June 2, 2016

The Seven Things to Know about the #DisruptFTC Bills Being Considered in Congress

Seller Beware: Consumer Protection Insights for Industry

The House Energy and Commerce Subcommittee on Commerce, Manufacturing, and Trade plans to take up legislation to reform and limit the authority of the Federal Trade Commission (FTC) as part of its #DisruptFTC series. Subcommittee Chairman Michael Burgess (R-TX) said that he plans to combine some of the FTC reform bills considered at a recent May 24 legislative hearing to create a comprehensive piece of legislation. While he has not decided which bills he will include in his combined legislation, Chairman Burgess noted that the bills focused on reforming the FTC's processes are his highest priority. A date for a mark-up of the bills has not been announced but is likely to occur before Congress recesses for the presidential conventions in July.

At the recent legislative hearing, FTC Chairwoman Edith Ramirez was a key witness and opposed a majority of the FTC reform bills given the effect the legislation would have in limiting the Commission's authority. While most of the witnesses supported the subcommittee's FTC reform efforts, David Vladeck, a law professor at Georgetown Law and Director of the FTC's Bureau of Consumer Protection from 2009 to 2012, was one of the witnesses invited by the Democratic members of the Subcommittee and opposed most of the bills along with Chairwoman Ramirez. A complete witness list is available here.

Below are seven takeaways on the key bills in the #DisruptFTC series, which we initially profiled in our May 5 blog post.

  1. General Federal Trade Commission Opposition. The Federal Trade Commission opposes all of the #DisruptFTC bills, except for the Consumer Review Fairness Act (see Takeaway #3). In sum, Chairwoman Ramirez believes the bills would create unintended consequences, administrative burdens, and at times, processes that undermine the objectives they are trying to achieve.
  1. Technological Innovation through Modernizing Enforcement (TIME) Act (H.R. 4093). Supporters want the bill strengthened by including an additional procedural change that allows a company subject to a consent decree to petition for review of its consent decree. Chairwoman Ramirez, however, opposes the bill because the Commission already has review procedures in place. Supporters also are asking the committee to consider a shorter sunset time for all consent orders -- from the agency practice of requiring 10 to 20 year consents to 8 years.
  1. Consumer Review Fairness Act (H.R. 5111). This is the only measure to receive support from all of the witnesses. The Chairwoman views the bill as an additional law enforcement tool to prevent companies from removing unfavorable reviews of products and services from websites and other sources of product information for consumers. Other supporters believe the bill's approach is a better alternative to piecemeal FTC enforcement actions. This bill is a priority for online review platforms, such as Yelp, TripAdvisor, and others.
  1. Clarifying Legality and Enforcement Action Reasoning (CLEAR) Act (H.R. 5109). Chairwoman Ramirez opposes the bill because companies under investigation could be easily identified from the legal analysis and industry details in the required annual report to Congress. Opponents also argue that the burdens imposed do not outweigh the benefits. Supporters counter by requesting Congress to appropriate funds to implement the bill.
  1. Start Taking Action on Lingering Liabilities (STALL) Act (H.R. 5097). The FTC fails to support the bill because "[i]t is intended to relieve businesses of a burden - uncertainty about whether an FTC investigation is still open - but may impede the Commission's ability to protect consumers without adding corresponding benefits," according to Chairwoman Ramirez. Supporters request that the bill be strengthened by requiring the FTC to send notification of an investigation's extension.
  1. Solidifying Habitual and Institutional Explanations of Liability and Defenses (SHEILD) Act (H.R. 5136). The bill would allow compliance with policy guidelines and guidance to be used as evidence of compliance with the law. Chairwoman Ramirez believes that the measure creates challenges for the FTC when considering how the law applies to the specific facts of a case, as guidance could be substituted for law. Supporters seek further clarifications, including amendments to: (1) ensure that reports, consent decrees, and FTC practices are not binding; (2) specify when a defendant may provide evidence to show compliance with FTC guidance; and (3) encourage the FTC to issue more guidance and policy statements.
  1. Statement on Unfairness Reinforcement and Emphasis (SURE) Act (H.R. 5115). The FTC opposes this bill because codifying selected portions of the Policy Statement on Unfairness will unintentionally create challenges for the Commission to initiate law enforcement actions. Chairwoman Ramirez noted that the bill might undermine the FTC's efforts to prevent likely substantial harm before it occurs, despite the fact that Section 5 expressly empowers the Commission to prevent entities from engaging in unfair or deceptive acts or practices. Supporters requested amendments to require a preponderance of the evidence standard in unfairness actions and a requirement that the Bureau of Economics publish a separate cost-benefit analysis with consent decrees.

We will continue to monitor developments in this area and provide updates, accordingly.

© Arnold & Porter Kaye Scholer LLP 2016 All Rights Reserved. This blog post is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.

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