Some items on our site have recently moved. Visit our News Hub for selected articles, special reports, podcasts and other resources.
Confident and upbeat, Smith reflects on leading Bureau of Consumer Protection
14 December 2020 00:00
Andrew Smith is confident the Federal Trade Commission is in a better place today than when he arrived more than two years ago. As head of the agency’s Bureau of Consumer Protection, Smith ticked off major accomplishments, praised the dedicated staff and voiced optimism about what lies ahead in a wide-sweeping interview with FTCWatch.
He pointed to high productivity, historic monetary penalties and redress to consumers as well as an all-hands-on-deck approach to combating the onslaught of rip-off artists promoting fake cures and other scams amid the coronavirus pandemic.
Smith’s success as director has come after dealing with the controversy his appointment provoked. The agency’s five members typically rubber-stamp the chairman’s selections for the three bureau director posts, but the two Democratic commissioners, Rohit Chopra and Rebecca Slaughter, opposed Smith because of concerns that he would have to recuse himself from some high-profile matters.
Smith’s law practice at Covington & Burling included representing some major companies with business before the FTC, including Facebook and Equifax, that would require him to step aside from cases in which they were involved. “Our quarterback will be spending too much time on the sidelines,” Chopra wrote.
Chairman Joe Simons expressed disappointment at the Democrats’ position and called Smith “widely respected as one of our country’s best and most experienced consumer protection lawyers.”
Smith noted in the interview that the agency’s deep bench of senior staffers ensured that it didn’t miss a beat on cases from which he was recused. “It frustrated me, and it hampered me, personally, but it didn’t change the outcomes at all with the agency,” he commented. “The commission soldiered on without the input from Smith. It smarts … but it didn’t have any effect on the effectiveness of the agency, which is good.”
After assuming his post, Smith was at an advantage. He knew the agency well from an earlier tour, serving as an assistant to a previous bureau director, J. Howard Beales, and as a staff attorney, leading the agency’s efforts to make several rules under the Fair Credit Reporting Act.
Following our interview, Smith sent an e-mail in which he, once again, expressed special pride in the bureau’s battle to protect consumers from the risks arising from the pandemic. “All eight headquarters and all eight regional offices have achieved major accomplishments responding to the challenges presented by the pandemic,” he said. “In my 20-year association with the FTC, I have never seen such a broad and sustained effort by BCP in the service of a single goal.”
Edited excerpts from our interview follow.
FTCWatch: How has your relationship with Chairman Simons been?
Smith: It couldn’t have been better. It’s hard for me to imagine being more in sync with someone than I am with Joe. His mantra has been vigorous enforcement. And that’s what we have been doing, and I think he has been delighted with the work that we have been able to do. It would be tough to not have a good relationship with the chair. Either you have to be on the same page, or you have to be willing to be on the chairman’s page, really. That’s the bottom line. The chairman is driving the bus and so you have to get with the program. I have had no problem being with Joe’s program. The opportunity to work with Joe has been a real highlight of the last two-and-a-half years. He’s an antitrust lawyer, obviously, and a darn good one, and he would probably tell you he’s a little new to consumer protection, but he has just an unbelievable gut. He gets things instantly and just cuts right to the chase and knows exactly what the right answer is.
FTCWatch: Has the Democratic commissioners’ opposition to your appointment made it tougher to work with them?
Smith: I thought that their statements weren’t unreasonable. I mean there are these recusal rules, and they are unforgiving. I did abide by them. So, their statements were fair. It didn’t affect my ability to deal with them at all. It’s been a fairly collaborative relationship. They have disagreed with a couple of things that we have done, but the Republicans have disagreed with a couple of things we have done as well. One of the things that we have been trying to do is to stay right down the middle, as we — the chairman and I — view it. We have been tough on liability. We have some novel theories of liability like our case against Avant [an online company that settled charges that it engaged in deceptive loan servicing] or the VoIP [Voice over Internet Protocol] services providers case. We are doing some things that have never been done before. We have been tough on the relief. We have gotten more money than we have ever gotten before — both penalty money as well as equitable monetary relief. We’re naming more individuals in cases. We’ve beefed up the injunctive relief that we get. If we had wanted to be pushovers, we wouldn’t have done any of that.
FTCWatch: But some critics, including the Democratic commissioners, have criticized BCP for being too eager to settle cases and reluctant to litigate. Is there anything to that charge?
Smith: No. At any given time we have probably 60 cases in open litigation, hot litigation. Litigation is a steady part of our diet. We are not afraid to litigate with anybody. Having said that, litigation is slow, and litigation does tend to be labor-intensive even though we staff cases pretty leanly. Litigating [requires] a couple of FTEs, full-time equivalents, over a couple of years. So, you’re looking at justice delayed for consumers. Depending on who the defendant is, they are chewing up their money defending this case rather than just paying it into a fund that you can use for consumers. And with those few FTEs that you have devoted to that case, you are losing many investigations. I figure that one staff attorney can probably conduct two to three investigations in the course of a year. You take two FTEs and put them on litigation for three years and you are losing between 12 and 18 investigations over that time and potential relief for consumers. So there are costs to litigation. We present a credible threat of litigation in every investigation that we bring. That has to be the case. We are not afraid to litigate with anybody — we can’t be; we are the government. We also have to be stewards of public resources. We want to bring a lot of investigations. It wouldn’t really help anybody if all we did all day was litigate.
FTCWatch: Another recurring criticism, including from Commissioner Chopra, is that the FTC doesn’t get companies to admit liability as part of settlements.
Smith: This is an issue that commissions and commissioners have dealt with a lot over the years. Maybe the next commission will make a different cut. But admissions of liability are very hard to get, and you frequently have to litigate for them. You have to ask yourself how much it moves the needle for consumers, particularly where you are looking at a settlement that is very good, where you will get injunctive relief and a decent amount of money for consumers. Is it really worth it to litigate over the admission, which a plaintiff’s lawyer might be able to [use to] prove his or her case more easily? Does that really help consumers? I suspect that this issue about admissions isn’t going away.
FTCWatch: Next month, the AMG Capital Management case is to be argued before the Supreme Court that will decide whether Section 13(b) of the FTC Act authorizes the agency to seek restitution as well as injunctive relief. How big a deal is it?
Smith: Well, it is really important. Obviously, we are paying a lot of attention to it. [But] the only thing that is at issue is the ability to get equitable monetary relief under 13(b). There is no question about our ability to get injunctions, and depending on the type of case we’re talking about, getting an injunction can be much more important than getting equitable monetary relief. Look at some of the cases that we have brought against more substantial companies to halt bad practices — like the AT&T case where they were throttling people. We got substantial money [but] what’s more important is the injunction. AT&T touches a lot of consumers’ lives and so getting that injunction is critically important.
We do have a variety of rules and statutes that allow us to get money. Coppa [Children’s Online Privacy Protection Act] is one of those and the TSR, Telemarketing Sales Rule. We have other civil penalty authority — like the Fair Credit Reporting Act. Also, of course, we have companies already under order.
FTCWatch: But despite that other authority, isn’t AMG a high-stakes case?
Smith: Oh yeah. I don’t want to understate the importance of it, but I do want to say that we have other tricks up our sleeve. A lot of our cases are not premised on our ability to get money under 13(b). So, it is a very important case but were there to be an unfavorable decision for the FTC, that doesn’t put us out of business by a longshot.
FTCWatch: The comment period for Coppa ended about a year ago and nothing has happened. What’s the status?
Smith: Well, it’s complicated. I do think that there are amendments and clarifications that need to be made, but that’s hard to do in a transition. Whatever you do, it’s going to be a bit of a lightning rod, and you definitely want to make sure that you have a full complement of permanent commissioners — you know who the chairman is going to be. We got almost 180,000 comments that we had to read. It would have been very difficult to do anything before the fall, and in early fall, you are in the political season. You want to make sure that you get it right, and that you can go the distance, too. You have to not only propose changes but make them final, too. That is a heavy lift.
FTCWatch: You’ve said the bureau is in a better spot today than when you arrived. How so?
Smith: The institution has been improved through new theories of liability, new avenues for relief, new resources — improved complaint intake, improved redress programs, improved research. For example, we have recently brought on board marketing professionals who are not lawyers, not economists, not accountants — which is what you would normally see at BCP. They are mid-career professionals in the digital marketing industry who are assisting us with investigating cases and strategic planning about where digital marketing might be going, and what the potential risks to consumers are. Our redesign of the complaint intake process is something that probably doesn’t get a lot of fanfare but has been very successful. It has [resulted in] increasing the numbers of consumers who are reporting fraud online, which not only reduces our costs but also improves the quality of our data pretty dramatically.
FTCWatch: How long will you remain in this job? What will you do next?
Smith: So, on the how long I am here, that’s a tough one to answer. I take my lead from the chairman. I have enjoyed being here. This has been a good experience. And if someone needed me to hold down the fort until President Biden was able to appoint the folks he wanted to appoint, then I would consider doing that because I think it is important for the institution. What am I going to do next? I don’t know.
No results found