FTC Testifies at Senate Oversight Hearing on Proposed Reauthorization

In testimony presented to the U.S. Senate Subcommittee on Consumer Affairs, Foreign Commerce and Tourism today, the five Commissioners of the Federal Trade Commission detailed the agency's recent accomplishments in its core law enforcement areas of competition and consumer protection, and reiterated their strong support for congressional reauthorization of the agency.

"Since our last reauthorization hearing in 1996, the FTC has continued to protect American consumers in dynamic domestic and world marketplaces," the Commission* said in its prepared statement. "The FTC is the only federal agency with both consumer protection and competition jurisdiction over broad sectors of the economy. Our national experience demonstrates that competition among producers and accurate information in the hands of consumers yields products at the lowest prices, spurs innovation, and strengthens the economy." According to the testimony, Congress has charged the FTC with maintaining a free and fair marketplace by, among other things, protecting American consumers and businesses from unfair methods of competition and unfair or deceptive acts or practices.

Stressing that "first and foremost, the FTC is a law enforcement agency," the Commission's testimony called the agency "well situated to study and respond to a changing marketplace, and to champion consumer interests in a dynamic setting." Citing the Commission's investigatory power, it called the agency a resource for Congress as well, with the limited regulatory power to address specific, widespread problems, often in response to express Congressional mandates. "[FTC] is a small agency," it stated, "but one with a record of achievement for American consumers."

The testimony next cited recent agency accomplishments, including:

• Saving consumers an estimated $1.6 billion in fiscal year 1999 through law enforcement actions brought in FTC's consumer protection and competition missions, achieving a consumer savings of $14 for every $1 spent on the agency;

• Protecting consumers and business from anticompetitive mergers before they occur by reviewing the increasing number of transactions filed under the Hart-Scott-Rodino provisions of the Clayton Act (reported transactions under this Act tripled from 1991 to 1999, with an accompanying 11-fold increase in the total value of the transactions - reaching $1.9 trillion in 1999);

• Targeting more than three-quarters of the agency's antitrust resources in FY99 to four sectors of the economy - energy and natural resources, information and technology, health care and pharmaceuticals, and consumer goods and services - thereby focusing on industries with major financial benefits for consumers;

• Fighting fraud on the Internet, beginning in 1994, by bringing more than 100 enforcement actions targeting 300 corporate and individual defendants, and leading to the collection of more than $20 million in consumer redress payments, court orders freezing another $65 million, and the cessation of schemes with annual estimated sales of over $250 million;

• Working to ensure consumers can register complaints and seek FTC information, through the operation of a toll-free phone line to the Consumer Response Center (1-877-FTC-HELP) and the maintenance of Consumer Sentinel -- a secure database developed by the Commission that now allows information sharing with 220 law enforcement agencies in the United States and Canada. This database currently contains more than 225,000 entries;

• Safeguarding consumer privacy by implementing the Children's Online Privacy Protection Act and bolstering industry self regulation through educational efforts; and

• Educating consumers and businesses about their rights and responsibilities -- and alerting them to potential fraud -- by distributing 8.6 million educational publications each year, both in print and through the Commission's Web site.

The testimony detailed the growth of the agency's responsibilities over the past five years stating that to continue to effectively meet its consumer protection and competition mandates, significant additional resources will be required. It pointed specifically to two major areas - "the explosive growth of the Internet and the dramatic increase in corporate mergers" - as primary reasons the agency will need additional resources in the future.

With 123 million Americans now on the Internet, and annual online purchasing expected to grow from $20 billion in 1999 to $184 billion in 2004, there is an increasing need to develop new Internet-related policies and fight cyberfraud - two areas in which the Commission already has significant experience, the Commission said. On the competition side, mergers are larger and more complex than ever, requiring more detailed analysis, and therefore increased staff commitments, to determine whether they raise anticompetitive concerns, according to the Commission.

Further, according to the testimony, the Commission is now involved in other initiatives that are straining its resources. These include, but are not limited to, a major study currently being conducted on the marketing of violent entertainment materials to children and the creation of an identity theft database, an issue about which FTC is scheduled to testify later this month. "The FTC has been both innovative and aggressive in meeting its expanding responsibilities," the Commission said of these new efforts.

"We reorganized and streamlined our workforce...we have prioritized our cases...we have leveraged our efforts through cooperative arrangements with the states and the private sector to obtain the greatest benefit for each dollar spent. Nevertheless, the growing demands of the marketplace are exceeding the FTC's ability at current resource levels to maintain its missions adequately. We need additional staff and funds to do the work effectively." An increase in the FTC's resources, according to the Commission, "would be a sound investment, reaping abundant dividends for American consumers and business."

The Commission vote to approve the testimony and submit a prepared copy for the record was 5-0.

*In addition to Chairman Robert Pitofsky, members of the Commission testifying at today's hearing included Sheila F. Anthony, Mozelle W. Thompson, Orson Swindle, and Thomas Leary.

 The testimony mentioned in this release, along with the release itself, is available from the FTC's web site at http://www.ftc.gov and also from the FTC's Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580; 877-FTC-HELP (877-382-4357); TDD for the hearing impaired 1-866-653-4261. To find out the latest news as it is announced, call the FTC NewsPhone recording at 202-326-2710.