PERFORMANCE AND ACCOUNTABILITY REPORT

Fiscal Year 2006

FEDERAL TRADE COMMISSION

PERFORMANCE AND ACCOUNTABILITY REPORT

Fiscal Year 2006

Message from the Chairman

It is my pleasure to present the Federal Trade Commission’s Performance 

and Accountability Report for Fiscal Year (FY) 2006. This is a unique and 

important time for the FTC’s mission as we increasingly encounter 

an online, high-tech, global marketplace. Our strategic goals are to 

protect consumers and maintain competition in this dynamic environment, and the FTC applies three objectives—identify, stop, and prevent fraud, deception, and anticompetitive conduct —to achieve these 

goals. We are committed to: identifying the latest scams and anticompetitive practices that develop in this marketplace; stopping them 

through law enforcement; and preventing consumer injury through 

education. The strategies to achieve these objectives are outlined in 

our recently issued Strategic Plan for FYs 2006-2011 (www.ftc.gov/

strategicplan). This FY 2006 report provides an overview of the FTC’s 

mission, ­accomplishments, performance, and financial ­management.

This report highlights our accomplishments in high priority areas, as 

well as challenges facing the FTC. Of these challenges, identity theft 

continues to top the list of categories of consumer complaints that the 

FTC receives. In May 2006, President Bush signed an Executive Order 

creating the nation’s first ever Identity Theft Task Force, comprised of

17 departments and agencies. U.S. Attorney General Alberto R. Gonzales chairs, and I co-chair, the Task Force, which is charged with developing a national strategy to better prevent identity theft, coordinate 

prosecution, and ensure recovery for victims (www.consumer.gov/

idtheft/taskforce).

The Performance Section of this report lists the key outcomes for each 

of our two strategic goals, which include areas such as protecting and 

educating consumers on such issues as data security, spam, and telemarketing, and promoting competition and innovation, in energy, health 

care, and real estate industries, among others. Globalization of competition and consumer protection principles also is a challenge to the 

United States and other countries around the world. In the coming 

year, the FTC will continue to address these and other challenges that 

are important to consumers. More information on the FTC’s activities 

and its wealth of consumer and business education materials can be 

found at our website at www.ftc.gov.

Without strong management practices, the FTC could not accomplish 

its mission. We place a high priority on sound financial management,

information technology, human resources, and administrative support 

services, and are rewarded with high quality services that make our work 

flow smoothly. In particular, an important goal of the FTC is to implement good financial management practices to ensure that our ­resources

are well-managed and wisely used. The FY 2006 independent financial

Deborah Platt Majoras

Chairman
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audit resulted in the FTC’s tenth consecutive unqualified opinion, the

highest audit opinion available. The audit of the FTC’s financial statements, which includes tests of internal controls and compliance with 

laws and regulations, is conducted in accordance with Government 

Auditing Standards and the Office of Management and Budget (OMB)

Bulletin No. 06-03. No material internal control weaknesses were identified. The Reports Consolidation Act of 2000 requires an assessment

of the completeness and reliability of the program and financial data

contained in this report. Based on criteria issued by OMB, I conclude 

that the data are complete and reliable.

The Financial Section of this report includes the Top Management 

Challenges as identified by the Office of the Inspector General (OIG).

These challenges focus on data security and effective control and 

administration of the FTC’s Information Technology Security Program 

and safeguards in the consumer redress administration program. As the 

OIG acknowledges, the FTC has taken significant action in these areas,

but more can, and will, be done. The FTC, which has the responsibility 

of enforcing laws safeguarding personally identifiable information, is

acutely aware of these issues and has moved to tighten our own data 

security measures. To ensure our continued attention to this issue, I 

named a new Chief Privacy Officer in FY 2006, and we have a senior

information security officer, who acts on behalf of the Office of Information and Technology Management. In the redress administration 

area, the Director of the Bureau of Consumer Protection issued a policy on selecting receivers in June 2006; the program staff also increased 

the size of their audit sample size and is exploring the automation of 

audit procedures to provide even more security.

I believe that the performance and financial information described

in this report will give American consumers confidence in the FTC’s

work to protect the nation’s marketplaces. I look forward to working 

with agency staff in the coming year to continue providing high-quality 

service, earning consumer trust in the job we are doing.

Deborah Platt Majoras

November 14, 2006
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Table of Contents

Message from the Chairman.................................................. i

Management Discussion and Analysis

FTC At-a-Glance ..................................................................... 1

Performance Summary ............................................................ 5

Ongoing and Future Challenges .............................................. 9

Financial Highlights............................................................... 13

Management Assurances........................................................ 16

Future Challenges in Financial Management......................... 21

Performance Section 

Strategic Goal 1: Protect Consumers ............................ 23

Key Outcomes for Goal 1: Protect Consumers...................... 30

Strategic Goal 2: Maintain Competition........................ 36

Key Outcomes for Goal 2: Maintain Competition ................. 48

Financial Section and Notes

Message from the Chief Financial Officer.............................. 55

Report of the Independent Auditors ..................................... 57

IG Identified Management Challenges .................................. 62

Principal Financial Statements .............................................. 66

Notes to the Financial Statements ......................................... 73

Supplementary Information .................................................. 93

Contact Information ............................................................ 98
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Management Discussion and Analysis

FTC At-a-Glance

Mission

To prevent business practices that are anticompetitive or deceptive or 

unfair to consumers; to enhance informed consumer choice and public 

understanding of the competitive process; and to accomplish these missions without unduly burdening legitimate business activity. 

Vision

A U.S. economy characterized by vigorous competition among producers and consumer access to accurate information, yielding high-quality 

products at low prices and rewarding efficiency, innovation, and consumer choice.

Strategic Goal 1 

Protect Consumers: Prevent fraud, deception, and unfair business 

practices in the marketplace.

Strategic Goal 2

Maintain Competition: Prevent anticompetitive mergers and other 

anticompetitive business practices in the marketplace.

Mission

The FTC addresses issues of major concern to American consumers 

and performs its mission through the use of a variety of tools, including law enforcement; rulemaking; research and studies on marketplace 

trends and legal developments; and consumer and business education 

and outreach. The FTC promotes informed consumer choice and public understanding of the competitive process. The work of the FTC is 

critical to protecting and strengthening free and open markets in both 

the United States and the world. 

The FTC has two separate but related strategic goals. The first is to

Protect Consumers by preventing fraud, deception, and unfair practices in the marketplace. The second is to Maintain Competition by 

promoting free markets and preventing anticompetitive practices and 

arrangements­, vigorous competition spurs innovation, provides more 

choices, and lowers prices among the goods and services offered to 

consumers. These two goals are closely related and complement each 

other—when consumers have accurate information about goods and 

services, they can make sound decisions among the choices presented, 

thus benefiting from and prompting competition. In the consumer protection area, current areas of major concern include law enforcement 

challenges involving a wide variety of fraudulent and deceptive activity, 

consumer privacy, data security, and identity theft; and issues of both 
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fraud and privacy in the electronic marketplace, including spyware and 

spam. Among other activities, the FTC also monitors the marketing 

of media violence to children; maintains and enforces the National Do 

Not Call Registry (DNC); and enforces credit, financial, and retail laws

and regulations. In addition, the FTC implements a vigorous business and consumer education outreach program. Finally, the agency 

maintains a national Consumer Response Center for consumer inquiries and complaints, which receives more than 30,000 contacts per week 

via its toll-free numbers and Internet complaint forms (see Appendix: 

Contact Information). 

In the competition area, the FTC investigates mergers and anticompetitive conduct, focusing its resources on sectors of the economy that 

most impact consumers, such as energy, health care, and high technology. For example, the FTC reviews each year well over 1,000 proposed 

mergers, most reported under the Hart-Scott-Rodino Premerger Notification Act (HSR), to determine if they are likely to reduce competition substantially in the relevant markets. The agency closely monitors 

price movements in retail gasoline and searches for any anticompetitive conduct. It also investigates anticompetitive conduct that could 

deprive consumers of lower-cost generic drugs or physician services or 

other arrangements that similarly could deny consumers the benefits

of competitive health care. Finally, in both consumer protection and 

competition, the agency’s focus is increasingly global. It works with 

competition and consumer protection agencies around the world to 

promote cooperation in cases of mutual interest and convergence toward 

best practices. 

The impact of the FTC on the nation’s marketplace is significant. The

FTC is the only federal consumer protection agency with jurisdiction 

over a wide spectrum of consumer issues. Consumers are affected every day by the FTC’s activities as they, for example, receive fewer telemarketing calls, obtain free credit reports, receive less spam, receive 

identity theft victim assistance, access truthful information about health 

and weight loss products, pay lower prescription drug prices due to the 

availability of generic drugs, and enjoy competitive prices for goods as a 

result of merger reviews and actions taken by the FTC. The FTC is an 

independent federal agency with a total staff of approximately 1,100 

individuals working in its Washington, D.C. headquarters and in seven 

regions across the country. In addition to its broad law enforcement 

authority and more limited rulemaking activities, the FTC has unique 

jurisdiction to gather, analyze, and make public information concerning markets, the state of competition, and business practices. With this 

information and analysis, the agency contributes to the policy deliberations of the Congress, the Executive Branch, other independent agencies, and state and local governments.
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Fiscal Year 2006



Organization

The FTC is headed by a Commission comprised of five members who

are nominated by the President and confirmed by the Senate, and who

serve staggered seven-year terms. The President chooses one Commissioner to act as Chairman. No more than three Commissioners can be 

of the same political party. In FY 2006, the Chairman was Deborah 

Platt Majoras, and the Commissioners were Pamela Jones Harbour, Jon 

Leibowitz, William E. Kovacic, and J. Thomas Rosch.

The FTC’s organizational structure is directly related to its two strategic goals. There are two major law enforcement bureaus, Consumer 

Protection and Competition, supported by an Economics Bureau, regional offices, and mission support offices. The FTC’s FY 2006-2011

Strategic Plan (www.ftc.gov/strategicplan) presents the objectives, 

strategies, implementation plans, performance measures, and evaluations for each goal.

Chairman

Deborah Platt Majoras

Commissioner

Pamela J. Harbour

Office of Congressional Relations

Jeanne Bumpus

Office of Public Affairs

Nancy Ness Judy

Office of Inspector General

Howard L. Sribnick

Office of Administrative Law Judges

Stephen J. McGuire

Office of the Secretary

Donald S. Clark

Commissioner

William E. Kovacic

Commissioner

J. Thomas Rosch

Commissioner

Jon Leibowitz

Office of the Executive Director

Charles Schneider

Regions

CFO

Steven A. Fisher

CIO

Stephen Warren

Bureau of Consumer Protection

Lydia B. Parnes

Office of General Counsel

William Blumenthal

Bureau of Economics

Michael Salinger

Bureau of Competition

Jeffrey Schmidt

Chief of Staff

Brian Huseman

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The mission of the FTC is to protect consumers and maintain and promote competition in the marketplace. The agency applies a number 

of objectives, performance goals, and desired outcomes to determine 

how well it is performing its mission, including identifying, stopping, 

and preventing fraud and anticompetitive mergers or conduct through 

shared data collection, strategic law enforcement actions, and effective 

consumer and business education. It is difficult, if not impossible, to

measure the value, in monetary terms or otherwise, of deterrence and 

education, but the agency is confident, taking into account the new

performance measures included in its recent FY 2006-2011 Strategic 

Plan (www.ftc.gov/strategicplan) as discussed below, that consumers benefit from accurate consumer information and the deterrence of

unfair or deceptive acts and anticompetitive mergers or conduct.

A measurable outcome of FTC’s mission is substantial financial savings

to consumers through law enforcement actions to stop specific frauds

and anticompetitive conduct or mergers. The FTC has developed performance measures directed at these law enforcement actions. Even so, 

the FTC strives to develop better performance measures that directly 

target these desired outcomes. The agency conducted a review of its 

performance measures for its recently issued FY 2006-2011 Strategic 

Plan and developed new outcome measures for coming years. 

The systems and methodologies for collecting performance data are 

reviewed by the FTC’s OIG. Senior economists from the FTC’s Bureau 

of Economics review statistical data, as appropriate. Performance measure results are reviewed by senior management and the Commission 

periodically throughout the fiscal year. The FTC is continuously striving to improve both the way it measures its performance, and the methods it uses to capture results. In FY 2007, the agency plans to document 

the methodology for each of its measures in the strategic plan and work 

with the OIG to ensure that methodology is sound.

Northeast

East Central

Southeast Southwest

Midwest

Northwest

Western

Alaska

Hawaii

Puerto Rico
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Fiscal Year 2006



Performance Summary

In FY 2006, the FTC measured its achievement of outcomes using 

three long-term performance measures: (1) the five-year consumer protection performance measure to save consumers approximately $2 billion through law enforcement actions stopping consumer fraud; (2) the 

five-year maintaining competition performance measure to take action

against anticompetitive mergers in markets with a total volume of commerce of at least $200 billion; and (3) a second five-year maintaining

competition measure to take law enforcement action against anticompetitive nonmerger conduct in markets with a total volume of commerce of at least $100 billion.

For its first long-term measure, the agency’s FY 2006 target was to save

consumers more than $400 million by stopping fraudulent practices in 

the marketplace. During FY 2006, the FTC saved consumers an estimated $293 million. Consumer savings are measured by estimating 

the annual fraudulent and deceptive sales made by defendants in the 

12 months prior to the FTC’s filing of a complaint. The savings calculation may underestimate the FTC’s impact because it assumes that 

the fraud and deception would have continued for only one additional 

year. Nonetheless, this method provides a uniform measure for calculating savings and minimizes speculation about the likely duration of 

the fraud and deception. Due to the variance of savings on an annual 

basis, this measure has a five-year target of $2 billion. Having exceeded

the annual target in FY 2003, and achieved 87 percent and 92 percent, 

respectively, in FY 2004 and FY 2005, the agency remains within reach 

of the five-year target.

For both merger and nonmerger enforcement long-term measures, the 

agency measured the volume of commerce in markets in which it takes 

successful enforcement action as an indicator of the scope of the FTC’s 

antitrust enforcement activities. As noted in the FTC’s 2003-2008 Strategic Plan, external factors, such as level of merger activity, may cause 

the results to fluctuate significantly from year to year. Consequently,

the two volume-of-commerce targets are each expressed in terms of an 

aggregate target for the five-year strategic plan period, rather than as

yearly targets. 

The five-year target for the volume of commerce in markets benefiting

from FTC merger enforcement action is $200 billion, or $40 billion 

per year. In FY 2006, the FTC’s merger enforcement actions affected 

markets in which the total volume of commerce was $13.4 billion; over 

the first three fiscal years of the five year plan (2004 through 2006) the

total volume of commerce in affected markets has been approximately 

$84.2 billion, or approximately 70 percent of the three-year target.
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The five-year target for the volume of commerce in markets benefiting

from FTC nonmerger enforcement action is $100 billion, or $20 billion 

per year. In the course of FY 2006, the FTC’s nonmerger enforcement 

actions affected markets in which the total volume of commerce was 

$1.4 billion. This measure has fluctuated greatly, going from $2.6 billion in FY 2004 to $19 billion in FY 2005 and back down to $1.4 billion 

for FY 2006. During the first three years that this measure has been

in place, the overall volume-of-commerce for nonmerger enforcement 

actions has thus been approximately $23.3 billion or 39 percent of the 

three-year target.

In evaluating and developing measures for its FYs 2006-2011 Strategic 

Plan, the agency focused on its long-term outcome measures. On the 

consumer protection side, the measure to save consumers more than 

$400 million by stopping fraudulent practices in the marketplace was 

modified to broaden the type of case included in the measure. As the

agency moves from a focus on fraud cases to non fraud cases such as 

those involving identity theft, data security, and spam, the measure was 

changed to read: Stop approximately $400 million a year in economic 

injury to consumers; by 2011, the FTC will have saved consumers at 

least $2 billion through its consumer protection law enforcement. This 

revised measure will permit the FTC to measure its performance for all 

types of cases that involve consumer injury.

In the merger area, the target for 2006 was set near the peak of the 

merger wave and no longer is representative of the number of mergers currently reviewed. Thus, the targets were adjusted downward to 

reflect recent experience. It is not the FTC’s intention to seek out mergers that involve large amount of sales to meet a target, but rather bring 

action against anticompetitive mergers. In addition, it was determined 

that the term “annual sales” was more meaningful to consumers than 

volume of commerce. The new measure reads: Over the five-year period 2006-2011, take action against mergers likely to harm competition 

in markets with a total of at least $125 billion in sales. To meet this 

goal, the FTC will need to take action each year against mergers likely 

to harm competition in markets with an average total of $25 billion in 

annual sales. 

In the nonmerger area, a similar analysis of results in the past three 

year was done and the targets adjusted. The new nonmerger measure 

reads: Over the five-year period 2006-2011, take action against nonmerger anticompetitive conduct in markets with a total of at least $40 

billion in annual sales. To meet this goal, the FTC will need to take action each year against anticompetitive conduct affecting markets with 

an average total of $8 billion in annual sales.
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Fiscal Year 2006



The FTC also added two additional merger and nonmerger measures 

under the maintaining competition enforcement objective. The first

new merger measure is: Over the five-year period 2006-2011, save consumers an estimated $400 million through enforcement actions against 

nonmerger anticompetitive conduct likely to harm competition in markets. To meet this goal, the FTC will need to save consumers an average 

of $80 million per year. The first new nonmerger measure is: Over the

five-year period 2006-2011, save consumers an estimated $400 million

through enforcement actions against nonmerger anticompetitive conduct likely to harm competition in markets. To meet this goal, the FTC 

will need to save consumers an average of $80 million per year. Both 

the merger and nonmerger measures include the explanation: Because 

external factors may cause the results to fluctuate significantly from year

to year, this performance goal is expressed in terms of an aggregate target for the five-year strategic plan period, rather than as a yearly target.

Using these two new measures, the FTC will calculate consumer savings 

as a result of its merger and nonmerger enforcement actions.

The second new merger and nonmerger long-term measures provide a 

measure of the efficiency of the FTC’s maintaining competition activities. The merger measure says: Achieve a level of consumer savings 

from merger enforcement over the five-year strategic plan period that

is at least six times the amount of agency resources (in dollars of total 

resources) allocated to the merger program during that period. The 

nonmerger measure says: Achieve a level of consumer savings from 

nonmerger enforcement over the five-year strategic plan period that is

at least four times the amount of agency resources (in dollars of total resources) allocated to the nonmerger program during that period. These 

results will be an indicator of the return on taxpayer’s dollars.

The table on the following page summarizes the Performance Measure 

Targets and Results for FY 2006. 
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FY 2006 Performance Measure Targets and Results

MEASURE ACTUAL TARGET

GOAL 1: Protect Consumers

OBJECTIVE 1.1

1.1.1: Annual number of consumer complaints and inquiries 

entered into database. 1,011,000 950,000

1.1.2: Annual number of consumer complaints and inquiries 

related to identity theft entered into database. 342,000 350,000

OBJECTIVE 1.2

1.2.1: Dollar savings for consumers from FTC actions which 

stop fraud. $293 million $400 million

1.2.3: Number of data searches conducted by FTC and 

law enforcement personnel of the FTC’s Consumer Sentinel 

database.

107,600 40,000

1.2.4: Number of data searches conducted by law 

enforcement personnel of the FTC’s identity theft database. 4,325 2,000

OBJECTIVE 1.3

1.3.1: Number of education publications distributed to or 

accessed electronically by consumers. 53.0 million 25.0 million

1.3.2: Number of education publications related to identity 

theft distributed to or accessed electronically by consumers. 9.4 million 3.3 million

1.3.3: Number of Spanish-language education publications 

distributed to or accessed electronically by consumers. 2,400,000 550,000

GOAL 2: Maintain Competition

OBJECTIVE 2.1

2.1.1: Percent of HSR second requests resulting in 

enforcement action. 59% 60% - 80%

2.1.3: Number of nonmerger investigations resulting in 

enforcement action. 40% 60% - 80%

OBJECTIVE 2.2

2.2.1: Positive outcome of cases brought by FTC due to 

alleged violations. 100% 80%

2.2.3: Volume-of-commerce in markets in which FTC took 

action to prevent anticompetitive mergers. $13.4 billion $40.0 billion

2.2.5: Volume-of-commerce in markets in which FTC took 

action to prevent anticompetitive conduct. $1.4 billion $20.0 billion

OBJECTIVE 2.2

2.3.2: Quantify number of hits on antitrust information on 

FTC Web site. 10.6 million 10.0 million

MET OR EXCEEDED TARGET
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Fiscal Year 2006



Ongoing and Future Challenges

Consumer Protection Mission

The FTC’s priorities include addressing the following consumer protection challenges: 

Monitoring Emerging Trends. The FTC needs to keep pace with 

emerging trends so that it can target resources in areas where consumers are most harmed. To this end, in November 2006, the FTC is hosting hearings on “Protecting Consumers in the Next Tech-Ade,” which 

will look at the intersection of new technologies and their applications 

in the global consumer marketplace. Experts from the business, government, and technology sectors, consumer advocates, academics, and 

law enforcement officials will examine changes that have occurred in

marketing and technology over the past decade, and discuss emerging trends, applications, products, services, and other issues, challenges, 

and opportunities affecting consumer protection that may arise over the 

next ten years.

Improving Data Security. The continuing announcements of data 

security breaches highlights the importance of safeguarding sensitive 

consumer information, and were a major factor leading to the creation 

of the President’s Identity Theft Task Force, of which the FTC Chairman is a Co-Chair. Data security in particular is one of several areas 

of concern to the FTC in its work to protect consumers’ privacy and 

combat identity theft. Through law enforcement and consumer and 

business education, the FTC has a leading role in creating a culture of 

security by addressing the misuse of consumers’ sensitive information 

and helping consumers protect their privacy and identities. 

Stopping Technology Abuses. The FTC brings cases against those 

who abuse technology and educates consumers on how to avoid these 

problems. To this end, the FTC’s highest priority is to stop spyware and 

other deceptive and unfair practices that make it difficult or dangerous

for consumers to operate their computers. The FTC also enforces the 

Controlling the Assault of Non-Solicited Pornography and Marketing 

Act of 2003 (CAN-SPAM Act), under which it brought eight law enforcement actions in fiscal year 2006 stopping deceptive or fraudulent

spam email. 

Building International Partnerships. The FTC is involved in law 

enforcement and policy development efforts with its consumer protection counterparts around the world. Since law enforcement cases increasingly involve an international component, the FTC continues to 

develop international partnerships to pursue these matters. The FTC 

also continues to promote international development of market-oriented consumer protection policies. For example, the FTC released a 
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report during FY 2005 advocating the passage of proposed legislation, 

the US SAFE WEB Act, which would improve the FTC’s ability to 

combat cross-border consumer protection law violations, particularly 

violations involving spam and spyware. This legislation is awaiting congressional action.

Improving Data Collection. The FTC continues to target its law 

enforcement efforts in large part based on the analysis of consumer 

complaint data that it gathers in the agency’s Consumer Information 

System (CIS) database. CIS enables the agency and its law enforcement 

partners to detect trends in consumer fraud as they occur. To meet the 

increasing volume of consumer complaints, the added number of users 

of the CIS system, and the increased demands on access to pertinent 

data, the FTC is planning for the redesign, development, implementation, and operation of an updated CIS. This update will ensure that 

the system is fully used by the agency and its law enforcement partners, 

and that the information it collects is reliable. 

National Do Not Call Registry. The National Do Not Call (DNC) 

Registry has been an unqualified success, and has logged more than 130

million telephone numbers since its inception. The FTC has brought 

law enforcement actions against many businesses violating the DNC 

provisions of the Telemarketing Sales Rule. Most entities covered by 

the DNC Rule comply, but for those who do not, tough enforcement is 

a high priority for the FTC.

Credit and Financial Fraud. The FTC enforces many of the nation’s consumer credit statutes, including the recent Fair and Accurate 

Credit Transactions Act (FACT Act). The agency also conducts studies and rulemakings that implement the provisions of the FACT Act 

and provide guidance to policymakers. The FTC also will continue to 

enforce consumer credit statutes and rules, such as the Fair Credit Reporting Act, Fair Debt Collection Act, Equal Credit Opportunity Act, 

and others, to protect consumers from deceptive lending practices and 

other illegal credit practices.

Maintaining Competition Mission

The FTC’s priorities include addressing the following maintaining 

competition challenges. 

Preventing and Stopping Anticompetitive Mergers. Companies 

are constantly restructuring and merging, seeking new ways to market 

both new and old products to a growing consumer market. During the 

1990s, the number of mergers reported to the FTC tripled, and the dollar value of commerce affected by those mergers increased eleven-fold. 

While merger activity has eased considerably since 2000, and the number of reportable transactions was reduced by a statutory change to the 
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HSR Premerger Notification Program in 2001, recent trends suggest

that merger activity is increasing, in terms of both number and complexity of transactions. The total dollar value of reportable transactions roughly doubled between 2002 and 2006, with a smaller, but still 

a substantial, increase in the number of reportable transactions. The 

number of merger filings has a direct impact on the allocation of resources within the FTC’s Maintain Competition goal. A large increase 

in filings can drain resources from nonmerger activities, which may affect the agency’s overall performance in maintaining competition.

Preventing and Stopping Anticompetitive Business Practices.

The ongoing transition to a knowledge-based economy from a primarily manufacturing-based economy highlights important questions about 

the relationship between the antitrust and intellectual property laws. 

In certain industries characterized by continued technological developments and regulatory reform, competition is supplanting regulation as 

the primary means of protecting consumers’ interests. The FTC relies 

on research, workshops, and hearings to refine its theoretical framework

and its empirical understanding of industry practices, which increase 

the agency’s ability to promote competition and consumer welfare in 

the marketplace. Health care quality, petroleum pricing, e-commerce, 

and intellectual property are just a few of the topics on which the FTC 

will seek to develop a significant knowledge base to guide future enforcement and policy decisions.

Promoting Sound Competition Policy at the International 

Level. Because antitrust enforcement increasingly crosses U.S. borders, 

the agency must continue its work in the international arena. Many 

merger investigations involve companies engaged in international commerce. More than 100 governments enforce a competition law, and antitrust enforcement by multiple authorities is increasingly common. Although antitrust laws and enforcement policies around the world share 

many goals, there are some differences that may increase the costs faced 

by firms that seek to combine assets or businesses, establish distribution

channels, or pursue other business arrangements across borders. This 

includes both the cost to comply with different antitrust requirements 

and the risk of inconsistent outcomes. Thus, the current growth and 

diversity of antitrust enforcement mechanisms can create tension with 

the ultimate goal of promoting competitive economies. The FTC will 

continue to work bilaterally and through international organizations to 

increase the procedural and substantive convergence of antitrust enforcement, including in the merger review process. The FTC also will 

broaden and deepen its already strong cooperation with other antitrust 

agencies on individual cases and antitrust policy issues. Finally, when 

appropriate, the FTC provides technical assistance to foreign antitrust 

authorities, particularly in countries in the process of developing competition laws or enforcing newly adopted laws.
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Energy. The petroleum industry continues to be a key focus of FTC 

investigative and enforcement resources. Over the past year, the agency 

has completed important law enforcement investigations and reports, 

and it will continue to investigate and study the industry closely. For 

example, in May 2006 the FTC delivered to Congress its report on 

whether gasoline prices had been manipulated and whether gasoline 

price gouging occurred after Hurricane Katrina. In addition, the FTC 

will continue to update and enhance its Oil and Gas Industry Initiatives 

Web site that provides consumers with important information on 

the FTC’s oversight of the petroleum industry (www.ftc.gov/

ftc/oilgas).

Real Estate. Real estate cases have become an increasingly important 

component of the FTC’s nonmerger agenda. For example, the FTC 

recently brought an action challenging a collective agreement by real 

estate brokers to enforce a rule that limited the ability of consumers, using low-cost real estate brokers, to market their home listings on important public Web sites. The FTC expects to bring additional real estate 

cases in the near future and will continue to prioritize its enforcement 

and advocacy efforts to preserve competition in this important sector, 

which greatly impacts so many of the nation’s consumers. In addition, 

in July 2006, the FTC debuted its real estate competition Web page 

(www.ftc.gov/bc/realestate) that provides important consumer 

educational materials on competition in the industry. 

Health Care. In the health care industry, the FTC will continue to 

bring enforcement actions against the most basic and perhaps most 

pernicious anticompetitive behavior—price fixing among horizontal

competitors—often physicians. The FTC also will remain vigilant in 

the detection and investigation of agreements between drug companies 

that delay generic drug entry into the marketplace. The agency will 

continue to bring enforcement actions to preserve competition in markets for health care products and services.

Section 2 of the Sherman Antitrust Act. The FTC and the DOJ 

are holding joint public hearings on how best to identify anticompetitive 

exclusionary conduct for purposes of antitrust enforcement under Section 2 of the Sherman Antitrust Act. The hearings seek to distinguish 

the specific types of conduct that may harm competition and consumer

welfare as compared to conduct that is pro-competitive or benign. The 

lessons learned from these hearings will help guide the FTC’s future law 

enforcement and policy efforts in this important area.
PERFORMANCE AND ACCOUNTABILITY REPORT

Fiscal Year 2006

13

Financial Highlights

Summary of Financial Position 

As of September 30, 2006, the financial condition of the FTC was

sound. During FY 2006 FTC’s overall financial position improved with

an increase in total exchange revenues of about 13 percent or $15 million and an increase in total assets of about 24 percent or $63 million. 

The FTC’s revenues are derived from spending authority from offsetting collections and from direct appropriation. The increase in both 

revenues and assets in FY 2006 is based on higher amounts accrued 

relative to spending authority from offsetting collections.

Spending authority from offsetting collections is comprised of amounts 

received for services performed under reimbursable agreements and 

collection of fees under the HSR Act and the National DNC Registry. 

In FY 2006, spending authority from offsetting collections accounted 

for about 62 percent of total revenues and financing sources realized

versus 35 percent received via direct appropriation (about 3 percent is 

imputed financing). Exchange revenue totaled $133 million and $118

million for FYs 2006 and 2005, respectively. 

Explanation of Key Financial Statement Line items and Major Fluctuations in Amounts 

In addition to having a higher volume in spending authority from offsetting collections, this year’s significant increase in both total assets

and total liabilities pertain primarily to actions involving civil penalties 

and redress cases. Specifically, the FTC obtained judgments late in the

FY thereby increasing year end amounts in Cash and Other Monetary 

Assets, Accounts Receivable, and Accrued Liabilities. 

There was an increase in Cash and Other Monetary Assets of 23 percent 

or $19 million relating to amounts collected for consumer redress but 

not yet disbursed to claimants. Correspondingly, there was a 24 percent 

or $12 million increase in the amount of undisbursed consumer redress 

reported as part of “Other” liabilities on the balance sheet. Further, 

net Accounts Receivable (Consumer redress) and the offsetting liability “redress receivables, accrued and due to claimants” increased by 

55 percent or $46 million. These amounts represent amounts accrued 

(based on judgments obtained) but not yet collected and distributed. 

Further, since judgments were obtained towards the end of the FY, 

actual collections decreased by about 40 percent, from $62 million during FY 2005 to $37 million in FY 2006. 
FEDERAL TRADE COMMISSION

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Overview of Stewardship Information

The major components of the FTC’s custodial activities are summarized 

below. Each of the following components impact amounts reported as 

“non-entity” assets, corresponding liabilities and amounts reported on 

the statements of custodial activity in the financial statements and accompanying notes. 

Premerger Filing Fees

All Hart-Scott-Rodino (HSR) premerger filing fees are collected by the

FTC pursuant to section 605 of P.L. 101-162, as amended, and are divided evenly between the FTC and the DOJ. The collected amounts are 

then credited to the appropriations accounts of the two agencies (FTC’s 

“Salaries and Expenses” and DOJ’s “Salaries and Expenses, Antitrust 

Division”). 

Civil Penalties and Fines

Civil penalties collected in connection with the settlement or litigation 

of the FTC’s administrative or federal court cases are collected by either the FTC or DOJ as provided for by law. DOJ assesses a fee equivalent to three percent of amounts collected before remitting them to the 

FTC. The FTC then deposits these collections into the U.S. Treasury. 

Civil penalties collected also include amounts collected for undecided 

civil penalty cases held in suspense until final disposition of the case.

Consumer Redress 

The FTC obtains consumer redress in connection with the settlement 

or litigation of both its administrative and its federal court cases. The 

FTC attempts to distribute funds thus obtained to consumers whenever possible. If consumer redress is not practical, the funds are paid 

(­disgorged) to the U. S. Treasury, or on occasion, other alternatives, 

such as consumer education, are explored. 

Summary of Key Financial Indicators

Revenues Earned and Other Financing Sources

The primary source of revenue earned was premerger filing fees under

the HSR Act, with $111 million in fiscal year 2006 and $100 million

in fiscal year 2005, respectively. Qualifying mergers with a transaction

amount over $53 million in total assets are charged a filing fee. The fee

is based on a three-tiered structure and is divided equally between the 

FTC and the Antitrust Division of the Department of Justice (DOJ). 

The disposition of amounts collected for the DOJ is reported on the 

Statements of Custodial Activity. The number of filings increased

by140 with 1,732 recorded in FY 2006 and 1,592 recorded in FY 2005, 

respectively. Premerger filing fees represented 51 percent and 47 percent of the total revenue and financing sources to the agency in fiscal

years 2006 and 2005, respectively. 
PERFORMANCE AND ACCOUNTABILITY REPORT

Fiscal Year 2006

15

The second largest source of revenue was Do Not Call (DNC) fees. Fees 

are based on the number of area codes downloaded and have resulted 

in collection of fees of $22 million and $18 million for fiscal years 2006

and 2005, respectively. DNC fees represented 10 percent and 8 percent 

of the total revenue and financing sources for fiscal year 2006 and 2005,

respectively.

An additional source of revenue was earned through reimbursable 

agreements with other federal agencies. Total reimbursable earnings 

were $1 million and represented about 1 percent of total revenue and 

financing sources for both fiscal years 2006 and 2005, respectively.

Also, an imputed revenue source was recognized to provide unfunded 

employee benefits cost in the amount of $7 million in fiscal years 2006

and 2005, respectively. These represented 3 percent of total revenue 

and financing sources for fiscal years 2006 and 2005, respectively.

In addition to revenue earned, other financing sources were realized

through a direct appropriation from the General Fund of the Treasury, and other non-expenditure transfers, in the amount of $77 million 

in fiscal year 2006 and $87 million in fiscal year 2005. The budgetary authority appropriated from the General Fund was reduced by the 

amount of offsetting collections (HSR and DNC fees) received during 

the year to arrive at the final amount of resources appropriated from

the General Fund. Direct appropriation and transfers represent 35 percent and 41 percent of total revenue and financing sources received for

fiscal years 2006 and 2005, respectively. Financing sources that are not

needed to fund the cost of operations are added to Cumulative Results 

of Operations and Net Position. 

Cost Summary 

The gross cost of operations for 2006 fiscal year was $208 million and

represents an increase of 6 percent over the fiscal year 2005 gross cost

of operations which was $197 million. During 2006, expenses for salaries and related benefits totaled $129 million, or 62 percent of the gross

cost of operations. Rental expense was $17 million, or 8 percent, and 

the remaining $62 million, or 30 percent, included travel, facility maintenance and equipment rental, utilities, imputed benefit costs, depreciation, and other items. 

In FY 2006 the gross cost of the Consumer Protection Mission, which 

relates directly to the Protect Consumers strategic goal, was $119 million, and the gross cost of the Maintaining Competition Mission, which 

relates directly to the Maintain Competition strategic goal, was $88 million. The FTC’s total net cost of operations, i.e., gross cost less offsets, 

was $74 million. These amounts are shown in the Statement of Net 

Cost, which can be found in the financial section of this report.
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Management Assurances

Federal Managers Financial Integrity Act (FMFIA) Statement of Assurance

The FMFIA requires federal agencies to provide an annual statement of 

assurance regarding management controls and financial systems. This

statement was based on the review and consideration of a wide variety 

of evaluations, control assessments, internal analyses, reconciliations, 

reports, and other information, including OIG audits, and the inspectors general’s opinion on the FTC financial statements and OIG reports

on internal control and compliance with laws and regulations. In addition, FTC is not identified on the Government Accountability Office’s

(GAO) High Risk List related to controls governing various areas.

In response to the FMFIA, the agency developed a management control 

program which holds managers accountable for the performance, productivity, operations and integrity of their programs through the use of 

management controls. Additionally, senior managers at the agency are 

responsible for evaluating the adequacy of the management controls 

surrounding their activities and determining whether they conform to 

the principles and standards established by the Office of Management

and Budget (OMB) and the GAO. The results of these evaluations and 

other senior management information are used to determine whether 

there are any management control problems to be reported. The FTC 

statement of assurance appears below:

As the Chairman of the Federal Trade Commission (FTC) it is my 

responsibility to ensure the FTC’s resources are efficiently managed

and effectively used. The objective of the FTC’s management control 

system is to provide reasonable assurance that: 

• obligations and costs are in compliance with applicable laws; 

• assets are safeguarded against waste, loss, and unauthorized use of 

appropriations; 

• revenues and expenditures applicable to agency operations are 

properly recorded and accounted for, permitting accurate accounts, 

reliable financial reports, and full accountability for assets; and

• programs are efficiently and effectively carried out in accordance

with applicable laws and management policy. 

During FY 2006 the FTC established an internal control senior assessment team. The FTC assessment team reviewed and evaluated selected 

FTC internal controls during FY 2006. The management controls were 

reviewed in accordance with the requirements of FMFIA, the Office

of Management and Budget (OMB) Circular No. A-123, Management 

Accountability and Control, and GAO internal control standards.
PERFORMANCE AND ACCOUNTABILITY REPORT

Fiscal Year 2006

17

Based on the management control program, reviews, and consideration of other information, including OIG audits, senior management’s 

assessment of the effectiveness of the entity’s internal controls is that 

controls are adequate to provide reasonable assurance in support of 

effective and efficient programmatic operations, reliable financial reporting, and compliance with laws and regulations; and that the FTC’s 

financial management system is in compliance with the FFMIA.

Section 2 of the FMFIA requires federal agencies to report, on the 

basis of annual assessments, any material weaknesses that have been 

identified in connection with their internal and administrative controls.

The reviews that took place during FY 2006 provide reasonable assurance that FTC systems and management controls comply with the 

requirements of the FMFIA. The FTC has no material weaknesses to 

report for FY 2006 relating to Section 2 of the FMFIA.

The following table reflects material weakness statistics reported

under Section 2 of the FMFIA in recent years by the Federal Trade 

Commission.

Section 4 of the FMFIA requires that agencies financial management

systems controls be evaluated annually. The FTC evaluated its financial

management systems for the fiscal year ending September 30, 2006 in

accordance with the FMFIA and OMB Circular No. A-127, Financial 

Management Systems, section 7, guidance. The audit results, management reviews, and statements provided by agency officials and external

financial service providers, provide reasonable assurance under Section

4 of the FMFIA that the FTC’s financial systems controls generally

conform to the principles and standards developed by the Comptroller 

General of the United States, OMB, and the Department of the Treasury. Pursuant to Section 4 of the FMFIA, OIG audits have included 

selected Commission accounting and financial systems in use over the

past fiscal year. Further, as further described under Federal Financial

Management Improvement Act (FFMIA) of 1996 below, FTC is in 

compliance with the FFMIA.

NUMBER OF MATERIAL WEAKNESSES Section 2 FMFIA

NUMBER AT

BEGINNING

OF YEAR

NUMBER

CORRECTED

NUMBER

ADDED

NUMBER

REMAINING 

END OF 

FISCAL YEAR

FY 2004 0 0 0 0

FY 2005 0 0 0 0

FY 2006 0 0 0 0
FEDERAL TRADE COMMISSION

18

The following table reflects material non-conformance statistics reported under Section 4 of the FMFIA in recent years by the Federal Trade 

Commission.

I am pleased to report the Federal Trade Commission has no FMFIA 

Section 2 material weaknesses to report for FY 2006 and can provide 

reasonable assurance under Section 4 of the FMFIA that the FTC’s 

financial systems generally conform to the principles and standards

developed by the Comptroller General of the United States (CG), 

OMB, and the Department of the Treasury. Based on the results of an 

Agency-wide management control assessment, financial management

systems review, and input from senior officials, I certify, with reasonable

assurance that the FTC is in compliance with Section 2 and Section 4 

of the FMFIA Act.

Deborah Platt Majoras

NUMBER OF MATERIAL NON-CONFORMANCES Section 4 FMFIA 

NUMBER AT

BEGINNING

OF YEAR

NUMBER

CORRECTED

NUMBER

ADDED

NUMBER

REMAINING 

END OF 

FISCAL YEAR

FY 2004 0 0 0 0

FY 2005 0 0 0 0

FY 2006 0 0 0 0
PERFORMANCE AND ACCOUNTABILITY REPORT

Fiscal Year 2006

19

Federal Financial Management Improvement Act (FFMIA) of 1996

The FFMIA of 1996 requires federal agencies to report on agency 

substantial compliance with federal financial management system

requirements, federal accounting standards, and the U.S. Government 

Standard General Ledger at the transaction level. Under this law, the 

agency heads are required to assess and report on whether these systems 

comply with FFMIA on an annual basis. In assessing compliance with 

FFMIA, FTC adheres to the FFMIA implementation guidance provided 

by OMB and considers the results of OIG and any GAO audit reports, 

annual financial statement audits, and any other information available.

The FTC maintains a system of internal controls to provide reasonable 

assurance that its assets are protected from fraud and abuse, transactions are properly executed and recorded, and operations are conducted in accordance with established policies and procedures. The FTC’s 

accounting system conforms in all material respects with the principles, 

standards, and related requirements specified in the FFMIA. 

The FTC’s accounting, personnel, payroll, and accounts payable 

processing is performed under contract by the Department of the Interior’s National Business Center in Denver, Colorado. Further, FTC 

has controls in place to ensure the integrity of both payment and payroll processing. Based on all information assessed, the Chairman of 

FTC has determined that FTC is compliant with requirements of the 

FFMIA of 1996. 

Summaries of Material Weaknesses and Non-Conformances

As described in the FMFIA Statement of Assurance above, there are 

currently no material weakness or non-conformances to report.

Improper Payments Information Act

The Improper Payments Information Act (Public Law (P.L.) No.107-300) 

defined requirements to reduce improper/erroneous payments made

by the federal government. OMB also has established specific reporting requirements for agencies with programs that possess a ­significant

risk of erroneous payments and for reporting on the results of recovery 

auditing activities. A significant erroneous payment as defined by OMB

guidance is an annual erroneous payment in a program that exceeds 

both 2.5 percent of the program payments and $10 million. 

The agency reviews controls and systems under the FMFIA to ensure 

that the agency has controls that can be relied on. In this review, the 

agency has not identified any programs where significant erroneous

payments have occurred within the agency. The agency will continue 

to review programs on an annual basis to determine if any significant

erroneous payments exist.
FEDERAL TRADE COMMISSION

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Limitations of the Financial Statements

The principal financial statements and related footnotes are the

responsibility of FTC senior management. In preparing the statements management makes certain assertions about valuation of assets 

and liabilities, overall presentation, obligation and rights, completeness, 

ownership, full disclosure and existence. However, the following are 

limitations to the financial statements.

a. They have been prepared to report the entity’s financial position

and results of operations pursuant to the requirements of 31 U.S.C. 

3515(b).

b. While the statements have been prepared from the entity’s books 

and records in accordance with U. S. Generally Accepted Accounting Principles (GAAP) for Federal entities and the formats prescribed 

by OMB (i.e., OMB Circular A-136, Financial Reporting Requirements) the statements are in addition to the financial reports used to

monitor and control budgetary resources.

c. The statements should be read with the realization that they are for 

a component of the U.S. Government, (i.e., sovereign entity). 

Debt Collection Improvement Act

The Debt Collection Improvement Act prescribes standards for the 

administrative collection, compromise, suspension, and termination of 

federal agency collection actions and referrals to the proper agency for 

litigation. Although the Act has no material effect on the FTC since it 

operates with minimal delinquent debt, all debt more than 180 days old 

has been transferred to the U.S. Department of the Treasury for crossservicing. In addition, recurring payments were processed by electronic 

funds transfer (EFT) in accordance with the EFT provisions of the Debt 

Collection Improvement Act of 1996. 

Audit of FTC’s 2006 Principal Statements

The Office of Inspector General of the Federal Trade Commission has

examined the Agency’s financial statements. The Inspector General’s

report on the principal statements, internal controls, and compliance 

with certain laws and regulations accompanies the statements. The 

financial statements were prepared in conformity with the hierarchy of

accounting principles approved by the Federal Accounting Standards 

Advisory Board (FASAB) and the Office of Management and Budget

(OMB) Circular A-136, Financial Reporting Requirements.
PERFORMANCE AND ACCOUNTABILITY REPORT

Fiscal Year 2006

21

Federal Information Security Management Act (FISMA)

The FTC continues to stay vigilant in ensuring that there are no material weaknesses in administrative controls over information systems 

and is always seeking methods of improving its secure configuration

As part of the effort to meet or exceed the requirements of FISMA, 

three agency systems have undergone certification and accreditation;

the FTC’s certification and accreditation policy was revised to conform

with the standard established by the National Institute of Standards 

and Technology (NIST); the agency reviewed and modified its Change

Management process; and the Acceptance Test environment was separated from the Production and Development environments. The FTC 

also conducted an assessment of its security controls against the new 

NIST Special Publication 800-53, Recommended Security Controls for 

Federal Information Systems, and found that more than 80 percent of 

the recommended controls have been implemented.

Prompt Payment Act

The Prompt Payment Act requires federal agencies to make timely 

payments to vendors, including any interest penalties for late invoice 

payments. In fiscal year 2006, the FTC paid interest penalties on 78

invoices, 2 percent, of the 4,372 vendor invoices processed, representing payments of approximately $2,360. The FTC paid only $0.01 in 

interest penalties for every 100 dollars disbursed in fiscal year 2006.

Future Challenges in Financial Management

The FTC is moving forward to meet the goal of its Five-Year Financial 

Systems Strategic Plan. The FTC is working towards leveraging advancements in technology to improve the integration, accessibility, and 

real-time nature of financial information required by program managers. To this extent, FTC plans to upgrade its core financial management system to increase data sharing among the various components of 

our FMS, including acquisition, funds control, and general ledger, and 

various other modules. Further, as part of this effort, the FTC plans 

to incorporate mechanisms that will facilitate better tracking of program costs relative to its strategic goals and objectives and performance 

measure results. By improving the capability to track costs to strategic 

goals and objectives, FTC will be moving towards having the ability to 

prepare performance-based budgets. 
FEDERAL TRADE COMMISSION

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Progress in Implementing Key Administration Initiatives

In support of the President’s Management Agenda, during FY 2006 

FTC Implemented an agency-wide “end-to-end” travel management 

system, in support of the e-Gov Travel Services (eTS) initiative. The 

FTC expects the system to help achieve cost saving in terms of improvements to process efficiencies and via reduced fees per transaction.

Additionally, during this year FTC completed the majority of the work 

in relation to a Program assessment rating tool (PART) review conducted by OMB. Although the results of the PART review are expected to 

be finalized and published in February 2007, FTC is confident that the

review will demonstrate positive results in terms the overall effectiveness of the agency.

Protecting Privacy

The FTC and a partnership including 

cybersecurity experts, online marketers, 

consumer advocates, and federal officials 

maintain a multimedia, interactive consumer 

education campaign to help consumers stay 

safe online. OnGuardOnline.gov, a Web 

site hosted by the FTC, provides practical 

tips from the federal government and the 

technology industry to help consumers 

guard against Internet fraud, secure their 

computers, and protect their personal 

information. For more information, visit 

www.onguardonline.gov.
PERFORMANCE AND ACCOUNTABILITY REPORT

Fiscal Year 2006

23

Performance Section

Goal 1: Protect Consumers

Prevent Fraud, Deception, and Unfair Business Practices in the Marketplace

As the nation’s leading consumer protection agency, a primary goal of 

the FTC is to protect consumers by preventing fraud, deception, and 

unfair business practices in the marketplace. It applies three related 

objectives to achieve this broad-reaching goal:

• Identify fraud, deception, and unfair practices that cause the 

greatest consumer injury.

• Stop fraud, deception, and unfair practices through law 

enforcement.

• Prevent consumer injury through education.

First, the FTC identifies practices that cause consumer injury by analyzing the consumer complaint data collected in its Consumer Information 

System (CIS) database, holding public discussions, and monitoring the 

marketplace, including the Internet. Next, the FTC uses this information to target law enforcement efforts. Its law enforcement program 

aims to stop and deter fraud and deception, protect consumers’ privacy, 

and increase compliance with its consumer protection statutes to ensure 

that consumers have accurate information for purchasing decisions. 

Finally, the FTC targets its education efforts to give consumers the information they need to protect themselves from injury and to explain to 

businesses how to comply with applicable laws.

Objective 1.1: Identify Fraud, Deception, and Unfair Practices That Cause the Greatest Consumer Injury

The first step in preventing fraud, deception, and unfair business practices in the marketplace is to identify the practices that cause the greatest consumer injury.

Strategies

To identify consumer protection problems, the FTC collects and analyzes data from many sources. Its Consumer Response Center receives 

consumer complaints and inquiries via a toll-free number (1-877-FTCHELP), mail, and the Internet. Partners such as the National Fraud 

Information Center of the National Consumers League, the Internet Fraud Complaint Center (a partnership between the FBI and the 

National White Collar Crime Center), Better Business Bureaus, and 

PhoneBusters (the Canadian fraud database), also share the consumer 

complaint data they collect with the FTC. 

All of this information is entered into the FTC’s CIS database and then 

analyzed by FTC staff to identify trends and target fraudulent, deceptive, and unfair business practices. The agency shares the more than 
FEDERAL TRADE COMMISSION

24

3.55 million fraud complaints that it has collected with nearly 1,600 

other law enforcement agencies across the United States, Canada, and 

Australia via an encrypted Web site. Although the FTC is not empowered to act on behalf of individual consumers, the consumer complaint 

database enables the FTC and its law enforcement partners to coordinate their enforcement efforts, and to spot trends and target the most 

serious consumer frauds. The constant input and analysis of current 

complaint data have allowed the FTC to move quickly to stop illegal 

practices before they cause more harm to consumers.

Consumers can call the FTC’s second toll-free number, 1-877-IDTHEFT, or view its Web site (www.consumer.gov/idtheft) to obtain information about, and report, identity theft. During FY 2006, the 

agency received 342,000 identity theft complaints and inquiries. The 

FTC uses this data to spot patterns that can help criminal law enforcement agencies prosecute identity theft and help businesses avoid the financial consequences of this crime. Criminal cases are identified by the

joint FTC and U.S. Secret Service Case Referral Program, and strong 

leads are referred to regional task forces, many led by the Secret Service 

Financial Crimes Division.

The FTC, along with the Secret Service and the Department of Justice 

(DOJ), initiated a training program in 2002 to provide local and state 

law enforcement officers with practical tools to enhance combined efforts to combat identity theft, including information about accessing 

consumer complaint data. During FY 2006, the FTC and its partners 

conducted 23 seminars and trained nearly 3,200 law enforcement officers from more than 1,050 agencies.

Finally, the FTC hosts workshops and conferences at which interested 

parties discuss practices that cause consumer injury. The workshops 

and conferences allow the parties to articulate their concerns and identify relevant strategies to combat these problems. Thus, the FTC is able 

to hear a variety of views on timely topics and help all parties understand the ramifications of these issues.

Performance Measures and Results

To assess its effectiveness in identifying fraudulent and deceptive practices, the FTC measured the number of consumer complaints and inquiries added to its CIS database. In FY 2006, the FTC added 1,011,000 

entries into its database, exceeding the target of 950,000. Included in 

these entries were 342,000 consumer complaints and inquiries related 

to identity theft, close to the target of 350,000.

These performance measures ensure that the agency’s enforcement 

activities are targeted at areas of greatest consumer concern, thus making the agency responsive to consumer needs and changes in the marketplace and efficient in its consumer protection efforts. They also help

Performance Measure 1.1.1

Annual number of consumer complaints 

and inquiries entered into database.

(numbers in thousands)

YEAR ACTUAL

2001 430

2002 680

2003 944

2004 994

2005 1,015

2006 1,011 Target: 950

Performance Measure 1.1.2

Annual number of consumer complaints 

and inquiries related to identity theft 

entered into database.

 (numbers in thousands)

YEAR ACTUAL

2003 321

2004 314

2005 348

2006 342 Target: 350
PERFORMANCE AND ACCOUNTABILITY REPORT

Fiscal Year 2006

25

ensure that the agency effectively leverages law enforcement resources 

by sharing this important information.

Performance Assessment and Future Trends

The large number of consumer complaints and inquiries added to the 

FTC’s database gives the agency a broad view of what reporting consumers are experiencing. The database allows the FTC and its law 

enforcement partners to identify and develop cases against fraudulent 

and deceptive operators that cause the greatest consumer injury. By 

analyzing consumer complaints, the FTC can refine its enforcement

and education efforts to target the top consumer complaints. Indeed, 

many of the FTC’s enforcement actions are responsive to consumer 

complaints, and the agency will add a performance measure on this 

point in FY 2007.

Not only does the FTC’s database help identify the most serious and 

commonly reported consumer protection problems, it quickly informs 

the agency of emerging scams so that the agency can move rapidly to 

stop consumer injury. In addition, by collecting data from consumers 

and other sources and sharing it with other law enforcers, the FTC is 

able to coordinate and augment the effectiveness of law enforcement 

agencies across the country and in Canada and Australia. To make 

the database even more valuable, the FTC continues to pursue new 

international partnerships to increase its collection of information from 

consumer agencies in other countries. For example, through the econsumer.gov Web site (www.econsumer.gov), the agency partners with 

other members of the International Consumer Protection Enforcement 

Network, an international group that identifies and shares information

about worldwide consumer protection issues.

The FTC will continue to expand its complaint database and increase 

its use by recruiting and training additional law enforcement partners. 

It also will make better use of its rich store of data by identifying repeat 

offenders and sharing this information with other law enforcers. In 

addition, the FTC will increase its capacity to analyze data quickly in 

order to identify and respond to fraud, deception, and identity theft in 

their early stages and help prevent consumer injury. The data will be 

used to provide more information to the public—by giving consumers 

information to protect themselves from scams, deceptive practices, and 

identity theft, and providing trend and statistical information to those 

involved in public policy discussions about consumer protection issues 

in the marketplace.

The evaluations listed under this and all other objectives in the agency’s FY 2003-2008 Strategic Plan do not reflect the actual analyses and

evaluations currently performed by the agency in most cases. To address this issue, the agency developed program evaluations for each of 
FEDERAL TRADE COMMISSION

26

the objectives set forth in the new FTC’s 2006-2011 Strategic Plan that 

demonstrate that the FTC will work to (1) improve the integration of 

budget and performance by linking goals and objectives to results, (2) 

develop improved processes for collection, use, and analysis of management data, and (3) follow a basic standard of data quality, including 

objectivity, utility, and integrity for the information used in measuring 

performance, and for any performance or other data that the agency 

may distribute publicly. Independent evaluations are included to meet 

the requirements of OMB’s Program Assessment Rating Tool (PART).

Objective 1.2: Stop Fraud, Deception, and Unfair Practices Through Law Enforcement

Once fraud, deception, and unfair business practices are identified in

the marketplace, the FTC focuses its law enforcement efforts on areas 

where it can have the greatest impact for consumers.

Strategies

The FTC’s enforcement efforts include cases covering a range of topics—from data security to spyware to fraudulent spam to deceptive 

lending practices and credit counseling services to misleading health 

claims. The FTC plays a vital role in protecting consumers’ privacy, emphasizing both enforcement and education. It focuses on telemarketing, spam, identity theft, spyware and unauthorized adware, and financial privacy, through enforcement of the CAN-SPAM Act, FACT Act, 

Gramm-Leach-Bliley Act and the Safeguards Rule, the Telemarketing 

Sales Rule, and Section 5 of the FTC Act.

With advances in technology, spammers, spyware operators, fraudulent telemarketers, and other scam artists can strike quickly on a global 

scale. An increasing number of complaints the FTC receives involve international transactions, and an increasing number of law enforcement 

investigations the FTC undertakes involve some international component. As a result, the FTC has implemented a comprehensive program 

to combat cross-border consumer protection law violations. The FTC 

continues to develop new bilateral and multilateral enforcement partnerships and to strengthen existing ones. 

In the nonfraud area, the FTC works to ensure compliance with the 

consumer protection statutes that it enforces. Given its broad jurisdiction and limited resources, it focuses on the most serious identified

problems, using varied enforcement tools and encouraging self-regulation in appropriate situations. One area of particular concern to the 

FTC is the advertising and marketing directed to youth, including violent entertainment products, online gambling, and alcohol. In 2006, 

the FTC released the results of its latest nationwide undercover mystery 

shop of electronic and video game stores, and announced enforcement 

actions in this area. The FTC also issued a report with the Department 
PERFORMANCE AND ACCOUNTABILITY REPORT

Fiscal Year 2006

27

of Health and Human Services recommending concrete steps that 

industry can take to change their marketing and other practices to make 

progress against childhood obesity. The FTC also works closely with 

industry and interested groups to seek their input on FTC policymaking 

efforts. For example, recent FTC workshops on Protecting Consumers 

in the New Mortgage Marketplace and the Appliance Labeling Rule 

were heavily attended by private sector participants.

Performance Measures and Results

The agency’s FY 2006 target was to save consumers more than $400 

million by stopping fraudulent practices in the marketplace. During FY 

2006, the FTC saved consumers an estimated $293 million. Consumer 

savings are measured by estimating the annual fraudulent and deceptive sales made by defendants in the 12 months prior to the FTC’s filing

of a complaint. The savings calculation may underestimate the FTC’s 

impact because it assumes that the fraud and deception would have 

continued for only one additional year. Nonetheless, this method provides a uniform measure for calculating savings and minimizes speculation about the likely duration of the fraud and deception. Due to the 

variance of savings on an annual basis, this measure has a five-year target of $2 billion. Having exceeded the annual target in FY 2003, and 

achieved 87 percent and 92 percent, respectively, in FY 2004 and FY 

2005, the agency remains within reach of the five-year target.

As an indicator of the usefulness of the FTC’s consumer complaint 

databases, the agency measures the number of data searches by its staff 

and other law enforcement personnel. During FY 2006, more than 

107,600 data searches of the FTC’s complaint database were conducted by the FTC and other law enforcement personnel, far exceeding the 

target of 40,000. The number of identity theft complaint searches by 

law enforcement personnel in FY 2006 was 4,325, exceeding its target 

of 2,100.

The FTC targets its enforcement resources towards areas of greatest 

risk to consumer health, safety, and economic well-being, with particular attention to emerging threats from new practices or technologies. 

These measures help guide deployment of the agency’s enforcement 

activities to ensure that they provide the most efficient level of protection to consumers. 

Performance Assessment and Future Trends

The measure of the dollars saved by stopping fraud is an important 

one. FTC’s experience in most cases is that once it files a complaint

in federal district court and obtains a court order, the defendants stop 

their fraudulent practices. If they fail to comply, they are subject to 

contempt proceedings. Thus, in stopping these frauds, the agency directly stops further consumer losses caused by these defendants. By 

Performance Measure 1.2.1

Dollar savings for consumers from FTC 

actions that stop fraud and deception.

(numbers in millions)

YEAR ACTUAL

2001 $487

2002 $561

2003 $606

2004 $349

2005 $366

2006 $293 Target: $400

Performance Measure 1.2.3

Number of data searches conducted by 

FTC and law enforcement personnel of 

the FTC’s Consumer Sentinel database.

(numbers in thousands)

YEAR ACTUAL

2003 28

2004 87

2005 79

2006 108 Target: 40

Performance Measure 1.2.4

Number of data searches by law 

enforcement personnel of the FTC’s 

identity theft database.

YEAR ACTUAL

2003 2,167

2004 2,120

2005 1,680

2006 4,325 Target: 2,000
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publicizing these law enforcement actions and distributing consumer 

education materials, it seeks to alert consumers to fraudulent and deceptive practices, educate them to avoid such practices in the future, 

and ultimately increase consumer confidence in the marketplace, while

deterring similar behavior by would-be violators. The FTC also can 

demonstrate its work to stop fraudulent and deceptive practices by measuring the number of orders it obtains.

The high number of searches by law enforcers of the FTC’s complaint 

databases demonstrates the relationship of consumer complaints to law 

enforcement results. By making extensive use of this tool, law enforcers 

are able to bring actions against those who violate the law. The FTC’s 

efforts to develop and maintain complaint databases pays off when cases are brought as a result.

In the future, the FTC will continue its aggressive law enforcement program and will target traditional and emerging frauds and unfair and 

deceptive practices. The focus on data security and high-tech scams 

will continue, as will emphasis on order enforcement, criminal referrals, 

and referrals to foreign law enforcement partners.

Objective 1.3: Prevent Consumer Injury Through Education

An educated consumer and business community is a first line of defense

against fraud and deception.

Strategies

The FTC is committed to using education and outreach as cost-effective methods to prevent consumer injury, increase business compliance, 

and add an extra dimension to its law enforcement program. Virtually 

every consumer protection effort contains an educational component, 

from compliance Internet surfs and law enforcement sweeps to the 

announcement of new rules and regulations. Through reports, publications, Web sites, media events, speeches, advocacy efforts, and collaborative activities with other organizations, the FTC reaches tens of 

millions of consumers and businesses every year. During FY 2006, the 

agency issued 125 new or revised publications—covering a full range of 

subjects such as saving money at the gas pump, online shopping, social 

networking sites, credit issues, and identity theft. The FTC also issued 

new electronic education tools, including quizzes, e-cards, and teaser 

Web sites.

The CIS database helps the FTC tailor its education efforts to topical 

areas where fraud, deception, unfair practices, and information gaps 

are causing the greatest injury. Consumers are given the tools they 

need to spot potentially fraudulent and other illegal promotions, and 

businesses are advised how they can comply with the law. As with the 

agency’s law enforcement, more of its educational efforts now involve 
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29

the Internet. The FTC not only addresses consumer issues involving 

the Internet, but it also uses the Internet as a tool to reach consumers.

The FTC coordinates with hundreds of private and public partners 

to provide information about specific campaigns, products, and services. It continues to manage the www.consumer.gov Web site, which 

offers one-stop access to federal consumer information. The www.

consumer.gov Web site is linked to the interagency firstgov.gov Web 

site. The FTC continues to increase the federal agency partnership base 

for www.consumer.gov, with more than 180 agencies participating.

To reach the growing population of Hispanic consumers in the United 

States, the FTC has expanded its Hispanic Outreach Program. The 

FTC’s Spanish-language page, www.ftc.gov/ojo continues to increase 

its library of translated consumer publications.

Performance Measures and Results

The FTC gauges the impact of its education efforts by tracking the 

number of consumer and business education publications it distributes 

to the public in response to consumer requests. During FY 2006, the 

FTC exceeded its target of 25 million publications by distributing 53 

million publications. This includes 9.4 million publications related to 

identity theft and 2.4 million Spanish-language publications. 

These performance measures help ensure that the agency is engaging 

in a sufficient amount of educational activity and that the educational

materials are aimed at particularly vulnerable populations. 

Performance Assessment and Future Trends

In FY 2006, the number of publications distributed far exceeded the 

agency’s target. The increasing use and accessability of the Internet 

helps explain this increase, as does the success of the FTC in its outreach efforts, relevancy of its messages to the public, and its translation 

of 125 publications to Spanish. The targets for FY 2007 and beyond 

have been raised significantly in the FTC’s 2006-2011 Strategic Plan.

In addition, as discussed below, new measures have been added to gauge 

the agency’s success in reaching as many consumers as possible.

The FTC seeks to alert as many consumers as possible to the telltale 

signs of fraud, deception, and unfair business practices, and other critical consumer protection issues through dissemination of its education 

messages. Ideally, the agency would like to measure the extent to which 

its educational materials improve consumer understanding and help 

them get better value for their money. This effect would be extremely 

difficult to measure, but tracking the distribution of publications provides a rough idea of how many consumers believe the information will 

prove useful. 

Performance Measure 1.3.1

Total number of education publications 

distributed to or accessed electronically 

by consumers. 

(numbers in millions)

YEAR ACTUAL

2001 15.0

2002 19.3 

2003 28.0 

2004 26.5

2005 35.3

2006 53.0 Target: 25.0

Performance Measure 1.3.2

Number of education publications 

related to identity theft distributed to or 

accessed electronically by consumers.

(numbers in millions)

YEAR ACTUAL

2003 3.0

2004 3.7

2005 3.7

2006 9.4 Target: 3.3

Performance Measure 1.3.3

Number of Spanish-language education 

publications distributed to or accessed 

electronically by consumers.

(numbers in thousands)

YEAR ACTUAL

2003 458

2004 737

2005 1,157

2006 2,400 Target: 550
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The measure of the number of publications distributed by the FTC indicates its impact in educating consumers, although it does not fully capture the millions of FTC publications that are distributed to consumers 

by others. While the number of print publications the FTC distributed 

remained relatively static, the number of publications accessed through 

the Internet soared as more consumers and businesses go online. In 

1996, the agency distributed only 140,000 publications online. During FY 2006, 43 million online publications were distributed. Use of 

the Internet to disseminate information about fraud and technology-related matters plays an integral role in the FTC’s education, deterrence, 

and enforcement efforts, permitting the agency to reach vast numbers 

of consumers and businesses quickly, simply, and at low cost. 

Going forward, the FTC will continue to focus consumer and business 

education efforts on subjects identified by its consumer complaint databases where information gaps cause the greatest injury, and that address 

the emerging issues of the day. The FTC will continue to use technology creatively, including new interactive media, to extend the reach 

of consumer and business education. The FTC will continue to work 

to identify and educate underserved consumer groups to help protect 

them from becoming victims of fraud. As another means to measure 

performance in this area, starting in FY 2007, the FTC will track the 

number of times print media publish articles that refer to the agency’s 

consumer protection activities and circulation of the media that publish 

those articles each year.

Key Outcomes for Goal 1: Protect Consumers

In FY 2006, the FTC took action on a wide variety of significant consumer protection matters that helped ensure that businesses and consumers alike reaped the full benefits of market innovation and informed

choice. The key outcomes of the Consumer Protection goal, objectives, 

and strategies are described below. 

Data Security and Identity Theft. The FTC has taken the lead 

to protect consumers from technology-driven threats to the security of 

their personal data, computers, and email inboxes. Concerns about 

data security and identity theft have intensified due in part to widespread media coverage of incidents of personal data theft. Identity 

theft tops the FTC’s list of consumer complaints, accounting for 40 percent of the 616,000 complaints filed in fiscal year 2006. In recognition

of the growing importance of these issues, the Consumer Protection 

Mission realigned in January 2006, creating a new Program of Privacy 

and Identity Protection to enforce relevant statutes and rules, develop 

policy, educate consumers and businesses, and analyze the impact of 

legislative initiatives. During fiscal year 2006, the FTC brought five

cases against companies that failed to provide reasonable security for 
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31

sensitive customer data. In one case, the FTC reached a settlement with 

ChoicePoint, Inc., that required the defendants to pay a $10 million 

civil penalty—the largest civil penalty in FTC history—and $5 million 

in consumer redress for compromising the personal financial records of

more than 163,000 consumers in its database. In addition to enforcement work, the FTC is a national leader on data security and identity 

theft policy and education. The FTC’s Chairman serves as Co-chair, 

and the Bureau of Consumer Protection Director serves as Deputy Executive Director, of the Identify Theft Task Force recently established 

by the President. In September 2006, the Task Force adopted interim 

recommendations on measures that can be implemented immediately 

to help address the problem of identity theft. The FTC also continues 

to educate consumers and businesses about steps to take to minimize 

the risk of identity theft and what can be done to mitigate injury if a 

problem occurs. In May 2006, the FTC launched a new nationwide 

education campaign, “AvoID Theft: Deter, Detect, Defend.” In fiscal

year 2006, the agency has distributed 3.4million copies of its identity 

theft publications and logged 6.0 million hits to its identity theft Web 

site.

Spam. In December 2005, the FTC, U.S. Attorneys, the U.S. Postal 

Inspection Service, and three state Attorneys General announced a law 

enforcement initiative targeting eight spamming operations that cluttered consumers’ mailboxes with millions of illegal email messages. In 

March 2006, an Internet marketer was ordered to pay a $900,000 civil 

penalty for violating the CAN-SPAM Act, the largest penalty yet for illegal spam. In April 2006, the FTC joined its foreign partners in calling 

for stepped up cross-border law enforcement cooperation and increased 

public/private sector cooperation to combat spam. In September 2006,

the FTC brought a permanent halt to and obtained settlements in four 

illegal spamming operations. The FTC also issued a report to Congress, required by the CAN-SPAM Act, assessing the effectiveness of 

the Act. The report concluded that technological anti-spam advances 

have reduced the amount of spam reaching consumers’ in-boxes, and 

that law enforcement has had some deterrent effect on spammers. 

Spyware and Unauthorized Adware. Spyware inflicts harm

on consumers with increasing frequency. As a result, the Consumer 

Protection Mission has made spyware investigations and prosecutions 

a priority. In October 2005, the FTC asked a U.S. District Court to 

halt an operation in which the defendants used the lure of free software 

to secretly install spyware and adware that could not be uninstalled 

by the consumers whose computers it infected. The FTC obtained an 

order for over $4 million against the primary defendants and separately 

settled with other defendants, who agreed to pay $300,000 in disgorgement. In November 2005, an operation that used the lure of free lyric 

Informing Consumers

Hispanic consumers are a powerful 

economic force, and marketers are 

reaching out to them with products and 

services like never before. It’s important 

for Hispanic consumers to have access 

to the information they need to make wellinformed decisions about how they spend 

their money, avoid scams and rip-offs, and 

protect their personal information. That’s 

why the FTC created Read Up! How to be 

an Informed Consumer, a comprehensive, 

bilingual guide for consumers. For more 

information, visit www.ftc.gov/bcp/edu/

microsites/reachout/index.html.
FEDERAL TRADE COMMISSION

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files, browser upgrades, and ring tones to download spyware and adware on consumers’ computers was ordered to halt its illegal downloads. The court also halted the deceptive downloads of an affiliate

who used unsuspecting bloggers to spread the malicious software by 

offering free background music. A September 2006 settlement in this 

matter requires the defendants to give up more than $2 million of their 

ill-gotten gains and includes a suspended judgment of $8.5 million. In 

a third matter, an operation that deceptively downloaded spyware onto 

unsuspecting consumers’ computers, changing their settings and hijacking their search engines, a U.S. District Court ordered the operators to 

give up more than $4 million in ill-gotten gains. Finally, the FTC obtained settlements against two operators that claimed to detect spyware, 

even when there was not any, and then sold consumers anti-spyware 

software that either did not work or did not work as advertised. The 

settlements require the defendants to give up a total of nearly $2 million 

in ill-gotten gains. 

Business Opportunities and Work-at-Home Schemes. The 

FTC brings law enforcement actions against fraudulent business opportunities under the FTC Act and the Franchise Rule. In November 

2005, the FTC stopped a business opportunity scam in which two Internet-based companies allegedly misrepresented “Web broker” packages 

to unwary customers. In March 2006, defendants in another matter 

agreed to settle charges that they violated the FTC Act and the Franchise Rule by making false and deceptive promises to franchise purchasers who paid as much as $8,000 in return for access to overstocked 

merchandise, expert training in the surplus goods industry, and substantial income. In May 2006, the FTC announced that a civil contempt 

judgment was entered against a defendant who violated a 2004 court 

order by continuing to deceptively market and sell envelope-stuffing,

work-at-home opportunities to consumers. In addition, a complaint 

was filed against four individuals and three companies that operated

the scheme with the defendant. In April 2006, the FTC proposed a 

rule to further enhance law enforcement efforts in the bogus business 

opportunities area.

Credit and Financial Fraud. The FTC enforces many of the nation’s consumer credit statutes. In January 2006, the FTC settled its 

action against the founder of a large credit-counseling firm. The settlement shut down the corporate defendants, permanently banned an individual from the credit counseling business, and imposed a $172 million suspended judgment. In addition, the individual defendant agreed 

to relinquish virtually all of his assets for consumer redress. The FTC 

will receive $35 million for distribution to consumers, and any monies 

that the receiver obtains in excess of $35 million will go to the founder’s 

bankruptcy case. Also in January 2006, a consumer credit reporting 
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33

agency agreed to pay $120,000 to settle FTC charges that it did not 

follow reasonable procedures to assure the accuracy of the information 

in the consumer reports it sold to mortgage companies. In May 2006, 

defendants in a credit foundation case agreed to settle FTC charges that 

they deceptively marketed themselves as a not-for-profit enterprise to

entice financially distressed consumers to enroll in debt management

plans, and then failed to deliver on promises of personalized credit 

counseling and dramatic and immediate interest rate reductions. Under the proposed settlements, the defendants will pay more than $2.4 

million in consumer redress, and are prohibited from making deceptive 

claims about credit counseling or debt management services.

National Do Not Call Registry/Telemarketing Sales Rule.

The National Do Not Call (DNC) Registry has been an unqualified success, and has logged more than 130 million telephone numbers since its 

inception. Most entities covered by the DNC Rule comply, but for those 

who do not, tough enforcement is a high priority. During fiscal year

2006, the FTC received more than 1.15 million consumer complaints 

alleging DNC violations. In December 2005, the FTC announced its 

then-largest civil penalty in a consumer protection enforcement action—$5.3 million to settle FTC charges that a satellite television firm

and companies it hired to promote its programming violated the DNC 

provisions of the Telemarketing Sales Rule (TSR). In June 2006, in 

the FTC’s first case to highlight the application of DNC provisions to

corporate affiliates, a seller of discount drug cards and its telemarketer

were ordered to pay $300,000 and $50,000, respectively, to settle charges that they violated the DNC provisions of the TSR. In January 2006, 

under a settlement reached by the FTC, a company and its CEO became the first service providers to pay a penalty for allegedly violating

the “assisting and facilitating” provision of the TSR. The defendants 

allegedly received money from another company to help it evade compliance with the DNC provisions of the TSR by assisting it in organizing and operating as a sham nonprofit corporation. In May 2006, in

the FTC’s first case alleging transmission of false caller ID information,

the agency sought civil penalties and an injunction against a nationwide 

telemarketer of mortgage loans for calling people whose numbers are 

listed on the Registry and doing so without identifying itself.

Health Fraud. The FTC is committed to protecting consumers from 

deceptive and unsubstantiated advertising, particularly health-related 

claims. In November 2005, FTC staff sent warning letters to 34 Web 

site operators that make claims that products advertised as natural alternatives to hormone replacement therapy could prevent or treat diseases. The letters, sent to Web sites identified in an FTC Internet surf,

warned that any health-related claims must be supported by competent 

and reliable scientific evidence. In January 2006, one of the largest

U.S. direct mail marketers of health-related products agreed to a ban 

Fighting Consumer Fraud

The FTC, law enforcement officials, 

consumer groups, and Hispanic leaders 

met in Los Angeles to discuss new ways 

to fight fraud in the community. At the 

meeting, the FTC announced five law 

enforcement actions against scammers 

targeting Hispanic consumers. These 

actions involved a range of products and 

services, including advance-fee credit 

cards, at-home English-language and automechanic training programs, a medicaldiscount plan, weight-loss products, music 

CDs, and credit-repair services. The FTC 

also released new consumer information 

about medical discount plans.

The Hispanic Law Enforcement and 

Outreach Forum was sponsored by the FTC, 

the U.S. Postal Inspection Service (USPIS), 

the U.S. Attorney’s Office in Los Angeles, 

and the Department of Consumer Affairs 

for the County of Los Angeles. For more 

information, visit www.ftc.gov/opa/2005/10/

losangeles.htm.
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from the direct response marketing of foods, unapproved drugs, and 

dietary supplements for making claims the FTC alleged were false and 

unsubstantiated and agreed to pay $1 million and turn over assets worth 

$3.5 million to settle the FTC’s charges. In May 2006, major weightloss marketers making questionable claims to peddle skin gels and diet 

supplements agreed to pay $3 million to settle FTC charges that their 

deceptive claims violated federal law. 

Law Enforcement Sweeps. The FTC continues to leverage its resources through partnerships with state and local law enforcers. During 

fiscal year 2006, the agency led two sweeps: one targeted individuals

who personally sent spam to consumers, in violation of the CAN-SPAM 

Act; the other targeted violators of the Credit Repair Organizations 

Act. The FTC and its 12 partners brought 31 cases, including 6 FTC 

cases.

Marketing of Media Violence to Children. In March 2006, the 

FTC released the results of its nationwide undercover shop of electronic and video game stores. The FTC conducted the shop to collect data on the extent to which retailers prevent children from buying video games that have been rated by the Entertainment Software 

Rating Board (ESRB) as Mature. The FTC also announced a second 

comment period for an upcoming survey on awareness of and attitudes 

towards ESRB ratings. The makers of the popular Grand Theft Auto: 

San Andreas video game agreed to settle FTC charges that, in advertising the ESRB rating for the game, they failed to disclose information 

about potentially viewable sexually explicit images and a mini-game 

that consumers could view if they had access to particular codes that 

were widely available on the Internet.

Consumer and Business Education. Consumer and business education 

is a key component of the FTC’s efforts to protect consumers. During 

fiscal year 2006, the FTC distributed 10 million print publications and

logged 43 million hits to its online informational materials. In October 2005, the FTC issued tips on helping victims of the earthquake in 

South Asia, suggesting wise ways for consumers to give. In May 2006, 

the FTC debuted an enhanced Web site dedicated to oil and gasolinerelated issues. Also in May 2006, the FTC offered an explanation of 

social networking sites and guidance for parents and children about 

how to use the sites safely. With millions of consumers planning summer vacations, the FTC launched a new online game, “Gear Up for 

a Great Trip,” which provides tips for travel planning. The FTC also 

unveiled new sections of OnGuard Online, including an identity theft 

quiz and a section offering tips for Internet auction buyers and sellers. 

For the FTC’s launch of the eighth annual National Consumer Protection Week, the agency unveiled the “Grand Scam Challenge,” online, 

interactive games that teach consumers about topics such as identity 

theft, the National DNC Registry, and spam.

Guarding Against Identity Theft

To help combat identity theft, the FTC 

established a new division in its Bureau 

of Consumer Protection that is staffed 

with experts in privacy, data security, 

and identity theft. The Division focuses 

resources on cutting edge consumer 

privacy matters through aggressive law 

enforcement, as well as rulemaking, policy 

development, and outreach to consumers 

and businesses. The FTC serves a key 

role as the central repository for identity 

theft complaints, facilitates criminal law 

enforcement in detecting and prosecuting 

identity thieves, and provides extensive 

victim assistance and consumer education. 

For more information, visit www.ftc.gov/

bcp/edu/microsites/idtheft.
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Hispanic Law Enforcement and Outreach. As the Hispanic 

market has grown, so has the opportunity for fraud targeting Hispanics. 

Detecting and preventing consumer fraud against Hispanics has been 

an important priority since launching our Hispanic Outreach and Law 

Enforcement Initiative in 2003. During fiscal year 2006, the FTC has

held Hispanic Law and Outreach Forums in Los Angeles, Cleveland, 

Las Vegas, and New York to promote education and awareness of consumer fraud targeted at the Hispanic community and to develop law 

enforcement responses. To identify appropriate enforcement targets, 

staff review all forms of Spanish-language media and analyze Spanishlanguage complaints from Consumer Sentinel. In October 2005, the 

FTC announced five law enforcement actions against alleged scammers

targeting Hispanic consumers, including the marketers of a weight-loss 

product and music CD collection, which will pay $231,000 in consumer 

redress to settle FTC charges that they made deceptive claims in infomercials shown on Spanish-language television stations. In November 

2005, the FTC launched a new Spanish-language education campaign, 

Alerta en Linea, to help consumers stay safe online. At the New York 

forum in September 2006, the FTC announced three law enforcement 

actions and an Internet surf targeting Spanish-language fraud. Furthermore, the FTC distributes 125 Spanish-language publications.

Criminal Liaison Unit. The FTC, a civil law enforcement agency, 

also is committed to protecting consumers from the worst perpetrators 

of fraud by encouraging their prosecution by criminal law enforcement 

agencies. From April 2005 through May 2006, there were 59 separate 

criminal cases in which formal criminal litigation was either ongoing or 

initiated against 138 FTC defendants or their close associates, or where 

the FTC provided significant assistance to criminal authorities. In 29

of those cases, 42 defendants received sentences of incarceration or 

other criminal penalties.

Consumer Protection Advocacy. During fiscal year 2006, the FTC

filed comments on a broad array of consumer protection-related subjects to various federal and state bodies. The variety of consumer protection issues that FTC advocacy addresses is demonstrated by the following examples:

 • In June 2006, the FTC told a meeting of the Internet Corporation 

for Assigned Names and Numbers (ICANN) that access to the Whois 

databases (online information directories that contain contact information about Web site operators) is critical to the agency’s consumer 

protection laws, to other law enforcement agencies around the world, 

and to consumers. The FTC delivered the same message in July 

2006 to a House subcommittee, and in September 2006 to the Senate Committee on Commerce, Science, and Transportation.
FEDERAL TRADE COMMISSION

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• In April 2006, the FTC staff provided comments to the Food and 

Drug Administration in response to a request for public comment 

regarding its recently issued draft guidelines on labeling statements 

about the whole grain content of food products. 

• In March 2006, the FTC staff sent a letter to a Hawaii State Senator 

in response to her request for the FTC’s views on a bill that proposed 

to establish a Child Protection Registry and make it unlawful for a 

person to send a commercial message to any registered contact point 

if the message advertises products or services that a minor child is 

prohibited by law from purchasing, or if the message contains or 

advertises adult content.

• In January 2006, in response to a California Assembly member’s request, the FTC staff commented on a bill to amend the California 

Confidentiality of Medical Information Act.

Goal 2: Maintain Competition

Prevent Anticompetitive Mergers and Other Anticompetitive Business Practices in the Marketplace

The other primary goal of the FTC is to protect and strengthen the free 

and open markets that are the cornerstone of a vibrant economy. Aggressive competition among sellers in an open marketplace gives consumers the benefit of lower prices, higher quality products and services,

maximum choice, and innovation leading to beneficial new products

and services. The FTC’s goal is to promote vigorous competition by 

using the antitrust laws to prevent anticompetitive mergers and to stop 

business practices that diminish competition, such as agreements among 

competitors about prices or other aspects of competition (referred to as 

nonmerger enforcement). The agency applies three related objectives 

to achieve this broad-reaching goal:

• Identify anticompetitive mergers and practices that cause the 

greatest consumer injury.

• Stop anticompetitive mergers and practices through law enforcement.

• Prevent consumer injury through education.

First, the FTC staff identifies mergers and business practices that have

resulted in or are likely to result in anticompetitive effects by conducting thorough factual investigations and applying economic analysis to 

distinguish between actions that threaten the operation of free markets and those that are benign or procompetitive. This step is critical 

because a merger or business practice may be either neutral, beneficial

(by enabling sellers to be more efficient and pass those savings along to
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37

consumers), or harmful (by enabling sellers to reduce the output of their 

product and/or raise the price to consumers). Thus, indiscriminate or

ill-considered intervention in the marketplace may do more harm than 

good.

Second, once the FTC identifies a harmful or potentially harmful merger or business practice, it takes enforcement action under the antitrust 

laws to stop it, either through an administrative challenge or in federal 

court. In many instances, the agency is able to reach an agreement 

with the parties that remedies its competitive concerns and avoids litigation.

Third, the FTC seeks to prevent anticompetitive activity by educating businesses and consumers about the antitrust laws and its efforts to 

ensure competitive markets. Increased knowledge and understanding 

facilitate businesses’ efforts to comply with the law. They also enable 

consumers to identify anticompetitive activity more readily and bring it 

to the FTC’s attention for possible enforcement action.

Objective 2.1: Identify Anticompetitive Mergers and Practices That Cause the Greatest Consumer Injury

The first step in preventing anticompetitive mergers and anticompetitive business conduct is determining which mergers and business practices are anticompetitive.

Strategies

The FTC seeks to identify anticompetitive mergers and practices with 

as much accuracy as possible. While certain business conduct (such as 

price fixing among competitors) is clearly anticompetitive, mergers and

many other forms of business conduct can benefit, harm, or have no

effect on consumers. Consequently, both under- and over-enforcement 

can harm consumers’ interests. The agency seeks to take enforcement 

action against transactions or conduct that harms consumers, but at the 

same time, avoid taking enforcement action that prevents businesses 

from completing transactions or engaging in practices that fundamentally benefit consumers or would have no effect. The FTC also tries

to accomplish the identification of enforcement targets as efficiently

as possible so that it can devote the bulk of its resources to further investigation of, and possible challenge to, the most problematic mergers 

and practices. A related, but important, consideration is to conduct the 

inquiry in a way that minimizes the cost or inconvenience to businesses, 

while still enabling the agency to gather sufficient information to support its enforcement decisions.

The premerger notification requirements of the Hart-Scott-Rodino

(HSR) Act provide the FTC with an effective starting point for identifying potentially anticompetitive mergers, acquisitions, and joint ventures (collectively referred to as mergers) before they are consummated. 
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The HSR Act requires companies to report certain proposed mergers 

to the FTC and the DOJ (which jointly enforce the HSR Act) and wait 

for a specified period (usually 30 days) to allow for antitrust review.

The FTC staff carefully examines each transaction reported under the 

HSR Act to determine whether it poses a threat to competition. The 

agency seeks to identify as many of the competitively harmless transactions as possible within the initial waiting period, both to conserve 

resources and to minimize the delay imposed on businesses. In most 

cases, the staff can make a reasonable judgment about whether a merger has the potential to be anticompetitive or not after an initial screening based on materials filed with the HSR Act notification. The agency

may authorize a more extensive investigation of transactions that raise 

more difficult questions. Under the HSR Act, the agency may issue a

formal request for additional information from the parties (a “second 

request”), which extends the initial waiting period. Given the typical 

scope and complexity of the issues, and the fact that the HSR statute 

permits only one request for additional information relating to a transaction, an investigation extended by the issuance of a second request 

almost always requires a significant investment of resources by both the

agency and the parties.

Most transactions reported under the HSR Act raise no antitrust issues, 

and the antitrust agencies permit these to proceed. Together, the FTC 

and the DOJ Antitrust Division issued second requests in less than three 

percent of reported mergers in FY 2006. Moreover, the enforcement 

agencies frequently complete the initial screening in less time than the 

30 days allowed under the HSR Act. In these instances, the government grants “early termination” of the HSR Act waiting periods, allowing transactions to go forward more quickly. Approximately two of 

every three filed transactions received early termination in FY 2006.

Despite filing thresholds that are now adjusted annually for inflation,

and some decline in merger activity from the historic peak levels reached 

during the late 1990s, the FTC continued to face a demanding merger 

review workload in FY 2006. Steady economic growth, together with 

the increased pace of mergers experienced in FY 2005 and FY 2006, 

indicates that merger activity remains on the rise. In FY 2006 the agency received 1,860 HSR filings, which represents a 10 percent increase

compared to the 1,695 received in FY 2005. Both the dollar value of 

transactions and the number of second requests issued increased by approximately the same percentage from FY 2005 to FY 2006.

While the major HSR Act amendments in 2001 reduced the number 

of mergers subject to the advance reporting requirement, they did not 

change the standard of legality for mergers. While the vast majority 

of potentially problematic mergers continue to be subject to the re-
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39

vised HSR filing requirements, smaller merger transactions may still

be anticompetitive. Consequently, the FTC continues to devote attention to the identification of unreported, usually consummated, mergers

that could harm consumers. This effort involves monitoring the trade 

press, industry sources, and the Internet to stay informed of industry 

developments; following up on case leads from congressional offices,

other Executive Branch agencies, and state and local governments; and 

encouraging consumers, businesses, and the bar to notify the FTC of 

possibly anticompetitive mergers.

In the nonmerger area, agency staff review complaints received from 

consumers, businesses, congressional offices, and elsewhere to identify

potentially anticompetitive nonmerger business practices. In addition to 

responding to complaints, the FTC has pursued a “positive agenda” of 

planned initiatives; that is, the agency has taken a systematic and proactive approach to identifying specific conduct likely to pose the greatest

threat to consumer welfare. Fundamentally, the focus continues to be on 

the types of practices, such as agreements among competitors, that are 

most likely to harm consumers. Other considerations include whether 

the relevant sector of the economy is one, such as health care or energy, 

that has a significant impact on consumers’ daily lives. Also, the agency

considers the deterrent effects of antitrust enforcement on businesses, 

and whether the FTC has enforcement experience in an area that will 

enable the agency to make an impact quickly and efficiently. Finally,

consideration is given to whether the matter presents an opportunity to 

contribute positively to the development of antitrust law.

Performance Measures and Results

The target for both measures used for this objective is that between 60 

and 80 percent of investigations result in enforcement action, where 

the universe consists of significant investigations that were completed

during the fiscal year. A percentage below 60 percent may suggest that

the FTC is targeting enforcement resources ineffectively by investigating too many competitively benign practices. A percentage higher than 

80 percent may suggest that the agency is focusing too narrowly and 

thus potentially allowing problematic business practices to go forward 

without sufficient review.

The FTC took enforcement action in 13 of 22, or 59 percent, of the 

second request merger investigations concluded during fiscal year 2006.

This figure is consistent with the results obtained in fiscal years 2001-

2003 and represents an increase with respect to the fiscal years 2004-

2005. The agency issued 28 second requests in FY 2006, compared to 

the 25 it issued in FY 2005. The stabilization in the trend is consistent 

with the number of reported mergers, and does not reflect a change in

the standards governing when a second request is warranted.

Performance Measure 2.1.1

Percent of HSR requests resulting in 

enforcement action.

YEAR ACTUAL

2001 68%

2002 68% 

2003 70%

2004 55%

2006 59% Target: 60-80%

Performance Measure 2.1.3

Percent of nonmerger investigations 

which resulted in enforcement action.

YEAR ACTUAL

2004 63%

2005 63%

2006 40% Target: 60-80%
FEDERAL TRADE COMMISSION

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To measure its success in identifying possibly illegal conduct (or 

nonmerger cases), the FTC uses a ratio similar to that used to measure 

the agency’s success in identifying anticompetitive mergers: the percentage of significant nonmerger investigations (i.e., those in which the

Commission has authorized the use of compulsory process—its authority to compel the submission of information) that ultimately result in 

enforcement action. By the end of FY 2006, the FTC achieved a 40 

percent result against the 60 to 80 percent target. This result, however, 

significantly understates the agency’s actual performance in nonmerger

enforcement in several respects. First, the statistics for this measure 

do not include five matters in which the Commission accepted, in the

first two weeks of FY 2007, consent orders subject to final approval.

The agency’s performance would be 70 percent—within the 60 to 80 

percent target—if the results were adjusted to reflect these five signed

settlements. Second, agency staff has completed investigations in three 

additional matters in FY 2006 that are in the final stages of settlement

negotiations; staff recommendations in those matters also are expected 

to reach the Commission in the near future. Third, the statistics do not 

include four consent agreements obtained in investigations where compulsory process authority was not needed. The agency anticipates that 

some portion of future nonmerger enforcement actions similarly may 

not require compulsory process authority. Therefore, in FY 2007, this 

performance measure will be replaced with one that more accurately 

reflects the FTC’s nonmerger enforcement efforts.

Success on these measures indicates that the FTC is effectively screening 

HSR-reported mergers and nonmerger investigations to identify those 

that raise significant antitrust issues and warrant further investigation

and possible enforcement action. The performance measures for this 

objective were analyzed in the process of developing the FTC 2006-

2011Strategic Plan. New definitions of results and the addition of new

measures for FY 2007 and beyond will help the agency better assess the 

success of its performance under this objective.

Performance Assessment and Future Trends

The issuance of a second request is a significant step in a merger investigation. Because the law permits only one second request, the FTC 

typically issues a very comprehensive request that calls for all relevant 

information on all possible issues in the investigation. Given the size 

of the parties involved and the necessarily broad scope of the inquiry, 

a response may consist of hundreds (or even thousands) of boxes of 

documents and as many electronic files. Gathering and examining this

material involves a major resource commitment by the parties and by 

FTC attorneys and economists. The HSR Act prevents the parties from 

proceeding with the merger while this process is taking place. Consequently, a second request can sometimes result in significant delays in

closing a transaction.

Protecting Innovation

The FTC works for a competitive 

marketplace, protecting healthy competition 

so that consumers have access to a wider 

variety of goods and services at competitive 

prices and businesses have a chance to 

compete on the merits of their work. FTC 

has embarked on a number of initiatives to 

encourage competition in the real estate 

industry, among them a one-day workshop 

co-hosed with the Department of Justice’s 

Antitrust Division. The workshop was 

prompted by the substantial changes in 

the real estate brokerage marketplace and 

consumers’ interest in a competitive real 

estate brokerage industry, the workshop 

covered such topics as new and innovative 

brokerage business models, multiple listing 

services, and the implications of stateimposed minimum-service requirements. 

For more information, visit www.ftc.gov/

bc/realestate/index.htm.
PERFORMANCE AND ACCOUNTABILITY REPORT

Fiscal Year 2006

41

For all of these reasons, the FTC does not lightly issue a second request. 

In fact, it does as much as possible within the initial 30 day waiting period to determine which transactions pose no competitive threat, so that 

the truly benign mergers may proceed without the delay and expense 

of a second request. In FY 2006, for example, the FTC issued second 

requests in 1.5 percent of the mergers reported under the HSR Act. 

At the same time, it is far easier to remedy an anticompetitive merger 

before it is consummated—which was the underlying reason the HSR 

premerger notification regime was implemented—so the agency makes

every effort to identify and scrutinize potentially harmful mergers during the HSR waiting period.

The FTC’s first performance measure reflects the balance between

these two considerations. If the staff uses the initial HSR waiting period effectively, the agency should be able to “clear” the great majority 

of reported transactions, permitting them to go forward without further 

delay or burden. The FTC also should be able to isolate for more intensive investigation those transactions that could be harmful. While 

the initial screening process should permit as many benign transactions 

as possible to pass through, the focus should not be so narrow that only 

those transactions in which an antitrust problem is relatively obvious 

are subject to further investigation, while other transactions that may be 

similarly harmful, but in more subtle ways, can proceed unchallenged.

Objective 2.2: Stop Anticompetitive Mergers and Practices Through Law Enforcement

Law enforcement represents the most direct method by which the 

FTC pursues its goal of stopping mergers and business practices that 

significantly threaten competition and harm consumers. In both merger and nonmerger enforcement, the FTC focuses primarily on transactions or practices most likely to harm consumers, that is, mergers of 

firms competing in the same market or markets, and agreements among

direct competitors. Other activities, such as unilateral action by a single 

firm, or a merger or agreement involving a supplier and customers or

between a firm and a potential competitor, also may threaten competition and therefore are subject to FTC scrutiny.

Since the FTC and DOJ jointly enforce the HSR Act, the FTC directs much of its attention and resources to certain segments of the 

economy that are particularly important to consumers and in which it 

has particular expertise. These include energy and natural resources, 

food, health care, consumer goods and services, pharmaceuticals, and 

technology.

Strategies

To stop potentially anticompetitive mergers and practices through law 

enforcement, the FTC seeks legal remedies under the antitrust laws, 
FEDERAL TRADE COMMISSION

42

through federal court action, administrative proceedings, or negotiated 

settlements. For mergers, the preferred— that is, the most effective and 

cost-efficient—strategy is to prevent anticompetitive mergers before

they occur. The agency implements this strategy primarily through its 

authority to seek a federal court injunction preventing the transaction. 

In many cases, the merging parties elect not to defend a court challenge 

and instead agree to resolve competitive concerns through a consent 

agreement. This approach is suitable when the competitive problem 

relates to only a portion of the transaction, such that a divestiture of 

assets will be sufficient to preserve or restore competition while allowing other competitively neutral or beneficial aspects of the merger to

go forward. In other instances, the parties may abandon a transaction 

after assessing the likely outcome of an FTC court challenge. When 

a merger already has been consummated, the FTC generally relies on 

administrative litigation to restore competition lost as a result of the 

merger. 

In nonmerger matters, the FTC seeks to stop ongoing activity that 

harms competition. The Commission may initiate administrative proceedings before an Administrative Law Judge to adjudicate the issues 

and establish a basis for an order that the parties to the proceeding 

“cease and desist” the conduct. The FTC also has authority to seek 

relief in federal courts, though it historically has used this option sparingly in nonmerger matters. Again, the agency often is able to negotiate 

a consent agreement with the parties that remedies the problem without 

need for litigation.

In both merger and nonmerger matters, thorough investigation, as well 

as sophisticated legal and economic analysis, is of critical importance 

to ensuring accurate assessment of the potential for competitive harm 

resulting from the transaction or conduct in question and, if necessary, demonstrating the likelihood of harm before an adjudicative body. 

When the FTC concludes that the likelihood of such harm indicates a 

law violation, and no settlement is possible, the Commission authorizes 

its staff to litigate the matter.

Economic theory and evidence demonstrate that competition results in 

lower prices, better quality, and more innovation in markets. Because 

successful enforcement of the antitrust laws protects competition and 

therefore promotes these consumer benefits, it is important that the

FTC succeed when it challenges anticompetitive mergers and practices. 

Even if the agency successfully identifies an anticompetitive merger or

practice, consumers derive no benefit unless the FTC obtains a positive outcome—that is, appropriate relief, through either settlement or 

successful litigation.
PERFORMANCE AND ACCOUNTABILITY REPORT

Fiscal Year 2006

43

The frequency with which the agency obtains positive outcomes is an 

important indicator of its success in producing tangible benefits for

consumers. Positive results include the parties’ abandonment of an 

anticompetitive transaction after antitrust concerns are identified, an

administrative consent agreement to resolve antitrust concerns, or a 

successful challenge in court. A negative result occurs when parties 

refuse to settle antitrust concerns raised by the agency, and court action 

fails to achieve the agency’s objectives. This is not to say that the FTC, 

or any law enforcement agency, should win every case. Some cases involve very close questions, on which reasonable minds can and do differ. 

Other cases may be very difficult from a litigation standpoint, but are

still worth pursuing. All of the FTC’s antitrust challenges are defended 

by highly competent and well-financed counsel.

In addition, the FTC’s responsibilities include taking action to help 

shape the development of the antitrust laws. To fulfill this duty, the

agency inevitably must bring cases that pose litigation risks—especially 

where there is no clear precedent and the FTC is seeking to establish a 

new legal principle. The FTC also helps consumers by bringing cases to 

clarify, or improve upon, existing precedent.

The Commission issues complaints when, based on the findings of staff

investigations, the Commission has “reason to believe” the merger or 

conduct is anticompetitive. The agency’s complaints are also founded 

on sound policy considerations. However, the ultimate outcomes depend on legal determinations often made by courts following appeal of 

Commission decisions, as well as development of a full factual record. 

The FTC’s mission includes bringing cases that highlight difficult issues

and seeking to persuade the courts of the merit of its views on what the 

law should be. Bringing cases that test the boundaries of the law is an 

important part of the FTC’s responsibilities, even though the results are 

far from certain. The target for this performance measure reflects the

reality that, even when the agency brings a meritorious case and litigates it well, success is not assured. In addition, setting the standard too 

high could be detrimental if the effect were to deter the agency from 

bringing important, but risky, cases.

Performance Measures and Results

The FTC’s 2006 target was to obtain a positive result in at least 80 

percent of the matters in which it determined that a merger or a course 

of conduct was anticompetitive. The agency exceeded its target in FY 

2006 achieving relief through litigation, reaching a successful settlement agreement, or persuading parties not to proceed with an anticompetitive acquisition in 22 of 22 or 100 percent of enforcement matters 

brought to conclusion during the fiscal year.

Performance Measure 2.2.1

Percentage of positive outcomes when 

the FTC challenges anticompetitive 

mergers and practices.

YEAR ACTUAL

2001 94%

2002 100% 

2003 100%

2004 100%

2005 95%

2006 100% Target: 80%

Performance Measure 2.2.3

Dollar volume of commerce in markets 

in which the FTC took successful action 

to protect competition from 

anticompetitive mergers.

(numbers in billions)

YEAR ACTUAL

2004 $ 8.5

2005 $ 61.8

2006 $ 13.4 Target: $ 40.0

Performance Measure 2.2.5

Dollar volume in markets in which 

the FTC took successful action to 

protect competition from 

anticompetitive conduct.

(numbers in billions)

YEAR ACTUAL

2004 $ 2.6

2005 $ 19.4

2006 $ 1.4 Target: $ 20.0
FEDERAL TRADE COMMISSION

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For both merger and nonmerger enforcement, the agency measures the 

volume of commerce in markets in which it takes successful enforcement 

action as an indicator of the scope of the FTC’s antitrust enforcement 

activities. As noted in the FTC’s 2003-2008 Strategic Plan, external 

factors, such as level of merger activity, may cause the results to fluctuate significantly from year to year. Consequently, the two volume-ofcommerce targets are each expressed in terms of an aggregate target 

for the five-year strategic plan period, rather than as yearly targets.

The five-year target for the volume of commerce in markets benefitting

from FTC merger enforcement action is $200 billion, or $40 billion per 

year. In FY 2006, the FTC’s merger enforcement actions affected markets in which the total volume of commerce was $13.4 billion; over the 

first three fiscal years of the five year plan (2004 through 2006) the total

volume of commerce in affected markets has been approximately $84.2 

billion, or approximately 70 percent of the three-year target.

The five-year target for the volume of commerce in markets benefitting

from FTC nonmerger enforcement action is $100 billion, or $20 billion 

per year. In the course of FY 2006, the FTC’s nonmerger enforcement actions affected markets in which the total volume of commerce 

was $1.4 billion. This measure has fluctuated greatly, going from $2.6

billion in FY 2004 to $19 billion in FY 2005 and back down to $1.4 

billion for FY 2006. During the first three years that this measure has

been in place, the overall volume-of-commerce for nonmerger enforcement actions has thus been approximately $23.3 billion or 39 percent 

of the three-year target.

These measures evaluate agency performance in two ways: the percentage of merger enforcement actions that have successful outcomes, and 

the volume of commerce affected (benefitted) by merger and nonmerger

enforcement action. The use of a volume of sales performance measure 

does not mean that the FTC will only investigate and take enforcement 

action in markets with large sales volumes. The FTC investigates and 

takes enforcement action as necessary in all markets where considerable 

consumer harm is likely. These measures help guide the agency in challenging conduct that causes substantial consumer injury through targeting of its resources effectively and efficiently. These measures evaluate

appropriate case selection and resolution, whether through litigation or 

settlement, as well as the crafting of sufficient and effective remedies.

Performance Assessment and Future Trends

The high success rate of positive outcomes in actions initiated by the 

FTC helps deter anticompetitive behavior. Parties who agree to cease 

and desist orders, or who abandon mergers about which the agency 

has expressed concern, do so in recognition of both the FTC’s policy 

expertise and its ability to successfully litigate contested matters. If 

Maintaining a Competitive

Marketplace

The FTC maintains competition in the 

petroleum industry to protect consumers 

from anticompetitive conduct and unfair or 

deceptive acts or practices in the industry. 

FTC created a Web site that describes 

FTC’s oversight of the petroleum industry 

and features reports and economic 

working papers, Congressional testimony, 

advocacy work, conference proceedings, 

and studies. The site features RSS news 

and information feeds to provide users with 

updates and information on new initiatives. 

For more information, visit www.ftc.gov/

ftc/oilgas/index.html. 
PERFORMANCE AND ACCOUNTABILITY REPORT

Fiscal Year 2006

45

the agency were perceived to be less successful in obtaining the relief 

it deems necessary on behalf of consumers, more parties would resist 

rather than settling FTC charges. The agency does not, however, expect to achieve 100 percent success each year. The 80 percent target for 

this performance measure recognizes that the agency occasionally must 

pursue extremely difficult and risky cases. Litigation is one of the most

effective ways for the agency to influence the development of competition law and policy, which is a critical goal of the agency’s maintaining 

competition mission.

The results on the two volume-of-commerce measures illustrate why the 

agency expressed its targets in terms of five-year amounts. Indeed, the

trends exhibited over the last five fiscal years indicate that year to year

the size of individual FTC cases varies widely, and a small number of 

large matters can have a significant impact on these measures. Also,

although the volume of commerce directly covered by an FTC enforcement action may be low, an FTC enforcement action can have a deterrent effect on a larger volume of commerce, even in unrelated industries. 

Any FTC enforcement action helps to educate the business community 

as a whole about what types of conduct are likely to be viewed by the 

FTC as anticompetitive, and thus to prevent such conduct. 

Based on recent experience and analyses of the measures, the targets 

for the volume-of-commerce measures have been lowered in the new 

FTC 2006-2011 Strategic Plan. The merger target being used in this 

current year was set at a time when merger filings were near a peak.

Over the past three years, merger filings have stabilized, so new targets

have been set that more accurately reflect the filings. The nonmerger

cases were also analyzed and the target adjusted for FY 2007 and beyond. Additional measures were added to more accurately assess the 

assessment of the FTC’s performance in this very important area.

Objective 2.3: Prevent Consumer Injury Through Education

In addition to its law enforcement activity, the FTC provides substantial 

information to the business community and consumers about the role 

of the antitrust laws and businesses’ obligations under those laws.

Strategies

The FTC uses education and outreach to help prevent consumer injury, 

increase business compliance, and augment its law enforcement efforts. 

The agency pursues this strategy through guidance to the business 

community; outreach efforts to federal, state, and local agencies, business groups, and consumers; development and publication of antitrust 

guidelines, policy statements, and reports; and speeches and testimony. 

By using these mechanisms to signal its enforcement policies and priorities, the FTC deters would-be violators of the antitrust laws.
FEDERAL TRADE COMMISSION

46

FTC law enforcement efforts also are made more effective by public 

awareness of what types of conduct are likely to be challenged as law 

violations. The FTC seeks to make its law enforcement presence visible 

and its enforcement policies transparent in order to serve its objectives 

through deterrence. Each successful enforcement action not only promotes competition in one or more relevant markets, but also serves to 

communicate to the business and legal communities that the FTC can 

and will move successfully to challenge similar transactions or conduct 

in the future. The agency explains the relevant facts and issues of cases 

in which it obtains a consent agreement in press releases and in published “Analyses To Aid Public Comment” so the nature of the problem 

is clear. Through press releases about FTC actions and publication 

of related materials on the agency Web site, www.ftc.gov, the public 

facts underlying FTC actions provide bases for companies to evaluate 

the likelihood that other transactions likely would face challenge. 

In FY 2006, the FTC jointly issued with the DOJ a Commentary on the 

Horizontal Merger Guidelines. The Guidelines set forth the analytical 

framework and standards that the antitrust agencies use to assess whether an anticompetitive outcome is likely. The Commentary explains how 

the agencies have applied particular Guidelines provisions and provides 

short summaries of matters that the agencies have investigated.

At the close of FY 2006, seven administrative proceedings were continuing in various phases of adjudication or appeal, signifying continuation 

of heavy litigation demands on the agency. Each of these cases may 

provide (or has provided) an opportunity for the FTC to set out in detail 

its analysis of important legal issues, and to have that analyses tested 

in the federal courts. Understanding fully the types of transactions or 

conduct the FTC is likely to challenge, and the reasons for the agency’s 

actions, greatly facilitates antitrust lawyers’ counseling of their clients 

and prevents many anticompetitive mergers from being proposed or 

anticompetitive practices from being implemented.

In addition, the FTC educates the public through guidelines; congressional or other type of testimony (such as testimony to the Antitrust 

Modernization Commission); conferences, hearings, and workshops 

(such as the hearings on Section 2 of the Sherman Act); advisory opinions (addressing issues such as a prescription drug benefit program);

and reports (such as the report on the post-Hurricane Katrina gasoline 

price increases and the report on ethanol market concentration).

As a complement to FTC enforcement activity, the agency also advises, 

when asked, other federal and state government officials about the possible effect that various regulatory proposals may have on competition. 

By providing economic analysis and other informed guidance, the FTC 

can help policymakers better understand the impact of their decisions 

Helping to Contain Health Care

Costs

Competition in health care markets benefits 

consumers because it helps contain costs, 

improve quality, and encourage innovation. 

The FTC’s job as a law enforcer is to stop 

firms from engaging in anticompetitive 

conduct that harms consumers. FTC also 

provides guidance to market participants 

—including physicians and other health 

professionals, hospitals and other 

institutional providers, pharmaceutical 

companies and other sellers of health 

care products, and insurers—to help them 

comply with the nation’s antitrust laws. For 

more information, visit www.ftc.gov/bc/

healthcare/index.htm.
PERFORMANCE AND ACCOUNTABILITY REPORT

Fiscal Year 2006

47

in creating, maintaining, or forestalling competitive markets. The FTC 

has a long and distinguished history in this area. The FTC advocates 

market-based solutions through the publication of studies and reports, 

as well as participation in state and federal legislative and regulatory 

fora. The agency also participates as an amicus curiae (friend of the 

court) in judicial proceedings when substantial questions of antitrust 

law or competition policy are involved, especially when the FTC may 

add a different perspective to the deliberations because of its specialized knowledge or experience.

Performance Measures and Results

The FTC uses the number of times (hits) that members of the public 

visit antitrust-related content on the FTC’s Web site (www. ftc.gov) as 

a good indicator of the quantity of information provided to the public, 

as well as its quality (because visitors will stay longer and return more 

often if the information is helpful). Based on a five month period in

FY 2006, the FTC’s Web site recorded more than 10.6 million hits on 

antitrust-related content, exceeding its target of 10 million hits.

The result of this measure indicates a significant continued public interest in the FTC and its Maintaining Competition Mission. In addition, 

the broad and increasing distribution of educational and policy materials through electronic channels represents important leveraging of the 

agency’s resources. This measure also helps ensure that the agency engages in consumer, business, and international education that advances 

the culture of competition, which enhances consumer welfare.

Performance Assessment and Future Trends

Use of the Internet to disseminate information about antitrust and other competition-related matters plays an integral role in the FTC’s education and deterrence efforts, permitting the agency to convey a wealth 

of information quickly, simply, and inexpensively to the business, legal, and regulatory communities, and to consumers. The performance 

measure is an indicator of the FTC’s effectiveness because it measures 

outcome based on the agency’s constituencies’ assessment of the usefulness of the agency’s published materials. That is, the level of activity 

on the FTC’s antitrust Web site depends to a large degree on the scope, 

utility, and reliability of the information made available there. People 

will revisit the site to the extent that what they find there is of value.

Matters that are of great importance to the public—as determined by 

the public—will draw a large number of visitors. But if the material 

presented is irrelevant, difficult to understand, or misleading, then interest in the site inevitably will diminish. Educating the legal and business communities about the applicable legal standards and enforcement 

policies helps to facilitate their compliance with the law, while educating the public in general, including policymakers, about the benefits of

competition helps to ensure continued support for the agency’s efforts.

Performance Measure 2.3.2

Measure and establish appropriate target 

for the number of hits on the 

FTC antitrust Web site.

(numbers in millions)

YEAR ACTUAL

2004 11.0

2005 9.8

2006 10.6 Target: 10.0
FEDERAL TRADE COMMISSION

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The FTC possesses a broad array of policy instruments that complement its enforcement authority and help to educate the public. Through 

the use of hearings, workshops, research projects, reports, studies, advocacy filings, and amicus briefs—all in coordination with its enforcement

initiatives—the agency provides intellectual leadership on competition 

issues and offers valuable education to the public. From the beginning, 

the FTC was conceived to be more than just an enforcement agency. 

President Woodrow Wilson saw the FTC as “... an indispensable instrument of information and content publicity, as a clearing house for the 

facts by which both the public mind and the managers of great business 

undertakings shall be guided.”

Today’s FTC has fully integrated all of the agency’s various capabilities 

and applies them in a strategic and sensible way to accomplish its goals 

directly, and indirectly, by facilitating public understanding of policy 

and the agency’s objectives. The FTC remains strongly committed to 

the importance of education and outreach and will continue to place 

emphasis on these efforts and expand its activities in this area in the 

future.

With the growing importance of the Internet as a vital source of information in today’s society, the volume of traffic on the FTC’s Web site

will continue to be a meaningful indicator of FTC success in educating 

the public at large, policy-makers, and the business and legal communities, and in stimulating public interest in the agency’s work. The agency 

will continue to seek ways to refine this important information to gain

better understanding of the agency’s success in fulfilling this objective

and to help assess how it might do so more effectively.

Key Outcomes for Goal 2: Maintain Competition

In FY 2006, the FTC took action on a wide variety of significant maintaining competition matters to ensure that businesses and consumers 

alike would reap the full benefits of competition and innovation in the

markeplace. The key outcomes of the Maintain Competition goal, objectives, and strategies are described below. 

Merger Guidelines Commentary. The FTC, together with the 

DOJ, published a Commentary on the Horizontal Merger Guidelines 

aimed at providing transparency and guidance to the antitrust bar 

and business community on how the government actually has applied 

particular provisions of the Guidelines. Using short summaries of past 

investigations and numerous examples, the Commentary highlights 

the integrated approach using the Merger Guidelines analysis that the 

agencies apply in each case.
PERFORMANCE AND ACCOUNTABILITY REPORT

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49

Merger Process Improvements. The FTC adopted and implemented significant merger process improvements to facilitate rapid identification of relevant issues, preparation of focused second requests, and

the use of consistent investigation timetables that will lower the costs of 

merger investigations for the FTC and outside parties by reducing the 

volume of materials that parties must submit to respond to a “second 

request.” The reforms also permit the staff and the parties to identify 

more rapidly the relevant substantive issues and focus more quickly and 

effectively on the relevant documents and data. The FTC continues to 

seek and implement solutions for electronic production issues.

Electronic Filing System. The FTC, in cooperation with the DOJ, 

implemented an electronic filing system that allows merging parties to

submit via the Internet premerger notification filings required by the

Hart-Scott-Rodino (HSR) Act. This electronic filing system eases the

burden of duplication and delivery for filing parties and enhances agency data entry of filing information.

Administrative Litigation. During FY 2006, the FTC has continued to pursue seven cases in administrative litigation that have reached 

various stages of adjudication and appeal. The administrative law 

judge issued an Initial Decision in Evanston Northwestern Healthcare Corp., 

and the Commission heard oral arguments on this matter. In Rambus 

Inc., the Commission issued a unanimous opinion holding that Rambus 

unlawfully monopolized certain markets for computer memory technology, and requesting further briefings on potential remedies. The Commission issued its decision affirming the administrative law judge’s ruling in North Texas Specialty Physicians, and the matter is on appeal before 

the Fifth Circuit Court of Appeals. A merger matter also is currently 

on appeal before the Fifth Circuit Court of Appeals: Chicago Bridge and 

Iron Co. N.V. The Sixth Circuit Court of Appeals recently affirmed the

opinion of the Commission in Kentucky Household Goods Carriers Association, Inc., finding that the Association’s ratemaking activities constituted

unlawful price fixing and were not exempt from the antitrust laws under

the state action doctrine. The Fourth Circuit Court of Appeals recently 

ruled on a motion from respondents in South Carolina State Board of Dentistry, adopting the FTC’s position that a denial of state action immunity 

is not immediately appealable. Finally, FTC staff submitted a petition 

for certiorari in Schering-Plough Corp., which the Supreme Court denied.

Merger Enforcement Actions. During the 2006 fiscal year, the FTC

brought sixteen merger enforcement challenges (nine consent agreements and seven withdrawn transactions after the second request was 

issued). This is approximately a 20 percent increase over the number of 

merger enforcement actions during the same period last year. These 

include the recent action taken against the consummated Hologic/Fischer

merger and settlement agreement restoring competition in the market 
FEDERAL TRADE COMMISSION

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for stereotactic prone breast biopsy systems; the challenge of Linde AG’s

proposed acquisition of The BOC Group and settlement agreement preserving competition in certain industrial gases; the consent order in the 

Boston Scientific/Guidant merger preserving competition for lifesaving vascular products; two consent orders restoring competition in the market 

for dialysis services—Fresenius/Renal Care and DaVita/Gambro; and the 

abandonment of a proposed acquisition of a refined petroleum products pipeline in the southwest.

Merger Filings. The number of reported transactions has continued 

to increase. Through the FY 2006, there was a ten percent increase in 

HSR filings over the same period last year. In addition, the FTC has

issued 28 “second requests” in FY 2006.

Nonmerger Actions and Litigation. In FY 2006, the FTC brought 

six nonmerger enforcement actions. First, the FTC is actively litigating a complaint in federal district court seeking a permanent injunction to end an agreement between Warner Chilcott and Barr Laboratories. 

The FTC alleges the agreement eliminated generic competition for 

Warner Chilcott’s oral contraceptive, Ovcon. Second, in March, the FTC 

alleged that Valassis Communications violated the antitrust laws by inviting its competitor for newspaper advertising and coupon inserts (in a 

public call with security analysts) to collude with Valassis and fix prices,

thus raising prices for inserts. To settle these charges, Valassis entered 

into a consent order with the FTC that prohibits Valassis from inviting collusion from, or actually colluding with, its competitors. Third, 

in July, the FTC charged the Austin Board of Realtors with violating the 

antitrust laws by preventing discount brokers or agents from posting 

certain types of listings on public Internet Web sites used by consumers 

while shopping for homes. The prohibited Internet postings were for 

listings where the sellers had contracted with the agent for potentially 

lower-cost unbundled brokerage services. The FTC alleged that this 

rule would discourage agents from entering into these types of listing 

agreements and potentially increase prices to home sellers. The Austin 

Board settled these charges by agreeing not to adopt or enforce rules 

that treat one type of real estate listing agreement more advantageously 

than any other listing type. Finally, the FTC continued in FY 2006 to 

bring enforcement actions against competing physicians or dental service providers who agree with their competitors to fix the prices they

charge for their medical services. This year, the FTC had three such 

cases, which were all settled with consent orders: Health Care Alliance of 

Laredo, New Century Health Quality Alliance/Prime Care of Northeast Kansas, 

and Puerto Rico Endodontists.
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Petroleum Reports and Advocacy. In May 2006, the FTC issued a 

report, “Investigation of Gasoline Price Manipulation and Post-Katrina Gasoline 

Price Increases.” The Congressionally mandated investigation examined 

whether gasoline prices nationwide were “artificially manipulated by

reducing refinery capacity or by any other form of market manipulation or price gouging practices” and further examined gasoline pricing 

by refiners, large wholesalers, and retailers in the aftermath of Hurricane Katrina. The FTC staff prepared the U.S. submission to the 

Organization for Economic Cooperation and Development on resale 

below-cost laws and regulations, which included discussions of laws 

covering below cost sales of gasoline. In addition, the FTC, along with 

the Departments of Justice and Energy, is currently conducting an inquiry requested by the President into current gasoline prices. Finally, 

the FTC continues to update and enhance its Oil and Gas Industry Initiatives Web site which provides consumers with important information 

on the petroleum industry (www.ftc.gov/ftc/oilgas).

Ethanol Market Concentration Report. As mandated by the Energy Policy Act of 2005, the FTC issued the “Report on Ethanol Market 

Concentration.” The report examined the current state of ethanol production in the United States and measured market concentration using 

capacity and production data. The study also considered the possible 

effect on market concentration of marketing agreements between ethanol producers and ethanol marketers.

Hearings on Section 2 of the Sherman Antitrust Act. The FTC 

and the DOJ initiated a series of hearings on how best to identify anticompetitive exclusionary conduct for purposes of antitrust enforcement 

under Section 2 of the Sherman Antitrust Act. The hearings will continue over the next several months.

Real Estate Industry. FTC staff is writing and coordinating with 

the DOJ on a report, “Competition Policy and the Real Estate Industry,” to 

be released in Fall 2006. The FTC and DOJ also sent a joint letter to 

Michigan officials urging them not to support minimum-service legislation, which would have required real estate brokers to provide certain 

services—including negotiation, assistance in closing, and advice on 

pricing—to consumers, regardless of whether they actually wanted 

such services. If enacted, the bill would have caused some home buyers and sellers to pay higher prices for real estate brokerage services. 

The bill was not enacted. In June 2006, the FTC and DOJ jointly 

filed comments opposing proposed legislation in New York that would,

by definition, exclude non-attorneys from nearly all aspects of real

estate transactions. Without a clear showing that non-attorney provision of such services has caused consumer harm, the agencies concluded, the proposed legislation is not in the best interest of consumers. The legislative session ended without any action taken on the bill. 

In July 2006, the FTC debuted its real estate competition Web page 
FEDERAL TRADE COMMISSION

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(www.ftc.gov/bc/realestate) that provides important consumer 

educational materials on competition in the industry.

Amicus Briefs. The Commission has achieved significant advances

in antitrust law through the filing of amicus curiae briefs in conjunction 

with the Solicitor General, often in cooperation with the DOJ. In the 

past year, the Supreme Court has adopted the Commission’s position 

in three major cases, clarifying important areas of antitrust laws, to 

the benefit of consumers and the American economy. In Texaco, Inc.

v. Dagher, the FTC and DOJ urged the Court to reverse a ruling of the 

Ninth Circuit that had found decisions by two companies, about the 

pricing of products sold by a joint venture that they had established 

following FTC review, could amount to per se antitrust violations. 

The Supreme Court unanimously agreed, accepting the Commission’s 

argument that such pricing decisions did not eliminate any competition 

that otherwise would have existed. In Illinois Tool Works v. Independent 

Ink, the U.S. Court of Appeals for the Federal Circuit had erroneously 

read older Supreme Court precedent as establishing that a patent-holder presumptively has market power by virtue of the patent. The FTC 

and DOJ filed an ­amicus brief urging the Supreme Court to reverse,

arguing that there is no economic basis for inferring any amount of 

market power from the mere fact that the defendant holds a valid patent, copyright, trademark, or other intellectual property right. Again, 

the Court unanimously agreed. Finally, in Volvo Trucks North America v. 

Reeder-Simco GMC, Inc., the Eighth Circuit Court of Appeals had held 

that a plaintiff dealer can establish price discrimination in violation of 

Section 2(a) of the Robinson-Patman Act even if it cannot show that 

the manufacturer discriminated between dealers competing to resell its 

product to the same retail customer. At the urging of the FTC and DOJ, 

the Supreme Court reversed. In each of these cases, the FTC argued 

against a rigid doctrinal rule that could actually chill efficient business

conduct and thereby harm consumers, and urged the Supreme Court 

instead to adopt an approach that accounts for marketplace realities.

Competition Advocacy. Throughout fiscal year 2006, the FTC filed

comments on a broad array of competition-related subjects to various 

federal and state bodies. The variety of competition issues that FTC 

advocacy addresses is demonstrated by the following examples.

• In May 2006, the FTC responded to a request for comments on a 

Louisiana bill, which would make clear that Louisiana law does not 

require individuals and firms that assist consumers in selling goods

through online auction houses (e.g., eBay) to hold auctioneer or auction business licenses.
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• In April 2006, the FTC staff sent a letter to a Florida State Senator 

in response to her request for staff ’s views on a bill that would allow the direct shipment of wine to Florida consumers from wineries 

either inside or outside the state, provided certain requirements are 

met.

• In March 2006, FTC staff submitted a comment to the Federal 

Communications Commission supporting modifications proposed by

FCC staff to prevent tacit collusion during the bidding process for 

advanced wireless services licenses. 
FEDERAL TRADE COMMISSION

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PERFORMANCE AND ACCOUNTABILITY REPORT

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Financial Section and Notes 

Message from the Chief Financial Officer

I am pleased to present the financial section of the FTC’s Performance

and Accountability Report for FY 2006. As guardians of fair trade, accountability is part of our culture, as evidenced by the Office of Inspector General’s (OIG) unqualified opinion on the FTC’s consolidated financial statements for the tenth consecutive year. Additionally, both the 

OIG audit and management’s assessment of internal controls (required 

by the Federal Manager’s Financial Integrity Act) revealed there were 

no material weaknesses or reportable conditions. The accompanying 

financial statements and related notes fairly present the FTC’s financial

position and were prepared in conformity with accounting principles 

generally accepted in the United States of America, and the Office of

Management and Budget (OMB) Circular A-136, Financial Reporting 

Requirements.

From a financial management perspective, FY 2006 was a rewarding

year for FTC. Some of our noteworthy accomplishments included the 

following: 

• Implemented an agency-wide “end-to-end” travel management 

system, in support of the government-wide e-Gov Travel Services (eTS) initiative. The GSA-approved system enables travelers 

to obtain requisite authorizations, research and book travel plans, 

submit travel claims, and receive reimbursement electronically, all in 

a single integrated system. 

• Paid 98 percent of vendor payments in a timely manner (as defined

by the Prompt Payment Act). 

• Rated “green” by the Department of Treasury Financial Management Service on the accuracy and timeliness of our financial reporting practices involving Fund Balance with Treasury transactions.

• Strengthened our internal control program by formally establishing a senior assessment team (as recommended by OMB Circular 

A-123) and developing internal guidance for use by agency managers in 

assessing risk and reviewing and enhancing management controls. 

Steven A. Fisher

Chief Financial Officer
FEDERAL TRADE COMMISSION

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• Partnered with senior program managers in updating the agency’s 

strategic plan for FY 2006-2011, incorporating new objectives and 

related performance measures.

• Substantially exceeded the goal (set by P.L. 108-183) to allocate a 

minimum of three percent of total contract dollars to companies 

owned and controlled by service-disabled veterans. 

• Embarked on modernizing our business systems.

Our current core financial management system is hosted by the

Department of Interior’s National Business Center (NBC). In partnership with NBC, the FTC also maintains interfaces with legacy feeder 

systems including acquisition and other modules. Although our current 

financial management system (FMS) is substantially compliant with the

FFMIA of 1996, there are opportunities to leverage advancements in 

technology for improving the integration, accessibility, and real-time 

nature of financial information required by program managers. To

this extent, FTC is working towards improving the integration and data 

sharing among the various components of our FMS. 

The Federal Trade Commission recognizes the importance of public 

disclosure and accountability. This report demonstrates our commitment 

to fulfill the FTC’s fiduciary responsibilities to American taxpayers.

Steven A. Fisher

Chief Financial Officer
PERFORMANCE AND ACCOUNTABILITY REPORT

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FEDERAL TRADE COMMISSION

BALANCE SHEETS

As of September 30, 2006 and 2005

(Dollars in thousands)

FEDERAL TRADE COMMISSION

BALANCE SHEETS

As of September 30, 2006 and 2005

(Dollars in thousands)

2006 2005

Assets (Note 2)

Intragovernmental:

Fund balance with Treasury (Note 3) $ 70,139 $ 78,213

Accounts receivable (Note 5) 55 87

Total intragovernmental 70,194 78,300

Cash and other monetary assets (Note 4) 100,548 81,468

Accounts receivable (Note 5) 136,968 84,355

General property, plant and equipment, net (Note 6) 14,400 15,096

Total assets $ 322,110 $ 259,219

Liabilities:

Intragovernmental:

Accounts payable $ 2,213 $ 2,468

Other (Note 8) 20,096 12,825

Total intragovernmental 22,309 15,293

Accounts payable 5,769 7,731

Other (Note 8) 244,897 185,245

Total liabilities (Note 7) 272,975 208,269

Net position: 

Unexpended appropriations - other funds 14 14

Cumulative results of operations - other funds 49,121 50,936

Total net position $ 49,135 $ 50,950

Total liabilities and net position $ 322,110 $ 259,219

The accompanying notes are an integral part of these statements.
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FEDERAL TRADE COMMISSION

STATEMENTS OF NET COST

For the Years Ended September 30, 2006 and 2005

(Dollars in thousands)

FEDERAL TRADE COMMISSION

STATEMENTS OF NET COST

For the Years Ended September 30, 2006 and 2005

(Dollars in thousands)

2006 2005

Program costs

Maintaining Competition Mission:

Gross costs $ 88,275 $ 84,486

Less: earned revenue (111,668) (100,375)

Net program (revenue) costs (Note 11) (23,393) (15,889)

Consumer Protection Mission:

Gross costs 119,430 111,992

Less: earned revenue (21,776) (18,169)

Net program (revenue) costs (Note 11) 97,654 93,823

Net cost of operations $ 74,261 $ 77,934

The accompanying notes are an integral part of these statements.
FEDERAL TRADE COMMISSION

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FEDERAL TRADE COMMISSION

STATEMENTS OF CHANGES IN NET POSITION

For the Years Ended September 30, 2006 and 2005

(Dollars in thousands)

FEDERAL TRADE COMMISSION

Statements of Changes in Net Position

For the Years Ended September 30, 2006 and 2005

(Dollars in thousands)

2006 2005

Cumulative Results of Operations:

Beginning balance, adjusted $ 50,936 $ 35,496

Budgetary Financing Sources:

Appropriations used 77,470 86,754

Less: Other - Recission (12,000) -

Other Financing Sources (Non-Exchange):

Imputed financing 6,976 6,620

Total Financing Sources 72,446 93,374

Less: Net Cost of Operations (74,261) (77,934)

Net Change (1,815) 15,440

Cumulative Results of Operations 49,121 50,936

Unexpended Appropriations:

Beginning balance, adjusted 14 36

Budgetary Financing Sources:

Appropriations received 78,390 87,838

Less: Other adjustments (Recission) (920) (1,106)

Less: Appropriations used (77,470) (86,754)

Total Budgetary Financing Sources - (22)

Total Unexpended Appropriations 14 14

Net Position $ 49,135 $ 50,950

The accompanying notes are an integral part of these statements.
PERFORMANCE AND ACCOUNTABILITY REPORT

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FEDERAL TRADE COMMISSION

STATEMENTS OF BUDGETARY RESOURCES

For the Years Ended September 30, 2006 and 2005

(Dollars in thousands)

FEDERAL TRADE COMMISSION

STATEMENTS OF BUDGETARY RESOURCES

For the Years Ended September 30, 2006 and 2005

(Dollars in thousands)

2006 2005

Budgetary Resources:

Unobligated balance, brought forward, October 1: $ 13,926 $ 8,427

Recoveries of prior year unpaid obligations 1,043 773

Budget authority

Appropriation 78,390 87,838

Spending authority from offsetting collections

Earned

Collected 133,475 118,579

Change in receivables from Federal sources (32) (34)

Change in unfilled customer orders

Without advance from Federal sources (167) 258

Subtotal 211,666 206,641

Permanently not available (12,920) (1,106)

Total Budgetary Resources $ 213,715 $ 214,735

Status of Budgetary Resources:

Obligations incurred (Note 13)

Direct 69,653 82,007

Reimbursable 133,187 118,802

Subtotal 202,840 200,809

Unobligated balance

Available 8,187 5,287

Not available 2,688 8,639

Total status of budgetary resources $ 213,715 $ 214,735

Change in Obligated Balance:

Obligated balance, net 

Unpaid obligations, brought forward, October 1 $ 47,045 $ 36,376

Less: Uncollected customer payments from 

Federal sources, brought forward, October 1 (400) (176)

Total unpaid obligated balance, net 46,645 36,200

Obligations incurred net 202,840 200,809

Less: Gross outlays (201,592) (189,367)

Less: Recoveries of prior year unpaid

obligations, actual (1,043) (773)

Change in uncollected customer payments 

from Federal sources (+/-) 199 (224)

Obligated balance, net , end of period

Unpaid obligations 47,250 47,045

Uncollected customer payments from Federal sources (201) (400)

Net Outlays

Net Outlays:

Gross outlays 201,592 189,367

Less: Offsetting collections (133,475) (118,579)

Less: Distributed offsetting receipts (10,021) (23,035)

Net Outlays $ 58,096 $ 47,753

The accompanying notes are an integral part of these statements.
FEDERAL TRADE COMMISSION

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FEDERAL TRADE COMMISSION

STATEMENTS OF FINANCING

For the Years Ended September 30, 2006 and 2005

(Dollars in thousands)

 FEDERAL TRADE COMMISSION

 STATEMENTS OF FINANCING

For the Years Ended September 30, 2006 and 2005

(Dollars in thousands)

2006 2005

Resources Used to Finance Activities:

Budgetary Resources Obligated

Obligations incurred $ 202,840 $ 200,809

Less: Spending authority from offsetting collections and recoveries (134,319) (119,576)

Obligations net of offsetting collections and recoveries 68,521 81,233

Other Resources

Imputed financing from costs absorbed by others 6,976 6,620

Net other resources used to finance activities 6,976 6,620

Total resources used to finance activities 75,497 87,853

Resources Used to Finance Items not Part of the Net Cost of Operations:

Change in budgetary resources obligated for goods,

services and benefits ordered but not yet provided (2,058) (9,225)

Resources that finance the acquistion of assets (3,208) (4,127)

Total resources used to finance items not part of the net cost of operations (5,266) (13,352)

Total resources used to finance the net cost of operations 70,231 74,501

Components of the Net Cost of Operations that will not Require or

Generate Resources in the Current Period:

Components Requiring or Generating Resources in Future Periods:

Increase in annual leave liability 113 87

Other 12 45

Total components of Net Cost of Operations that will require or

 generate resources in future periods 125 132

Components not Requiring or Generating Resources:

Depreciation and amortization 3,905 3,301

Total Components of Net Cost of Operations that will not require or 

 generate resources 3,905 3,301

Total components of net cost of operations that will not require or

 generate resources in the current period 4,030 3,433

Net Cost of Operations $ 74,261 $ 77,934

The accompanying notes are an integral part of these statements.
PERFORMANCE AND ACCOUNTABILITY REPORT

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FEDERAL TRADE COMMISSION

STATEMENTS OF CUSTODIAL ACTIVITY

For the Years Ended September 30, 2006 and 2005

(Dollars in thousands)

FEDERAL TRADE COMMISSION

STATEMENTS OF CUSTODIAL ACTIVITY

For the Years Ended September 30, 2006 and 2005

(Dollars in thousands)

(Refer to Note 16)

MC Mission CP Mission 2006 2005

Revenue Activity:

Sources of Collections:

Premerger Filing Fees (Net of Refunds) (a) $ 110,913 $ - $ 110,913 $ 99,511

Civil Penalties and Fines (b) - 20,458 20,458 6,479

Redress (c) - 37,283 37,283 62,181

Divestiture Fund (d) 970 - 970 708

Funeral Rule Violations - 170 170 7

Total Cash Collections 111,883 57,911 169,794 168,886

Accrual Adjustments (e) - 52,613 52,613 21,476

Total Custodial Revenue $ 111,883 $ 110,524 $ 222,407 $ 190,362

Disposition of Collections:

Transferred to Others:

Treasury General Fund - 29,402 29,402 20,095

Department of Justice 109,861 - 109,861 96,652

Receivers (f) - 7 7 182

Redress to Claimants (g) - 14,367 14,367 66,109

Contrator Fees Net of Interest Earned (h) - 905 905 6,291

Attorney Fees - - - 8,712

Court Registry - 1,600 1,600 2,755

Increase/(Decrease) in Amounts Yet to be Transferred 2,022 64,243 66,265 (10,434)

Net Custodial Activity $ - $ - $ - $ -

The accompanying notes are an integral part of these statements
FEDERAL TRADE COMMISSION

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PERFORMANCE AND ACCOUNTABILITY REPORT

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Notes to the Financial Statements

For the Years Ended September 30, 2006 and 2005

NOTE 1—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Reporting Entity

The Federal Trade Commission (FTC) is an independent United States 

(U.S.) Government agency, established by the Federal Trade Commission Act of 1914. The FTC enforces a variety of federal antitrust and 

consumer protection laws. The Commission is headed by five Commissioners, nominated by the President and confirmed by the Senate, each

serving a seven-year term. The President chooses one Commissioner 

to act as Chairman. No more than three Commissioners can be of the 

same political party. 

The FTC has two primary mission areas; maintaining competition and 

consumer protection that are supported by the Bureau of Competition (BC), the Bureau of Consumer Protection (BCP) and the Bureau 

of Economics (BE). Additionally, the following Offices provide mission

support as described. The Office of the Executive Director is the FTC’s

chief operating officer and manager, responsible for such matters as

administrative services, financial management, procurement, human

resources management, information and technology management, as 

well as overall FTC program and policy execution. The Office of Congressional Relations works closely with members of Congress and their 

staffs. The Office of General Counsel is the FTC’s chief legal officer

and adviser. The Office of Public Affairs provides information to the

public through the media. The Secretary is the Commission’s “court 

clerk,” responsible for implementing the Commission’s voting procedures, creating official records of its decisions, receiving and serving

Commission orders and other official documents, and coordinating the

preparation of responses to congressional constituent inquiries. The 

Office of Inspector General is responsible for the detection and prevention of waste, fraud and abuse in agency programs.

The majority of FTC staff is located in Washington D.C., however the 

FTC’s Regional Offices cover seven geographic areas. The regional offices work with the Bureaus of Competition and Consumer Protection

to conduct investigations and litigation; provide advice to state and local officials on the competitive implications of proposed actions; recommend cases; provide local outreach services to consumers and business 

persons; and coordinate activities with local, state, and regional authorities. FTC regional offices frequently sponsor conferences for small

businesses, local authorities, and consumer groups. 
FEDERAL TRADE COMMISSION

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The FTC seeks to ensure that the nation’s markets function competitively and are vigorous, efficient, and free of undue restrictions. The

FTC also works to enhance the smooth operation of the marketplace by 

eliminating acts or practices that are unfair or deceptive.

(b) Fund Accounting Structure

The FTC’s financial activities are accounted for by federal account

symbol (i.e., fund oversight groups). They include the accounts for 

appropriated funds and other fund groups described below for which 

the FTC maintains financial records and consumer redress accounts for

which the agency has management. 

General Funds Treasury Account Symbol (TAS) 29X0100 consists 

of salaries and expense appropriation accounts used to fund agency 

operations and capital expenditures.

Deposit Funds TAS 29X6013 consists of monies held temporarily 

by the FTC as an agent for others (e.g. redress funds).

Suspense Funds TAS 29F3875 represent receipts awaiting proper 

classification, or held in escrow, until ownership is established and proper distributions can be made.

Miscellaneous Receipt Accounts TAS 29 1040 and 29 3220 

reflects civil penalties and other miscellaneous receipts that by law are

not retained by the FTC. Cash balances are automatically transferred 

to the general fund of the Treasury at the end of each fiscal year.

(c) Basis of Accounting and Presentation

The financial statements present the financial position, net cost of

operations, changes in net position, budgetary resources, financing,

and custodial activities of the FTC, in accordance with U.S. Generally Accepted Accounting Principles (GAAP) and the Financial Reporting Requirements of the Office of Management and Budget (OMB)

prescribed in OMB Circular A-136 (as revised July 2006). They have 

been prepared from the books and records of the FTC and include the 

accounts of all funds under the control of the FTC. Accounting principles generally accepted in the U.S. of America encompass both accrual 

and budgetary transactions. Under the accrual method, revenues are 

recognized when earned and expenses are recognized when a liability 

is incurred, without regard to receipt or payment of cash. Budgetary 

accounting facilitates compliance with legal constraints and controls 

over the use of federal funds. The accompanying financial statements

are prepared on the accrual basis of accounting.
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75

In addition, the accompanying statements include information on the 

activities of the agency’s consumer redress program. Independent 

agents are contracted to administer the program under the oversight 

of FTC program offices, which maintain the financial records for consumer redress activity. 

(d) Budget Authority 

Congress annually passes appropriations that provide the FTC with authority to obligate funds for necessary expenses to carry out mandated 

program activities. These funds are available until expended, subject to 

OMB apportionment and to Congressional restrictions on the expenditure of funds. Also, the FTC places internal restrictions on fund expenditures to ensure the efficient and proper use of all funds. Appropriated

funding is derived from various revenues and financing sources.

(e) Fund Balance with the U.S. Treasury 

Fund balance with Treasury consist of appropriated funds that are 

available to pay current liabilities and to finance authorized purchase

commitments, and restricted funds, which include deposit and suspense 

funds. The FTC’s fund balance with Treasury is carried forward until 

such time as goods or services are received and payment is made or 

until the funds are returned to the U.S. Treasury. Cash receipts and 

disbursements are processed by the U.S. Treasury, with the exception 

of (redress) funds received and subsequently distributed (in accordance 

with court orders) by FTC agents to claimants.

(f) Accounts Receivable 

Accounts receivable consist of amounts due from other federal entities 

and from current and former employees and vendors. Non-entity accounts receivable include uncollected civil monetary penalties imposed 

as a result of the FTC’s enforcement activities and uncollected redress 

judgments. Since the FTC does not retain these receipts, a corresponding liability is also recorded for non-entity accounts receivable. Gross 

receivables are reduced to Net Realizable value by an allowance for 

uncollectible accounts (see Note 5 Accounts Receivable). 

(g) Property, Plant, and Equipment 

The basis for recording purchased general Property, Plant and Equipment (PP&E) is full cost, including all costs incurred to bring the PP&E 

to and from a location suitable for its intended use. The FTC’s PP&E 

consists of equipment, leasehold improvements, and software. Leasehold Improvements include all costs incurred during the design and 

construction phase of the improvement. These costs are amortized 

over the remaining life of the lease, or the useful life of the improvements, whichever is shorter. The land and buildings in which the FTC 

utilizes are owned by commercial vendors and the U.S. General Services 
FEDERAL TRADE COMMISSION

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Administration (GSA). Owners of Commercial buildings charge rent 

based on rates negotiated by GSA (on FTC’s behalf). For GSA owned 

property, GSA charges the FTC a Standard Level Users Charge (SLUC) 

that approximates the commercial rental rates for similar properties. 

FTC policy is to capitalize all PP&E with an initial cost greater than 

$100,000 and a useful life over two years

(h) Cash and Other Monetary Assets

With the exception of cash held in consumer redress custodial accounts 

by FTC’s contracted agents, the FTC does not maintain cash in commercial bank accounts. (See accompanying Statements of Custodial 

Activity.)

(i) Accrued Liabilities and Accounts Payable 

Accrued Liabilities and Accounts Payable represents a probable future 

outflow or other sacrifices of resources as a result of past transactions

or events. Liabilities are recognized when they are incurred, regardless 

of whether they are covered by budgetary resources. Liabilities can 

not be liquidated without legislation that provides the resources to do 

so. Also, the Government, acting in its sovereign capacity, can abrogate 

FTC liabilities (other than contracts). See Note 7 for information on 

“Liabilities not covered by budgetary resources” and Note 8 for information on “Other Liabilities.” 

(j) Employee Health Benefits and Life Insurance 

FTC employees are eligible to participate in the contributory Federal 

Employees Health Benefit Program (FEHBP) and the Federal Employees Group Life Insurance Program (FEGLIP). The FTC contributes a 

percentage to each program to pay for current benefits. 

(k) Post-Retirement Health Benefits and Life 

Insurance

FTC employees eligible to participate in the FEHBP and the FEGLIP 

may continue to participate in these programs after their retirement. 

The Office of Personnel Management (OPM) has provided the FTC

with certain cost factors that estimate the true cost of providing the 

post-retirement benefit to current employees. The FTC recognizes a

current cost for these and Other Retirement Benefits (ORB) at the time

the employee’s services are rendered. The ORB expense is financed by

OPM, and offset by the FTC through the recognition of an imputed 

financing source on the Statement of Financing. During fiscal years

2006 and 2005, the cost factors relating to FEHBP were $5,229 and 

$4,903, respectively, per employee enrolled. During fiscal years 2006

and 2005, the cost factor relating to FEGLIP was 0.02 percent of basic 

pay per employee enrolled. 
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(l) Employee Retirement Benefits 

FTC employees participate in either the Civil Service Retirement System 

(CSRS) or the Federal Employees Retirement System (FERS). Employees hired after December 31, 1983, are covered by FERS and Social 

Security, while employees hired prior to January 1, 1984, may elect to 

either join FERS or remain in CSRS. Approximately 24 percent of FTC 

employees participate in CSRS. For employees participating in CSRS, 

the FTC contributes seven percent of the employee’s gross earnings to 

the CSRS Retirement and Disability Fund. For employees participating 

in FERS, the FTC contributes 11.2 percent to the Federal Employees’ 

Retirement Fund. Employees participating in FERS are covered under the Federal Insurance Contributions Act (FICA) for which the FTC 

contributes a matching amount to the Social Security Administration. 

FTC contributions are recognized as current operating expenses. The 

Thrift Savings Plan (TSP) is a defined contribution retirement savings

and investment plan for employees covered by either CSRS or FERS. 

CSRS and FERS participating employees may contribute any dollar 

amount or percentage of basic salary to TSP, not to exceed an annual 

dollar amount of $15,000, for 2006. CSRS participating employees do 

not receive a matching contribution from the FTC. For FERS employees, the FTC contributes one percent of the employee’s gross pay to 

the TSP. The FTC also matches 100 ­percent of the first three percent

contributed and 50 percent of the next 2 percent contributed. FTC 

contributions are recognized as current operating expenses. Although 

the FTC contributes a portion for pension benefits and makes the necessary payroll withholdings, it is not responsible for contribution refunds, 

employee’s retirement benefits, or the retirement plan assets. Therefore,

the FTC financial statements do not report CSRS and FERS assets,

accumulated plan benefits, or unfunded liabilities, if any, which may

be applicable to employees. Such reporting is the responsibility of the 

OPM.

However, the FTC recognizes the full cost of providing future pension 

benefits to covered employees at the time the employees’ services are

rendered. OPM has provided the FTC with certain cost factors that estimate the true service cost of providing the pension benefits to covered

employees. The cost factors used to arrive at the service cost are 25 percent of basic pay for CSRS covered employees and 12 percent of basic 

pay for FERS covered employees during fiscal years 2006 and 2005.

The pension expense recognized in the financial statements equals this

service cost to covered employees less amounts contributed by these 

employees. If the pension expense exceeds the amount contributed by 

the FTC as employer, the excess is recognized as an imputed financing

cost. The excess total pension expense over the amount contributed by 

the agency must be financed by OPM and is recognized as an imputed

financing source, non-exchange revenue.
FEDERAL TRADE COMMISSION

78

Pension expenses in 2006 and 2005 consisted of the following:

(m) Net Position 

The FTC’s net position is composed of the following: 

Unexpended appropriations include the amount of unobligated balances 

and undelivered orders. Unobligated balances are the amount of appropriations or other authority remaining after deducting the cumulative 

obligations from the amount available for obligation. 

Cumulative results of operations represent the net results of operations 

since inception, the cumulative amount of prior period adjustments, 

the remaining book value of capitalized assets, and future funding 

requirements.

(n) Revenues and Other Financing Sources

The FTC’s revenues are derived from spending authority from offsetting collections and from direct appropriation. Spending authority from 

offsetting collections, is comprised of (1) amounts received for services 

performed under reimbursable agreements and (2) amounts received 

from collection of fees under the HSR Act and the National DNC 

Registry. For amounts collected under reimbursable work performed, 

revenue is recognized (accrued) when services are performed. Relative 

to fees, revenues are recognized when fees are earned. (See note 12)

In addition to exchange revenue, the FTC receives financing sources

through direct appropriation from the general fund of the Treasury 

to support its operations. A financing source, appropriations used, is

recognized to the extent these appropriated funds have been consumed. 

In fiscal years 2006 and 2005, the FTC received a financing source in

the form of a direct appropriation that represented approximately 36 

percent of total revenues and financing sources realized. 
PERFORMANCE AND ACCOUNTABILITY REPORT

Fiscal Year 2006

79

(o) Methodology for Assigning Cost 

Total costs were allocated to each mission based on two components: 

a) direct costs to each mission and b) indirect costs based on the 

percentage of direct FTE used by each mission.

(p) Use of Estimates

The preparation of financial statements in conformity with generally

accepted accounting principles requires management to make estimates 

and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts

of revenues and expenses during the reporting period. Actual results 

could differ from those estimates.

(q) Reclassifications

Certain reclassifications to prior-year balances have been made in the

accompanying financial statements to make disclosures consistent with

those of the current year. 

NOTE 2—NON-ENITY ASSETS

The following summarizes Non-entity Assets as of September 30, 2006 

and 2005:

Non-entity Fund Balance with Treasury primarily represents undisbursed premerger filing fees and deposits held for the consumer ­redress

program. Cash and other Monetary Assets consist of amounts on 

deposit with FTC distribution agents and divestiture fund deposits. 
FEDERAL TRADE COMMISSION

80

NOTE 3—FUND BALANCES WITH TREASURY

Fund balance with Treasury consisted of the following at September 

30, 2006 and 2005:

The Obligated Balance Not Yet Disbursed includes accounts payable 

and undelivered orders that have reduced unexpended appropriations 

but have not yet decreased the cash balance on hand.

Other Information Deposit and suspense funds stated above are 

not available to finance FTC activities and are classified as non-entity

assets, and a corresponding liability is recorded. 

NOTE 4—CASH AND OTHER MONETARY ASSETS

Cash and other monetary assets held as non-entity assets consist of 

redress judgment amounts on deposit with FTC’s distribution agents 

and divestiture fund deposits. A corresponding liability is recorded for 

these assets.

Cash and other monetary assets consisted of the following as of 

September 30, 2006 and 2005:
PERFORMANCE AND ACCOUNTABILITY REPORT

Fiscal Year 2006

81

NOTE 5—ACCOUNTS RECEIVABLE

Opening judgments receivable (consumer redress and civil penalties) 

balances reflect the Federal Accounting Standards Advisory Board

(FASAB) standard for the recognition of losses using the collection criterion of “more likely than not.” This criterion results in receivable 

balances that are more conservatively stated than those valued by the 

private sector under generally accepted accounting principles. The 

Board states that it is appropriate to recognize the nature of federal 

receivables, which, unlike trade accounts of private firms or loans made

by banks, are not created through credit screening procedures. Rather, 

these receivables arise because of the assessment of fines from regulatory violations. In these circumstances, historical experience and economic realities indicate that these types of claims are frequently not 

fully collectible.

Accounts receivable consisted of the following as of September 30, 

2006 and 2005:

NOTE 6—PROPERTY, PLANT, AND EQUIPMENT, NET

FTC policy is to capitalize all PP&E with an initial cost greater than 

$100,000 and a useful life over two years. Such assets are depreciated 

using the straight-line method of depreciation with service lives range 

from three to twenty years. Additionally, internal use software development and acquisition costs of $100,000 or greater are capitalized as 

software development in progress until the development stage has been 

completed and the software successfully tested. Upon completion and 

testing, software development-in-progress costs are reclassified as internal use software costs and amortized using the straight-line method over 

the estimated useful life of three years. Purchased commercial software 

that does not meet the capitalization criteria is expensed. Capitalized 

property and equipment, net of accumulated depreciation, consisted of 

the following as of September 30, 2006 and 2005:
FEDERAL TRADE COMMISSION

82

Depreciation expense was $3.9 million and $3.3 million for fiscal years

ending September 30, 2006 and 2005, respectively and is contained in 

the accumulated depreciation. 

NOTE 7—LIABILITIES NOT COVERED BY BUDGETARY RESOURCES

A breakout of Intragovernmental Liabilities and Liabilities With the 

Public not covered by budgetary resources as of September 30, 2006 

and 2005 are shown below:

(a) Intragovernmental and With the Public

(b) Other Information

Civil Penalty Collections Due to Treasury represents the contra 

account for accounts receivable due for civil monetary penalties, which 

will be transferred to the general fund of the Treasury upon receipt. 

FECA Liability consists of workers compensation claims payable to 

the Department of Labor (DOL), which will be funded in a future period 

and an unfunded estimated liability for future workers’ compensation 
PERFORMANCE AND ACCOUNTABILITY REPORT

Fiscal Year 2006

83

claims based on data provided from DOL. The actuarial calculation 

is based on benefit payments made over the last 12 quarters, and calculates the annual average of payments. For medical expenses and 

compensation this average is then multiplied by the liability to benefit

paid ratio for the whole FECA program.

Undisbursed Redress includes redress in FTC’s Treasury deposit 

account, or with FTC redress contractors.

Divestiture Fund Due represents the contra account for the divestiture fund held by one of FTC’s contractors until distribution of the 

funds are ordered per terms of the agreement.

Redress Net Collections Due represents the contra account for accounts receivable due from judgments obtained as a result of the agency’s consumer redress litigation.

Undisbursed Premerger Filing Fees Liability represents undisbursed filing fees collected under the HSR Act, which are due to the

Department of Justice in a subsequent period. 

Accrued Leave represents a liability for earned leave and is reduced 

when leave is taken. At year end, the balance in the accrued annual 

leave account is adjusted to reflect the liability at current pay rates and

leave balances. Accrued annual leave is paid from future funding sources and, accordingly, is reflected as a liability not covered by budgetary

resources. Sick and other leave is expensed as taken.

NOTE 8—OTHER LIABILITIES 

The following summarizes Other Liabilities as of September 30, 2006 

and 2005, all are considered current:
FEDERAL TRADE COMMISSION

84

NOTE 9—LEASES

Leases of commercial property are made through and managed by 

GSA. The Commission has leases on four government-owned properties and ten commercial properties. The FTC’s current leases expire at 

various dates through 2013. Two leases provide for tenant improvement 

allowances totaling $7.1 million and provide that these costs be amortized over the length of the leases. Under the terms of the leases, the 

FTC agrees to reimburse the landlord for the principal balance of the 

unamortized portion of the tenant improvement allowance in the event 

the agency vacates the space before lease expiration. The FTC rents 

approximately 571,734 square feet of space in both commercial and 

government-owned properties for use as offices, storage and parking.

Rent expenditures for the years ended September 30, 2006 and 2005, 

were approximately $17.5 million and $17.3, respectively. 

Future minimum lease payments due under leases of governmentowned property as of September 30, 2006, are as follows:

Future minimum lease payments under leases of commercial property 

due as of September 30, 2006 are as follows:
PERFORMANCE AND ACCOUNTABILITY REPORT

Fiscal Year 2006

85

NOTE 10—COMMITMENTS AND CONTINGENCIES

Commitments The FTC is committed under obligations for goods 

and services that have been ordered but not yet received (undelivered 

orders) at fiscal year end. Undelivered orders, net of unfilled customer

orders from federal sources, were $33.9 million and $31.9 million as of 

September 30, 2006 and 2005, respectively.

Contingencies The FTC is a party in various administrative proceedings, legal actions, and claims brought by or against it. In the opinion 

of FTC management and legal counsel, the ultimate resolution of these 

proceedings, actions, and claims, will not materially affect the financial

position or the results of operation of the FTC. 

NOTE 11—INTRAGOVERNMENTAL COSTS AND EXCHANGE REVENUES

For ‘exchange revenue with the public,’ the buyer of the goods or services is a non-Federal entity. For ‘intragovernmental costs,’ the buyer 

and seller are both Federal entities. If a Federal entity purchases goods 

or services from another Federal entity and sells them to the public, 

the exchange revenue would be classified as ‘with the public,’ but the

related costs would be classified as ‘intragovernmental.’ The purpose

of this classification is to enable the Federal government to provide

consolidated financial statements, and not to match public and intragovernmental revenue with costs that are incurred to produce public 

and intragovernmental revenue.
FEDERAL TRADE COMMISSION

86

NOTE 12—EXCHANGE REVENUES

Exchange revenues are earned through the collection of fees under 

the Hart-Scott-Rodino Act. This Act, in part, requires the filing of

premerger notifications with the FTC and the Antitrust Division of the

Department of Justice (DOJ) and establishes a waiting period before 

certain acquisitions may be consummated. Mergers with transaction 

amounts over $53 million require the acquiring party to pay a filing

fee. The filing fees are based on the transaction amount and follow

a three-tiered structure: $45,000, $125,000, and $280,000. The FTC 

retains one-half of the HSR premerger filing fees collected. Revenue

is recognized when all required documentation under the HSR Act has 

been received by the agency. Fees not retained by the FTC are maintained in a suspense fund until transferred to the DOJ and not reported 

as revenue to the FTC. 

Exchange revenues are also earned through the collection of fees for 

the national Do Not Call Registry. This registry operates under Section 

5 of the FTC Act, which enforces the Telemarketing Sales Rule (TSR). 

The Do Not Call Implementation Act, P.L. 108-010, gives the FTC 

authority to establish fees for fiscal years 2003 through 2007 sufficient

to offset the implementation and enforcement of the provisions relating 

to the Do Not Call Registry. Telemarketers are required to pay an 

annual subscription fee and download from the Do Not Call Registry 

database a list of telephone numbers of consumers who do not wish to 

receive calls. Fees are based on the number of area codes downloaded. 

The minimum charge was $56 to download one area code. The maximum charge was $15,400 for all area codes within the United States. 

Effective September 1, 2006, the new minimum charge is $62 and the 

maximum charge is $17,030. Revenue is recognized when collected 

and the Telemarketer is given access to download data from the Do Not 

Call database. Fees collected over expenses are retained for use in other 

FTC missions.

Exchange revenue is also earned for services provided to other Government agencies through reimbursable agreements. The FTC recovers the 

full cost of services, primarily salaries and related expenses. Revenue is 

earned at the time the expenditures are incurred against the reimbursable order. All exchange revenues are deducted from the full cost of the 

FTC’s programs to arrive at net program cost.
PERFORMANCE AND ACCOUNTABILITY REPORT

Fiscal Year 2006

87

Exchange revenue consisted of the following:

NOTE 13—APPORTIONMENT CATEGORIES OF OBLIGATIONS INCURRED: DIRECT VS. REIMBURSEABLE OBLIGATIONS

(a) Apportionment Categories of Obligations 

Incurred 

Obligations incurred reported on the Statement of Budgetary Resources in 2006 and 2005 consisted of the following:

NOTE 14—EXPLANATION OF DIFFERENCES BETWEEN THE STATEMENT OF BUDGETARY RESOURCES AND THE 

BUDGET OF THE UNITED STATES GOVERNMENT 

There are no material differences between amounts reported in the 

Statement of Budgetary Resources and the actual amounts reported in 

the Budget of the United States Government.

NOTE 15—EXPLANATION OF DIFFERENCES BETWEEN LIABILITIES NOT COVERED BY BUDGETARY RESOURCES 

AND COMPONENTS REQUIRING OR GENERATING RESOURCES IN FUTURE PERIODS

FECA Liability and Accrued Leave. The changes in both of 

these balances between FY 2006 and FY2005 are reflected as part

of Components Requiring or Generating Resources in Future Periods on the Statement of Financing. The increase in Accrued Leave 

of $113,000 is included in the increase in Annual Leave Liability line 

on the Statement of Financing, and the increase in FECA Liability of 
FEDERAL TRADE COMMISSION

88

$12,000 is included in the “Other” line as part of the resources that 

fund future periods.

NOTE 16—CUSTODIAL ACTIVITIES

The FTC functions in a custodial capacity with respect to revenue 

transferred or transferable to recipient government entities or the public. These amounts are not reported as revenue to the FTC. The major 

components of the FTC’s custodial activities are discussed below.

(a) Premerger Filing Fees

All Hart-Scott-Rodino (HSR) premerger filing fees are collected by the

FTC pursuant to section 605 of P.L. 101-162, as amended, and are divided evenly between the FTC and the DOJ. The collected amounts are 

then credited to the appropriations accounts of the two agencies (FTC’s 

“Salaries and Expenses” and DOJ’s “Salaries and Expenses, Antitrust 

Division”). During fiscal years 2006 and 2005 FTC collected $221.8

million and $199.0 million, respectively, in HSR fees. Total collections 

in the amount of $110.9 were retained for distribution, of which $100.6 

million of this collection was transferred to DOJ in 2006 and $90.3 in 

2005. As of September 30, 2006 the undistributed collections remaining in the amount of $10.4 million represent amounts to be transferred 

to DOJ in a future period. 

(b) Civil Penalties and Fines

Civil penalties collected in connection with the settlement or litigation 

of the FTC’s administrative or federal court cases are collected by either 

the FTC or DOJ as provided for by law. DOJ assesses a fee equivalent to 

three percent of amounts collected before remitting them to the FTC. 

The FTC then deposits these collections into the U.S. Treasury. Civil 

penalties collected also include amounts collected for undecided civil 

penalty cases held in suspense until final disposition of the case.

(c) Redress 

The FTC obtains consumer redress in connection with the settlement 

or litigation of both its administrative and its federal court cases. The 

FTC attempts to distribute funds thus obtained to consumers whenever possible. If consumer redress is not practical, the funds are paid 

(­disgorged) to the U. S. Treasury, or on occasion, other alternatives, 

such as consumer education, are explored. Major components of the 

program include eligibility determination, disbursing redress to claimants, and accounting for the disposition of these funds. Collections 

made against court-ordered judgments totaled $37.2 million and $62.2 

million during fiscal years 2006 and 2005, respectively.
PERFORMANCE AND ACCOUNTABILITY REPORT

Fiscal Year 2006

89

The sources of these collections are as follows:

(d) Divestiture Fund 

One judgment obtained by the FTC on behalf of its maintaining competition mission stipulates the divestiture of assets by the defendants 

into an interest-bearing account to be monitored by the agency. The 

account balance represents principal and related interest held in one 

of the FTC’s contractor accounts as stipulated in the judgment. A corresponding liability is recorded. Net interest earned in fiscal year 2006

and 2005, was $970,000 and $708,000, respectively. 

Divestiture Fund activity in fiscal years 2006 and 2005 consisted of the

following:

(e) Accrual Adjustments

These adjustments represent the difference between the agency’s 

opening and closing accounts receivable balances. Accounts receivable 

are the funds owed to the agency (as a custodian) and ultimately to 

consumers or other entities. See Exhibit A for computation of accrual 

adjustments to the Statements of Custodial Activity.
FEDERAL TRADE COMMISSION

90

(f) Receivers

Funds forwarded to receivers for distribution to consumers was $7,560 

and $182,000 for fiscal year 2006 and 2005, respectively.

(g) Redress to Claimants

Redress to claimants consists of amounts distributed to consumers by 

the FTC, one of its contracted agents, the court appointed receiver, or 

the defendant. In fiscal year 2006 a total of $14.3 million was distributed to consumers: $12.6 million was paid by the FTC and its contracted 

agents, and $1.7 million was paid by receivers. In fiscal year 2005,

a total of $66.1 million was distributed to consumers: $40.3 million 

was paid by the FTC and its contracted agents, and $25.8 million was 

distributed by receivers. 

(h) Contractor Fees Net of Interest Earned

Collections against monetary judgments are often deposited with one 

of the agency’s two redress contractors until distributions to consumers occur. Funds are deposited in interest-bearing accounts, and the 

interest earnings are used to fund administrative expenses. Contractor 

expenses for the administration of redress activities and funds management amounted to $2.5 million and $6.8 million during the years ended 

September 30, 2006 and 2005, respectively. Interest earned was $1.6 

million and $.5 million during fiscal years 2006 and 2005, respectively,

with the difference of $.9 million and $6.3 million representing net 

expense. 

(i) Change in Liability Accounts

Liability accounts contain funds that are in the custody of the agency or 

its agents, and are owed to others (consumers, receivers for fees, and/or

the Department of Justice). See Exhibit B for the computation of liability account changes.

(j) Current Year Judgments

A judgment is a formal decision handed down by a court. Redress judgments include amounts that defendants have agreed, or are ordered to 

pay, for the purpose of making restitution to consumers deemed to have 

been harmed by the actions of the defendant(s) in the case. For purposes 

of presentation in Exhibit A, redress judgments include cases in which 

the FTC, or one of its agents, is directly involved in the collection or distribution of consumer redress. In fiscal years 2006 and 2005 the agency

obtained and reported in Exhibit A monetary redress judgments against 

defendants totaling $315.2 million and $835.0 million, respectively. 
PERFORMANCE AND ACCOUNTABILITY REPORT

Fiscal Year 2006

91

The FTC does not include in the presentation of Exhibit A current 

redress judgment cases in which the FTC, or one of its agents, is not directly involved with the collection or distribution of consumer redress. 

These are cases in which the defendant, or other third party, has been 

ordered to pay redress directly to the consumers. In most of these cases, 

the judgment has ordered redress in the form of refunds or credits. 

The agency also obtained civil penalty judgments of $27.3 and $6.6 

million in fiscal years 2006 and 2005, respectively.

(k) Treasury Referrals and Prior Year Recoveries

Monetary judgments six months or more past due are referred to the 

Department of Treasury for follow-up collection efforts in keeping with 

the Debt Collection Improvement Act of 1996 (DCIA). Treasury’s Debt 

Management Services (DMS) administers the program, and deducts 18 

percent from amounts ultimately collected for its fee. Collections, net 

of fees, are returned to the FTC for distribution to either consumers, in 

the form of redress, or to the general fund of the Treasury as disgorged 

amounts. In fiscal years 2006 and 2005, $.9 million and $1.5 million

(net of fees) were collected by DMS based on FTC referrals and are 

reported as collections on the Statements of Custodial Activity. The 

FTC refers to DMS only those cases as defined in DCIA. This excludes

cases that are in receivership, or bankruptcy or foreign debt. During 

2006 and 2005, $176.7 and $104.6 million were referred to the DMS 

for collection. 

Prior year recoveries include amounts collected on cases that were written off in a previous year. In fiscal years 2006 and 2005, $1.7 million

and $2.9 million were collected. 

(l) Adjustments to the Allowance

Adjustments to the allowance for redress, totaling $233.1 million, 

represent adjustments to the provision for uncollectible amounts. 

Adjustments to the allowance for civil penalty, totaling $147,800, 

represent adjustments to the provision for uncollectible amounts.

NOTE 17 – UNDELIVERED ORDERS AT THE END OF THE PERIOD

The amount of budgetary resources obligated for undelivered orders at 

the end of September 30, 2006 and 2005 is $33.2 and $32.5 million, 

respectively.
FEDERAL TRADE COMMISSION

92
PERFORMANCE AND ACCOUNTABILITY REPORT

Fiscal Year 2006

93

FEDERAL TRADE COMMISSION

SUPPLEMENTARY INFORMATION

For the Years Ended September 30, 2006 and 2005

(Dollars in thousands)

FEDERAL TRADE COMMISSION

SUPPLEMENTARY INFORMATION

For the Years Ending September 30, 2006 and 2005

(Dollars in thousands)

Intragovernmental Assets:

Fund Balance with Treasury Accounts Total Total

Trading Partner Agency: Entity Non-Entity Receivable 2006 2005

U.S. Department of Treasury $ 57,925 $ 12,214 $ - $ 70,139 $ 78,213

Agency for International Development - - 46 46 33

Other Government Agencies - - 9 9 54

Total Intragovernmental Assets $ 57,925 $ 12,214 $ 55 $ 70,194 $ 78,300

Intragovernmental Liabilities:

Accrued Accounts Total Total

Trading Partner Agency: Benefits Payable NA 2006 2005

Covered by Budgetary Resources:

General Services Administration $ - $ 694 $ - $ 694 $ 416

Government Printing Ofice - 603 - 603 1,274

Homeland Security - 401 - 401 100

Department of Justice - 253 - 253 -

U.S. Postal Inspection Service - 114 - 114 125

U.S. Department of Treasury 198 94 - 292 256

Office of Personnel Management 602 37 - 639 593

Department of Transportation - 17 - 17 416

Department of Labor - - - - 4

Total Covered by Budgetary Resources $ 800 $ 2,213 $ - $ 3,013 $ 3,184

Not Covered by Budgetary Resources:

Department of Justice $ - $ 10,441 $ - $ 10,441 $ 9,389

Department of Labor - 2,400 - 2,400 2,388

U.S. Department of Treasury - 6,455 - 6,455 332

Total Not Covered by Budgetary Resources $ - $ 19,296 $ - $ 19,296 $ 12,109
FEDERAL TRADE COMMISSION

94

FEDERAL TRADE COMMISSION

SUPPLEMENTARY INFORMATION

For the Years Ended September 30, 2006 and 2005

(Dollars in thousands) FEDERAL TRADE COMMISSION

Supplementary Information

For the Years Ending September 30, 2006 and 2005

(Dollars in thousands)

Exchange Revenue from Reimbursable Agreements 

Trading Partner: 2006 2005

U.S. Agency for International Development $ 592 $ 332

U.S. Department of State 120 401

Federal Mine Safety & Health Review Commission 40 38

Medicare Payment Advisory Commission/GSA 20 19

U.S. Postal Inspection Service 20 17

Department of Commerce 9 4

Securities and Exchange Commission 8 21

Board of Governors of the Federal Reserve System 8 21

Federal Deposit Insurance Corp. 8 21

Office of the Comptroller of the Currency 8 21

National Credit Union Admin 1 15

Department of Justice - 42

U.S. Trade and Development Agency - 29

Total Exchange Revenue from Reimbursable Agreements $ 834 $ 981

Related Costs:

Budget Function Classification: 2006 2005

Other Advancement of Commerce $ 834 $ 981

Total Related Costs $ 834 $ 981
PERFORMANCE AND ACCOUNTABILITY REPORT

Fiscal Year 2006

95

FEDERAL TRADE COMMISSION

SUPPLEMENTARY INFORMATION

For the Years Ended September 30, 2006 and 2005

(Dollars in thousands)

FEDERAL TRADE COMMISSION

Supplementary Information

For the Years Ending September 30, 2006 and 2005

(Dollars in thousands)

Intragovernmental Expenses:

Trading Partner: 2006 2005

Office of Personnel Management $ 22,268 $ 21,109

General Services Administration 18,389 18,422

Social Security Administration 5,591 5,254

Government Printing Office 1,762 2,270

Department of Homeland Security 1,655 1,038

Department of the Interior 872 865

Department of Transportation 722 709

Department of Justice 646 53

Department of Labor 378 265

Department of Health and Human Services 226 229

National Archives and Records Administration 47 46

Department of State 26 64

Library of Congress 10 -

Department of Commerce 9 4

U.S. Environmental Protection Agency 2 185

United States Postal Service 1 247

U.S. Department of Treasury (5) 14

Total Intragovernmental Expenses $ 52,599 $ 50,774

Mission:

Maintaining Competition $ 22,355 $ 21,833

Consumer Protection 30,244 28,941

Total Intragovernmental Expenses $ 52,599 $ 50,774
FE

DERAL TRADE COMMISSION

96

FEDERAL TRADE COMMISSION

NOTES TO THE STATEMENTS OF CUSTODIAL ACTIVITY

ACCRUAL ADJUSTMENTS

September 30, 2006 and 2005

(Dollars in thousands)

Exhibit A

FEDERAL TRADE COMMISSION

Notes to the Statements of Custodial Activity

Accrual Adjustments

September 30, 2006 and 2005

(Dollars in thousands)

- 2006 ------------------------------CP Mission-------------------------------- 2005

Part 1 Civil Penalty Redress Subtotal CP Total TotalJudgments Receivable - Net Beginning 332 $ 84,023 $ 84,355 $ 84,355 $ 62,879 $ Add: Current Year Judgments (Note 16j) 27,360 315,195 342,555 342,555 841,649 Prior Year Recoveries (Note 16k) - 1,719 1,719 1,719 2,921Less: Collections by FTC/Contractors Receivers (20,458) (37,283) (57,741) (57,741) (68,660) Collections by DOJ for Litigation Fees/Other (631) - (631) (631) (199)Less: Adjustments to Allowance (Note 16 l) (148) (233,141) (233,289) (233,289) (754,235)Judgments Receivable - Net, Ending 6,455 $ 130,513 $ 136,968 $ 136,968 $ 84,355 $ 

Part 2

Judgments Receivable - Net Ending 6,455 $ 130,513 $ 136,968 $ 136,968 $ 84,355 $ Judgments Receivable - Net Beginning 332 84,023 84,355 84,355 62,879Accrual Adjustment 6,123 $ 46,490 $ 52,613 $ 52,613 $ 21,476 $ 

EXHIBIT A
PERFORMANCE AND ACCOUNTABILITY REPORT

Fiscal Year 2006

97

FEDERAL TRADE COMMISSION

NOTES TO THE STATEMENTS OF CUSTODIAL ACTIVITY

CHANGE IN LIABILITY

September 30, 2006 and 2005

(Dollars in thousands)

Exhibit B

FEDERAL TRADE COMMISSION

Notes to the Statements of Custodial Activity

Change in Liability

September 30, 2006 and 2005

(Dollars in thousands)

MC Mission CP Mission

Pre-Merger Divestiture Civil Penalty Subtotal MC Civil Penalty Redress Subtotal-CP Total

Liabilities @ 09/30/06 10,441 $ 43,054 $ - $ 53,495 $ 6,455 $ 189,780 $ 196,235 $ 249,730 $Liabilities @ 09/30/05 9,389 42,084 - 51,473 332 131,660 131,992 183,465Change in Liability Accounts 1,052 $ 970 $ - $ 2,022 $ 6,123 $ 58,120 $ 64,243 $ 66,265 $

MC Mission CP Mission

Pre-Merger Divestiture Civil Penalty Subtotal MC Civil Penalty Redress Subtotal-CP Total

Liabilities @ 09/30/05 9,389 $ 42,084 $ - $ 51,473 $ 332 $ 131,660 $ 131,992 $ 183,465 $Liabilities @ 09/30/04 6,530 41,376 - 47,906 985 145,008 145,993 193,899Change in Liability Accounts 2,859 $ 708 $ - $ 3,567 $ (653) $ (13,348) $ (14,001) $ (10,434)

EXHIBIT B

$
FEDERAL TRADE COMMISSION

98

Contact Information

Federal Trade Commission 

Internet Home Page www.ftc.gov

FTC Spanish Home Page www.ftc.gov/ojo

PAR Internet Site www.ftc.gov/par

Strategic Plan Internet Site www.ftc.gov/strategicplan

PAR Email Address gpra@ftc.gov

PAR Facsimile Number 202-326-2329

PAR Mailing Address Federal Trade Commission

 600 Pennsylvania Avenue, NW

Mail Drop H-774

Attention PAR

Washington, DC 20580

PAR Telephone Number Darlene Cossette, Report Editor

 202–326–3255

Consumer Response Center

General Complaints 1-877-FTC-HELP (1-877-382-4357)

Identity Theft Complaints 1-877-ID-THEFT (1-877-438-4338)

Online General Complaints www.ftc.gov/complaint 

Identity Theft Education/

 Complaints www.ftc.gov/idtheft

National Do Not Call Registry www.donotcall.gov

The FTC welcomes comments or suggestions for improvement of its 

PAR. Please contact the agency at its email address, facsimile number, 

or mailing address.

www.ftc.gov

FEDERAL TRADE COMMISSION