Alert: Wall St. Reform & Expanded FTC Powers

To: AAF Members
From: Clark Rector, Executive Vice President-Government Affairs
Re: Wall St. Reform & Expanded FTC Powers

The U.S. Senate has passed the financial reform legislation.  The Senate bill does not include the expanded powers for the Federal Trade Commission that were included in the House version of the bill.  You will recall that the House bill would give the FTC broad authority to issue new rules governing industry – including advertising – on an accelerated timetable. The bill would make media and advertising professionals responsible for FTC violations even though they cannot know whether an advertisement might later be declared unfair or deceptive (see my previous alert for a more complete discussion of the issue).

That the Senate did not include these provisions is due in large part to the grassroots efforts of AAF members and others in the advertising industry.

However, the threat is not over.  The House and Senate must now reconcile the differences between the two bills before it can be sent to the President. 

I urge you to contact your Representative and ask them to support dropping this provision from financial regulation legislation and to contact House leadership with the same message.  Contact information and links to Representatives websites can be found on the House website at http://www.house.gov/.

The expanded rulemaking powers for the FTC should not be included in the bill because:

  • FTC rulemaking authority is far too complicated to consider as a side issue in the financial regulatory reform bill. Constituent consumers and businesses would be better served if the House FTC rulemaking provisions were removed from the financial reform legislation.   Any proposed changes to the FTC's jurisdiction should be considered carefully at a later time. Financial reform demands action now – FTC rulemaking changes do not.

  • The FTC regulates advertising, which today generates 20% of economic activity in the U.S. and 15% of the jobs. Among other areas, the FTC is involved in regulating advertising and marketing of over-the-counter drugs, food products, telecommunications products, and energy for homes, manufacturing, and transportation. The agency also has jurisdiction over Internet marketing, privacy and antitrust matters.  The FTC often is referred to as the second most powerful legislature in the world because of the scope of its jurisdiction over the entire economy.

  • Overly broad industry-wide rules on manufacturers and advertisers will adversely affect revenue and employment in every state and congressional district. Our economy today is too vulnerable to absorb major regulatory shocks to marketing and sales.

  • The provisions in current law represent important and carefully considered consumer protection laws. The proposed changes are controversial and could disrupt the consumer protection mission of the FTC.

  • While it is doing a good job regulating consumer fraud, the FTC needs more resources to enforce its rules against bad actors in the marketplace.  It does not need expansive new authority in order to protect consumers.