Andrew Smith was recently named Director of the FTC’s Bureau of Consumer Protection. With a strong background in financial matters, businesses can expect Smith to focus on issues affecting consumer financial services.
Smith is not a stranger to federal positions. Although most recently a Partner in the Regulatory and Public Policy Group at Covington & Burling LLP and Co-Chair of the firm’s Financial Services Group, Smith previously held roles as Senior Counsel and Acting Assistant General Counsel at the SEC from 1997 to 2000 and as the Assistant to the Director of the Bureau of Consumer Protection from 2001 to 2005. During Smith’s time at the FTC, he focused largely on consumer financial protection policy—mainly through enforcement and rulemaking. For example, while serving as the program manager for the Fair and Accurate Credit Transactions Act of 2003, Smith helped to draft ten rules and six studies.
Smith’s interest in financial services has followed him throughout his career. His practice at Covington focused specifically on financial privacy—including regulatory compliance, consumer financial services laws, and enforcement actions and investigations. He also serves as the Chair of the ABA’s Consumer Financial Services Committee.
Notably, in January of this year, Smith testified before the House of Representatives Subcommittee on Financial Institutions and Consumer Credit about fintech policy. His statements suggest that he is in favor of an increased role of fintech in the banking industry, although he proposes passing legislation that clarifies the role of banks as lenders, regardless of the vendor or service provider. Further indications of Smith’s interest in the fintech space come from an editorial he authored in The Hill in February of this year. He advocates collaboration between fintech and banks to offer the middle class more financial options, e.g., point-of-sale lending. In Smith’s words, “the future of banking is the internet, and brick-and-mortar is the past.” His piece supports the Modernizing Borrower Credit Opportunities Act of 2017, a bipartisan bill to regulate the fintech industry introduced in November of 2017.
Another indication of Smith’s likely priorities as Bureau Director may be the people he worked with during his prior stint at the FTC. For example, he worked closely with Howard Beales who served as the Director of the Bureau of Consumer Protection from 2001 to 2004. Regarding advertising specifically, Beales advocates for a flexible “reasonable basis” standard for substantiation requirements, as opposed to more stringent evidentiary standards. This position favors the view that consumers benefit from having access to information. Having served with Beales, Smith may take a similar approach to substantiation requirements as Director.
Despite Smith’s previous experience, however, his appointment has not been without controversy. While at Covington, Smith represented Facebook, Uber, and Equifax in both investigations and FTC settlements regarding data breaches. Although Smith plans to recuse himself from these high profile cases in his new role, opponents have noted that Smith’s representation of these companies may put him at odds with the FTC’s consumer protection mission. Senator Richard Blumenthal stated that he could “imagine worse choices [for Bureau Director], but not many,” noting that Smith was “on the wrong side of [the] issues” in his testimony on behalf of Equifax last fall. During that testimony, Smith indicated that credit bureaus should not have a fiduciary duty to consumers from whom they collect data, and that current industry regulations were satisfactory to protect consumers. Senator Elizabeth Warren called Smith’s appointment “corruption, plain and simple,” referring to him as “Equifax’s hired gun.” Further, David Vladeck, who was Bureau Director from 2009 to 2012, noted that Smith’s recusing himself from some of the agency’s most important cases is an unusual position for someone in his role and wondered “how far-reaching the recusals will be.”
The FTC’s newly-appointed Democratic Commissioners had similar concerns, turning a usually perfunctory vote into a point of contention. Rebecca Slaughter noted that appointing a Director “who is barred from leading on data privacy and security matters that affect so many consumers, command so much public attention, and implicate such key areas of the law potentially undermines the public’s confidence in the commission’s ability to fulfill its mission.” Rohit Chopra, a fellow Democrat, agreed, noting that Smith’s conflicts “[raise] many questions,” and would put Smith “on the sidelines” in some of the agency’s most important cases. He also noted that FTC Chairman Joe Simons made the pick without a Commission meeting. Simons, however, called the appointment a “source of unnecessary controversy,” indicating that “it is impossible to attract high caliber professionals to the FTC without encountering some conflicts,” and noting that the agency can readily handle recusals.
Although we may have some insight into Smith’s new role as Director, his position on consumer protection issues outside of the financial industry, and the effects of his recusals, are left to be seen. We can expect, however, that helping to regulate fintech, and other financial security issues, will likely be high on his list of things to do.