Majority Statement

• Chairman John Thune
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  Majority Statement

  Chairman John Thune

  "Good morning, and welcome to today’s hearing on oversight of the Federal Trade Commission.

  "This morning, we will hear directly from the FTC’s three sitting commissioners: Chairman Ramirez, Commissioner Ohlhausen, and Commissioner McSweeny. Let me take this opportunity to welcome you to the Committee and thank you for your service.

  "I first want to note that Chairman Moran was scheduled to convene a Subcommittee hearing this afternoon. That hearing was to include a panel of thought leaders who would offer their own perspectives from outside the Commission. Due to scheduling conflicts that have arisen, we will unfortunately have to reschedule that hearing until a later date. We appreciate the willingness of those witnesses to testify and thank them for their understanding.

  "The FTC was founded in 1914 by Congress – specifically by this Committee. In fact, the FTC is the oldest independent federal agency under the jurisdiction of this Committee. At the beginning of this Congress, the agency celebrated its 100th anniversary, an event that prompted retrospection both from the Commission and its observers.

  "As many in the room know, the agency was born of the concern that more needed to be done to ensure competitive markets in the United States and to “bust the trusts” that threatened that competition. The Commission’s focus soon expanded to include an enforcement mandate against unfair and deceptive acts and practices that threatened consumer welfare.

  "A common theme uniting the Commission’s dual focus on competition and consumer protection is ensuring freedom in the marketplace. Throughout the decades, and on the balance, the FTC has been a strong cop on the beat, ensuring that Americans reap the benefits of a functioning economy free from domination by firms with unfairly concentrated market power. It has also made it possible for Americans to be confident in their commercial transactions and grow the economy with the knowledge that they are protected from fraudsters and cheats seeking to do them harm.

  "Among its many programs, the FTC administers the national Do-Not-Call program, which was created in 2003 and was once rated as the second-most popular federal initiative in American history, second only to the Elvis stamp. By 2010, the registry had topped 200 million numbers.

  "But the agency has not been without controversy. In the late 1970s, for example, the agency drew criticism from none other than the Washington Post editorial board for its consideration of a regulation that would impose major restrictions on television advertisements aimed at young children in order to reduce the amount of sugar children eat. This regulatory overreach led the Post to criticize the Commission as the “great national nanny” and led Congress to adopt heightened procedural safeguards on the Commission’s authority to promulgate rulemakings. It was a recognition that the proper role of government must be limited.

  "Despite these measures, the Commission has at times asserted itself in ways that continue to raise concerns about overreach. This Committee has pressed the Commission, for instance, on the scope of its Section 5 authority, which prohibits unfair and deceptive acts in commerce.

  "When Congress drafted the FTC Act, we took care to ensure the prohibitions of Section 5 would be evergreen. And this flexibility is one of the statute’s key features. For example, in the 1930s, in one of its first cases to use this “unfair and deceptive” language, the Commission brought a paint misbranding case against a manufacturer who allegedly sold a product branded as high-quality white lead paint when the paint, in fact, contained no white lead.

  "While not the case today, at the time this occurred, lead in paint was a desirable characteristic. I raise this example to illustrate that, as market preferences and technologies evolve, Section 5 adapts. The Commission is equally comfortable using the same language in recent years to bring cases against app developers who deviate from their stated privacy policy, or against mobile phone carriers who cram third-party charges onto customers’ bills.

  "But Section 5’s flexibility does not mean it is open-ended. To best serve customers, the business community needs certainty, guidance, and predictability in order to comply with the law. American merchants are also entitled to fairness and due process when it comes to enforcement. When the FTC deviates from longstanding practice, it creates uncertainty about what the Commission’s interpretation of the law may be, who is liable, and the extent of that liability.

  "We have heard concerns, for instance, about the Commission’s application of its unfairness authority to bring cases against private companies for lax data security practices. We all agree that consumers should be protected against unreasonable data security practices that put them at risk of identity theft and financial harm. But for some time now, a key element in any unfairness case has been whether or not a practice causes substantial – that is, monetary but not subjective – injury to consumers. In one recent high-profile case, the FTC sought to enforce against a small business on grounds that it failed to implement reasonable security measures to protect the sensitive consumer information on its computer network. The FTC took the extraordinary step of overturning the decision of its own administrative law judge, who found, on the basis of the evidence in the case, no monetary harm to the affected consumers. We will continue to monitor developments in that case.

  "Another area of focus for this Committee has been regulations impacting technology innovation. One of the first hearings we held this Congress was on the Internet of Things. In that hearing, we examined the significant economic and societal impact the connected world might bring. At the time, I expressed my hope that we, the government, would have the humility to recognize that the best solutions are often not government solutions, and that we not stifle the Internet of Things before we, and consumers, have had a chance to gain an understanding of its real promise and implications.

  "The Commission has also focused on the Internet of things, both with enforcement activity and guidance to industry. The Commission issued its Internet of Things report last year, which summarized a workshop the FTC held on the topic. The report provided policy recommendations that some, including Commissioner Ohlhausen, have criticized for its “government-knows-best” approach that could inhibit innovation and growth. While I appreciate the Commission’s willingness to explore new topics, I would caution the Commission to exercise regulatory humility, preserve “permission-less innovation,” and continue to address actual consumer harms as they arise.

  "With that, I will close by thanking the Commissioners for being here today, and turn to Senator Blumenthal for any opening remarks he might have."

Testimony

• The Honorable Edith Ramirez

  Chairwoman

  Federal Trade Commission
  Download Testimony (163.60 KB)

• The Honorable Maureen K. Ohlhausen

  Commissioner

  Federal Trade Commission

• The Honorable Terrell McSweeny

  Commissioner

  Federal Trade Commission