction over the advertising industry, enforcing laws against false claims, fraud and other dishonest practices. Vladeck takes the helm as lawmakers are becoming more interested in regulating the online advertising industry and limiting the amount of personal data Internet companies can collect for commercial purposes.
“Our concern is the responsibilities for safeguarding data may be more diffuse,” Vladeck said in an interview with The Hill. “Whose job is it to protect this data?”
Big Internet firms including Google, Facebook and Microsoft say they already disclose what data they collect and why, and that they have plenty of incentive to protect their users’ data. The Interactive Advertising Bureau put out a set of self-regulatory guidelines for the industry.
Vladeck has had meetings with nearly every e-commerce and online advertising firm, but he’s not convinced enough safeguards are in place. He’s hosting a series of town hall meetings on the subject starting in December.
“Everyone is very worried about imposing rules that will get in the way of a viable industry,” he said. “We don’t want to be a speed bump that clogs up the information superhighway. But we are worried that privacy may be getting shortchanged.”
Before coming to the FTC, Vladeck, 57, was co-director of Georgetown Law Center’s Institute for Public Representation, a program for civil liberties, free speech and open government. Previously, as director of the Public Citizen Litigation Group, he argued a number of First Amendment and civil rights cases before the Supreme Court, and more than 60 cases before federal and state appellate courts.
So far, the bureau has focused on scams directed at the economically vulnerable with the proliferation of fake debt-reduction and mortgage-rescue ads. Vladeck is also going after misleading advertising campaigns for dietary supplements and food ads directed at kids. For example, the bureau earlier this year took action against Kellogg’s for falsely claiming its Frosted Flakes cereal will make kids 20 percent more attentive.
Vladeck is now turning his attention to matters of digital privacy — a new area for him, and one that is becoming increasingly complex. Advertising on cell phones is one of the first issues he wants to address.
“The problems are in part spurred by the complications of using old frameworks for new handsets,” he said. “Companies want to know when you’re standing in line at Burger King, but consumers can hardly read the fine print about the privacy policy on their BlackBerry. Is that type of notice and consent right for these technologies?”
Mobile advertising and the extent to which marketers can exploit consumer location information tracked by cell phone GPS systems have been looked at by the FTC over the past two years. But the agency was criticized under the George W. Bush administration for not coming up with firm standards and guidelines.
Public interest groups were also frustrated the FTC did not take stronger enforcement action against predatory lending practices and rising credit card fees.
“The Consumer Protection Division has been an intellectual laggard for years,” said Jeffrey Chester, executive director for the Center for Digital Democracy. “There’s an institutional timidity that’s been built into the FTC. Some of its career staff isn’t well-connected to the new media and challenges of the digital age.”
While Vladeck is no technology expert, Chester calls him “one of the leading public interest consumer experts in the country.” Vladeck has tried to bring the FTC’s privacy and advertising experts together, Chester said. “The door is open there to have a very serious, informed discussion that hasn’t been there for many years.”
In February, the FTC released a report on self-regulatory principles for online behavioral advertising, or tracking consumers’ habits on the Web and using that data to serve them ads relevant to their interests. For example, the FTC staff proposed that websites where data is collected for behavioral advertising should provide prominent notice to consumers and give them the ability to choose whether to allow that data collection and use.
Congress is also stepping into the online advertising arena. Rep. Rick Boucher (D-Va.), chairman of the House Commerce Committee’s Subcommittee on Communications, Technology and the Internet, is drafting a bill that would impose broader rules on websites and advertisers to give consumers more control over their information.
He is working with Rep. Cliff Stearns (Fla.), the top Republican on the subcommittee, and Rep. Bobby Rush (D-Ill.), chairman of the House Subcommittee on Commerce, Trade and Consumer Protection.
“My observation is that David has an extensive command of consumer protection laws and is a trusted adviser to the FTC commissioners, two attributes that should serve the FTC well,” Rush told The Hill.
Unlike the Federal Communications Commission, which is continuously drafting rules for the telecom industry, the FTC is more of an enforcement agency. The FTC’s guidelines for Internet firms and marketers would likely have more weight if Congress passed laws to back them up.
“The FTC has long wanted to examine its authority and expand that authority,” said Mike Zaneis, vice president for public policy for Interactive Advertising Bureau. “I think the staff is still trying to determine what their priorities are, but one thing is certain — he’ll be an aggressive enforcer.”
Vladeck and his staff are also closely watching “spyware” applications, which are often invisible to consumers but can track their every move online, including financial information and passwords, and could lead to identity theft. In June, Sears settled federal charges after it was found to be using spyware to collect sensitive information from visitors to and without telling consumers. As part of the settlement, Sears was forced to destroy all the information collected.
Some companies, including Facebook, would like the FTC to take the lead in policing data collection by third-party applications. Facebook alone has more than 350,000 applications developed by outside software developers.
Vladeck did not say whether that is something the bureau would consider. He did say the FTC often takes its lead from consumer complaints, of which the agency received 1.2 million last year.
“We use complaints every day to look for trends,” he said, but noted that he also relies on companies to tell him what they are doing. “We’d like to get a better handle on what the next generation of technology is.”
Meanwhile, Vladeck is still getting comfortable with his first BlackBerry.
“You know, when I first started practicing law, we were using typewriters,” he said. “Now I can’t go a few minutes without checking e-mail.”