Monday Wake Up Call – Rule of Law Edition

While America celebrated the Labor Day weekend, we overlooked an extremely important decision by a three-judge panel of the US Court of Appeals for the Ninth Circuit.

Last week, they issued a sweeping decision in the Federal Trade Commission v ATT, that drastically restricts the Federal Trade Commission’s (FTC) consumer protection authority over companies that offer “common carrier” services (e.g., telephone services, mobile data, and internet services) whether or not these services comprise their core business. Moreover, since no other federal agency has the necessary scope of regulatory authority over this area, if this decision stands, significant activities of such companies would become largely unregulated.

As the WaPo reports:

The ruling could wind up giving Google and Facebook — not to mention other companies across the United States — the ability to escape all consumer-protection actions from the FTC, and possibly from the rest of government, too, critics claim, unless Congress intervenes.

A little history: The FTC had brought an action against ATT over the adequacy of the company’s consumer disclosures regarding its data throttling plan, by which ATT intentionally reduced the data speed of customers to whom it had sold unlimited mobile data plans:

In 2007, ATT became Apple’s sole wireless provider for iPhone.
In 2011, ATT began reducing the speed at which unlimited data plan users received data on their smartphones.
Under ATTs data throttling program, unlimited data plan customers were throttled for the remainder of a billing cycle once their data usage during that cycle exceeded a certain threshold.

So the FTC filed suit against ATT. The FTC’s argument was that ATT was not providing an “unlimited” service, which is what subscribers thought they were buying. After signing up the initial subscribers, ATT changed to tiered plans, under different contracts. And ATT neglected to inform the original customers – the ones who thought they’d purchased an unlimited plan – that they weren’t getting what they paid for.

But the FTC lost. To understand the complicated legal issues and why the FTC lost, you can read all about it here.

The implications are huge. The decision means that any company that creates or purchases either a phone company or an internet service provider (ISP) can escape federal consumer protection regulations entirely. This is particularly important for individual privacy and security matters, since the FTC currently is trying to impose comprehensive privacy and data security regulations on ISPs, and this decision may hamper that effort. After all, big data has been collecting for years now and there is so much data on millions, if not billions of people, the population are starting to understand the risks of their data security with many big companies.

The court decided that the FTC lacks authority to regulate common carriers. So, no matter how egregious the company’s conduct– even for false, deceptive, misleading practices, the FTC would be unable to do anything about it. Nor, at the moment, can any other federal agency.

The ATT case concerned regulation of advertising. But, since the court’s decision rejected outright the FTC’s claim to be able to regulate any activities of companies deemed to be common carriers, it is not limited to deceptive advertising alone. Facebook and Google already gorge themselves on your personal data and the decision prevents the FTC, the agency that has a track record of regulating privacy issues, from exercising any oversight of these activities (provided that Facebook and Google make the appropriate acquisitions or otherwise position themselves to qualify as common carriers).

So it’s time to wake up America! The steady erosion of your privacy and consumer protection rights continues under the flag of “the rule of law”. In the REAL world, the wealthy and powerful are often above the law. The Wall Street banking cartels committed mortgage fraud, foreclosure fraud, and securities fraud. They laundered money for terrorists and drug cartels. They rigged interest rates. Aside from stockholders paying token fines, no human was prosecuted for these massive, organized criminal activities.

Let’s groove to “I Fought the Law”, written in 1958 by Sonny Curtis of the Crickets, and later popularized by the Bobby Fuller Four who had a top-ten hit with it in 1966. It was also recorded by the Clash in 1977, and Green Day in 2004. In 1989, during the US invasion of Panama, the US military blasted loud rock music—including the Clash’s version of “I Fought the Law“, to pressure Manuel Noriega to surrender.

The guitar riff in this Bobby Fuller version sounds positively Hollyesque: