CFPA Bill Would "Put the FTC on Steroids"

The House Energy and Commerce Committee yesterday approved the "Consumer Financial Protection Agency Act" (H.R.3126) by a party-line vote of 33-19.  The bill was passed on October 22nd by the House Financial Services Committee.  The bill would create a new federal agency with sweeping powers to regulate all consumer financial products and services, broadly defined.  It would also radically transform the regulatory authority of the Federal Trade Commission (FTC), impacting the advertising community in general.  Jim Miller, a former Chairman of the FTC from 1981 to 1985, told The Wall Street Journal that the legislation "is like putting the FTC on steroids."

House leadership hopes to have the bill ready to go to the floor in the next several weeks.  We need your help on this legislation.

We have been actively lobbying this bill with a particular focus on how the legislation affects the FTC.  The original bill would have transferred virtually all of the FTC's regulatory authority in the financial marketing area to the new CFPA.  Much of the FTC staff working in these areas likely would have been transferred as well.   

The bill approved yesterday by the Energy and Commerce Committee still moves various financial regulatory authority from the Commission to the CFPA, but it provides for a greater residuary responsibility for the FTC.  H.R.3216 would give the states concurrent authority to enforce regulations adopted by the CFPA and give them the green light to adopt consumer protection laws that are even stricter than the federal laws.  Thus, it is possible that advertisers in the financial sector will face regulation from the CFPA, the FTC and the states.  This will certainly balkanize regulation of financial marketing and undermine the goal of consistent and coherent national regulation.

The bill also would give the CFPA broad "unfairness" rulemaking authority that goes far beyond the current authority for the FTC.  "Unfairness" is a highly elusive and amorphous concept so Congress put important limitations on the rulemaking powers of the FTC.  Those limits are missing in this bill, so the CFPA would have nearly unfettered discretion to issue broad rules regulating the marketing of financial products and services based on "unfairness."  In addition, the CFPA would have authority to issue rules prohibiting "abusive acts," a term not defined in the legislation.  The question is what would be considered abusive that would not be covered by the concept of unfairness?  Clearly, by providing such an undefined and elastic standard, the potential for unlimited regulation and enforcement goes up substantially.

Impact on Advertisers in General

The CFPA bill contains provisions that would alter long standing procedures at the FTC.  The bill would allow the Commission to carry out rapid across the board industry wide notice and comment rulemakings rather than having to use the more rigorous Magnuson-Moss rulemaking procedures.  The Commission would have expanded "aiding and abetting" provisions that would implicate the ad agencies and media.  The bill would permit the FTC to seek immediate civil penalties for violations of the FTC Act, not just for violations of rules or cease and desist orders.  Finally, the Committee approved an amendment giving the FTC independent litigating authority for civil penalty actions.  In other words, virtually all of the checks that Congress placed on the Commission to focus its regulatory efforts would be stripped from the law by this bill.    

We tried to convince the House Energy and Commerce Committee to either uphold the Magnuson-Moss provisions or keep some of the procedural safeguards in the Act.  These safeguards include: the requirement that the Commission must identify a pattern of activity - a prevalence, as opposed to one instance -- before engaging in a rulemaking; the requirement that a rule may be overturned by the courts if it is not supported by substantial evidence taken as a whole; the requirement that the Commission provide a statement as to the economic effect of the rule.  All of these protections are presently being abrogated in the bill.  Amendments to preserve these protections were offered in the markup but were rejected on party-line votes.

Prior to the Committee markup, ANA sent a letter expressing our serious concerns about several changes the legislation would make in the jurisdiction and regulatory powers of the Commission as well as expanded powers for the new CFPA. 

The marketing community is facing a much more activist FTC.  H.R. 3126 would greatly expand the powers of that agency in the event the FTC decided to initiate major rulemakings in various controversial areas, such as children's advertising, green marketing or online behavioral advertising.

We need your assistance on this legislation.  It is critical that Congress hears more forcefully from the business community about the impact these changes would have on your companies.  Please contact the members of Congress where you have operations or employees to let them know about the problems with this bill.

We have also been holding meetings with members of the Senate to discuss these issues.  We have been told that the Senate Commerce Committee is likely to examine many of these issues as part of the reauthorization of the FTC Act.

If you have any questions or comments about the impact of the CFPA bill on the marketing community, please contact Dan Jaffe ( or Keith Scarborough ( in ANA's Washington, DC office at (202) 296-1883.