The Federal Trade Commission (FTC) on Thursday followed through with its promise to appeal a court ruling in its throttling case against AT&T, arguing the judgement as it stands would create a critical loophole in consumer protection enforcement.
In its filing with the Ninth Circuit Court of Appeals, the FTC said the court’s August decision to dismiss its lawsuit against AT&T set a precedent that would create an “enforcement gap” and leave millions of consumers defenseless against “unfair or deceptive practices,” Bloomberg and the Chicago Tribune reported.
At the heart of the case is a complaint filed by the FTC in 2014 accusing AT&T of failing to adequately disclose its data throttling practices to consumers.
The FTC said AT&T’s practice was barred under section 5 of the FTC Act, but the carrier contended it was exempt from liability under that provision due to its status as a “common carrier.” AT&T filed a motion to dismiss the lawsuit, which was denied by the district court before being granted by a three-judge panel of the appeals court in August.
The loophole the FTC is worried about comes from AT&T’s definition of how a “common carrier” is classified.
Leading up to the appeals court’s August decision, AT&T argued its common carrier status under section 5 covers even non-common carrier activity. But the FTC said common carrier status should be an activity-based exemption that applies only to common carrier activities.
Critics like the FTC say that in upholding AT&T’s argument that the common carrier designation is status-based, the court has created a blind spot where neither the FTC nor the FCC has enforcement powers to address violations. The FTC said Google is among the companies that could benefit from this gap due to its Google Fiber business.
“The FCC’s authority over common carriers is limited to the provision of services for or in connection with common carriage,” FTC Chairwoman Edith Ramirez said last month in comments delivered to the Senate Commerce Committee. “If common carriers are providing non-common carrier products or services, one outcome might be that neither the FCC nor the FTC would have jurisdiction to respond to practices that harm consumers. And even in cases where the FCC can respond, it lacks authority to seek consumer redress.”
Filed Under: Industry regulations + certifications