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Prepared Witness Testimony The House Committee on Energy and Commerce
The Reauthorization of the Federal Trade Commission: Positioning the Commission for the Twenty-First Century.
Subcommittee on Commerce, Trade, and Consumer Protection
Prepared Statement of The Honorable Cliff Stearns Good morning. I would like to welcome and thank the Chairman of the Federal Trade Commission, Mr. Muris and three FTC Commissioners, Messrs. Leary, Thompson and Swindle for appearing before the subcommittee on the matter of FTC reauthorization. In working with the Commission, we had specifically scheduled the hearing today, as the schedule of all five Commissioners permitted them to be here. Unfortunately, due to "urgent family matter", Commissioner Sheila Anthony is not able to testify this morning. As I have suggested in the past, I think that Congress must undertake its "household duties" more diligently. One such duty is reauthorizing the various agencies of the federal government. That's what we are trying to accomplish starting with this mornings hearing. The last time we reauthorized the Commission was 1996, when we authorized it through fiscal year 1998. The reauthorization process accords us the opportunity to carefully examine the mission of an agency and its effectiveness in advancing that mission. In that light, I am pleased that the Commission is presenting a number of legislative proposals to the Committee this morning that it deems necessary for it to better fulfill its mission, in particular, its consumer protection mission. I commend the Commission for being proactive on these matters. I do, however, want to express my displeasure with the fact that the Committee was not informed, in a timely fashion, of the Commission's intent to present its legislative proposal with respect to spam at today's hearing. That said this hearing is a good opportunity for us to hear the Commission's arguments in support of its three major legislative proposals. The first FTC legislative proposal calls for the elimination of the FTC Act's common carrier exemption. The statutory exemption precludes the FTC from investigating and prosecuting common carriers for both anticompetitive behavior and deceptive, unfair and fraudulent activities. The Commission seeks a revisit of that exemption, in particular, with respect to its ability to pursue deceptive, unfair and fraudulent non-common carrier activities of a telecommunications common carrier. As the subtitle of this hearing is "[p]ositioning the Commission for the Twenty-First Century," I would attentively be listening to the Commission's arguments as the exemption was written into the statute some 70 years ago. The second FTC legislative proposal addresses spam, the modern scourge of e-mail users everywhere. The substantive legislative proposal as opposed to the procedural one, essentially calls for vesting the FTC with broad rule-making authority addressing deceptive and abusive practices with the respect to unsolicited commercial e-mail - along the lines of similar authority granted to it with respect to telemarketing by Congress in the Telemarketing and Consumer Fraud and Abuse Prevention Act of 1991. What I find curious about the proposal and an issue that I would like to further explore with the Commissioners is the qualifying language that surrounds the proposal, making the proposal seem tentative. Specifically, the Commission's testimony prefaces the proposal by stating that even though "Section 5 of the FTC Act provides a firm footing for spam prosecutions, additional law enforcement tools could make more explicit the boundaries of legal and illegal conduct.." More significantly, the statement concludes by stating that "[a]dmittedly, [the Commission] recognize[s] that these legal steps will not solve the growing spam problem. Nor is it clear what impact these steps will have on some of the other problems associated with spam (e.g., volume and security)." As an original co-sponsor of Chairman Tauzin's spam bill (H.R. 2214, Reduction in Distribution of Spam Act of 2003), I am most interested in working closely with the Commission, so that we can advance from this Committee and this Congress "effective" spam legislation. The Commission's sweeping cross-border fraud legislative proposal is one that I think is worthy of careful consideration by Members, as I believe, if we derive the right formulation of that language, it could indeed empower the FTC to more effectively tackle challenges of this century. It is important that the proposal be rigorously debated making sure that civil liberties are not compromised. Still, as the Commission is well aware, we need to respond more effectively to fraud that finds its genesis overseas. For example, one reason that spam as problem defies easy solutions is the fact that even if we combat it effectively within our borders, spam will continue to be a serious nuisance and costly problem, as it will be dispatched from overseas. Thus, it is imperative that we explore ways to better protect our consumers from unfair, deceptive and fraudulent activities that increasingly have international dimensions to them. I will work closely with the Commission in further developing its cross-border fraud proposal in ways that it does not abridge our civil liberties with the objective of enacting legislation this Congress. In conclusion, I would like to raise a number of other issues for the Commission's consideration. First, I think it imperative that the Commission focus more resources on its efforts fighting ID theft and assisting the victims of this crime. I ask that the Commission consider any and all ideas that would help consumers' find speedy redress. Time permitting, I will raise with you a few thoughts that I have during the Q&A session. Second, I think it is time for the Commission to seriously consider promulgating a rule, separate and distinct from the Franchise Rule, addressing business opportunities. Third, I have followed the Commission's activities with respect to information security, specifically the Eli Lilly and Microsoft consent agreements. I again commend the Commission for being proactive on an issue of substantial importance. Still, I am concerned that consent decrees concluded at the agency level may now effectively become the corpus of legal guidance on information security obligations of firms with respect to their customers' personal data. I seek to explore this issue this morning and in the near future with the Commission. I thank all the Commissioners for their participation today and look forward to their testimony and working with them this Congress.
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