Amicus Brief of ICLE & TEchfreedom, LabMD Inc., v. Federal Trade Commission, 11th Circuit

48 Pages Posted: 24 Jun 2019

See all articles by Geoffrey A. Manne

Geoffrey A. Manne

International Center for Law & Economics (ICLE)

Kristian Stout

International Center for Law & Economics (ICLE)

Date Written: January 3, 2017

Abstract

The touchstone for Section 5 actions is not “reasonableness,” but consumer welfare: Does this enforcement action deter a preventable “unfair” act or practice that, on net, harms consumer welfare, and do the benefits to consumers from this action outweigh its costs? Section 5’s purpose is neither fundamentally remedial nor prescriptive. Concern for consumer welfare means deterring bad conduct, avoiding over-deterrence of pro-consumer conduct, minimizing compliance costs, and minimizing administrative costs (by focusing only on substantial harms) — not preventing every possible harm. Instead of weighing such factors carefully, or even performing a proper analysis of negligence, as it purports to do, the Commission has effectively created a strict liability standard unmoored from Section 5.

Across the Commission’s purported guidance on data security, it has likewise failed to articulate a standard by which companies themselves should weigh costs and benefits to determine which risks are sufficiently foreseeable that they can be mitigated cost-effectively. Thus, in addition to violating the intent of Congress, the FTC has also violated the Constitution by failing to provide companies like LabMD with “fair notice” of the agency’s interpretation of what Section 5 requires.

Keywords: Consumer Protection, Cybersecurity, Data Security, FTC, FTC Act Section 5, FTC Reform, LabMD, Privacy

Suggested Citation

Manne, Geoffrey and Stout, Kristian, Amicus Brief of ICLE & TEchfreedom, LabMD Inc., v. Federal Trade Commission, 11th Circuit (January 3, 2017). Available at SSRN: https://ssrn.com/abstract=3405717 or http://dx.doi.org/10.2139/ssrn.3405717

Geoffrey Manne (Contact Author)

International Center for Law & Economics (ICLE) ( email )

2117 NE Oregon St.
Suite 501
Portland, OR 97232
United States
503-770-0076 (Phone)

HOME PAGE: http://www.laweconcenter.org

Kristian Stout

International Center for Law & Economics (ICLE) ( email )

2117 NE Oregon St.
Ste 501
Portland, OR Oregon 97232
United States
5037700076 (Phone)
5037700076 (Fax)

HOME PAGE: http://www.laweconcenter.org

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