FTC Commissioner discusses federal privacy legislation

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On September 21, 2021, U.S. Federal Trade Commissioner Christine Wilson provided keynote remarks at the Duke University Sanford School of Public Policy’s Robert R. Wilson Distinguished Lecture Series regarding some of the major issues lawmakers must confront to pass federal privacy legislation. Commissioner Wilson, a Trump-appointee, argued that comprehensive federal privacy legislation is the right approach because there is an information asymmetry between consumers and businesses that results in a market failure and because federal legislation will create a more consistent legal landscape for businesses.

“The bottom line is that federal privacy legislation is long overdue. But two key gating issues must be resolved before privacy legislation becomes a reality,” she said. She then provided a detailed and enlightening analysis of these issues: preemption and private right of action.

Preemption is the legal doctrine that federal legislation may overrule state legislation. Preemption typically takes one of two forms. With “subject matter” preemption, the federal government has exclusive legal power to legislate on the subject. With “conflict preemption,” federal and state law can coexist, but where it conflicts federal law will control. In practice this usually means that federal law establishes a legal “floor,” but states may pass more stringent legislation.

Commissioner Wilson noted that subject matter preemption is rare and has many detractors. She also noted that federal legislation could quickly result in out dated laws if Congress does not act to update the law as technology develops, and that states often serve as “laboratories of democracy” when they regulate in areas. However, technology, like other infrastructure-heavy fields like transportation, are particularly sensitive to inconsistent laws. As a result, she argues that subject matter preemption is appropriate here, because establishing a consistent legal landscape for business should be a top goal of any legislation.

Commissioner Wilson also discussed whether federal law should include a private right of action. She started by addressing the most common reason given for allowing individual consumers the opportunity to bring civil suits to enforce laws: the fact that enforcing agencies are often underfunded. She noted that recent Congressional legislation proposes to fund the FTC by an additional $1 billion to focus on data breaches and privacy.

She then moved on to arguments against private rights of action. She notes that studies show that these provisions often lead to strategic class actions that significantly increase the cost of doing business without producing measurable improvements in compliance. However, she does not conclude that federal legislation should not include a private right of action, instead highlighting nuanced approaches that allow for limited suits for specific harms.

Overall, the talk is an illuminating glimpse into the current debate regarding federal privacy legislation. As one of the most recent Republican appointees to the Commission, Commissioner Wilson has special insight into the issues that Republican legislators are likely to weigh. However, her talk also indicates that discussion of new federal privacy legislation remains conceptual, and that we are still likely several years away from a comprehensive bill.