The new head of the Bureau of Consumer Protection for the Federal Trade Commission (FTC), Andrew Smith, was confirmed this week along a party-line vote despite acknowledgment that he’ll have to recuse himself from participating in major investigations into Facebook and Equifax—both of which are the subjects of FTC scrutiny for mishandling user data.
Smith will need to stay on the sidelines for the investigations because he’s been representing those and other companies as an industry lawyer for the past decade. His client list also included Uber and other bank lenders, credit-reporting agencies, and tech companies. In 2012, he helped defend the payday lender AMG Services against FTC charges that it deceived consumers and illegally charged undisclosed and inflated fees—AMG Services eventually had to pay a record $1.3 billion settlement and its owner was sent to prison for charging interest rates as high as 1,000 percent on loans.
“It’s outrageous the FTC would pick the lawyer for a criminally convicted racketeer’s payday loan company as consumer protection chief,” Massachusetts Senator Elizabeth Warren told the New York Times. “The agency should pick someone with a track record of protecting consumers, not companies that cheat people.”
The consumer protection unit serves as a watchdog for the FTC, and its mission is to stop “unfair, deceptive, and fraudulent business practices,” per the agency’s website. Aside from the AMG case, it has recently investigated a timeshare resale company, smart TVs with software that tracked viewing data without owners’ consent or knowledge, and the misleading marketing claims of companies selling health products. In the years leading up to Trump University’s $25 million class action settlement, dozens of its students had filed complaints with the FTC.
The administration’s efforts to defang federal agencies that protect Americans in favor of corporate interests have been wide-ranging: The EPA has rolled back car emissions standards and even limited the scientific studies that can be used in rule-making; enforcement actions at the Consumer Financial Protection Bureau have completely dropped off; the Labor Department has delayed implementing a rule that requires financial advisers to put their clients’ interests first; and the Department of Education has been dismissing civil rights complaints and has basically disbanded the team investigating for-profit college abuses.
So why wouldn’t the FTC’s consumer protection efforts be led by a person who argued on behalf of the credit reporting agencies at a congressional hearing about the Equifax breach last year? In that testimony—convened after Equifax was found to have leaked personal information of more than 145 million people—Smith said he did not think credit reporting agencies should have a legal obligation to act in the best interests of consumers.
In the early 2000s, Smith worked as a lawyer for the FTC and helped draft regulations on credit reports and identity theft. After entering private practice, his intimate knowledge of the commission’s laws and processes must have been helpful in defending clients against enforcement actions. It will be a surprise if his allegiances switch back to the interests of the consumers he’s being assigned to protect.