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1.3.3.1.3 Courts’ failure to give deference to FTC regulations

Unfortunately, the FTC’s previous history of being restricted from issuing formal regulations may have led some courts to fail to give due deference to its current rules. For example, in a 2008 decision, the Seventh Circuit somewhat inexplicably stated that the FTC’s prescreening notice regulations apply only to the FTC’s enforcement actions, and not to private litigation.87 The Seventh Circuit incorrectly cited the Act’s provision granting the FTC general enforcement power,88 which does not set forth the FTC’s rulemaking authority. The Seventh Circuit appeared to overlook the provision added by the 2003 FACTA amendments that had specifically granted the FTC rulemaking authority regarding the prescreening notice (prior to the Dodd-Frank Act).89

Similarly, a federal district court in dicta referred to the FTC regulation establishing appropriate proof of identity as an “interpretative rule” and questioned whether it could give rise to a private cause of action,90 despite FACTA’s clear grant of formal rulemaking authority.91

However, in another case involving a challenge to the FTC’s interpretation of its risk-based pricing notice regulations,92 a federal district court held that the FTC’s interpretation was entitled to the level of deference established by the Supreme Court’s decision in Chevron, U.S.A., Inc. v. Natural Resources Defense Council.93

In remains to be seen whether the CFPB’s interpretations will be accorded a similar level of “Chevron” deference.94

Footnotes

  • 87 {87} Murray v. New Cingular Wireless Serv., Inc., 523 F.3d 719, 725 (7th Cir. 2008). Nonetheless, the court recognized the regulations’ content as being “a useful guidepost” and measured the challenged notice against their standards. Id.

  • 88 {88} 15 U.S.C. § 1681s(a)(1).

  • 89 {89} 15 U.S.C. § 1681m(d)(2) (providing that the prescreening notice “be presented in such form and in such type size and manner . . . as established by the Commission, by rule”).

  • 90 {90} Holmes v. Telecheck Int’l, 556 F. Supp. 2d 819, 2008 WL 118064, at *20 (M.D. Tenn. Jan. 10, 2008).

  • 91 {91} Pub. L. No. 108-159, § 112(b) (2003) (“[t]he Commission shall prescribe regulations to define what constitutes appropriate proof of identity”).

  • 92 {92} The interpretation was contained in the supplementary information to an amendment to the risk-based pricing notice regulation. 76 Fed. Reg. 41,602, 41,606 (July 15, 2011).

  • 93 {93} Nat’l Auto. Dealers Ass’n v. Fed. Trade Comm’n, 864 F. Supp. 2d 65 (D.D.C. 2012). See Chevron, U.S.A., Inc. v. Natural Res. Defense Council, 467 U.S. 837, 104 S. Ct. 2778, 81 L. Ed. 2d 694 (1984).

  • 94 {94} Cf. Pedro v. Equifax, Inc., 186 F. Supp. 3d 1364 (N.D. Ga. 2016) (deferring to CFPB regulation (albeit under the Equal Credit Opportunity Act, not the FCRA) in holding that it was not objectively unreasonable for CRA to list authorized user information on consumer reports).