FCC privacy rules veer off course in eleventh hour

For most of this year, the FCC has been working on new broadband privacy rules for the internet.  The agency has heard from thousands of experts, stakeholders, and members of the public, weighing difficult issues such as how to give consumers meaningful control over personal data without degrading their online experience or grinding the internet to a halt. 

Most of the work is complete, and while it is unlikely that the final rules will satisfy everyone, the agency is scheduled to vote this Thursday, Oct. 27.


However, this week brought an unfortunate development.  According to a recent column in Time Magazine by FCC Commissioner Mignon Clyburn and Sen. Al FrankenAlan (Al) Stuart FrankenHarrison seen as front-runner to take over DNC at crucial moment The Hill's Morning Report - Presented by the UAE Embassy in Washington, DC - Trump, Biden clash over transition holdup, pandemic plans The Hill's Morning Report - Fearing defeat, Trump claims 'illegal' ballots MORE (D-Minn.), an issue that has nothing to do with protecting consumer privacy has been thrown into the mix: a controversial call to change the rules governing consumer arbitration agreements. 

Slipping a major restriction on arbitration agreements into the privacy rules on their way out the door would be a mistake. 

Most important, Sen. Franken and Commissioner Clyburn’s column ignores a significant reality: the FCC does not have the legal authority to enact a restriction on mandatory arbitration agreements.  Therefore, including this provision likely will bog down consumer privacy protections in the courts and deny consumers the privacy benefits that the FCC seeks to achieve.

The Federal Arbitration Act establishes a clear congressional preference for arbitration, and the Supreme Court has held repeatedly that federal agencies and state legislatures cannot override this fundamental mandate without an explicit “contrary congressional command” to do so.

In the rare case where Congress has passed a specific statute overriding the default pro-arbitration policy in the Federal Arbitration Act, some agencies have been given the power to restrict arbitration in limited ways.  But Congress has passed no such statute authorizing the FCC to do so.

Adding this dead-on-arrival arbitration provision at the eleventh hour is certain to provoke court challenges and put the entire broadband privacy proceeding at risk.

This is particularly troubling because class action lawyers, not consumers, will be the real beneficiaries of this legally-suspect gambit.  Class-action lawyers are able to lump consumers into giant cases that generate massive legal fees, often benefitting the lawyers more than helping individual consumers find actual solutions to their problems in a timely manner.  In contrast, research has shown that consumers who take their disputes to arbitration are more likely to prevail, typically reach resolution in half the time, and, when they succeed, recover on average more than 10 times the amount that their fellow consumers recover in class actions.

Legislation regarding arbitration is currently pending before Congress.  And as the Supreme Court has made clear, the proper venue for changes to arbitration law is the Congress.   The FCC cannot – and shouldn’t try to – claim these congressional powers for itself, and in the process, jeopardize the important progress it has recently made on consumer privacy. 

Nancy Libin, a partner at the law firm Jenner & Block, is the former Chief Privacy Officer of the U.S. Department of Justice, Senate Judiciary Committee Counsel to then-Senator Joe BidenJoe BidenConfirmation hearing for Biden's DNI pick postponed Biden's Sunday inauguration rehearsal postponed due to security concerns: report Murkowski says it would be 'appropriate' to bar Trump from holding office again MORE, and Counsel at the Center for Democracy & Technology.

The views expressed by authors are their own and not the views of The Hill.