The Senate Commerce Committee’s recent oversight hearing on the Federal Trade Commission raised a question worth answering: Does the agency need sweeping new rules to protect consumers or does the enforcement of existing laws accomplish that job? The answer is the latter, and the agency’s own track record proves it.
President Trump has made clear that restoring economic growth, strengthening private enterprise, and boosting the confidence of entrepreneurs are central priorities of his Administration. Achieving those goals requires federal agencies to ensure that their regulatory agendas support, not undermine, that mission.
To their credit, the FTC has not yet published various Biden-era proposals left pending when President Trump took office. Still, some of those proposals remain on the FTC’s regulatory agenda, meaning they are active, and the agency may decide to move them forward.
That would be a mistake.
For example, proposed regulations in question include new restrictions on earnings claims advertising and a significant expansion of the agency’s existing Business Opportunity Rule. If implemented, the proposals could restrict and undermine small businesses. An outcome that runs counter to the President’s rational-regulation agenda being successfully implemented across other federal department and agencies, thus providing the certainty entrepreneurs need to invest, hire, and grow their firms.
In his Executive Order “Ensuring Lawful Governance and Implementing the President’s Department of Government Efficiency Deregulatory Initiative,” President Trump communicated that federal agencies should prioritize eliminating unnecessary regulations and restoring constitutional limits on administrative power. The order directs agencies to identify and rescind regulations and proposals that undermine the national interest, including those that “impose undue burdens on small business and impede private enterprise and entrepreneurship.” Pursuing new rulemaking in areas already governed by existing law runs counter to that order.
The FTC has acknowledged that deceptive and misleading claims are already illegal under existing law, and has long possessed strong enforcement tools to pursue bad actors. Moreover, it has demonstrated its willingness to use that authority effectively.
Creating new layers of regulation that duplicate existing legal protections does not improve consumer protection. It complicates the mission – and the outcomes - and can impose costly, complex, and unnecessary compliance requirements on businesses that are already operating within the law. Duplicative regulations drive up compliance costs for businesses, and those costs are routinely passed on to consumers in the form of higher prices and less innovation. Piling new rules on top of existing ones does not make consumers safer; it makes goods and services more expensive.
The Biden-era Earnings Claims rulemaking currently on the FTC’s regulatory agenda is a case in point. Of course, the prevention of deception is a worthy endeavor. But the FTC already has the tools and authority to act. The super-charged proposal would impose extensive documentation and recordkeeping requirements on businesses that communicate legitimate income opportunities. Entrepreneurs offering training programs, franchise opportunities, or direct-selling ventures could face new administrative obligations and legal liabilities, not because they are deceptive. They will be forced to comply with expensive, time-consuming, and one-size-fits-all documentation and tracking requirements to “prove” claims.
The expansion of the Biden-era Business Opportunity Rule raises similar concerns. By significantly widening the scope of regulated activity, it would pull a broad range of business models into an expanded federal compliance framework. Real estate brokerages, insurance agencies, financial services providers, and other firms offering sales support tools could suddenly face new disclosure mandates and compliance costs that ultimately land on consumers, disproportionately burden small businesses, and undermine entrepreneurship.
Members of Congress have raised concerns, and rightly so.
The proposals represent a significant expansion of federal oversight into areas where existing fraud enforcement tools are already in place. Moreover, these efforts would add a layer on top of existing state laws.
Effective consumer protection does not require piles of blanket regulations that burden legitimate enterprises. Instead, the FTC should focus on enforcing existing law against bad actors and help to preserve the flexibility and space that entrepreneurs need to innovate, compete, and grow.
The FTC is doing good work enforcing existing consumer protection laws. Enforcement works. Reviving Biden-era rulemakings that duplicate protections already on the books will pile complexity and burdens onto small businesses, and ultimately raise prices for consumers and undermine the competition and opportunity President Trump’s agenda is aiming to foster.
Karen Kerrigan is the President of the Small Business and Entrepreneurship Council.
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