The Information Technology and Innovation Foundation submitted comments in response to the Federal Trade Commission’s (FTC) request for public comment on the consent agreement of “Nomi Technologies, Inc.” that settled alleged violations of federal law prohibiting unfair or deceptive acts or practices. ITIF argues that by taking this case, the FTC discourages the type of consumer-friendly innovation that it should be encouraging.
The FTC can use its regulatory authority to encourage consumer-friendly innovations, but only if it exercises discretion in when it chooses to take action. In particular, the FTC should focus its resources on cases where there is direct and tangible consumer harm so that companies prioritize internal actions that prevent consumer harm. By bringing action against a company that made a fairly insignificant mistake where there was no evidence of consumer harm, the FTC is signaling to companies that they should direct limited resources away from other innovations and toward corporate lawyers. The result is a net loss for consumers.