Markets Wired

In testimony before the U.S. House Energy and Commerce Subcommittee on Digital Commerce and Consumer Protection, the Federal Trade Commission described its work to protect consumers and promote competition, and stressed the agency’s commitment to maximizing its resources, enhancing its effectiveness, and anticipating and responding to changes in the marketplace.

Testifying on behalf of the Commission, FTC Chairman Joe Simons and Commissioners Maureen K. Ohlhausen, Noah Joshua Phillips, Rohit Chopra, and Rebecca Kelly Slaughter noted that during FY 2017, the Commission returned over $543 million in redress to consumers and deposited $94 million into the U.S. Treasury, reflecting collections in both consumer protection and competition matters. In addition, in FY 2017, FTC orders in the Volkswagen, Amazon, and Net Spend matters required defendants to self-administer consumer refund programs worth more than $11.5 billion.

The FTC complements its enforcement efforts through policy and research work, and advocacy and education initiatives, the testimony notes. Most recently, the Commission announced its Hearings on Competition and Consumer Protection in the 21st Century, which will begin this fall and explore whether broad-based changes in the economy, evolving business practices, new technologies, or international developments might require adjustments to competition and consumer protection law, enforcement priorities, and policy.

According to the testimony, consumer privacy and data security will continue to be an enforcement priority at the FTC, and the agency will use every tool at its disposal to redress consumer harm. To date, the Commission has brought more than 60 cases alleging that companies failed to implement reasonable safeguards, as well as more than 50 general privacy cases.

For example, the Commission recently announced an expanded settlement with ride sharing platform company Uber Technologies related to the company’s data security practices, and a settlement with PayPal, Inc. over its privacy practices. The agency also announced its first children’s privacy case involving Internet-connected toys, a settlement that imposed a $650,000 civil penalty on electronic toy manufacturer VTech Electronics for violations of the Children’s Online Privacy Protection Rule. The FTC also is committed to the success of the EU-U.S. Privacy Shield Framework, a critical tool for protecting privacy and enabling cross-border data flows, the testimony stated.

However, the testimony also noted that the main statute enforced by the Commission, Section 5 of the FTC Act, cannot address all privacy and data security concerns in the marketplace. Section 5 does not provide for civil penalties, reducing the Commission’s deterrent capability. In addition, the Commission also lacks authority over non-profits and over common carrier activity, and it lacks broad APA rulemaking authority for privacy and data security generally. The testimony reiterated the FTC’s longstanding bipartisan call for comprehensive data security legislation.

“In my view, we need more authority. I support data security legislation that would give us three things: (1) the ability to seek civil penalties to effectively deter unlawful conduct, (2) jurisdiction over non-profits and common carriers, and (3) the authority to issue implementing rules under the Administrative Procedure Act. And we should consider additional privacy authority as well,” Simons said in separate oral remarks before the Subcommittee. “Make no mistake however: under my leadership, privacy and data security will continue to be an enforcement priority, and the FTC will use every tool in our arsenal to redress consumer harm to the extent we can.”

The testimony also describes the FTC’s recent work to ensure that advertising is truthful and not misleading, which allows consumers to make the best use of their resources and promotes competition by companies on a level playing field. This past year, the agency has continued to bring cases challenging false claims in the financial area, as well as false and unsubstantiated health claims, including those targeting older consumers, consumers affected by the opioid crisis, and consumers with serious medical conditions. 

Fighting fraud continues to be a major focus of the FTC’s law enforcement efforts, the testimony states. The Commission’s anti-fraud program attempts to track down and stop some of the most egregious scams that prey on U.S. consumers. During the past year, the FTC joined with other law enforcement agencies in coordinated crackdowns on tech support scams, as well as a separate initiative to stop scams that target small businesses. The FTC also strives to stay ahead of scammers, who are always on the lookout for new ways to market old schemes, the testimony stated. The agency hosted a workshop to explore how scammers are exploiting public interest in cryptocurrencies. It also has worked to educate consumers about cryptocurrencies, and halted one scam called Bitcoin Funding Team that told victims they could pay with cryptocurrency.

The testimony also noted the FTC’s ongoing work to combat illegal robocalls, which were responsible for more than 4.5 million complaints to the agency in FY 2017. The agency has used many methods to fight these illegal calls. Still, technological advances have allowed bad actors to place millions or even billions of calls, often from abroad, at very low cost, and in ways that are difficult to trace. The testimony notes that the Commission has testified for many years in favor of eliminating the common carrier exemption, which it believes is outdated and no longer makes sense in today’s marketplace.

The testimony also describes the FTC’s work to preserve and promote competition in sectors of the economy that directly affect consumers and their pocketbooks, such as health care, consumer products and services, technology, manufacturing, and energy. Since the beginning of FY 2016, the Commission has challenged 53 mergers. Many were resolved through divestiture settlements, but the Commission voted to initiate litigation to block seven mergers. Three of those challenges ended successfully when the parties abandoned the transactions after the Commission initiated litigation, while four others are still being litigated.

The testimony also noted the FTC’s ongoing efforts to challenge anticompetitive conduct by drug manufacturers. In one FTC case, a federal court recently ruled that the pharmaceutical company AbbVie Inc. used sham litigation to illegally maintain its monopoly over the testosterone replacement drug Androgel, and ordered $448 million in monetary relief to consumers. In another case, the Commission obtained a stipulated order in which Mallinckrodt ARD Inc. agreed to pay $100 million and divest assets to settle charges that it had illegally acquired the rights to develop a drug that threatened its monopoly in the U.S. market for a specialty drug used to treat a rare seizure disorder afflicting infants.

According to the testimony, the FTC is closely following activity in the high-technology sector, which has brought many consumer benefits, but also has raised complex and sometimes novel competition issues. It is critical that the agency understand current and developing business models and scrutinize incumbents’ conduct to ensure that they abide by the same rules of competitive markets that apply to any company, the testimony states.

The Commission vote approving the testimony and its inclusion in the formal record was 5-0.

The Federal Trade Commission works to promote competition, and protect and educate consumers. You can learn more about how competition benefits consumers or file an antitrust complaint. Like the FTC on Facebook, follow us on Twitter, read our blogs and subscribe to press releases for the latest FTC news and resources.