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21–275 2017

LEGISLATIVE HEARING ON 17 FTC BILLS 

HEARING 

BEFORE THE

SUBCOMMITTEE ON COMMERCE, MANUFACTURING, 

AND TRADE 

OF THE

COMMITTEE ON ENERGY AND 

COMMERCE 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED FOURTEENTH CONGRESS 

SECOND SESSION 

MAY 24, 2016 

Serial No. 114–148 

( 

Printed for the use of the Committee on Energy and Commerce 

energycommerce.house.gov 

(II) 

COMMITTEE ON ENERGY AND COMMERCE 

FRED UPTON, Michigan 

Chairman 

JOE BARTON, Texas 

Chairman Emeritus 

ED WHITFIELD, Kentucky 

JOHN SHIMKUS, Illinois 

JOSEPH R. PITTS, Pennsylvania 

GREG WALDEN, Oregon 

TIM MURPHY, Pennsylvania 

MICHAEL C. BURGESS, Texas 

MARSHA BLACKBURN, Tennessee 

Vice Chairman 

STEVE SCALISE, Louisiana 

ROBERT E. LATTA, Ohio 

CATHY MCMORRIS RODGERS, Washington 

GREGG HARPER, Mississippi 

LEONARD LANCE, New Jersey 

BRETT GUTHRIE, Kentucky 

PETE OLSON, Texas 

DAVID B. MCKINLEY, West Virginia 

MIKE POMPEO, Kansas 

ADAM KINZINGER, Illinois 

H. MORGAN GRIFFITH, Virginia 

GUS M. BILIRAKIS, Florida 

BILL JOHNSON, Missouri 

BILLY LONG, Missouri 

RENEE L. ELLMERS, North Carolina 

LARRY BUCSHON, Indiana 

BILL FLORES, Texas 

SUSAN W. BROOKS, Indiana 

MARKWAYNE MULLIN, Oklahoma 

RICHARD HUDSON, North Carolina 

CHRIS COLLINS, New York 

KEVIN CRAMER, North Dakota 

FRANK PALLONE, JR., New Jersey 

Ranking Member 

BOBBY L. RUSH, Illinois 

ANNA G. ESHOO, California 

ELIOT L. ENGEL, New York 

GENE GREEN, Texas 

DIANA DEGETTE, Colorado 

LOIS CAPPS, California 

MICHAEL F. DOYLE, Pennsylvania 

JANICE D. SCHAKOWSKY, Illinois 

G.K. BUTTERFIELD, North Carolina 

DORIS O. MATSUI, California 

KATHY CASTOR, Florida 

JOHN P. SARBANES, Maryland 

JERRY MCNERNEY, California 

PETER WELCH, Vermont 

BEN RAY LUJA ́ N, New Mexico 

PAUL TONKO, New York 

JOHN A. YARMUTH, Kentucky 

YVETTE D. CLARKE, New York 

DAVID LOEBSACK, Iowa 

KURT SCHRADER, Oregon 

JOSEPH P. KENNEDY, III, Massachusetts 

TONY CA ́ RDENAS, California 

SUBCOMMITTEE ON COMMERCE, MANUFACTURING, AND TRADE

MICHAEL C. BURGESS, Texas 

Chairman 

LEONARD LANCE, New Jersey 

Vice Chairman 

MARSHA BLACKBURN, Tennessee 

GREGG HARPER, Mississippi 

BRETT GUTHRIE, Kentucky 

PETE OLSON, Texas 

MIKE POMPEO, Kansas 

ADAM KINZINGER, Illinois 

GUS M. BILIRAKIS, Florida 

SUSAN W. BROOKS, Indiana 

MARKWAYNE MULLIN, Oklahoma 

FRED UPTON, Michigan (ex officio) 

JANICE D. SCHAKOWSKY, Illinois 

Ranking Member 

YVETTE D. CLARKE, New York 

JOSEPH P. KENNEDY, III, Massachusetts 

TONY CA ́ RDENAS, California 

BOBBY L. RUSH, Illinois 

G.K. BUTTERFIELD, North Carolina 

PETER WELCH, Vermont 

FRANK PALLONE, JR., New Jersey (ex 

officio) 

(III) 

C O N T E N T S 

Page 

Hon. Michael C. Burgess, a Representative in Congress from the State of 

Texas, opening statement .................................................................................... 1 

Prepared statement .......................................................................................... 3 

Hon. Janice D. Schakowsky, a Representative in Congress from the State 

of Illinois, opening statement .............................................................................. 4 

Hon. Marsha Blackburn, a Representative in Congress from the State of 

Tennessee, opening statement ............................................................................ 6 

Hon. Frank Pallone, Jr., a Representative in Congress from the State of 

New Jersey, opening statement .......................................................................... 7 

Hon. Fred Upton, a Representative in Congress from the State of Michigan, 

prepared statement .............................................................................................. 226 

WITNESSES

Edith Ramirez, Chairwoman, Federal Trade Commission ................................... 8 

Prepared statement .......................................................................................... 11 

Joshua Wright, University Professor, Antonin Scalia Law School, George 

Mason University ................................................................................................. 59 

Prepared statement .......................................................................................... 62 

Abigail Slater, General Counsel, the Internet Association .................................. 78 

Prepared statement .......................................................................................... 80 

David Vladeck, Professor of Law, Georgetown Law School ................................. 88 

Prepared statement .......................................................................................... 90 

Geoffrey Manne, Founder and Executive Director, the International Center 

for Law and Economics ........................................................................................ 110 

Prepared statement .......................................................................................... 112 

Daniel Castro, Vice President, Information Technology and Innovation Foundation .................................................................................................................... 134 

Prepared statement .......................................................................................... 136 

Richard Hendrickson, President and CEO, Lifetime Products ............................ 158 

Prepared statement .......................................................................................... 160 

Greg O’Shanick, President and Medical Director, the Center for 

Neurorehabilitation Services ............................................................................... 163 

Prepared statement .......................................................................................... 165 

Stephen Shur, President, Travel Technology Association .................................... 168 

Prepared statement .......................................................................................... 170 

Robert Arrington, President, the National Funeral Directors Association ......... 178 

Prepared statement .......................................................................................... 180 

John Breyault, Vice President of Public Policy, Telecommunications, and 

Fraud, the National Consumers League ............................................................ 185 

Prepared statement .......................................................................................... 187 

Gil Genn, Maryland Sports and Entertainment Industry Coalition ................... 199 

Prepared statement .......................................................................................... 201 

Jamie Pena, Vice President, Revenue Strategy and Global Distribution, Omni 

Hotels & Resorts .................................................................................................. 204 

Prepared statement 1 ........................................................................................ 206 

Michael Best, Senior Policy Advocate of Consumer Federation of America ....... 213 

Prepared statement .......................................................................................... 215 

SUBMITTED MATERIAL

Statement of the Brain Injury Association of America ........................................ 227 

Statement of the American Society of Association Executives ............................ 229 

Statement of the National Sporting Goods Association ....................................... 231 

Statement of joint associations ............................................................................... 232 

Page

IV 

Statement of Ashford ............................................................................................... 234 

Statement of Delta ................................................................................................... 235 

Statement of the Chamber of Commerce ............................................................... 261 

Statement of the American Academy of Pediatrics .............................................. 263 

Statements of Consumers Union ............................................................................ 264 

Statement of the Retail Industry Leaders Association ......................................... 269 

Statement of Safe Kids Worldwide ........................................................................ 271 

Statement of the National Association of State Head Injury Administrators .... 272 

Article entitled, ‘‘In dark move, Congress considers rolling back transparency 

for meetings,’’ Sunlight Foundation Blog, May 23, 2016 .................................. 273 

Statement of various stakeholders ......................................................................... 278 

1 The addendum to Ms. Pena’s testimony is available at: http:// 

docs.house.gov/meetings/IF/IF17/20160524/104976/HHRG-114-IF17- 

Wstate-PenaJ-20160524.pdf. 

(1) 

LEGISLATIVE HEARING ON 17 FTC BILLS 

TUESDAY, MAY 24, 2016 

HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON COMMERCE, MANUFACTURING, AND

TRADE, COMMITTEE ON ENERGY AND COMMERCE, 

Washington, DC. 

The subcommittee met, pursuant to call, at 10:00 a.m., in room 

2123 Rayburn House Office Building, Hon. Michael Burgess (chairman of the subcommittee) presiding. 

Members present: Representatives Burgess, Lance, Blackburn, 

Harper, Guthrie, Olson, Pompeo, Kinzinger, Bilirakis, Brooks, 

Mullin, Schakowsky, Clarke, Kennedy, Cardenas, Rush, 

Butterfield, Welch, and Pallone (ex officio). 

Also present: Representatives McNerney and Tonko. 

Staff present: Leighton Brown, Deputy Press Secretary; Rebecca 

Card, Assistant Press Secretary; James Decker, Policy Coordinator, 

Commerce, Manufacturing, and Trade; Graham Dufault, Counsel, 

Commerce, Manufacturing, and Trade; Melissa Froelich, Counsel, 

Commerce, Manufacturing, and Trade; Giulia Giannangeli, Legislative Clerk, Commerce, Manufacturing, and Trade; Paul Nagle, 

Chief Counsel, Commerce, Manufacturing, and Trade; Tim Pataki, 

Professional Staff Member; Olivia Trusty, Professional Staff, Commerce, Manufacturing, and Trade; Dylan Vorbach, Deputy Press 

Secretary; Michelle Ash, Minority Chief Counsel, Commerce, Manufacturing, and Trade; Jeff Carroll, Minority Staff Director; Lisa 

Goldman, Minority Counsel, Commerce, Manufacturing, and Trade; 

Rick Kessler, Minority Senior Advisor and Staff Director, Energy 

and Environment; Dan Miller, Minority Staff Assistant; Caroline 

Paris-Behr, Minority Policy Analyst; Tim Robinson, Minority Chief 

Counsel; Matt Schumacher, Minority Press Assistant; Andrew 

Souvall, Minority Director of Communications, Outreach and Member Services; and CJ Young, Minority Press Secretary. 

OPENING STATEMENT OF HON. MICHAEL C. BURGESS, A 

REPRESENTATIVE IN CONGRESS FROM THE STATE OF TEXAS 

Mr. BURGESS [presiding]. The subcommittee on Commerce, Manufacturing, and Trade will come to order. 

The Chair recognizes himself for 5 minutes for the purpose of an 

opening statement. 

I want to welcome everyone here this morning. This is going to 

be a very productive morning and, certainly, we have been looking 

forward to it for some time. It has been 20 years since Congress 

last reauthorized the Federal Trade Commission. I don’t need to reVerDate Nov 24 2008 11:35 Feb 24, 2017 Jkt 037690 PO 00000 Frm 00005 Fmt 6633 Sfmt 6633 F:\MY DOCS\HEARINGS 114\114-148 CHRIS
2 

mind you that that was in the Dark Ages. People still carried 

pagers; they dialed into the internet, if they were lucky enough to 

have one, let alone multiple, e-mail accounts. The world was very 

much a different place. 

We are long overdue to revisit the FTC Act and to ponder some 

of the targeted adjustments. We are guided by many new products 

and services that we have examined in this subcommittee in our 

Disruptor Series. Mobile payments and connected devices, for example, pose new policy questions. Some of these questions have inspired technophobia, but there is something that is actually more 

frightening than new technology, the prospect of never realizing 

the jobs and prosperity that result from the inventive industry because of fear of production. 

A key takeaway from the Disruptor Series is that, if the law lags 

behind technology, capital shrinks and new products and services 

do not emerge. Certainty, on the other hand, begets investment, 

which, in turn, delivers more progress for consumers and, finally, 

does answer the questions that many Americans are still asking, 

where are the jobs? 

Many members of the subcommittee have introduced bills that 

make general reforms to the Commission’s activities under Section 

5 of the FTC Act, and I thank them for their involvement and their 

leadership in this area. The basic FTC framework for policing unfair or deceptive conduct after the fact is a good one. However, the 

Federal Trade Commission faces tough decisions when it encounters cases presented by new products and new services in evolving 

markets. 

For example, it must revisit the length of consent decrees against 

the speed of businesses and what other agencies do. Twenty-year 

consent decrees easily move away from after-the-fact remedies to a 

prospective ‘‘Mother May I’’-type regulation. 

Other areas need fortification. It is widely understood that informal policy guidelines are helpful and do not create liability independent of enforceable rules or statutes. Clarifying that the Federal Trade Commission will not use them to pressure a settlement 

would provide incremental definition to a company’s liability while 

maintaining the Federal Trade Commission’s current authority. 

Similarly, providing analyses showing why the Federal Trade 

Commission believes certain investigations reveal no liability would 

also help define legality under Section 5. Along with policy guidance, previous complaints, and consent orders, this additional information would be another strong signal for the market. 

The second thing this morning deals with specific industries or 

services under the Federal Trade Commission’s jurisdiction. The 

bills in this category focus on specific conduct that has been observed and has felt to possibly harm consumers. The Federal Trade 

Commission is likely familiar with many of these issues. 

The Reinforcing American-Made Products Act recognizes the 

Federal Trade Commission’s work on made-in-the-USA labeling 

and establishes it as a nationwide standard. Differing standards 

among states as to what is an American product has not always 

been helpful. This legislation would be especially impactful to a 

company back in Texas. In Justin, Texas, surprisingly, is the home 

of Justin Boots. They make handcrafted leather cowboy boots. The 

3 

various patchwork state standards of made-in-America regulations 

throughout the country have made it difficult for Justin Boots to 

sell its products in all 50 states. And certainly, this morning I look 

forward to supporting legislation that will unburden this historic 

and great company from the amount of red tape imposed on it 

through these regulations. This bill is a critical step in making it 

worthwhile for United States manufacturers to make their product 

in America. 

The Consumer Review Fairness Act builds on the Federal Trade 

Commission’s work in the Roca Labs case, which was an enforcement action brought by the FTC against a company which producing a line of weight-loss supplements who allegedly made baseless claims for its products and, then, threatened to enforce gag 

clause provisions against consumers to stop them from posting negative reviews and testimonials online. A company should never be 

in the business of preventing American consumers from speaking 

honestly. 

In summary, the bills we put forward today are designed to 

make some adjustments to ensure that innovation can thrive in 

order to provide consumer benefits and create jobs. 

I now yield to the ranking member of the subcommittee, Ms. 

Schakowsky, for 5 minutes. 

[The prepared statement of Mr. Burgess follows:] 

PREPARED STATEMENT OF HON. MICHAEL C. BURGESS

It has been 20 years since Congress last reauthorized the Federal Trade Commission. Back then, people still carried pagers, dialed into the Internet and were lucky 

to have one, let alone multiple, email accounts. The world was a different place. 

Thus, we are long overdue to revisit the FTC Act and ponder some targeted adjustments. 

We are guided by the many new products and services examined in our 

Disrupters Series of hearings. 

Mobile payments and connected devices, for example, pose new policy questions. 

Some of these questions have inspired ‘technophobia.’ But there is something more 

frightening than new technology: The prospect of never realizing the jobs and prosperity that result from inventive industry, simply because of fear. 

A key takeaway from the Disrupters Series is that if the law lags behind technology, capital shrinks and new products and services will not emerge. Certainty, 

on the other hand, begets investment-which in turn delivers progress for consumers 

and help the many Americans still asking, ‘‘Where are the jobs?’’ 

Many members of our Subcommittee introduced bills that make general reforms 

to the Commission’s activities under Section 5 of the FTC Act, and I thank them 

for their leadership in this area. 

The basic FTC framework for policing unfair or deceptive conduct after the fact 

is a good one. However, the FTC faces tough decisions when it encounters cases presented by new products or services in fast evolving markets. 

For example, it must revisit the length of its consent decrees against the speed 

of business and what other agencies do. 20 year consent decrees easily move away 

from after the fact remedies to prospective, ‘‘Mother May I’’ regulation. 

Other areas need fortification. It is widely understood that informal policy guidelines are helpful do not create liability independent of enforceable rules or statutes. 

Clarifying that the FTC will not use them to pressure a settlement would provide 

incremental definition to a company’s liability while maintaining the FTC’s current 

authority. 

Similarly, providing analyses showing why the FTC believes certain investigations 

reveal no liability would also help define legality under Section 5. Along with policy 

guidance, previous complaints, and consent orders, this additional information 

would be another strong signal for the market. 

The second theme deals with specific industries or services under the FTC’s jurisdiction. The bills in this category focus on specific conduct that has been observed 

to harm consumers. 

4 

The FTC is likely familiar with many of these issues. The Reinforcing American 

Made Products Act recognizes the FTC’s work on ‘Made in the USA’ labeling and 

establishes it as the nationwide standard. Differing standards among states as to 

what is an American product is not a helpful approach. This legislation would be 

especially impactful to a company in my district, Justin Boots, which makes 

handcrafted leather cowboy boots. The various patchwork state standards of ‘‘Made 

in America’’ regulations throughout the country have made it difficult for Justin 

Boots to sell its products in all 50 states, and I look forward to supporting legislation that will unburden this great company from the myriad of red tape imposed 

on it through these regulations. 

This bill is a critical step in making it worthwhile for U.S. manufacturers to make 

their products here in America. The Consumer Review Fairness Act builds on the 

FTC’s work in the Roca Labs case, which was an enforcement action brought by the 

FTC against a company which produces a line of weight-loss supplements who allegedly made baseless claims for its products, and then threatened to enforce ‘‘gag 

clause’’ provisions against consumers to stop them from posting negative reviews 

and testimonials online. A company should never be in the business of preventing 

American consumers from speaking honestly. 

In summary, the bills we put forward today are designed make some adjustments 

to ensure that innovation can thrive in order to provide consumer benefits and create jobs. I thank all of the witnesses for being here and helping guide our inquiry 

today. I look forward to their testimony. 

OPENING STATEMENT OF HON. JANICE D. SCHAKOWSKY, A 

REPRESENTATIVE IN CONGRESS FROM THE STATE OF ILLINOIS 

Ms. SCHAKOWSKY. OK. All right. Thank you, Chairman Burgess, 

for holding this, our first legislative hearing in the subcommittee 

since September. 

We have a long list of bills to discuss today, enough to fill several 

legislative hearings, and the connecting theme is the Federal Trade 

Commission. 

The FTC is critical to consumers and businesses. It protects consumers from unfair and deceptive practices. At the same time, it 

defends fair competition. In just the past few months, the FTC has 

stopped organizations falsely claiming to help cancer patients in 

order to steal from unsuspecting donors. It has stopped a debt-relief organization that was targeting struggling homeowners and 

charging illegal fees. 

We have talked a lot in this subcommittee about new technology, 

and the FTC has been fully engaged. Last month the FTC put out 

guidance for mobile health apps, encouraging companies to protect 

consumers’ privacy as they develop these new products. 

The FTC track record as a consumer and competition watchdog 

is impressive. As Chairman Ramirez shares with us in her written 

testimony, last year the FTC’s consumer protection efforts yielded 

over $700 million in savings and its competition efforts saved consumers $3.4 billion. This agency works, and this subcommittee 

should be working to strengthen the FTC, not disrupt it. 

Unfortunately, the bills put forth by Republicans in this hearing 

go in the wrong direction. They tie the hands of the FTC under the 

guise of so-called process reform. I have concerns with each of the 

eight Republican process bills. 

For instance, the FTC uses consent decrees to protect consumers 

from repeated bad behavior by companies. One bill would cut the 

maximum length of these consent decrees by more than half, leaving consumers more vulnerable. 

5 

Suppose the FTC issues a consent decree against a company that 

fails to protect a consumer’s credit card information. Under this 

bill, the company could put consumers’ finances back at risk in as 

little as five years. 

This and other proposals would effectively bog down the FTC by 

forcing it more frequently to review and renew its actions. Stretching the agency’s resources would mean less protection, more consumers falling victim to deceptive ads and unfair business practices. 

Under these bills when the FTC does take action, it would have 

to jump through additional hoops to protect consumers. It would be 

harder for the FTC to pursue actions to prevent harm to consumers, and when the FTC would want to take action under its 

now-narrowed authority, it would have to wait for a time-consuming economic analysis, even on minor actions. Instead of protecting consumers, these bills would protect companies that victimize consumers. 

The so-called SHIELD Act would provide a safe harbor for companies that comply with FTC guidance at the same time it says 

that FTC cannot use noncompliance with guidance as proof that 

the law was violated. You can’t have it both ways. Guidance is not 

the law and it definitely should not be treated as the law only 

when it works to the company’s advantage. 

I don’t have enough time to go through all the problems with 

these bills one by one, but I think you have got the picture. These 

eight bills reflect an effort to prioritize the interest of industry 

above the interest of consumers. 

Meanwhile, Democrats have introduced bills to empower the 

FTC. Congressman McNerney’s bill would allow the FTC to go 

after deceptive practices by telecom companies such as lying about 

data, speed, or service that consumers will receive. Congressman 

Rush’s bill would allow the FTC to more easily go after sham nonprofits. 

In this hearing we will also be considering seven bills directed 

at specific areas of commerce such as tickets, sporting goods, hotels, funeral services, consumer reviews, and American manufacturing. 

I look forward to hearing from supporters and opponents of each 

of these bills. I worry we won’t have enough time to give each individual bill a thorough examination in this hearing, but I am glad 

that we are finally giving them a closer look. 

We have a lot to discuss today, but, as we look at the bills today, 

I hope we focus on how we can best fulfill the FTC’s mission of protecting consumers and competition. 

I thank all our three panels of witnesses, and I look forward to 

your testimony. 

I yield back right on time. 

Mr. BURGESS. Thank you very much, Congresswoman. 

The Chair now recognizes the Vice Chair of the full committee, 

Congresswoman Blackburn of Tennessee. 

6 

OPENING STATEMENT OF HON. MARSHA BLACKBURN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF TENNESSEE 

Mrs. BLACKBURN. Thank you, Mr. Chairman. 

Ms. Ramirez, we appreciate that you would take the time; also, 

appreciate your testimony and the fact that you have given a review to the legislation that we are bringing before you today. As 

Ms. Schakowsky said, we are going to have questions. We do want 

your input, and we look forward to moving ahead with the legislation and the bills that would really bring some additional and 

needed transparency to the FTC’s consumer protection mission and 

get into addressing some industry-specific concerns. That is always 

helpful to industry. It is helpful to us, and I know you all as regulators, it is helpful to you. 

I want to speak briefly about H.R. 5104, which Congressman 

Tonko and I have introduced, the Better On-Line Ticket Sales Act 

of 2016, or the BOTS bill as it is commonly called. This is important to many of my constituents who are in Tennessee who are concert performers and entertainers. 

What this will do, simply, it to disallow the use of some of this 

hacking software that we see the scalpers use, and they bundle up 

all the tickets, purchase all the tickets before fans and our constituents and consumers have the ability to, from their laptop or 

mobile device or PC, get onto that online ticket sales portal and 

make their purchase. 

So, as more of this moves online, it is important that we look at 

this. As a label head said to me yesterday, this is about keeping 

the marketplace fair and about allowing consumers to exercise online commerce and ecommerce. So, we do seek your input there. 

I also want to welcome Robert Arrington, a fellow Tennessean 

who is here for the National Funeral Directors and say welcome to 

the committee. We look forward to hearing from you later on the 

bill. 

With that, I yield my time to the Vice Chair of the subcommittee, 

Mr. Lance. 

Mr. LANCE. Thank you very much, Congresswoman. 

This hearing is a product of our ongoing Disruptor Series, and 

the package of bills we are considering today is the result of what 

we have learned from these hearings and aims to bring the Federal 

Trade Commission into the 21st century. 

For my part, I have introduced H.R. 5111, the Consumer Review 

Fairness Act, with my colleague from Massachusetts, Congressman 

Kenned. Today it is easier than ever for consumers to make informed choices on which business or service to use by conducting 

Web sites and apps that publish crowdsourced reviews of local 

businesses. Easy access to reliable product and service evaluations 

has reduced transactions costs and helped contribute to an enormous consumer surplus estimated in the billions of dollars. 

Unfortunately, a number of businesses have become frustrated 

by what they perceive as unfair criticism, and some have turned 

to the questionable legal remedy known as non-disparagement 

clauses, often buried in nonnegotiable form contracts. These 

clauses prohibit their customers from writing negative reviews 

about their businesses. It is essential we protect consumers’ right 

7 

to free speech and remove any doubt in potential consumers’ minds 

that the reviews they are reading online are anything other than 

fair and accurate. 

This bill would void non-disparagement clauses in form contracts. It would also provide the FTC with the enforcement tools it 

needs to combat the bad actors who try to use these onerous 

clauses. 

And I yield the balance of my time to Mr. Pompeo of Kansas. 

Anyone else on our side? 

[No response.] 

Thank you very much. 

I next recognize the ranking member of the full committee, Mr. 

Pallone. 

Mr. PALLONE. Thank you. It is good to see you in the chair. 

Mr. LANCE. Thank you, Mr. Pallone. New Jersey has to stick together. 

OPENING STATEMENT OF HON. FRANK PALLONE, JR., A REPRESENTATIVE IN CONGRESS FROM THE STATE OF NEW JERSEY 

Mr. PALLONE. Today the subcommittee will attempt to review 17 

bills. I say ‘‘attempt’’ because we cannot possibly expect a thorough 

review of each piece of legislation on the agenda. While I am 

pleased that the majority agreed to add six bills authored by Democrats, unfortunately, it was to an already-too-long list of 11 Republican bills. 

Mr. Chairman, as you know, I am a big proponent of regular 

order. To me, that means engaging in real deliberation, not just 

having a check-the-box hearing. Since I can’t possibly cover all the 

bills being considered, I am going to focus my comments on those 

that are intended to inhibit the ability of the Federal Trade Commission from carrying out its mission of protecting consumers. This 

attack on the FTC is notable, in light of the majority’s recent praise 

of the FTC’s privacy and data security expertise, both recently in 

the Communications and Technology Subcommittee and last year 

during this subcommittee’s markup of data security legislation. 

But the Republican process bills before us today just confirm the 

majority’s true intention, I believe, and that is across-the-board deregulation. Republicans say privacy should be only in the purview 

of the FTC. Yet, they are simultaneously introducing bills to gut 

the FTC of even its limited authorities. 

Among their many deficiencies, these bills would encourage stall 

tactics by bad actors, burden the staff with unconstructive tasks, 

and effectively obstruct important information exchanges between 

Congress and the FTC. These initiatives also would limit the FTC’s 

ability to assist local, state, federal, and other countries’ governments in their efforts to help consumers. They would also undermine the FTC’s ability to be flexible and nimble in addressing 

emerging problems. 

Republicans claim that these bills would promote innovation, 

but, in reality, they would actually hurt companies. For example, 

two of these bills could lead to confidential investigations being inadvertently revealed before the FTC has decided whether to take 

action or after the Commission has decided not to take any action. 

8 

And businesses do not want the FTC being discouraged from providing guidance to help those companies ensure that they are complying with the law. 

These eight bills put the FTC on the wrong track. If we want to 

help consumers, we should be giving the FTC additional tools, not 

raiding their toolshed. 

And that is why I support the bill authored by Mr. Rush that 

would give the FTC authority over nonprofits. That bill would increase the ability of the FTC to protect consumers. For example, 

it would allow the FTC to pursue scammers that have formed 

faked veterans’ charities to scam Americans who want to help veterans. 

And I support Mr. McNerney’s bill, also, the Protecting Consumers in Commerce Act of 2016, which would give the FTC the 

authority to bring enforcement actions against communications 

common carriers. Enforcement should be based on the activity, not 

the entity. If a company in the telecommunications industry acts 

unfairly or deceptively in advertising, marketing, or billing, the 

FTC should act to protect consumers. For example, if a wireless 

company promises unlimited data, but deceptively slows the data 

speeds of high-usage customers, the FTC should be able to act. 

So, Mr. Chairman, I would like to move several of the bills under 

discussion forward with the limited time that we have left before 

the summer recess, but I would strongly urge that we only advance 

those bills that can garner true bipartisan support, because together I know we can move the ball forward for consumers. 

I don’t know that anybody on my side would like some time. If 

not, I will yield back the balance of the time. 

Thanks, Mr. Chairman. 

Mr. BURGESS. The gentleman yields back. The Chair thanks the 

gentleman. 

That concludes member opening statements. The Chair would remind members that, pursuant to committee rules, all members’ 

opening statements will be made part of the record. 

We do want to thank our witnesses for being here today and for 

taking time to testify before the subcommittee. 

Today’s hearing will consist of three panels. Each panel of witnesses will have the opportunity to give a summary of their opening statement, followed by a round of questions from members. 

Once we conclude with questions from the first panel, we will take 

a brief recess and set up for the second panel and, then, subsequently, the third panel. 

Our first witness panel for today’s hearing is Ms. Edith Ramirez, 

the Chairwoman at the Federal Trade Commission. We appreciate 

your being here today and thank you for the time and attention 

that you have always given to the subcommittee when we have 

called. It is certainly appreciated. 

We will begin the panel with you, 5 minutes to summarize your 

opening statement, please. 

STATEMENT OF EDITH RAMIREZ, CHAIRWOMAN, FEDERAL 

TRADE COMMISSION 

Ms. RAMIREZ. Thank you. Dr. Burgess, Ranking Member Schakowsky, and members of the subcommittee, I appreciate the opporVerDate Nov 24 2008 11:35 Feb 24, 2017 Jkt 037690 PO 00000 Frm 00012 Fmt 6633 Sfmt 6633 F:\MY DOCS\HEARINGS 114\114-148 CHRIS
9 

tunity to appear before you today to present the Federal Trade 

Commission’s testimony on the 17 bills under consideration by the 

subcommittee. My fellow Commissioners and I appreciate the subcommittee’s commitment to protecting both consumers and innovation. 

As you know, the FTC is an independent and highly-effective bipartisan agency. We are the only agency with the jurisdiction to 

protect consumers and promote competition in most sectors of the 

economy. 

As a civil law enforcer, we guard against business practices that 

are unfair or deceptive to consumers and we aim to do so without 

impeding legitimate business activity. We also enforce the antitrust 

laws to ensure a competitive marketplace in which law-abiding 

businesses can flourish. 

In addition to our law enforcement, the FTC engages in extensive 

research and policy work. The FTC also educates consumers and 

businesses to encourage informed consumer choices, compliance 

with the law, and public understanding of the competitive process. 

We are particularly committed to addressing the impact of technology and changing business practices as part of our law enforcement, policy, and education efforts. We work to enhance our understanding of how technology affects consumers and the functioning 

of the marketplace through research and engagement with consumer advocates, industry, academics, and other experts. 

Over the last several years, we have also deepened our internal 

technical expertise. We hired our first Chief Technologist in 2010 

and have continued to attract prominent experts to serve in that 

role. And last year we created the Office of Technology, Research, 

and Investigation to support our law enforcement efforts and explore cutting-edge technical and policy issues relating to big data, 

the internet of things, and other emerging technologies. 

But, even as commerce and technology continue to evolve, many 

of the fundamental problems we see in the marketplace remain the 

same: fraudulent schemes, deceptive advertising, unfair practices, 

as well as mergers and conduct that harm or threaten to harm 

competition. The agency tackles these challenges through targeted 

law enforcement. Our structure, committed staff, and research capacity enable the FTC to meet its mandate of protecting consumers 

and competition in an ever-changing marketplace. 

I appreciate the opportunity to comment on the 17 proposed bills 

before the subcommittee. While the Commission generally supports 

several of the bills, we believe that other measures may unintentionally hamper the FTC’s ability to continue to fulfil its mission 

to protect consumers and competition. Our written testimony addresses each of the bills, but let me provide a brief overview. 

House bills 5111, 5092, 4460, 4526, 5212, 5245, and 5104, if enacted, would identify and address specific acts or practices that 

Congress proposes to include in the Commission’s consumer protection agenda. We generally share the subcommittee’s goals in these 

areas. For example, to prevent companies from silencing truthful 

consumer reviews, to stop deceptive safety claims in the sale of 

sports equipment, to promote fairness and transparency in sale of 

concert tickets, and to prohibit online travel sites from deceiving 

consumers about their affiliations with hotels. 

10 

The Commission also shares the subcommittee’s goal of facilitating deliberations and highlighting important agency work. To 

this end, H.R. 5116 would give a bipartisan majority of Commissioners another way to meet and deliberate, and portions of H.R. 

5098 would require an annual report to Congress on the important 

problem of elder fraud. 

As to several other bills, specifically H.R. 5093, 5097, 5109, 5118, 

5136, 5115, and the remaining portions of 5098, we do have certain 

concerns. We recognize and support the objectives of these bills, the 

avoidance of undue burdens on business, transparency of agency 

operations and its application of the law, and assurance that agency actions are based on sound analysis and evidence. 

But the agency already has a variety of processes in place to advance these important values. As explained in our written statement, we are concerned that the measures could have unintended 

consequences for our work and, ultimately, for consumers. 

Finally, House bills 5239 and 5255 would repeal the common carrier and nonprofit exemptions to the FTC Act. The Commission 

supports these measures which would allow us to protect consumers and competition more broadly and to ensure the consistent 

application of laws across economic sectors. 

In closing, I want to reiterate that we are committed to finding 

ways to enhance our effectiveness, anticipate and respond to 

changes in the marketplace, and meet current and future challenges. 

Thank you very much. 

[The prepared statement of Ms. Ramirez follows:] 

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34 

Mr. BURGESS. The Chair thanks the gentlelady for her testimony, 

and we will move to the question-and-answer portion of the hearing. I will begin the questioning by recognizing Mr. Lance of New 

Jersey for 5 minutes, please. 

Mr. LANCE. Thank you, Mr. Chairman, and good morning to you, 

Commissioner. 

I understand that the FTC settled a case with Roca Labs that 

resulted in an injunction that prohibits the company from using 

form contract provisions punishing consumers for giving negative 

reviews. And I am the sponsor the legislation in this regard, H.R. 

5111, and I am pleased that you commented favorably upon it. 

I would like to know, based on your expertise, what additional 

tools would the Consumer Review Fairness Act give the Commission to stop these kinds of deceptive practices. 

Ms. RAMIREZ. Congressman, thank you for your question. This is 

an issue that is of concern to us in connection with the case that 

you mentioned, Roca Labs. That case involved deceptive advertising with regard to weight-loss products, but the company also 

threatened lawsuits against consumers who wrote negative reviews 

in connection with those products. 

We believe that it is important for consumers to have access to 

truthful information, and we believe that the bill that you are cosponsoring would, in fact, permit that. We can’t address these 

kinds of issues individually as effectively as legislation like the 

kind that you are sponsoring. So, we see this as something that 

would be beneficial. 

Mr. LANCE. I don’t recall the details. Was this a decision of one 

of the United States Circuit Courts in that case? 

Ms. RAMIREZ. This was a settlement that was reached by the 

Commission and it did address this issue of non-disparagement 

clauses that we believe have the effect of impeding accurate and 

truthful information about products. 

Mr. LANCE. And generally, how do companies entrap consumers 

so as not to be able to be honest in their reviews? 

Ms. RAMIREZ. What could happen is that there might be a nondisparagement clause that is included as a term in a contract that 

consumers may potentially not be aware of. In any event, it does 

impede the ability of consumers to provide useful reviews online. 

We think that that is an important avenue for consumers to be 

aware of reviews of products, and we promote the need for consumers to have access to truthful and accurate information, regardless of whether it is a negative review, so long as it is truthful. 

Mr. LANCE. And the average consumer might sign some sort of 

form when he or she purchases a product and not realize that he 

or she is signing a form with a non-disparagement clause in it? 

Ms. RAMIREZ. That certainly could be a scenario that we might 

encounter, yes. 

Mr. LANCE. I think it is essential that the American people have 

the right to speak their minds in this area, and I hope that the bill 

I am sponsoring, with the cosponsorship of Congressman Kennedy, 

will be able to garner unanimous support here. And I certainly 

want to work with the FTC because I think it is nothing short of 

a scandal that the American people cannot freely and fairly express 

35 

their points of view regarding products and services for which they 

have contracted. 

Thank you, Mr. Chairman, and I yield back the balance of my 

time. 

Mr. BURGESS. The gentleman yields back. The Chair thanks the 

gentleman. 

The Chair recognizes Ms. Schakowsky of Illinois, the ranking 

member of the subcommittee, for 5 minutes for questions, please. 

Ms. SCHAKOWSKY. Thank you, Mr. Chairman. 

Much of the discussion from the majority in today’s hearing is 

about how the FTC is holding back innovation by overreaching on 

its enforcement. At the same time, they are ignoring, I think, the 

need for the FTC to be innovative and flexible, to adapt to innovation in industry. 

So, let me refer to H.R. 5098, which requires the FTC to publish 

an annual plan of its projected activities for the year. The bill may 

seem innocuous to some people, but I know the FTC has concerns 

about publishing such a report. What are some of the concerns, Mr. 

Ramirez? 

Ms. RAMIREZ. Thank you, Ranking Member. 

I would highlight at least two concerns. One is that we are already quite transparent about the priorities and work that the 

agency undertakes. I mean, I will just offer you just a few examples of that. That includes the fact that we include our priorities 

and plans for the upcoming year in connection with our congressional budget justification. We also go through a strategic planning 

process that we are required to do at the outset of every administration. We last published a strategic plan, a 5-year plan, back in 

2014 covering the years 2014 through 2018. 

Also, in connection with our regulatory matters, we on annual 

basis publish upcoming rule reviews or rulemakings that we are 

undertaking. That is apart from the significant communication that 

we have on our Web site where we list upcoming events. Our law 

enforcement actions, of course, are confidential, but when we do 

take enforcement action, we absolutely publicize those. 

So, No. 1, I believe that we are fully transparent when it comes 

to our priorities and upcoming plans. And secondly, I worry about 

the added burden that would be placed on the agency doing more 

than we already do with existing reporting requirements. 

Ms. SCHAKOWSKY. Well, let me raise a concern I have, that it 

would inhibit in some way the agency’s ability to react to emerging 

trends. So that, if you have to issue a report more than a year in 

advance, that it could, and I would be concerned, that it would 

make the Commission less flexible. 

Ms. RAMIREZ. I completely concur. We, for instance, hold a number of workshops over the course of a year. Oftentimes, we may not 

know in December what all of the workshops that we may be 

hosting the following year. We want to be flexible. We want to 

make sure that we stay on top of emerging trends, and we want 

to have the flexibility to decide on those going forward. I think the 

more burdened that we are with reporting requirements, we may 

feel compelled to stick to a particular framework that has been set 

out when, in fact, it is more important for the agency to remain 

nimble and flexible. 

36 

Ms. SCHAKOWSKY. Right. H.R. 5097 automatically closes investigations after 6 months unless the FTC acts through communications with the company being investigated or the Commissioners 

vote to keep the investigation open. Why would investigations take 

longer than 6 months? And I wonder if you have any examples of 

investigations that may have been idle for some or just taken 

longer and why. 

Ms. RAMIREZ. It is not uncommon for an investigation to take 

longer than 6 months. A lot of the investigations that we handle 

are complex. The competition investigations that we handle are 

certainly difficult and complex and do require time. 

Let me note that there is regular communication as a general 

practice with companies that are under investigation. So, any concern about there being a company who may not know the status 

of an investigation, we generally endeavor to stay in contact with 

them. 

I think that it would be a very severe consequence that would 

penalize consumers if the measure that you note were to pass. To 

automatically terminate an investigation for failure to communicate with a company would, in my mind, be far too severe and 

really would undermine our ability to protect consumers. There 

could easily be an oversight where there might not be communication, and in my mind, it is a disproportionate consequence, a failure to communicate. 

Let me also just note that we already have processes in place. 

We have a rule that requires any company that is subject to an obligation to preserve materials, if there has not been any communication with the agency over the course of one year, that duty to 

maintain information expires. 

So, we already have rules in place to ensure that there is regular 

contact with companies that are under investigation, but I think it 

would unduly harm consumers if this measure were to be adopted. 

Ms. SCHAKOWSKY. Thank you for clarifying that. 

I yield back. 

Mr. BURGESS. Thanks to the gentlelady. The gentlelady yields 

back. 

The Chair recognizes the gentlelady from Tennessee, Mrs. Blackburn, and Vice Chair of the full committee, for 5 minutes for questions, please. 

Mrs. BLACKBURN. Thank you, Mr. Chairman, and it looks like 

your allergies are under control. I am happy to see you sitting back 

there with the gavel. 

Ms. Ramirez, I do want to come to you with just a couple of questions on the BOTS Act. As I said earlier, I appreciate your comments on this. Of course, it is a simple three-page bill. It would 

make an unfair and deceptive practice under the Federal Trade 

Commission Act to violate the terms and conditions of a ticketing 

site and the use of a bot to do that. And the third section would 

create a private right of action with a clear federal standard to 

allow parties harmed by bots to sue botsters under that clear federal standard. 

So, our goal—and I think you share this goal—is to say, how can 

we help ticket-sellers protect themselves against scalpers who use 

this circumvention software? And if a ticket-seller is the victim of 

37 

a ticket bot scheme, how should they report that unlawful activity 

to the Commission? 

Ms. RAMIREZ. Generally supportive of this measure. So, thank 

you for sponsoring it. We share the concerns that you have about 

the use of software in connection with the sale of online tickets. 

In connection with this bill, we would only have just a couple of 

comments to ensure that the bill only prohibits unlawful activity 

and doesn’t unintentionally ensnare legitimate activity. And that 

would be to make sure that it doesn’t punish general purpose software and only software that is designed for the activities that you 

note. 

We would also suggest that the bill clarify that consumers could 

be permitted to resell tickets. Again, our goal would simply be to 

make sure that only unlawful activity is captured by the bill. But 

generally, we are supportive and share the concerns that you have 

articulated. 

Mrs. BLACKBURN. OK. And then, if a ticket-seller is the victim 

of a bot scheme, how do they go about reporting that to you? I want 

you to discuss just a little bit about your record of work in combating the illegal activities of ticket scalpers. 

Ms. RAMIREZ. We take all complaints. People who have been afflicted and victimized by unlawful activity can report complaints to 

us online or also via telephone. This is an area that we are concerned about, and I think this measure would allow us to be even 

more active in an area that we certainly do care about. 

Mrs. BLACKBURN. Well, we will look forward to moving the legislation forward. We know that scalpers using the bots and really 

putting themselves at the head of the line ahead of consumers ends 

up costing consumers to have to pay higher prices. So, we want to 

make certain that we are specific, that there is that clear federal 

standard, and we will look forward to moving the bill through the 

process and working with you. 

And then, Mr. Chairman, I am going to yield my time back. 

Mr. BURGESS. The Chair thanks the gentlelady. The gentlelady 

yields back. 

The Chair recognizes the gentleman from Massachusetts, 5 minutes for your questions, please. 

Mr. KENNEDY. Thank you, Mr. Chair. I appreciate the chance to 

have an important hearing. 

And to the Chairwoman, thank you very, very much for appearing before us. 

Last month I was pleased to join my colleague, Congressman 

Lance of New Jersey, in introducing the Consumer Review Fairness Act. And I appreciate the comments on the proposed legislation that you were helpful with. 

I would also like to commend a friend of mine, Eric Swalwell, 

who has been working on this issue for several years as well. 

I think we can all agree that truthful consumer reviews are an 

invaluable tool for prospective consumers in making an informed 

decision. Like you, I am concerned about companies hiding non-disparagement clauses in their terms of service in an effort to bar consumers from posting negative reviews of a product, service, or experience. 

38 

Ms. Ramirez, can you briefly discuss the current tools at the 

FTC’s disposal to combat these types of non-disparagement clauses 

and how the FTC has dealt with these cases in the past using 

these clauses? 

Ms. RAMIREZ. We have our enforcement tools available to us. I 

mentioned in my earlier comments a case, Roca Labs, in which we 

encountered this issue. It was a weight-loss case where the company was making deceptive weight-loss claims. 

But, as part of that, they have included terms and conditions 

that included a non-disparagement clause, and the company was 

threatening to sue consumers who had included negative reviews 

about this what we alleged was a bogus product. 

So, we do have law enforcement tools. We can go case by case, 

on a case-by-case basis, in an effort to address this issue. I think 

legislation would enhance our ability to tackle these types of nondisparagement clauses. 

Mr. KENNEDY. And I appreciate that. If you are looking for additional legislation, do you think the Consumer Review Fairness Act 

would address and provide you with sufficient authority to prevent 

future use of those clauses from intimidating—— 

Ms. RAMIREZ. I think it would be beneficial for us to have the additional authority under this measure, yes. 

Mr. KENNEDY. Great. Thank you. 

And shifting gears for a quick second, I was hoping you might 

be able to discuss the FTC’s approach to made-in-the-USA labeling. 

How is it enforced and what are the benefits of ‘‘all or substantially 

all’’ that standard, if you can just articulate that? 

Ms. RAMIREZ. Sure. This is a standard that the agency has been 

applying for some time now. It is derived from research that the 

agency has done to understand how consumers interpret made-inthe-USA claims. And so, based on this understanding of the net impression that consumers take away from those types of claims, we 

have determined that a product, in order to make an unconditional, 

unqualified made-in-the-USA claim, that the product in question 

must be all or virtually all, it should all be made in the USA, in 

the U.S., rather. 

So, as a result, we have been quite active in this area. This particular measure that would apply a consistent federal standard we 

think would be beneficial. The one comment that I would make 

here is that I believe that state enforcement is an important complement to the tools that the agency has used in this area. So, that 

would be something that we would encourage. 

Mr. KENNEDY. So, I agree, and it is my understanding that the 

chief goal of this legislation is, just as you said, to create a singular 

uniform federal standard for made-in-the-USA manufactured products. I think that is a great goal. But I share the reservation when 

it comes to blanket preemption of all state laws in that area. In 

many cases states are far more effective at implementing these 

types of standards and serve as a great partner and complement 

some of your efforts. 

Can you discuss concerns you have with the bill as it is currently 

written? And if that is the main concern, preemptive concerns, if 

you would just go into a little bit more detail, and about the ability 

of states to be able to actually enforce that standard as well? 

39 

Ms. RAMIREZ. My principal concern here, as in a number of other 

areas, is that I find state enforcement to be beneficial. I think it 

would be very unfortunate if we were to lose state activity when 

it comes to enforcing claims, made-in-the-USA claims. So, in my 

mind, it is something that I would urge the members of the committee to consider adding ‘‘state’’. That is my primary concern. 

Mr. KENNEDY. And what about a private right of action? I’m 

sorry. Excuse me. What about a private right of action? 

Ms. RAMIREZ. The Commission hasn’t taken a position on a private right of action. I think my main concern would be ensuring 

that there is enforcement by state law enforcers. 

Mr. KENNEDY. Great. 

In your view, would blanket preemption, as the bill is currently 

drafted, cause any shortfalls in consumer protection? Would it limit 

the ability of consumers to ensure products are labeled truthfully 

if only the FTC has the authority to enforce it? 

Ms. RAMIREZ. Again, I do. I believe that, as an agency, we have 

limited resources. We do our best to tackle deceptive claims in this 

area, but I believe that it is important to have other enforcers in 

the space. In my mind, state attorney general offices have done tremendous work in this and other areas. So, I view, as a general 

matter and here as well, state enforcement to be important. 

Mr. KENNEDY. Thank you, ma’am. 

I yield back. 

Mr. BURGESS. The gentleman yields back. The Chair thanks the 

gentleman. 

The Chair recognizes the gentleman from Mississippi, Mr. Harper, 5 minutes for your questions, please. 

Mr. HARPER. Thank you, Mr. Chair. 

And thank you, Chairwoman Ramirez, for being here. 

H.R. 5092, the Reinforcing American-Made Products Act, would 

establish a national standard on marketing products made domestically with the label ‘‘Made in USA’’. The bill aims to provide that 

consistency and clarity for manufacturers and businesses and, 

hopefully, for consumers as well. It would also help manufacturers 

avoid legal risk and additional regulations caused by conflicting labeling requirements for individual states and, thereby, I believe, 

help consumers by reducing those costs. 

And I certainly appreciate the work that the Commission has 

done to develop its guidance on made-in-USA labeling. The FTC 

has worked with American manufacturers to ensure they understand what it means to source all or virtually all of their inputs 

domestically. As you noted in your testimony, the FTC standard is 

based on consumer understanding, and this is the touchstone that 

matters most because the purpose of the label is to inform rather 

than to confuse consumers. 

What is the danger in having differing standards throughout the 

United States on made-in-USA labeling? 

Ms. RAMIREZ. As a Commission, we haven’t explored the dangers 

of different standards. I think we are generally supportive of the 

measure applying what we believe is a robust standard that the 

FTC applies. My only comment here would be, again, the focus that 

we not lose state enforcement. So, we haven’t opined. I am not an 

expert in all of the various state standards. I can certainly see the 

40 

benefits of having one federal standard. I think the standard that 

we employ is a robust one that does adequately protect consumers. 

So, as a result, we are generally supportive of this measure. 

Mr. HARPER. Of course, the word I used was ‘‘danger’’. Had I said 

‘‘impact,’’ maybe that would have been a better word. But doesn’t 

that create, by having different standards in different states, that 

is what you believe this would improve on? 

Ms. RAMIREZ. I think there are benefits to having a consistent 

standard. Again, my principal concern would be to ensure that 

states continue to play an active role in this area. They have done, 

I think, a good job, and I think it is always important to have complementary law enforcement. 

Mr. HARPER. So you are saying play an active role based on a 

single standard? 

Ms. RAMIREZ. That is right. 

Mr. HARPER. A uniform standard? Versus having all the different 

states with different impacts that may be in compliance or differing 

from what FTC would prefer? 

Ms. RAMIREZ. Generally, in support of there being a single standard that applies the FTC standard, yes. 

Mr. HARPER. If states begin legislating in this area, what happens if they conflict and compliance with one means being out of 

compliance with another? 

Ms. RAMIREZ. Again, I can see there would be benefits to having 

one standard. So, generally supportive of your measure. 

Mr. HARPER. The Commission has brought a mandate to enforce 

all deceptive marketing practices, not just those dedicated to madein-USA labeling. Fortunately, however, the Commission has dedicated a fair amount of resources to this issue. The Commission 

brought a complaint against a company in February for deceptive 

marketing with a made-in-USA label. Continuing to ensure that 

companies are playing by the rules is important to guarantee that 

consumers can rely on made-in-USA labeling. Is the Commission 

committed to continuing its robust enforcement on this issue? 

Ms. RAMIREZ. Absolutely, we are. 

Mr. HARPER. I certainly appreciate your time here. I guess one 

of the concerns that we would have, as we look at your suggestion 

on this, is, yes, it would move us away from a single standard, but 

you could still have a broad interpretation by 50 different states of 

state enforcement of an FTC standard versus FTC doing that. But 

I appreciate your input on it and your testimony, and we think this 

would be a step in the right direction. Thank you. 

I yield back. 

Mr. BURGESS. The gentleman yields back. The Chair thanks the 

gentleman. 

The Chair recognizes the gentleman from New Jersey, the ranking member of the full committee, 5 minutes for your questions, 

please. 

Mr. PALLONE. Thank you, Mr. Chairman. 

Ms. Ramirez, H.R. 5136 would require the FTC’s Bureau of Economics to conduct a cost/benefit analysis for all recommendations 

for legislative or regulatory actions submitted by the Commission. 

Can you provide some background on the Bureau of Economics, 

what its function is now, and if the Bureau were forced to devote 

41 

time and resources to preparing the kind of economic analysis required by this bill, would resources have to be redirected away 

from the Bureau’s current work? 

Ms. RAMIREZ. Yes, happy to. There are Bureau of Economics supports all over the work that the agency undertakes. So, there is no 

Commission action without the input of our Bureau of Economics. 

So, already, they are involved in review, our enforcement work, our 

policy work. They play a very active role. Economic thinking is an 

important issue that we want to take into account as we consider 

any of the work that the agency undertakes. 

We are both a competition agency as well as a consumer protection agency. So, we are always mindful of the signals that we are 

sending to the marketplace, and we want to encourage companies 

to protect consumers and to—— 

Mr. PALLONE. Well, what about the resources, because our time 

is limited? 

Ms. RAMIREZ. Yes. 

Mr. PALLONE. And whether this bill would force a redirection? 

Ms. RAMIREZ. So, my concern about this particular bill is that it 

would, frankly, impede our ability to comment on a number of actions, legislative actions at both the federal and state level, as well 

as regulatory actions by other agencies. 

We frequently provide our thinking, including our economic 

thinking, on proposed action by Congress and other policymakers. 

However, what the bill calls for is a comprehensive cost/benefit 

analysis that we may not be in a position to undertake. 

No. 1, our expertise is limited to competition and consumer protection. So, oftentimes, we will comment on a proposed bill that 

may have other impacts, including health and safety. We will not 

comment on those, but we will simply comment and ask policymakers to consider the competition or consumer protection aspects 

of those bills. 

If we are required to undertake a comprehensive cost/benefit 

analysis, we would be impeded from commenting on those types of 

bills. Even beyond that, the types of resources that it would take 

for us to do a type of cost/benefit analysis of the kind required by 

the measure would really impede our ability to comment on a number of things. So, I think the measure unintentionally would hinder 

our ability to provide very useful comments, and I don’t believe 

that that is the intent. 

Mr. PALLONE. Well, you listed a number of activities that the 

Commission would no longer be able to do. Let me ask, how does 

the FTC provide recommendations to state lawmakers or foreign 

governments? And under this bill, will you be able to assist states 

or foreign governments on these crucial consumer protection or 

competition matters or is that going to be limited, too? 

Ms. RAMIREZ. I think it would dramatically limit our ability to 

do that because we would not have the ability to undertake a full 

cost/benefit analysis. And, also, it would dramatically even limit 

the types of bills on which we could comment, again, if they implicate areas of expertise that are beyond competition and beyond 

consumer protection, we would feel that we could not opine on the 

impacts on that side of the equation. So, I am very concerned about 

42 

this, and I think, again, that it does not accomplish its intended 

objective. 

Mr. PALLONE. The last thing is my concern that the bill could 

prevent the Commission from providing recommendations to Congress. You are here today to provide comments on 17 bills that 

would fundamentally affect the operations of the FTC. Your written 

testimony was 22 pages, including a number of comments and recommendations regarding each of the 17 bills. But, under this bill, 

the Bureau of Economics would have to conduct a full economic 

analysis of each recommendation you are sharing with us about 

each bill. So, would these burdensome analyses required, would 

they have even prevented you from being here today or limited 

what your ability would have been to even comment on what you 

did today, for example? 

Ms. RAMIREZ. We would be severely hampered in our ability to 

provide useful comments by this measure, yes. 

Mr. PALLONE. And other than testifying before Congress, when 

else does the FTC provide recommendations? And again, would 

that hinder the abilities of the Commission to assist Congress in 

these types of things, day-to-day interactions, whatever? 

Ms. RAMIREZ. We provide both formal comments as well as informal comments to a host of policymakers, including state legislators, 

sister federal agencies. So, this would really impede our ability to 

provide, I think, very useful observations that the agency can convey. 

Mr. PALLONE. All right. Thank you so much. 

Thank you, Mr. Chairman. 

Mr. BURGESS. The Chair thanks the gentleman. The gentleman 

yields back. 

And the Chair recognizes the gentleman from Houston, Texas, 

Mr. Olson, 5 minutes for your questions, please. 

Mr. OLSON. I thank my friend from Texas. 

Good morning, Chairwoman Ramirez. 

As Chairman Burgess mentioned in his opening statement, this 

hearing is very important to me and the people of Texas, too. FTC’s 

actions threatened Justin Boots in Justin, Texas. That gets my attention because I walked into this hearing with a pair of black ostrich, form-fitting Justin boots made in Justin, Texas. Don’t mess 

with Texas. 

[Laughter.] 

But, to be serious, I do want to talk about the best bill in the 

FTC pack, H.R. 5116, the FREE Act. This bill corrects 

misapplication of open meeting initiatives, and thank you for your 

support. 

I have seen this problem firsthand back at home in Pearland, 

Texas. Under Texas Open Records laws, I could not meet with our 

members of the city council to talk about flood control, expanding 

Highway 288, or our team playing baseball in the Little League 

World Series. I could not do that because of Texas Open Records. 

So, to get around that, well, we had to meet in public, have an 

audience, engage the whole apparatus of the city to record that 

meeting for the record. We solved that problem by meeting two-bytwo for half-an-hour, very inefficient, without enjoying discussions 

with the full council. 

43 

It appears we have strapped the FTC with similar constraints. 

H.R. 5116 fixes that problem. My question is, how does FTC’s work 

see needless constraints on meetings among Commissioners because of the Open Records Act? I mean, are there times when this 

would be helpful? You have three Commissioners right now. If two 

sought to meet informally, it would trigger Open Records. How 

about making this stop and just having open and free discussion? 

Ms. RAMIREZ. I can certainly understand the aim of the Sunshine 

Act to ensure transparency in government. There are moments 

when I agree that the Sunshine Act does create problems. Certainly, in our situation right now where we have three Commissioners, I can no longer speak with another one of my fellow Commissioners without implicating in certain circumstances the Sunshine Act. 

I appreciate your measure, Congressman, that would add another way for us to deal with the Sunshine Act and allow us to deliberate. There are constraints. At the same time, we are moving 

forward and we are complying with the Sunshine Act and believe 

that we can still certainly fulfill our duties. 

Mr. OLSON. How can you do your job effectively if you can’t sit 

down with another Commissioner, two of you, and discuss what is 

going forward, not discussing some new rules or something, but 

just discussing what the FTC does? How does that hurt you? Because we have got to stop that. That is just insane. Any examples, 

specific ones, you would like to share with us? 

Ms. RAMIREZ. No. Again, I think right now, given our current 

composition and the fact that we do have two vacancies, it has 

made it more challenging. What it means is that we now have to 

notice meetings in advance. I used to be able to pick up the phone 

and speak to at least one other fellow Commissioner. We now have 

to notice that. 

Again, we are certainly working within the confines and meeting 

our obligations under the Sunshine Act, but there are challenges 

that it presents. 

Mr. OLSON. So, say it takes you hours/days to fix a problem as 

opposed to minutes/seconds with an email, a phone call. You can’t 

do that. It just seems, in the cafeteria, hey, another Commissioner, 

‘‘Let’s chat about this issue.’’ You can’t do that without triggering 

this whole Open Records law, is that correct? 

Ms. RAMIREZ. It has made it more challenging. Again, we are 

working again in compliance with our obligations. 

Mr. OLSON. Thank you. 

And I will close by letting the Chair know that I will support or 

introduce some comments for the record for the third panel from 

the funeral directors back home over H.R. 5212. It is coming from 

the Settegast-Kopf Funeral Home in Sugar Land, Texas; the DavisGreenlawn and Hernandez homes there in Rosenberg, Texas; the 

Froberg Funeral Home in Alvin, Texas, and the South Park Funeral Home in Pearland, Texas. They have some concerns they 

want to address. I may not be here. So, I will ask permission to 

submit those for the record. 

Mr. BURGESS. OK. 

Mr. OLSON. And one more time, don’t mess with Texas boots. 

[Laughter.] 

44 

I yield back. 

Mr. BURGESS. The Chair thanks the gentleman. The gentleman 

yields back. 

The Chair recognizes the gentleman from Illinois, Mr. Rush, 5 

minutes for your questions, please. 

Mr. RUSH. I want to thank you, Mr. Chairman, and I want to 

thank Chairman Ramirez for her appearance today. 

Chairwoman Ramirez, currently, the FTC Act applies only to 

companies ‘‘organized to carry on business for its own profit or that 

of its members,’’ which means that the FTC cannot protect consumers from nonprofit companies that committee unfair or deceptive acts. 

I introduced H.R. 5255, which would amend the FTC Act to give 

the FTC authority to cover nonprofits. If a company kind of runs 

afoul of the FTC Act, consumers, in my opinion, must be protected, 

even if that company is a nonprofit. 

Chairwoman Ramirez, in your written testimony, you discuss 

how H.R. 5255 would allow the FTC to pursue enforcement of deceptive data security and privacy practices at not-for-profits that 

have been involved with data breaches. I just want you to take this 

one sliver of what H.R. 5255 is aimed at, and could you please expand on the importance of this authority specifically as it relates 

to better security and privacy practices? 

Ms. RAMIREZ. Absolutely. This is a gap that I have serious concerns about. The fact is that a lot of nonprofits, including hospitals 

and universities, hold a significant amount of consumer information, personal information, that needs to be protected. And we simply don’t have the ability to reach nonprofits. There are a few exemptions, but for the most part it is a gap that I think we ought 

to close in order to provide more complete consumer protection. So, 

I think it is an incredibly important area. The data security side, 

it is crucial, but it also impacts us in a number of other areas, including, frankly, in connection with our competition work, where 

we can’t reach certain nonprofit hospitals, for instance. 

Mr. RUSH. Shifting to the unfair or deceptive acts and practices, 

what are some cases that the FTC could bring if it were able to 

bring cases against nonprofits that are committing unfair and/or 

deceptive acts or practices? 

Ms. RAMIREZ. Well, you cited an important area, which is the 

data security/privacy arena. Another area that we do often find 

that certain charities who avail themselves of nonprofit status do 

engage in fraudulent or deceptive conduct, we can reach that kind 

of conduct if we can establish that the entity is, in fact, a sham 

nonprofit. But sometimes it can be difficult to establish that, and 

this measure would close, I think, an important gap and allow us 

to be more fulsome in our protection. 

Mr. RUSH. Can you expound a little on if the authority at FTC 

were expanded to cover not-for-profits? Tell us a little bit more 

about how it would protect consumers. 

Ms. RAMIREZ. Again, the examples that you offered are significant to me. Data security is one of the most significant issues that 

we face as a nation. And so, being able to reach conduct by just 

universities, for example, or hospitals I think is deeply important. 

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nificant area that is of concern to us. And while we have had some 

limited activity, where the facts have warranted it and where we 

are able to establish that a supposedly nonprofit organization is, in 

fact, one of the top-rating for-profits, we can reach that conduct. 

The case of hospital mergers is another example where we would 

benefit from having jurisdiction over nonprofits. Because of the current jurisdictional limitation, those matters have to go to the Department of Justice for handling, even though we have significant 

expertise when it comes to ensuring that healthcare provider consolidation isn’t anti-competitive. So, I think those are just three different examples of ways that it would be very beneficial for us to 

have jurisdiction over nonprofits. 

Mr. RUSH. Well, thank you, Mr. Chairman. I yield back. 

Mr. BURGESS. The Chair thanks the gentleman. The gentleman 

yields back. 

The Chair recognizes Mr. Guthrie from Kentucky, 5 minutes for 

questions, please. 

Mr. GUTHRIE. Thank you. 

Thank you, Commissioner, for being here. 

A particular piece of legislation that I have that we are looking 

at today is the CLEAR Act, and I understand that closing letters 

are sometimes provided when an investigation has taken place and 

you decide that there wasn’t an illegal act. So, the closing letters 

are provided, but these do not include information that would be 

helpful for companies to determine behavior that is not illegal. 

The CLEAR Act provides a framework for illustrating fair and 

truthful practices. But you noted your concern in testimony that 

the descriptions required in the bill may identify a company even 

though the bill prohibits the Commission from including information that identifies the company at issue. And I understand your 

concern to mean that, even if no information identifies the company in the description, the company could be, nonetheless, identified. 

So, my first question is, do you believe the Commission is unable 

to describe the legal activities of a company without providing sufficient information for the company to be identified? Because what 

we are hoping is that in the course of your investigation you can 

say, ‘‘We looked at these practices. They are legal,’’ and other companies could use that to guide themselves as guidance. Is there a 

possibility of doing that? I know when you asked about the CLEAR 

Act, your concern on the CLEAR Act was you would disclose companies, and we think it could be done without. 

Ms. RAMIREZ. I have at least two concerns in connection with this 

measure, Congressman. The first is that companies, as you can 

imagine, would much rather that we not do anything that could 

risk identifying that they were the subject of an investigation if we 

determine that it is appropriate the close the investigation without 

any enforcement action. 

One concern that we have is that being required to identify and 

explain the basis for not taking action and being sector-specific 

does risk, as you lay out particular facts, does risk the potential 

that companies, one could make an inference about the identity of 

companies. So, in my mind, that is a very substantial risk that I 

think companies would much rather avoid. 

46 

Another significant concern that I have here has to do with burden. I think it is important for the agency to be able to, in a very 

nimble and flexible way, be able to close investigations. Just to give 

you a sense of the volume of work that we do, in the last year we 

completed approximately 250 investigations, many of which did 

not, in fact, result in any type of formal enforcement action. 

So, the burden, also, that would be entailed would be very significant. When it comes to providing guidance, we really do endeavor to provide guidance to companies about ways that they can stay 

on the right side of the law. In my mind, this measure would not 

accomplish, I think, its intended objectives. 

Mr. GUTHRIE. But if you were doing an investigation on the company, obviously, something brought you into the company to do the 

investigation. And if you do the investigation and you realize that 

they are complying with the law, then I think it would be useful 

information for other people to have. I think it would be good guidance to say, ‘‘Hey, we found these practices are within what we are 

describing.’’ 

But would this concern about disclosure be mitigated if the company could request that particular disclosure for that company not 

be made before the final CLEAR Act report is completed? 

Ms. RAMIREZ. I would still be concerned about this measure in 

all candor. I think in order to describe a basis for not taking action, 

I think one would have to describe certain facts that, again, raises 

the same risk of potentially identifying a company. So, I think that 

concern would persist. 

Again, I think in my conversations with companies and our interactions with them, they would much prefer the ability of the agency to much more nimbly close the investigation. I will note that, 

when we think it is important for us to convey information about 

the closing of an investigation, we do have closing letters that are 

posted to our Web site. Last year we had approximately 40 closing 

letters, to give you an example. So, sometimes we might encounter 

a particular business practice that we feel, while it did not rise to 

a violation, we think it would be useful to notify industry about the 

concerns and, then, also just explain why we decided not to take 

action. So, we certainly do do that when it is appropriate. But I 

think to require that that be done in every single instance when 

the agency closes an investigation would place an undue burden 

and would not achieve—— 

Mr. GUTHRIE. Well, what if you could make out a company the 

end result was make out this company and say, ‘‘They’re complying 

with the law.’’? That is when you do the closing. 

But, Rule 3.2.4.2 of the Staff Manual provides that, if no violation of laws or regulations is revealed in the initial phase of the 

investigation, it shall be submitted for closing. You must have some 

kind of information that you send back to say, ‘‘Hey, the Staff Manual says we are going to look at this.’’ 

My point is that you are already doing the work. It seems like 

that would suffice for the report on the CLEAR Act. 

Ms. RAMIREZ. We do communicate with companies, but it is not 

necessarily in written form. And when we do have a formal closing 

letter, those are posted to the Web site. Again, in our experience, 

companies really would prefer to maintain our current practice. I 

47 

have not heard complaints, any significant complaints, about this 

area. 

Mr. GUTHRIE. OK. Well, thank you. My time has expired and I 

yield back. 

Mr. BURGESS. The gentleman yields back. The Chair thanks the 

gentleman. 

The Chair recognizes the gentlelady from New York, Ms. Clarke, 

5 minutes for your questions, please. 

Ms. CLARKE. I thank the chairman and I thank our ranking 

member. 

And I thank the Chairwoman for her testimony here this morning. 

We all need to remember that the FTC exists not to attack companies, but to protect consumers. Enforcement actions have happened when a company or a person is committing unfair or deceptive acts or practices that harm consumers. 

Chairwoman Ramirez, in my view, a number of the bills we are 

discussing today could have detrimental effects on the FTC’s ability 

to carry out its consumer protection mission. For example, H.R. 

5115 codifies select portions of the FTC’s statement on unfairness. 

The bill focuses on portions of the statement that discusses substantial injury, but ignores other portions of the statement, including a discussion of circumstances in which public policy concerns 

will independently support action by the FTC. 

So, can you tell us a bit more about some cases in which the 

Commission relied on public policy standards? 

Ms. RAMIREZ. What we do when we apply our unfairness authority is to apply that three-pronged test under Section 5(n) of the 

FTC Act. We have used that standard now for many years, since 

the 1980s. I think that it provides a very solid framework for analysis in which we focus on whether or not there is likely substantial 

harm to consumers, whether consumers can reasonably avoid that 

harm, and then, also, calls for us to also weigh potential benefits 

to either competition or to consumers from the practice that we are 

examining. 

So, in my mind, that standard has provided a solid analytical 

framework and the cases in which we have applied our unfairness 

authority are ones that we have looked at very seriously and very 

carefully. And so, we generally don’t simply look to general public 

policy considerations, although that may be a factor that is examined. But I think that we have applied its authority in a very careful and serious way. 

Ms. CLARKE. So, if this bill becomes law, would the Commission 

be able to bring those types of cases in the future? 

Ms. RAMIREZ. My worry is that it would create uncertainty when 

it comes to applying our unfairness authority, and I have a couple 

of concerns, in particular. One is that it could operate to prevent 

the agency from taking action when harm has yet to happen, but 

could happen in the future. 

And let me just give you a very simple example that is cited in 

the unfairness statement itself that the agency issued back in the 

1980s. There we had a case, and the Commission cited it, the Philip Morris case which involved a defendant that distributed free 

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ger, particularly if small children opened a package, as you can 

imagine. 

My worry is that, in that kind of an instance because the harms 

happens in the future, that kind of situation and others could potentially be hampered. And I think the current framework operates 

well, and I worry about creating uncertainty. And that is just one 

example of the concerns I have about this particular measure. 

Ms. CLARKE. Let me turn your attention to FR 5118 that prohibits the FTC from taking enforcement action based on noncompliance with agency-issued guidance. Does the FTC do that now and 

are enforcement actions brought based on companies’ failure to follow guidance? 

Ms. RAMIREZ. Guidance is an administrative interpretation, of 

the law. It is not the law. And we, in order to bring an enforcement 

action, always have to show, and to prevail, we need to show that 

there has been a violation of the law. 

My concern with that particular measure is that, on the one 

hand, it allows companies to be able to rely on guidance as a safe 

harbor, but at the same time reinforces this idea that guidance is 

not the law. So, in my mind, the existing law is the right approach 

to take. Companies can certainly point to guidance and argue that 

they have fully complied with the law, but does not provide for a 

safe harbor, which I think, in my mind, could raise concerns. It 

could also lead the agency, frankly, to provide less guidance than 

we currently do, for fear that a company that we believe has engaged in unlawful activity could on a post-hoc basis cling to a statement that is made in some form of guidance. 

Another question that this particular measure raises is how one 

actually defines guidance. 

Ms. CLARKE. Correct. I was going to ask that. 

Ms. RAMIREZ. There is a multitude of work product that is out 

there that we put out, whether it is in business education, blogs, 

as well as more formal forms of guidance that we put out. 

Ms. CLARKE. Thank you. I yield back, Mr. Chairman. 

Mr. BURGESS. The Chair thanks the gentlelady., The gentlelady 

yields back. 

The Chair recognizes the gentleman from Florida, Mr. Bilirakis, 

5 minutes for your questions. 

Mr. BILIRAKIS. Thank you, Mr. Chairman. I appreciate it. Thanks 

for holding this very important hearing. 

Chairwoman Ramirez, I want to thank you and the Commission 

for your great efforts on behalf of the past on the campaign to educate seniors on schemes that could affect them. 

I am also supportive of the Commission’s effort to identify and 

bring enforcement actions against bad actors that specifically target older Americans. Although the FTC has not yet seen increased 

rates of fraud in older Americans versus other populations, I am 

concerned that, as the population ages and more older Americans 

begin using the internet regularly, that these trends will be accompanied by fraud targeting seniors. 

It has been about 2 years since the Pass It On Campaign began. 

Do you have any thoughts as to what has worked best in this outreach campaign and what lessons other outreach organizations 

might learn from the Commission’s experiences along the way? 

49 

Ms. RAMIREZ. Absolutely. I mean, we certainly have found that 

outreach is an incredibly important tool in order to make sure that 

consumers have information available to them, so that they can 

avoid becoming victims. The Pass It On Campaign is one of our incredibly successful campaigns. 

One thing that inspired us to go in that direction was the fact 

that we learned that consumers, in particular older consumers, 

don’t like to be told what to do or what not to do. And what this 

campaign taught us is that, if we can pass information, if we get 

information to consumers and ask them to pass that information 

on to their friends and family, consumers tend to be, all of us tend 

to be more receptive to receiving that information and passing it 

on to others, as opposed to being dictated to. So, that campaign has 

proven very effective. 

I agree with you that making sure that we address the needs of 

older Americans is incredibly important. So, in addition to the law 

enforcement efforts that we undertake, we are very much engaged 

when it comes to outreach and education. 

Mr. BILIRAKIS. Well, thank you for focusing on that. 

Your testimony also states that the Commission already reports 

on its performance base for the following year and its strategic 

plan, as required by the GPRA. This is a useful document that provides some of the highlights of the Commission’s plans. However, 

is the FTC currently required by statute to specifically list its 

planned workshops, rulemakings, and plans to develop guidelines 

as far as a strategic plan? If you can answer that question, I would 

appreciate it. 

Ms. RAMIREZ. So, when it comes to rulemakings, actually, twice 

a year we publish a chart of information about all upcoming 

rulemakings. What we aren’t obligated to do is that we aren’t required to identify specific workshops that we may decide to do over 

the course of an ensuing year. I think that that is a good thing not 

to be required to do that because it gives us a lot of flexibility to 

undertake workshops and participate in other forums that address 

issues that we may not have thought about, that we see as emerging trends that need to be addressed. 

At the same time, I think the proposed measure to provide additional information about the work that we do in connection with 

protecting older Americans, that is something that we would be 

happy to provide information about. So, we are happy to do that. 

But my worry is on being forced to identify, for instance, workshops. I think it might have the unintended consequence of eliminating the flexibility that we currently have. 

Mr. BILIRAKIS. Again, staying on this topic, the FTC’s strategic 

plan states that the Commission conducts workshops as a form of 

research, stakeholder outreach, and to advance the agency’s understanding of certain issues. Again, how does the Commission decide 

which topics to pursue in workshops? Who is part of that decisionmaking process? Does the Commission solicit any public feedback 

in determining what topics to cover in its workshops? 

Ms. RAMIREZ. We do. It is an agencywide endeavor, and we are 

consistently engaging with industry, with consumer advocates, 

with academics and other experts. Technology is an area where we 

want to make sure that we stay current. So, when we develop ideas 

50 

for workshops, we will also not only make a decision about a particular workshop, but we will also announce it oftentimes months 

in advance and solicit input from experts and other stakeholders to 

get their views about what topics we ought to cover within the 

scope of a particular workshop. 

So, we really do endeavor to provide a balanced approach to the 

topics that we cover. Our aim with our workshops is to learn, and 

we take that very seriously. So, we come at it with an open mind 

and really do solicit a lot of input before we proceed with an agenda. 

Mr. BILIRAKIS. Thank you very much. It is very informative. I appreciate it. 

I yield back, Mr. Chairman. 

Mr. BURGESS. The Chair thanks the gentleman. The gentleman 

yields back. 

The Chair recognizes Mr. McNerney, 5 minutes for your questions, please. 

Mr. MCNERNEY. Well, I thank the chairman. I thank the chairman for allowing me to sit in on this hearing. 

Ms. Ramirez, as you know, my bill, H.R. 5239, the Protecting 

Consumers in Commerce Act of 2016, would lift the common carrier exemption from the FTC’s jurisdiction. Lifting this exemption 

would have the effect of directing the FTC to prevent common carriers from engaging in unfair and deceptive practices against consumers. 

Would you briefly explain what the common carrier exemption is 

and what it means? 

Ms. RAMIREZ. Sure. The common carrier exception to the FTC 

Act is an exception that was part of our original statute back in 

1914. It does not allow the agency to take action with regard to 

common carriers. One example of that would be carriers that provide voice service. Today, in light of the FTC’s reclassification of 

broadband service as a common carrier service, that also means 

that today we cannot take action against internet service providers. 

So, this is an area where another example where we at the Commission feel that it creates a gap in our jurisdiction that ought to 

be addressed. This particular exception is one that is quite antiquated, that in our view no longer makes sense in today’s environment, where there has been significant deregulation and where the 

roles that common carrier services play in today’s environment, 

that no longer makes sense. And so, it is something that we would 

like to see eliminated. 

Mr. MCNERNEY. Well, what are some examples of the exemption 

harm? What are some examples of how the exemption harms consumers? 

Ms. RAMIREZ. Well, it doesn’t allow us to take action. Let me give 

you one example. We have brought actions involving data throttling where a carrier that is providing internet service will reduce 

the speeds, will set certain thresholds for consumers, and if they 

go beyond a particular threshold, reduce their internet speed, 

which basically would hamper the ability of a consumer to 

download certain information without having to wait endlessly. 

By example, we have litigation that is pending against AT&T involving what we consider to be deceptive data-throttling practices 

51 

in light of the FTC’s reclassification of broadband service as a common carrier. That would be a type of action that we would no 

longer be able to bring prospectively. So, that is just, generally 

speaking, an example. 

Mr. MCNERNEY. What type of redress does the FTC provide to 

consumers? 

Ms. RAMIREZ. Generally speaking, there are various remedial 

tools that we have. One is an injunction relief in order to put a stop 

to unlawful activity. What we also try to do is to obtain consumer 

redress, which would be to put money back in the hands of consumers who have been defrauded, who have, for instance, paid a 

particular premium as a result of deceptive conduct. So, one of our 

significant aims is to get money back in the hands of consumers 

who have been victimized. 

Mr. MCNERNEY. Well, how do the redress tools that the FTC has 

differ from those that FCC? 

Ms. RAMIREZ. I think that the FCC has a different congressional 

mandate. We are, first and foremost, a law enforcement agency. 

The FCC, for instance, has an ability to get civil penalties. We have 

also brought enforcement actions in cooperation with the FCC. 

We had two actions that I will mention, AT&T and T–Mobile, involving the practice of what is known as cramming, where unauthorized charges are placed on a consumer’s cell phone bill. And in 

connection with that, our principal aim was to get money back in 

the hands of consumers. The FCC obtained civil penalties. 

So, I think there are different congressional sets of objectives and 

different mandates. Ours is to primarily seek redress and put a 

stop to unlawful conduct. 

Mr. MCNERNEY. And there has been cooperation between the two 

agencies? 

Ms. RAMIREZ. Absolutely. We have cooperated in a number of 

areas over the years, including the area of telemarketing. So, yes, 

there has been significant cooperation, and we have a history of cooperating not only with the FCC, but with a number of other agencies. We share, for example, competition jurisdiction with the Department of Justice. We have a long history of being able to work 

effectively with other agencies. 

Mr. MCNERNEY. Very good. 

Thank you, Mr. Chairman. 

Mr. BURGESS. The gentleman’s time has expired. The Chair recognizes the gentleman from Oklahoma, Mr. Markwayne Mullin, 5 

minutes for your questions, please. 

Mr. MULLIN. Thank you, Mr. Chairman. 

Ma’am, thank you for being here. 

What I am wanting to focus on a little bit first is a bill that we 

have. My legislation, the SURE Act, would build that by qualifying 

additional portions of the policy statement. My goal is to provide 

more clarity as to the consideration at play in the unfairness cases 

without altering the FTC authority. It seems my bill simply clarifies current language. 

My question to you, ma’am, how does codifying a statement that 

the FTC currently uses to guide its unfairness case take away any 

authority? 

52 

Ms. RAMIREZ. First of all, I think the current standard that has 

been codified works well, as I noted earlier. Secondly, my concern 

is that, by codifying certain pieces of what is in the unfairness 

statement, leads to a certain emphasis that I worry would ultimately impede our ability to effectively protect consumers. 

If you look at the track record that we have in applying our unfairness standard, I think that we have applied it in a very evenhanded way. We always look very carefully and ensure that the 

three prongs of the standard are met, and the key issue is always 

looking to protect consumers against substantial injury. But we undertake a cost/benefit analysis. 

Mr. MULLIN. Well, my legislation doesn’t alter current statutory 

authority for the Commission to prohibit acts or practices that are 

likely to cause substantial injury. It doesn’t alter any of that. It 

just helps clarify it. 

Ms. RAMIREZ. My concern is that, in that effort to clarify, I think 

it has the potential to create uncertainty that could limit us. 

Mr. MULLIN. Well, my biggest concern is, ma’am, that all we are 

trying to do is clarify something. It doesn’t alter it. And what we 

are afraid of is change. I mean, there is always room for an improvement. I have been in business my whole adult life. One thing 

we always do is look for better practices. And so, we are sitting 

here saying that it doesn’t need change or there is no point in looking at it because we think everything is working perfectly, can you 

really tell me that your agency is working perfectly? 

Ms. RAMIREZ. I wouldn’t say that we are working perfectly, but 

I would say—— 

Mr. MULLIN. OK. So, what we are trying to do—— 

Ms. RAMIREZ. But I would say that we are working effectively. 

And my concern is—— 

Mr. MULLIN. Well, effectively is OK, but improving is better. 

There is always room for improving. I mean, we used to do debriefs 

all the time in a different line of work I used to do, and we would 

do it after every situation because we always looked to tweak the 

practices we were using because there is always a better opportunity and a better way to do things. 

And so, it concerns me when we are not even willing to change. 

Ma’am, I am not here getting onto you at all. I am just concerned 

about the FTC, by you simply saying that, ‘‘No, we’re good,’’ because that is basically what I am hearing. 

Ms. RAMIREZ. With all due respect, I believe and I would ask, 

what problem has been identified in connection with our application of the unfairness standard? My serious concern is that, while 

I understand the effort to clarify, my worry is that it creates greater uncertainty—— 

Mr. MULLIN. There is already uncertainty out there. 

Ms. RAMIREZ [continuing]. More litigation that ultimately I think 

will consume agency resources, and not to the benefit of consumers. 

So, that is my—— 

Mr. MULLIN. But it is so broad right now that people are left to 

wonder what it is; whereas, it is only within the agency’s hands to 

determine to clarify. All we are trying to do is just to make sure 

everybody is on the same page. Is that wrong? 

53 

Ms. RAMIREZ. Again, I appreciate the effort. My worry is that 

this will lead to uncertainty that could impede our ability to be effective when—— 

Mr. MULLIN. How? What is it that you are saying? How could it 

impede it? Just give me an example of why you are concerned 

about it. 

Ms. RAMIREZ. I think it has the potential to create difficulties for 

the agency when we seek to prevent/correct wrong. 

Mr. MULLIN. Specifically, how does the language do that to you? 

Ms. RAMIREZ. I have already noted that. I believe that by expressing a concern about speculative harm, it has the potential to 

lead to a situation where it might make it difficult for us to prevent—— 

Mr. MULLIN. In which way? 

Ms. RAMIREZ [continuing]. Prevent future harm by creating uncertainty about how that applies. 

Let me also give you another example, if I may. 

Mr. MULLIN. OK. 

Ms. RAMIREZ. I also think that it elevates, in doing the cost/benefit analysis of the third prong, to use a shorthand, I think that 

it elevates the impact that our efforts might have on consumers 

who are not injured, to the detriment of those who might be injured. 

Mr. MULLIN. But, ma’am, in all due respect back, you are making 

an assumption, and we really don’t know because there was already uncertainty. All we are trying to do is improve it. If there 

is already uncertainty in it and we are trying to improve the uncertainty, but yet, we are OK with the way that it is, we move nowhere; there is no change. When we already are trying to help a 

situation out, trying to make a subtle change to it, it doesn’t hurt 

the situation. It tries to improve it. And next year or later on down 

the road, if we need to improve some more, we will. 

Thank you for your time. 

Mr. Chairman, I yield back. 

Mr. BURGESS. The Chair thanks the gentleman. The gentleman 

yields back. 

The Chair recognizes the gentleman from Kansas, Mr. Pompeo, 

5 minutes for your questions, please. 

Mr. POMPEO. Thank you, Mr. Chairman. 

And thank you, Chairwoman Ramirez, for being here today. 

You had a discussion with Mr. Pallone about H.R. 5136 that had 

to do with publishing the work of the Bureau of Economics. The bill 

is pretty simple. It requires the Bureau of Economics to point to 

a problem with your recommendation that it seeks to solve, and 

then, requires the Bureau to say why the market and public institutions are inadequate to take on that problem. 

Your primary criticism was that it was going to impose a burden, 

that you might not be able to do some other things you do because 

of this burden. Did I understand that correctly? 

Ms. RAMIREZ. Yes, my concern is that the requirement that a 

comprehensive cost/benefit analysis be conducted prior to the agency providing any form of comments on legislative action, for instance, that would be my main concern, that it would be resourceVerDate Nov 24 2008 11:35 Feb 24, 2017 Jkt 037690 PO 00000 Frm 00057 Fmt 6633 Sfmt 6633 F:\MY DOCS\HEARINGS 114\114-148 CHRIS
54 

prohibitive and would impede our ability to provide very useful 

comments to policymakers. 

Mr. POMPEO. What is the budget for the Bureau of Economics 

today? 

Ms. RAMIREZ. I can give you our budget as a whole is approxi- mately $300 million. 

Mr. POMPEO. For the Bureau of Economics, though, what is your 

budget, the people that would be impacted by this? 

Ms. RAMIREZ. I would have to give you that information. I don’t 

have a specific figure. But what I can tell you is that my economists have very serious concerns about this proposal because our 

resources, as you can imagine, are limited. 

Mr. POMPEO. Fair enough. Fair enough. Fair enough. 

I am trying to find out—you said it is an enormous burden—I am 

trying to translate that to reality, because we might provide the additional funding for that. 

How many economists do you have today? 

Ms. RAMIREZ. We have approximately 80 economists. 

Mr. POMPEO. And so, how many additional economists would it 

take, in your judgment, to comply with this? Because you said it 

was an enormous burden, so you have obviously done some work 

thinking about this. So, tell me how many more than 80 we would 

need to fund in order to comply with it. 

Ms. RAMIREZ. Well, sitting here right now, I couldn’t answer that 

question. But let me also just note a related concern, which is that, 

by requiring that there be a full and comprehensive cost/benefit 

analysis, we would also be inhibited from commenting on a matter 

that would be outside of our expertise. So, for instance, we may 

comment on a particular legislation that may have health and safety implications, but we will comment and note and ask policymakers to take into account the competitive impact in that situation because we don’t have expertise when it comes to health and 

safety, for instance. So, we comment a lot in connection with scope 

of practice in the healthcare sector, by way of example. 

We are not equipped to comment on health and safety pieces of 

the equation. But this measure, again, while I think it has a good 

intention, would impede our ability to provide any comment there 

because we would not be able to assess the health and safety part 

of the equation. That would be a related concern. 

Mr. POMPEO. All the more reason you should do it, in my judgment, but I digress. 

If you just took what they were doing today and published that, 

what would be the harm there? So, they are already providing, 

they are doing something, right? You are doing a recommendation. 

The Bureau of Economics is doing something. They are providing 

that to you, correct? 

Ms. RAMIREZ. Yes. These are—— 

Mr. POMPEO. So, that you can provide your recommendation or 

your blog post, or whatever it is, or your testimony here today. 

Why couldn’t we just publish that, no additional burden? 

Ms. RAMIREZ. Ultimately, it is the responsibility of the Commission to decide what action they—— 

Mr. POMPEO. But why couldn’t you publish the underlying data? 

What would be wrong—— 

55 

Ms. RAMIREZ. Because, in my mind, we get input from various 

parts of our agency. We take economic thinking into account. But, 

ultimately, the people who are accountable, it would be myself and 

my fellow Commissioners. And it is up to us, taking into account 

the recommendations made by our staff. With all due respect to 

them, ultimately, we are the ones to be held accountable. And what 

we, then, do, any action that we take, then, becomes public. 

Mr. POMPEO. It just seems, as the consumer protection agency, 

you would want consumers to have a chance to see your economic 

analysis. Perhaps we just disagree about that. 

I want to go on to the SHIELD Act. Is it the FTC’s position that 

a company’s compliance with guidelines should not be admissible 

as evidence, compliance to a statute? 

Ms. RAMIREZ. I think that may be a relevant consideration, and 

we certainly would take that into account. My concern is that it not 

be a safe harbor. 

Mr. POMPEO. Right. There is no dispute. That is fine. The 

SHIELD Act doesn’t propose that it become a safe harbor. It simply 

says that you will not, that the FTC will not argue against a company submitting their compliance with your guideline as evidence 

that they have complied with a statute. Do you find that acceptable? 

Ms. RAMIREZ. Again, I think it would be a relevant consideration, 

certainly something that we would consider relevant. But my worry 

is that that would be tantamount to creating a safe harbor for posthoc reliance on guidance. 

Mr. POMPEO. Fair enough. 

I yield back. 

Mr. BURGESS. The gentleman yields back. The Chair thanks the 

gentleman. 

The Chair recognizes the gentlelady from Indiana, Ms. Brooks, 5 

minutes for your questions, please. 

Mrs. BROOKS. Thank you, Mr. Chairman. I also want to thank 

you for holding this hearing. 

As the chairman and others may know, Sunday is going to be the 

100th running of the Indianapolis 500. As you might imagine, this 

garners a lot of attention, not only at home, but across the country 

and the world. In fact, over 300,000 people are expected to come 

from around the world to our great city this weekend to witness 

the greatest spectacle in racing. 

But our Indianapolis area hotels have been sold out since March 

15th and people are booking hotels as far away as South Bend, 

which is about three hours away. And so, while demand is high, 

there is, unfortunately, some who seek to take advantage of this 

and other major sporting events to deceive or mislead the race fans 

for a quick buck. Last week my office met with a constituent from 

Shockett Hotels who told us that third-party sites take payments 

from visitors and promise a room in return. And then, this comes 

as news for the hotel that has not contracted with these entities 

and is left to deal with legitimate rage of a visitor who is showing 

up when they, the hotel, has to break the news that they are 

booked and that that visitor does not have a room. It can be a huge 

problem for us this weekend. 

56 

That is why I am interested in examining my good friend Ms. 

Frankel and Ms. Ros-Lehtinen’s bill 4526 today that seeks to 

strengthen the vital safeguards, increase consumer protections, and 

bolster the enforcement efforts necessary to stop scammers from 

mimicking legitimate Web sites. So, I am interested in hearing 

about the benefits of the legislation and how we might improve 

their legislation because, obviously, the backbone of Hoosier hospitality relies on getting these types of things right. We don’t want 

a lot of angry visitors and race fans. It is not a pretty picture when 

that happens. 

So, Ms. Ramirez, according to the hotel industry, this type of 

scam, close to 15 million reservations were made on such deceptive 

Web sites and cost U.S. travelers upward of $1.3 billion. Forty-one 

thousand people every day are getting scammed by these types of 

Web sites. 

Are you aware of this and seeing this kind of fraud in the hotel 

market? And what kind of numbers are you seeing, if not? 

Ms. RAMIREZ. We certainly are aware of this concern, and I have 

certainly engaged with the online travel industry to address this. 

I can’t give you any specific numbers, and I can try to get you additional information following the hear. 

But what I can tell you is that this is certainly a concern, and 

we would certainly want consumers to be able to access hotel reservations free of deception. I think that this particular measure 

does have benefits. One concern that I would have is that we would 

want to make sure that legitimate businesses that are not deceiving consumers are not captured by the measure. And so, one suggestion we have is that, rather than imposing disclosure requirements, that there be a prohibition on misrepresentations. But, generally speaking, it is a concern that I certainly share and would be 

happy to continue to work with you and the members of the subcommittee. 

Mrs. BROOKS. I am curious about that because that is what I 

think I read in your written testimony. And so, you indicate mainstream third-party online travel agencies generally do not generate 

that kind of deception. Of course they don’t. That is why they have 

been so incredibly successful. And, of course, this bill is not meant 

to impede companies like Expedia and others. 

But what is it that you actually think a company, a deceptive 

company would be—how do we get a deceptive company from operating? What are you suggesting? I am confused by your written testimony and even this testimony. 

Ms. RAMIREZ. It is, generally, we are supportive of the measure. 

Mrs. BROOKS. OK. 

Ms. RAMIREZ. However, we think that, rather than specifying 

particular disclosures, that a better way to tackle the problem 

would be to prohibit misrepresentations. Again, I think getting to 

your point that a fraudulent site may not comply with law, in our 

mind, it would be better to bar misrepresentations. It also would 

not place undue burden on legitimate sites. 

Mrs. BROOKS. Is that not inherent, that companies like this 

should not make misrepresentations on their Web sites? 

57 

Ms. RAMIREZ. I think the objective is the same. Our preference 

would just simply be to word it differently and bar misrepresentations rather than seeking to specify disclosures. 

Mrs. BROOKS. And you have authority currently to enforce unfair 

and deceptive practices, correct? And are you prosecuting any? Are 

you pursuing any? 

Ms. RAMIREZ. We do. I can’t comment on any specific investigation, but it is an issue that I, personally, have met with—— 

Mrs. BROOKS. Can you answer yes or no whether or not you are 

pursuing any right now? 

Ms. RAMIREZ. It is a matter that we are looking into and are 

aware of. That is all I can say—— 

Mrs. BROOKS. So, you cannot say whether or not you are pursuing any investigations of these deceptive Web sites, yes or no? 

That is a yes or no, without going into details. 

Ms. RAMIREZ. It is an issue that we are looking at. I can tell you 

that. 

Mrs. BROOKS. Then, that—— 

Ms. RAMIREZ. I can tell you that. 

Mrs. BROOKS. That is certainly a deceptive answer. Thank you. 

I yield back. 

Mr. BURGESS. The Chair thanks the gentlelady. The gentlelady 

yields back. 

I would recognize myself for 5 minutes. 

And, Chairwoman, again, I do want to thank you for being here 

and thank you for your forbearance today. 

I just have a couple of questions on the consent orders, consent 

decrees. Is it fair enough to use those two terms interchangeably, 

consent decree and consent order? 

Ms. RAMIREZ. Yes. 

Mr. BURGESS. So, for people who are not lawyers who are watching this, what does a consent decree or a consent order, what does 

that entail? When you enter into a consent decree with the FTC, 

as a business, what is the practical effect of that? 

Ms. RAMIREZ. Generally speaking, our primary remedial tool is 

an injunction. So, a consent decree will oftentimes prohibit the unlawful conduct that we were targeting. The consent decree may 

also include monetary provisions. Other provisions that also are 

typical of our consent decrees would be recordkeeping requirements, so that that would allow us to ensure that a company is, 

in fact, complying with our order. 

Mr. BURGESS. And how long will these orders typically run? 

What is the lifespan of one of these orders? 

Ms. RAMIREZ. Federal court orders are indefinite. An injunction 

that would be in place, put in place by a federal district court 

would be indefinite. Under our administrative process, an administrative consent order would be generally in place for 20 years, although the Commission certainly does have flexibility to modify 

that and impose a different timeframe. 

Mr. BURGESS. And as a practical matter, is that flexibility employed or are generally consent decrees through the Federal Trade 

Commission going to exist for 20 years? 

Ms. RAMIREZ. Most of them are for 20 years, but we have modified that timeframe in certain instances. So, to give you a couple 

58 

of examples, we have certain data security cases where we imposed 

a requirement that there be data security audits. I can cite to you 

two examples of the Twitter case and the investor case. There the 

requirements of a data security audit lasts only 10 years rather 

than 20. 

Mr. BURGESS. Yes, having been in business before I came here, 

I mean, 20 years is an enormous timeframe in the life of a business. Most businesses don’t last 20 years. I don’t know if you have 

noticed. So, I do worry about the fact that the default position 

tends to be 20 years. 

Now what do other agencies do? If the Federal Communications 

Commission is going to issue a consent decree, what is the timeline 

likely to be there? 

Ms. RAMIREZ. Dr. Burgess, in all candor, we don’t keep track. I 

couldn’t tell you, sitting here right now, what the typical approach 

is by other agencies. 

Mr. BURGESS. Do you feel your agency is in line with what other 

agencies are performing? 

Ms. RAMIREZ. I can’t speak to that. What I can tell you is that 

I think that what the agency does or what the Federal Trade Commission does is appropriate, and it is an important tool. Our consent decrees are an important tool to ensure that consumers are 

protected. An injunction tends to be our primary remedial tool that 

we use. We don’t have the authority to impose civil penalties, and 

a good number, most of our cases don’t entail any form of consumer 

redress or other monetary relief. And so, I think it is important as 

a matter of deterrence to be able to have a tool that can be long 

lasting and that protects consumers. 

Mr. BURGESS. Now you bring cases both on the anticompetitive 

front and the consumer protection front. Is there a difference in the 

consent decree for either one of those subjurisdictions? 

Ms. RAMIREZ. Sure. We do tailor consent decrees to the particular 

facts. And so, just by way of example, an order in connection with 

a settlement in a competition matter would require a divestiture, 

and in that context the requirements of the order would only last 

so long as it would take to effectuate divestiture. So, they do vary 

because of the different set of circumstances. 

Mr. BURGESS. Let me ask you this: just as a practical consideration for a business that is under a consent decree, are they required to obtain permission from the Federal Trade Commission 

before they were to roll out a new product or service if they are 

under a consent decree? 

Ms. RAMIREZ. Certainly not, Dr. Burgess. The aim and the predominant form of our injunctions is to prohibit violations of law. 

So, there are a number of companies that continue to innovate. 

This includes Google, Facebook, Apple. They continue to innovate. 

They are operating just fine under our orders. I think our orders 

are tailored to the particular circumstances of a case, tailored to 

address the consumer harm that we have identified. And I think 

that we do a good job of ensuring that. 

Let me also just note that we also have flexibility to modify and 

even terminate an order. So, a company, if it finds that there are 

changed conditions, can always come to us and make a request to 

modify or even terminate an order. 

59 

Mr. BURGESS. I have some questions, and in the interest of time, 

I am going to submit those questions for the record in writing. 

Seeing no further members wishing to ask questions, I do want 

to thank the Chairwoman for being here, for answering our questions, and being our witness today. 

This will conclude the first panel, and the committee will take 

a brief recess while we assemble for the second panel. 

[Recess.] 

Mr. BURGESS. The subcommittee will come to order. 

Welcome back. Thank you for your patience, and thank you, 

again, for taking the time to be here today. 

We are moving into the second panel for today’s hearing. We are 

going to follow the same format as the first panel. Each witness 

will be given 5 minutes for an opening statement, followed by questions from members. 

For our second panel, we have the following witnesses: Mr. Joshua Wright, University professor, Antonin Scalia Law School, 

George Mason University; Ms. Abigail Slater, general counsel at 

The Internet Association; Mr. David Vladeck, professor of law at 

Georgetown; Mr. Geoffrey Manne, founder and executive director at 

the International Center for Law and Economics, and Mr. Daniel 

Castro, vice president for Information Technology and Innovation 

Foundation. 

We appreciate each of you being here today. We will begin our 

panel with you, Mr. Wright. You are recognized for 5 minutes for 

an opening statement. 

STATEMENTS OF JOSHUA WRIGHT, UNIVERSITY PROFESSOR, 

ANTONIN SCALIA LAW SCHOOL, GEORGE MASON UNIVERSITY; ABIGAIL SLATER, GENERAL COUNSEL, THE INTERNET 

ASSOCIATION; DAVID VLADECK, PROFESSOR OF LAW, 

GEORGETOWN LAW SCHOOL; GEOFFREY MANNE, FOUNDER 

AND EXECUTIVE DIRECTOR, THE INTERNATIONAL CENTER 

FOR LAW AND ECONOMICS, AND DANIEL CASTRO, VICE 

PRESIDENT, INFORMATION TECHNOLOGY AND INNOVATION 

FOUNDATION 

STATEMENT OF JOSHUA WRIGHT 

Mr. WRIGHT. Thank you, and thank you for the invitation to testify today. 

Chairman Burgess, Ranking Member Schakowsky, and members 

of the subcommittee, thank you for the opportunity to appear before you today, in particular, to discuss those proposed bills aimed 

at improving the FTC’s processes and consumer protection enforcement. 

My name is Josh Wright, and I am a university professor at the 

Antonin Scalia Law School at George Mason University and senior 

counsel at Wilson Sonsini Goodrich & Rosati. 

Until August 2015, I was Commissioner of the Federal Trade 

Commission. During my career as an economist and lawyer, I have 

been fortunate enough to enjoy four separate positions at the FTC, 

ranging from a teenaged intern in the Bureau of Economics to 

Commissioner. 

60 

Before diving into the subject of today’s hearing, I want to make 

clear that the views I express here today are my own. In my written statement I discuss in greater detail a number of the 17 bills 

that are the subject of today’s hearing. 

In my opening remarks I would like to discuss what I view as 

the key institutional challenge facing the FTC and its consumer 

protection mission, to more deeply integrate economic analysis at 

all levels of decisionmaking from staff members to the Commission. 

With this in mind, I would like to begin with a brief discussion of 

the role of economics and the Bureau of Economics at the FTC. 

The Bureau of Economics provides guidance and support to the 

agency’s competition and consumer protection activities. It is a separate unit from the Bureaus of Competition and Consumer Protection and, thus, provides independent economic advice to the Commissioners. Working within the Bureaus of Competition and Consumer Protection, the Bureau of Economics participates in the investigation of mergers and alleged anticompetitive, deceptive, and 

unfair acts or practices. It also conducts rigorous economic analyses 

of various markets and industries. 

The FTC’s success has been attributable in large part to its flexible enforcement authority that allows it to adapt quickly to 

changes in technology and business practices, its commitment to 

integrating independent economic analysis to guide the use of those 

enforcement tools, and the remarkably high quality of its staff of 

PhD economists in the Bureau of Economics. I have written elsewhere, and I think it’s worth repeating here, that the economists 

assembled within the Bureau of Economics are simply the best 

team in any regulatory agency in the United States. 

Where the FTC has been mindful of integrating economic thinking and research into its new enforcement and policy endeavors, it 

has performed very well. When the agency’s enforcement priorities 

have become untethered from economic analysis, it has faltered, 

overreached, and become the subject of significant criticism. 

As technology evolves and the FTC’s consumer protection shifts 

into digital markets, privacy regulation, the internet of things, and 

the world of big data, it is more important than ever that rigorous 

economic analysis anchors the FTC’s activities. With that in mind, 

I do want to specifically acknowledge Chairwoman Ramirez for her 

leadership on these issues and commitment to ensuring that economic analysis remains a priority for the agency. 

The Commission, however, does occasionally fail to tether itself 

sufficiently to rigorous economic analysis in its reports, recommendations, and enforcement actions. Consider the Commission’s application of its unfairness authority and its recent action 

against Apple. The Commission issues an administrative complaint 

alleging that Apple engaged in an unfair act or practice because 

Apple’s 15-minute window which allowed consumers to void entry 

of a password a second time after an initial purchase did not allow 

parents the opportunity for express informed consent. 

Apple’s product design choices, including the nature of these disclosures and its choice to integrate the 15-minute window to enhance the user experience are a product of considerable investment 

and innovation. And as most consumers with smartphones know, 

this feature provides substantial benefits for consumers who don’t 

61 

want to experience excessive disclosures or enter passwords every 

time they make a purchase. Yet, the FTC cursorily dismissed Apple’s design decisions and disclosures having zero benefits for consumers and only imposing harm. 

To be clear, while cases like Apple are relatively rare, they are 

likely to be an increasing part of the FTC’s portfolio. Rigorous economic analysis is the best tool the FTC has available to protect 

consumers against a risk of erroneously condemning business practices that benefit consumers. For example, in Apple, greater attention to economic analysis would, in my view, have kept the FTC 

from a harmful second-guessing of product design decisions in ways 

that might damage innovation. 

I would like to mention one specific suggestion to the subcommittee concerning a proposal that would facilitate greater incorporation of economic analysis into Commission decisionmaking. 

Specifically, I would propose the subcommittee consider amending 

the SURE Act to mandate that the Bureau of Economics publish 

a separate explanation of the economic analysis of its cost and benefits of the Commission’s action whenever it enters into consent decrees. 

The primary benefit of this proposal would be to provide the 

economists within the FTC a greater role in the development of the 

agency’s consumer protection enforcement priorities in this era of 

increasingly-complex cases involving rigorous analysis of policy 

tradeoffs. 

Thank you very much for your time, and I am happy to answer 

any questions. 

[The prepared statement of Joshua Wright follows:] 

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Mr. BURGESS. The Chair thanks the gentleman. 

The Chair recognizes Ms. Slater for 5 minutes for your opening 

statement, please. 

STATEMENT OF ABIGAIL SLATER 

Ms. SLATER. Thank you. Chairman Burgess, Ranking Member 

Schakowsky, and members of the subcommittee, thank you for the 

opportunity to testify before you today. 

My name is Gail Slater, and I am the General Counsel at The 

Internet Association. The Internet Association represents over 40 of 

the world’s leading internet companies. As the voice of the internet 

economy, part of our job is to ensure that all stakeholders understand the benefits the internet brings to our society. 

Today I will highlight three issues for the committee which my 

written testimony provides greater detail on. First, the Federal 

Trade Commission plays an important and respected role in our society. However, there is always room for modernization and increased transparency at any agency. 

Second, one FTC process bill, in particular, the TIME Act, is important to The Internet Association’s members. The internet is a 

fast-moving and dynamic marketplace, and the framework for FTC 

consent orders should recognize this reality. 

Lastly, the Consumer Review Fairness Act will protect consumers nationwide from meritless attempts to silence free speech, 

in addition to bolstering the growing online economy. 

Regarding FTC process, it is important, first, to acknowledge the 

valuable role the FTC plays in promoting competition and protecting consumers in our society. Beyond our borders, the FTC 

plays an equally important role, most recently in the extensive negotiations around the U.S.-EU Privacy Shield with which the committee is familiar. 

The Internet Association thanks Chairwoman Ramirez for her 

leadership of the agency, both here in the U.S. and overseas. However, while we recognize the FTC for the important work that it 

does, there is always room for modernization and increased transparency at a 100-year-old agency. 

Although FTC consumer protection and substantive law and policy commands most of the spotlight, Commission process can be 

equally important to stakeholders, which brings me to my second 

point. Of the bills before the committee today, the TIME Act is of 

particular importance to Internet Association members. The TIME 

Act would create an 8-year cap on consent orders the FTC enters 

into; whereas, under current agency practice, consent orders expire 

only after 20 years. 

To put 20 years in context for internet companies, it might be 

helpful for the committee, first, to cast their memories back to the 

year 1996, if they can, and then, to fast-forward to the year 2036. 

In 1996, AOL and CompuServe were the largest internet platforms 

in the world. Facebook founder Mark Zuckerberg was 12 years old, 

and Google was still just a research project for two Stanford grads. 

Dumb mobile phones barely existed, and smartphones were a figment of Steve Jobs’ imagination. In 2036, it is hard to even begin 

to predict the ways in which we will use the internet. 

79 

This time travel exercise is a lighthearted way of illustrating 

that the internet changes a lot in 20 years. Yet, while internet 

markets are highly-dynamic, the FTC consent orders applied to 

them are static. This matters because 20-year consent orders serve 

to slow down the pace of innovation of the companies involved and 

are often outstripped by marketplace developments during their 

term. The TIME Act corrects this imbalance by creating a presumptive 8-year limit on FTC consent orders. 

The third and final topic I wish to address today is the Consumer 

Review Fairness Act, also known as CRFA, which will protect consumers nationwide from meritless attempts to silence free speech 

online, in addition to bolstering the growing online economy. The 

FTC would play an important role in the CRFA as backstop enforcer. 

To put the CRFA in context, it may be helpful, first, to talk about 

the importance of online reviews to consumers. Included in the benefits the internet brings to our economy is the so-called consumer 

surplus, which exists because the internet empowers consumers to 

make smarter and quicker choices about how and where they 

spend their money. This consumer surplus is calculated to be valued at billions of dollars per year. 

A great example of the consumer surplus in action is consumer 

reviews. Every day Internet Association members like Amazon, 

Trip Advisor, and Yelp democratize purchasing and access to information by crowdsourcing the experiences of others in consumer reviews. 

In today’s digital economy, nearly 70 percent of consumers rely 

on online consumer reviews for information on where to eat, shop, 

travel, and more. However, although most businesses have come to 

accept this shift in consumers’ knowledge, a minority of holdouts 

refuse to let consumers share their experiences online through onerous contractual terms. 

Consumers usually have no idea they are signing up for contracts 

attempting to limit speech, which are usually only provided in 

small print at the moment of check-in or purchase. A patchwork of 

state laws, court decisions, and federal agency actions, including 

the FTC’s, have attempted to protect consumers subject to non-disparagement clauses. However, we must address the issue on a national level to ensure the protection of all consumers online. 

The CRFA, which would prohibit the use of these onerous 

clauses, will protect consumers nationwide from meritless attempts 

to silence free speech. The Internet Association strongly supports 

this legislation’s effort to protect online reviewers of goods and 

services from clauses that inhibit honest reviews, and commends 

the committee for examining this issue during today’s hearing. 

I welcome your questions on these important topics. Thank you. 

[The prepared statement of Abigail Slater follows:] 

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Mr. BURGESS. The Chair thanks the gentlelady. 

Mr. Vladeck, you are recognized for 5 minutes for your opening 

statement, please. 

STATEMENT OF DAVID VLADECK 

Mr. VLADECK. Thank you. Thank you very much, Dr. Burgess, 

Ranking Member Schakowsky. 

I am David Vladeck. I teach at Georgetown Law School, and I 

served as Director of the Federal Trade Commission’s Bureau of 

Consumer Protection from 2009 until 2012. 

I thank you for inviting me to be here this morning. You have 

my written statement which addresses many of the proposals pending before this committee. I want to focus my remarks on three 

particular bills. 

And I want to start off by urging the committee to first do no 

harm. There are a number of these bills that I think are, no doubt, 

well-intentioned, but would hobble the agency’s ability to effectively 

protect consumers. 

I want to start with the TIME Act which would overturn by statute a carefully-considered, balanced, bipartisan view of the Commission that consent decrees ought to last for 20 years, absent 

some change in circumstance that warrants their modification. 

Now one thing to keep in mind is, if we sue in District Court, 

those injunctions last in perpetuity until they are modified or otherwise rescinded. And so, 20 years I understand sounds like a long 

time, but it is the only remedy the Commission has in virtually all 

of the cases. So, the proposed bill would turn a 20-year consent decree into an eight-year one, renewable only if the Commission can 

meet the standards set out in the statute. It turns meaningful restraint into what lawyers would call somewhat of a glorified slap 

on the wrist. And it is particularly inapt here because the data 

breach cases that the agency litigates and settles are really the 

only economic incentive for companies to really have robust data 

security. 

So, let’s look at the facts. In 2015, there were nearly half a million complaints filed with the FTC about identity theft. Identity 

theft is the debris of an internet economy that does not take data 

security seriously enough. 

The Department of Justice estimates that more than 17 million 

people, 7 percent of American adults, were victims of at least one 

incident of identity theft in 2014, and this is big business. The last 

statistics the Justice Department compiled come from 2012, but 

there identity theft cost the U.S. economy $24 billion, $10 billion 

more than all of the losses attributable to property loss through 

crimes. 

So, this is the one real tool the agency has. I don’t believe any 

of the companies under consent order have ever been recidivists. 

And, you know, the argument is this is going to stifle innovation. 

Well, look at the companies under order. Not one has experienced 

any sort of speed bump in innovation. Facebook, Twitter, Google, 

small companies like Chitika, FrostWire, they are thriving. 

And the reason is our consent decrees are tailored not to stifle 

innovation. If you look at the Google order, it requires the company 

don’t lie; if you are going to change your data-sharing practices, get 

89 

the consent of the consumer first, and give the agency audits every 

other year. 

In data security cases the fundamental consent decree is do what 

is reasonable; do what a reasonable company in your shoes would 

do, and help keep us informed. Those are the nuts and bolts of 

these FTC orders. 

There is a lot of rhetoric here about stifling innovation. I would 

like to see a case in which some company made a credible claim 

that was true. 

Next, I would like to talk about the changes to the unfairness 

statement. Contrary to the remarks earlier, the unfairness statement would substantially amend existing law. There are no two 

ways about it. It would cherry-pick certain provisions to the unfairness statement and make them the law, and it would add others. 

Congress has deliberated on this issue for 100 years, and Congress has decided not to do what has been proposed, which is to 

rigidify and take off the table options for the agency simply because 

the marketplace changes. We could not have conceived of unfair 

acts like what took place in DesignerWare where people devised devices that you take into your home and surreptitiously photograph 

you, your family, and your loved ones. This is something that we 

didn’t anticipate in 1980, but it is true today. And this recodification of the unfairness standard jeopardizes those kinds of cases. 

The last point I want to make is the SHIELD Act. It may be that 

the intent of the bill is simply to allow evidence of compliance introduced as compliance with guidance documents, but that is not 

the way the bill is written. Compliance with a guidance document 

would be viewed as compliance with the law, and it would serve 

as an absolute defense liability. This may simply be a drafting 

problem, but the way it is written now, it is a get-out-of-jail-free 

card for companies that have violated the law, simply because they 

can find somewhere in the agency’s archives a statement from a 

guidance document that might support its position in litigation. 

That doesn’t protect anyone that we want to protect. It certainly 

doesn’t protect consumers. 

I see my time has expired. Thank you very much. 

[The prepared statement of David Vladeck follows:] 

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Mr. BURGESS. The Chair thanks the gentleman. 

Mr. Manne, you are recognized for 5 minutes for an opening 

statement, please. 

STATEMENT OF GEOFFREY MANNE 

Mr. MANNE. Thank you. Thank you, Chairman Burgess and 

Ranking Member Schakowsky, and members of the subcommittee. 

Thank you for the opportunity to appear today. 

I am the executive director of the International Center for Law 

and Economics, a nonprofit, nonpartisan research center; a formerly law professor. I used to work at Microsoft. And I had what 

I like to call the most illustrious FTC career ever because, at approximately two weeks, it was probably the shortest. 

I am not typically one to advocate for active engagement by Congress in anything, no offense, but the FTC is different. The FTC 

is unique. Despite some congressional reforms, the FTC remains 

the closest thing we have to a second national legislature. People 

don’t see it that way, but its jurisdiction really does cover nearly 

every company in America. Section 5, the heart of the FTC, the 

substantive part runs about 20 words. That leaves an enormous 

amount of discretion for the Commission to use in a way that is 

effectively making policy decisions that are essentially legislative. 

The courts were supposed to keep the agency on course, but they 

haven’t. As former Chairman of the FTC Muris has written, the 

agency has traditionally been beyond judicial control. 

So, it is up to Congress to monitor the FTC’s progress, to tweak 

them when the FTC goes off-course, which is inevitable. That is not 

a condemnation of the FTC’s dedicated staff. It is just that this 

one-way rachet of ever-expanding discretion is simply the nature of 

the beast. 

Yet, too many people lionize the status quo. They see any effort 

to change the agency from the outside as an affront. It is as if Congress was struck by a bolt of lightning in 1914 and the perfect platonic agency sprang forth and there is nothing we can do to improve it. 

But in the real world an agency with such massive scope and discretion needs oversight and feedback on how its legal doctrines 

evolve. So, why don’t the courts play that role? Well, it turns out 

companies essentially always settle with the FTC in its consumer 

protection work because of its exceptionally-broad investigatory 

powers, its relatively-weak standard for voting out complaints, and 

the fact that those decisions effectively aren’t reviewable in federal 

court. 

And then, there is the fact that the FTC sits in judgment of its 

own prosecutions. So, even a company that doesn’t settle and actually wins before the administrative law judge, even in those cases, 

when the FTC staff comes back to the Commission on appeal, it 

wins 100 percent of the time. Well, able, though, the FTC staffers 

are, this cannot be from sheer skill alone. 

So, whether by design or neglect, the FTC has become a largely 

unconstrained agency, again in Tim Muris’ words. But please understand, I say this out of love. To paraphrase Churchill, the FTC 

is the worst form of regulatory agency except for all the others. 

111 

Eventually, Congress did, of course, have to course-correct the 

agency, to fix the disconnect, to apply its own pressure to try to 

refocus this evolution of Section 5 doctrine. A heavily Democratic 

Congress pressured the Commission to adopt the unfairness policy 

statement. The FTC promised to restrain itself by balancing the 

perceived benefits of its actions, of its unfairness actions against 

the costs, not acting when an injury was insignificant or consumers 

could have reasonably avoided the injury on their own. This was 

inherently an economic sort of calculus. 

But, while the Commission certainly pays lip service to this test, 

you would be hard-pressed to identify or even know whether it is 

being implemented in practice. Meanwhile, the agency has essentially nullified the materiality requirement that it volunteered in 

its 1983 deception policy statement. 

Worst of all, Congress failed to anticipate that the FTC—not the 

omniscient Congress of 1914, this was later—Congress failed to anticipate that the FTC would resume exercising its vast discretion 

through what it now proudly calls its common law of consent decrees in data security cases. Combined with a flurry of recommended best practices and reports that function as quasirulemakings, these settlements have enabled the FTC to circumvent both congressional rulemaking reforms and meaningful 

oversight by the courts. 

The FTC’s data security settlements aren’t an evolving common 

law. They are a static restatement of reasonable practices repeated 

about 55 times over the past 14 years. At this point, it is reasonable to assume that they apply to all circumstances, kind of like 

a rule would, which is more or less the opposite of the common law. 

Congressman Pompeo’s SHIELD Act would help curtail this 

practice, especially if amended to include consent orders and reports within its scope. It would also help focus the Commission on 

the actual elements of an unfairness policy statement. Those 

should, indeed, be codified through Congressman Mullin’s SURE 

Act. Mr. Vladeck and I will have some words about that, I suspect. 

Significantly, only one data security case has actually gone before 

the court, an Article III Court, one. The FTC trumped its 

Wyndham as an out-and-out win, but it wasn’t. In fact, the court 

agreed with Wyndham that prior consent orders were of little use 

in trying to understand the requirements of Section 5. 

More recently, the FTC suffered another rebuke. While it won its 

product design suit against Amazon, the Court rejected the Commission’s fencing-in request to permanently hover over the company and micromanage practices that Amazon had already ended. 

As the FTC grapples with the cutting-edge legal issues of today, 

it is drifting away from the balance it promised Congress. Congress 

can’t fix these problems simply by telling the FTC to take its bedrock policy principles more seriously. Congress must regularly reassess the process that has allowed the FTC to avoid meaningful judicial scrutiny. The FTC requires significant course correction, and 

significant course correction over time, if its model is to move closer 

to a true common law. 

Thank you. 

[The prepared statement of Geoffrey Manne follows:] 

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Mr. BURGESS. The Chair thanks the gentleman. 

Mr. Castro, you are recognized for 5 minutes, please. 

STATEMENT OF DANIEL CASTRO 

Mr. CASTRO. Thank you. Chairman Burgess, Ranking Member 

Schakowsky, and members of the subcommittee, I appreciate the 

chance to discuss the opportunity Congress has to modernize the 

FTC, so that it better protects consumers from harm while minimizing regulatory cost and better enabling robust innovation in the 

U.S. economy. 

The FTC’s actions send important signals to the private sector 

about how it should allocate its resources to comply with federal 

regulations. Ideally, these signals should encourage business to 

take actions that protect consumers, discourage actions that harm 

consumers, and not interfere with the private sector risk-taking 

that underpins innovation. Unfortunately, that is not always the 

case. Let me provide two examples. 

In 2014, the FTC entered a consent decree with Apple over complaint that the company had charged consumers millions of dollars 

for charges incurred by children without their parents’ consent. 

The key fact in this case was that Apple did not inform customers 

that, once they enter their password, they opened a 15-minute window during which further charges could be made without additional verification from the account-holder. As part of the consent 

decree, Apple agreed to stop this practice. 

However, for many users, not having to enter their password repeatedly was a convenient feature, not a bug. After all, only a tiny 

fraction of Apple’s customers are children making purchases without their parents’ permission. Thus, on balance, it is unlikely that 

there is even a net harm. It is even possible that the FTC’s actions 

made consumers worse off, since users who are forced to enter their 

password too frequently may choose to use simpler and, thus, 

weaker passwords, and thereby increase their risk of a data breach. 

These types of unintended consequences happen when government is put in charge of product design. My fellow panelists ask 

how consent decrees impact innovation. This is exactly how it does 

it. 

As a second example, consider the FTC’s case against Nomi. 

Nomi ran into trouble because it misstated in its privacy policy 

that customers had the option to opt out of its in-store retail analytic service at its partners’ stores. To be clear, the FTC did not object to the tracking itself and the company was under no obligation 

to provide this additional opt-out feature. Moreover, the FTC could 

not find any evidence that a single consumer actually suffered any 

harm. Therefore, the FTC ultimately chose to use its regulatory authority to take action against the company for what was possibly 

a lawyer’s mistake in drafting Nomi’s privacy policy, despite no evidence that any consumers were actually harmed. 

By formally taking action when there is no injury to consumers, 

the FTC has signaled to companies that they should spend more 

time on corporate lawyers and less time delivering value to consumers, including through developing privacy- and security-enhancing technologies. After all, companies like Nomi would be better off providing no privacy guarantees to their consumers, so they 

135 

will not fall victim to ‘‘gotcha’’-style regulatory enforcement actions. 

Rather than bringing a case and settlement against Nomi, the FTC 

should have shown some regulatory restraint by simply notifying 

the company of the problem and verifying that it had been corrected. 

There are a number of changes that Congress should make to the 

FTC, so as to avoid these types of perverse outcomes and unintended consequences. First, the FTC should not take enforcement 

actions against companies for acts or practices unless the FTC can 

show substantial injury that is more than trivial or merely speculative. Instead, the FTC should focus its resources on cases where 

there is a direct and tangible consumer harm. Doing so will 

incentivize companies to prioritize internal actions that can actually prevent consumer injury. 

Second, the FTC should publicly disclose when it decides to not 

pursue an investigation. This information would help the private 

sector better understand how the FTC is enforcing its policies and 

allow businesses to better comply with the law. 

Third, the FTC should stop its practice of using 20-year terms for 

its consent decrees. By almost any standard, this is an extraordinary amount of time. Most states do not even require sex offenders to register for this long. And there does not appear to be any 

legitimate reason for this length. This is a waste of time and 

money for all parties and an avenue for backdoor rulemaking. 

Finally, when making policy recommendations, the FTC tends to 

focus disproportionately on speculative harms while ignoring the 

tangible benefits for both consumers and businesses and the cost 

of overly-restrictive regulations. The FTC should only make evidence-based policy recommendations that include a cost/benefit 

analysis. 

If Congress does not address the FTC’s approach to consumer 

protection, compliance may become either a check-the-box activity 

or, worse, interfere with business practices that would make consumers better off and increase innovation in the U.S. economy. 

Thank you for the opportunity to share with you my thoughts on 

how to transform the FTC into a more modern, innovation-friendly 

regulatory agency. I look forward to your questions. 

[The prepared statement of Daniel Castro follows:] 

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Mr. BURGESS. The Chair thanks the gentleman, thanks all of our 

panelists for your forbearance today and for your testimony. 

I would like to recognize Mr. Olson of Texas for 5 minutes for 

questions, please. 

Mr. OLSON. I thank the Chair. 

And welcome to panel two. 

My questions will focus on one bill, the FTC package, my bill, the 

FREE Act, H.R. 5116. It appears from you all’s opening comments 

I am batting 400. Two of five have mentioned my bill in your opening statements, Mr. Wright and Mr. Castro. So, my questions will 

be largely for them, but to the other three, if the spirit moves you, 

please feel free to jump in. 

Mr. Wright and Mr. Castro, current rules and three Commissioners forced the FTC Commissioners to forego most direct communications and communicate through staff playing telephone. 

What are the consequences of playing telephone on the efficiency 

of the FTC? Mr. Wright? 

Mr. WRIGHT. Thank you, and I appreciate the question, and will 

say, as I did in my testimony, that I am fully supportive of the bill. 

As a former Commissioner, I can certainly testify to the fact that 

the limitations placed on communication between Commissioners 

by the Sunshine Act, for all of its other virtues, are a real drag, 

I think, on the type of collegial decisionmaking that Congress envisioned when they put the FTC together. The idea of the five-person 

Commission and bipartisan Commission is to encourage precisely 

those types of communications, especially in case—I was here for 

the exchange with Chairwoman Ramirez, but I would like to add 

to her concerns. It is not just when it is three Commissioners; 

when it is four Commissioners, when it is five Commissioners, and 

one is recused or there is a vacant seat, even when the Commission 

has its full complement, I think there are considerable virtues to 

the bill that arise on a regular basis. 

Mr. OLSON. Thank you. 

Mr. Castro, if two FTC Commissioners meet at Starbucks for coffee, they could wave at each other, say, ‘‘How was your weekend? 

How is the family?’’, complain about the Nats and the Redskins, 

the Capitals, whatever, but they can’t talk about the job at all, 

risking some violation of this Open Records Act. How does this 

hurt the FTC in terms of making sure they are efficient at protecting consumers, their No. 1 job? How does this impact their ability to do their job? 

Mr. CASTRO. I think this is a very important proposal because, 

when we look at the types of Commissioners that we want, we 

want those that are very engaged with each other, that are able 

to collaborate and work through problems, that are constantly in 

communication. The digital age that we live in, that is how you do 

business. 

This bill is so important because it really gets to that fundamental problem that is arising, obviously, right now. It arises in 

situations, as my colleague just mentioned, when Commissioners 

recuse themselves. And it will certainly arise in the future when 

there are vacancies. 

And so, this is the kind of issue where we want to fix it now because we expect the FTC to be fast and responsive and able to deal 

148 

with problems as they arise, and you can’t do that if you can’t talk 

among leadership. And so, this will, I think, move us in that right 

direction while still preserving the goals of the Sunshine Act, so we 

are not losing those opportunities. 

Mr. OLSON. Thank you. 

Back to you, Mr. Wright. You mentioned some amendments to 

my bill, the FREE Act, that I am curious about. One would redefine ‘‘bipartisan majority’’ to ‘‘any bipartisan combination of Commissioners.’’ Enlighten me. What does that do? How does that improve the bill? 

Mr. WRIGHT. I think what it does, as I read the current bill, bipartisan majority is defined as a group of three or more. In my 

mind, the modification to any bipartisan combination of Commissioners would free situations to allow one-on-one communications. 

Mr. OLSON. So, No. 3 is the issue there? Just wipe out the No. 

3? Just put ‘‘majority of Commissioners’’? 

Mr. WRIGHT. Yes. So that, when I see a colleague at Starbucks, 

I can grab them and talk to them or, if I walk into the parking garage, I don’t have to leave. 

Mr. OLSON. Yes, sir. 

And finally, questions for you, Mrs. Slater. I will get it here. How 

do you think the FREE Act will add greater disclosure and collaboration among Commissioners? How would it streamline the decisionmaking process going forward? 

Ms. SLATER. Thank you for the question. Although I didn’t address in oral remarks, I think the FREE Act is a very important 

piece of legislation before the Committee. 

Some context on me. I worked for the FTC for 10 years prior to 

my current job. The last three years I spent as an attorney advisor 

to a Commissioner. So, I am quite familiar with the process that 

Commissioner Wright also was familiar with. 

I would say that, when you take a step back and look at the statute of design of the FTC, the Commissioners were intended by Congress as the board of directors. Given the vagaries of the Sunshine 

Act, they are often inhibited from acting like a board of directors. 

And it is sometimes the case that the power devolves from the 

Commissioners to Bureau Directors, to attorney advisors. I was 

one. I need to be a little bit careful because we are sitting next to 

a former Bureau Director here. 

[Laughter.] 

Mr. OLSON. We’re all friends here. 

Ms. SLATER. But I don’t think that was the actual intent of Congress. And so, I see in your Act measures to course-correct back to 

the original design for the Commission, which is a good thing. 

Mr. OLSON. The panacea is the FREE Act, H.R. 5116. 

I yield back. 

Mr. BURGESS. The gentleman yields back. The Chair thanks the 

gentleman. 

The Chair recognizes the gentlelady from Illinois, Ms. Schakowsky, the ranking member of the subcommittee, for 5 minutes 

for questions, please. 

Ms. SCHAKOWSKY. I thank all of you for your testimony. 

Mr. Vladeck, I just wanted to start by asking if you had any reaction—and I know that you have been sitting here—to some of the 

149 

questions that were asked by my colleagues during the first panel 

or other things that were on your mind to say? 

Mr. VLADECK. Well, again, there are parts of these proposals that 

I think make great sense. Certainly, there needs to be reform of 

the common carrier exception. There needs to be reform in terms 

of the exception for bonafide nonprofits because that exemption 

really seriously impairs a lot of our antifraud work, nonprofits only 

in name, but scams in practice. The anti-disparagement provision 

I think is really an important step forward. 

But there are a number of concerns I have. For example, requiring BE to vet any public pronouncement the agency may make to 

Congress, to state legislatures, to state regulators, the clear impact 

of that provision, put aside its intent, will be to muzzle the FTC. 

And why would want to restrain the FTC from simply giving its 

views, when, of course, the state or Congress can disregard them, 

just doesn’t make sense. To perform a real cost/benefit analysis of 

the kind contemplated in the statute would drain very scarce resources. 

And part of that is we are an under-resourced agency. My job 

was to do triage. Even though we were the largest component of 

the FTC, my job was to figure out what matters we would proceed 

with and which ones we would let go. And so, I am very sensitive 

to the resource constraints the agency has, and I would urge you 

to avoid placing additional constraints, unless there was enormous 

bang for the buck, unless we were getting something seriously out 

of it. 

Ms. SCHAKOWSKY. Well, do you think that this tips the balance 

to less consumer protection? Who is the winner? Who are the winners and the losers in these process changes, by and large, that 

have been recommended? 

Mr. VLADECK. Oh, the American consumer will be the loser. Each 

of these provisions drains agency resources or gives people who violate the law an out. Termination of investigations because we miss 

a six-month deadline, really? No matter how egregious the conduct 

was, no matter what justification was there for missing a deadline? 

It seems utterly disproportionate to an agency that has got many 

matters in place simply for missing a deadline. I mean, there is no 

one here who wins other than lawbreaker, and there is no one here 

who loses other than the American people. 

Modifying the unfairness doctrine will constrain the agency. 

There is just no question about it. It amends the unfairness standard. It adds components that will make it more difficult to bring 

actions to prevent harm, which, of course, has been the agency’s 

mission since its founding. And it will make it difficult to do cases 

where, like DesignerWare, you have people engaged in immoral, 

unscrupulous conduct, but the conduct does not cause economic 

harm. 

So, yes, I think there are many, many difficulties with some of 

these proposals. 

Ms. SCHAKOWSKY. So, not causing economic harm? I think you 

definitely did talk about this, but I am also particularly concerned 

about the fact that one of the bills does require now the Bureau 

of Economics, as you mentioned, to conduct an economic analysis 

for every recommendation provided by the Commission. It doesn’t 

150 

matter who the recommendation is for or whether the recommendation affects American business or American consumers. 

All recommendations require a detailed cost/benefit analysis. 

You mentioned a number of times in your written testimony that 

some of these bills are a solution in search of a problem. And so, 

in your experience at the FTC, was the Bureau of Economics ignored? 

Mr. VLADECK. Oh, the Bureau of Economics is involved in every 

matter that goes before the Commission. Every case I worked on, 

there was a BE economist assigned to it. Every policy, the paper 

that we generated, a BE economist was assigned to work on that. 

Every workshop that we held, much of the important reports that 

the agency generates were largely generated by BE. We did a huge 

report on the debt buyer industry, a very important report, which 

was done by BE. And so, it is a constant presence and powerful 

force within the agency. 

Ms. SCHAKOWSKY. Thank you. I appreciate that. 

I yield back. 

Mr. BURGESS. The Chair thanks the gentlelady. The gentlelady 

yields back. 

And the Chair recognizes Mr. Guthrie of Kentucky, 5 minutes for 

your questions, please. 

Mr. GUTHRIE. Thank you, Mr. Chairman. 

I thank the panel for being here today, the second panel. 

A first question for Mr. Wright: the FTC used to issue closing letters indicating why it closed investigations without taking formal 

agency action. Could you explain how an analysis of why something 

is not legal is different from complaints which lay out what activities are legal? 

Mr. WRIGHT. Sure. So, I am a law professor. I teach the common 

law to my students all the time. And one of the things that is sort 

of the first lesson that they learn in contract law, or what have 

you, is to understand where the line is, you need to know something that falls on each side of it. 

And so, I have been occasionally frustrated with the perception 

that, when the FTC puts out a pile of consent decrees that come 

through a process, it looks a little bit different, like the process in 

front of an Article III judge, that we can refer to those as having 

the virtues of a common-law-type process. 

I think for parties to understand quite simply where the line is, 

it is critical that the agency be transparent, both with respect to 

its views on what violates the law and what does not. And to the 

FTC’s credit, on many instances the FTC is sort of on the right side 

of promoting transparency with respect to standards. Just a year 

ago, the agency put forth guidance on its unfair methods of competition statute, policy statement, which I think some had been 

asking for for decades and decades. 

Merger guidelines, the unfairness statement, the deception statement, the agency has been on the right side of this for some time. 

I do think, as the economy shifts into digital markets, privacy regulation, the internet of things, more complicated business practices 

that involve tradeoffs, that involve costs and benefits—they are not 

simple fraud cases that are all harms, no benefits—as we increasingly shift into those areas, I think it is more important now than 

151 

ever that the agency continue that trend and maybe even extend 

it more strongly in those areas where I think guidance is especially 

needed. 

Mr. GUTHRIE. OK. Thanks. 

I also have H.R. 5109. Well, H.R. 5109 specifically applies to unfair or deceptive acts or practices. But I have introduced a related 

bill with a colleague on the Judiciary Committee, with Chairman 

Burgess, that would also require CLEAR Act disclosures for investigations of unfair methods of competition. In your opinion, would 

adding this layer of disclosure also be valuable for companies? 

Mr. WRIGHT. Yes, I think adding information with respect to— 

it is true I did hear the answer on the earlier panel. The FTC does 

disclose some of this information already. 

In my view, some form of aggregated disclosure, so as to avoid 

some of the confidentiality concerns that arise, some sort of aggregated information that would tell companies these are the types of 

characteristics of cases where we close, these are the types of characteristics. You can get the other side or you can read the complaints and say, ‘‘I understand the types of characteristics that lead 

the agency to bring a case.’’ 

In my view, while we do this sometimes, I think we are a little 

short of the mark at the FTC in terms of providing some aggregated information to give a sense of when we do not bring cases 

or when we close. To the extent that the bill furthers that, I think 

that it is a step in the right direction. 

Mr. GUTHRIE. Thank you. 

And based on your first answer leads me to my next question, 

Mr. Castro. We talked about common law, and you teach common 

law. So, Mr. Castro, do you believe there is a true common law created by the FTC’s published consent orders? Please explain why 

you believe that or not believe it. 

Mr. CASTRO. So, I believe there shouldn’t be. I believe what we 

are seeing is that there are a number of avenues aside from official 

rulemaking where the FTC is making policy through its guidelines, 

through its consent orders. 

As I said in my statement, these are the signals that industry 

is interpreting about what they should do, and they matter as 

much as any formal rules they create. The problem is, when you 

don’t go through these formal rulemaking processes, I think we 

subvert the democratic processes that we intended to create. 

And so, if we want to have effective rules, if we want to have full 

participation and an open, transparent process to do it, we need to 

have a process that we all agree is the right process. And so, that 

is why I think it is bad for innovation, it is bad for consumers if 

we are using these other avenues to create these rules. 

Mr. GUTHRIE. In just a couple of seconds, Mr. Manne, if I can get 

it in real quick, what value do you see in adding transparency to 

the FTC’s closed process of any investigations where companies 

have not engaged in unfair or deceptive acts? And, of course, how 

would the CLEAR Act improve the current state of affairs at the 

FTC? Mr. Manne, yes? 

Mr. MANNE. You said that last part so fast, I couldn’t hear what 

you said, but I got the first part. 

152 

Mr. GUTHRIE. OK. How would the CLEAR Act improve the current state of affairs at the FTC? 

Mr. MANNE. Well, I think an important source of guidance that 

is often neglected—Josh may have just mentioned this—which is 

the reasons that a case is closed, right? That, in and of itself, is 

actually extremely informative guidance. As Josh said, you can certainly convey that information in a way that doesn’t disclose any 

confidential information and would be particularly useful. It used 

to be done that way at the Commission. Even when you didn’t have 

an incredibly fulsome sort of closing letter, there are examples of 

closing letters that at least would enumerate the bases on which 

the investigation was closed, sort of the issues that they looked at. 

Well, that in itself is huge. 

Now I could suggest a whole welter of more things that should 

have been asked in that letter and that should be looked at. This 

is the kind of situation—I am not saying we would have to do it 

here—where economists, as with pretty much everything at the 

agency, are incredibly useful. And despite Mr. Vladeck’s claims to 

the contrary—I believe he said something to the effect that it 

would be enormous cost and no gain—I tend to believe, especially 

in an agency of the sort like the FTC where in the unfairness context it is asked to take on an essentially economic calculation, that 

having some economists actually help with that calculation would 

be particularly useful. I think it would be enormously useful, but 

I certainly think I could identify positive value to it. 

The fact that there may be a cost to it is not a reason not to do 

it. There are tradeoffs to everything, right? I think, well, that is 

what economists would say, I guess. 

Mr. GUTHRIE. Thank you. I am out of time. 

Mr. BURGESS. The gentleman’s time has expired. 

Mr. GUTHRIE. My time has expired. I appreciate it. 

Mr. BURGESS. The Chair recognizes Mr. Rush, 5 minutes for your 

questions, please. 

Mr. RUSH. Thank you, Mr. Chairman. 

Mr. Vladeck, I introduced a bill that will give the FTC the authority to protect consumers from unfair and deceptive practices by 

nonprofit organizations. And we heard the Chairwoman earlier testify that the Commission supports repealing the nonprofit exemption. You also testified that you support repealing the nonprofit exemption. 

How do you see, me repealing this exemption, how do you see it 

being of benefit to consumers? 

Mr. VLADECK. This is an enormously important area because 

often fraudsters, people who are scamming, fake health insurance, 

they hide under the shield of being a nonprofit. So, one of the first 

major sweeps I worked on when I got to the FTC involved collaboration with state insurance commissioners, state attorneys general, 

to go after dozens and dozens and dozens of fake insurers and 

health providers. And the principal objection we found as a jurisdiction threshold was we don’t have any authority because we are 

organized as a nonprofit. That is a showstopper. If we don’t have 

jurisdiction, we can’t proceed. We can’t proceed with our investigations. We certainly can’t proceed with litigation. And so, the first 

and important point about this, this will take away a devise 

153 

scammers and others intent on stealing people’s money use to hide 

from the agency. 

Second, we have seen a lot of very serious data breaches by entities that are essentially unregulated, colleges, university, nonprofit 

healthcare providers. The nonprofit healthcare corporations may 

have some obligations under HIPAA, but they are not regulated 

elsewhere. 

Time and again, we see massive data breaches involving very 

sensitive information, health records, education records, and there 

is no remedy. We did a peer-to-peer sweep to find out what kinds 

of information were available from unsecure networks. And many 

of the most egregious problems were with hospitals, nonprofit hospitals, and with state universities. Yes, we let them know they had 

vulnerabilities on their system, but we had no leverage to force 

them to upgrade their systems or to do a better job protecting highly-sensitive data. 

And so, this is a very important reform. I urge your colleagues 

to give this the most careful consideration. It really is essential to 

enable the FTC to better protect consumers in this space. 

Mr. RUSH. On the flip side, I have heard of concerns from the 

nonprofit community that FTC jurisdiction could lead to increased 

regulation and increases in the cost of doing business. Do you agree 

with this statement? How accurate do you believe this statement 

is? And also, do you believe that the increase in consumer protection would justify these costs if any exist? 

Mr. VLADECK. Thank you for the question. I am calling on my 

economist friends on the panel to do the cost/benefit analysis, but 

I have no—this was a joke. 

[Laughter.] 

But there is no question that better regulation will ultimately 

serve the economy. A level playing field, consumer protection, the 

cost of data breach and identity theft are an enormous strain on 

the economy, partly because institutions can externalize their cost 

on the consumers, who are stuck with the bill. 

And so, I think ex-ante regulation makes a whole lot of sense, 

more than ex-post consumer cost, in trying to restore their credit. 

If it is a medical facility, medical ID theft has skyrocketed, and 

there is no easy way to restore your identity. You have to go provider by provider to prove who you are and to get the benefits that 

you are paying for. 

And so, anything that we can do to place at least some market 

discipline on these actors I think is really critical, and I think this 

is a very important measure that I urge the committee to seriously 

consider. 

Mr. RUSH. Thank you, Mr. Chairman. I yield back. 

Mr. BURGESS. The Chair thanks the gentleman. The gentleman 

yields back. 

The Chair recognizes Mr. McNerney for 5 minutes for your questions, please. 

Mr. MCNERNEY. Well, I thank the chairman. 

And I apologize that I missed your testimony. 

Professor Vladeck, in your testimony you mentioned that the 

FTC has long asked Congress to lift the common carrier exemption. 

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What are the justifications for this prior to the FCC’s Title II reclassification of broadband internet services common carrier? 

Mr. VLADECK. So, the FTC and the FCC share jurisdiction in 

most of the consumer protection issues involved in providing these 

kinds of telecommunication services. So, a lot of what we did were 

cases involving false or deceptive advertising, improper marketing 

claims, billing abuses such as cramming, forcing unauthorized 

charges onto consumer bills, privacy, data security. These were 

spaces that we occupied jointly. We collaborated very closely on enforcement. 

But with the common carrier exception, and particularly the reclassification under Title II of internet services, the agency is 

threatened with losing some of that authority. I think it is very important for consumers to have a consumer protection agency in that 

space. 

The FCC is essentially a regulatory agency. It has a very short 

statute of limitations. It can collect civil penalties. It does not do 

consumer redress. The FTC puts money back in the hands of consumers. The FCC does not. 

Consumers deserve better in this space, and repealing this archaic common carrier exception, which is really an artifact of a different time when monopolies were regulated by the FCC, is long 

overdue. This is a measure the Commission on a bipartisan basis 

has urged Congress to take for decades, and the time really is now. 

Mr. MCNERNEY. Well, if the common carrier exemption is not 

lifted, what are some of the abuses that we would be seeing? 

Mr. VLADECK. So, for example, AT&T and TracFone were throttling consumers. They promised unlimited data, but they didn’t tell 

them that, after a certain setpoint, they would get data; they would 

just get it one grain of sand at a time. 

It was incredibly frustrating for consumers. They complained to 

both agencies. The FTC sued both AT&T and TracFone over this 

throttling. We got substantial redress for consumers which will go 

back into their wallets. 

This is the sort of thing that the FTC has historically done. We 

do it well. We certainly did it in cooperation with the FCC. These 

were investigations that were jointly conducted, but we managed to 

both stop the practice and to return money to consumers’ wallets 

for a service they did not get. 

Mr. MCNERNEY. So, throttling, for example, do you think that 

was intentional? Do you think they intentionally misled? 

Mr. VLADECK. Well, the throttling was intentional. 

Mr. MCNERNEY. Right. Well, couldn’t it have been the broadband 

limitations or some other technical limitations? 

Mr. VLADECK. Well, for example, I think it is fair to say the Commission took a very hard look at advertised rates of delivery of 

broadband service. We did this in collaboration with the FCC. We 

did not bring enforcement actions, but this is the sort of issue that 

the Commission, prior to reclassification, took a very hard look at. 

Post-reclassification our authority to do that, I think, is in some 

doubt. 

Mr. MCNERNEY. Well, I think we agree that the FTC has the expertise in protecting consumer privacy. Would lifting the common 

carrier exemption lead to better privacy protections? 

155 

Mr. VLADECK. Well, again, I think that the FTC has had enormous success in developing a reasonable privacy program that protects consumers’ expectations without putting a speed bump on the 

road to innovation. And I think that we are well-equipped to do 

that. We have worked jointly with the FCC on all sorts of things 

ranging from mobile apps to investigations on these kinds of issues. 

I think there ought to be overlapping jurisdiction here, just the way 

the FTC has overlapping jurisdiction with the FDA, the SEC, the 

Commodities Future Trading Commission, and virtually every 

other agency in the city. We play well, but we also do a very good 

job of protecting consumers because that is our only mission, unlike 

the FCC which has the mission of making sure the industry delivers the services it does. 

Mr. MCNERNEY. Thank you, Mr. Chairman. 

Mr. BURGESS. The Chair thanks the gentleman. The gentleman 

yields back. 

I recognize myself for 5 minutes for questions. These are going 

to be questions regarding the 20-year lengths on the consent decrees, the consent orders. 

Mr. Manne, let me just start with you. Even though your tenure 

at the FTC was very brief, are you aware of any factors that went 

into the Federal Trade Commission’s decision to set the duration 

of consent orders at 20 years? Should it be a one-size-fits-all program? 

Mr. MANNE. Well, yes, you hit on what is the real problem. To 

my knowledge—David and Josh can correct me if this isn’t right— 

to my knowledge, there isn’t a set 20 years for everything, but that 

is what it effectively is. It is not a 20-year program, as far as I 

know. It is just that, miraculously somehow, all of these companies 

that are wildly divergent, engaged in wildly different activities, different sizes—sometimes you have got deception cases and, then, 

you have unfairness cases. You have situations that it is sort of 

begs belief to think that they would entail precisely the same remedy. 

If you cared about getting your remedy right, so if you had some 

economists talking to you—apologies—they might say something 

like you want your remedy to lead to an appropriate optimal level 

of deterrence. You want the right level of punishment. Because you 

want to deter the bad conduct, you don’t want to overdeter the good 

conduct, right? You know, everyone sort of understands this stuff. 

It cannot be the 20 years is appropriate in every single one of 

those situations. 

Mr. BURGESS. So, you think there are variables that should be 

considered in the negotiation process? 

Mr. MANNE. Well, yes, of course. It is one of the elements that 

should be considered, just like every other element should be considered. Now it happens that, actually, these consent decrees, at 

least in the data security cases, they pretty much all look identical. 

Never mind all of those differences that I mentioned, they all look 

at least extraordinarily similar. And that strikes me as problematic, too. 

Now it is possible. It is possible that, when the FTC adopted the 

Safeguards Rule under Gramm-Leach-Bliley, to relate to data security issues at financial institutions, it is possible that they hit upon 

156 

the optimal menu of data security practices for every company that 

has ever come in front of the FTC. It is possible. I think it is really 

unlikely, though. 

And I could take three days talking about what I think is going 

on here; I will try not to. 

Mr. BURGESS. Please. 

Mr. MANNE. But I don’t think it is what we want to be going on. 

Mr. BURGESS. And I agree. That is one of the reasons we are 

having this panel and this discussion. 

Mr. Wright, let me just ask you, if a company is under a consent 

order, they have probably got a lot of stuff to do to be in compliance 

with that order. Is that a fair statement? 

Mr. WRIGHT. Yes, that is a fair statement. 

Mr. BURGESS. So, what is the practical effect of a 20-year compliance or 20-year consent agreement with having to produce documentary evidence that they are behaving by the guidelines that 

have been set out? Is there a cost to having to comply with the 20- 

year length of time on the consent decree? 

Mr. WRIGHT. Sure. You are talking to an economist. So, there is 

a cost to everything. Most of my students would tell you there is 

a big cost of being in my classroom. 

Mr. BURGESS. One of my fondest fantasies is to have a group of 

doctors on this panel and ask them how economists should be paid. 

[Laughter.] 

But that is another story. Carry on. 

Mr. WRIGHT. I will tell you when the microphone is not on. 

[Laughter.] 

So, there is certainly a cost to consent orders. There is a cost to 

compliance. There is a cost to injunctive relief that changes behavior that is in the consent order. Sometimes we want to incur those 

costs because we are getting, as Professor Vladeck said, a big bang 

for the buck in terms of consumer return. We are stopping fraud. 

Sometimes, whether it is competition or consumer protection, we 

are stopping behavior that we are really not sure about what its 

effects on consumers are. We are sort of drawing a big fence 

around the firm’s behavior and hoping for the best. This is the reason, precisely the reason, you want economists in the room who are 

trained, sort of by definition, to think about those tradeoffs. If you 

start from the premise that everything the agency does is good for 

consumers, this is a really easy hearing. Just do more of all the 

things. 

Mr. BURGESS. Well, let me ask you a question. You heard the 

Chairwoman testify. I mean, I asked her, are we asking a company 

to ask permission before it rolls out a new good or service? And her 

answer was the essentially negative. But do you agree with that 

answer that she gave? 

Mr. WRIGHT. I agree that most of the time our consents don’t 

necessarily ask the firms to get prior permission from the agency, 

but sometimes they do. The Apple consent, the line of consents that 

comes from those inapt purchase cases do exactly that. Those are 

product design cases that say, if you want to change your product 

in a particular way, either you can’t or you must get permission. 

That is precisely what those do. 

157 

And I think something for the committee to consider is those 

types of cases I think are going to be an important and increasing 

part of the agency’s portfolio over time. If you go back 20 years, 

most of what the agency did was fraud, and frauds are relatively 

easy cases. Fraud is bad. You don’t need a PhD economist to write 

you a 20-page memo on fraud, right? You need them to write it 

once and, then, copy it every time. 

But the types of activities where the agency is applying its enforcement authority are different. They are complicated. There are 

tradeoffs. There may well be harm in these inapt purchase cases 

with disclosures, but there may also be benefits to the 15-minute 

window. And that is precisely where you need some sort of calibration, where you need economic analysis to have a bigger seat at the 

table within the agency than it did 10 years ago, 20 years ago, or 

probably ever. 

And I will say one small point, if I may, which is I have been 

following the FTC since I was intern in the Bureau of Economics. 

I pay pretty close attention to what the Bureau of Economics does. 

In my view, since I have followed the agency, contrary to some of 

the remarks that I have heard, while they may perform an input 

into most of the cases, I can’t bring myself to say ‘‘all,’’ my own 

view is BE right now is less influential than it has been over the 

past three decades. 

Mr. BURGESS. Well, I just really want to thank all of our panelists for being here today. 

Seeing no other members wishing to ask questions, we will conclude the second panel. And we take the briefest of brief recesses 

to set up for the third panel. 

This panel is adjourned. 

[Recess.] 

Mr. BURGESS. Well, welcome back, and thank you all for your patience and taking time to be here today. 

We will move into the third panel for today’s hearing. We are 

going to follow the same format as the first and second panel. Each 

witness will be given 5 minutes for an opening statement, followed 

by questions from members. 

For our third panel we have the following witnesses: Mr. Richard 

Hendrickson, the President and CEO of Lifetime Products; Dr. 

Greg O’Shanick, President and Medical Director for the Center for 

Neurorehabilitation Services; Mr. Steven Shur, President of Travel 

Technology Association; Mr. Robert Arrington, President of the National Funeral Directors Association; Mr. John Breyault, Vice 

President of Public Policy, Telecommunications, and Fraud, the National Consumers League; Mr. Gil Genn, Maryland Sports and Entertainment Industry Coalition; Ms. Jamie Pena, Vice President, 

Revenue Strategy and Global Distribution, Omni Hotels & Resorts, 

and Mr. Michael Best, Senior Policy Advocate of Consumer Federation of America. 

We appreciate you all being here today. 

We will begin the panel with you, Mr. Hendrickson. You are recognized for 5 minutes to give a summary of your opening statement, please. 

158 

STATEMENTS OF RICHARD HENDRICKSON, PRESIDENT AND 

CEO, LIFETIME PRODUCTS; GREG O’SHANICK, PRESIDENT 

AND MEDICAL DIRECTOR, THE CENTER FOR 

NEUROREHABILITATION SERVICES; STEPHEN SHUR, PRESIDENT, TRAVEL TECHNOLOGY ASSOCIATION; ROBERT 

ARRINGTON, PRESIDENT, THE NATIONAL FUNERAL DIRECTORS ASSOCIATION; JOHN BREYAULT, VICE PRESIDENT OF 

PUBLIC POLICY, TELECOMMUNICATIONS, AND FRAUD, THE 

NATIONAL CONSUMERS LEAGUE; GIL GENN, MARYLAND 

SPORTS AND ENTERTAINMENT INDUSTRY COALITION; 

JAMIE PENA, VICE PRESIDENT, REVENUE STRATEGY AND 

GLOBAL DISTRIBUTION, OMNI HOTELS & RESORTS, AND MICHAEL BEST, SENIOR POLICY ADVOCATE OF CONSUMER 

FEDERATION OF AMERICA 

STATEMENT OF RICHARD HENDRICKSON 

Mr. HENDRICKSON. Thank you, Chairman Burgess and Ranking 

Member Schakowsky, committee members. 

As CEO of Lifetime Products, it is an honor to appear before you 

today and address the Reinforcing Made-in-America Act of 2016, 

H.R. 5092. 

Lifetime Products is a wonderful example of the American dream 

made in the USA. It was started 30 years ago by a father who 

wanted to build a better basketball hoop for his children. Today we 

employ over 1900 people in the U.S. and work hard every day to 

keep those jobs here in the United States of America. It isn’t easy, 

as you can imagine, when your key competitors are taking advantage of lower labor and material cost in other countries around the 

world. However, by investing large amounts of capital, verticallyintegrating our factory, we have been able to keep the majority of 

our manufacturing jobs here in the U.S. 

Data shows that 78 percent of Americans, if given the choice, 

prefer to purchase made-in-the-USA products. Consumers want to 

support American manufacturing and believe that American-made 

goods are generally of higher quality and supportive of American 

jobs. 

Since 1997, the Federal Trade Commission has enforced a stringent national labeling standard that requires products marked 

‘‘Made in the USA’’ to be all, or virtually all, manufactured in the 

U.S. While providing the necessary consumer protection, it also 

gives companies a slight, but necessary amount of leeway, permitting them to import negligible or de minimis components for their 

products. However, the manufacturing process must always take 

place in the U.S., and vital components for the product’s core function must also be domestically-produced. 

Today, currently, one of a state’s laws has upended really the 

FTC labeling system. A 50-year-old California State statute held 

that products bearing the ‘‘Made in USA’’ label had to be composed 

of 100 percent domestic content. This really rendered the USA FTC 

label impossible for many companies like us to use. 

Companies like Lifetime had no idea that we were in violation 

of the State’s labeling law and were unexpectedly sued, which resulted in multimillion dollar settlements based on infractions as inVerDate Nov 24 2008 11:35 Feb 24, 2017 Jkt 037690 PO 00000 Frm 00162 Fmt 6633 Sfmt 6633 F:\MY DOCS\HEARINGS 114\114-148 CHRIS
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significant as a 50-cent net suspended from a $500 made-in-theUSA basketball system. 

Now, as companies try to choose whether to follow the FTC’s federal guidelines or the California State statute, many USA companies, like ourselves, have decided not to use the made-in-USA label 

mark at all on the majority of our products, even though they are, 

indeed, made in the USA. And this really leaves the consumer illinformed with regard to a product’s origin. 

Despite continued efforts over the last 3 years to amend the California statute, it is now even more confusing, inviting more opportunities for the California State statute and the FTC rule to clash. 

The FTC made-in-the-USA standard is robust, it is meaningful, it 

is difficult to meet. It challenges manufacturers to source and manufacture domestically and it conveys a clear unified message to consumers in the United States and around the world. 

The FTC’s made-in-the-USA standard requires significant investment in American manufacturing and in American jobs. As such, 

when consumers choose products marked ‘‘made in the USA,’’ they 

can feel confident that they are supporting American manufacturing and American jobs. 

About 15 years ago, our main competitor in the basketball industry decided to pack up and leave the U.S. They relocated to Asia, 

began lowering prices with less-expensive labor and materials. 

After a great deal—and I mean a great deal—of deliberation, we 

chose to stay. We stayed committed to made in the USA. Had we 

known then that the FTC standard did not create a unified standard and the potential of California lawsuits to follow, we may have 

made a different decision at that time. Why invest millions in capital to manufacture in the U.S. if you are not allowed to tell the 

consumer ‘‘made in the USA’’? 

Thank you for your time. Thank you for the time you give to 

serve our country, and thank you for your efforts in helping keep 

manufacturing alive in the United States of America. 

[The prepared statement of Richard Hendrickson follows:] 

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Mr. BURGESS. The Chair thanks the gentleman. 

Dr. O’Shanick, you are recognized for 5 minutes for your opening 

statement, please. 

STATEMENT OF GREG O’SHANICK 

Dr. O’SHANICK. Thank you. Chairman Burgess, Ranking Member 

Schakowsky, and members of the subcommittee, good afternoon 

and thank you for the opportunity to provide testimony on the important issue of protecting our nation’s youth from concussion. I 

commend Chairman Upton and Ranking Member Pallone and 

members of the committee for their ongoing investigation into concussion. 

As stated, my name is Dr. Greg O’Shanick, and I am the president and medical director of the Center for Neurorehab Services in 

Richmond, Virginia. I am also the medical director emeritus of the 

Brain Injury Association of America, the nation’s oldest and largest 

brain injury patient advocacy organization. 

Today I am here to discuss the Youth Sports Concussion Act, 

H.R.4460, sponsored by Congressman Bill Pascrell, Jr., and Congressman Thomas J. Rooney, Co-Chairs of the Congressional Brain 

Injury Task Force. 

The Brain Injury Association of America and 35 organizations 

submitted a letter to the committee in support of this legislation. 

I would like to submit this letter for the record. 

[The information appears at the conclusion of the hearing.] 

Dr. O’SHANICK. The Youth Sports Concussion Act would help ensure that safety standards for sports equipment are based on the 

latest science and curb false-advertising claims made by manufacturers to increase protective sports gear sales. 

An extensive National Academy of Sciences report previously 

found a lack of scientific evidence that helmets and other protective 

devices designed for young athletes reduced concussion risk. Yet, 

some manufacturers continue to use false-advertising claims that 

prevent athletes, parents, and coaches from making informed safety decisions. 

In 2012, the FTC warned nearly 20 sports equipment manufacturers that they might be making deceptive concussion prevention 

claims, but the FTC’s actions thus far have not deterred companies 

from making these claims. The Youth Sports Concussion Act would 

empower the FTC to seek civil penalties in such cases. 

As parents and grandparents, we want to do our best to educate 

ourselves to protect our children while they are competing in 

sports. Companies that claim they protect a child from a concussion 

with their sporting goods equipment when they cannot should be 

prevented from using this tactic while advertising their product to 

the American public. 

In my clinical practice, every day I see children and adolescents 

who have sustained a concussion whose parents are torn between 

wanting to encourage their child’s physical activity in team sports, 

but simultaneously are fearful of what we are now recognizing as 

the immediate and long-term risk of concussive injury in the developing brain. 

Effective coaching and adult supervision of these activities by individuals who understand and have themselves been trained in 

164 

concussion protocols is one element of this prevention and awareness process. And while we have solid data, for example, regarding 

the benefits of helmets in the prevention of bicycle-related concussions, my patients’ parents are being bombarded with a host of 

misleading and false claims that allow other manufacturers to financially capitalize on these fears. 

My advice to these parents is typically, if it seems too good to 

be true, it most likely is. For the kids, education, awareness, 

proactive planning are the elements I encourage in both their return-to-learn and return-to-play activities. 

The Brain Injury Association of America has a Concussion Information Center that is located at www.biausa.org. This information 

is designed to shed further light on concussion-related issues to 

help families, individuals, educators, healthcare professionals, and 

others to be more mindful of the signs of a concussion, how to respond accordingly, and to identify resources to assist following a 

concussion, also known as a mild traumatic brain injury. 

BIAA is launching a concussion certificate for professionals this 

fall. Awarding the concussion certificate demonstrates that the individual responsible for return-to-work, learn or play decisions has 

acquired the requisite knowledge base needed to make sound, informed decisions. 

Prevention is important in reducing concussion in our youth, and 

safety equipment is a key component of prevention. States have enacted several measures designed to reduce fatalities and brain injuries, including seatbelt legislation, distracted driving laws, drunken 

driving laws, and return-to-play laws with regard to sports-related 

concussions. 

Individuals can take several measures designed to reduce the 

risk of brain injury. These include wearing protective gear such as 

helmets when bicycling, motorcycling, snowboarding, riding a 

horse, skiing, riding, diving, ATVs, or playing sports; wearing seatbelts when driving or riding in vehicles; ensuring that living areas 

for seniors and young children are free of trip hazards and have 

sufficient barriers for stairs, and maintaining physical activity to 

improve lower body strength and balance. 

Your efforts to prevent mild traumatic brain injury in our nation’s youth are needed and welcomed. Thank you, and I look forward for your questions. 

[The prepared statement of Greg O’Shanick follows:] 

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Mr. BURGESS. The Chair thanks the gentleman for his testimony. 

Mr. Shur, you are recognized for 5 minutes for your opening 

statement, please. 

STATEMENT OF STEPHEN SHUR 

Mr. SHUR. Thank you, Chairman Burgess, Ranking Member 

Schakowsky, and all members of the subcommittee. 

My name is Steve Shur. I am the president of Travel Tech. The 

association represents online travel agents, global distribution systems, and short-term rental platforms. 

Our online travel agent members, OTAs as they are known, have 

created the marketplace where consumers can shop for all aspects 

of travel in a single platform. Travelers have benefitted immeasurably from the ability to search, compare, and book hotels through 

the technology created and operated by the members of Travel 

Tech. 

When suppliers have to compete in a dynamic marketplace, consumers benefit in the form of lower prices and better service offerings. The scale and popularity of third-party online booking sites 

illustrates consumers’ preferences and confidence. Last year 

Expedia helped travelers book over 200 million room nights. Trip 

Advisor reaches 340 million unique monthly visitors and hosts 

more than 350 million reviews. Priceline partners with over 

370,000 hotels in 170 countries. 

Integrity in the hotel booking marketplace is critical. Without it, 

companies that fail to deliver reliable customer service and seamless transactions with their hotel partners will not survive. OTAs 

thrive on ensuring that customers have a positive experience every 

time they book. Each of our members has 24-hour customer service 

teams ready to assist travelers who choose to book on their platforms. 

Travel Tech strongly opposes H.R. 4526 on all fronts. We categorically reject the premise of a need for such legislation. This bill 

would impose new, burdensome requirements on online travel sites 

without any justification for doing so. Online travel companies 

would needlessly have to provide additional notification to the consumer that they are ‘‘not affiliated with’’ the hotel with which the 

consumer is about to book his stay. However, online travel companies are absolutely affiliated with hotels. Hotels willingly sign contracts with OTAs to take advantage of this very effective marketing 

and distribution channel. Further, it is unclear why this heightened standard for intermediaries or distributors is needed for online hotel bookings, but not for the online purchase of any other 

goods. 

H.R. 4526 would authorize the FTC to study whether the new 

disclosure requirements are necessary and if consumers are, indeed, confused about where they are booking their hotel rooms. It 

seems illogical to apply new, onerous regulations on American businesses without a demonstrable record of consumer harm, while simultaneously acknowledging that a study is needed to confirm 

whether these regulations are necessary in the first place. 

H.R. 4526 would amend the Restore Online Shoppers’ Confidence 

Act, a bill that was passed several years ago to address a practice 

in which people were truly harmed by companies sharing credit 

169 

card information with other entities without their knowledge or 

consent. Associating an entire reputable industry with this activity 

addressed in the Restore Online Shoppers’ Confidence Act is a 

gross misappropriation of the facts and an assault on our industry’s 

reputation and integrity. 

There is no tangible record of consumer complaints justifying any 

part of this legislation, only unsubstantiated claims offered by the 

hotel industry in an effort to scare consumers into booking direct. 

We have all seen the book-direct advertising campaigns by the 

hotel chains. The motivations here are clear. 

The hotel lobby claims that 15 million Americans are scammed 

every year by third-party booking sites. Fifteen million, that is 

41,000 Americans every day showing up at a hotel, only to find 

that their reservation was lost and that they were scammed. Where 

are these numbers coming from? Where is the evidence? 

The FTC has no record that such complaints have been lodged. 

The nation’s leading consumer groups are not aware of fraud, certainly not at this level. Bloggers and reporters who root out issues 

like this have no record of such activity taking place. 

According to the hotel lobby, 41,000 people every day have been 

scammed by third-party booking sites, and the only place you have 

heard about this problem is from the trade association representing 

the largest hotel chains. The hotel lobby is fabricating a problem 

as a means to boost its members’ margins by scaring consumers 

into thinking that booking anywhere other than direct is risky and 

riddled with fraud. It is just not true. It is insulting to consumers. 

Any government action in this regard should be predicated on a 

tangible record of consumer harm, rather than anecdotes provided 

by a trade association that wants to dismantle the transparency of 

a marketplace where consumers can compare prices and services 

across brands. 

I urge the members of the subcommittee not to wade into what 

is essentially a contractual battle between the hotel industry and 

their own distribution partners. OTAs are proud to offer consumers 

a safe, effective, and transparent marketplace where hotel properties compete on price and service. 

Thank you for the opportunity to speak in opposition to H.R. 

4526. I look forward to your questions. 

[The prepared statement of Stephen Shur follows:] 

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Mr. BURGESS. The Chair thanks the gentleman for his testimony. 

Mr. Arrington, you are recognized for 5 minutes for an opening 

statement, please. 

STATEMENT OF ROBERT ARRINGTON 

Mr. ARRINGTON. Mr. Chairman and members of the subcommittee, thank you for the opportunity to testify this afternoon. 

I am Bob Arrington, founder and president of Arrington Funeral 

Directors in Jackson, Tennessee. I am honored to be serving as the 

president of the National Funeral Directors Association, referred to 

as NFDA. 

Over the years, I have served my community and my profession 

by taking on leadership roles with the Tennessee Funeral Directors 

Association. I was appointed to a 4-year term by the governor of 

the State of Tennessee to serve on the Tennessee State Board of 

Funeral Directors and Embalmers, and I served the last year of my 

term as president of this State regulatory board. 

I am testifying today on behalf of the nearly 20,000 funeral directors who are members of NFDA. Together, we represent more than 

10,000 funeral homes in the United States and 39 countries worldwide. 

NFDA is the world’s leading and largest funeral service association, a trusted leader, a beacon for ethics, and the strongest advocate for the profession and the families we are called to serve. 

I want to thank Congressman Rush for his efforts to protect consumers. Like the Congressman, NFDA members were horrified at 

the illegal activity that was discovered in 2009 at Burr Oak Cemetery in Illinois. In the findings section of this legislation, two other 

incidents involving a cemetery and a crematory are mentioned, TriState Crematory in Georgia and Menorah Gardens in Florida. 

There is no doubt these were criminal and vile acts by a few bad 

apples, but I must state my profession, the profession that I love 

and have dedicated my life to, should not be cast in a disparaging 

light because of three incidents in the last 15 years which were 

handled appropriately by each state. 

NFDA works closely with state associations to improve state 

laws governing the profession, ensuring they reflect the evolving 

needs of consumers and the funeral professionals that serve them. 

Over the last several years, states have continued to provide oversight and increased protections for the deceased, their families, and 

the providers of funeral services. 

Therefore, it is the belief of the NFDA and its members that 

state regulation of the funeral profession is sufficient. There is no 

need for further regulation by the federal government at this time. 

While we applaud Congressman Rush’s concern for grieving families, a concern that is equal to our own, we oppose H.R. 5212 because we believe it is not the best way to address the illegal and 

immoral activities I previously described. 

Next year the FTC is scheduled to begin a comprehensive review 

of the funeral rule, something that happens on a regular basis. 

NFDA feels this review offers a better alternative to H.R. 5212, 

which would merely expand a rule that is already flawed. In 

NFDA’s opinion, the funeral rule needs to be redesigned and redrafted, not simply expanded. 

179 

While the funeral rule offers important consumer protections, it 

is a not a one-stop-shop solution. When the FTC reviews the funeral rule next year, everyone who has a concern about the funeral 

rule will be able to make their voice heard. NFDA is confident that 

the review will produce an updated funeral rule that protects consumers in today’s market. And in NFDA’s opinion, the funeral rule 

is far too important to be expanded without a full exploration of the 

complex issues involved, something that may not happen in Congress. 

NFDA is dedicated to ensuring this review process will result in 

positive changes for both families and funeral service. We wholeheartedly agree with Congressman Rush that changes need to be 

made, but we feel the funeral rule needs to be redesigned and clarified to address the realities of the funeral market in 2016. It would 

be better to do this through a comprehensive rulemaking process 

where all interested parties can be heard rather than through a 

congressional mandate. 

I am sure many of you know funeral directors in your community. You probably have been served by some. What we do is for 

the good of others, not for the good of us. We dedicate ourselves 

that families have one mother that is going to die one time and we 

are going to have one funeral. Our dedication is to do that one time 

because we have only one opportunity. The last thing we want is 

to do that wrong. 

I thank you for the opportunity to be here, and I look forward 

to your questions. 

[The prepared statement of Robert Arrington follows:] 

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Mr. BURGESS. The Chair thanks the gentleman for his testimony. 

The Chair recognizes Mr. John Breyault for 5 minutes for your 

opening statement, please. 

STATEMENT OF JOHN BREYAULT 

Mr. BREYAULT. Good afternoon, Chairman Burgess, Ranking 

Member Schakowsky, and members of the subcommittee. 

My name is John Breyault, and I am the vice president of public 

policy, telecommunications, and fraud at the National Consumers 

League. 

Founded in 1899, NCL is the nation’s pioneering consumer organization. Our nonprofit mission is to advocate for social and economic justice on behalf of consumers and workers in the United 

States and abroad. 

Thank you for giving us the opportunity to speak today on the 

important issue of live event ticketing fairness. The modern ticketbuying experience is rigged and it is too often an exercise in frustration for millions of fans that simply want to see their favorite 

artist or sports teams at a fair price. 

Consumers trying to buy tickets at general on sale to popular 

events are almost always competing without knowing it against secret insider sales and scalpers who use special software to electronically cut in line. This leads to considerable frustration when 

consumers are shut out of the box office and anger when resale 

markets immediately have hundreds of tickets available at inflated 

prices. 

A little publicized fact about tickets is that artists, promoters, 

and venues often make only a small percentage of tickets available 

to the general public. For example, of the 750,000 tickets for 

Adele’s 2016 North American Tour, fewer than 300,000 were made 

available to the general public. 

According to the New York Attorney General, less than half, 46 

percent, of tickets to the most popular events are ever made available to public on sale. Most tickets, 54 percent on average, are diverted to fan club and premium credit card presales and holds for 

industry insiders. These diverted tickets often make their way to 

the secondary market, where they typically fetch a price far above 

face value. 

For example, at a January 2013 Justin Bieber show in Nashville, 

Tennessee, 90 percent of the tickets were set aside for presales and 

insiders. Many of the tickets allocated to Bieber’s management 

company were later listed on ticket resale Web sites at hugely-inflated prices. 

These examples are just the tip of the iceberg. Artists of every 

type from rap to rock, country to comedy, hold back tickets. We 

think the system is rigged against average consumers. We don’t believe artists should have the right to hide how many tickets are to 

be made available to the general public, so they can trumpet quick 

saleouts that hype their events; that they, then, often take advantage of their fans by anonymously reselling tickets, often for several multiples of face value, while blaming scalpers for their fans’ 

inability to get tickets, is the height of Chutzpah. 

Undisclosed ticket allocations are not the only way that consumers find themselves at a disadvantage at the box office. Fans 

186 

must also compete against ticket brokers employing sophisticated 

ticket-buying software known as bots. Bots allow brokers to purchase tickets at lightning-fast speeds, helping them acquire hundreds or thousands of tickets in minutes or even seconds. These 

are, then, listed on resell Web sites, often at outrageous markups. 

Evidence of rampant abuses by ticket bots abound. One bot was 

used to purchase 1,012 tickets in one minute to U2’s July 2015 

show at Madison Square Garden. That same day two bots were 

used to purchase more than 15,000 tickets in 24 hours for several 

performances on the same U2 tour. 

Between 2002 and 2009, one bot operator, Wiseguys Tickets, Inc., 

bought more than 1.5 million tickets and netted more than $25 million in profit when tickets were resold to brokers who, then, resold 

them to fans. 

Ticketmaster has stated that ticket bots can account for as much 

as 90 percent of the traffic to its Web site and 60 percent of sales 

for the most desirable seats to some shows. 

To address the broken ticket marketplace for popular concert 

tours and many sporting events nationwide, congressional action is 

sorely needed. Both the BOSS Act and the BOTS Act crack down 

on robotic ticket-buying software. However, only Congressman 

Pascrell’s BOSS Act offers comprehensive solutions that collectively 

will significantly improve fans’ ticket-buying experiences. By requiring greater transparency in the primary ticketing market, prohibiting egregious broker practices like undisclosed speculative selling, and limiting the ability of connected insiders to surreptitiously 

divert tickets to the secondary market, the BOSS Act would lead 

to beneficial reforms in the ticketing marketplace. 

To conclude, it is clear to us, and to millions of fans, that the 

ticket-buying experience is rigged. All too often buying a ticket is 

an exercise in frustrations for fans that simply want to see their 

favorite artist or sports teams at a fair price. To this end, we urge 

the subcommittee to support Congressman Pascrell’s common-sense 

pro-consumer bill. 

Chairman Burgess and Ranking Member Schakowsky, thank you 

again for inviting NCL to speak today. I look forward to answering 

your questions. 

[The prepared statement of John Breyault follows:] 

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Mr. BURGESS. The Chair thanks the gentleman for his testimony. 

Mr. Genn, you are recognized for 5 minutes for your opening 

statement, please. 

STATEMENT OF GIL GENN 

Mr. GENN. Thank you, Chairman Burgess, Ranking Member 

Schakowsky, members of the subcommittee. Thank you for allowing me to testify in support of H.R. 5104, the BOTS Act. 

I am testifying today on behalf of the Maryland Sports and Entertainment Industry Coalition, a coalition of diverse players in the 

live entertainment business, including professional sports teams, 

large and small musical and theatrical venues, and providers of 

live entertainment shows. 

The sports and entertainment industry is a huge source of pride 

in Maryland, and hundreds of millions of dollars have been invested in venues, sporting events, concerts, and other live productions in the State, significantly contributing to the employment of 

thousands of Maryland residents. 

Our coalition brings some experience to your debate, as we were 

instrumental in recently enacting legislation in Maryland similar 

to the BOTS Act. While we are grateful to our state legislatures for 

enacting that legislation, we recognize the limits of its effectiveness. 

The underground industry that uses BOTS to hack ticketing Web 

sites is clearly an interstate business. Interstate commerce transactions require federal solutions, and H.R. 5104 is a substantial solution to the problem of ticket bots. 

As you know, for most live entertainment events, there is a restriction on the number of seats one purchaser can buy, usually in 

the four-to-eight-ticket range. It is often the case that during the 

opening minutes of the on sale for a championship game or a premier entertainment show the Web site of the ticketing agent is 

overwhelmed by hundreds or thousands of requests for tickets 

placed by computer programs pretending to be real fans. 

These bots, as they are called, seize up substantial portions of 

the ticket inventory. Their software is sophisticated enough to recognize which tickets are the best tickets that wills fetch the highest 

resale price on the secondary market. Once the botsters have the 

tickets they want, they release the others back into the on-sale 

pool. 

When people use bots to violate the terms and conditions of 

ticketing Web sites to buy up large blocks of tickets and resell 

them at a markup on the secondary market, they are effectively 

stealing that investment. H.R. 5104 at least provides a clear civil 

remedy for this abuse. The bipartisan, pro-consumer BOTS Act 

would create a dual enforcement mechanism to stop that theft. It 

would make it an unfair and deceptive practice to use a bot to hack 

a ticketing Web site and allow the FTC to enforce against people 

who do. It would also create a private right of action by which any 

affected party, an artist team, an agent, a fan could sue a botster 

under a clear federal standard and recover damages. 

Bruce Springsteen, Paul McCartney, Taylor Swift, and others 

don’t come to Washington, D.C., every year or your congressional 

districts. It is unfair to the younger fans who have discovered these 

200 

legends to have to pay exorbitant prices to secondary ticket sellers 

when they are also concerned about their first job salary, saving for 

college, even paying off student loans, and other life expenses. 

We are hopeful that the dual threat of FTC enforcement and private litigation will serve as a deterrent against people who use bots 

and help restore the ability of real fans to get good tickets at face 

value. 

This hearing is also examining legislation that more extensively 

regulates the primary ticketing market, requiring inventory disclosures of proprietary business information and prohibiting restrictions on resale of tickets. Many states have looked at adopting such 

policies, and nearly all of them have rejected them. Legislators realize that these bills, while well-intentioned, would only empower 

scalpers at the expense of real fans. 

In recent years, Maryland considered and rejected legislation 

that would prohibit restrictions on the resale of tickets from the 

primary ticket-seller. One of those restrictive provisions would have 

prohibited making tickets non-transferrable. This is similar to 

what is in Congressman Pascrell’s draft on page 5, lines 12 through 

15. 

Think of all the times when you may have attended an event 

with the Speaker of the House, the Cabinet officials, or even the 

President. One of the reasons these tickets are non-transferrable is 

because of security. Taking away the right of the primary ticketseller to restrict tickets could lead to anyone getting those tickets 

on the secondary market. In such a case, it would be a very bad 

policy for obvious security reasons. 

I hope Congress will enact H.R. 5104, the BOTS Act, and refrain 

from adding controversial and burdensome measures to regulate 

the primary ticketing marketplace. 

Once again, thank you, Congressmen Blackburn and Tonko for 

sponsoring and the cosponsors for introducing this legislation. 

I look forward to your questions. 

[The prepared statement of Gil Genn follows:] 

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Mr. BURGESS. The Chair thanks the gentleman for his testimony. 

The Chair now takes great pleasure in recognizing a constituent, 

Ms. Pena, 5 minutes for your opening statement, please. 

STATEMENT OF JAMIE PENA 

Ms. PENA. Thank you. Chairman Burgess, Ranking Member 

Schakowsky, and members of the subcommittee, thank you for the 

opportunity to speak to you today about addressing deceptive hotel 

booking Web sites. 

My name is Jamie Pena, the vice president of revenue strategy 

and global distribution for Omni Hotels, located in Dallas, Texas. 

As Mr. Burgess mentioned, I am also a proud constituent of Chairman Burgess. 

I am here today representing the over 18,000 employees and associates of Omni Hotels. Omni Hotels is a proud member of the 

American Hotel and Lodging Association, which represents 2 million employees of the lodging industry. 

It is an honor to appear here before your committee to discuss 

the need for Congress to pass the Stop On-Line Booking Scams Act, 

H.R. 4526. I would like to thank the 18 bipartisan cosponsors for 

their leadership on this issue as well. 

I am here today to discuss the growing problem of deceptive hotel 

booking Web sites that are scamming customers and the need for 

legislation to address this issue. The ever-evolving online channels 

for booking hotel rooms from desktops to mobile phones and internet-enabled devices like tablets have transformed the way guests 

book their hotel rooms and at the same time created new customerfacing business models. 

Amid these transformations, the lodging industry continues to 

put guests and customers first. We are focused on educating consumers on how to avoid being victimized by these scam Web sites. 

It is with that purpose that we can bring to the committee the 

growing problem of misleading scam Web sites that deceive customers into thinking they are making a legitimate booking directly 

with the hotel company. They use pictures and graphics and other 

unique images from the hotel. They even set up 800-number call 

centers where the guest calls and the agent answers in a way that 

leads the customer to believe they are talking directly to the hotel. 

Further, as customers increasingly move to mobile booking, 

smaller screens make it even more difficult for them to discern between the hotel’s Web site and the URL of these scammed Web 

sites. Customers are definitely harmed and the result is we get different complaints from lost reservations, incorrect accommodations, 

loss of hotel loyalty program benefits, and simply the customers are 

confused. 

By AHLA’s estimates, these scams are impacting 15 million online bookings a year in the U.S. Omni customers have certainly 

fallen victim to these scams. I have two specific examples that I 

would like to share with you that are very recent. 

One is a guest that was booking at the Omni Parker House in 

Boston. They called our call center to add an accompanying guest 

name to their reservation that she thought she booked on 

omnihotels.com. However, our agent was unable to assist her because, unknowingly, she had booked with a third party. She was 

205 

very upset that her credit card information was in the hands of 

strangers since she thought she had booked directly with our hotel. 

Another example comes from the Omni Houston Hotel. We had 

a similar scenario where the guest realized after the fact that they 

had clicked on a link and booked their reservation with one of 

these third-party rogue Web sites. To her surprise, it was not 

booked direct with us. I was able to get the 800 number from the 

Web site myself that the lady had spoken with, and the agent even 

continued to insist to me that he was an agent of Omni Hotels, 

which he was not. 

These are not just problems for customers trying to book with 

Omni. No ordinary customer would be able to realize that these are 

fake Web sites. And make no mistakes, these Web sites are designed to deceive consumers. 

Thankfully, the hotel industry is one of many voices concerned 

about this growing problem. The Federal Trade Commission, AAA, 

and the Better Business Bureau have all issued formal alerts 

warning consumers of these scams, and the hotel industry is also 

working on better methods of tracking the expansive nature of this 

program. 

Many times the instances where consumers are frauded are not 

formally reported because the front desk agents just take care of 

the customer and they just make it right for them at their expense. 

Congress has a role. So, to better quantify this issue, we are beginning a pilot program in three states to better train the front 

desk personnel to report these instances of fraud directly to the 

states’ attorney general office. But Congress has a role to play as 

well, and that is why I am here today to express our support for 

H.R. 4526. 

This bill is narrowly tailored to address only the unscrupulous 

sites that purposely deceive the customers. The bill simply requires 

online travel Web sites who do not have direct contracts with hotels to clearly disclose that they are not the actual hotel property. 

Because it is directed only at non-affiliated third-party Web sites, 

it excludes our partner OTAs. These OTAs we have direct relationships with design their Web sites in a manner that distinguishes 

their site from our hotels. In addition, our partner OTAs are very 

quick to address instances of confusion and they are very transparent on their Web sites that they are not the actual hotel. 

As you can see, H.R. 4526 is a targeted bill to address a serious 

problem for U.S. consumers. 

Thank you for the opportunity to testify here, and I look forward 

to answering your questions. 

[The prepared statement of Jamie Pena follows:] 

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[The addendum to Ms. Pena’s testimony has been retained in 

committee files and can be found at: http://docs.house.gov/meetings/IF/IF17/20160524/104976/HHRG-114-IF17-Wstate-PenaJ20160524.pdf.] 

Mr. BURGESS. The Chair thanks the gentlelady for her testimony. 

Mr. Best, you are recognized for 5 minutes, please. 

STATEMENT OF MICHAEL BEST 

Mr. BEST. Thank you, Chairman Burgess, Ranking Member 

Schakowsky, and other members of the Commerce, Manufacturing, 

and Trade Subcommittee. 

I am Michael Best, senior policy advocate for the Consumer Federation of America. CFA is a nonprofit association of more than 250 

pro-consumer, not-for-profit groups that was established in 1968 to 

advance the consumer interest through research, advocacy, and 

education. 

The Funeral Consumers Alliance is a nonprofit organization with 

more than 70 local educational groups that was founded in 1963 to 

protect the consumer’s right to choose a meaningful and affordable 

funeral. CFA and FCA appreciate this opportunity to provide testimony on H.R. 5212, the Bereaved Consumers Bill of Rights Act of 

2016. I would like to outline our support of H.R. 5212 and, also, 

urge you to call on the Federal Trade Commission to modernize its 

funeral rule. 

For consumers, funeral and cemetery services are not discretionary. Everyone will die and require performance of some kind of 

service, and it will be a large expense for many households. In 

2014, the median cost of a funeral with viewing and burial was 

$7,181. Yet, according to a 2011 study, about half of all households 

in the country would have difficulty paying an unexpected expense 

of $2,000. This expense is also often incurred at a time when we 

are all especially vulnerable and disinclined to undertake a careful 

search involving different types of services and service providers. 

The bill would, among other things, extend the consumer benefits 

of the FTC funeral rule to all death-related businesses and codify 

that rule, establish minimum standards and a culture of accountability for the cemetery industry, and give the FTC and states attorneys general additional tools to ensure the marketplace for funeral and burial services is truly competitive. 

We are aware of and not unsympathetic to the claims of some 

nonprofit providers of cemetery services, particularly individual 

churches, that they would have difficulty complying with some requirements of the bill. Therefore, we did not oppose the amendment that sought to ease requirements on some of the small nonprofits. 

We also would not object to the FTC ensuring that any rules that 

were written were informed by an understanding of the different 

types of service providers, from large for-profits at one end of the 

continuum to individual churches operating nonprofit services at 

the other end. 

Both CFA and FCA support H.R. 2212 because it would provide 

stronger and broader protection to consumers of funeral and burial 

services. High cost, vulnerable consumers, and changing markets 

are also why the FTC needs to modernize its funeral rule to include 

214 

online disclosures. The rule worked well for a long time and it was 

even supported by industry. 

Randall L. Earl, in his capacity as an elected officer of the National Funeral Directors Association, testified before this committee 

about a previous version of H.R. 2212 stating ‘‘Many NFDA members have reported that the rule has made them better businessmen and women.’’ 

But the rule needs to reflect how consumers now shop. The rule 

requires written disclosures, but as far back as 2010, 97 percent of 

consumers used the internet when searching for local products or 

services. The FTC, in its consumer information web pages, also 

touts internet search as a way to get the best product and deal. 

The cost to consumers of antiquated disclosure requirements of 

the funeral rule were evident in a survey of funeral home services 

undertaken and released last year by CFA and FCA. The price information we needed to accurately price services was found on the 

Web site of only about one-quarter, 38, of the 150 funeral homes 

we surveyed. 

In the absence of a requirement to offer complete online disclosures, some funeral businesses that do post prices online mislead 

consumers and directly contradict the intent of the funeral rule. 

Those businesses in our survey that did post prices online usually 

posted only all-inclusive packages and failed to alert consumers 

that they have the right to buy a la carte and to decline any unwanted goods or services. 

If the same funeral home offered this incomplete information on 

a paper price list, that would be a violation of the federal rule. But, 

because the rule does not contemplate online transactions, these 

omissions are legal. 

In our study, prices for the same funeral services within individual areas almost always varied by at least 100 percent, and 

often varied by more than 200 percent. For example, right here in 

D.C., prices among 15 funeral homes for a full-service funeral 

ranged from $3,770 to $13,800. That variation would be difficult to 

sustain at a market with easy-to-research prices. 

Thank you for the opportunity to support H.R. 2212 and explain 

why the federal rule needs to be updated, and I look forward to 

your questions. 

[The prepared statement of Michael Best follows:] 

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Mr. BURGESS. The Chair thanks the gentleman. The Chair 

thanks everyone for their testimony today, and we are going to 

move into the members’ questions portion of the hearing. 

I wish to yield 5 minutes to Ms. Schakowsky of Illinois, ranking 

member of the subcommittee, 5 minutes for questions, please. 

Ms. SCHAKOWSKY. Thank you, Mr. Chairman. 

Dr. O’Shanick, I have been involved in this issue of brain injury. 

I asked the question of the NFL about the connection between CTE 

and brain injury. 

First of all, do you do research, also, on sub-concussive brain 

trauma? 

Dr. O’SHANICK. No, ma’am. My job is a clinical practice. I take 

care of sick folks on a daily basis. I was in academics for a decade. 

That was 20 years ago. 

Ms. SCHAKOWSKY. OK, but you are testifying today about brain 

trauma, no? 

Dr. O’SHANICK. Yes, ma’am. 

Ms. SCHAKOWSKY. Yes. OK. 

Dr. O’SHANICK. That is correct. 

Ms. SCHAKOWSKY. OK. So, studies have shown that children and 

teens are more likely than adults to get a concussion and that they 

take longer to recover. What explains the difference in concussion 

risk and recovery between children and adults, and what can we 

do to guarantee children’s brains are protected while they engage 

in youth contact sports? 

Dr. O’SHANICK. Thank you very much for the question and for 

your support in terms of this area. 

Children are not just small adults. Unfortunately, for too long, 

the type of information we have been using to look at kids has been 

extracted from the adult literature, both in terms of the brain development—frontal lobes of the brain start developing in utero, 

aren’t fully developed until 25–26 years of age. In that situation, 

what you are doing fundamentally with any type of insult or injury 

is you are damaging a developing brain and you are slowing down 

and causing an ultimate loss of full attainment of what they can 

ultimately achieve. They never literally catch up with their agemates. 

So, the issue relates to one of being appropriate in terms of minimal types of issues of concussive tackling before a certain age. It 

relates to effective coaching. It requires, also, more vigilance in 

terms of the sideline staff. 

Ms. SCHAKOWSKY. So, you were testifying in support of legislation that would prevent claims for protective gear that are false. 

Is that right? 

Dr. O’SHANICK. Correct. One of the issues that my patients and 

their families have is how do you allow your kids to participate in 

activities and yet have them be safe. Quite honestly, much of the 

information that they read on the internet or the Web sites that 

they visit to try to protect their kids simply has misleading information, incomplete information, and at times, frankly, erroneous 

information. Many places are more concerned about the colors that 

they offer, and offer one size adult, one size child, as opposed to 

really looking at the science and investing in what is going to be 

protective. 

220 

Ms. SCHAKOWSKY. So, we had a hearing on this subject of brain 

injury, and Dr. Tom Talavage, a witness at that hearing, testified 

that current helmet designs prevent massive trauma, like skull 

fracture. They do not, however, according to him, prevent the brain 

from moving around inside the skull, which results in a concussion. 

Is that true? 

Dr. O’SHANICK. Absolutely correct, yes. What we are looking at 

is kind of the same concept as airbags. Airbags do not prevent concussion or do not prevent brain injury. They prevent catastrophic 

brain injury. The abbreviated injury scale for airbags is designed 

so you can still be rendered unconscious for 30 minutes and it 

meets the current federal standards. 

So, what we are looking at is the prevention of a catastrophic injury. However, we know, especially in the developing brain, that 

sub-concussive and other concussive injuries that would be relatively innocuous for an adult with a fully-developed brain are 

much differently managed—— 

Ms. SCHAKOWSKY. And over time? 

Dr. O’SHANICK. Exactly, the exposure over time. 

Ms. SCHAKOWSKY. Right. Some have suggested narrowing the bill 

to only youth sporting equipment, but I am concerned that the bill 

would no longer cover sporting equipment used by all young athletes. Some younger players are wearing adult-sized helmets, for 

example. 

So, I wondered, Dr. O’Shanick, if you share my concern and if 

you have seen young athletes who are grown out of the so-called 

youth sporting equipment. 

Dr. O’SHANICK. Absolutely. Very astute observation, especially 

when you get into high school and some of the middle school kids. 

I mean, I am not sure where these kids come from, but they look 

like full-grown adults. I want to check their driver’s license. 

But the issue is that, whenever it is going to be used by a child, 

whenever it is going to be used by somebody of an age where we 

are responsible for protecting them and their brain, I think this 

needs to be the policy that we exhibit. 

Ms. SCHAKOWSKY. Thank you. I want to thank all of the witnesses. There is so much richness here, that I could ask about all 

of these. So, thank you so much. I listened carefully to all your testimony. Thank you., 

Dr. O’SHANICK. Thank you. 

Mr. BURGESS. The Chair thanks the gentlelady. The gentlelady 

yields back. 

Unfortunately, we do have a vote on the floor. So, the committee 

is going to take a recess while we vote, and we will reconvene immediately after the vote series concludes. 

Ms. SCHAKOWSKY. Mr. Chairman, may I ask permission to insert 

these letters from the minority into the record? 

Mr. BURGESS. Without objection, so ordered. 

[The information appears at the conclusion of the hearing.] 

Mr. BURGESS. We stand in recess. 

[Recess.] 

Mr. BURGESS. I call the subcommittee back to order. 

221 

We will resume where we were with member questions of the 

third panel. I would like to recognize Mr. Harper of Mississippi for 

5 minutes for his questions, please. 

Mr. HARPER. Thank you, Mr. Chairman, and I appreciate the opportunity. 

And thank you to each one of you for being here. This is some 

very important issues, obviously. And thanks for what each of you 

deals with in the arena of these important pieces of legislation. 

Mr. Hendrickson, I would like to ask you a few questions, if I 

may. And specifically, we are discussing some things that are very 

important to us. One of those, of course, is the Reinforcing American-Made Products Act of 2016. 

A nice tie, by the way. 

Mr. HENDRICKSON. Thank you very much. I picked that out special today. 

Mr. HARPER. There you go. 

If other states begin instituting their own made-in-America labeling standards, as California has done, how would that impact the 

manufacturing sector broadly and specifically? 

Mr. HENDRICKSON. Thank you, Congressman Harper, and thank 

you for your work on this bill. 

We have been very troubled with the addition of another state, 

and especially the potential of additional states after that, taking 

up their own definition of made-in-America. Our experience, and 

just a slight bit of background about us, we are a very, very 

vertically-integrated factory, meaning we don’t just make the basketball hoops, but we actually make the tubing that goes into the 

basketball hoops. We manufacture the plastic bases for the portable portion of it. And beyond that, we have a tooling facility that 

manufactures the tools to make the parts and oftentimes even the 

automated equipment beyond that. So, extremely vertically-integrated. 

Yet, with separate state laws and a separate approach and a different definition of made-in-USA, it leaves even a company like 

ours, as vertical as we are and as 100-percent made-in-America as 

we are, unable to make that claim because we don’t have the ability to meet multiple litmus tests or multiple definitions of madein-USA. 

And so, the outcome of that is, frankly, we don’t get to tell the 

consumer that it is made in America. Our people who work every 

day to make the products and keep them in the USA don’t get to 

see ‘‘made in America’’ on the boxes that they know they produced 

right here in America. And it takes away just one more element of 

manufacturing in the U.S., which is extremely important. 

You know, the significance of manufacturers here in the United 

States of America has impacts all across the country. And so, confusion in this area is just one more detriment to those of us who 

are fighting so hard to keep those jobs in the U.S. 

So, this Reinforcement Act allowing us to abide by what is a 

very, very strong test, a very demanding made-in-USA definition 

that the FTC holds, it allows us to meet that and, then, be able 

to properly and accurately communicate to the consumer where the 

product was made. 

222 

Mr. HARPER. Right, and I think it is very appropriate, if you are 

manufacturing basketball equipment, that it be vertically-integrated. 

[Laughter.] 

Mr. HENDRICKSON. Thank you. I think you are absolutely correct. 

Mr. HARPER. So, those go very well together. 

Do consumers prefer that products be made in the United 

States? 

Mr. HENDRICKSON. You know, I referred to in my testimony 78 

percent. That came from a Consumer Reports test that was conducted in 2013. If given the opportunity and it is a similar product, 

there is an understanding and a belief that not only should it be 

a very respectable and, hopefully, even higher quality many of the 

times, but it also allows them to say, yes, I am spending my dollars 

in a way that supports the nation, that supports the jobs, my 

neighbor, my friends, my families. And so, the consumer does care, 

and they should be able to accurately be notified if it has been 

made in the U.S., and that has been very difficult for us to have 

to remove ‘‘made in the USA’’ from products that we have fought 

for decades to keep in the USA. 

Mr. HARPER. So, obviously, consumers would prefer to buy it 

with that label and it would benefit manufacturers if you can display that. How would a uniform national standard, as we are discussing, for made-in-America labels help strengthen the manufacturing sector in the United States? 

Mr. HENDRICKSON. Well, there are certain national retailers that 

are actually pushing marketing campaigns of made in USA. If 

those of us who are manufacturers in the U.S. can’t communicate 

that to the consumer nor to the retailer, then we miss out on those 

opportunities for growth. So, this unified standard by the FTC allows manufacturers to benefit from the increased demand and from 

the consumer desire to seek out and purchase made-in-the-USA 

products. 

Mr. HARPER. Regrettably, my time has expired. I am going to 

yield back. 

But thank you so much for your testimony, what your company 

is doing, and we hope for resolution that will help you and many 

others. Thank you. 

Mr. HENDRICKSON. Thank you very much, Congressman. 

Mr. BURGESS. The Chair thanks the gentleman. The gentleman 

yields back. 

The Chair recognizes Mr. Rush of Illinois, 5 minutes for your 

questions, please. 

Mr. RUSH. Again, I want to thank you, Mr. Chairman, for this 

panel. 

I want to welcome the witnesses. 

The funeral industry, Mr. Chairman, is a mystery to most people. 

The vast majority of consumers arrange only one or at most two 

funerals during their lifetime. And, generally, they do this at a 

time of much grief and duress. 

In the eighties, the FTC recognized the opportunity for consumer 

abuse and issued a, quote, ‘‘funeral rule’’ containing disclosures to 

consumers at the funeral homes. 

223 

Mr. Best, I want to ask you how have prices at funeral homes 

evolved since the rule was enacted back in the early eighties? Have 

you seen any improvements in the transparency of this kind of 

business arrangement with consumers? 

Mr. BEST. Thank you, Mr. Rush. 

I mean, I think our research showed that, while there is good enforcement of the current rule, it is very much, as you said, in the 

eighties and nineties, it is about written price lists and doesn’t reflect how consumers now shop, which is through the internet, and 

they want to quickly compare prices across a broad variety of businesses in their area, especially when they are under this duress. 

We see a huge a variation in the price within localities, and we 

think that that is in no small part because it is very hard for consumers now with the way they shop to find out what the prices are 

because there is no requirement to disclose funeral home prices on 

the web, sir. 

Mr. RUSH. So, you would agree that very fine sellers of funeral 

services such as caskets and monuments and cemeteries that do 

not have an onsite funeral home are not covered by the funeral 

rule? Is that right? 

Mr. BEST. That is correct, sir, and we agree that more and more 

the entities not covered by the funeral rule are interacting with the 

public as part of the funeral services industry and should be covered by the same disclosure requirements, absolutely. 

Mr. RUSH. Would you also agree that consumers seeking any 

type of funeral goods or services would stand to benefit from the 

FTC’s protection from unfair and deceptive acts? 

Mr. BEST. Absolutely, sir, and we feel that your bill was very 

well-drafted and it is a really good, balanced approach to that. 

Mr. RUSH. You mentioned the use of the internet when researching local products and services. Can you provide any information 

on how consumers use the internet to purchase products and services from outside of their local area? 

Mr. BEST. From outside their local area, I am not sure. In preparation for this testimony, I looked up statistics for within your local 

area because I imagine that is generally how people procure funeral services. I mean, within the local area, it is over 96 percent 

of consumers use the internet to do that kind of research and price 

comparison. I don’t have exact numbers, but I imagine it is quite 

high, no matter what. I mean, I know I certainly use the internet 

to price everything at this point. 

Mr. RUSH. The funeral rule also covers some aspects of pre-need 

contracts which allow complete payment for all their own funeral 

needs, including caskets and burial plots and funeral services. It 

seems that most people would buy these prepaid services to provide 

a sense of peace of mind and ease the burden on their family members without an instance of fraud and financial mismanagement 

surrounding premium contracts that led to services in this area 

maybe being misguided. Do you think that H.R. 5212 would give 

some sense of relief and safety and give a sense of comfort to some 

of these consumers? 

Mr. BEST. I absolutely do, sir. I mean, I think this is going to 

go a long way to setting a good, solid floor of requirements that are 

easy to understand for consumers and businesses both. 

224 

Mr. RUSH. Mr. Chairman, I see that my time has expired. 

Mr. BURGESS. Indeed, it has. The gentleman yields back. The 

Chair thanks the gentleman. 

Mr. RUSH. You didn’t have to say it like that, Mr. Chairman. 

[Laughter.] 

Mr. BURGESS. The Chair thanks the gentleman. 

I am going to recognize myself, finally, for 5 minutes for questions. I have deferred and let all members go first. So, I am not 

taking extra time. 

It occurs to me that my first term on this subcommittee some 10 

years ago Mr. Rush was the chairman of the subcommittee, sat 

here. I sat way down there on the minority side. 

And we had a hearing on some problem with toys that were coming in from China and the yellow paint on the toys apparently had 

more lead in it than the law allowed. And we had an executive 

from one of the major manufacturers sitting here at the desk. And 

I remember when it finally came my time to question, I said, ‘‘I just 

simply do not understand. I think if you marketed your toys with 

made in the USA, had a little American flag on the bottom of that 

truck or duck,’’ or whatever it was, ‘‘that those things would fly off 

the shelves. And if you even went one step further and said made 

in Ft. Worth, Texas, and had a little Texas flag on the bottom, 

those things, you know, they would be collectors’ items the day 

they went on the shelves.’’ He didn’t agree with me. 

But, Mr. Hendrickson, I feel the same way you do. I think there 

is value to being made in America. And I just want to ask you a 

question because most things that I buy—and I am not even sure 

what the rules are governing this—will have ‘‘made in China,’’ 

‘‘made in Mexico,’’ not that I buy things made in China, but, I 

mean, you look at packages and there is a country of origin. 

So, if you are not allowed to put ‘‘made in the USA’’ on your basketball hoop, what does it say, ‘‘made nowhere’’? 

Mr. HENDRICKSON. Now previous to our incident and lawsuit in 

California, we had ‘‘made in the USA,’’ obviously, on there. Today 

we don’t claim where it is made. However, products that do come 

from other countries, some of our products that come from another 

country will represent that country. Today—and it is very unfortunate—the products that we have fought the hardest to keep in the 

U.S., we are unable to claim where they are made, for fear of additional negative impact lawsuits. 

And we are very pleased to see H.R. 5092 come through because 

I think the U.S. manufacturing needs it, and it is going to help us. 

I think it is at the same time protecting the consumer because 

today they don’t get to see that it was made in the U.S. and they 

deserve to know that. 

Mr. BURGESS. I couldn’t agree more. 

Ms. Pena, how do people fall into the trap that you have laid out 

for us that they think they are booking on a reputable site and 

they are actually booking—they have gone through the looking 

glass and they are booking in a different dimension? How does that 

happen? 

Ms. PENA. Typically, in my experience, it happens when the customer uses a search engine and types in the name of the hotel. And 

the top few listings, they appear to be genuine Omni hotels, and 

225 

in some cases they actually use our name in their URL to trick the 

customer. And then, they go to that Web site, assuming that they 

clicked on our Web site, and make the reservation. 

Mr. BURGESS. But the transaction does not go through the hotel’s 

registry? It is going through something else? 

Ms. PENA. Sometimes we receive it and that they had onward 

from somebody we are partners with. And sometimes we don’t receive the reservation at all. Most of the time, we receive it through 

another party that we are contracted with. 

Mr. BURGESS. And then, what is the bottom line for the consumer when they go to check in? 

Ms. PENA. Well, there are times where we don’t have—if we have 

the reservation, sometimes we don’t have the right request from 

them. Maybe they need two beds, and we didn’t know. Or maybe 

they wanted to get their loyalty benefit rewards and they can’t 

now. Maybe their payment information, they need to change payment, and we weren’t the ones that took their money, so it is we 

are unable to assist them. So, it causes a lot of frustration. 

Mr. BURGESS. I see. 

And, Mr. Genn, let me just ask you briefly, the ticket sales issue, 

a lot of states have state laws around this. Why wouldn’t this just 

remain a state issue? Why is it necessary to do something at a federal level? 

Mr. GENN. Mr. Chairman, thank you for the question. 

Because of interstate issues. Or I will give you a good example. 

I contacted the Consumer Affairs Division of our attorney general 

in Maryland yesterday and I said, ‘‘What complaints have you received since we passed the BOTS Act?’’ And they said, ‘‘We have 

received a raft of complaints about the Bruce Springsteen concert 

being held at Nats Park September 1st, and we cannot do anything 

because the people complained.’’ They said they went online, just 

all the testimony you heard. It wasn’t accessible. A couple of hours 

later, it was on the secondary market. 

The Maryland attorney general said, ‘‘Well, I can take the complaint, but it is jurisdictional issues. This is out of D.C. I don’t have 

jurisdiction to act.’’ And that is exactly why H.R. 5104 is a necessary remedy to deal with this at the federal level. 

Mr. BURGESS. Very well. 

Well, once again, I want to thank all of you for your testimony 

today. It has been a long day, but I think it has been very, very 

informative. 

And seeing there are no further members wishing to ask questions of this panel, I want to say before we conclude I do have the 

following documents that I want to submit for the record by unanimous consent: 

A letter from the American Society of Association Executives; a 

letter from the National Sporting Groups Association; a letter from 

the Joint Association of H.R. 4460; a letter from Ashford, Incorporated; a letter from Delta Airlines; a letter from the United 

States Chamber of Commerce; a letter from the American Academy 

of Pediatrics; a letter from the Consumer Review on H.R. 5111; a 

letter from Consumer Review on FTC process; a letter from the 

Brain Injury Association of America; a letter from the Retail Industry Leaders Association; a letter from Safe Kids Worldwide; a letter 

226 

from the National Association of State Head Injury Administration; 

a blog posting from the Sunlight Foundation; a letter from the 

medical stakeholders on the Youth Sports Concussion Act; a letter 

from the California Hotel and Lodging Association. 

[The information appears at the conclusion of the hearing.] 

Mr. BURGESS. Pursuant to committee rules, I will remind the 

members that they have 10 business days to submit additional 

questions for the record, and I ask that our witnesses submit their 

responses in a timely fashion. 

Mr. BEST. With that, the subcommittee again thanks the panel 

for their forbearance today. Again, it has been a long day, but I 

think we have gotten a lot of information. 

And the subcommittee now stands adjourned. 

[Whereupon, at 3:09 p.m., the subcommittee was adjourned.] 

[Material submitted for inclusion in the record follows:] 

PREPARED STATEMENT OF HON. FRED UPTON

Across the House of Representatives, committees are constantly addressing new 

technologies. And as part of the Majority Leader’s Innovation Initiative, we are collectively taking a fresh look at how technology interacts with regulation, how we 

can modernize federal agencies for the 21st century, and promote jobs and the economy. 

This subcommittee in particular has taken a deliberative approach through the 

Disrupter Series by examining the continual unsettling of industries and governmental roles caused by novel technologies and business models. 

The task is different depending on the nature of the agencies and industries affected. In the case of the FTC, the agency is a technology-forward and creative agency. So our work is more focused on future-proofing the commission and keeping it 

focused on after the fact enforcement. 

This may mean prompting more input from economists and more participation at 

the commissioner level. It may also mean making sure that if the concern is only 

possible harms, we are also examining possible benefits and treading carefully. 

Needed certainty requires that everyone understand both the legal theories that 

do and those that do not give rise to an enforcement action. We are looking at a 

combination of these approaches with our process and transparency reform bills 

today. However, sometimes specific problems do develop that must also be addressed. For example, hackers have taken advantage of ticket sellers for too long, 

robbing consumers of an opportunity to see their favorite musical acts or sports 

teams. 

It is hard enough to get a ticket for Hamilton or a postseason Cubs game. It is 

time to give the FTC some additional tools and put a federal enforcer on the beat 

in this area. 

In 1994, when the most recent statutory changes were made to the FTC’s general 

Section 5 authority, spirited disagreement yielded a solid compromise. Where the 

Senate sought to ban all advertising rules under FTC ‘‘unfairness’’ authority, the 

House disagreed and the compromise yielded the statutory ‘‘unfairness’’ balancing 

test. 

Codifying this test was a positive advancement and over twenty years later, we 

seek to build on it. As the FTC encounters new technologies and is incentivized to 

prevent new harms to further its consumer protection purpose, there must be countervailing incentives not to thwart innovation. It cannot be overstated that hindering innovation is often the same thing as hindering consumer welfare. 

Many of the bills we unveiled are a step forward and an invitation to begin the 

real work of reconciling differences. We commit to honest and open inquiry with the 

commission, experts, and industry and to consider all options to achieve our shared 

goals of protecting consumers, competition, and innovation. These thoughtful solutions that modernize the FTC for the 21st century and put innovation first will 

greatly benefit folks in Michigan and across the country. I thank the witnesses and 

look forward to testimony. 

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