Streamlined Rulemaking for the FTC’s Consumer Protection Mission?

Guest Post by Dee Pridgen

I was recently invited to testify at the March 17 hearing of the Senate Commerce Committee, Subcommittee on Consumer Protection, Product Safety and Insurance on some proposed FTC reforms that had previously been passed as part of the House bill on consumer financial protection. This was a follow-up to hearings held in February by the full committee. The proposals being discussed included:

• substituting APA informal rulemaking procedures for the FTC’s existing unwieldy and cumbersome Magnuson Moss rulemaking proceedings,
• providing the FTC with authority to seek civil penalties for direct violations of the statute, rather than only for violations of rules and orders, and 
• providing the FTC with explicit authority to pursue aiders and abetters of FTC Act violators.

I testified in favor of all three proposals. Due to the spotlight on healthcare reform this week on Capitol Hill, this hearing did not get much attention (outside of the affected industries) but these consumer protection proposals should be supported.

FTC Commissioner Thomas Rosch testified in favor; Edward Mierzwinski, Consumer Program Director of the U.S. Public Interest Research Group, spoke in favor. Linda Woolley of the Direct Marketing Association spoke against, as did Timothy Muris, former chair of the FTC and now a professor at George Mason University School of Law. Commissioner William Kovacic was not at the hearing but provided a statement opposing the proposals. All the statements of these witnesses, including mine, can be found here.

I favor these proposals because the current Magnuson-Moss rulemaking procedures are so cumbersome that they have become a “dead letter.” FTC is now relegated to issuing industry guides, which do not have the force of law, responding to directives of Congress to promulgate regulations under specific statutes, such as the Telemarketing Sales Act, or bringing individual adjudications resulting in injunctions or cease and desist orders. To say that the FTC should keep this current process is basically to say they should not have the power to issue industry-wide rules without a specific Congressional mandate. The opponents have said that the FTC with APA rulemaking power would be like a “kid in a candy store,” or the “FTC on steroids” because the statute broadly prohibits all “unfair and deceptive trade practices.” However, I point out that the law of “unfair and deceptive trade practices” has been constrained and tempered since Magnuson Moss was passed in 1975, mainly by FTC policy statements using consumer injury cost-benefit ideas in unfairness policy and implementing a “reasonable consumer” standard in deception doctrine, so the need for the “safeguards” of Magnuson Moss is diminished. Also, there is no reason to believe that the FTC would go into regulatory overdrive if it had APA rulemaking authority to enforce its general unfair and deceptive practices jurisdiction. If the FTC uses APA rulemaking, it will be governed by the safeguards of the APA, including notice requirements, regulatory statement of basis and purpose, and judicial review. All agency rules must comply with other safeguards such as the Regulatory Flexibility Act, the Congressional Review Act and review by the Office of Information and Regulatory Affairs.

The Direct Marketing Association spokesperson expressed concern that the FTC would use APA rulemaking authority to limit innovation in internet marketing by requiring that consumers “opt-in” to the use of online profiling to develop focused ads on websites. Tim Muris stressed that the FTC would likely go back to the “binge” of regulating that occurred in the late 70s if given APA rulemaking authority. I say “times have changed” and the FTC needs the tools that other agencies have to issue binding rules in consumer protection.

Comments

[SEO Company]

Don't know what is wrong what is rite but i know that every one has there own point of view and same goes to this one..