Industry Lawyer Expected to Head FTC Consumer Protection

Posted May 11, 2018 8:39 p.m. EDT

WASHINGTON — The Federal Trade Commission is expected to appoint an industry lawyer who has represented Facebook, Uber and Equifax to lead the agency’s consumer protection bureau tasked with policing those companies.

The lawyer, Andrew M. Smith, would recuse himself from any potential investigations or enforcement involving dozens of companies he has worked for over the past two years while at Covington & Burling in Washington, including many banks, lenders, credit-reporting agencies and technology companies, according to two people familiar with his proposed appointment but were not authorized to speak publicly.

Those recusals would force Smith to step aside from his bureau’s most prominent investigations: the investigations into incidents at Facebook and Equifax that leaked the personal data of tens of millions of people. He also would not be involved in enforcing an FTC settlement with Uber over a data breach.

Joseph J. Simons, the FTC’s chairman, has put Smith’s appointment up for a vote, causing debate among the five commissioners, one person close to the FTC said. Such appointments are typically perfunctory votes. Four of the commissioners, including Simons, were sworn in this month. Simons and the two other Republican commissioners are expected to approve Smith’s appointment, the person said.

Sen. Richard Blumenthal, D-Conn., the ranking member of the Senate’s consumer protection subcommittee, said in an interview that regardless of his recusals, Smith has the wrong résumé to run the nation’s top consumer protection office.

“It isn’t the specific clients. It’s the culture and mindset that’s important. He’s on the wrong side of these issues,” Blumenthal said. “I can imagine worse choices, but not many.”

Blumenthal said Smith’s appointment was particularly concerning given that, for a congressional hearing on the Equifax breach last fall, the trade group representing credit reporting agencies chose Smith to testify on behalf of the industry.

In that testimony, Smith said he did not think credit bureaus should have a fiduciary duty to consumers whose data they collect, and that current regulations on the industry were sufficient.

David Vladeck, head of the consumer protection bureau from 2009 to 2012, said some recusals were common for FTC officials, but it is unusual for an official to have to step aside from his office’s most important cases.

“There’s no question about his qualifications. The question is, Covington has a very large practice in many of the fields where the bureau is supposed to be the principal law enforcer, including financial regulation, privacy and data security,” said Vladeck, who now teaches law at Georgetown University. “So there are legitimate questions to ask about how far-reaching the recusals will be.”

Vladeck added that the Facebook and Equifax cases were “two extremely important investigations and both of them will be precedent-setting.”

The FTC confirmed in March that it was investigating whether Facebook violated a consent decree it signed in 2011 after the regulator concluded Facebook routinely shared its users’ data without permission.

The decree required the company to give users more control over their data and assess other potential privacy risks. In recent months, Facebook has said the political data firm Cambridge Analytica improperly harvested the public profile data of up to 87 million of its users.

The FTC is also investigating Equifax, one of the three major consumer credit reporting agencies, after it revealed last year that hackers had gained access to company data that potentially compromised personal data about 143 million Americans.

Vladeck said he did not have any recusals when he was tapped to lead the bureau, but that was unusual. He said the bureau’s acting director, Thomas Pahl, had recused himself from the Equifax investigation because of past legal work for the company.

Terrell McSweeny, a former FTC commissioner who stepped down last month, said that although the number of Smith’s recusals seemed atypical, she was confident the bureau would be able to effectively investigate Facebook, Equifax and others, in part because there are able staff members at work on those cases. “The FTC is a strong institution,” she said.