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Published: April 2010

Give the FTC the tools it needs to protect consumers

Coalition: Privacy

In coalition with other organizations Consumer Action asked the Senate to keep provisions in a bill under consideration that would strengthen the Federal Trade Commission (FTC).

Below is an excerpt from the letter:

As the Senate addresses financial reform, we strongly urge you to support both the strong, independent Consumer Financial Protection Bureau (CFPB) contained in the bill and also proposed additions to the Senate measure to strengthen the Federal Trade Commission (FTC).  Currently, the FTC is hindered in its ability to carry out its duties and protect consumers.  It is essential for the Senate to modernize the FTC's legal and regulatory framework.

We urge the Senate to include in its bill, S. 3127, provisions to authorize the FTC to:

• Apply the Administrative Procedures Act (APA) as the process for the FTC to promulgate rules within its jurisdiction;
• Enforce the Federal Trade Commission Act (FTCA) against people who aid and abet others who commit unfair or deceptive acts or practices in violation of the Act; and
• Seek civil penalties against people who violate the FTCA’s statutory prohibitions (not only those who violate rules or orders, as under current law).

These three reforms were passed by the House in H.R. 4173.  They are necessary so that the FTC can effectively regulate in those areas which will remain with it after the creation of a strong CFPB.  Under current law, generally, FTC rulemaking is authorized only under the highly cumbersome process required by the 1975 Magnuson-Moss amendments to the FTCA.  Magnuson-Moss requires as many as 18 detailed stages before the FTC may issue a final rule, and can take eight to ten years.  That process largely prevents the agency from addressing issues through generally applicable regulations, requiring it to rely on more time consuming, more costly, and less effective case-by-case enforcement actions, even where industry-wide action would be more efficient and beneficial to consumers, and would provide more certainty to business about how to shape conduct to stay within the law.

Most other federal agencies, including financial regulators such as the Securities and Exchange Commission and the Commodity Futures Trading Commission, as well as the FCC, are authorized to use APA rulemaking procedures.  APA rulemaking requires a specific open public process.  Before issuing a final rule, agencies must promulgate a proposed rule, provide the public an opportunity to comment, and give comprehensive and fair consideration to all relevant data accumulated during the rulemaking process. And, of course, the procedural and substantive legality of a final agency rule promulgated under the APA is subject to judicial review by any adversely affected party.

In sum, authorizing the FTC to issue regulations under the APA would enhance the FTC's regulatory ability to address unfair and deceptive conduct before it occurs and to address it in a more efficient and effective across-the-board manner, rather than just case-by-case.

Lead Organization

Center for Digital Democracy

More Information

S. 3127

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