The Federal Trade Commission (FTC) was conceived as a pro-business agency, but over time it has strayed from that ideal. Current FTC Chair Andrew Ferguson has the opportunity to promote change at the agency. One way to do that is by shortening the length of FTC consent orders to ten years. The current practice of binding businesses to 20 year or indefinite consent orders is unduly burdensome on businesses, out of step with the length of other agencies’ practices, and hinders innovation. It would be a good idea for Chair Ferguson’s FTC to shorten the length of FTC consent orders to ten years or less.
When a business under investigation by the FTC chooses to settle instead of litigate, it can sign a consent order with the FTC without admitting liability. Such consent orders can be entered administratively by the FTC or judicially by federal courts. Administrative consent orders generally bind a business for 20 years, while judicial consent orders bind a company forever. Consent orders typically contain injunctive provisions requiring a business to do or not do certain things, “fencing in” relief that regulates conduct different but related to the conduct at issue in the investigation, monetary provisions, and ancillary relief that has historically included things like customer notice and recordkeeping provisions but today often requires things like third-party compliance monitoring.
In a piece titled FTC Consumer Protection Orders: The Case for a New Sunset Policy published in the Washington Legal Foundation, John Villafranco and Andrea deLorimier identified why the FTC’s consent orders should not last 20 years or more.
They are argue that first, 20 year or indefinite consent orders unduly burden a business’s financial and operational resources. Many consent orders require a business to submit to intensive compliance audits and/or third party monitoring, both of which can ultimately cost a business tens of millions of dollars and hundreds of operational hours. These resources would otherwise go toward competing in the marketplace and creating processes and products that benefit consumers.
The authors also point out that FTC consent orders are far longer than the consent orders of other federal agencies with a consumer protection mandate. For example, Federal Communications Commission (FCC) orders generally last three years, while Consumer Financial Protection Bureau (CFBP) orders generally last five years. The FTC’s twenty year—or perpetual—orders are stark outliers, which suggests that they are longer than is necessary to serve their stated purpose.
Third, the authors argue that FTC orders have the effect of hindering innovation and binding companies to antiquated ideologies and technologies. For example, the authors note that many orders were drafted before e-commerce became largely digital and before data minimization was valued—such orders thus may require certain notices to be sent via first-class mail and the retention of consumer data for longer than is necessary for a business’s operational purposes. When businesses are anchored to technologies and ideologies of the past, they are unable to innovate effectively, harming both competition and consumers.
For these reasons, the authors argue that consent decrees, both federal and administrative, should be limited to ten years.
Importantly, shortening the term of FTC consent decrees is consistent with the Trump Administration’s push for deregulation. The White House announced on January 31, 2025 that “overregulation stops American entrepreneurship, crushes small business, reduces consumer choice, discourages innovation, and infringes on the liberties of American citizens.” In line with this view, Andrew Ferguson’s FTC should shorten the length of FTC consent orders. Doing so would not only shave off decades of unnecessary regulatory oversight, but it would also promote the FTC mission of protecting consumers and the marketplace without unduly burdening legitimate business activity.
This reform idea is a good one, because it will impose some common sense to regulation while not burdening businesses in a way that does not forward the cause of protecting consumers while promoting fair competition in the marketplace.
