After seeing the overwhelmingly jubilant attitude of the community in the wake of Butterfly Labs being shut down, I thought it would be good to examine how effective the FTC is in doing its job of "Protecting America's Consumers". Perhaps it will shed some light where it really belongs - not on a company that may or may not be scamming customers, but on a regulatory agency that provides very little protection, enforcement, or benefit, at great cost to the consumer.
According to the FTC's website, in 2013 there were just over 2.1 million complaints filed against companies. These 2.1 million complains led to 79 consumer protection actions filed, 137 consumer protection orders obtained, and 24 antitrust enforcement actions.
In other words, the FTC filed action once for every 25,000 complaints received, or obtained an order just once for every 15,000 complaints. In the case of Butterfly Labs, action was filed after less than 400 complaints filed, or less than .0002 of all complaints filed in 2013. Clearly, either consumer complaints are not a good indicator of action that should be or is taken, or there is some other reason for action after so few (relative) complaints. Unfortunately I didn't have actual data showing the the companies actions were taken against and how many complaints were filed against them, so we can't be sure if this is an anomaly or average.
The FTC proudly boasts that, in 2013, "767,744 consumers received redress totaling over $23.27 million." Doing some simple division shows that on average, consumers received about $30.00 as a result of FTC's action.
The department had an estimated 2013 budget of $300 million. If, instead of operating, the FTC were shut down and every person that filed a complaint had been given a proportional share of the budget, the result would be that each person filing a complaint would have received over $140, or almost 5x the money they actually received as a result of the FTC's actions. If only those who were given redress were paid, that number would almost triple, to $390.
Even if Butterfly Labs is/was a scam, it would seem pretty evident that the FTC does very little to stop scams, and very little to help people recover from them financially. It costs 13x more to operate than it pays back to consumers.
Even though it may seem like a win for Bitcoin that action was taken, it serves only to perpetuate dependence on the state as a way of life. It sets a dangerous precedent - similar to the BitLicense proposal - that Bitcoin companies will be treated more harshly than other companies, and that action will be taken against them faster than with others. The community screams and whines at the suggestions from New York, yet cheer for this action taken from Washington. Let's not forget that BFL
was shipping and issuing refunds. Until the FTC stepped in.
https://www.youtube.com/watch?v=xhYJS80MgYAall numbers taken from:
http://www.ftc.gov/system/files/attachments/stats-data-2013/statsdata2013.pdf or other FTC documents on their site.
