United States: House Subcommittee Pushes FTC Overhaul, Restricting Investigations And Consent Orders

In an effort to "reduce some of the ambiguous legal liability" that exists under Section 5 of the FTC Act, the House Energy and Commerce trade subcommittee advanced eleven legislative initiatives consolidated into four bills to "modernize" the Federal Trade Commission last Thursday. Three bills give the FTC additional authority to police "gag clauses" and online ticket sales and to standardize "Made in the USA" labeling. The final bill—the FTC Process and Transparency Reform Act—contains eight Republican-sponsored reform bills examined at a subcommittee hearing in late May.

These reform bills could significantly alter the FTC's responsibilities under the FTC Act, and they include the following proposals:

  • H.R. 5093, the Technological Innovation through Modernizing Enforcement (TIME) Act;
  • H.R. 5097, the Start Taking Action on Lingering Liabilities (STALL) Act;
  • H.R. 5098, the FTC Robust Elderly Protections and Organizational Requirements to Track Scams Act;
  • H.R. 5109, the Clarifying Legality and Enforcement Action Reasoning (CLEAR) Act;
  • H.R. 5115, the Statement on Unfairness Reinforcement and Emphasis Act (SURE) Act;
  • H.R. 5116, the Freeing Responsible and Effective Exchanges (FREE) Act;
  • H.R. 5118, the Solidifying Habitual and Institutional Explanations of Liability and Defenses (SHIELD) Act; and
  • H.R. 5136, the Revealing Economic Conclusions for Suggestions (RECS) Act.

In brief, these measures impose restrictions on FTC investigations and consent orders, establish a "safe harbor" for compliance with FTC guidance, and require additional reports and documentation from the FTC. A more detailed breakdown of the eight substantive sections of the FTC Process and Transparency Reform Act follows.

Codify the FTC's 1980 Policy Statement on Unfairness: Section 2 captures the SURE Act, which would amend the FTC Act to codify the FTC's test for substantial injury from its Unfairness Policy Statement. The FTC would be statutorily required to consider whether an act or practice results in monetary harm, unwarranted health or safety risks, or "only in emotional or other more subjective harm," which would not qualify. Further, acts or practices may not be deemed unfair unless the FTC can conclude they are injurious in their "net effects." In written testimony last month, Chairwoman Ramirez cautioned that this codification effort could undermine the FTC's efforts "to prevent likely substantial harm before it occurs."

Limit FTC Consent Orders to Eight-Year Durations: Section 3 incorporates the TIME Act and imposes an eight-year limit on most FTC consent orders. In determining the time limit for any consent order, the FTC shall consider: (1) the impact of technological progress on the continuing relevance of the order; and (2) whether there is reason to believe the entity will continue to engage in the alleged activities after eight years. No order may last longer than eight years unless it relates to alleged fraud and requires a longer time frame based on these two factors. Moreover, companies subject to consent orders lasting longer than five years (including existing consent orders) may petition the FTC to evaluate whether provisions in the consent order continue to serve their initial purposes. Consent orders may be terminated early based upon this evaluation.

Report on FTC Unfair and Deceptive Investigations Annually: Section 4 captures the CLEAR Act, which would require the FTC to publish an annual report to Congress on its consumer protection investigations. This report would include information about both open and closed matters. Specifically, the report must detail: (1) the number of investigations begun by the FTC; (2) the number of investigations closed with no official action, (3) the disposition of any investigation resulting in agency action, and (4) for any closed action, a description sufficient "to indicate the legal analysis supporting the Commission's decision not to continue such investigation, and the industry sectors of the entities subject to each such investigation." Privacy protections would be put in place to ensure no description identifies a person subject to an investigation.

Require FTC Recommendations Be Supported by Economic Analysis: Section 5 describes the RECS Act, which would amend the FTC Act to require that any legislative or regulatory recommendation sought by the Commission to be accompanied by an economic analysis from the Bureau of Economics. This analysis must: (1) be sufficient to demonstrate that the FTC has identified a problem it determines should be addressed; (2) include the rationale for the FTC's determination that private markets or public institutions could not adequately address the issue; and (3) be supported by on a determination that the benefits of the recommended action outweigh its costs.

Clarify that FTC Policy Guidance Does Not Provide an Independent Basis of Liability: Section 6 incorporates the SHIELD Act, which would limit the ability of the FTC to bring an enforcement action based solely on a Respondent's practices being inconsistent with FTC-issued industry guidance. Further, companies could use compliance with FTC guidance as evidence of legal compliance, creating a "safe harbor" of sorts. While the bill states that it is not to construed to "negate any authority of the Commission to issue guidelines, general statements of policy, or similar guidance," Commissioner Ramirez has expressed concern that this provision would preclude the ability of the FTC to consider "the law's applicability to the specific facts and circumstances of the case" and would chill the FTC's efforts to provide informal guidance to industry through workshops and reports.

Terminate Investigations After Six Months: Section 7 captures the STALL Act, requiring the termination of an FTC investigation if the FTC fails to contact the target of an investigation with a "verifiable" written communication every six months or unless the FTC formally votes to continue the investigation.

Permit Closed-Door Meetings with a Bipartisan Majority of FTC Commissioners: Section 8 incorporates the FREE Act, which would permit a bipartisan majority of commissioners to hold a closed-door meeting to discuss official business. These meetings would be subject to transparency requirements provided by the Sunshine Act, and the FTC also would be required to publish online a list of any attendees to these meetings.

Require an Annual Report on Elder Fraud: Finally, Section 9 would require the FTC to submit an annual report to Congress that details the Commission's policy and rulemaking work with respect to elder fraud. Commissioner Ramirez has suggested that while the FTC is "happy to continue to keep the Subcommittee apprised of Commission activities" and would support "broadening the report to capture all of what the FTC is doing on behalf of seniors," she is concerned that the specification required by Section 9 could "impair the FTC's ability to respond to emergent issues, or would not produce helpful additional information."

The markup had limited bipartisan support, and it is unclear whether or when the full committee will take up these measures.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.