U.S. Senate Committee on Commerce, Science, & Transportation

WASHINGTON, D.C. – Commerce Committee Chairman Daniel K. Inouye (D-Hawaii) joined Interstate Commerce, Trade, and Tourism Subcommittee Chairman Byron Dorgan (D-N.D.) to cosponsor the FTC Reauthorization Act of 2008. Introduced today, the measure would reauthorize the Federal Trade Commission (FTC) for the first time since 1996.

“I commend Senator Dorgan for his hard work in drafting this bill. His leadership has been central to this process,” said Chairman Inouye. “The bill contains significant improvements to strengthen the Federal Trade Commission’s ability to protect consumers and deter wrong-doers, particularly in the area of e-commerce fraud. The bill also contains provisions that would expedite Commission processes, resulting in better consumer protection for all Americans.”

The FTC Reauthorization Act of 2008 authorizes a 10 percent increase in the FTC’s appropriations each year over the next seven years, grants the FTC greater civil penalty and independent litigation authority, streamlines the process for creating rules against deceptive practices in the subprime mortgage lending arena, and clarifies that state law with more restrictive requirements for intrastate or interstate telemarketing will not be preempted.

The act is attached. A summary of the act’s key provisions is below:

Reauthorization Levels: Sets forth authorization levels for seven years starting at $264 million in 2009 and increasing at a rate of 10 percent per year to reach a level of $467.7 million in 2015. Of the total authorized, $10 million is provided for each of fiscal years 2009 through 2015 to continue and enhance the Commission’s provision of international technical assistance. In addition to the annual authorized levels, a total of $20 million is authorized for use during 2009 through 2015 to improve technology in support of the Commission’s consumer protection and competition missions.

Independent Litigation Authority: The bill provides the FTC with the authority to litigate any civil action involving the Federal Trade Commission Act (FTC Act). Under current law, the Commission may litigate certain cases in its own name, but the majority of the cases are brought by attorneys at the Department of Justice often with the assistance of FTC attorneys who possess the needed technical expertise.

Specialized Administrative Law Judges: Authorizes the Commission to give preference to administrative law judges (ALJs) who have relevant antitrust or trade regulation litigation experience, and requires the Office of Personnel Management to accommodate such a request, to the maximum extent possible. Currently, there is no mandate that the FTC’s ALJs have technical expertise in consumer protection matters.

Civil Penalty Authority: Expands the Commission’s authority to recover civil penalties for any violation of the FTC Act. Currently, the FTC is limited to recovering civil penalties for violations of a rule or a final cease and desist order with respect to an unfair or deceptive act or practice.

Application of the FTC Act to Non-Profits: Expands the Commission’s authority to regulate non-profits for unfair or deceptive acts or practices. Currently, some non-profits have used their tax-exempt status as a shield to block FTC enforcement action.

Makes Aiding and Abetting a Violation: Allows the Commission to hold entities accountable that aid or abet another in violating any law enforced by the FTC.

Streamlines Rulemaking Process: Allows the Commission, by majority vote of the full Commission, to promulgate rules under the Administrative Procedure Act (APA) instead of the lengthy procedure set forth in the Magnuson-Moss Act. This provision would help the Commission to conduct rulemakings with respect to any consumer protection matter at a more expedited pace. For rules regarding subprime mortgage lending and nontraditional mortgage loans, the FTC would be required to utilize APA procedures.

Inclusion of All Banking Agencies Under the FTC Act: Increases the number of federal agencies permitted to promulgate rules regarding unfair or deceptive financial acts or practices under the FTC Act. When these financial regulators promulgate rules under the FTC Act, the FTC would be permitted to promulgate similar rules utilizing APA rulemaking procedures.

Enforcement of State Attorneys General: Allows State attorneys general (AGs) to bring cases under the FTC Act to seek civil penalties, disgorgement or injunctions against bad actors. State AGs must provide notice to the FTC regarding their intent to bring suit, and may not bring a case if the FTC has initiated a civil action or an administrative action.

Harmonization of the National Do-Not-Call Registry: Clarifies that states have the right to maintain their own do-not-call registries, if a state’s registry imposes stricter requirements on telemarketers than those imposed by the federal registry.

Common Carrier Exception: Repeals the telecommunications common carrier exemption. Currently, common carriers subject to the Communications Act of 1934 are exempt from the requirements of the Federal Trade Commission Act. The legislation repeals this exemption, allowing the Commission to protect consumers from unfair and deceptive acts or practices by telecommunications common carriers, particularly in the areas of advertising, marketing, and billing.

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