FTC Commissioners Testify on Agency's Reauthorization Request

Providing Federal Trade Commission reauthorization testimony today separately before the Subcommittee on Competition, Foreign Commerce, and Infrastructure of the Senate Commerce Committee and the Subcommittee on Commerce, Trade, and Consumer Protection of the House Energy and Commerce Committee, Chairman Timothy J. Muris, accompanied by his fellow Commissioners, outlined the FTC’s recent successes and future goals on behalf of the nation’s consumers. The Commissioners also provided a range of legislative recommendations that would: 1) enact measures to improve the FTC’s ability to combat cross-border fraud; 2) enact measures to improve the FTC’s ability to combat unauthorized commercial e-mail, commonly known as spam; 3) eliminate the FTC Act’s exemption for communications common carriers; and 4) make it possible for the agency to accept certain types of reimbursement that will enhance overall mission performance.

In detailing the legislative recommendations, the Commissioners’ testimony stated that each is intended “to improve the agency’s ability to implement its mission to serve consumers.” First addressing cross-border fraud, the Commissioners asserted the fact that “fraud is now more global than ever before.” To better protect consumers, the Commissioners requested that Congress enact legislation that would “better address the changing nature of the consumer marketplace and improve the agency’s ability to cooperate and share information in cases and investigations relating to cross-border fraud.” The FTC’s recommendations focus primarily on improving its ability to combat fraud involving foreign parties, evidence, or assets. At the same time, as it is often not immediately evident that a fraud matter has a cross-border component, the testimony noted “the recommendations also may benefit the pursuit of purely domestic investigations and cases.” Further, according to the testimony, “the proposals would help the FTC fight deceptive spam,” by allowing the Commission to investigate more fully spam originating from outside the United States.

Specifically addressing the growing problem of spam, the testimony next discussed a range of procedural and substantive legislative recommendations the FTC believes would enhance its effectiveness in combating spam. First, the testimony requested that the FTC Act be amended to allow Commission attorneys to seek a court order requiring a recipient of a civil investigative demand (CID) to maintain the confidentiality of the CID for a given amount of time. Second, the testimony requested that the Act be amended to provide FTC attorneys with the ability to apply for a court order temporarily delaying notice to an investigative target where a CID has been issued to a third party in certain circumstances when the Right to Financial Privacy Act (RFPA) and the Electronic Communications Privacy Act (ECPA) would require such notice.

Next, the Commission testimony suggested several proposals designed to enhance the FTC’s ability to track deceptive spammers, including clarification of the ECPA to allow the FTC to obtain complaints received by an Internet Service Provider (ISP) regarding a subscriber, and clarification of the scope of the ECPA so that a hacker or spammer who hijacks a bonafide customer’s e-mail account is deemed a mere unauthorized user of the account, and not a “customer” entitled to the protections afforded by the statute. In addition, the Commissioners recommended that the ECPA be amended to include the term “discovery subpoena” in its language. The testimony noted that this change was particularly important because a district court has ruled that the FTC staff cannot obtain information under the ECPA from ISPs during the discovery phase of a case, which limits the agency’s ability to investigate spammers.

Continuing, the Commission testimony suggested substantive legislative changes that could aid in the FTC’s law enforcement efforts against spam. These included amendments to the Telemarketing and Consumer Fraud and Abuse Prevention Act (the Telemarketing Act) that would authorize the FTC to adopt rules addressing deceptive and abusive practices with respect to the sending of spam and that would give the FTC general discretionary authority via rulemaking to address deceptive and abusive practices related to spam. Amending the Telemarketing Act, the testimony states, also would ensure that the rule “embodies the same standard of liability” as the FTC Act and that it is enforceable, like all FTC rules, through actions in federal district court seeking appropriate penalties. Finally, according to the testimony, “the possible criminalization of false header and routing information should be explored.” The FTC currently is discussing this issue with criminal authorities. At this time, however, the agency has no recommendations on whether changes to the criminal code are necessary.

The testimony next provided information on the FTC Act’s exemption for communications common carriers. The exemption dates from a period when telecommunications services were provided by government-authorized, highly regulated monopolies. Calling the exemption outdated, the Chairman stated that it “has prevented the FTC from applying its legal, economic, and industry experience regarding competition to mergers and other possible anticompetitive practices, not only involving common carriage, but also in other high-tech fields involving telecommunications.” Accordingly, he said, “The FTC believes that Congress should eliminate the special exemption to reflect the fact that competition and deregulation have replaced comprehensive economic regulation.”

In concluding its testimony, the Commission suggested several technical changes that would aid the agency in its mission of protecting U.S. consumers. Among these were: 1) the ability to accept reimbursement for expenses incurred by the FTC in assisting foreign or domestic law enforcement authorities; and 2) the ability to accept volunteer services, in-kind benefits, or other gifts or donations. According to the testimony, both new authorities “would be useful as the FTC tries to stretch its resources to meet its statutory obligations.”

In addition to the Commission’s testimony, Chairman Muris and Commissioners Thompson, Swindle, and Leary presented individual statements. Commissioner Thompson provided an overview of the Commission’s recommendations to improve cross-border fraud enforcement, citing the critical nature of these recommendations to the FTC’s fight against deceptive spam. Commissioner Swindle presented he agency’s recommendations to enhance the FTC’s effectiveness in fighting fraudulent spam. Commissioner Leary concluded the statements by discussing the recommendation to eliminate the FTC Act’s exemption for communications common carriers.

The FTC vote to approve the testimony and place a copy on the public record was 5-0. The FTC testimony as well as the Commissioner statements are available at www.ftc.gov.

Copies of the Commission testimony presented today 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.

(FTC File No. P859900)