FTC's Ramirez Tells House Lawmakers Some Bills Would Be Burdensome to Commission

Subcommittee ranking member Jan Schakowsky, D-Ill., said eight Republican-sponsored "process" bills would tie the commission's hands, making the FTC less flexible. She specifically cited two bills, including the Start Taking Action on Lingering Liabilities, or Stall, Act (HR-5097) -- that automatically would end investigations if the FTC doesn't send a "verifiable written communication" every six months -- and the Robust Elderly Protections and Organizational Requirements to Track Scams, or Reports, Act (HR-5098) that would require the FTC to publish and submit every year to Congress on Dec. 1 an annual plan of the commission's projected activities for the next calendar year.

Ramirez, who agreed with Schakowsky about both bills, said the FTC is fully transparent with its priorities and plans and worried that the Reports Act would be an additional burden "on the agency doing more than we already do with existing reporting requirements.” She also said it's not uncommon for investigations to take longer than six months, especially competition cases that are complex and require time. She said the Stall Act "would, in my mind, be far too severe and ... would undermine our ability to protect consumers." There "easily" could be an instance when there's an "oversight" in communication with a company, she said. "In my mind, it's a disproportionate consequence.”

The "true intention" of those Republican process bills, said Rep. Frank Pallone, D-N.J., the full committee's ranking member, is "across-the-board deregulation" and to "gut" the FTC. He cited HR-5136 or the Revealing Economic Conclusions for Suggestions, or RECS, Act that would bar the commission from submitting recommendations for legislative or regulatory actions without getting an economic analysis from the FTC's Bureau of Economics.

Ramirez said the RECS Act requires a comprehensive cost-benefit analysis that would be "resource prohibitive" for the agency. Sometimes a proposed bill has health and safety aspects, but since the FTC's expertise is limited to competition and consumer protection, it can comment only on those aspects of the bill, she said. If the agency is required to conduct comprehensive analysis then it would be able to comment on those types of bills. She said the measure "unintentionally" would hinder the FTC's ability to provide comments "and I don't believe that's the intent" of the bill.

Rep. Mike Pompeo, R-Kan., later in the hearing asked Ramirez how many more economists in addition to the 80 there now that would be needed so the RECS Act wouldn't be a burden on the FTC. "You said it’s an enormous burden, I’m trying to … translate that into reality because we might provide the additional funding for that," he said. Ramirez replied that she couldn't answer that question but restated her previous concern that the bill would impede the agency's ability to provide analysis on pending legislation, for example, that may have health and safety aspects not part of the commission's expertise. "As a consumer protection agency you'd want consumers to have a chance to see your economic analysis," said Pompeo. "Perhaps we just disagree about that.”

On a second panel, former FTC Commissioner Joshua Wright, a George Mason University law professor and Wilson Sonsini attorney, said the FTC needs to "deeply integrate" economic analysis in decision-making at all levels. He cited the commission's 2014 complaint against Apple for not expressly informing iTunes account holders, namely parents, about a 15-minute window in which their children could make more purchases without the need to re-enter a password (see 1401160066). He said "rigorous economic" analysis would have kept the FTC from "harmful second guessing of product designs and decisions." He suggested the Statement on Unfairness Reinforcement and Emphasis, or Sure, Act (HR-5115) be amended, requiring the Bureau of Economics to publish a separate public explanation of cost-benefit analysis when the FTC enters into consent decrees.

On that same panel, Georgetown University Law professor David Vladeck, a former FTC Bureau of Consumer Protection director, took issue with the Technological Innovation through Modernizing Enforcement, or Time, Act (HR-5093), which would cut FTC consent decrees from typically 20 years down to eight years. "It turns a meaningful restraint to what lawyers would call somewhat of a glorified slap on the wrist," he said. The 20-year decree is the "only remedy" that the commission has in almost all cases, especially in data security cases. He said no company that has entered into a 20-year decree for data security cases has ever been recidivist nor has it stifled innovation. "Not one company has experienced any sort of speed bump in innovation," he said, citing Facebook, Google and Twitter, along with smaller companies.

Subcommittee Chairman Michael Burgess, R-Texas, who introduced HR-5093, largely asked Ramirez about the FTC's use of consent decrees and what other agencies do in comparison. Ramirez said she didn't know what other agencies did, but the commission's intent in imposing a consent decree is to prohibit violations of law. The decrees are tailored to a specific circumstance to address a consumer harm and they don't impede a company's ability to innovate, she said. The FTC also has the ability to modify or terminate the order, which companies can ask the commission to do, she added.

Ramirez supported some bills such as the Consumer Review Fairness Act (HR-5111), which would prohibit companies from using gag clauses in their terms of service to prevent consumers from posting negative reviews of products and services online. She generally supported the Better Online Ticket Sales, or Bots, Act (HR-5104) -- that would make it unlawful for people to use software to circumvent systems to buy up tickets in bulk for an event and also give a private right of action to people to sue such scalpers -- as long as it wouldn't unintentionally snare legitimate activities and wouldn't punish "general purpose software," she said.

Ramirez also supported another bill called the Protecting Consumers in Commerce Act (HR-5239) -- sponsored by Rep. Jerry McNerney, D-Calif., who sits on the full committee, but not the subcommittee -- that would lift the common-carrier exemption from the FTC's jurisdiction. She said the exemption was part of the original 1914 statute, prohibiting the agency from taking action against common carriers. She said it's "antiquated" and no longer makes sense in an environment where there has been significant deregulation and would like to see it eliminated and would help in areas such as data throttling. She said the FCC's reclassification of broadband services means the FTC also can't act against ISPs so there's a gap in the commission's jurisdiction that should be addressed.