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Budget Cuts to the Federal Trade Commission Will Hurt Kids and Consumers [1]

['July']

Date: 2023-12

By Irene Ly | July 13, 2023

As Congress continues its effort to pass data privacy and online safety legislation, one federal agency has been consistently and steadily doing the hard work to protect consumers, including kids: the Federal Trade Commission (FTC). Despite being the primary agency charged with keeping consumers safe from online harms caused by the biggest tech companies in the world, the FTC is consistently underfunded and understaffed.

Now, it looks like the U.S. House of Representatives might make the problem worse by cutting the agency's funding for next year. Consumers will pay a big price if Congress cuts the FTC's budget.

The FTC is hardly a household name, but it looks out for the public interest by enforcing actions against big companies that violate a wide range of consumer protection and antitrust laws. For example, since July 2018, the commission has returned $12.2 billion to consumers who have been victims of fraud and identity theft. With better funding, it could be even more successful.

One of the FTC's biggest challenges is its responsibility to hold large tech companies accountable. Consider the following example of its important work.

Last May, the commission rang the alarm bell over educational technology (edtech) companies forcing parents and schools to turn over kids' personal data. The FTC said that the federal law the companies were violating, the Children's Online Privacy Protection Act (COPPA), is a "critical tool in the FTC's toolbox," and that the agency intends to use it rigorously even as Congress considers updates needed for the 25-year-old statute.

Since then, the commission has announced the resolution of several notable enforcement actions:

In May, consistent with its policy statement, the commission issued its first order prohibiting an edtech provider, Edmodo, from requiring students to provide more personal data than necessary to participate in online activities. That same month, the commission issued a proposed order that would require Amazon to pay $25 million and delete the children's data, geolocation data, and other voice recordings that its Alexa-enabled devices collected and retained in violation of COPPA.

In June, the commission announced that Microsoft would pay a $20 million fine for collecting personal information from children who signed up for its Xbox gaming system without first getting their parents' consent—which is a violation of COPPA—and illegally retaining children's personal information.

And the commission proposed changes to its 2020 privacy order for Facebook, now Meta, that would prohibit it from monetizing data of all minor users under the age of 18.

Common Sense Media, along with many groups we work with, has called on Congress to increase the agency's funding. This spring, we urged Congress to appropriate $590 million for the fiscal year that begins this October, a 37% increase to address chronic underfunding and help level the playing field against tech companies' army of high-paid private sector attorneys and lobbyists.

Despite the FTC's key role in looking out for average Americans and their kids, and the demonstrated success it can have when given the opportunity, the Republican-controlled House Appropriations Committee approved only $376 million for the commission in its fiscal 2024 appropriations bill, a 13% cut from this year's $430 million budget. In contrast, the Senate Appropriations Committee approved an appropriations bill today that provides the FTC with the same budget as it received this year. The House's approved budget will further undermine the FTC's ability to stand up for everyday people against Big Tech and other companies that break the law. This cut should be reversed.

Not only is the FTC underfunded compared to the size of the companies it regulates, the U.S. also lags behind international partners when it comes to resources for enforcing tech laws.

In the United Kingdom, for example, with a population of just 67.3 million people, there are two agencies dedicated solely to regulation and consumer protection in the tech industry. Ofcom, the UK communications agency that regulates the telecom and internet sectors specifically, has over 1,000 full-time employees. More than 300 employees are dedicated to online safety, and Ofcom continues to invest in hiring to implement and enforce its online safety rules, such as the Online Safety Bill that lawmakers are seeking to pass this year. Additionally, the Information Commissioner's Office (ICO), the UK's independent data protection regulator that enforces the Data Protection Act 2018 and the Age-Appropriate Design Code, has more than 500 employees, with 200 staff hired upon passage of the Data Protection Act.

In comparison, the FTC, representing a population of almost 332 million people and charged with enforcing more than 80 consumer protection and antitrust laws across virtually every sector, has a total staff of 1,119 full-time employees. Both Ofcom and ICO's biggest staff-hiring waves followed the passage of new legislation, to ensure they were sufficiently staffed up to fulfill their new enforcement obligations. At a time when Congress, on a bipartisan basis, is seriously weighing crucial online privacy and social media platform safety legislation, it should commit more, not less, funding to the FTC.

Because of its already insufficient budget, the commission has enacted pay and hiring freezes, and may need to bring fewer and less expensive cases. Cutting the FTC's budget further will just make things worse. The FTC is the enforcer on the beat when it comes to protecting children and families from tech and other companies that choose to break the law and fight against needed reforms. And the agency clearly needs more resources to meet these important challenges. Congress should not work to strengthen data privacy and platform safety laws with one hand but weaken the agency that will enforce these laws with the other.

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[1] Url: https://www.commonsensemedia.org/kids-action/articles/budget-cuts-to-the-federal-trade-commission-will-hurt-kids-and-consumers

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