April 14, 2008

To: AAF Members
From: Clark Rector Jr., Senior Vice President – Government Affairs
Re: Federal Trade Commission Reauthorization Legislation

Senator Byron Dorgan, D-N.D., has introduced legislation (S. 2831) to reauthorize the Federal Trade Commission that would make significant—and potentially very harmful—changes to the commission's regulatory authority. The bill is co-sponsored by Senator Daniel Inouye, D-Hawaii, chairman of the Senate Commerce Committee, which has jurisdiction over the FTC.

The bill would allow a majority of the commissioners to waive long-standing rulemaking procedures under their current Magnuson-Moss authority in favor of a rulemaking under the Administrative Procedures Act (APA). The APA is a streamlined and much faster procedure, which could lead to "fast track" rulemakings without sufficient input and consideration by all interested parties.

    Other provisions of the bill include:
  • Giving the FTC independent litigating authority so they won't have to refer their cases to the Department of Justice. It also gives the FTC the authority to give preference in the hiring process to administrative law judges who have experience in their issues.
  • Providing the FTC the authority to initiate civil action suits to recover monetary penalties at the district court level for any violation of the FTC Act.
  • Extending their jurisdiction to allow the commission to go after nonprofit entities as well as for-profit entities. It also allows the commission to go after those aiding and abetting an FTC violation.
  • Requiring the FTC to conduct a rulemaking under the APA in the area of subprime loans. The bill gives them authority to create a rule preventing unfair or deceptive behavior by lenders and allows state attorneys general to enforce the rule.
  • Repealing the common carrier exemption, which would allow the FTC to address deceptive practices in consumer billing and advertising by phone companies and wireless service providers.
  • Allowing states to adopt Do-Not-Call registries that impose stricter requirements on telemarketers than those imposed by the federal registry.

No action is currently scheduled for this bill. It is unclear when, or if, it will be taken up this year. Many of these provisions have been considered and rejected in the past. The last FTC Reauthorization bill was enacted in 1996.

The AAF will work with our industry allies to communicate our concerns about the legislation with members of the Commerce Committee and other senators. Please do not hesitate to contact me if you have any questions or comments.