This week, Republican leaders in both chambers of Congress began an investigation into whether Federal Trade Commission (FTC) Chair Lina Khan violated the Hatch Act and FTC ethics rules. A joint letter sent by House Judiciary Committee Chairman Jim Jordan (R-Ohio) and Senator Mike Lee (R-Utah), the Ranking Member on the Senate Judiciary Committee’s Subcommittee on Competition Policy, Antitrust, and Consumer Rights, focuses on Chair Khan’s recent appearances at all-but explicit campaign events with Democratic candidates for Congress ahead of the 2024 election. While Rep. Jordan and Sen. Lee’s letter is timely and prudent oversight of specific, recent actions by Chair Khan, it’s important that this investigation exists in the context of all that came before it. That is a Democratic FTC majority under the Biden administration and Chair Khan that has routinely skirted and outright tossed-aside the “independent” agency’s rules and norms to serve partisan ends—and continues to do so right up until the very end.
Almost four years ago, Lina Khan was confirmed by the Senate as an FTC commissioner, only for the White House to abruptly designate her as Chair as soon as the vote closed. The move conferred an immense amount of power to the green academic and progressive ideologue while circumnavigating the usual vetting the Senate would afford a presumptive chair nominee versus other commissioners.
Under Khan’s leadership, the FTC has pursued radical policies and unorthodox cases designed to consolidate its power and bully Congress into granting it even more. As a result, taxpayers have funded expensive goose chases leading to consistent rebuke by federal courts while staff morale has plummeted. In turn, merger and acquisition activity has also plummeted. Rep. Jordan and Sen. Lee rightly touch on much of this in their letter. This most recent politicization of the consumer protection agency is unfortunately not an isolated incident but a sub-pattern of the radical tenure of Chair Khan.
As the 2024 election draws near, change may be coming to the FTC even if Democrats retain control of the White House. Yet before the clock strikes midnight, it seems Chair Khan has moved heaven and earth to both lock in the Biden agenda, curry political favor with Vice President and Democratic nominee Kamala Harris, and incidentally turn the economy into a pumpkin. Some of the strongest evidence of this comes from a strong dissent from Republican FTC Commissioner Melissa Holyoak.
The FTC recently finalized its Negative Option Rule. The rule is nominally targeted at things such as automatic subscription and membership renewals that occur if consumers do not specifically request a cancellation. Whether or not a negative option is a good thing is inherently subjective. Some may like to be routinely reminded and asked if they’d like to keep paying for a service such as Netflix or their gym, while others may consider such notices to be annoying and unnecessary. Regardless, the breadth and ambiguity of the final rule, despite not explicitly banning negative options, have Commissioner Holyoak concerned that “businesses may avoid using negative option billing models, even when businesses and consumers could derive significant value from them.” The result may be a creeping cookies notification-ication of the economy, where consumers are increasingly bombarded with permission pop-ups and emails.
On top of the policy perversions, Commissioner Holyoak lays out compelling evidence of continued increasing politicization of the agency, not just in the Chair’s campaign trail appearances but in its administrative actions as well. Holyoak summarizes the procedural shenanigans in her dissent: “Among other things, the Commission revised the Rules of Practice so as to remove selection of the Presiding Officer from an independent judge and assign that role to the Chair; strip the Presiding Officer of significant control over the hearing process; and narrow opportunities for the public to help determine which factual issues are in dispute… political leadership now speeds to the finish line with minimal opportunity for Commissioner engagement on the final Rule.”
The reason for the rush job on the rule seems painfully clear to Commissioner Holyoak. She explains, “[T]his rush to the finish line (and less than a month from a Presidential election) is no surprise. This Rule is connected to the current administration’s efforts relating to so-called junk fees (which are beginning to make a regular appearance before elections), and it has been in the spotlight for some time, including at the White House and now on the campaign trail.”
It seems that Holyoak’s concerns about the political angle here were not unfounded as Harris has repeatedly boasted about the rule on X.
Lawmakers such as Rep. Jordan and Sen. Lee are right to be concerned with Chair Khan’s campaign trailblazing. That said, it’s critical for conservative lawmakers to recognize that the FTC’s politicization over the past four years runs much deeper, eroding critical norms to ensure the agency is focused on protecting consumers versus the incumbent party.