Chairman Rockefeller Remarks on Financial Services and Products: The Role of the FTC in Protecting Consumers

March 17, 2010

JDR Head ShotWASHINGTON, D.C.—Today’s hearing reflects the Commerce Committee’s ongoing commitment to consumer financial protection and the important role of the Federal Trade Commission (FTC). It is an important follow-up to the full committee hearing we held on February 4th when we heard from FTC Chairman Jon Leibowitz.

Today, members of the subcommittee will hear a wider array of viewpoints on proposed reforms to the FTC and its authorizing statute, the Federal Trade Commission Act. I want to thank Senator Pryor for presiding and for his excellent work as Chairman of the Subcommittee on Consumer Protection.

As I said last month, we cannot forget how we got here: many of the enormous economic problems we face today are a direct result of weak consumer protections in the financial sector.

We have to do better for the American consumer. With family budgets stretched thin, foreclosures up and unemployment still sky-high, unscrupulous business practices continue to target consumers directly when they can least afford it. The American people need to know there is someone out there they can trust to stand up against those bad actors.

The Federal Trade Commission is our nation’s premier consumer protection agency. When credit repair companies defraud consumers, it is the FTC that steps in to stop the scams and provide relief to victims. When people are sold products or services under false pretenses, billed for services they do not want, or have their identity stolen, it is the FTC that takes action. Only the FTC has the experience and expertise to regulate consumer protection across a broad swath of the U.S. economy.

The Commission’s core consumer protection mission embodied under Section 5 of the FTC Act is to prevent and enforce against “unfair or deceptive acts or practices in or affecting interstate commerce.” This broad prohibition has served as the bedrock of consumer protection law in the United States for over 70 years. Throughout its history, the FTC has used its authority to enforce and regulate against unfair or deceptive acts or practices to address a wide range of commercial abuses – from abusive credit practices, to fraudulent debt relief scams, to deceptive advertisements and marketing schemes. 

Whenever and however the Senate addresses financial regulatory reform and consumer protection in the coming weeks and months, I believe this well-established authority must be kept firmly intact. We cannot afford to compromise the FTC’s core consumer protection mission that has served the American public well.

What is more, we may need further reforms to the FTC and its underlying statute, to ensure the Commission can fulfill its mission as effectively as possible. During the full committee hearing we discussed a number of long-sought reforms. Consumer advocates believe we need to liberate the FTC from statutory limitations that have shackled the Commission from aggressively and effectively addressing abusive commercial practices. 

At the top of the list: granting the FTC normal rulemaking authority set forth under the Administrative Procedures Act. Currently, the Commission must follow cumbersome Magnuson-Moss rulemaking procedures, so difficult to navigate that it can take the FTC, literally, 10 years to promulgate a rule involving any controversy. The rulemaking process is so burdensome the Commission no longer devotes any time or resources to it.

Critics argue that Magnuson-Moss’s procedural hurdles are necessary given the broad scope of “unfair or deceptive acts or practices.” And they point to alleged Commission abuses of the past, specifically during the late 1970s. But the statutory and regulatory landscape has changed significantly since the turbulent 70s, and I am not sure the criticism still stands.

Other proposed reforms include granting the Commission authority to:

  • Independently seek civil penalties without approval from the Justice Department;
  • Enforce against those who aid and abet unfair or deceptive acts or practices and;
  • Seek civil penalties for general violations of the FTC Act.

All of these reforms were included in the House-passed version of consumer financial protection legislation, and they deserve to be considered in our Committee as well.

We can bring much-needed transparency to financial services by fully preserving the FTC’s enormously important role in protecting consumers from unfair or deceptive practices and strengthening that authority through legislative reforms. As Chairman of the Commerce Committee with a fundamental commitment to consumer protection, I fully intend to pursue the legislative options that best serve this goal.

Again, I want to thank Senator Pryor for presiding over this important hearing. And I want to thank our witnesses for testifying today. As the Committee continues to focus on consumer financial protection, we will continue to call on their expertise and perspective.