Nomi Enforcement will Not Improve Consumer Welfare

Nomi Enforcement will Not Improve Consumer Welfare

Lenard Files Comments with FTC on Nomi Consent Agreement

Contact: Amy Smorodin
(202) 828-4405

May 26, 2015 – “From a public policy perspective, the goal of the FTC’s enforcement actions should be to maximize net social benefits,” explains Thomas Lenard, Technology Policy Institute President and Senior Fellow, in comments filed today with the Federal Trade Commission. “In the case of Nomi Technologies, the Commission failed to show that its Consent Agreement will yield any net benefits. Indeed, it is questionable whether the Agreement will yield any benefits at all.”

At issue in the Nomi Consent Agreement is a statement in their privacy policy, since removed, that claimed a consumer could opt-out of its analytics services at retail establishments, which was not correct. Nomi did, however, make an opt-out option available through its website. Nomi wasn’t legally required to offer either the global or the in-store op-out.

Lenard cites the dissents of Commissioners Ohlhausen and Wright to indicate if there were harms associated with Nomi’s misrepresentation they were likely to be small. Nomi’s online opt-out mechanism was easy to use and available, and the Commission did “not provide any evidence showing that the opt-out rate would have been appreciably higher and that, as a consequence, consumers were harmed by the lack of the in-store option.” He observes, “Since benefits consist of the reduction of harms, in order to have benefits there must be harms that can be reduced.”

Lenard concludes that “the Commission should provide evidence that its enforcement actions yield positive net benefits” rather than punishing a company going “above and beyond” its legal obligation.

The comments are available on the TPI website.

The Technology Policy Institute

The Technology Policy Institute is a non-profit research and educational organization that focuses on the economics of innovation, technological change, and related regulation in the United States and around the world. More information is available at https://techpolicyinstitute.org/.

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