Over the last three years, leadership at the Federal Trade Commission has prioritized high-profile cases to stay in the news and give the impression that they are helping consumers. However, this media-first strategy has meant ignoring the real, continuing harms perpetrated by scammers, grifters and swindlers who continuously devise ways to steal from vulnerable American consumers, especially the elderly and less financially sophisticated.
This misguided focus on “swinging for the fences” and courting flattering media attention has come at the expense of the FTC’s core mission to protect consumers.
Suppressing the schemes of cheats and fraudsters has long been one of the FTC’s primary missions. However, a quick review of the agency’s recent Annual Performance Report for 2023 shows this mission is not getting the attention it deserves, as a troubling trend of rising abuses ranging from identity theft to investment scams reveals.
Fraud, identity theft, and similar complaints to the FTC hit 5.4 million in 2023, up from 5.3 million in 2022 and 3.5 million in 2019. Reported fraud losses reached its highest level of $10 billion, $1 billion higher than in 2022. Investment scams alone cost consumers $4.6 billion in 2023, more than double that of 2021 when Lina Khan joined the FTC.
A catchall category of business-related abuses, including problems with credit bureaus, lenders and debt collectors, has also soared, becoming the second-biggest class of consumer complaints at 1.5 million in 2023. The biggest single category of complaints, identity theft schemes, which often target older Americans, resulted in $43 billion in losses in 2023 — a figure 13 percent higher than the previous year, according to AARP.
The data show that online scams and complaints have spiked under Khan’s tenure. Yet, the FTC’s efforts in combating these bread-and-butter consumer protection issues seem inadequate. The agency collected $617 million for victims in 2023, down from $640 million the year before; collaboration with state/local authorities — who are closer to the facts on the ground — also fell sharply in 2023 to 292 from 541 the year before. The agency’s alerts and warnings are also down, especially during tax season when identity theft soars. In addition, the number of page views of the FTC’s educational publications was down in 2023, as was the number of consumer protection reports the agency produces.
Khan recently testified before the House Appropriations Committee to address the increase in scams and frauds, requesting a 37 percent increase for the FTC’s 2024 fiscal year budget. She spoke about hiring more staff to bolster its enforcement and consumer protection tools, acknowledging “no doubt that we are not fully and faithfully going after all of the law violations.”
Days after that hearing, it was announced that Khan had hired a new speechwriter and had begun a slew of prominent keynote addresses and media appearances. By my count, she’s given more speeches in 2024 than she did in all of 2023. In addition to “The Daily Show,” she’s also appeared on ABC’s “This Week” and “CBS Sunday Morning,” among others. Kahn is spending more resources protecting her public image than addressing the genuine issues facing consumers.
The FTC’s proposed ban on “junk fees” appears to be an attempt to distract from its shortcomings through unnecessary rulemaking efforts. While these supplementary charges can be viewed as a nuisance, a closer examination reveals they often provide valuable benefits to consumers. The Cato Institute’s analysis explains how these fees can help keep base prices down by offsetting the costs of providing goods and services and letting consumers customize their purchases.
Additionally, revenue from junk fees is frequently used to fund essential customer services and innovations that ultimately benefit the public. Research highlights the benefits of the unbundled method and how separate charges for different fees — such as security, bags, seats and taxes on an airline ticket — better explain to consumers precisely what they are being charged. If all fees are bundled into one price, the ambiguity makes it easier for businesses to continuously raise individual fees over time, ultimately increasing the overall cost to the consumer.
If customers do not need to check extra bags nor have a seating preference, should they all be forced to pay the higher bundled price? Allowing consumers to customize their purchases will save them money.Bundling fees will also make bills less transparent. For example, look at your phone bill and notice that most junk fees are government taxes, surcharges and universal service fees. Mandating price bundling will hide the degree of “government greed” in your broadband, cable, wireless and telephone bills. Maybe the government does not want consumers to know that the government is the primary source of these so-called junk fees.
The FTC would be better served focusing its time and other resources on addressing the increasing prevalence of frauds and scams rather than pursuing unnecessary regulatory actions in a thriving, competitive market.
Consumers have a right to know how the FTC fulfills its mandate to combat common scams and protect the public from fraudulent practices. However, the FTC has increasingly diverted its attention and funding away from its core consumer protection mission. The agency has focused on high-profile initiatives that lack a clear congressional directive or demonstrated consumer benefit.
The agency needs to recommit itself to rooting out fraud, safeguarding vulnerable populations, and ensuring a fair and honest marketplace for all. By refocusing its efforts on this critical consumer protection mandate, the FTC can better serve the public good and uphold its trust as a bulwark against deception.