Legislation Would Make Sweeping Changes in FTC's Enforcement Powers

Legislation was introduced in the U.S. Senate on Tuesday that would make sweeping changes in the enforcement powers of the Federal Trade Commission (FTC).  If passed by the Congress, these changes could have serious implications for virtually every sector of the business community.

The FTC Reauthorization Act of 2008 (S.2831) was introduced by Senator Byron Dorgan (D-ND), Chairman of the Subcommittee on Interstate Commerce, Trade and Tourism of the Senate Commerce Committee.  Commerce Committee Chairman Daniel Inouye (D-HI) is a cosponsor.  Among other things, the bill would make the following changes in FTC law:

  • It expands the Commission's authority to impose civil penalties for any violation of the FTC Act.  Currently, the FTC is limited to recovering civil penalties for violations of a rule or a final cease and desist order with respect to an unfair or deceptive act or practice.
  • It allows the agency, by a majority vote of the full Commission, to promulgate rules on any consumer protection matter under the expedited rules of the Administrative Procedures Act (APA), rather than under the procedures of the Magnuson-Moss Act.
  • It includes all federal banking agencies under the FTC Act, giving the Commission new authority to promulgate rules regarding unfair or deceptive financial acts or practices.
  • It allows state attorneys general to bring cases under the FTC Act to seek civil penalties, disgorgement or injunctions against bad actors.
  • It repeals the telecommunications common carrier exemption, giving the Commission new authority to regulate telecommunications common carriers in the areas of advertising, marketing and billing.
  • It expands the Commission's authority to regulate non-profits for unfair or deceptive acts or practices.

In addition, the legislation provides dramatic increases in funding and staffing for the agency, essentially a 10% increase in authorization levels each year for seven years.  The Senate Commerce Committee held a hearing on S.2831 on April 8th.  The only witnesses at that hearing were Commissioners of the FTC.

Many of these proposals have been considered but rejected in the past.  This bill could have a very serious negative impact.  For example, the expedited rulemaking authority (180 days) could lead to a serious "rush to judgment," allowing the FTC to make major industry-wide regulatory changes without adequate time for business input and thoughtful consideration.  The bill also would give the FTC power to impose civil penalties without any prior rule or order by the agency, an authority the agency has never had before.

The Congress has not passed an FTC reauthorization bill since 1996 so it is not clear how far this bill will move.  However, the legislation would be the most significant expansion of FTC regulatory authority in decades.

ANA will be working with our member companies and other industry groups to point out the serious problems with this legislation. 

If you have any questions or comments, please contact Dan Jaffe (djaffe@ana.net) or Keith Scarborough (kscarborough@ana.net) in ANA's Washington, DC office at 202-296-1883.