America’s Top Consumer Protection Cop Needs Better Weapons in its Arsenal
February 5, 2010
Federal Trade Commission Chairman Jon Leibowitz urged Congress to give the FTC the tools it needs to effectively protect consumers, particularly against financial fraud, in the 21st century economy at a Senate Commerce Committee hearing yesterday. The FTC is the top cop on the beat, but it is hard to police without adequate weapons. Specifically, Leibowitz urged Congress to grant the FTC (1) aiding and abetting authority; (2) Administrative Procedures Act (APA) rulemaking authority; (3) civil penalty authority; and (4) independent litigating authority. While this may seem like a lot, the FTC is the only agency whose sole objective is to protect consumers and this is an enormous responsibility.
CDT has encouraged Congress to give the FTC APA rulemaking authority and civil penalty authority to address consumer protection issues in the past. Recently, in our first set of comments to the FTC’s “Exploring Privacy” roundtable series, we urged Congress to give the FTC APA rulemaking authority under Section 5 of the FTC Act to enable the Commission to act with greater flexibility and within a more timely and efficient manner than it can today under its complex, cumbersome, and time-consuming Magnuson-Moss rulemaking authority. The FTC cannot adequately respond to conduct in the marketplace that harms consumers by crafting rules that take 8-10 years to promulgate. Having to work within such a time frame is absurd, and as a result, the FTC regularly avoids Magnuson-Moss rulemaking altogether. The original policy reason for Magnuson-Moss rulemaking was to limit the FTC’s broad jurisdiction over the economy, but traditional APA notice-and-comment rulemaking procedures should provide adequate checks against imprudent agency action. Before ultimately promulgating a rule, agencies must conduct a thorough analysis and review comments from all interested stakeholders – this procedure does not happen over night, it can still take several years. Most other federal agencies are authorized to use the procedural requirements for APA rulemaking. It is time for Congress to supply its top cop on the beat this authority.
Further, we continue to believe it is critical that Congress give the FTC civil penalty authority. Without the authority to seek civil penalties for violations of the FTC Act serving as a deterrent, the agency’s law enforcement is less effective. The FTC should no longer be a cop without a gun.