FTC Act Section 5 Unfairness Balancing Test
The Federal Trade Commission (FTC) uses its authority under Section 5 of the FTC Act to enforce against unfair and deceptive practices in consumer privacy. Section 5(n) provides the standard for finding that a practice is unfair: 1) the practice causes or is likely to cause substantial injury to consumers, 2) the injury is not reasonably avoidable by the consumers themselves, and 3) the injury is not outweighed by countervailing benefits to consumers or competition. As Professor Neil Richards explains, the unfairness balancing test may be too onerous to capture the types of manipulative practices that companies regularly employ to collect more consumer data and increase engagement, practices he believes are abusive. He discusses how Section 5(n) falls short and makes the case for broadening the FTC’s authority to regulate unfair and deceptive practices.
