Federal Trade Commission Testifies Before Senate in Support of Reauthorization Request for Fiscal Years 2003 to 2005

Presenting Federal Trade Commission reauthorization testimony today before the U.S. Senate Subcommittee on Consumer Affairs, Foreign Commerce and Tourism of the Commerce Committee, Chairman Timothy J. Muris said that as the only federal agency with both consumer protection and competition responsibilities, the FTC is "a small agency, but one with a large mission," whose work is "critical in protecting and strengthening free and open markets in the United States and, increasingly, the world."

In addition to the testimony presented by the Chairman, each of the FTC's four other Commissioners provided an oral statement on a subject related to current agency activities. Commissioner Sheila Anthony testified on the need to eliminate the FTC Act's exemption for communications common carriers; Commissioner Mozelle Thompson testified on international consumer protection efforts; Commissioner Orson Swindle testified on the importance of enhancing consumer security through the development of a "Culture of Security"; and Commissioner Thomas B. Leary testified on education through consumer and business outreach initiatives and workshops.

The Commission's testimony noted that "the FTC has shouldered an ever-increasing workload as the economy becomes more global and more high-tech." These broad responsibilities "have been met with only modest increases in resources." The testimony then highlighted recent Commission activities, including:

• Enhancing consumer privacy and security through 22 cases brought on issues ranging from "pretexting" to children's privacy and unsolicited e-mail, or "spam";
• Recovering as much as $60 million for nearly 18,000 consumers who were victims of fraudulent lending under a proposed settlement, subject to court approval, that was announced in March 2002;
• Attacking fraud through the filing of 98 federal court actions since June 2001, through which judgments of more than $160 million have been obtained;
• Stopping branded drug manufacturers from eliminating competition from cheaper generic equivalents by addressing conduct that allegedly stifles such competition;
• Preventing anticompetitive effects of mergers in the petroleum industry by reviewing pending mergers and requiring divestitures when necessary; and
• Ensuring competition among health care providers by challenging allegedly illegal agreements by such providers to fix fees and boycott health plans that resist paying the higher fees.

The testimony stated that "there is a high degree of unity among the five Commissioners. In fact, there is near unanimity in voting patterns, particularly with respect to votes concerning law enforcement matters. The near unanimity of voting patterns reflects both a broad consensus among the Commissioners about the types of cases the Commission should pursue, and the careful and deliberate process by which the Commissioners consider matters, consulting with the staff to address the issues and concerns of individual Commissioners."

The testimony then provided an overview of the Commission's mission focus, stating that in the coming years, the FTC will concentrate its resources to bring law enforcement efforts in significant areas of the economy, will develop and implement consumer and business education campaigns in these areas, and will continue to assess ongoing developments in the marketplace.

Each of the following thematic issue areas was then presented: 1) continuing emphasis on critical areas of law enforcement - fighting consumer fraud and deception, as well as stopping anticompetitive mergers; 2) enhancing consumer privacy and security; 3) preventing deceptive and anticompetitive health care practices; 4) promoting and maintaining competitive energy markets; 5) keeping pace with technology and the changing marketplace; 6) targeting special initiatives to specific groups of customers; and 7) advancing efficient law enforcement. Law enforcement cases from the past year were discussed, demonstrating how the Commission is fulfilling its mission on behalf of American consumers.

Finally, the testimony presented legislative recommendations that would "improve the FTC's ability to implement its mission and to serve consumers." The first of these recommendations suggested the elimination of the FTC Act's exemption for communications common carriers. The testimony noted that the FTC Act exemption has proven to be a barrier to effective consumer protection, both in common carriage and in other telecommunication businesses. In addition, the testimony asserted that the FTC's efforts to halt fraudulent or deceptive practices by telecommunications firms have sometimes been stymied by the common carrier exemption.

Second, the testimony recommended several technical changes related to the authority the FTC currently possesses, requesting: 1) the ability to accept reimbursement for expenses incurred by the agency in assisting foreign or domestic law enforcement agencies; and 2) the ability to accept volunteer services, in-kind benefits, or other gifts or donations. Both changes, the testimony stated, "would be useful as the FTC tries to stretch is resources to meet its statutory responsibilities."

"We believe that the Commission's antitrust and consumer protection enforcement has demonstrable benefits for consumers and the American economy benefits that far outweigh the resources allocated to maintaining our mission," concluded the testimony.

The Commission vote to approve the testimony and place a copy on the public record was 5-0. Each Commissioner's separate statement was also placed on the public record.

Copies of FTC's testimony and individual Commissioners' statements are 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. The FTC works for the consumer to prevent fraudulent, deceptive and unfair business practices in the marketplace and to provide information to help consumers spot, stop and avoid them. To file a complaint, or to get free information on any of 150 consumer topics, call toll-free, 1-877-FTC-HELP (1-877-382-4357), or use the complaint form at http://www.ftc.gov. The FTC enters Internet, telemarketing, identity theft and other fraud-related complaints into Consumer Sentinel, a secure, online database available to hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.