Reform Needed in Federal Trade Commission Settlements

The Federal Trade Commission (FTC), originally designed to support business-friendly policies, has gradually shifted away from that founding principle. Current FTC Chair Andrew Ferguson has an opportunity to guide the agency toward meaningful reform.

One proposed change is to reduce the duration of FTC consent orders to a maximum of ten years. At present, businesses can be bound by consent orders for 20 years or indefinitely, a practice that places heavy demands on companies, exceeds the norms of other federal agencies, and can limit innovation.

When a company facing FTC scrutiny opts to settle rather than contest allegations in court, it may agree to a consent order without admitting wrongdoing. These orders can be issued administratively by the FTC or through federal courts. Administrative consent orders typically last 20 years, while judicial orders can be permanent.

Consent orders usually include:

• Injunctive provisions requiring or prohibiting certain actions
• Fencing in provisions regulating related conduct
• Monetary requirements
• Ancillary provisions such as customer notifications, recordkeeping, and increasingly, third-party compliance monitoring

In a Washington Legal Foundation article, John Villafranco and Andrea deLorimier explained why 20-year or longer consent orders are excessive. They highlight that these extended terms place heavy financial and operational burdens on companies, as many orders mandate extensive audits or third-party monitoring, often costing tens of millions of dollars and hundreds of hours of work. These resources could otherwise support innovation and consumer-benefiting products.

The authors also note that FTC orders are unusually long compared with other federal agencies with consumer protection roles. For instance, Federal Communications Commission (FCC) orders generally last three years, and Consumer Financial Protection Bureau (CFPB) orders five years. FTC consent orders, lasting 20 years or longer, are significant outliers.

Extended orders can also stifle innovation. Many older orders were drafted before the rise of digital commerce and modern data minimization practices. Consequently, they may require outdated practices such as sending notices via postal mail or retaining consumer data longer than necessary, forcing companies to adhere to antiquated technologies and policies, which can harm competition and consumers.

For these reasons, it is argued that both administrative and judicial consent orders should be capped at ten years.

Shortening FTC consent order terms aligns with broader deregulatory goals. According to a White House statement from January 31, 2025, overregulation can stifle entrepreneurship, burden small businesses, limit consumer choice, and restrict innovation. By reducing the duration of consent orders, Chair Fergusons FTC could eliminate decades of unnecessary regulatory oversight while still protecting consumers and promoting fair competition.

This reform introduces practical, common-sense limits to regulation without imposing excessive constraints on legitimate business activity, balancing the interests of consumers and market innovation.

Author: Ava Mitchell