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[Senate Hearing 114-631]
[From the U.S. Government Publishing Office]

                                                        S. Hrg. 114-631

                             OVERSIGHT OF 
                      THE FEDERAL TRADE COMMISSION

=======================================================================

                                HEARING

                               before the

                         COMMITTEE ON COMMERCE,
                      SCIENCE, AND TRANSPORTATION
                          UNITED STATES SENATE

                    ONE HUNDRED FOURTEENTH CONGRESS

                             SECOND SESSION

                               __________

                           SEPTEMBER 27, 2016

                               __________

    Printed for the use of the Committee on Commerce, Science, and 
                             Transportation

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                         U.S. GOVERNMENT PUBLISHING OFFICE 

25-376 PDF                     WASHINGTON : 2017 
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                          Washington, DC 20402-0001
                          

       SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION

                    ONE HUNDRED FOURTEENTH CONGRESS

                             SECOND SESSION

                   JOHN THUNE, South Dakota, Chairman
ROGER F. WICKER, Mississippi         BILL NELSON, Florida, Ranking
ROY BLUNT, Missouri                  MARIA CANTWELL, Washington
MARCO RUBIO, Florida                 CLAIRE McCASKILL, Missouri
KELLY AYOTTE, New Hampshire          AMY KLOBUCHAR, Minnesota
TED CRUZ, Texas                      RICHARD BLUMENTHAL, Connecticut
DEB FISCHER, Nebraska                BRIAN SCHATZ, Hawaii
JERRY MORAN, Kansas                  EDWARD MARKEY, Massachusetts
DAN SULLIVAN, Alaska                 CORY BOOKER, New Jersey
RON JOHNSON, Wisconsin               TOM UDALL, New Mexico
DEAN HELLER, Nevada                  JOE MANCHIN III, West Virginia
CORY GARDNER, Colorado               GARY PETERS, Michigan
STEVE DAINES, Montana
                       Nick Rossi, Staff Director
                 Adrian Arnakis, Deputy Staff Director
                    Jason Van Beek, General Counsel
                 Kim Lipsky, Democratic Staff Director
              Chris Day, Democratic Deputy Staff Director
       Clint Odom, Democratic General Counsel and Policy Director
       
       
       
       
       
       
       
       
       
       
       
       
       
       
       
       
       
       
       
       
       
       
       
       
                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on September 27, 2016...............................     1
Statement of Senator Thune.......................................     1
Statement of Senator Blumenthal..................................     3
Statement of Senator Heller......................................    26
Statement of Senator Klobuchar...................................    29
Statement of Senator Schatz......................................    31
Statement of Senator Moran.......................................    33
Statement of Senator Daines......................................    35
Statement of Senator Sullivan....................................    37
Statement of Senator Markey......................................    39
Statement of Senator Udall.......................................    41
Statement of Senator Ayotte......................................    42
Statement of Senator Cantwell....................................    44
Statement of Senator Fischer.....................................    45

                               Witnesses

Hon. Edith Ramirez, Chairwoman, Federal Trade Commission.........     5
    Prepared statement from the Federal Trade Commission.........     6
Hon. Maureen K. Ohlhausen, Commissioner, Federal Trade Commission    19
Hon. Terrell McSweeny, Commissioner, Federal Trade Commission....    20

                                Appendix

Letter dated September 26, 2016 to Hon. Jonn Thune and Hon. Bill 
  Nelson from Marc Rotenberg, Electronic Privacy Information 
  Center (EPIC) President and Claire Gartland, Director, EPIC 
  Consumer Privacy Project.......................................    51
Letter dated September 26, 2016 to the Hon. Tom Wheeler, 
  Chairman, Federal Communications Commission from Dean Garfield, 
  ITI President and CEO; Mary Bono, Co-Chair, 21st Century 
  Privacy Coalition; and Jon Leibowitz, Co-Chair, 21st Century 
  Privacy Coalition..............................................    55
Letter dated September 28, 2016 to Hon. John Thune and Hon. Bill 
  Nelson from the Coalition for Patient Vision Care Safety, 
  AdvaMed, Alcon--a Novartis Company, American Optometric 
  Association, Bausch+Lomb, CooperVision, Inc., and Johnson & 
  Johnson Vision Care, Inc.......................................    57
Response to written questions submitted to Hon. Edith Ramirez by:
    Hon. John Thune..............................................    74
    Hon. Roy Blunt...............................................    84
    Hon. Marco Rubio.............................................    85
    Hon. Kelly Ayotte............................................    88
    Hon. Deb Fischer.............................................    90
    Hon. Ron Johnson.............................................    91
    Hon. Steve Daines............................................    92
    Hon. Bill Nelson.............................................    94
    Hon. Maria Cantwell..........................................    97
    Hon. Richard Blumenthal......................................    97
    Hon. Cory Booker.............................................   102
    Hon. Gary Peters.............................................   104
Response to written questions submitted to Hon. Maureen K. 
  Ohlhausen by:
    Hon. Marco Rubio.............................................   107
    Hon. Bill Nelson.............................................   111
    Hon. Richard Blumenthal......................................   112
    Hon. Gary Peters.............................................   114
Response to written questions submitted to Hon. Terrell McSweeney 
  by:
    Hon. John Thune..............................................   116
    Hon. Marco Rubio.............................................   116
    Hon. Deb Fischer.............................................   118
Response to written questions submitted to Hon. Terrell McSweeny 
  by:
    Hon. Bill Nelson.............................................   119
    Hon. Richard Blumenthal......................................   119
    Hon. Cory Booker.............................................   120
    Hon. Gary Peters.............................................   121

 
                             OVERSIGHT OF 
                      THE FEDERAL TRADE COMMISSION

                              ----------                              

                      TUESDAY, SEPTEMBER 27, 2016

                                       U.S. Senate,
        Committee on Commerce, Science, and Transportation,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 10 a.m., in room 
SR-253, Russell Senate Office Building, Hon. John Thune, 
Chairman of the Committee, presiding.
    Present: Senators Thune [presiding], Ayotte, Fischer, 
Moran, Sullivan, Heller, Daines, Blumenthal, Cantwell, 
McCaskill, Klobuchar, Schatz, Markey, and Udall.

             OPENING STATEMENT OF HON. JOHN THUNE, 
                 U.S. SENATOR FROM SOUTH DAKOTA

    The Chairman. This hearing will come to order. Good morning 
and welcome to today's hearing on oversight of the Federal 
Trade Commission.
    This morning, we'll hear directly from the FTC's three 
sitting commissioners, Chairman Ramirez, Commissioner 
Ohlhausen, and Commissioner McSweeny.
    Let me take this opportunity to welcome you to the 
Committee and to thank you all for your service.
    I first want to note that Chairman Moran was scheduled to 
convene a subcommittee hearing this afternoon. That hearing was 
to include a panel of thought leaders who would offer their own 
perspectives from outside the Commission. Due to scheduling 
conflicts that have arisen, we will, unfortunately, have to 
reschedule that hearing until a later date. So, we appreciate 
the willingness of those witnesses to testify, and want to 
thank them for their understanding.
    The FTC was founded in 1914 by Congress, specifically by 
this committee. In fact, the FTC is the oldest independent 
Federal agency under the jurisdiction of this committee. At the 
beginning of this Congress, the agency celebrated its 100th 
anniversary, an event that prompted retrospection both from the 
Commission and its observers.
    As many in the room know, the agency was born of the 
concern that more needed to be done to ensure competitive 
markets in the United States and to bust the trusts that 
threatened that competition. The Commission's focus soon 
expanded to include an enforcement mandate against unfair and 
deceptive acts and practices that threaten consumer welfare.
    A common theme uniting the Commission's dual focus on 
competition and consumer protection is ensuring freedom in the 
marketplace. Throughout the decades and on balance, the FTC has 
been a strong cop on the beat, ensuring that Americans reap the 
benefits of a functioning economy free from domination by firms 
with unfairly concentrated market power. It has also made it 
possible for Americans to be confident in their commercial 
transactions and grow the economy with the knowledge that they 
are protected from fraudsters and cheats seeking to do them 
harm.
    Among its many programs, the FTC administers the National 
Do Not Call Program, which was created in 2003 and was once 
rated as the second most popular Federal initiative in American 
history, second only to the Elvis stamp. By 2010, the registry 
had topped 200 million numbers.
    But, the agency has not been without controversy. In the 
late 1970s, for example, the agency drew criticism from none 
other than the Washington Post Editorial Board for its 
consideration of a regulation that would impose major 
restrictions on television advertisements aimed at young 
children in order to reduce the amount of sugar that children 
eat. This regulatory overreach led the Post to criticize the 
Commission as the ``great national nanny'' and led to Congress 
adopting heightened procedural safeguards on the Commission's 
authority to promulgate rules. It was a recognition that the 
proper role of government must be limited.
    Despite these measures, the Commission has at times 
asserted itself in ways that continue to raise concerns about 
overreach. This committee has pressed the Commission, for 
instance, on the scope of its Section 5 authority, which 
prohibits unfair and deceptive acts in commerce. When Congress 
drafted the FTC Act, we took care to ensure the prohibitions of 
Section 5 would be evergreen. And this flexibility is one of 
the statute's key features.
    For example, in the 1930s, in one of the first cases to use 
this ``unfair and deceptive'' language, the Commission brought 
a paint misbranding case against a manufacturer who allegedly 
sold a product branded as high quality white lead paint, when 
the paint, in fact, contained no white lead. While not the case 
today, at the same--at the time this occurred, lead in paint 
was a desirable characteristic. I raise this example to 
illustrate that, as market preferences and technologies evolve, 
Section 5 adapts.
    The Commission is equally comfortable using the same 
language in recent years to bring cases against app developers 
who deviate from their stated privacy policy or against mobile 
phone carriers who cram third-party charges onto customers' 
bills.
    But, Section 5's flexibility does not mean it's open-ended. 
To best serve customers, the business community needs 
certainty, guidance, and predictability in order to comply with 
the law. American merchants are also entitled to fairness and 
due process when it comes to enforcement. When the FTC deviates 
from longstanding practice, it creates uncertainty about what 
the Commission's interpretation of the law may be, who is 
liable, and the extent of that liability.
    We've heard concerns, for instance, about the Commission's 
application of its unfairness authority to bring cases against 
private companies for lax data security practices. We all agree 
that consumers should be protected against unreasonable data 
security practices that put them at risk of identity theft and 
financial harm. But, for some time now, a key element in any 
unfairness case has been whether or not a practice causes 
substantial--that is, monetary--but not subjective injury to 
consumers. In one recent high-profile case, the FTC sought to 
enforce against a small business on grounds that it failed to 
implement reasonable security measures to protect the sensitive 
consumer information on its computer network. The FTC took the 
extraordinary step of overturning the decision of its own 
administrative law judge, who found, on the basis of the 
evidence in the case, no monetary harm to the affected 
consumers. We will continue to monitor developments in this 
case.
    Another area of focus for this committee has been 
regulations impacting technological innovation. One of the 
first hearings we held this Congress was on the Internet of 
Things. In that hearing, we examined the significant economic 
and societal impact the connected world might bring. At the 
time, I expressed my hope that we, the government, would have 
the humility to recognize that the best solutions are often not 
government solutions and that we not stifle the Internet of 
Things before we and consumers have had a chance to gain an 
understanding of its real promise and implications.
    The Commission is also focused on the Internet of Things, 
both with enforcement activity and guidance to industry. The 
Commission issued its Internet of Things Report last year, 
which summarized a workshop the FTC held on the topic. The 
report provided policy recommendations that some, including 
Commissioner Ohlhausen, have criticized for its government-
knows-best approach that could inhibit innovation and growth. 
While I appreciate the Commission's willingness to explore new 
topics, I would caution the Commission to exercise regulatory 
humility, preserve permission-less innovation, and continue to 
address actual consumer harms as they arise.
    With that, I will close, again, by thanking the 
Commissioners for being here today and turn to Senator 
Blumenthal for any opening remarks that he would like to make.
    Senator Blumenthal.

             STATEMENT OF HON. RICHARD BLUMENTHAL, 
                 U.S. SENATOR FROM CONNECTICUT

    Senator Blumenthal. Thank you, Mr. Chairman. And thank you 
for holding this hearing to discuss many of the very pressing 
consumer protection issues that are before the FTC and before 
this committee.
    And, as Senator Thune has said so well, protecting 
consumers is not only good for them, but it is also good for 
businesses that play by the rules and obey the law; effective, 
fair enforcement is critical to job creation and economic 
growth by establishing the rules that will also enforce a level 
playing field. The good guys should be rewarded for following 
the rules and playing by them, and the bad guys should be 
prosecuted. A fair and effective law enforcement agency like 
the FTC can lead to better consumer conduct, better consumer 
protection, and better economic growth and job creation.
    We observe more than 100 years of effective enforcement by 
the FTC. Obviously, a lot of the markets, products, and types 
of businesses have changed radically over those 102 years. I've 
been privileged to work with the FTC in stopping false ads for 
dietary supplements, sham charities, and securing redress for 
consumers with unauthorized cramming charges on their mobile 
phones. As Attorney General of the state of Connecticut, the 
FTC was a ready and effective partner in those efforts. But, 
the advances of technology have also changed the challenges of 
protecting consumers under Section 5. Now we face what is, in 
my view, the new frontier of consumer protection, which is 
privacy.
    Today's hearing is extraordinarily timely, because Yahoo 
confirmed, just last week, that more than 500 user accounts 
have been hacked. Consumers are grappling with yet another data 
breach. This committee must consider what to do to make sure 
that the FTC can hold businesses accountable for those 
breaches. And that means also making sure that consumers are 
notified promptly and efficiently when there are any breaches. 
There are serious questions as to whether Yahoo effectively 
notified consumers as promptly as they should have about those 
security breaches.
    The FTC has brought numerous enforcement actions over the 
years against companies for lax data security practices, but 
this piecemeal after-the-fact approach might be better served 
if the Commission were able to prescribe rules requiring 
security practices. In fact, in my view, they would be, and 
that's the reason that Senator Nelson and I introduced the Data 
Security and Breach Notification Act. Only stiffer enforcement 
and stringent penalties will make sure companies are properly 
and promptly notifying consumers when their data has been 
compromised.
    Protecting consumer privacy also means that children should 
be protected, because so much of the data about them is 
potentially within the realm of public observation. And so, we 
have introduced, and I hope we will pass--Senator Daines and I 
have introduced the SAFE KIDS Act. My strong hope is that the 
SAFE KIDS Act will be the next piece of legislation we vote out 
of committee, because protecting our children can't wait, and 
shouldn't wait.
    Similarly, in other areas, data, personal facts are at 
risk, making the Internet of Things almost the Wild West of 
potential breaches of security. That puts identities in danger, 
it risks privacy, it creates potential costs, it discourages 
innovation and invention, and ultimately deters economic growth 
and job creation.
    So, I look forward to moving forward, as we have done on a 
bipartisan basis, with the Online Ticket Sales Act, as we did 
in last week's Executive Session. I hope that legislation and 
other measures that we passed will be a template for the 
process that we adopt in this committee, and that we will 
recognize, in a very bipartisan way, that we all have a stake 
in protecting consumers.
    Thank you, Mr. Chairman.
    The Chairman. Thank you, Senator Blumenthal.
    And we'll proceed now to our witnesses. And again, thank 
you for being here.
    We'll start on my left, and your right, with Chairman 
Ramirez, and then we'll go to Commissioner Ohlhausen and then 
Commissioner McSweeny.
    So, Madam Chairwoman, if you would please proceed, we'd 
love to hear from you.
    Thank you.

  STATEMENT OF HON. EDITH RAMIREZ, CHAIRWOMAN, FEDERAL TRADE 
                           COMMISSION

    Ms. Ramirez. Chairman Thune, Senator Blumenthal, and 
members of the Committee, thank you for the opportunity to 
testify about the Federal Trade Commission's important role 
protecting consumers and promoting competition.
    The FTC is an independent, bipartisan agency charged with 
enforcing laws that prohibit unfair and deceptive practices and 
unfair methods of competition. We operate in a constantly 
evolving landscape as business practices, technologies, and our 
country's demographics continue to change. We seek to exercise 
our authority through targeted law enforcement efforts that 
address unlawful conduct without impeding legitimate business 
activity or innovation. As a complement to our law enforcement 
efforts, we also engage in policy work, research, and consumer 
and business education to address current and emerging 
challenges.
    The hallmark of our consumer protection work is stopping 
unfair and deceptive practices and returning money to injured 
consumers. One example is the FTC's recent settlement with 
Volkswagen to resolve charges that VW violated the FTC Act by 
unfairly selling cars with illegal defeat devices to cheat 
emissions tests and deceptively advertising that these cars 
were clean. As part of a joint effort with the Department of 
Justice and the EPA, the FTC settlement required VW to create a 
$10 billion fund to compensate affected consumers for the lost 
or diminished value of their cars and other harm caused by VW. 
This is the largest ever FTC consumer redress program.
    Another recent example is the FTC's action against the 
multilevel marketing company Herbalife. We alleged that 
Herbalife deceived consumers into believing they could earn 
substantial money selling diet, nutritional, and personal care 
products, and that the company's business structure was unfair 
because it rewarded distributors for recruiting others to join 
and purchase products rather than in response to actual retail 
demand. Our landmark settlement requires Herbalife to 
fundamentally restructure its business, stop its deceptive 
practices, and return $200 million to consumers.
    In addition to these notable cases, we've brought numerous 
other actions addressing a wide array of issues, including 
financial scams, telemarketing fraud, and unsubstantiated 
health claims. And we're endeavoring to reach everyone affected 
by unlawful conduct. As part of our Every Community Initiative, 
we've expanded our consumer outreach to, among others, the 
elderly, low-income consumers, minorities, and military members 
and their families.
    Another key priority for the Commission is protecting the 
privacy and security of consumers' personal information. We 
seek to ensure that companies keep the promises they make about 
how they handle consumer data, including sensitive health, 
financial, and children's information, and that they do not 
unfairly reveal private information or otherwise intrude on 
consumers' privacy. And, as the number of data breaches 
continues to rise, we've sought to address data security issues 
on multiple fronts. We've brought approximately 60 actions 
against companies that we alleged failed to safeguard 
consumers' information with reasonable security measures. We 
also devote significant resources to business education. Last 
year, for instance, we launched our Start With Security 
Campaign to help small and medium-sized businesses implement 
effective data security practices.
    To help address new challenges and the privacy and security 
implications of emerging technologies, we regularly host 
workshops and issue reports. Recent topics we've explored 
include ransomware, cross-device tracking, big data, and the 
Internet of Things.
    The FTC also seeks to promote competition, our other core 
mission, through vigorous enforcement of our Nation's antitrust 
laws. In the last 2 years, the Commission has challenged 44 
mergers. In eight of those instances, we sued to stop the 
proposed transactions outright. Among other major wins, we 
successfully challenged the Sysco/U.S. Foods and Staples Office 
Depot mergers, and we've been particularly active in addressing 
what we believe to be anticompetitive consolidation in the 
healthcare, pharmaceutical, retail, and energy sectors, among 
others.
    The FTC also maintains a robust program to identify and 
stop anticompetitive conduct. We've had significant success in 
this area, as well, including three Supreme Court victories on 
important subjects that range from pay-for-delay agreements to 
exclusive dealing to the state action doctrine.
    We also maintain an active competition policy and research 
agenda. A focus of our advocacy efforts has been to encourage 
policymakers to take into account the impact on competition of 
legislative and regulatory frameworks. We also urge that they 
not place unnecessary restrictions on new business models that 
have the potential to enhance competition and benefit 
consumers.
    I'm delighted to be here with my colleagues, Commissioners 
Maureen Ohlhausen and Terrell McSweeny. And to expand on the 
overview that I've provided, Commissioner Ohlhausen will 
provide more details on the FTC's efforts to protect consumers 
in today's dynamic and global marketplace, and Commissioner 
McSweeny on our efforts to address fraud and deception in the 
marketplace and the important partners with whom we engage to 
protect consumers.
    Thank you, again, for the invitation to be here.
    [The prepared statement of the Federal Trade Commission 
follows:]

           Prepared Statement of the Federal Trade Commission
I. Introduction
    Chairman Thune, Ranking Member Nelson, and members of the 
Committee, the Federal Trade Commission (``FTC'' or ``Commission'') is 
pleased to appear before you today to testify about the FTC's work to 
protect consumers and promote competition.\1\
---------------------------------------------------------------------------
    \1\ This written statement presents the views of the Federal Trade 
Commission. Our oral statements and responses to questions are our own 
and do not necessarily reflect the views of the Commission or of any 
other Commissioner.
---------------------------------------------------------------------------
    The FTC is a highly productive, bipartisan independent agency with 
a broad mission. It is the only Federal agency with jurisdiction to 
both protect consumers and maintain competition in most sectors of the 
economy. The agency enforces laws that prohibit business practices that 
are unfair or deceptive to consumers, or anticompetitive, and seeks to 
do so without impeding legitimate business activity.\2\ The FTC also 
educates consumers and businesses to encourage informed consumer 
choices, compliance with the law, and public understanding of the 
competitive process. Through its research, advocacy, education, and 
policy work, the FTC promotes consumer protection and competitive 
markets in the United States.
---------------------------------------------------------------------------
    \2\ The FTC has broad law enforcement responsibilities under the 
Federal Trade Commission Act, 15 U.S.C. Sec. 41 et seq., and enforces a 
wide variety of other laws ranging from the Clayton Act to the Fair 
Credit Reporting Act. In total, the Commission has enforcement or 
administrative responsibilities under more than 70 laws. See http://
www.ftc.gov/ogc/stats.shtm.
---------------------------------------------------------------------------
    The impact of the FTC's work is significant. During the last Fiscal 
Year alone, the agency estimates that it saved consumers over $3.4 
billion through its competition enforcement efforts and over $717 
million through its consumer protection law enforcement actions.\3\
---------------------------------------------------------------------------
    \3\ See Summary of Performance and Financial Information Fiscal 
Year 2015 (Feb. 2016), available at https://www.ftc.gov/reports/ftc-fy-
2015-summary-performance-financial-information.
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    The FTC is committed to addressing the impact of technology and 
globalization as part of our law enforcement, rulemaking, and policy 
work. But even as commerce and technology continue to evolve, many of 
the fundamental problems we see in the marketplace remain the same: 
consumer fraud schemes, deceptive advertising, unfair practices causing 
substantial consumer harm with little or no benefits to consumers or 
competition, as well as mergers and conduct that harm or threaten to 
harm competition. The agency tackles these challenges through targeted 
law enforcement. Our structure, research capacity, and committed staff 
enable the FTC to continue to meet its mandate of protecting consumers 
and competition in an ever-changing marketplace.
    Our testimony today highlights some of the agency's major recent 
activities and initiatives. It also identifies certain challenges that 
affect the Commission's ability to protect U.S. consumers and 
competition.
II. FTC Accomplishments
A. Consumer Protection
    As the Nation's consumer protection agency, the FTC has a broad 
mandate to protect consumers from unfair, deceptive, or fraudulent 
practices in the marketplace by, among other things, taking law 
enforcement actions to stop unlawful practices and educating consumers 
and businesses about their rights and responsibilities. The FTC targets 
its enforcement and education efforts to achieve maximum impact and 
works closely with federal, state, international, and private sector 
partners in joint initiatives. The agency also convenes workshops with 
various stakeholders to examine emerging consumer protection issues and 
releases reports on a variety of consumer protection topics. In 
addition, last year we created an Office of Technology Research and 
Investigation comprised of technologists and researchers. The office 
plays an important role by engaging in research and supporting our work 
in, among other areas, privacy, data security, emerging payment 
systems, big data, and the Internet of Things.
    During Fiscal Years 2013 through 2015, the FTC filed over 160 new 
consumer protection complaints in Federal district court and obtained 
over 300 permanent injunctions and orders requiring defendants to pay 
over $1.6 billion in consumer redress or disgorgement of ill-gotten 
gains. In addition, the FTC's consumer protection cases that were 
referred to the Department of Justice resulted in over 40 court 
judgments for civil penalties totaling almost $43 million. The FTC also 
filed 116 new administrative consumer protection actions and obtained 
114 administrative orders.
    During the same timeframe, the Commission hosted almost 40 
workshops, conferences, and roundtables, and issued 18 reports on a 
variety of consumer protection topics, released 141 new or revised 
consumer and business education publications, and released almost 30 
consumer and business education videos.
    We recently have brought several high profile cases that illustrate 
two important goals: stopping unfair and deceptive practices, and 
returning money to consumers who are harmed. For example, earlier this 
year the FTC entered into a settlement that requires Volkswagen to 
create a $10 billion compensation fund--the largest consumer refund 
program in the FTC's history--to resolve allegations that the company 
unfairly sold cars with illegal defeat devices that cheated emissions 
tests and deceptively advertised these cars with claims that they were 
``clean.'' \4\ And in July, the FTC obtained an order requiring multi-
level marketing company Herbalife to fully restructure its U.S. 
business operations and pay $200 million in consumer redress to settle 
allegations that the company deceived consumers into believing they 
could earn substantial money selling diet, nutritional supplements, and 
personal care products.\5\
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    \4\ FTC v. Volkswagen Group of Am., Inc., No. 3:15-md-02672-CRB 
(N.D. Cal. filed June 28, 2016), available at https://www.ftc.gov/
enforcement/cases-proceedings/162-3006/volkswagen-group-america-inc.
    \5\ FTC v. Herbalife of Am., Inc., No. 2:16-cv-05217 (C.D. Cal. 
filed July 25, 2016), available at https://www.ftc.gov/enforcement/
cases-proceedings/142-3037/herbalife-international-america-inc-et-al.
---------------------------------------------------------------------------
    In recent years, the FTC's consumer protection initiatives have 
focused primarily on addressing trends we see in the marketplace: 
protecting consumers on all platforms, protecting consumer privacy and 
data security, prosecuting false or deceptive health claims, 
safeguarding children in the marketplace, and stopping fraud in every 
community. Many of our cases have involved more than one of these 
trends. Each initiative is discussed in more detail below.
1. Protecting Consumers on All Platforms

    In recent years, we have seen remarkable growth in the use of 
smartphones and connected devices, which enable consumers--from any 
location--to find information, contact friends, shop and pay for goods 
and services, update their social networks, monitor their health and 
fitness, and access devices in their cars and homes remotely, among 
many other benefits and conveniences. But the growth of technology 
provides new mechanisms for engaging in unfair or deceptive practices--
for example, unauthorized payments, false advertising, and basic fraud. 
Protecting consumers as they use and benefit from new technologies and 
platforms has been a chief FTC priority in recent years.
    For example, the FTC has taken action against numerous companies--
including T-Mobile \6\ and AT&T \7\ (with all 50 states and the Federal 
Communications Commission)--for allegedly ``cramming'' unauthorized 
third-party charges on consumers' mobile phone bills. In addition, the 
Commission has settled charges against TracFone,\8\ which was accused 
of making misleading claims about ``unlimited data'' Internet service 
to subscribers.\9\ Thus far, the agency has obtained hundreds of 
millions of dollars for consumers from these cases.
---------------------------------------------------------------------------
    \6\ FTC v. T-Mobile USA, Inc., No. 2:14-cv-0097-JLR (W.D. Wash. 
filed Dec. 19, 2014), available at https://www.ftc.gov/enforcement/
cases-proceedings/132-3231/t-mobile-usa-inc.
    \7\ FTC v. AT&T Mobility, Inc., No. 1:14-cv-3227-HLM (N.D. Ga. 
filed Oct. 8, 2014), available at https://www.ftc.gov/enforcement/
cases-proceedings/132-3248/att-mobility-llc.
    \8\ FTC v. TracFone Wireless, Inc., No. 3:15-cv-00392 (N.D. Cal. 
filed Jan. 28, 2015), available at https://www.ftc.gov/enforcement/
cases-proceedings/132-3176/straight-talk-wireless-tracfone-wireless-
inc. See also FTC v. DirecTV, No. 3:15-cv-01129 (N.D. Cal. filed Mar. 
11, 2015), available at https://www.ftc.gov/enforcement/cases-
proceedings/102-3141/directv (alleging company misrepresented costs of 
its cable service).
    \9\ The Court of Appeals for the Ninth Circuit recently held that 
the FTC could not bring a case similar to the TracFone matter against 
AT&T because the common carrier exception in Section 5 of the FTC Act 
precluded FTC enforcement of the Act against any company with the 
status of a common carrier, even if the case involved non-common-
carrier service.
---------------------------------------------------------------------------
    The Commission has also brought several actions challenging fraud 
on new platforms. For example, the FTC challenged the alleged deceptive 
tactics of Erik Chevalier, a project creator who raised money from 
consumers through a Kickstarter campaign by promising to provide 
rewards related to a board game, but instead used most of the funds on 
unrelated personal items, such as rent.\10\ The agency also took action 
against the operators of Prized, a mobile gaming app that promised it 
would be free from malware. We alleged that it instead loaded 
consumers' mobile phones with malicious software to mine virtual 
currencies.\11\
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    \10\ FTC v. Erik Chevalier, Co., No. 3:15-cv-1029-AC (D. Ore. filed 
June 11, 2015), available at https://www.ftc.gov/enforcement/cases-
proceedings/142-3061/erik-chevalier-forking-path.
    \11\ FTC v. Equiliv Investments, Matter No. 142-3144 (D.N.J. filed 
June 29, 2015), available at https://www.ftc.gov/enforcement/cases-
proceedings/142-3144/equiliv-investments-prized; see also FTC v. BF 
Labs, Inc., No. 4:14-cv-00815-BCW (W.D. Mo. Feb. 18, 2016), available 
at https://www.ftc.gov/enforcement/cases-proceedings/142-3058/bf-labs-
inc (settling allegations that the company deceptively marketed 
computers designed to produce Bitcoins).
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    In addition, the FTC has focused resources to challenge deceptive 
endorsements online. For example, the Commission alleged that Warner 
Bros. Home Entertainment deceived consumers during a marketing campaign 
for a video game by failing to adequately disclose that it paid online 
``influencers'' thousands of dollars to post positive gameplay video 
review on YouTube and social media.\12\ And in Roca Labs, the 
Commission filed a case in Federal court against the marketers of a 
line of weight-loss supplements who allegedly made baseless claims for 
their products, and then threatened to enforce ``gag clause'' 
provisions against consumers to stop them from posting negative reviews 
and testimonials online.\13\
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    \12\ See Warner Bros. Home Entertainment, Inc., Matter No. 1523034 
(July 11, 2016) (proposed consent), available at https://www.ftc.gov/
enforcement/cases-proceedings/152-3034/warner-bros-home-entertainment-
inc-matter.
    \13\ FTC v. Roca Labs, Inc., No. 8:15-cv-02231-MSS-TBM (M.D. Fla. 
Sept. 28, 2015), available at https://www.ftc.gov/enforcement/cases-
proceedings/142-3255/roca-labs-inc.
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    Last year, the Commission issued an Enforcement Policy Statement 
and accompanying guidance on native advertising, content that bears a 
similarity to the news, feature articles, product reviews, 
entertainment, and other material that surrounds it online.\14\ The 
policy statement explains how established truth-in-advertising 
principles apply to different ad formats, including native ads. 
Following the policy statement, the FTC brought its first native 
advertising case against national retailer, Lord & Taylor.\15\ The 
Commission alleged that the company deceived consumers by paying for 
native ads, including a seemingly objective article in the online 
publication Nylon, without disclosing the ads were actually paid 
promotions for a 2015 clothing launch.
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    \14\ See Commission Enforcement Policy Statement on Deceptively 
Formatted Advertisements (Dec. 2015), available at https://www.ftc.gov/
public-statements/2015/12/commission-enforcement-policy-statement-
deceptively-formatted; Native Advertising: A Guide for Businesses (Dec. 
2015), available at https://www.ftc.gov/tips-advice/business-center/
guidance/native-advertis
ing-guide-businesses.
    \15\ Lord & Taylor, LLC, Matter No. 152 3181 (Mar. 15, 2016) 
(proposed consent), available at https://www.ftc.gov/enforcement/cases-
proceedings/152-3181/lord-taylor-llc-matter.
---------------------------------------------------------------------------
    Finally, the Commission has continued its efforts to stop illegal 
robocalls, which continue to top our complaint list. For example, the 
Commission and ten state attorneys general took action against 
Caribbean Cruise Line, and seven other assisting companies, for an 
alleged massive telemarketing campaign resulting in billions of 
robocalls.\16\ Recognizing the need to spur the marketplace to develop 
technical solutions that protect American consumers from illegal 
robocalls, the FTC has led four public challenges to help tackle the 
unlawful robocalls that plague consumers.\17\ And the FTC has developed 
numerous educational materials to deliver the key message to consumers: 
if you answer a call and hear an unwanted recorded sales message--hang 
up.\18\
---------------------------------------------------------------------------
    \16\ FTC v. Caribbean Cruise Line, Inc. et al., No. 0:15-cv-60423 
(S.D. Fla. Mar. 4, 2015), available at https://www.ftc.gov/enforcement/
cases-proceedings/122-3196/caribbean-cruise-line-inc.
    \17\ See, e.g., Robocalls: Humanity Strikes Back Challenge, at 
https://www.ftc.gov/news-events/contests/robocalls-humanity-strikes-
back; Detectarobo Challenge, at https://www.ftc.gov/news-events/
contests/detectarobo; Zapping Rachel Challenge, at https://www.ftc.gov/
news-events/contests/zapping-rachel; FTC Robocall Challenge (2012-
2013), at https://www.ftc.gov/news-events/press-releases/2013/04/ftc-
announces-robocall-challenge-winners.
    \18\ See, e.g., FTC Robocall Microsite, https://
www.consumer.ftc.gov/features/feature-0025-robo
calls.
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2. Protecting Consumer Privacy and Data Security

    The FTC has unparalleled experience in consumer privacy 
enforcement. The Commission has used its core enforcement authority--
Section 5 of the FTC Act--to take action against companies engaged in 
unfair or deceptive practices involving the privacy and security of 
consumers' information.\19\ If a company makes materially misleading 
statements or omissions about a product or service, including its 
privacy or data security features, and such statements or omissions are 
likely to mislead reasonable consumers, such statements or omissions 
can be found to be deceptive and in violation of Section 5.\20\ 
Further, if a company's privacy or data security practices cause or are 
likely to cause substantial injury to consumers that is neither 
reasonably avoidable by consumers nor outweighed by countervailing 
benefits to consumers or to competition, those practices can be found 
to be unfair and in violation of Section 5.\21\ The FTC also enforces 
sector-specific statutes that protect certain health,\22\ credit,\23\ 
financial,\24\ and children's information.\25\
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    \19\ 15 U.S.C. Sec. 45(a).
    \20\ See FTC Policy Statement on Deception, appended to Cliffdale 
Assocs., Inc., 103 F.T.C. 110, 174 (1984), available at https://
www.ftc.gov/public-statements/1983/10/ftc-policy-statement-deception.
    \21\ See FTC Policy Statement on Unfairness, appended to Int'l 
Harvester Co., 104 F.T.C. 949, 1070 (1984), available at https://
www.ftc.gov/public-statements/1980/12/ftc-policy-statement-unfairness; 
15 U.S.C. Sec. 45(n).
    \22\ 16 C.F.R. Part 318.
    \23\ 15 U.S.C. Sec. Sec. 1681-1681x.
    \24\ 16 C.F.R. Part 314, implementing 15 U.S.C. Sec. 6801(b).
    \25\ 15 U.S.C. Sec. Sec. 6501-6506; see also 16 C.F.R. Part 312.
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    The FTC's current privacy enforcement priorities include health 
privacy, the Internet of Things, big data, and data security. Over the 
past few years, the Commission has brought several cases to stop 
illegal practices that compromise health information.\26\ For example, 
the FTC alleged that PaymentsMD and its former CEO misled thousands of 
consumers who signed up for an online billing portal.\27\ According to 
the complaint, the defendants used the registration process for the 
billing portal as a way to deceptively seek consumers' consent to 
obtain highly-detailed medical information about the consumers from 
pharmacies, medical labs, and insurance companies to facilitate the 
launch of a separate online medical records service. The Commission 
also alleged that Practice Fusion, a company that provides management 
services to physicians, deceived hundreds of thousands of consumers by 
soliciting reviews about their doctors without adequately disclosing 
that the reviews would be posted publicly on the internet.\28\ As 
detailed in our complaint, many of the posted reviews included 
consumers' full names, medications, health conditions, and treatments 
received.
---------------------------------------------------------------------------
    \26\ See, e.g., Henry Schein Practice Solutions, Inc., No. C-4575 
(May 23, 2016), available at https://www.ftc.gov/enforcement/cases-
proceedings/142-3161/henry-schein-practice-solutions-inc-matter; GMR 
Transcription Servs., Inc., No. C-4482 (Aug. 21, 2014), available at  
https://www.ftc.gov/enforcement/cases-proceedings/122-3095/gmr-
transcription-services-inc-matter.
    \27\ PaymentsMD, LLC, No. C-4505 (Jan. 27, 2015), available at 
https://www.ftc.gov/enforcement/cases-proceedings/132-3088/paymentsmd-
llc-matter.
    \28\ Practice Fusion, Inc., Matter No. 1423039 (June 8, 2016) 
(proposed consent), available at https://www.ftc.gov/enforcement/cases-
proceedings/142-3039/practice-fusion-inc-matter.
---------------------------------------------------------------------------
    The Internet of Things is also an expanding part of the 
Commission's privacy work. For example, the FTC announced a settlement 
with computer hardware company ASUS for allegedly failing to take 
reasonable steps to secure the software on its routers.\29\ According 
to the complaint, the company's failures to timely address 
vulnerabilities or notify consumers about the availability of security 
updates resulted in critical security flaws in its routers that put the 
home networks of consumers at risk. The complaint also alleged that the 
routers' insecure ``cloud'' services led to the compromise of thousands 
of consumers' connected storage devices, exposing their sensitive 
personal data on the internet.\30\ Last year, the FTC also issued a 
report addressing how longstanding privacy principles can be adapted to 
Internet of Things devices and recommending best practices for 
companies to follow.\31\
---------------------------------------------------------------------------
    \29\ ASUSTeK Computer Inc., No. C-4587 (July 28, 2016), available 
at https://www.ftc.gov/enforcement/cases-proceedings/142-3156/asustek-
computer-inc-matter.
    \30\ See also TRENDnet, Inc., No. C-4426 (Jan. 16, 2014), available 
at https://www.ftc.gov/enforcement/cases-proceedings/122-3090/trendnet-
inc-matter.
    \31\ FTC Staff Workshop Report, The Internet of Things: Privacy and 
Security in a Connected World (Jan. 2015), available at https://
www.ftc.gov/reports/federal-trade-commission-staff-report-november-
2013-workshop-entitled-internet-things.
---------------------------------------------------------------------------
    Another area of interest is big data, specifically the vast 
collection of data about consumers and enhanced capabilities to analyze 
data to make inferences and predictions about consumers. In January the 
Commission issued a report entitled Big Data: A Tool for Inclusion or 
Exclusion? addressing how the categorization of consumers may be both 
creating and limiting opportunities for them, with a focus on low-
income and underserved consumers.\32\ A key message in the report is 
that there are laws--including the Fair Credit Reporting Act, the Equal 
Credit Opportunity Act, and the FTC Act--that address some of the 
concerns raised by big data. The report also suggests questions 
businesses should ask to maximize the benefits of big data and reduce 
the risk of biases or inaccurate results about certain groups of 
consumers. The FTC also continues to focus on data brokers \33\ and, 
among other things, the role they may play in facilitating fraud.\34\ 
For example, last year, the Commission brought two cases against data 
brokers LeapLab and Sequoia One, alleging that both purchased the 
payday loan applications of financially strapped consumers--including 
names, addresses, phone numbers, Social Security numbers, and bank 
account numbers--and then sold them to scam artists who used the data 
to withdraw millions of dollars from consumers' accounts.\35\ The FTC 
has also hosted public workshops on big data issues such as the growing 
use of online lead generation in various industries \36\ and cross-
device tracking.\37\
---------------------------------------------------------------------------
    \32\ FTC Report, Big Data: A Tool for Inclusion or Exclusion? 
Understanding the Issues, (Jan. 2016), available at https://
www.ftc.gov/reports/big-data-tool-inclusion-or-exclusion-understanding-
issues-ftc-report.
    \33\ See, e.g., FTC Report, Data Brokers: A Call For Transparency 
and Accountability (May 2014), available at https://www.ftc.gov/
reports/data-brokers-call-transparency-accountability-report-federal-
trade-commission-may-2014.
    \34\ See, e.g., FTC v. Bayview Solutions LLC, No. 1:14-cv-01830-RC 
(D.D.C. filed Oct. 31, 2014), available at https://www.ftc.gov/
enforcement/cases-proceedings/142-3226-x140062/bayview-solutions-llc; 
FTC v. Cornerstone & Co., No. 1:14-cv-01479-RC (D.D.C. filed Aug. 27, 
2014), available at https://www.ftc.gov/enforcement/cases-proceedings/
142-3211-x150005/cornerstone-company-llc.
    \35\ FTC v. Sitesearch Corp., LLC, No. CV-14-02750-PHX-NVW (D. Az. 
Feb 5, 2016), available at https://www.ftc.gov/enforcement/cases-
proceedings/142-3192/sitesearch-corporation-doing-business-leaplab; FTC 
v. Sequoia One, LLC, No. 2:15-cv-01512-JCM-CWH (D. Nev. filed Aug. 12, 
2015), available at https://www.ftc.gov/enforcement/cases-proceedings/
132-3253/sequoia-one-llc.
    \36\ FTC Workshop, Follow the Lead: An FTC Workshop on Lead 
Generation (Oct. 30, 2015), available at https://www.ftc.gov/news-
events/events-calendar/2015/10/follow-lead-ftc-workshop-lead-
generation.
    \37\ FTC Workshop, Cross Device Tracking (Nov. 16, 2015), available 
at https://www.ftc.gov/news-events/events-calendar/2015/11/cross-
device-tracking.
---------------------------------------------------------------------------
    Finally, data security continues to be a crucial part of the FTC's 
privacy work.\38\ To date, the Commission has brought approximately 60 
cases alleging that companies failed to implement reasonable safeguards 
for the consumer data they maintain.\39\ For example, the Commission 
secured its largest data security judgment this year, $100 million, 
against LifeLock based on allegations the company violated a 2010 
Federal court order by, among other things, failing to establish and 
maintain a comprehensive information security program to protect its 
customers' sensitive personal information.\40\ And, the Commission 
continues to reiterate its longstanding, bipartisan call for Federal 
legislation that would (1) strengthen its existing data security 
authority and (2) require companies, in appropriate circumstances, to 
provide notification to consumers when there is a security breach.\41\
---------------------------------------------------------------------------
    \38\ See, e.g., FTC v. Wyndham Worldwide Corp., No. 2:13-CV-01887-
ES-JAD (D.N.J. Dec. 11, 2015), available at https://www.ftc.gov/
enforcement/cases-proceedings/1023142-x120032/wynd
ham-worldwide-corporation. In 2015, the Third Circuit affirmed the 
Commission's authority under the FTC Act to challenge data security 
failures. See FTC v. Wyndham Worldwide Corp., No. 14-3514 (3d Cir. Aug. 
24, 2015), available at https://www.ftc.gov/enforcement/cases-
proceedings/1023142-x120032/wyndham-worldwide-corporation.
    \39\ See generally ww.ftc.gov/datasecurity.
    \40\ FTC v. Lifelock, No. CV-10-00530-PHX-JJT (D. Az Dec. 17, 
2015), available at https://www.ftc.gov/enforcement/cases-proceedings/
072-3069-x100023/lifelock-inc-corporation (Commissioner Ohlhausen 
dissenting).
    \41\ Legislation in both areas--data security and breach 
notification--should give the FTC the ability to seek civil penalties 
to help deter unlawful conduct, jurisdiction over non-profits, and 
rulemaking authority under the Administrative Procedure Act.
---------------------------------------------------------------------------
    Additionally, the agency has placed considerable emphasis in this 
area on education. Last year, for example, the Commission announced its 
Start with Security initiative, which includes a guide for businesses 
that summarizes the lessons learned from the FTC's 60 data security 
cases,\42\ as well as videos.\43\ As part of this initiative, the FTC 
has organized one-day conferences in Austin, San Francisco, Seattle, 
and Chicago, bringing business owners and developers together with 
industry experts to discuss practical tips and strategies for 
implementing effective data security.\44\ The FTC has also launched an 
improved version of IdentityTheft.gov \45\ (robodeidentidad.gov in 
Spanish \46\), a free, one-stop resource consumers can use to report 
and recover from identity theft. As part of the relaunched site, 
identity theft victims can use the site to create a personal recovery 
plan based on the type of identity theft they face, and get pre-filled 
letters and forms to send to credit bureaus, businesses, and debt 
collectors.
---------------------------------------------------------------------------
    \42\ Start with Security: A Guide for Business (June 2015), 
available at https://www.ftc.gov/tips-advice/business-center/guidance/
start-security-guide-business.
    \43\ Start with Security: Free Resources for Any Business (Feb. 19, 
2016), available at https://www.ftc.gov/news-events/audio-video/
business.
    \44\ See, e.g., FTC Event, Start with Security--Seattle, Feb. 9, 
2016, available at https://www.ftc.gov/news-events/events-calendar/
2016/02/start-security-seattle.
    \45\ See https://identitytheft.gov/.
    \46\ See https://robodeidentidad.gov/.
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3. Prosecuting False or Deceptive Health Claims

    The FTC has a long history of targeting deceptive health claims, 
which can result in serious harm to consumers. For example, as part of 
a joint law enforcement sweep with the Department of Justice and other 
Federal agencies targeting illegal dietary supplement marketing, the 
FTC settled allegations that Sunrise Nutraceuticals deceptively claimed 
its supplement would alleviate opiate withdrawal symptoms and increase 
a user's likelihood of overcoming opiate addiction.\47\ The Commission 
is also targeting unsubstantiated health claims in the mobile space. 
The FTC charged two app developers with deceptively claiming that their 
mobile apps--Mole Detective and MelApp--could detect symptoms of 
melanoma, even in the early stages.\48\ The Commission alleged the 
companies lacked scientific evidence to support their claims. 
Similarly, the Commission sued the marketers of an app called Ultimeyes 
for deceptive claims that they had scientific proof the app could 
``turn back the clock'' on consumers' vision through a series of visual 
exercises available on the app.\49\ The Commission has also taken 
action against deceptive cognitive benefits claims. For example, this 
January, Lumosity agreed to pay $2 million in redress to settle FTC 
charges that Lumosity deceptively claimed its ``brain training'' 
program could help users perform better at work and in school, and 
could stave off memory loss, dementia, and even Alzheimer's 
disease.\50\
---------------------------------------------------------------------------
    \47\ FTC v. Sunrise Nutraceuticals, LLC, No. 9:15-cv-81567 (S.D. 
Fla. filed Nov. 17, 2015), available at https://www.ftc.gov/
enforcement/cases-proceedings/152-3208/sunrise-nutraceuti
cals-llc.
    \48\ Health Discovery Corp., No. C-4516 (Mar. 13, 2015), available 
at https://www.ftc.gov/enforcement/cases-proceedings/132-3211/health-
discovery-corporation-melapp-matter (Commissioner Ohlhausen 
dissenting); FTC v. New Consumer Solutions LLC et al., No. 15-C-1614 
(N.D. Ill. filed Feb. 23, 2015), available at https://www.ftc.gov/
enforcement/cases-proceedings/132-3210/new-consumer-solutions-llc-mole-
detective (Commissioner Ohlhausen dissenting).
    \49\ Carrot Neurotechnology, Inc., No. C-4567 (Feb. 23, 2016), 
available at https://www.ftc.gov/enforcement/cases-proceedings/142-
3132/carrot-neurotechnology-inc-matter-ultimeyes (Commissioner 
Ohlhausen concurring).
    \50\ FTC v. Lumos Labs, Inc. d/b/a Lumosity, No. 3:16-cv-00001 
(N.D. Cal. filed Jan. 5, 2016), available at https://www.ftc.gov/
enforcement/cases-proceedings/132-3212/lumos-labs-inc-lumo
sity-mobile-online-cognitive-game.
---------------------------------------------------------------------------
    Deceptive weight loss claims continue to be an enforcement 
priority. In 2015, the Commission brought a number of cases against 
companies touting the slimming effects of various products. For 
example, the FTC obtained an $11.9 million judgment against affiliate 
marketing network LeadClick Media for using fake news sites to convince 
consumers that acai berry and colon cleansing weight loss products were 
proven effective.\51\ The FTC also obtained a Federal court order 
against Lunada Biomedical and its principals settling allegations that 
they deceptively advertised that their dietary supplement Amberen 
caused substantial weight loss for women over 40, and that the weight 
loss was clinically proven.\52\
---------------------------------------------------------------------------
    \51\ See FTC & Connecticut v. Leanspa, LLC, No. 311-cv-01715 (D. 
Conn. Apr. 6, 2015), available at https://www.ftc.gov/enforcement/
cases-proceedings/1123135/leanspa-llc-et-al (Commissioner Ohlhausen 
dissenting in part and concurring in part).
    \52\ FTC v. Lunada Biomedical, Inc., No. 2:15-cv-03380-MWF (PLAx) 
(C.D. Cal. filed May 12, 2015), available at https://www.ftc.gov/
enforcement/cases-proceedings/132-3067/lunada-biomedical-inc.
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4. Safeguarding Children in the Marketplace

    The FTC also spends significant resources to safeguard children in 
the marketplace. For example, the Commission announced cases against 
Apple,\53\ Amazon,\54\ and Google \55\ for allegedly billing parents 
without their consent for items kids bought in mobile apps. We alleged 
that the companies either failed to require a password for in-app 
purchases or failed to alert parents that entering a password opened a 
significant window of time where kids could rack up charges. Apple and 
Google agreed to change their billing practices and pay at least $32.5 
million and $19 million, respectively, as redress to consumers. A 
Federal judge granted the FTC's request for summary judgment in the 
case against Amazon.\56\
---------------------------------------------------------------------------
    \53\ Apple, Inc., No. C-4444 (Mar. 25, 2014), available at https://
www.ftc.gov/enforcement/cases-proceedings/112-3108/apple-inc.
    \54\ FTC v. Amazon.com, No. 2:14-cv-01038 (W.D. Wash. filed July 
10, 2014), available at https://www.ftc.gov/enforcement/cases-
proceedings/122-3238/amazoncom-inc.
    \55\ Google, Inc., No. C-4499 (Dec. 2, 2014), available at https://
www.ftc.gov/enforcement/cases-proceedings/122-3237/google-inc.
    \56\ FTC v. Amazon.com, No. 2:14-cv-01038 (W.D. Wash. Apr. 27, 
2016) (summary judgment decision), available at https://www.ftc.gov/
enforcement/cases-proceedings/122-3238/ama
zoncom-inc.
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    The Commission has also focused its resources on deceptive health 
claims involving children. The FTC's case against NourishLife 
challenged allegedly unsubstantiated claims for a supplement purporting 
to treat childhood speech and behavioral disorders, including those 
associated with autism.\57\ Similarly, the Commission took action 
against the makers of the Jungle Rangers computer game for making false 
and unsubstantiated claims that the game permanently improves 
children's focus, memory, behavior, and school performance--including 
for kids with ADHD.\58\
---------------------------------------------------------------------------
    \57\ FTC v. NourishLife, LLC, No. 1:15-cv-00093 (N.D. Ill. filed 
Jan. 7, 2015), available at https://www.ftc.gov/enforcement/cases-
proceedings/132-3152/nourishlife-llc; Legacy Learning Systems, Inc., 
No. C-4323 (June 10, 2011), available at https://www.ftc.gov/
enforcement/cases-proceedings/102-3055/legacy-learning-systems-inc-et-
al-matter.
    \58\ Focus Education, LLC, No. C-4517 (Apr. 9, 2015), available at 
https://www.ftc.gov/enforcement/cases-proceedings/122-3153/focus-
education-llc-matter. See also Learning Rx Franchise Corp., No. 1:16-
cv-01159-RM (D. Colo. May 24, 2016) (alleging the defendants 
deceptively claimed that their programs were clinically proven to 
permanently improve serious health conditions like ADHD and autism, and 
that the training substantially improved school grades and college 
admission test scores).
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    The Children's Online Privacy Protection Act of 1998 (``COPPA'') 
generally requires websites and apps to obtain parental consent before 
collecting personal information from children under 13. In 2013, the 
FTC updated its regulatory rule that implements COPPA to address new 
developments--such as social networking, mobile apps, and the ability 
to use geolocation information--that affect children's privacy. Since 
2000, the FTC has brought over 20 COPPA cases and collected millions of 
dollars in civil penalties. For example, the COPPA cases against app 
developers LAI Systems \59\ and Retro Dreamer \60\ alleged that the 
companies created a number of apps directed to children that allowed 
third-party advertisers to collect personal information from children 
in the form of persistent identifiers without obtaining parental 
consent. Most recently, mobile advertising company InMobi agreed to pay 
$950,000 in civil penalties to settle FTC allegations that it 
deceptively tracked the locations of hundreds of millions of 
consumers--including children--without their knowledge or consent to 
serve them geo-targeted advertising.\61\
---------------------------------------------------------------------------
    \59\ U.S. v. LAI Systems, LLC, No. 2:15-cv-09691 (C.D. Cal. filed 
Dec. 17, 2015), available at https://www.ftc.gov/enforcement/cases-
proceedings/142-3261/lai-systems-llc.
    \60\ U.S. v. Retro Dream et al., No. 5:15-cv-02569 (C.D. Cal. filed 
Dec. 17, 2015), available at https://www.ftc.gov/enforcement/cases-
proceedings/142-3262/retro-dreamer.
    \61\ U.S. v. InMobi Pte Ltd., No. 3:16-cv-03474 (N.D. Cal. filed 
June 22, 2016), available at https://www.ftc.gov/enforcement/cases-
proceedings/152-3203/inmobi-pte-ltd.
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5. Stopping Fraud in Every Community

    Stopping fraud is the FTC's largest consumer protection program, 
and for good reason: fraud causes enormous harm to consumers. The 
Commission's work has targeted many different forms of fraud--including 
sham charities,\62\ illegal robocalling,\63\ phony business 
opportunities,\64\ investment schemes,\65\ bogus business coaching and 
mentoring,\66\ and imposter scams.\67\
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    \62\ See, e.g., FTC v. Cancer Fund of America, Inc. et al., No. 
CV15-884 PHX NVW (D. Az. filed May 18, 2015), available at https://
www.ftc.gov/enforcement/cases-proceedings/122-3005/cancer-fund-america-
inc.
    \63\ See, e.g., FTC v. Lifewatch Inc., 1:15-cv-05781 (N.D. IL. Jul. 
14, 2016), available at https://www.ftc.gov/enforcement/cases-
proceedings/142-3123/lifewatch-inc; FTC v. Life Management Services, 
Inc., 6:16-cv-982 (MD. Fla. Jun. 14, 2016), available at https://
www.ftc.gov/enforcement/cases-proceedings/152-3216/life-management; FTC 
v. Caribbean Cruise Line, Inc. et al., No. 0:15-cv-60423 (S.D. Fla. 
Mar. 4, 2015), available at https://www.ftc.gov/enforcement/cases-
proceedings/122-3196/caribbean-cruise-line-inc.
    \64\ See, e.g., FTC v. Money Now Funding, LLC, No. CV-13-01583 (D. 
Ariz., June 3, 2015), available at https://www.ftc.gov/enforcement/
cases-proceedings/122-3216-x130063/money-now-funding-llc; FTC v. The 
Online Entrepreneur, Inc., No. 812-cv-2500-T-27MAP (M.D. Fla. July 30, 
2014), available at https://www.ftc.gov/enforcement/cases-proceedings/
122-3186/online-entrepreneur-inc-et-al.
    \65\ See, e.g., FTC v. Consumer Collection Advocates, Corp., No. 
0:14-cv-62491-BB (S.D. Fla. Nov. 3, 2014), available at https://
www.ftc.gov/enforcement/cases-proceedings/142-3082/consumer-collection-
advocates-corp.
    \66\ FTC v. Apply Knowledge, LLC, 2:14-cv-00088 (D. UT., Mar. 2, 
2016) (final orders), available at https://www.ftc.gov/enforcement/
cases-proceedings/132-3121-x140018/apply-knowledge-llc; FTC v. Top 
Shelf Marketing Corp., 1:16-cv-00206 (S.D.N.Y. Jan. 12, 2016), 
available at https://www.ftc.gov/enforcement/cases-proceedings/142-
3228/top-shelf-marketing-corp.
    \67\ See, e.g., FTC v. Centro Natural Corp., No. 14:23879 (S.D. 
Fla. June 30, 2015), available at https://www.ftc.gov/enforcement/
cases-proceedings/142-3159/centro-natural-corp; FTC v. First Time 
Credit Solution, Corp., No. CV15-01921-DDP-PJW (C.D. Cal. filed Mar. 
16, 2015), available at https://www.ftc.gov/enforcement/cases-
proceedings/152-3114/first-time-credit-solution-corp-ftc-credit-
solutions.
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    Through the agency's Every Community Initiative, the FTC has 
conducted outreach and education, developed partnerships with trusted 
community advocates, and brought cases to stop fraud targeting certain 
groups of consumers like the elderly, low-income consumers, or 
minorities. The FTC has hosted over a dozen major conferences to learn 
more about consumer protection issues in a wide range of 
communities.\68\ FTC regional offices have brought together key players 
in consumer protection for what we call ``Common Ground'' conferences 
in their communities.\69\ In December, the FTC will bring together 
researchers, marketers, community groups, and law enforcement to 
examine the changing consumer demographics in this country and how they 
will affect the FTC's future work.\70\
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    \68\ See, e.g., FTC Workshop, Fraud Affects Every Community, Oct. 
29, 2014, available at https://www.ftc.gov/news-events/events-calendar/
2014/10/fraud-affects-every-community; FTC Roundtable, Debt Collection 
& the Latino Community Roundtable, Oct. 23, 2014, available at https://
www.ftc.gov/news-events/events-calendar/2014/10/debt-collection-latino-
community-roundtable; FTC Conference, Working Together to Advance 
Protections for Immigrant Consumers, Apr. 21, 2014, available at 
https://www.ftc.gov/news-events/events-calendar/2014/04/working-
together-advance-protections-immigrant-consumers.
    \69\ See, e.g., Colorado Common Ground Conference: Working Together 
to Protect Colorado Consumers, Apr. 24, 2015, available at https://
www.ftc.gov/news-events/events-calendar/2015/04/colorado-common-ground-
conference-working-together-protect (joint event with Colorado Attorney 
General's Office); NW Common Ground Conference, Nov. 18-19, 2014, 
available at https://www.ftc.gov/news-events/events-calendar/2014/11/
nw-common-ground-conference (joint event with Washington State Attorney 
General's Office).
    \70\ See FTC Workshop, Changing Consumer Demographics, Dec. 6, 
2016, available at https://www.ftc.gov/news-events/events-calendar/
2016/12/changing-consumer-demographics.
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    Over the past year, the FTC has also expanded its outreach to older 
adults, service members and veterans, and people in African-American, 
Native American, immigrant and Latino communities. For example, the FTC 
has partnered with the Navajo Human Rights Commission to reach the 
Navajo Nation,\71\ and with the NAACP to reach African Americans.\72\ 
In addition, to encourage more attention to consumer protection issues 
in diverse communities, the FTC began a new project to reach ethnic 
media outlets by hosting roundtables with them in cities across the 
country. These ethnic media events highlight scams, frauds, and illegal 
practices affecting the relevant communities. The Bureau of Consumer 
Protection and its Regional Offices have participated in over 170 
outreach events, including webinars, trainings, presentations, 
exhibits, and Twitter chats.
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    \71\ FTC Roundtable, Navajo Consumer Credit Seminar and Roundtable, 
Apr. 17, 2015, available at https://www.ftc.gov/news-events/events-
calendar/2015/04/navajo-consumer-credit-seminar-roundtable.
    \72\ Obstacles to Economic Opportunity: A Joint Conference of the 
FTC and the NAACP Examining Frauds that Affect the African American 
Community, May 19, 2015, available at https://www.ftc.gov/news-events/
events-calendar/2015/05/obstacles-economic-opportunity-joint-
conference-ftc-naacp.
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    And the Commission has used its strongest tool--enforcement--to 
protect communities that have been specifically targeted by fraudsters. 
Most cases affect a broad cross-section of people, but scams are 
increasingly targeting specific groups, aided by the widespread 
availability of data profiles and leads on consumers. For example, the 
Commission halted the operations of a company that used false 
affiliation with the FTC--calling itself ``FTC Credit Solutions''--to 
market bogus credit repair services to Spanish-speaking consumers.\73\ 
Scams targeting the Spanish speaking population are pervasive, and the 
FTC has taken action to address many different kinds--involving 
pyramids and business opportunities,\74\ unordered merchandise,\75\ 
fraudulent debt collection,\76\ and bogus health insurance.\77\ The 
Commission is also stopping scams that target older consumers, 
including two sweepstakes that used personalized letters to seniors to 
trick them into paying to claim their prizes and took in more than $28 
million in one scam and over $17 million in another.\78\ Other frauds 
targeting seniors have involved tech support to fix nonexistent 
computer problems,\79\ recovery scams purporting to recoup losses from 
other frauds,\80\ and fraudulent health and safety schemes.\81\
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    \73\ FTC v. First Time Credit Solution, Corp., No. CV15-01921-DDP-
PJW (C.D. Cal. Aug. 3, 2015), available at https://www.ftc.gov/
enforcement/cases-proceedings/152-3114/first-time-credit-solution-corp-
ftc-credit-solutions.
    \74\ See, e.g., FTC v. Oro Marketing, Inc., No. 2:13-CV-08843 (C.D. 
Cal. Dec 22, 2015), available at https://www.ftc.gov/enforcement/cases-
proceedings/132-3047-x140010/oro-marketing-inc-et-al; FTC v. Fortune 
Hi-Tech Marketing, Inc., No. 5:13-cv-00123-GFVT-REW (N.D. Ill. May 9, 
2014), available at https://www.ftc.gov/enforcement/cases-proceedings/
112-3069/fortune-hi-tech-marketing-inc-et-al.
    \75\ See, e.g., FTC v. Herbalife of Am., Inc., No. 2:16-cv-05217 
(C.D. Cal. July 25, 2016), available at https://www.ftc.gov/
enforcement/cases-proceedings/142-3037/herbalife-international-america-
inc-et-al; FTC v. Hispanic Global Way Corp., No. 14-22018-CIV-ALTONGA/
O'Sullivan (Feb 26, 2015), available at https://www.ftc.gov/
enforcement/cases-proceedings/132-3113/hispanic-global-way-corporation.
    \76\ See, e.g., FTC v. Centro Natural Corp., No. 14:23879-CIV-
ALTONAGA/O'Sullivan (S.D. Fla. June 30, 2015), available at https://
www.ftc.gov/enforcement/cases-proceedings/142-3159/centro-natural-corp.
    \77\ FTC v. Partners in Health Care Association, Inc., No. 1:14-CV-
23109 (S.D. Fla., July 21, 2016) (summary judgment), available at 
https://www.ftc.gov/enforcement/cases-proceedings/132-3122/partners-
health-care-association-inc.
    \78\ FTC v. Mail Tree Inc., No. 0:15-cv-61034-JIC (S.D. Fla. June 
12, 2015), available at https://www.ftc.gov/enforcement/cases-
proceedings/142-3068/mail-tree-inc.; FTC v. Dayton Films, No. 2:97-CV-
00750-PMP (LRL) (D. Nev. January 28, 2013), available at https://
www.ftc.gov/enforcement/cases-proceedings/x970058/dayton-family-
productions-inc-et-al.
    \79\ See, e.g., FTC v. Help Desk National, 1:16-cv-06607 (N.D. IL. 
Jul. 8, 2016), available at https://www.ftc.gov/enforcement/cases-
proceedings/162-3042-x160045/help-desk-national; FTC v. Boost Software, 
Inc., 14-cv-81397 (Feb. 12, 2016) (final orders), available at https://
www.ftc.gov/enforcement/cases-proceedings/132-3283-x150040/boost-
software-inc; FTC v. Inbound Call Experts, LLC, No. 9:14-cv-81395-KAM 
(S.D. Fla. Nov. 10, 2014), available at https://www.ftc.gov/
enforcement/cases-proceedings/132-3135/inbound-call-experts-llc.
    \80\ See, e.g., FTC v. Consumer Collection Advocates, Corp., No. 
0:14-cv-62491-BB (S.D. Fla. Nov. 3, 2014), available at https://
www.ftc.gov/enforcement/cases-proceedings/142-3082/consumer-collection-
advocates-corp.
    \81\ See, e.g., FTC v. Sunbright Ventures LLC, No. 8:14-cv-02153-
JDW-EAJ (M.D. Fla. July 22, 2015), available at https://www.ftc.gov/
enforcement/cases-proceedings/132-3217/sun-bright-ventures-llc-gmy-llc; 
FTC v. Instant Response Systems LLC,, No. 1:13-cv-00976 (E.D.N.Y. Apr. 
14, 2015), available at https://www.ftc.gov/enforcement/cases-
proceedings/1223041/instant-response-systems-llc-et-al.
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    The FTC has also brought actions against companies that target 
military service members. For example, for-profit school Ashworth 
College recruited service members and their families and accepted their 
military benefits as payment.\82\ The FTC alleged Ashworth 
misrepresented that students would get the training and credentials 
needed to switch careers or get a new job, and that the course credits 
they earned would transfer to other schools. In fact, the FTC alleged, 
neither claim was true. This fall, the FTC, in cooperation with the 
Department of Defense and other organizations, will release a consumer 
protection toolkit for servicemembers and their families.
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    \82\ FTC v. Professional Career Development Institute, LLC, No. 
1:15-cv-01872-WSD (N.D. Ga. June 4, 2015), available at https://
www.ftc.gov/enforcement/cases-proceedings/132-3225/ashworth-college.
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    The FTC is also fighting scams that specifically target consumers 
already facing financial difficulties. The HOPE Services case--just one 
example--involved a sham operation that allegedly told financially 
distressed homeowners it would help reduce their mortgages, but instead 
effectively stole their mortgage payments, leading some to foreclosure 
and bankruptcy.\83\ And the Commission has brought several cases 
involving abusive debt collection that victimized consumers already in 
debt.\84\
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    \83\ See FTC v. Sameer Lakhany, No. 8:12-cv-00337-CJC-JPR (C.D. 
Cal. Apr. 29, 2015), available at https://www.ftc.gov/news-events/
press-releases/2015/04/court-halts-mortgage-relief-operation-targeted-
homeowners-facing. See also FTC v. C.C. Enterprises, Inc., No. 8:15-cv-
00585-CJC-JPR (C.D. Cal. Apr. 16, 2015), available at https://
www.ftc.gov/enforcement/cases-proceedings/112-3136-x120014/
householdrelief; FTC v. Wealth Educators Inc., No. cv15-2357 (C.D. Cal. 
Apr. 10, 2015), available at https://www.ftc.gov/enforcement/cases-
proceedings/1523004/wealth-educators-inc.
    \84\ See e.g., FTC v. Lanier Law, LLC, No. 3:14-cv-00786-MMH-PDB 
(M.D. Fla. Sept. 1, 2016), available at https://www.ftc.gov/
enforcement/cases-proceedings/142-3038-x140039/lanier-law-llc; FTC & 
CFPB v. Green Tree Servicing, LLC, No. 0:15-cv-02064 (D. Minn. filed 
Apr. 21, 2015), available at https://www.ftc.gov/enforcement/cases-
proceedings/112-3008/green-tree-servicing-llc; FTC v. Asset & Capital 
Mgmt. Group, No. CV13-5267 (C.D. Cal. May 19, 2014), available at 
https://www.ftc.gov/enforcement/cases-proceedings/122-3031/asset-
capital-management-group-dba-acm-group.
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B. Competition
    The Commission seeks to promote competition through vigorous law 
enforcement. The FTC enforces U.S. antitrust law in many sectors that 
most directly affect consumers and their pocketbooks, such as health 
care, consumer products and services, technology, manufacturing, and 
energy.\85\ In addition, the FTC undertakes competition policy research 
to improve agency decision-making, and engages in competition advocacy 
and education initiatives to encourage state, local and foreign 
jurisdictions to adopt policies that promote competition and consumer 
welfare.
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    \85\ For a more detailed discussion of the FTC's recent antitrust 
enforcement matters, see Prepared Statement of the Federal Trade 
Commission On ``Oversight of the Enforcement of the Antitrust Laws,'' 
Before the Subcommittee on Antitrust, Competition Policy and Consumer 
Rights of the Committee on the Judiciary, United States Senate (Mar. 9, 
2016), https://www.ftc.gov/system/files/documents/public_statements/
934563/160309enforcementanti
trustlawstest.pdf.
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    One of the agency's principal responsibilities is preventing 
mergers that may substantially lessen competition. Over the past two 
Fiscal Years, premerger filings under the Hart-Scott-Rodino Act have 
increased significantly; they are up approximately 36 percent in FY 
2015 as compared to FY 2013 and have more than doubled over the past 
five years.\86\ The vast majority of reported transactions, 
approximately 95 percent, do not raise competition concerns, and the 
Commission clears those transactions expeditiously. However, when the 
evidence has shown that the merger could be anticompetitive, the 
Commission has intervened. Since the beginning of Fiscal Year 2015, the 
Commission has challenged 44 mergers, including eight cases in which 
the Commission voted to initiate litigation to block the 
transactions.\87\ This includes significant trial victories stopping 
both the Sysco/US Foods \88\ and Staples/Office Depot \89\ mergers. The 
Commission has been especially vigilant in response to heightened 
merger activity in the hospital and pharmaceutical sectors. In the last 
two years alone, the Commission has taken action in 13 pharmaceutical 
industry mergers, ordering divestitures of more than a hundred branded 
and generic drugs used to treat a variety of conditions.\90\
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    \86\ In FY 2015, the Agencies received notice of 1,801 
transactions, compared with 1,326 in FY 2013 and 716 in FY 2009.
    \87\ Complete data on the FTC's competition workload is available 
on its website at https://www.ftc.gov/competition-enforcement-database.
    \88\ FTC v. Sysco Corp., 113 F. Supp. 3d 1 (D.D.C. 2015).
    \89\ FTC v. Staples, Inc.,--F. Supp. 3d--(D.D.C. 2016), available 
at https://www.ftc.gov/system/files/documents/cases/
051016staplesopinion.pdf.
    \90\ See, e.g., FTC News Release, FTC Requires Teva to Divest Over 
75 Generic Drugs to Settle Competition Concerns Related to its 
Acquisition of Allergan's Generic Business (Jul. 27, 2016), https://
www.ftc.gov/news-events/press-releases/2016/07/ftc-requires-teva-
divest-over-75-generic-drugs-rival-firms-settle.
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    The Commission also maintains a robust program to identify and stop 
anticompetitive conduct. For nearly 20 years, the Commission has 
prioritized ending anticompetitive reverse-payment patent settlements 
in which a brand-name drug firm pays its potential generic rival to 
delay entering the market with a lower cost, generic product. Following 
the Supreme Court's 2013 decision in FTC v. Actavis, Inc.,\91\ the 
Commission is in a much stronger position to protect consumers. Last 
June, for example, the FTC obtained a landmark settlement in its 
litigation against Cephalon, Inc.\92\ when Cephalon's parent, Teva 
Pharmaceuticals, agreed to stop using certain types of anticompetitive 
patent settlements and pay up to $1.2 billion in ill-gotten gains to 
reimburse drug wholesalers, pharmacies, insurers, and others who 
overpaid for the blockbuster sleep disorder drug Provigil.
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    \91\ FTC v. Actavis, Inc., 570 U.S. 756 (2013).
    \92\ FTC News Release, FTC Settlement of Cephalon Pay for Delay 
Case Ensures $1.2 Billion in Ill-Gotten Gains Relinquished; Refunds 
Will Go To Purchasers Affected by Anticompetitive Tactics (May 28, 
2015), https://www.ftc.gov/news-events/press-releases/2015/05/ftc-
settlement-cephalon-pay-delay-case-ensures-12-billion-ill.
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    To complement our enforcement efforts, the FTC pursues a robust 
policy and research agenda. The FTC promotes competition principles in 
advocacy comments to state lawmakers and regulators as well as our 
sister Federal agencies. The FTC also organizes public workshops and 
issues reports on cutting-edge topics, including workshops on solar 
distributed generation and the so-called ``sharing economy.'' The 
Commission's current competition research projects include a remedy 
study to evaluate the effectiveness of the Commission's orders in past 
merger cases, which builds on a similar effort conducted in the 1990s 
that led to important improvements in the Commission's orders.\93\ We 
are also in the final stages of a landmark study of patent assertion 
entities (PAEs) that will provide unique insights into PAE business 
models and activity.\94\
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    \93\ FTC News Release, FTC Proposes to Study Merger Remedies (Jan. 
9, 2015), https://www.ftc.gov/news-events/press-releases/2015/01/ftc-
proposes-study-merger-remedies.
    \94\ FTC News Release, FTC Seeks to Examine Patent Assertion 
Entities and Their Impact on Innovation, Competition (Sept. 26, 2013), 
available at https://www.ftc.gov/news-events/press-releases/2013/09/
ftc-seeks-examine-patent-assertion-entities-their-impact.
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    With the expansion of global trade and the operation of many 
companies across national borders, the FTC and the Antitrust Division 
of the Department of Justice increasingly engage with foreign antitrust 
agencies to ensure close collaboration on cross-border cases and 
convergence toward sound competition policies and procedures.\95\ The 
FTC effectively coordinates reviews of multijurisdictional mergers and 
continues to work with its international counterparts to achieve 
consistent outcomes in cases of possible unilateral anticompetitive 
conduct. The U.S. antitrust agencies also facilitate dialogue and 
promote convergence through multiple channels, including through strong 
bilateral relations with foreign competition agencies, and an active 
role in multilateral competition organization projects and initiatives. 
When appropriate, we also work with other agencies within the U.S. 
government to advance consistent competition enforcement policies, 
practices, and procedures in other parts of the world.
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    \95\ In competition matters, the FTC also seeks to collaborate with 
the state attorneys general to obtain the best results and maximize the 
use of limited resources in the enforcement of the U.S. antitrust laws.
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III. Challenges Facing the FTC
    The FTC has worked to keep pace with the vast changes of the ever-
changing marketplace. We recognize the agency must remain nimble to 
anticipate and respond to future marketplace changes and other 
challenges. However, two particular challenges are of concern: 
jurisdictional limitations over common carriers and nonprofits.
A. The FTC Act's Exception for Communications Common Carriers
    The FTC Act exempts common carriers subject to the Communications 
Act from the FTC's enforcement of its prohibitions on unfair or 
deceptive acts or practices and unfair methods of competition. The FTC 
has long called for the repeal of the common carrier exception. This 
carve-out originated in an era when telecommunications services were 
provided by highly-regulated monopolies. The exception no longer makes 
sense in today's deregulated environment where the lines between 
telecommunications and other services are increasingly becoming 
blurred, such as when telecommunications companies are buying edge 
providers and consumers increasingly communicate over online social 
networks instead of landlines.
    As the telecommunications and Internet industries continue to 
converge, the common carrier exception is increasingly likely to 
frustrate the FTC's ability to stop deceptive and unfair acts and 
practices and unfair methods of competition with respect to a wide 
array of activities. That is particularly so if the Ninth Circuit's 
recent decision in the AT&T case stands.\96\ As a result of that 
decision, the common carrier exception may disable the FTC from 
enforcing Section 5 of the FTC Act not only against common carriage 
activities, but also against non-common-carriage activities engaged in 
by an entity with merely the ``status'' of a common carrier, even if 
that is not its principal line of business. For example, the AT&T 
decision could prevent the FTC from bringing ``cramming'' cases against 
telephone companies and could have other farther-reaching effects as 
well on FTC programs ranging from Do Not Call to COPPA. The FCC's 
authority over common carriers is limited to the provision of services 
for or in connection with common carriage. If common carriers are 
providing non-common carrier products or services, one outcome might be 
that neither the FCC nor the FTC would have jurisdiction to respond to 
practices that harm consumers. And even in cases where the FCC can 
respond, it lacks authority to seek consumer redress.
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    \96\ See Federal Trade Comm'n v. AT&T Mobility LLC, No. 15-16585 
Slip Op. (9th Cir. Aug. 29, 2016).
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    This problem is intensified by the FCC's reclassification of 
broadband Internet access service as a common carriage service.\97\ 
Because broadband providers are now deemed common carriers, not only is 
their broadband service beyond the reach of FTC enforcement, but other, 
non-broadband activities may be as well. Any company that has or 
acquires the status of a common carrier will be able to argue that it 
is immune from FTC enforcement against any of its lines of business by 
virtue of its common carrier status.
---------------------------------------------------------------------------
    \97\ See In re Protecting and Promoting the Open Internet, FCC 15-
24 (2015) (report and order) (GN Docket No. 14-28).
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    Even apart from the effect of the AT&T decision, unless the common 
carrier exception is repealed, the Commission will no longer be able to 
bring cases like the ``throttling'' actions against AT&T \98\ and 
TracFone.\99\ In both cases, we alleged that the companies promised 
their customers unlimited data but in reality severely limited data 
usage by reducing--or throttling--the data speeds of high-usage 
customers to the point that many common mobile phone applications, like 
web browsing, GPS navigation, and streaming video, became difficult or 
nearly impossible to use.
---------------------------------------------------------------------------
    \98\ FTC v. AT&T Mobility, Inc., https://www.ftc.gov/enforcement/
cases-proceedings/122-3253/att-mobility-llc-mobile-data-service.
    \99\ FTC v. TracFone Wireless, Inc., No. 3:15-cv-00392 (N.D. Cal. 
filed Jan. 28, 2015), available at https://www.ftc.gov/enforcement/
cases-proceedings/132-3176/straight-talk-wireless-tracfone-wireless-
inc.
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    This type of basic consumer protection issue falls squarely within 
the core mission of the FTC. Such matters are emerging with increasing 
regularity in the telecommunications industry as major 
telecommunications and broadband companies increasingly diversify. Yet 
the common carrier exception may prevent the FTC from protecting 
consumers from these problems and emerging issues presented by new 
technologies and the blurring of industries. And under the AT&T 
decision, we could wind up in a situation where the same service or 
product (no matter how far afield from telecommunications) sold by two 
different companies, one with common carrier ``status'' and one without 
it, will be subject to unequal enforcement.
    Removing the exception from the FTC Act would enable the FTC to 
bring its extensive law enforcement experience to bear in protecting 
consumers of common carriage services (and non-common-carriage services 
offered by common carriers) against unfair and deceptive practices in 
the same way that it can protect against unfair and deceptive practices 
for other services. For example, we have a long history of privacy and 
data security enforcement against a wide range of entities under our 
jurisdiction that operate in the technology and communications 
industries--companies like Microsoft, Facebook, Google, HTC, and 
Twitter, app providers like Snapchat, Fandango, and Credit Karma, and 
cases involving the Internet of Things, mobile payments, retail 
tracking, crowdsourcing, and lead generators. Removing the exception is 
the simplest, cleanest way to ensure continued consumer protection.
B. Jurisdiction over Nonprofit Entities
    Currently, the FTC's jurisdiction over non-profits is limited.\100\ 
The FTC Act applies to ``persons, partnerships, or corporations,'' 
\101\ and the Act defines ``corporation'' as an entity that ``is 
organized to carry on business for its own profit or that of its 
members.'' \102\
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    \100\ The Commission has jurisdiction over most non-profits in 
several discrete areas, for example, under certain consumer financial 
statutes such as the Truth in Lending Act and the Equal Credit 
Opportunity Act. The Commission also has jurisdiction over non-profit 
entities for purposes of the Clayton Act, most notably Section 7, which 
prohibits mergers or acquisitions where ``the effect of such 
acquisition may be substantially to lessen competition, or to tend to 
create a monopoly.'' 15 U.S.C. Sec. 18.
    \101\ 15 U.S.C. Sec. 45(a)(2).
    \102\ 15 U.S.C. Sec. 44. Under this framework, the Commission can 
reach ``sham'' non-profits, such as shell non-profit corporations that 
actually operate for profit; for-profit entities falsely claiming to be 
affiliated with charitable organizations who affirmatively misrepresent 
that ``donations'' collected will go to charity; and organizations such 
as trade associations that engage in activities that provide 
substantial economic benefit to their for-profit members, for example, 
by providing advice and other arrangements on insurance and business 
matters, or engaging in lobbying activities.
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    We recommend that our jurisdiction be extended to certain non-
profit entities. In healthcare provider markets, where the Commission 
has particular expertise, the agency's inability to reach conduct by 
various non-profit entities has prevented the Commission from taking 
action against potentially anticompetitive behavior of non-profits 
engaged in business.\103\ These concerns also apply to our consumer 
protection mission. For example, despite many publicized data breaches 
at nonprofit hospitals and universities, the FTC cannot challenge 
unfair or deceptive data security or privacy practices of these 
entities.\104\ These breaches have exposed the sensitive data of 
millions of consumers, yet the Commission cannot act due to the non-
profit status of these entities. Further, while the Commission can use 
Section 5 to reach ``sham'' non-profits, such as shell non-profit 
corporations that actually operate for profit \105\ and sham 
charities,\106\ these investigations require resource-intensive 
factfinding to satisfy this standard.
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    \103\ For example, the Commission generally cannot challenge 
anticompetitive conduct, such as collusive behavior, by non-profit 
hospitals. In three past enforcement actions, the Commission alleged 
that groups of physicians and hospitals had participated in unlawful 
price-fixing arrangements, but was able to sue only the physicians and 
a for-profit hospital. See Piedmont Health Alliance, 138 F.T.C. 675 
(2004) (consent order), available at https://www.ftc.gov/enforcement/
cases-proceedings/0210119i/piedmont-health-alliance-inc-et-al-matter; 
Tenet Healthcare Corp./Frye Regional Medical Center, 137 F.T.C. 219 
(2004) (consent order), available at https://www.ftc.gov/enforcement/
cases-proceedings/0210119h/tenet-healthcare-corporation-frye-regional-
medical-center-inc; Maine Health Alliance, 136 F.T.C. 616 (2003) 
(consent order), available at https://www.ftc.gov/enforcement/cases-
proceedings/0210017/maine-health-alliance-william-r-diggins-matter.
    \104\ A substantial number of reported breaches have involved non-
profit universities and health systems. See Privacy Rights 
Clearinghouse Chronology of Data Breaches (listing breaches including 
breaches at non-profits, educational institutions, and health 
facilities), available at http://www.privacyrights.org/data-breach/new.
    \105\ See, e.g., FTC v. Ameridebt, Inc., 343 F. Supp. 2d 451, 460-
62 (D. Md. 2004) (denying motion to dismiss where FTC complaint alleged 
that purported credit counseling organization incorporated as a non-
profit entity was a ``de facto for-profit organization''). The history 
of the FTC's case is available at https://www.ftc.gov/enforcement/
cases-proceedings/0223171/ameridebt-inc.
    \106\ See, e.g., FTC et al., v. Cancer Fund of America, Inc. et 
al., No. CV15-884 PHX NVW (D. Az. filed May 19, 2015), available at 
https://www.ftc.gov/enforcement/cases-proceedings/122-3005-x150042/
cancer-fund-america-inc.
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IV. Conclusion
    Thank you for the opportunity to provide the Commission's views. We 
appreciate Congress's confidence in the FTC's ability to protect 
consumers and, through our enforcement, education, and policy efforts, 
we will ensure that your confidence is well-placed. The FTC remains 
committed to finding ways to enhance its effectiveness in protecting 
consumers and promoting competition, to anticipate and respond to 
changes in the marketplace, and to meet current and future challenges. 
We look forward to continuing to work with the Committee and Congress, 
and we would be happy to answer any questions that you and other 
Members may have about the FTC.

    The Chairman. Thank you, Madam Chair.
    Commissioner Ohlhausen.

 STATEMENT OF HON. MAUREEN K. OHLHAUSEN, COMMISSIONER, FEDERAL 
                        TRADE COMMISSION

    Ms. Ohlhausen. Chairman Thune, Senator Blumenthal, and 
members of the Committee, thank you for the opportunity to 
appear before you today. I'm FTC Commissioner Maureen 
Ohlhausen, and I will briefly address the FTC's efforts to 
protect consumers and competition in the face of technological 
change and increasing globalization.
    These two trends offer substantial benefits to American 
consumers and businesses through new products, business models, 
and competition. Unfortunately, they also provide new avenues 
for unfair and deceptive practices. Thus, the FTC is committed 
to addressing the impact of new technology and increasing 
globalization as part of our law enforcement and policy 
efforts. In this work, we strive to ensure our approach remains 
flexible and effective in the face of dynamic conditions.
    The FTC has been at the forefront of combating deceptive 
practices on the platforms that consumers use on a daily basis, 
including smartphones and connected devices. Our enforcement 
actions have included cases against ISPs and some of the 
biggest telecom and Internet companies. For example, T-Mobile 
and AT&T recently settled FTC allegations over cramming, which 
is the placement of unauthorized third-party charges on 
consumers' phone bills. Apple, Amazon, and Google settled FTC 
allegations that they billed parents for items kids bought in 
mobile apps without the parents' consent. TracFone settled FTC 
charges that it made deceptive claims concerning its unlimited 
data service. We also continue our aggressive enforcement and 
education efforts in the area of Do Not Call, and, in 
particular, the fight against automated telephone calls, known 
as robocalls.
    The FTC is also the primary privacy and data-protection 
agency in the U.S. In 2015, in the Wyndham case, the Third 
Circuit affirmed the Commission's authority to challenge 
unreasonable data security failures. The Wyndham matter also 
serves as an important reminder that companies who store 
sensitive consumer data should create reasonable data security 
measures and keep the promises they make to consumers about 
protecting their information.
    Another hallmark of our privacy work is protecting children 
online. The Children's Online Privacy Protection Act, or COPPA, 
requires websites and apps to obtain parental consent before 
collecting personal information from children under 13. To 
date, the FTC has brought over 20 COPPA cases protecting 
children and collecting millions of dollars in penalties. As 
children have increasingly used mobile phones and connected 
devices, we've brought actions against companies with child-
directed apps that allowed third-party advertisers to collect 
kids' personal information and tracked kids' locations without 
parental consent.
    In addition to enforcement, the Commission regularly 
employs other tools. For example, the FTC held a workshop on 
the Internet of Things, as you mentioned, Senator, a technology 
with the potential to revolutionize many fields, including 
manufacturing, logistics, medicine, transportation, and energy.
    The ability to collect and use large amounts of information 
also raises important consumer privacy and data issues--data 
security issues, however. Following the workshop, we published 
a staff report addressing how longstanding privacy principles 
can be adapted to the Internet of Things, and recommended best 
practices. The report also stated that, given the rapid pace of 
technological innovation, Internet of Things specific 
regulations would be premature.
    I would also like to reiterate the Commission's 
longstanding bipartisan request for Congress to repeal the 
common carrier exemption. Although the FTC has nearly a century 
of experience protecting consumers across many industries, the 
exemption from our jurisdiction for common carriers frustrates 
effective consumer protection with respect to a wide array of 
activities, including fraud in billing practices in the 
crucially important telecommunications and Internet industries. 
This is particularly true in light of the Ninth Circuit's 
recent decision in the AT&T case, which held the common carrier 
exemption was status-based and thus extended to non-common-
carrier activities of common carriers. This may impact our 
ability to prevent cramming, deceptive marketing, COPPA 
violations, and unwanted calls affecting millions of consumers.
    Along with technological innovation, globalization has also 
greatly impacted American consumers and businesses. Thus, the 
FTC has worked to build strong relationships with foreign 
counterparts and organizations to further cooperation on 
enforcement, promote convergence toward sound economic policies 
and enhanced due process.
    To end on a broader note, I want to emphasize that the 
FTC's institutional structures and culture facilitate an open 
exchange of ideas among the Commissioners. I believe this 
process of finding common ground improves the quality of our 
decisions, and thus furthers our mission of protecting 
consumers. Occasionally, however, I have respectfully 
dissented, particularly where I believed FTC action would not, 
on balance, make consumers better off. Yet, I'm confident that 
my colleagues share with me the goal of ensuring that our work 
provides a net benefit to consumers, even if we don't always 
agree on how to reach that goal.
    I look forward to working with the Committee and my 
colleagues to continue our important work to protect consumers 
and preserve competition.
    The Chairman. Thank you, Commissioner Ohlhausen.
    Commissioner McSweeny.

STATEMENT OF HON. TERRELL McSWEENY, COMMISSIONER, FEDERAL TRADE 
                           COMMISSION

    Ms. McSweeny. Thank you very much, Chairman Thune, Senator 
Blumenthal, and members of the Committee, for inviting us here 
today. I'm Terrell McSweeny, a Federal Trade Commissioner. And, 
like my colleagues, I look forward to speaking with the 
Committee about our work, our priorities, and how we protect 
American consumers from scams and ensure a competitive 
marketplace.
    The Federal Trade Commission safeguards consumers from 
unfair or deceptive acts and practices. Since its founding--and 
thank you for acknowledging our long history with this 
committee--the FTC has followed American consumers from the 
corner store of 1914 to the Internet-connected wearable of 
today.
    Much of today's discussion will focus on the Internet of 
Things, privacy, and data security, but our enforcement actions 
in those areas are a seamless part of our overall enforcement 
agenda, an agenda that is rooted in the principles that 
consumers should be treated fairly and honestly in the 
marketplace.
    Even as we examine digital technologies, we continue to 
police against more analog frauds. For example, in the last 
week, we challenged a sweepstakes fraud that targeted senior 
citizens with promises of million-dollar prizes, but instead 
stole their money; we banned abusive debt collectors and shut 
down a phony business directory scam that stole millions from 
small businesses.
    On the debt-collection front alone, in the first 9 months 
of this year we have recovered $94 million for consumers and 
banned 30 companies from ever working in debt collection again.
    These are the frauds that our attorneys and investigators 
fight every single day. These scams prey on people who are 
struggling, the elderly, and underserved communities. They are 
perpetrated by unscrupulous fraudsters, and ending their 
operations is a part of our bipartisan mission.
    Policing frauds and scams are just one aspect of our 
efforts to protect American consumers. We also work closely 
with State and local enforcement partners throughout the 
country. Our collaboration with State attorneys general was 
integral in shutting down a fraudulent charity, Cancer Fund of 
America, which took in millions of dollars and largely served 
as a slush fund for its executives.
    The Commission also works with partners on the local level. 
Each year, we hold multiple Common Ground Conferences around 
the country. These events give local law enforcement, social 
service organizations, community institutions, and regular old 
consumers a better understanding of our consumer protection 
work and helps us form the partnerships that both inform our 
enforcement and lead to stopping frauds in the marketplace.
    Our Every Community Initiative recognizes that fraud 
impacts each and every community in our country. This could 
mean undertaking efforts to combat Medicare fraud among our 
seniors, mortgage modification frauds in distressed 
neighborhoods, or ``notario'' fraud in Latino communities. The 
initiative works with local partners, distributes materials to 
libraries and senior centers and other gathering places, and 
works with ethnic media to get specific information to media 
outlets that directly serve their communities.
    In addition to our Every Community Initiative, last year we 
relaunched IdentityTheft.gov, creating an easy-to-use one-stop 
shop of information and personalized recovery plans for 
consumers experiencing identity theft. Our team is currently 
working on streamlining what was once a time-consuming and 
difficult process. Unfortunately, however, in this environment, 
identity theft remains a top consumer complaint in our sentinel 
system year after year.
    Educating businesses and entrepreneurs is a major part of 
our effort to improve data security. This year, we launched our 
Start with Security program to help guide businesses through 
the process of developing strong data security procedures. 
Through sessions in various cities and the publication of our 
Start With Security Guide, the FTC has helped businesses of all 
sizes develop plans to safeguard their data.
    Finally, we keep pace with developing technologies. Take 
for instance FinTech, or financial technology. This is the 
emerging technology of payments, banking, and lending. In the 
last year, we've brought cases involving the deceptive use of 
crowd-funding platforms and stopped a fraudulent bitcoin mining 
operation. We're also holding workshops on marketplace lending 
and ransomware, crowd funding, and peer-to-peer payments.
    Our experience enforcing statutes like the Gramm-Leach-
Bliley Act, the Truth in Lending Act, the Electronic Funds 
Transfer Act, and the Fair Credit Reporting Act, the Fair Debt 
Collection Practices Act, and others, gives the FTC the 
expertise and capacity to protect consumers as traditional 
banking is disrupted by new technologies and new services while 
at the same time facilitating this important innovation, which 
has tremendous consumer benefit.
    We're a dynamic agency, even though we've been around for 
100 years, and one that has always been protecting consumers 
wherever they are. The FTC will continue to be a bipartisan 
protector of the American consumer and markets.
    We look forward to answering your questions. Thank you for 
having us here today.
    The Chairman. Thank you, Commissioner McSweeny.
    Let me just start. I want to ask about data security--it 
has been covered in your remarks, and some of ours as well--and 
the Commissioner's enforcement authority. The recent news of 
yet another massive data breach, this time involving at least 
500 million Yahoo accounts, underscores the need to protect 
consumers against unreasonable data security practices that put 
them at risk of identity theft and financial harm. At the same 
time, there are questions that remain about the Commission's 
authority in this area. On the one hand, the Third Circuit's 
ruling last year would appear to be a major victory 
underscoring your authority to enforce against lax data 
security practices. On the other hand, as I noted in my opening 
remarks, the Commission's own recent administrative ruling 
raises serious questions about whether the FTC's actions are 
always predicated on substantial injury to consumers.
    When weighing whether to bring a case alleging unfair 
practices, the Commission must assess whether the practices 
causes substantial injury, which has traditionally meant 
monetary harm, not emotional impact or other subjective types 
of harm. Chairwoman Ramirez, what do you believe it means for 
harm to be ``substantial''? And what are the implications for 
the FTC's approach to data security cases?
    Ms. Ramirez. Thank you for the question, Chairman Thune.
    I agree with you that the issue of data security is a very 
significant concern, and it's an issue that we've been 
addressing for well over a decade. I will note that all of our 
cases do comply with the standard for unfairness that is set 
out in our statute, which requires that there be substantial 
injury. However, I will disagree with you in one respect, and 
that is that there is no limitation or requirement that the 
harm be economic. Most of our cases do allege harm that is 
economic and tangible, but there is no such restriction. And in 
a few instances that are appropriate, we do feel that it's 
proper for the agency to address serious intangible harms, like 
privacy harms. That would include the infringement and 
potential revelation of private information, as well as privacy 
intrusions.
    I'll give you one example, and that's our Aaron's case, 
which involves a company that rented out computers. As a method 
to attempt to address situations where customers did not either 
make rental payments or did not return these rented computers, 
they used software that allowed and basically captured, via 
camera, what was happening inside a person's home. In that kind 
of a situation, I believe that it would be absolutely 
appropriate for the agency to take action, and that it is 
important for us--when there is a serious intrusion of that 
type, for the Commission to take action.
    The Chairman. So, substantial harm, in your mind, does not 
just constitute simply an economic or monetary----
    Ms. Ramirez. Again, in most instances, that is likely to be 
the harm at issue, but, in certain cases, and, in particular, I 
think, in privacy and data security cases, there may be another 
more intangible harm that may be implicated. And I believe that 
a privacy intrusion would be one of those instances.
    The Chairman. Regarding the FCC's Title II privacy 
proceeding, the Chairman, Tom Wheeler, has stated that the FTC 
filed good comments, and the FCC's final rule will look a lot 
like that. I appreciate Chairman Wheeler's deference to the 
FTC's experience regarding consumer privacy protection, but I 
also would like to know whether each of you believes that 
consumers would benefit from the FTC having an opportunity to 
review the text of the FCC's new privacy proposal and publicly 
comment on it before the FCC votes. And, if not, could you 
explain why?
    We'll start with you, Chairwoman Ramirez, and then hear 
from each of the Commissioners.
    Ms. Ramirez. Mr. Chairman, as you've noted, we have had an 
opportunity to publicly comment and provide our suggestions to 
the FCC about how they can improve their proposed framework. If 
it's appropriate for us to have an opportunity to do that 
again--and I'd have to defer to Chairman Wheeler and his 
colleagues as to whether it's appropriate for us to be 
commenting publicly again, and having another opportunity to do 
that--we are certainly happy to do so.
    I will say that we do engage in regular conversations with 
the Federal Communications Commission, both at the staff level 
as well as at more senior levels and my level, to discuss the 
approach that we take when it comes to privacy. And I do, as 
you already noted--do know that they take our comments very 
seriously.
    The Chairman. OK. And, before they vote on it and it 
becomes more final, do you think it would be useful and helpful 
for the FTC to be able to react to the current iteration of 
that proposal?
    Ms. Ramirez. Again, I have to defer to them on what's 
appropriate for their process. I don't want to intrude on that 
process. But, at the same time, we're certainly happy to 
provide any additional comments and offer our own suggestions. 
Certainly.
    The Chairman. Commissioner Ohlhausen.
    Ms. Ohlhausen. Thank you, Senator.
    I was very pleased that the FTC was able to file 
bipartisan, unanimous comments approving our staff comments to 
the FCC on these important issues. And I continue to try to, 
through other means, bring attention to the FTC's time-tested 
approach in this area.
    Like Chairwoman Ramirez, I would certainly want to be sure 
we were, you know, permitted to weigh in, but I think it could 
be beneficial, given the years and years of experience the 
FTC's brought to consumer privacy, to be able to give some 
additional feedback to the FCC.
    The Chairman. Chairman McSweeny?
    Ms. McSweeny. Like my colleagues, I would reiterate that we 
stand ready to work with the Federal Communications Commission. 
You know, I want to make sure that I underscore the fact that, 
in our initial bipartisan comment to the FCC, we were very 
supportive of their proposed rule in this area. We do believe 
that, like the FTC, the FCC shares our goals of transparency, 
consumer choice, and security, and that they have an important 
role to play in protecting consumer privacy as they undertake 
this rulemaking. So, if it's--as my colleagues have said--if 
it's permissible for us to again comment, I'm sure we'd be 
willing to do so if it comported with their rules and 
procedures.
    The Chairman. Senator Blumenthal.
    Senator Blumenthal. Thanks, Mr. Chairman.
    Coming back to data breaches, Yahoo and the like--they have 
affected Home Depot, Target, Experian, Anthem, a variety of 
nonprofits, insurers, hospitals, and literally every major 
collector or storer or possessor of data has been subject to 
this kind of attack or breach that, in many instances, could 
have been prevented by reasonable and appropriate measures to 
safeguard consumer data that these very entities collect.
    So, my question is, under Section 5 and the report that the 
FTC issued--it's called ``Protecting Consumer Privacy in an Era 
of Rapid Change''--aren't there changes in the law that could 
make the FTC a more effective enforcer of privacy, to require 
more robust security practices and more honest disclosure by 
these companies and other entities about what they do? I would 
like to ask each of the panel members whether they support the 
Data Security and Breach Notification Act that Senator Nelson 
and I have introduced.
    Chairwoman Ramirez?
    Ms. Ramirez. Senator, as I noted before, this is an 
incredibly important issue. I think, frankly, that data 
security is one of the most significant challenges that we face 
as a Nation. And I believe that, while we have been able to do 
very important work using our Section 5 authority at the 
Commission, including not only bringing enforcement actions, 
but then also providing guidance to the business community, I 
do believe that it is necessary for Congress to take action in 
this area. It would be very helpful for there to be Federal 
legislation that would give additional authority to the FTC, 
including providing for civil penalty authority, and among 
other things, also providing and giving us jurisdiction over 
nonprofits, which also see significant--have experienced 
significant breaches. So, those would be two areas where we 
would benefit from additional authority.
    So, yes, I am in favor of the proposed legislation and 
believe it's something that ought to happen.
    Senator Blumenthal. Commissioner Ohlhausen?
    Ms. Ohlhausen. I agree with Chairwoman Ramirez that data 
security is one of the biggest issues facing businesses and 
consumers today, and, therefore, facing the FTC. And I have 
been supportive of having Federal data security and breach 
notification legislation that would give the agency civil 
penalty authority and authority over nonprofits.
    Senator Blumenthal. Thank you.
    Commissioner McSweeny?
    Ms. McSweeny. I believe you're witnessing one of those 
areas of bipartisan agreement among the Commissioners, because 
I, like my colleagues, support comprehensive data security 
legislation, as well.
    I'd just like to underscore an important point here that, 
as we are on the cusp of this Internet of Things facilitated, 
sort of, innovation and revolution connecting all of these 
different parts of our daily lives, we have a significant 
challenge, which is that something like 84 percent of U.S. 
households are deeply concerned about the privacy and security 
implications of this technology. So, if we want this innovation 
to flourish, we want this marketplace to flourish, which I 
believe we do, we need to address their security concerns so 
that consumers feel comfortable adopting these technologies.
    Senator Blumenthal. I think that point is very, very well 
taken. There's no reason for this new frontier of privacy to be 
a Wild West. In fact, if it is, it will discourage innovation, 
invention and consumers adopting and adapting to this new world 
that increasingly confronts them.
    Let me come back to an issue that Commissioner McSweeny 
raised, the plethora of complaints that are received about the 
Do Not Call List. States have them. The Federal Government has 
them--Do Not Call Lists. And yet, one of the most common 
sources of complaints to me and, I'm sure, my colleagues, is 
that they receive unwanted and unsolicited calls. Again, as 
technology enables robocalling and other new advances in 
outreach to consumers, do we need a different system, new 
legislation? What has to be done to make it more effective?
    I have advocated, for example, for a ban on robocalls. What 
would this panel think about more effective new action in this 
area?
    Ms. Ramirez. As you noted, Senator Blumenthal, this is an 
area that is a frustrating one for us. We do engage in 
significant efforts to try to ensure compliance with current 
law. But, at the same time, there's no question technology has 
enabled malefactors to avoid and bypass the law in this area. 
So, what we have done, in addition to continuing active 
enforcement, is to, frankly, try to utilize technology as a way 
of stopping these illegal robocalls. And so, we have--as 
already has been noted, we have had challenges to, basically, 
seek assistance from the private sector and ask for the 
development of technology that might help in this arena. We're 
also consistently engaging in discussions with the Federal 
Communications Commission to see if there might be appropriate 
action that can be taken at their end to help block these 
unwanted calls.
    So it's an area that we are certainly very keenly aware of 
and understand the concerns, and are working both to develop 
technological solutions as well as determine whether it's 
appropriate for other form of regulation to assist.
    Senator Blumenthal. My time is expired. I don't know 
whether the other members of the Commission have views, but I 
would welcome them in writing if you do. I don't want to take 
more time now. If we have a second round of questions, maybe we 
can return to this issue.
    Thank you, Mr. Chairman.
    The Chairman. Thank you, Senator Blumenthal.
    Senator Heller is up next.

                STATEMENT OF HON. DEAN HELLER, 
                    U.S. SENATOR FROM NEVADA

    Senator Heller. Mr. Chairman, thank you.
    And, to the Commissioners, thank you for taking time and 
being here today. I certainly do appreciate it.
    I want to talk a little bit about--a little bit about the 
state of Nevada and the tourism being the lifeblood of the 
economy. I guess I'll just let the statistic speak for itself.
    I don't think there's anybody that hosts better than the 
state of Nevada. I think the rest of the world knows it, 
because nearly $60 billion of travel spending is injected into 
Nevada's economy every year, accounting for about 13 percent of 
the State's annual GDP. Last year, the Las Vegas--Las Vegas 
experienced a record year, so it continues to grow, surpassing 
42 million tourists. The Las Vegas Convention and Visitor 
Authorities has estimated that our tourism economy generates 
more than $50 billion annually and supports over 366,000 jobs 
in southern Nevada alone, which is about 40 percent of the 
total jobs in that area of the state. I think most of you know 
that lodging and gaming industry is a big part of that. So, 
when travelers come to Nevada, they expect to stay in some of 
the nicest resorts in the world. They expect to be treated like 
kings and queens, and pampered with the latest and the greatest 
of amenities. It's all part of the Las Vegas and Nevada 
experience.
    Chairwoman Ramirez, you and I had several discussions on 
some of these resort fees, and I'd like to move to that area. 
Now, the Commission offered some guidance in 2011. In your 
opinion, do you believe that the consumers have benefited from 
those 2011 practices coming from the Commission for lodging and 
for the industry as a whole?
    Ms. Ramirez. Senator, yes. And so, let me just provide a 
little bit of background here so that my----
    Senator Heller. Don't take up too much of my time.
    Ms. Ramirez. I promise I won't.
    Senator Heller. All right.
    Ms. Ramirez. Back in 2012, we did provide some guidance 
with regard to the use of hotel resort fees.
    Senator Heller. Yes.
    Ms. Ramirez. And we did have a concern that mandatory 
resort fees were being separated from room rates, and we were 
also concerned that those mandatory resort fees were not being 
properly disclosed to consumers. And so, we did provide some 
guidance indicating that it would be adequate to promptly--
after advertising a room rate, to promptly thereafter show any 
mandatory resort fee.
    I will note, however, that, although that guidance that we 
provided back in 2012 has improved the conduct of many 
companies when it comes to the effective disclosure of resort 
fees, I have become increasingly concerned about certain 
developments since then that have raised and--raise questions 
about whether that is enough when it comes to effective 
disclosure.
    Senator Heller. So, what brought your concern? What 
prompted your concern?
    Ms. Ramirez. So, let me note that----
    Senator Heller. I guess the question is, How many 
complaints have you received?
    Ms. Ramirez. Well, I don't have an--a number, but let me 
just say that----
    Senator Heller. I do.
    Ms. Ramirez.--let me just say that it's important for us to 
continuously evaluate our positions, given the evolving 
marketplace. This is one of those areas where I think it is 
appropriate for us to take another look, because--number one, 
we've seen a surge in the use of mandatory resort fees being 
separated from room rates. Secondly, we've seen an increase in 
the use of comparison sites to search for information about 
hotels. We've also seen a rise in the use of smartphones that 
have very small screens. Additionally, I think we have a more 
sophisticated and refined understanding about how consumers 
actually process----
    Senator Heller. OK, so----
    Ms. Ramirez.--information when----
    Senator Heller.--the question is----
    Ms. Ramirez.--it comes to----
    Senator Heller. You're explaining all this. But, how many 
complaints have you actually received?
    Ms. Ramirez. I can't give you a figure. I can certainly 
provide you additional information. What I can tell you is that 
this is a concern that we have----
    Senator Heller. Well, I can tell you what the number is.
    Ms. Ramirez.--heard about breaking up----
    Senator Heller. Eight or ten.
    Ms. Ramirez.--fees.
    Senator Heller. Eight or ten. Eight or ten complaints.
    Ms. Ramirez. I'm happy to provide you additional 
information to--in terms of the number of complaints. What I 
can tell you is that I have received--we have received consumer 
complaints. We have received----
    Senator Heller. How many----
    Ms. Ramirez.--concerns about this area.
    Senator Heller.--consumer complaints--how many consumer 
complaints do you get on consumer fraud?
    Ms. Ramirez. We get hundreds of thousands, if not----
    Senator Heller. Millions.
    Ms. Ramirez.--millions, of consumer----
    Senator Heller. Millions. You get eight or ten on this. And 
now you want to enact new regulations.
    Ms. Ramirez. No. It's an issue that I think is very 
appropriate for us to take a look at. It's a concern----
    Senator Heller. Well----
    Ms. Ramirez.--of mine. And I think it's something that, as 
an agency, as the marketplace evolves, and as consumers use the 
online marketplace, I think it's important for us to make sure 
that they can be confident in that online marketplace.
    Senator Heller. Have you taken any enforcement action 
against any hotel or resort operators on resort fees? Any 
actions?
    Ms. Ramirez. We have sent warning letters, and----
    Senator Heller. Right. Right. I understand that. Twenty-
two, I think----
    Ms. Ramirez. As of----
    Senator Heller.--total.
    Ms. Ramirez.--right now, what we're doing is, I'm taking 
another look at this issue, because I think it's one that's of 
serious concern. And in order to----
    Senator Heller. OK.
    Ms. Ramirez.--ensure that consumers have confidence in the 
marketplace--before I take any--we take any enforcement action, 
I have been engaging in discussions with the industry to see if 
there might be a voluntary approach that can be taken here to 
address some of these concerns.
    Senator Heller. This--OK, thank you. Thank you for your 
comments.
    Ms. Ohlhausen, you've been on the Commission since 2012. In 
your experience, does the Commission often spend time 
developing new guidance on issues, having received only eight 
complaints and zero enforcement actions in 5 years?
    Ms. Ohlhausen. Well, I haven't done a study of how many 
complaints drive actions that we've taken. I would say that we 
do get information from a variety of sources. And particularly 
on the resort fees, I've been encouraged by the interactions 
we've had with the hotel and gaming industries on ideas they 
have for making progress in this area.
    Senator Heller. Do you believe that the current disclosures 
implemented as a result of the previous guidance in 2011 are 
deceptive?
    Ms. Ohlhausen. I haven't applied the deception test to it. 
I would have to see what consumers--how they react to it. I 
certainly believe that you can have a disclosure that is 
nondeceptive, but the question is, Can you have one also that 
is improved or has technology changed in a way that makes it 
not as informative to consumers as previously available.
    Senator Heller. So, are you comfortable with the rulemaking 
authority on resort fees?
    Ms. Ohlhausen. I don't anticipate, just speaking for 
myself, that this is where we will make a rule. I'm still in 
the phase of gathering information and hearing from the parties 
and hearing from our staff, our economists, what information 
they have, to determine what the correct next step is.
    Senator Heller. Mr. Chairman, my time's run out.
    The Chairman. Thank you, Senator Heller.
    Senator Klobuchar is up next.

               STATEMENT OF HON. AMY KLOBUCHAR, 
                  U.S. SENATOR FROM MINNESOTA

    Senator Klobuchar. Thank you very much.
    And thank you all for being here today. You do very 
important work. I especially wanted to thank you for the work 
on Volkswagen at the Commission. I know that was a difficult 
issue, and I thank you for that. I understand you, just this 
morning, won an important case in the Third Circuit--Is that 
right?--on hospitals, which we appreciate. If we have more 
time, you can talk about that, as well.
    I thought I'd start, before going to the issue that I'm 
most focused on with the FTC, which is the prescription drug 
prices, by following up on not the same, but a related travel 
issue. I'm Chair of the Tourist Subcaucus, and I know Senator 
Schatz does a lot of work on that, as well.
    Chairwoman Ramirez, in March, when you appeared before the 
Judiciary Antitrust Subcommittee, of which I'm the Ranking 
Member, we discussed my concern about concentration in the 
online travel agency market. Specifically, I asked about the 
Expedia Accelerator Program, under which a hotel can pay 
Expedia more and obtain a better position in search results. We 
discussed the 2013 letters you sent to search, travel, and 
retail sites reminding them that they must be clear when their 
results are not natural search results. At that hearing, you 
committed to looking into whether the program complies with 
Section 5 of the Federal Trade Commission Act. What progress 
have you made on this matter?
    Ms. Ramirez. Senator, again, thank you for the concern that 
you raised. Unfortunately, I can't discuss publicly any 
specific practices of particular companies. But, I assure you 
that we certainly did hear the concerns that you've raised, and 
I also can assure that we are committed to rooting out any 
anticompetitive conduct.
    Senator Klobuchar. Thank you.
    Now, on to prescription drugs. As you know, one drug has 
made a lot of press lately. And that was the 500-percent 
increase to the EpiPen. There have been hearings. There have 
been the usual cycle of people complaining. Then there are mea 
culpas, then the drug price gets reduced, and then we start the 
cycle again with the next drug. What I hope my colleagues are 
aware of is that four out of ten of the top-selling drugs in 
America have, in fact, gone up over 100 percent in the last few 
years. Insulin has gone up three times the amount. This is 
getting to be an untenable situation for the American people.
    There are a number of bills out there that I think would be 
helpful. One of them is the Pay for Delay bill that I have with 
Senator Grassley, which CBO estimates would bring in $3 billion 
for taxpayers, even more for individuals. Same with the CREATES 
Act, which forces brand-name drug companies to give samples so 
we can create generics.
    But, on the Pay for Delay, obviously you guys did some work 
here on the FTC v. Actavis case, which was an important 
victory.
    Chairman Ramirez and Commissioner McSweeny, do you believe 
the bill that I have with Senator Grassley on the CREATES Act 
or the Pay for Delay bill--would these be helpful in trying to 
get more generics on the market and get more competition?
    Ms. Ramirez. Senator, yes. You noted the victory that the 
FTC had in the Actavis case. I think that certainly was an 
important victory for the agency that allows us to do important 
work in the pay-for-delay arena. However, I do believe that 
your proposed legislation would buttress our efforts and, by 
creating a rebuttable presumption, would further strengthen our 
ability to tackle situations where we believe there might be 
anticompetitive conduct.
    Ms. McSweeny. And I agree.
    Senator Klobuchar. OK. Very good.
    You want to add anything, Commissioner?
    Ms. Ohlhausen. Well, I've been very supportive of the FTC's 
Pay for Delay enforcement. And I also generally have concerns 
about the ability of a competitor to abuse a government process 
to keep competitors out of the market.
    Senator Klobuchar. Thank you.
    Evergreening or product hopping is another type of conduct 
that has raised antitrust concerns. For example, Allergen tried 
to force patients taking Namenda, which is a drug used to treat 
Alzheimer's, to switch to a new version of the drug before the 
generic was out and available. Instead of suing after the fact, 
the New York Attorney General used the antitrust laws and 
obtained a court order blocking the plan until after generic 
competition was available. According to one report, that action 
averted an estimated $6 billion in increased Medicare drug 
spending.
    Chairwoman, do you believe product hopping can cause 
consumer harm? And could you explain it to my colleagues?
    Ms. Ramirez. Senator, yes. This is another area of concern. 
I think it's an area that we have to be careful in, because, of 
course, we do want companies to continue to make improvements 
with new drugs, but, at the same time, if a company makes a 
minor improvement in a drug product that ends up having little 
or no therapeutic benefit and has anticompetitive consequences, 
that could certainly violate the antitrust laws and would be of 
significant concern to us.
    Senator Klobuchar. And the idea here is that a company will 
take a drug and maybe go from a tablet to a capsule or maybe to 
a 24-release capsule, and that extends their patent 
protections. That's why they call it ``evergreening.'' Then 
another competitor or a generic can't come in the market. So, 
you can just keep extending and extending, and then we have no 
competition at all.
    Ms. Ramirez. That's right. What would happen would be that 
that would allow the branded drug manufacturer to bypass 
automatic generic substitution laws, and thereby prevent or 
impede and get in the way of a very effective distribution 
method, and that would end up potentially harming consumers.
    Senator Klobuchar. And this could be part of the reason 
that our drug prices in America are double the average prices 
in Canada?
    Ms. Ramirez. This would be one of the areas, again, that 
causes us concern. And we certainly are, of course, concerned 
about significant hikes that we've seen in prices. So, it is 
a--it can be a concern.
    Senator Klobuchar. OK.
    And my last question, just maybe a sentence answer, is that 
I've asked the FTC to investigate specifically whether Mylan 
Pharmaceuticals used incentives or exclusionary contracts with 
insurers, distributors, or pharmacies to deny an alternative 
product access to the market. I also asked you to provide any 
guidance or policy proposals to make these drugs more 
competitive and eliminate the ability of some drug 
manufacturers to reap windfall profits at the expense of 
consumers.
    I know I asked for a response within 90 days, but can you 
update me on where the Commission is in answering these 
questions?
    Ms. Ramirez. Certainly. Again, let me just say that we 
share the concerns that you've expressed, Senator Klobuchar, 
and we absolutely are committed to making sure that there's 
enforcement of the antitrust laws. We are in the process of 
preparing a response, and will, in short order, have a response 
to you.
    Senator Klobuchar. Thank you.
    Thank you, to all three of you, for your good work.
    The Chairman. Thank you, Senator Klobuchar.
    Senator Schatz.

                STATEMENT OF HON. BRIAN SCHATZ, 
                    U.S. SENATOR FROM HAWAII

    Senator Schatz. Thank you, Mr. Chairman.
    Commissioner Ramirez, I wanted to start with credit 
reports. The FTC found that 1 in 20 consumers have errors 
significant enough to materially hurt their credit scores. 
That's about a 5-percent error rate. And that means about 10 
million individuals are likely unable to get a loan for a car 
or a mortgage and, in some instances, are prevented from 
getting the employment that they need as a result of an 
erroneous credit score.
    The FTC recently followed up on its earlier study and found 
that nearly 70 percent of consumers with errors in their credit 
score were still unable to resolve those errors 2 years later. 
The FTC cited problems with the way the credit reporting 
agencies resolve disputes and communicate with consumers.
    I guess my question for you is: what is the FTC doing to 
resolve this problem? As I hear about the Do Not Call and I 
hear about lots of individual consumer issues, resort fees--all 
of those important--but, I can't imagine that there is an issue 
larger than one that is potentially impacting 10 million 
Americans and their ability to, basically, participate in the 
economy.
    Ms. Ramirez. Senator, thank you for your question.
    I completely agree, this is an incredibly important issue. 
Unfortunately, I cannot comment on specific companies, but what 
I will say is that we take very seriously the role that we play 
here in enforcing the Fair Credit Reporting Act and other 
applicable law, including Section 5. And so, this is a priority 
area for us, and we do, and have, brought a number of actions 
relating to this area.
    In addition to that, we also cooperate extensively with the 
Consumer Financial Protection Bureau, which also has 
jurisdiction in this area. And so I can assure you that it's a 
priority for us to ensure that consumers have, and are 
provided, accurate consumer reports. It is a top priority, and 
it's something that we are certainly looking at.
    Senator Schatz. Commissioner Ohlhausen?
    Ms. Ohlhausen. I agree with Chairwoman Ramirez. The Fair 
Credit Reporting Act, I think, is a very, very useful statute, 
both for consumers and businesses, but we have to make sure 
that it is providing accurate information on which those credit 
and employment and other important decisions are made.
    Senator Schatz. Commissioner McSweeny.
    Ms. McSweeny. I would second what my colleagues have said. 
It's a huge priority. As you point out, it's absolutely 
essential to consumers who are trying to access credit and 
function in the marketplace to have accurate information on 
their credit reports. And it's an essential part, also, of 
dealing with problems like identity theft.
    So, we have to do several things. One is remind people of 
their obligations under the Fair Credit Reporting Act, make 
sure we're enforcing all through the marketplace, and continue 
to work with the credit reporting agencies to make sure that 
they have good processes in place to mitigate and address 
concerns and inaccuracies in reports.
    Senator Schatz. Do you think they have good processes in 
place right now?
    Ms. McSweeny. I think that we could continue to see some 
improvements in that area, especially with regards to including 
the speed with which people could correct errors on their 
credit reports. I have anecdotally heard the same kinds of 
problems with people having to go through really strenuous, 
time-consuming processes to get corrections made.
    Senator Schatz. I just want to add one thought for you to 
consider, which is the potential for disparate impact in 
minority communities when it comes to erroneous credit reports, 
because I think it just stands to reason that people with 
resources--financial, time, access to people who can help them 
to navigate these challenges--are going to have a better shot 
at untangling an erroneous credit report. And if you are a 
shift worker, if you have limited English proficiency, if you 
are in any number of circumstances that make it difficult to 
unravel this, then I think there's a tremendous potential for 
disparate impact.
    Chair Ramirez?
    Ms. Ramirez. I absolutely concur with you, and I assure you 
that, in all of the work that we do, we are also thinking about 
how conduct and activities in the marketplace might impact low-
income consumers, minorities, and others who may be 
underserved. So absolutely, this is certainly a priority for 
us.
    Senator Schatz. My final question goes back to this data 
security issue. I guess I just wanted to say that we talk a lot 
on this committee about breach notification. And I think that's 
critically important. But, if we're talking about 900 million 
individual records that are breached, plus whatever number ends 
up being assigned to the Yahoo breach, it's not any longer 
about notification, it's about preventing the breach.
    My question for the Commission, and I'll take it for the 
record, in the interest of time, is, What's a reasonable data 
security requirement? And not just under, sort of, the 
interpretation of the statute, but also, are you in a position, 
given the current law, to increase your data security 
requirements on the basis that they're obviously not working? 
Can you use this ``reasonable'' test in a commonsense way? Can 
you say, ``It is not reasonable if it is not preventing data 
breaches in the hundreds of millions''? I'll take that for the 
record.
    But, I'd really like for the Commission to get more 
aggressive when they consider whether the requirement is 
reasonable, or not. Because it seems to me, on a common sense 
level, it's just not working.
    Thank you.
    The Chairman. Thank you, Senator Schatz.
    And please get that back on the record, that would be 
great.
    Senator Moran.

                STATEMENT OF HON. JERRY MORAN, 
                    U.S. SENATOR FROM KANSAS

    Senator Moran. Mr. Chairman, thank you. Thank you and 
Senator Blumenthal for the hearing.
    Madam Chairwoman and Commissioners, welcome to our 
committee.
    I want to talk about the topic--I'll direct my question to 
the Chairwoman, although if either of the other Commissioners 
have any comments, I would welcome that, as well. The topic I 
want to talk about is renewable identification numbers, known 
as RINs. This is the enforcement mechanism used by the EPA when 
it comes to determining whether the renewable fuel standard is 
being complied with. And, in the process of--there are 
obligated parties to demonstrate that they are complying with 
the EPA requirements of the Renewable Fuel Standard, but RINs 
become traded, separate from the actual fuel. And as that 
occurs, as that disassociation occurs between the unit of 
biofuel and you have an instrument that then is traded, my 
question is, Is there FTC oversight over that transaction? And 
I assume that the oversight would be in regard to any potential 
fraud that may exist in that market. My understanding is that 
the Office of Air Quality and Transportation within the EPA is 
the entity that's charged with the monitoring of and policing 
of RINs. But, I'm curious as to whether or not there's a role 
the FTC does play, should play, as buyers and sellers of this 
increasingly expensive compliance monitoring tool becomes so 
prevalent.
    Ms. Ramirez. Chairman Moran, I'm certainly aware of the 
concern that you have. And there may be some authority that the 
FTC has if there were evidence of manipulation in this 
particular market. I'm happy to take a closer look at this 
issue and have further discussions with you or with your staff. 
But, it's conceivable that there may be a role to play here, 
but, again, happy to provide you with additional information.
    Senator Moran. Thank you very much. Does that answer 
suggest that, to date, there hasn't been any kind of review or 
investigation by the FTC?
    Ms. Ramirez. Again, I'm limited in what I can say publicly. 
All I can say is that I am aware of this issue, we are aware of 
this, and we certainly do look very closely at energy markets. 
But, it would really, again, depend on the facts. And noting 
your concern, I'm certainly happy to take a closer look.
    Senator Moran. Well, I'd be glad to have additional 
conversation, and I welcome that look.
    Any other Commissioners have the need or desire to share 
anything with me?
    [No response.]
    Senator Moran. Thank you very much.
    Let me turn to set-top boxes. As you know, we've had a 
number of conversations this morning about the Federal 
Communications Commission. They're advancing their own rule in 
regard to set-top boxes. But, by their own admission, it--
indicated that they don't have jurisdiction over device 
manufacturers. Chairman Wheeler told us recently that he has 
worked with you, the FTC in writing that rule and has been 
advised that the FCC's final rule, quote, ``Requires the 
devices warrant to consumers that they are in compliance with 
certain sections of the Communications Act and that the FTC 
will have the ability to do the necessary enforcement to 
protect that privacy.'' Could you confirm that, tell us of the 
conversations you've had with the FCC in this regard? And do 
you believe data should be treated differently based on what 
government entity regulates the company or by the level of 
sensitivity that the data has that's being collected?
    Ms. Ramirez. Yes. The FTC did submit comments to the 
proposed set-top box rulemaking by the Federal Communications 
Commission. We did, in our comment, note that third-party 
manufacturers of set-top boxes ought to be required to make 
consumer-facing statements in which they indicated that they 
would comply with the rules that would apply to cable 
companies. And, by doing this, it would facilitate the ability 
of the FTC to enforce in this arena. And I am aware that 
Commissioner Wheeler has indicated an intent to include that in 
the rule. And again, that would allow us to take action in 
appropriate circumstances.
    Senator Moran. And your thought about my second question?
    Ms. Ramirez. And I apologize.
    Senator Moran. Do you believe that data should be treated 
differently based on what government entity regulates the 
company or by the level of sensitivity the data has that's 
being collected?
    Ms. Ramirez. I think it is important for there to be 
general harmony in the way that data is treated. And, in 
keeping with that and to that end, the FTC has submitted 
comments to the privacy rulemaking that the FCC is engaging in. 
I will note that we are in an era when a number of different 
agencies are having to take a look at issues that relate to 
privacy and data security. We certainly have been active in 
sharing the extensive expertise that we have in looking at 
these issues, given that we've devoted many resources and many 
years to this. But, I think, going forward, it will be 
appropriate for us to endeavor to harmonize. But, there's no 
question that different agencies with different authority will 
be examining these issues.
    Senator Moran. Chairwoman, thank you very much.
    Mr. Chairman, thank you. I would note, in our memo, that it 
announces a 1:30 subcommittee hearing, a subcommittee that I 
chair, the Subcommittee on Consumer Protection, Product Safety, 
Insurance, and Data Security. We have postponed that hearing 
until later in the year, due to a 2:15 vote and then a 
classified briefing at 3 o'clock for all Senators. So, we 
appreciate the chance we will soon have to bring in thought 
leaders in regard to the role of the FTC and consumer 
protection, as well as some of the industries that are affected 
by the FTC.
    The Chairman. Thank you, Senator Moran. We do look forward 
to getting that hearing in, and adding the perspective that the 
various members of that panel were going to add. And so, we'll 
try and take that up, if not this week, sometime later in the 
year.
    And I also am very interested in the RINs discussion that 
you began earlier, because that is something that has a pretty 
profound impact on most Midwestern states, wherever corn is 
raised. And I would love to--whatever the FTC has underway, in 
terms of looking into that issue, we would welcome, at some 
point, your findings.
    Next up is Senator Daines.

                STATEMENT OF HON. STEVE DAINES, 
                   U.S. SENATOR FROM MONTANA

    Senator Daines. Thank you, Mr. Chairman.
    Welcome to the Committee today.
    As technology has become more prevalent in our lives, data 
has certainly become now a form of currency. I'm a daddy of 
four children. I know firsthand how big a role technology 
certainly plays in our kids' lives, particularly in our 
schools. Protecting the privacy and security of our kids' data, 
I believe, is critical in today's world, which is why I 
introduced the SAFE KIDS Act with my colleague Senator 
Blumenthal. The SAFE KIDS Act provides clarity in what 
companies can and cannot do with student data collected in 
schools. And I look forward to working with this committee to 
advance this important legislation.
    I now want to pivot to legislation that we do have on the 
books governing student data privacy. We have FERPA, passed in 
1974. I think the Carpenters had a number one song called ``On 
Top of the World'' that year. John Denver was singing 
``Sunshine on My Shoulders,'' and I was in sixth grade. And 
that is--doesn't even apply to technology companies. We have 
the Children's Online Privacy Protection Act, which was passed 
in 1998, and that does not apply to children 13 years and 
older.
    Commissioner Ohlhausen, is it fair to say that there are 
holes in Federal legislation pertaining to student data 
privacy? And how can Congress update the law to reflect the 
realities of today?
    Ms. Ohlhausen. Senator, you bring up some very important 
issues about how technology has really changed so greatly 
students' lives, children's lives, and we are, you know, 
working very carefully to try to keep up with that. So, we have 
brought enforcement actions. We updated COPPA. We've done that.
    Now, I do think that there is a question--COPPA goes up to 
age 13--and are there special--are there protections that would 
be appropriate for children between the ages of 13 and 18? And 
when we adopted COPPA, the Commission thought about this. 
Because teenagers do have different needs and different 
capabilities than do young children, and we--that is where we, 
and Congress, decided to draw the line.
    So, I do think that there are some issues worth considering 
at the, you know, 13- to 18-year-old age group, but I would say 
they need to be sensitive to the differences between those 
older children and children who are currently covered by COPPA.
    Senator Daines. As we all know, it's somewhat remarkable, 
we all--our technology Help Desks now are typically our 
children when we want to get something fixed or corrected or an 
app adjusted.
    I want to move to this issue of data collection--student 
data collection. The software and the apps our students are 
using, they know a lot about them--their location, they know 
their preferences, they know what school subjects they struggle 
with. And data collection is big business in the U.S., so 
there's a big incentive to collect user data.
    Chairman Ramirez, the Commission's written testimony 
mentioned cases the FTC has brought against companies who 
collect personal information from children without parental 
consent. What do these companies do with the information they 
collect? And how could it be harmful to children?
    Ms. Ramirez. Senator, there might be a variety of different 
uses--commercial uses that these companies might engage in. 
From our perspective, however, regardless of the proposed use, 
in my view, it's vital that personal information of children be 
protected, and that companies not be permitted to use that 
information unless there has been permission granted by 
parents. That's a mandate that Congress has issued, and we take 
our obligations to enforce COPPA very seriously. And, as you 
know, we promulgated the COPPA rule and are very active in 
enforcing in this area.
    Senator Daines. So, certainly, as you mentioned, there are 
legitimate uses for student data, like personalized learning. 
But, do you think it's appropriate for companies, for example, 
to use information about a student, let's say, struggling with 
literacy to determine what kind of credit they might be 
eligible for?
    Ms. Ramirez. Senator, it may be inappropriate to make that 
kind of a use, because of the Fair Credit Reporting Act, but I 
will say that I certainly am, and would be, concerned about the 
use, for instance, for advertising purposes, of certain 
information about students. And for that reason, I do think 
that there are certain gaps in existing protections relating to 
student information, and am supportive of efforts to address 
those issues.
    Senator Daines. So I need to wrap up here. Five minutes 
goes by fast. But, does Congress, do you think, then have a 
role here in preventing this type of behavior, potentially?
    Ms. Ramirez. I do, yes.
    Senator Daines. OK.
    Thank you.
    The Chairman. Thank you, Senator Daines.
    Next up is Senator Sullivan.

                STATEMENT OF HON. DAN SULLIVAN, 
                    U.S. SENATOR FROM ALASKA

    Senator Sullivan. Thank you, Mr. Chairman. I appreciate you 
calling this hearing to have an oversight testimony on an 
important Commission, but a Commission that actually has broad 
regulatory authority. So, I think that's important. I 
appreciate that very much.
    Madam Chair, I wanted to follow up. I actually kind of came 
in at the end of Senator Blumenthal's questions. But, I want to 
go back to this issue of security breaches. And what--and maybe 
it has already been answered, so I apologize if it has been--
but, what is the obligation right now, either under FTC 
regulations or Federal law, for the kind of episode we had 
recently with Yahoo? And I know this is happening a lot. When I 
was Attorney General for the state of Alaska, we had an--we had 
an incident where a company that was working for the State lost 
a lot of data on the state of Alaska employees. And one of the 
things we tried to do was get it--make people aware of that as 
soon as we could.
    So, what is the obligation right now, either under your 
regs or Federal law? And do you need more--what do you--how do 
you balance that? What--seems sometimes that companies hold 
this for a long, long, long time, and it doesn't seem to be 
promoting consumer welfare when that happens.
    Ms. Ramirez. The obligations of a company, under Section 5 
of the FTC Act, are for companies to put in place reasonable 
security measures to protect consumer information.
    Senator Sullivan. Right. But, what I'm talking about is 
notification to consumers once there has been a breach.
    Ms. Ramirez. With regard----
    Senator Sullivan. What's the obligation to----
    Ms. Ramirez. With regard to notification, there are 
applicable State laws, and there may be pertinent--just across 
the board, I'm speaking generally--there are sectoral laws that 
also provide certain notification requirements. I believe that 
there is need for Congress to have Federal legislation in this 
area. I did have a chance to speak about this earlier in my 
testimony. And I believe, number one, that there needs to be a 
Federal standard that's put in place for security, a 
reasonableness approach along the lines of the approach that we 
take at the FTC. And I also believe that it's important for 
there to be a Federal requirement when it comes to data breach 
notification that also provides--within a reasonable timeframe, 
requires companies to notify affected consumers.
    Senator Sullivan. And so, what do you think is--I mean, 
it's--is it case-by-case? Is ``reasonable'' 2 weeks? Is it 30 
days? I mean, what--certainly not a year or 6 months, is it?
    Ms. Ramirez. In our view, approximately 30 to 60 days might 
be appropriate. I think you want to allow a company to 
appropriately evaluate what has transpired so that consumers 
also aren't overnotified and have appropriate information about 
what has happened. But, at the same time, it is necessary for 
consumers to be notified so that they can take appropriate 
measures to protect themselves against potential identity theft 
or other possible harm that may flow from a data breach.
    Senator Sullivan. Let me--I'd like to broaden my line of 
questioning, here, to the economy. I know you have an economic 
bureau that focuses on economic issues. In terms of 
macroeconomic issues, you know, we've had a--essentially, 
what's been a lost decade of economic growth. The country's 
growth rate, in terms of GDP, has been anemic.
    The last two quarters have been barely above 1 percent. I 
think President Obama will be the first President, perhaps 
ever, since the statistics were kept, that's never hit 3 
percent GDP growth, even in 1 year. And, of course, that hurts 
everybody. That hurts the whole country. That hurts some of the 
most vulnerable people in the country.
    Do you think we can do better than that? You know, 
sometimes the Obama administration talks about, ``Well, this is 
the new normal. We have to accept one and a half, 2 percent GDP 
growth.'' The actual average for the country over the last 200 
years is about 3.7, almost 4 percent, whether it's Democrat or 
Republican administrations.
    Should we be satisfied with one and a half percent GDP 
growth? Do you believe in the new normal, or can we do better?
    Ms. Ramirez. What I can speak to is the role that we can 
play.
    Senator Sullivan. Yes, I'd be very interested in that. How 
do you balance your role as regulating industry, consumer 
protection, unfair competition, all of which are very 
important, with the broader goal that we all share of creating 
the conditions for much more robust economic growth? So, if you 
can just, any of you, answer that. Can we do better? Do we have 
to live with 2 percent or less----
    Ms. Ramirez. Well, let me----
    Senator Sullivan.--GDP growth? And if we can, how do you 
guys view the broad macroeconomic issues in balancing your 
regulatory authority over industries?
    Ms. Ramirez. Well, let me just start by saying that we are, 
first and foremost, a law enforcement agency, and that really 
is how we see ourselves. So, the role that we play when it 
comes to promoting competition, I think, is a very important 
and vital one to assist in aiding a competitive marketplace and 
furthering economic growth.
    Let me also add that as part of our role, we also are very 
active in engaging in advocacy. And, as part of that, we do 
comment and urge policymakers to take a look at regulatory 
frameworks and take into account competitive impacts so that we 
can ultimately promote competition and not create barriers to 
entry that might enhance competition. So----
    Senator Sullivan. So, does your economic bureau think that 
we can do better than one and a half, 2 percent GDP growth?
    Ms. Ramirez. So, the--you're raising macro questions that 
are a bit beyond the role that we play, but I can assure you 
that, in everything that we do, we get the input of our 
economists, who are microeconomists. And again, in terms of the 
role that we play, we do what we can to promote competition and 
ensure that there's an active and competitive marketplace.
    At the same time, let me also note that what we do play, 
while an important role, is a limited role. We aren't market 
regulators. Nonetheless, we take our role very seriously. And I 
think we do well by it.
    Senator Sullivan. Any other Commissioners want to comment 
on that line of questions?
    Ms. Ohlhausen. In a previous life at the FTC, I used to run 
our competition advocacy program. And that was focusing on 
identifying barriers to competition, barriers to innovation 
that the Commission could weigh in upon and help encourage the 
free flow of new ideas, new business models into the economy. 
So, I think that's a useful and appropriate role that the FTC 
has played over a number of years. And I'm proud that I used to 
head that up. And I'm glad, as a Commissioner, we've continued 
to focus on those areas.
    Senator Sullivan. Thank you, Mr. Chairman.
    The Chairman. Thank you, Senator Sullivan.
    Senator Markey.

               STATEMENT OF HON. EDWARD MARKEY, 
                U.S. SENATOR FROM MASSACHUSETTS

    Senator Markey. Thank you, Mr. Chairman, very much.
    In Massachusetts and communities across the country, we 
have an epidemic of heroin and prescription drug overdose that 
is absolutely out of control. Buprenorphine is the active 
ingredient in suboxone, and has proven to be an effective 
treatment for opioid use disorders. However, actions by 
Indivior, the producer of suboxone, may have made the crucial 
drug less accessible as a treatment to deal with this problem. 
Indivior is alleged to have violated antitrust laws by 
conspiring to block generic competition, extending its monopoly 
over treatments for opioid addiction and driving up drug costs. 
Thirty-five states and the District of Columbia have recently 
filed a lawsuit against the company. Public documents show that 
the Federal Trade Commission has begun an investigation into 
Indivior's actions, but the investigation was significantly 
impeded by the company's repeated attempts to deny the Federal 
Trade Commission access to documents that were critical to its 
investigation. And it now appears that the court has recently 
ordered Indivior to turn over all remaining non-privileged 
documents.
    Now, I've sent a letter to the Federal Trade Commission on 
this issue to investigate whether or not Indivior has engaged 
in unlawful behavior to delay the approval of cheaper generic 
competition, which could help deal with this incredible 
epidemic of heroin and prescription drug Fentanyl overdoses in 
our country.
    Do you have enough resources at the Federal Trade 
Commission to be able to take that issue on and to get it 
completed in a timely fashion? We just see a spike across this 
country. We need more help.
    Ms. Ramirez. Senator, yes, thank you for your question.
    I had an opportunity to talk, a bit earlier, about the 
importance of examining and monitoring the pharmaceutical 
marketplace, and I can assure you that we're very active. I 
can't comment on the specifics of any investigation, but I can 
tell you that we are certainly doing everything that we can 
with our resources. We could, of course, use--always use 
additional resources. And we've made appropriate requests from 
Congress with regard to our budget in order to fulfill our dual 
mission of protecting consumers and promoting competition. But, 
what I can tell you, with our existing resources, we're doing 
everything that we can.
    Senator Markey. Does that mean that you are right now 
aggressively pursuing Indivior and its attempt to control the 
market for Buprenorphine?
    Ms. Ramirez. All I can say publicly is to let you know that 
we certainly are continuing with our investigation. But, 
unfortunately, due to confidentiality restrictions, I can't say 
more than that.
    Senator Markey. OK.
    Let me move over to child privacy. Right now, as Congress--
as Senator Daines pointed out, the existing law, which I'm the 
author of in 1998, protects children 12 and under and their 
privacy. Can you give us your view as to whether or not 
children 13 to 15 are entitled to the same kinds of protections 
as those that are 12 and under?
    Ms. Ramirez. Under current law, as you've noted, it does 
apply to those children that are under 13. As I had an 
opportunity to discuss earlier, I do think that it would be 
appropriate to address issues particularly relating to 
education and information about students. And, in that regard, 
I think appropriate protection would be beyond the age of 12. 
So, I think there are areas where Congress may want to take a 
look and see if there--if it's appropriate to have further 
protection.
    Senator Markey. Do you think that the parents of children 
15 and younger should have an eraser button which they're able 
to call and have all these companies then erase the information 
about their children 15 and under so that that mistake that the 
child may have made doesn't track them for the rest of their 
life?
    Ms. Ramirez. I think one can discuss where one draws the 
line appropriately for the protection of children. I am 
certainly sympathetic and supportive of efforts to provide 
additional protection to children, given, of course, the 
indefinite nature of information that can be posted online.
    So, yes--I'm generally supportive of efforts to look at 
that issue.
    Senator Markey. OK, thank you.
    And now that the question of whether broadband is a 
telecommunications service under Title II was strongly settled 
by the D.C. Circuit Court, the Federal Communications 
Commission is correctly extending privacy protections to 
broadband. It's clear that the Federal Trade Commission and 
Federal Communications Commission both have clear roles to play 
as privacy cops on the beat. But, now that the broadband 
privacy issue is in the basket of common carriage, which the 
Federal Trade Commission does not have jurisdiction over, the 
Federal Communications Commission must act without delay to put 
in place strong broadband privacy rules. Do you agree with that 
that they are the principal agency responsible for that issue?
    Ms. Ramirez. Yes. In light of the reclassification of 
broadband service, the Federal Communications Commission is the 
one that has jurisdiction here. I do think it's appropriate for 
them to put in place appropriate privacy rules. We have, as 
part of their rulemaking process, submitted comments in which 
we've opined as to what we believe would be improvements to 
what they've proposed.
    Senator Markey. OK, thank you and thank all the 
Commissioners for your great work.
    The Chairman. Thank you, Senator Markey.
    Next up is Senator Udall.

                 STATEMENT OF HON. TOM UDALL, 
                  U.S. SENATOR FROM NEW MEXICO

    Senator Udall. Thank you, Mr. Chairman, for this very good 
hearing on oversight.
    And wonderful to see the Commissioners here today.
    Chairwoman Ramirez, this Friday, a sports tradition will 
play out across New Mexico and the Nation. High school teams 
will take to the gridiron and the soccer pitch, and we 
absolutely want to encourage young people to play sports. But, 
we want them to do so safely. And parents and coaches have good 
reason to be concerned about the dangers of concussions. The 
National Academy of Sciences has stated that all concussions 
involve some level of injury to the brain.
    Earlier this month, the NFL said it will provide $100 
million for medical and engineering research on concussion, 
chronic traumatic encephalopathy, or CTE, and player health. 
This follows the blockbuster movie ``Concussion,'' starring 
Will Smith as the doctor who first diagnosed CTE in a 
professional football player.
    The NFL denied the dangers of CTE and concussion for far 
too long. And it has been dangerously slow to act before now. 
So, its announcement is significant. We should welcome these 
new resources, and encourage more.
    But, this isn't just about the million-dollar pros, this is 
about our kids. CTE has been found in former high school 
athletes. We can't just accept what the NFL-funded research 
finds. Medical research must be peer-reviewed and unbiased. 
Efforts to find an engineering solution or new technology to 
prevent concussion may prove elusive.
    We also need agencies like the FTC engaged and ready to 
take action. For example, when it comes to sports products that 
prevent concussions, it is understandable that parents and 
players want to buy such products. But, the National Academy's 
report found there is no scientific evidence to support claims 
that sports gear such as mouth guards and soccer headbands 
reduce the risk of concussion. They've found little evidence 
that football helmets can reduce concussions. Unfortunately, 
some irresponsible sports equipment-makers falsely claim that 
their products protect against head injuries, and that may give 
players a false sense of safety and lead them to take risks. 
Former University of New Mexico soccer star Alexis Ball 
testified in this committee that she felt she could play more 
aggressively when wearing so-called anti-concussion headgear. 
Concussion experts warn that this is dangerous. It puts kids at 
greater risk of injury, including permanent brain damage from 
second-impact syndrome.
    I'm pleased that this committee approved legislation I 
sponsored to crack down on these false claims. I continue to 
work with stakeholders to enact it this year, and time's really 
running short to get this done.
    Chairman Ramirez, here is just one current example of a 
dangerous anti-concussion marketing claim. The Shock Doctor is 
a leading mouth guard for youth sports. It is the official 
mouth guard of USA football, and sponsors its concussion 
awareness program Heads Up Football. Approximately 1 million 
young athletes are enrolled in Heads Up Football. So, I'm 
deeply concerned by Shock Doctors' false claims that its mouth 
guards prevent concussions. Shock Doctor mouth guards--and I'm 
quoting right here from this product--it promises it will 
absorb shock to help protect against brain concussions.
    It promises hardcore protection and fearless performance. 
Shock Doctor even encourages this false sense of security when 
it states that--and this is what it states about its product--
``Many athletes report that they perform better with a properly 
fitting mouth guard. Maybe it's because, with extra protection, 
you aren't afraid to really throw yourself into the tackle, the 
face-off, the draw, or the scrum.''
    So, Chairwoman Ramirez, the FTC previously sent warning 
letters to sports equipment-makers and retailers about these 
types of advertising claims. Do you agree that this type of 
anti-concussion marketing constitutes a deceptive practice and 
that could put young athletes at real risk of injury?
    Ms. Ramirez. Senator, thank you for your question. I 
absolutely agree that this is a very serious issue. And, as 
you've noted, the agency has sent warning letters to companies 
about these types of claims. I'm absolutely concerned about 
deceptive claims that lack substantiation. I appreciate you 
bringing this particular issue to my attention, and I assure 
you that we will take a very close look.
    Senator Udall. We really appreciate the earlier letters, 
and we want you to stay on guard and stay on top of this. As 
you know, earlier this year, the Committee approved my Youth 
Sports Concussions Act, which would increase the potential FTC 
penalties for such unscrupulous advertising. I'm working with 
Senate colleagues to get this important bill signed in this 
Congress. And it's past time to put an end to these dangerous 
anti-concussion marketing claims for youth sports.
    Thank you.
    And thank you for your courtesies, Mr. Chairman.
    The Chairman. Thank you, Senator Udall.
    Senator Ayotte.

                STATEMENT OF HON. KELLY AYOTTE, 
                U.S. SENATOR FROM NEW HAMPSHIRE

    Senator Ayotte. Thank you, Chairman.
    Commissioner Ohlhausen, I wanted to ask about the issue of 
healthcare. So, with the Affordable Care Act, we have seen 
greater consolidation in the healthcare sector. And one of the 
concerns I have is that we are able to foster competition, 
including innovation. Yet, that can be countered by healthcare 
consolidation, in terms of new innovation and competition.
    So, what is--what are some of the challenges that a 
disruptive actor in the healthcare industry--so, let's say 
you've got a new innovation that wants to come on--and I mean 
``disruptive'' in the good sense of a new idea to help serve 
consumers--that can be addressed? And how are--how is this 
healthcare consolidation and proposed mergers--what is the FTC 
view on its role? And what will you be doing to make sure that 
there continues to be competition and innovation in the 
healthcare sector?
    Ms. Ohlhausen. Senator Ayotte, thank you for your question.
    The FTC has a very active healthcare enforcement program on 
several grounds. Hospital consolidation is an area the FTC has 
been paying very close attention to. We want to be sure that 
consumers continue to have options for care in their 
communities that are cost-effective. So, the FTC continues to 
act in this space. Fortunately, we just won an important case 
in the Third Circuit about how we would define a healthcare 
hospital market. So, I'm pleased. I think that will help us 
continue to act in that space.
    And then, second, you bring in the important issue of, How 
do new innovations--how do new methods of delivering healthcare 
to consumers get into the market? So, we recently won a case 
before the Supreme Court, called North Carolina Dental, where 
we stood for the proposition that if a board is made up of 
self-interested actors, they need additional--they need 
oversight by the State, and they need authorization by the 
State to do anything that might be anticompetitive. So, that 
has been a particularly useful statement in the areas of, like, 
telehealth, allowing doctors to treat patients remotely, or to 
have nurse practitioners there to help in telehealth. So, I 
think those are some very important areas where the FTC, 
through advancing the law, through bringing enforcement 
actions, and through bringing our advocacy expertise to bear, 
have tried to ensure that consumers get the benefits of 
competition through traditional methods and new and emerging 
methods, as well.
    Senator Ayotte. Great, thank you.
    I wanted to ask the--Chairman Ramirez about an issue that--
having served as Attorney General before coming to serve in the 
Senate, you know, I know that it's really important that 
consumers--there have to be fair consumer service experiences. 
Charter recently completed its transaction with Time Warner 
Cable and Brighthouse Networks. This will greatly increase the 
combined subscriber base in states like New Hampshire. I also 
serve on the Homeland Security Committee, and there was 
recently a hearing on billing reports that Senators Johnson and 
McCaskill obtained that found that both companies' practices 
for identifying and correcting overcharges had been 
substandard. And, in light of these findings, many cable TV 
providers have stated they're striving to improve their billing 
practices.
    But, I'm hearing from people in New Hampshire that--
concerns about this transaction. One of my constituents in 
Campton, New Hampshire, who's frequently away from home as a 
merchant mariner, recently wrote to me explaining that the 
promotional rates that kept jumping with every call he made to 
the company, and, after they expired and he attempted to adjust 
his subscription, the quoted prices skipped around with each 
call he made, leaving him exasperated, with no alternative 
providers in a rural and mountainous area of our state. This 
frustration was compounded by the fact that he returned from 
several months overseas and, after repeated calls, was given 
quotes not reflected what he was ultimately charged.
    Can you comment at all on the FCC's plan and its provisions 
to ensure that the Merger serves in the public interest to 
provide fair and transparent services to consumers in affected 
states like mine, especially in areas where you end up with one 
provider?
    Ms. Ramirez. I can certainly talk about what falls under 
FTC jurisdiction, but I have to defer to the FCC to address how 
they might address issues that are within their domain.
    Senator Ayotte. But, do you have any jurisdiction when it 
comes to looking at the merger, itself, in terms of the lack of 
competition and----
    Ms. Ramirez. So, what these----
    Senator Ayotte.--and also the consumer practices that can 
be deceptive or problematic?
    Ms. Ramirez. We did not look at that particular merger. 
This is something that was examined by the Department of 
Justice and the Federal Communications Commission. What I can 
tell you is that if it falls outside of common carriage 
activity, we would have jurisdiction over deceptive practices. 
And we, I think, are very vigilant when it comes to ensuring 
that those parts of the economy that are subject to our 
jurisdiction, that we tackle deceptive practices. So, if it 
falls within our jurisdiction, we would certainly play a role--
and I believe that we're active in the marketplace--but this is 
one that I'd have to defer to the FCC on.
    Senator Ayotte. OK. Even on the billing practice piece?
    Ms. Ramirez. Yes.
    Senator Ayotte. OK.
    Thanks.
    The Chairman. Thank you, Senator Ayotte.
    Senator Cantwell.

               STATEMENT OF HON. MARIA CANTWELL, 
                  U.S. SENATOR FROM WASHINGTON

    Senator Cantwell. Thank you, Mr. Chairman.
    And it's good to see the members here of the FTC.
    I wanted to talk about the BOTS Act, which is the Better 
Online Ticket Sales Act that was passed out of the Committee 
and has had similar action in the House. It will make it 
illegal to use computer software to scoop up large chunks of 
tickets, making them more expensive before consumers can get to 
them. This is about empowering consumers through your 
organization and through attorneys general. So, can any of you 
comment on what aggressive measures--if this legislation 
becomes law--the FTC will take to prosecute these companies and 
organizations?
    Ms. Ramirez. We are certainly aware of the concern that you 
have, Senator. It's also a concern that has been expressed by 
others. I can certainly tell you that we would absolutely--any 
jurisdiction that Congress would give us in this respect, we 
would absolutely enforce in the area. We have taken certain 
actions using our existing authority under the FTC Act, but are 
aware that it continues to be an issue. And again, we're happy 
to continue looking at this area and then, if we're given 
additional authority, to utilize that.
    Senator Cantwell. Anybody else want to comment on that?
    Ms. Ohlhausen. When we get a new authority, one of the 
important adjunct things we can do is also to bring business 
education materials into the marketplace to educate businesses 
about what their new obligations may be. So, I would say, in 
addition to any enforcement, I would certainly support that we 
tell businesses what--where the rules of the road are.
    Senator Cantwell. Yes. I guess I'm looking for something a 
little more aggressive. And I know you haven't gotten the 
authority. But, this is clearly a problem for consumers. While 
I expect people like our Attorney General will be very 
aggressive on it, I think that we pass laws giving the FTC this 
simultaneous authority because we expect the FTC to be 
aggressive on it. So we'll be looking to you to what avenues 
that you will be taking to aggressively pursue this from a 
Federal level. I think it's very important that we protect 
consumers and that we're going to use the power of the Federal 
Government to help on these cases. So, thank you.
    Thank you, Mr. Chairman.
    The Chairman. Thank you, Senator Cantwell.
    Senator Blumenthal has a couple more questions. We'll give 
Senator Fischer a chance to get set up here.
    Senator Blumenthal.
    Senator Blumenthal. Mr. Chairman, I'd be happy to yield to 
Senator Fischer if she wants to go now, or I can go ahead, 
whichever she would prefer.
    The Chairman. Senator----
    Senator Fischer. Thank you, Senator.
    The Chairman.--Fischer, are you ready to roll?

                STATEMENT OF HON. DEB FISCHER, 
                   U.S. SENATOR FROM NEBRASKA

    Senator Fischer. Thank you, Mr. Chairman.
    The Chairman. All right.
    Senator Fischer. And thank you, Senator Blumenthal, for 
your kindness. I appreciate that.
    Commissioner Ohlhausen, earlier this year, the FTC filed 
comments in the FCC's privacy proceeding. You wrote a separate 
statement warning that the FCC's approach may not best serve 
consumer interests and that some of its proposals would prevent 
consumers from willingly sharing their data to obtain benefits, 
such as price discounts. I believe that consumers should be 
able to choose when and how to share that data. This option can 
be particularly beneficial for low-income consumers who could 
opt to receive a benefit in the form of lower prices or access 
to innovative services. Could you elaborate on your concern 
that customers could be negatively impacted by the FCC's 
proposed discounts policy for me, please?
    Ms. Ohlhausen. Thank you, Senator.
    I do think it's important to keep in mind that consumers, 
if they have--if they're informed about what the deal is, 
should have the right to make that deal, and that, in lots of 
areas of life, we share information to get discounts. For 
example, I use a discount, you know, Giant card to get 
discounts at the grocery store. And that if consumers have 
choices in the marketplace, and they have information, I think 
they should be permitted to make that choice to decide to share 
some of their data to reduce costs or prices.
    Particular surveys have indicated that one of the main 
reasons consumers are not adopting broadband is because of cost 
concerns. So, this could help alleviate those kinds of 
challenges that some consumers face.
    Senator Fischer. And how important is that access to 
broadband?
    Ms. Ohlhausen. I think access----
    Senator Fischer. Do you have an opinion on that?
    Ms. Ohlhausen. I'm sorry. I think access to broadband is 
very important, and I think that's something that the FTC, the 
FCC, and really anyone who's looked at this issue has 
considered it, sort of, as the road to the future for 
consumers.
    Senator Fischer. I'm glad you used the terminology 
``road,'' because broadband, in my opinion, is infrastructure, 
as are highways and bridges and ports, and it's important that 
we move forward on that.
    Chairwoman, if I could ask you, I understand that there are 
over 48 million pages of FTC documents that may be used as 
guidance or that otherwise help companies understand how the 
FTC interprets its broad statutory authority. That number is 
large, and it's daunting. In addition, stakeholders have raised 
concerns that the FTC could treat these materials as 
enforceable, even though they are not the result of legislation 
and they're not the result of rulemaking. So, I worry that the 
FTC could use an FAQ document or materials professed to be just 
guidance as evidence that a company's business practices are 
illegal, creating regulatory uncertainty that will hurt 
economic growth.
    So, just to be clear, could guidance documents be used as 
the basis for a complaint or for a consent order?
    Ms. Ramirez. The guidance that we issue does not have the 
force of law, but we do think that it's beneficial for us to 
explain to the business community and to practitioners and 
other relevant stakeholders how it is that we apply our law. 
And so, we think it is useful guidance, but it does not have 
the force of law. So, ultimately, any enforcement action would 
have to reflect a considered decision by the Commission that we 
have a reasonable belief that the law--applicable law, whether 
it's the FTC Act or other statutes that we enforce has been 
violated.
    Senator Fischer. OK. And also, as I understand it, the FTC 
lost its jurisdiction over Internet Service Providers in the 
area of data security and privacy after the FCC reclassified 
retail broadband as a common carrier service. Recently, the 
U.S. Court of Appeals for the Ninth Circuit reaffirmed that the 
FTC is categorically barred from taking action against common 
carriers.
    So, I'm curious to know whether the FCC coordinated with 
you prior to taking action that effectively took away your 
agency's jurisdiction over Internet Service Providers. Did the 
FTC caution them against the consequences of reclassification?
    Ms. Ramirez. We certainly communicated the impact that this 
would have. At the end of the day, the FCC, of course, had to 
make a decision about what they felt was appropriate when it 
came to addressing the issue of net neutrality. That has had a 
consequence for us. But, at the same time, the FTC, on a 
unanimous and bipartisan basis, has long argued that the common 
carrier exception to our jurisdiction is something that really 
no longer ought to apply. It's absolutely outdated.
    This recent decision that you referred to, the Ninth 
Circuit decision, in our view, has significant implications, 
because the court disagreed with the position that we 
articulated, which is that the common carrier exception is 
activities-based and not status-based. Unfortunately, the court 
took a different view, and that has significant ramifications 
for our jurisdiction. I will note that we're going to be 
seeking a rehearing in that matter, so we're hopeful that we 
shall have an opportunity to voice our concerns about this.
    But, in any event, reclassification has had an impact on 
our jurisdiction, yes.
    Senator Fischer. And was that a unanimous concern by your 
board?
    Ms. Ramirez. It's simply a consequence of reclassification. 
You'd have to, you know, ask the FCC Commissioners as to what 
factors most influenced them. Again, at the end of the day, I 
think they made a decision based on what they felt was 
appropriate for the public interest, when it came to net 
neutrality.
    Senator Fischer. OK. Thank you.
    Thank you, Mr. Chairman. And thank you, Senator Blumenthal.
    The Chairman. Thank you, Senator Fischer.
    Senator Blumenthal.
    Senator Blumenthal. Thanks, Mr. Chairman.
    Just a few questions to tie up some loose ends.
    I am assuming that if a rehearing is denied, as is 
customary in most courts of appeals, there will be an appeal in 
the Ninth Circuit ruling, which I regard as unfortunate and 
erroneous, and I think you agree.
    Ms. Ramirez. I do, Senator. I can assure you that we're 
going to explore all options that we have available to us, in 
terms of appeal.
    Senator Blumenthal. Let me ask you about drug pricing. 
Mylan's pricing of EpiPens was simply another strawbreaking the 
backs of consumers. They are running out of the tolerance and 
endurance that are attributed to camels when the straw breaks 
the camel's back. This is profiteering at the expense of 
countless consumers, many of them children who can't afford 
$600 or more, the astronomic price increases. I know that you 
have committed to get back to us within a specific amount of 
time, but can't your response be expedited?
    Ms. Ramirez. Again, I am limited in what I can say, because 
I'm restricted from conveying any information about specific 
investigations. But, I can assure you that these are issues, of 
course, that we've seen before. This is not the first time that 
we've seen a significant spike in drug prices. It's an issue 
that does concern us. And I can assure you that when that 
happens, we will look very closely to see if the reasons for 
those price hikes might be due to anticompetitive activity.
    Senator Blumenthal. And----
    Ms. Ramirez. This is an area that we care very deeply about 
and are very active in.
    Senator Blumenthal. And I think that's really the point, 
because deterrence of abuses in this area really depends on 
effective and prompt enforcement. For example, in recent 
testimony given to Congress, just in the past week, Mylan has 
seemingly obfuscated and misrepresented profit margins, 
according to stories as recently as this morning's Wall Street 
Journal, which pointed out how it has engaged in potentially 
deceptive and misleading practices relating to pricing. These 
new reports are even more disturbing, are they not?
    Ms. Ramirez. Absolutely. And again, I can't get into 
details, but what I also want to note--and I'm not commenting 
at all on Mylan's conduct, but I will also just simply note 
that in prior examinations of price hikes, we have also 
observed that sometimes they happen without there being what we 
believe to be a violation of the antitrust laws. So, this is an 
area where we play an important role, but it is limited. And, 
unfortunately, sometimes companies that have appropriately 
obtained market power end up exercising that in a way that is 
detrimental to consumers. So, it may be appropriate for there 
to be other actions that are taken.
    I just want to convey that, while we have an important 
role, we can't address all of the problems that exist when it 
comes to drug prices.
    Senator Blumenthal. Not all of the problems, but many of 
them, because your agency is uniquely located at the 
intersection of deceptive and misleading pricing and other 
abusive practices and the antitrust responsibility. That you 
have both of them seemingly involved in Mylan's power to raise 
prices in the--and now offer a generic version, at $300, that 
may, in fact, forestall other competition. So----
    Ms. Ramirez. Where there's anticompetitive activity, I 
assure you that we will absolutely take action.
    Senator Blumenthal. It really is of a piece with other 
drugs that may have been involved in the same kinds of 
practices--Narcan, Daraprim. There are other instances. And I 
think they cry out for action. I would just urge you to take 
prompt and effective action.
    Let me also join with Senator Udall in expressing very 
grave concern about the marketing of sports equipment. I have 
been very vocal about the NHL's practices in this area, as well 
as the NFL's, because of the power that they have over players 
at the younger league levels, whether it's in high school or 
college. As models, they can set better practices. I welcome 
the National Football League devoting money to research. I've 
urged the NHL to do the same. But, sports equipment, in a 
sense, illustrates the real importance of being vigilant and 
vigorous, not only as to specific products, but also as to the 
governing standards. I would welcome your scrutiny and 
involvement in this area.
    And let me just finish. I've written to you already about 
my concern regarding the public safety implications of the 
FTC's recent proposed settlement with used car dealers. Under 
the proposed settlement, used car dealers will continue to be 
allowed to advertise that they have rigorously inspected their 
vehicles for safety, including that they're certified--in 
quotes, ``certified''--even if the vehicle has unrepaired 
safety recalls. NHTSA has repeatedly said that all recalls 
address an unreasonable risk to safety and should not be 
ignored. I've introduced legislation, with Senator Markey, the 
Used Car Safety Recall Repair Act, that would require used car 
dealers to fix recalls before selling or leasing a vehicle.
    Despite the proposed settlement, or maybe because of it, 
I'd like to ask each of you, Do you support this legislation?
    Ms. Ramirez. Senator, I do.
    Ms. Ohlhausen. Senator, I certainly support the goals of 
the legislation, but I would need to review the details.
    Senator Blumenthal. I'd ask you to review it and get back 
to me, if you would, please Commissioner----
    Ms. Ohlhausen. Certainly.
    Ms. McSweeny. I would support the legislation.
    Senator Blumenthal. Thank you.
    I want to thank all of you for being here today. I have 
other questions that I'll submit for the record.
    I want to thank Commissioner McSweeny for her reference to 
the nonprofit area, where I'd like to follow up with some 
questions. I don't want to keep the Committee going now.
    But, thank you all for being here and for your excellent 
work.
    Thank you.
    The Chairman. Thank you, Senator Blumenthal.
    And again, thank you, to all three of you, for being here 
and for responding to these questions. And there are some, I'm 
sure, that will be submitted for the record. We will keep the 
hearing record open for 2 weeks, during which time Senators are 
asked to submit any questions. And, upon receipt of those 
questions, we would ask you to respond as promptly and quickly 
as possible.
    So, thank you so much for being here.
    This hearing is adjourned.
    [Whereupon, at 11:56 a.m., the hearing was adjourned.]

                            A P P E N D I X

                      Electronic Privacy Information Center
                                                 September 26, 2016
Hon. John Thune, Chairman,
Hon. Bill Nelson, Ranking Member,
U.S. Senate Committee on Commerce, Science, and Transportation,
Washington, DC.

RE: Hearing on ``Oversight of the Federal Trade Commission''

Dear Chairman Thune and Ranking Member Nelson:

    We write to you regarding the upcoming hearing on ``Oversight of 
the Federal Trade Commission.'' Simply put, the Federal Trade 
Commission (``FTC'') is not doing enough to protect the personal data 
of American consumers. Identity theft, data breaches, and financial 
fraud are increasing. The damage to American consumers and families is 
escalating. Rather than curtailing the Commission's enforcement 
efforts, you must determine why the agency is not doing more. The FTC's 
continued failure to act against the growing threats to consumer 
privacy and security could be catastrophic.
    The Electronic Privacy Information Center (``EPIC'') is a public 
interest research center established more than 20 years ago to focus 
public attention on emerging privacy and civil liberties issues. EPIC 
has a particular interest in protecting consumer privacy, and has 
played a leading role in developing the authority of the FTC to address 
emerging privacy issues and to safeguard the privacy rights of 
consumers.\1\ EPIC is involved in a wide range of activities involving 
the FTC, from consumer privacy and antitrust to rulemaking, enforcement 
of consent orders, and participation in public workshops.\2\ Most 
recently, EPIC and the Center for Digital Democracy (``CDD'') filed a 
complaint with the FTC over WhatsApp's decision to transfer user data 
to Facebook in violation of commitments both companies previously made 
to subscribers.\3\ At the time Facebook acquired WhatsApp, the FTC 
stated clearly that the companies must honor their privacy promises to 
users.\4\
---------------------------------------------------------------------------
    \1\ See, e.g., Letter from EPIC Exec. Dir. Marc Rotenberg to FTC 
Comm'r Christine Varney (Dec. 14, 1995) (urging the FTC to investigate 
the misuse of personal information by the direct marketing industry), 
http://epic.org/privacy/internet/ftc/ftc_letter.html; DoubleClick, 
Inc., FTC File No. 071-0170 (2000) (Complaint and Request for 
Injunction, Request for Investigation and for Other Relief), http://
epic.org/privacy/internet/ftc/DCLK_complaint.pdf; Microsoft 
Corporation, FTC File No. 012 3240 (2002) (Complaint and Request for 
Injunction, Request for Investigation and for Other Relief), http://
epic.org/privacy/consumer/MS_complaint.pdf; Press Release, Federal 
Trade Comm'n, FTC Charges Deceptive Privacy Practices in Google's 
Rollout of Its Buzz Social Network (Mar. 30, 2011), http://ftc.gov/opa/
2011/03/google.shtm (``Google's data practices in connection with its 
launch of Google Buzz were the subject of a complaint filed with the 
FTC by the Electronic Privacy Information Center shortly after the 
service was launched.''); In the Matter of Facebook, Inc., (2009) (EPIC 
Complaint, Request for Investigation, Injunction, and Other Relief), 
https://epic.org/privacy/inrefacebook/EPIC-FacebookComplaint
.pdf; In the Matter of Facebook, Inc., (2010) (EPIC Complaint, Request 
for Investigation, Injunction, and Other Relief), https://epic.org/
privacy/facebook/EPIC_FTC_FB_Complaint.pdf.
    \2\ See EPIC, Federal Trade Commission, https://epic.org/privacy/
internet/ftc/.
    \3\ In the Matter of WhatsApp, Inc., (Aug. 29, 2016) (EPIC, CDD 
Complaint, Request for Investigation, Injunction, and Other Relief), 
https://epic.org/privacy/ftc/whatsapp/EPIC-CDDFTC-WhatsApp-Complaint-
2016.pdf.
    \4\ Letter from Jessica Rich, Director of FTC Bureau of Consumer 
Protection, to WhatsApp and Facebook (Apr. 10, 2014) https://
www.ftc.gov/system/files/documents/public_statements/2977
01/140410facebookwhatappltr.pdf.
---------------------------------------------------------------------------
American Consumers Face Unprecedented Privacy and Security Challenges
    The unregulated collection of personal data has led to staggering 
increases in identity theft, security breaches, and financial fraud in 
the United States.\5\ The recent Yahoo! data breach that exposed the 
personal information of at least half-a-billion users \6\ is the latest 
in a growing number of high-profile hacks that threaten the privacy, 
security, and financial stability of American consumers. Far too many 
organizations collect, use, and disclose detailed personal information 
with too little regard for the consequences.
---------------------------------------------------------------------------
    \5\ See, e.g., Fed. Trade Comm'n, Consumer Sentinel Network Data 
Book (Feb. 2016), https://www.ftc.gov/system/files/documents/reports/
consumer-sentinel-network-data-book-january-dec
ember-2015/160229csn-2015databook.pdf.
    \6\ Yahoo!, An Important Message to Yahoo Users on Security (Sept. 
22, 2016), https://investor.yahoo.net/
releasedetail.cfm?ReleaseID=990570.
---------------------------------------------------------------------------
    Not surprisingly, the privacy concerns of Americans are increasing 
at a rapid rate. Industry expert Mary Meeker's most recent Internet 
Trend report said simply, ``[a]s data explodes . . . data security 
trends explode.'' According to Meeker, 45 percent of users ``are more 
worried about their online privacy than one year ago'' and 74 percent 
have limited their online activity in the last year due to privacy 
concerns.'' \7\ Public opinion polls show that 91 percent of Americans 
believe they have lost control of how companies collect and use their 
personal information.\8\ And a recent government study found that 
nearly half of American internet users refrain from online activities 
due to privacy and security concerns.\9\
---------------------------------------------------------------------------
    \7\ Mary Meeker, Internet Trends 2016--Code Conference, KPCB (June 
1, 2016), http://www
.kpcb.com/internet-trends.
    \8\ Lee Rainie, The State of Privacy in Post-Snowden America, Pew 
Research Center (Sept. 21, 2016), http://www.pewresearch.org/fact-tank/
2016/01/20/the-state-of-privacy-in-america.
    \9\ Rafi Goldberg, Lack of Trust in Internet Privacy and Security 
May Deter Economic and Other Online Activities, Nat'l Telecomm. and 
Info. Admin. (May 13, 2016), https://www.ntia
.doc.gov/blog/2016/lack-trust-internet-privacy-and-security-may-deter-
economic-and-other-online-activities.
---------------------------------------------------------------------------
    The threats to consumer privacy and security are growing as new 
challenges emerge. Protecting consumer privacy will become increasingly 
difficult as the Internet of Things becomes more prevalent.\10\ The 
ubiquity of connected devices enables collection of data about 
sensitive behavior patterns, which could be used in unauthorized ways 
or by unauthorized individuals. Another significant risk to consumers 
in the Internet of Things is security, of both the users' data and 
their physical person.
---------------------------------------------------------------------------
    \10\ See, e.g., EPIC, Comments on the Benefits, Challenges, and 
Potential Roles for the Government in Fostering the Advancement of the 
Internet of Things, NTIA Docket No. 160331306-6306-01 (June 2, 2016), 
https://epic.org/apa/comments/EPIC-NTIA-on-IOT.pdf.
---------------------------------------------------------------------------
    The increased use of drones for commercial purposes also raises 
unique privacy issues for American consumers. Drones are designed to 
undertake constant, persistent surveillance to a degree that former 
methods of video surveillance were unable to achieve. The FTC recently 
held a workshop that explored privacy issues related to the commercial 
uses of drones, but more must be done to protect consumers from this 
invasive technology.
The American Public Supports and Deserves Baseline Consumer Privacy 
        Legislation
    The United States has been slow to update its privacy laws, and 
companies have been reluctant to implement Privacy Enhancing 
Technologies. Thus, neither an appropriate legal nor technical 
framework has been implemented to consistently safeguard individual 
privacy in the United States. Many of the current laws are no longer 
suited to protect the privacy of American consumers in the digital age. 
It is critical that privacy protections for consumers keep pace with 
advances in technology.
    The American public supports updating U.S. privacy safeguards. 
According to a recent study by the Pew Research Center, ``68% of 
internet users believe current laws are not good enough in protecting 
people's privacy online; and 64% believe the government should do more 
to regulate advertisers.'' \11\ 91 percent of Americans believe they 
have lost control of how companies collect and use their personal 
information.\12\ The overwhelming majority want that control, with 74 
percent of Americans saying it is ``very important'' to control who 
gets their information and 65 percent saying it is ``very important'' 
to control what information gets collected.\13\ Americans also 
consistently express a lack of confidence in the privacy and security 
of their online communications.\14\ Pew also found that ``young adults 
are more focused than elders when it comes to online privacy,'' and 
many have tried to protect their privacy, removed their names from 
tagged photos, and taken steps to mask their identity.
---------------------------------------------------------------------------
    \11\ Lee Rainie, The State of Privacy in Post-Snowden America, PEW 
RESEARCH CENTER (Sept. 21, 2016), http://www.pewresearch.org/fact-tank/
2016/01/20/the-state-of-privacy-in-america.
    \12\ Id.
    \13\ Id.
    \14\ Id.
---------------------------------------------------------------------------
    The consequences of inadequate data protection in the U.S. 
implicate the interests of U.S. consumers and businesses.\15\ The 
competitiveness of American technology companies in the global market 
also requires strong U.S. legal protections for communications 
privacy.\16\ Officials in Europe are reviewing the ``ePrivacy 
Directive'' as internet users in Europe face challenges similar to 
those faced by American consumers.\17\ A framework for baseline 
consumer privacy protections may provide a good starting point to build 
a common approach to online privacy and to avoid the dramatic 
divergence that has arisen.\18\
---------------------------------------------------------------------------
    \15\ See Marc Rotenberg, Testimony before the U.S. House of 
Representatives Energy & Commerce Subcommittees on Commerce, 
Manufacturing, and Trade and Communications and Technology, Examining 
the EU Safe Harbor Decision and Impacts for Transatlantic Data Flows 
(Nov. 3, 2015), https://epic.org/privacy/intl/schrems/EPIC-EU-SH-
Testimony-HCEC-11-3-final.pdf.
    \16\ See Aarti Shahani, A Year After Snowden, U.S. Tech Losing 
Trust Overseas, NPR (June 5, 2014), http://www.npr.org/sections/
alltechconsidered/2014/06/05/318770896/a-year-after-snowden-u-s-tech-
losing-trust- overseas; Claire Caine Miller, Revelations of N.S.A. 
Spying Cost U.S. Tech Companies, NY Times (Mar. 21, 2014), http://
www.nytimes.com/2014/03/22/business/fallout-from-snowden-hurting-
bottom-line-of-tech-companies.html.
    \17\ ePrivacy Directive: assessment of transposition, effectiveness 
and compatibility with proposed Data Protection Regulation, European 
Commission (June 10, 2015), https://ec.europa.eu/digital-agenda/en/
news/eprivacy-directive- assessment-transposition-effectiveness-and-
compatibility-proposed-data.
    \18\ EPIC, Examining the EU Safe Harbor Decision and Impacts for 
Transatlantic Data Flows, EPIC (Nov. 3, 2015) https://epic.org/privacy/
intl/schrems/EPIC-EU-SH-Testimony-HCEC-11-3-final.pdf.
---------------------------------------------------------------------------
    The common refrain that greater privacy protections are contrary to 
innovation is simply wrong. According to a recent report by the World 
Economic Forum, three of the top five countries that benefit most from 
technology innovation are members of the European Union: Finland, 
Sweden, and Norway.\19\ The United States ranked fifth in this report. 
These European
---------------------------------------------------------------------------
    \19\ World Economic Forum, Global Information Technology Report 
2016, http://reports.weforum.org/global-information-technology-report-
2016/report-highlights/.
---------------------------------------------------------------------------
    countries are subject to robust EU data protection laws, yet foster 
greater technology innovation than that of the United States. Privacy 
and innovation are not mutually exclusive.
    Moreover, strong privacy protections are also a necessary and 
pragmatic part of risk mitigation in the age of the ubiquitous 
cybersecurity breach. Failure to protect user privacy frequently stems 
from failure to adequately protect user data, which can result in 
enormous liability for companies.\20\ The more data a company stores, 
the more valuable a target its database is for hackers; and the more 
stored data, the greater the company's losses in the event of a 
breach.\21\
---------------------------------------------------------------------------
    \20\ 2016 Cost of Data Breach Study: United States, Ponemon Inst., 
1 (June 2016).
    \21\ Bruce Schneier, Data Is A Toxic Asset, Schneier on Security, 
(March 4, 2016), https://www.schneier.com/blog/archives/2016/03/
data_is_a_toxic.html (``saving [data] is dangerous because failing to 
secure it is damaging. It will reduce a company's profits, reduce its 
market share, hurt its stock price, cause it public embarrassment, 
and--in some cases--result in expensive lawsuits and occasionally, 
criminal charges. All this makes data a toxic asset, and it continues 
to be toxic as long as it sits in a company's computers and 
networks.'').
---------------------------------------------------------------------------
The FTC's Current Approach is Insufficient to Protect Consumer Privacy 
        and Security
    EPIC has fought for privacy rights for internet users at the FTC 
for more than two decades. We filed landmark complaints about privacy 
violations by Microsoft, Facebook, and Google.\22\ While we respect the 
efforts of the Commission to protect consumers, the reality is that the 
FTC lacks the statutory authority, the resources, and the political 
will to adequately protect the online privacy of American consumers.
---------------------------------------------------------------------------
    \22\ See Complaint and Request for Injunction, Request for 
Investigation and for Other Relief, In the Matter of Microsoft 
Corporation, (July 26, 2001), https://www.epic.org/privacy/consumer/
MS_complaint.pdf. See also Complaint, Request for Investigation, 
Injunction, and Other Relief, In the Matter of Facebook, Inc, (Dec. 17, 
2009), https://epic.org/privacy/inrefacebook/EPIC-
FacebookComplaint.pdf; Complaint, Request for Investigation, 
Injunction, and Other Relief, In the Matter of Google, Inc, (Feb. 16, 
2010), https://epic.org/privacy/ftc/googlebuzz/
GoogleBuzz_Complaint.pdf.
---------------------------------------------------------------------------
    The FTC's privacy framework--based largely on ``notice and 
choice''--is simply not working. Research shows that consumers rarely 
read privacy policies; when they do, these complex legal documents are 
difficult to understand. Moreover, emphasizing notice or disclosure 
favors the interests of businesses over consumers and fails to 
establish meaningful privacy safeguards. Nor can industry self-
regulatory programs provide realistic privacy protections when they are 
not supported by enforceable legal standards.
    Even when the FTC reaches a consent agreement with a privacy-
violating company, the Commission rarely enforces the Consent Order 
terms.\23\ American consumers whose privacy has been violated by unfair 
or deceptive trade practices do not have a private right of action to 
obtain redress. Only enforceable privacy protections create meaningful 
safeguards, and the lack of FTC enforcement has left consumers with 
little recourse.
---------------------------------------------------------------------------
    \23\ See EPIC v. FTC, No. 12-206 (D.C. Cir. Feb. 8, 2012).
---------------------------------------------------------------------------
    This is illustrated by the FTC's decision to permit Google to 
consolidate users' personal information across more than 60 Google 
services, including search, email, browsing, and YouTube, into single, 
comprehensive user profiles.\24\ Google's plan to consolidate user data 
without consent was a clear violation of the FTC's 2011 consent order 
with the company, which bars Google from misrepresenting its privacy 
practices and sharing user information without affirmative consent.\25\ 
EPIC filed suit seeking to compel the FTC to enforce the terms of its 
consent order with Google, but the agency succeeded in dismissing the 
suit and took no action to protect the privacy interests of Google 
users.\26\ As a result of the FTC's inaction, virtually all internet 
activity now comes under the purview of one company.
---------------------------------------------------------------------------
    \24\ See EPIC, EPIC v. FTC (Enforcement of the Google Consent 
Order), https://epic.org/privacy/ftc/google/consent-order.html.
    \25\ The FTC's 2011 consent order with Google arose from a 
complaint filed by EPIC in 2010 over the company's introduction of the 
Google Buzz social network, which automatically enrolled Gmail users 
and published their contact lists without first notifying users or 
obtaining their consent. See EPIC, In re Google Buzz, https://epic.org/
privacy/ftc/googlebuzz/.
    \26\ See EPIC, supra note 18.
---------------------------------------------------------------------------
    The FTC also consistently fails to modify proposed settlement 
agreements in response to public comments. EPIC has submitted comments 
to the Commission on numerous proposed orders that implicate the 
privacy interests of consumers. However, to date the Commission has 
adopted these consent orders without any modification.\27\ The FTC's 
failure to make any changes to proposed settlements based on comments 
it has explicitly requested is: (1) contrary to the explicit purpose of 
the statutory provision that allows the Commission to request comments 
from the public;\28\ (2) contrary to the broader purpose of the 
Commission to police unfair and deceptive trade practices;\29\ and (3) 
contrary to the interests of American consumers.
---------------------------------------------------------------------------
    \27\ Comments of the Elec. Privacy Info. Ctr., FTC Docket No. 102 
3058 (Jun. 8, 2012), https://epic.org/privacy/socialnet/EPIC-Myspace-
comments-FINAL.pdf; Comments of the Elec. Privacy Info. Ctr., FTC 
Docket No. 092 3184 (Dec. 17, 2011), https://epic.org/privacy/facebook/
Facebook-FTCSettlement-Comments-FINAL.pdf; Comments of the Elec. 
Privacy Info. Ctr., FTC Docket No. 102 3136 (May 2, 2011), https://
epic.org/privacy/ftc/googlebuzz/EPIC_Comments
_to_FTC_Google_Buzz.pdf.
    \28\ Commission Rules of Practice, 16 C.F.R. Sec. 2.34 (C) (2014).
    \29\ Federal Trade Commission Act, 15 U.S.C. Sec. 46 (2006).
---------------------------------------------------------------------------
    The Commission has never required compliance with the Consumer 
Privacy Bill of Rights (``CPBR''),\30\ a basic set of privacy 
requirements, under its Consent Orders even when companies are found to 
violate Section 5 of the FTC Act.\31\ By requiring compliance with the 
CPBR, the Commission could ensure that the personal data of consumers 
is protected throughout the data lifecycle. More importantly, the 
Commission would be able to put in place the baseline privacy standards 
that are widely recognized around the world and necessary to protect 
the interests of consumers.
---------------------------------------------------------------------------
    \30\ White House, Consumer Data Privacy in a Networked World: A 
Framework for Protecting Privacy and Promoting Innovation in the Global 
Economy, Feb. 23, 2012, http://www
.whitehouse.gov/sites/default/files/privacy-final.pdf; see also EPIC, 
White House Sets Out Consumer Privacy Bill of Rights, https://epic.org/
privacy/white_house_consumer_privacy_.html.
    \31\ EPIC has recommended compliance with the CPBR in numerous 
settlement proceeding where the FTC has asked for public comment. See, 
e.g., EPIC Comments, FTC Project No P114506 (Jul. 11, 2012), https://
epic.org/privacy/ftc/FTC-In-Short-Cmts-7-11-12-FINAL.pdf; EPIC 
Comments, FTC Docket No. 102 3058 (Jun. 8, 2012), https://epic.org/
privacy/socialnet/EPIC-Myspace-comments-FINAL.pdf; EPIC Comments, FTC 
Project No P114506 (May 11, 2012), https://epic.org/privacy/ftc/EPIC-
FTCAd-Disclosures-FINAL.pdf; EPIC Comments, FTC Docket No. 092 3184 
(Dec. 17, 2011), https://epic.org/privacy/facebook/Facebook-FTC-
Settlement-Comments-FINAL.pdf; EPIC Comments, FTC Docket No. 102 3136 
(May 2, 2011), https://epic.org/privacy/ftc/googlebuzz/
EPIC_Comments_to_FTC_Google_Buzz.pdf.
---------------------------------------------------------------------------
    Fundamentally, the FTC is not a data protection agency. Without 
regulatory authority, the FTC is limited to reactive, after-the-fact 
enforcement actions that largely focus on whether companies honored 
their own privacy promises. Because the United States currently lacks 
comprehensive privacy legislation or an agency dedicated to privacy 
protection, there are very few legal constraints on business practices 
that impact the privacy of American consumers.
EPIC's Recommendations
    Maintaining the status quo imposes enormous costs on American 
consumers and businesses. Consumers face unprecedented threats of 
identity theft, financial fraud, and security breach.\32\ Privacy 
protections based on industry self-regulation and burdensome ``notice 
and choice'' policies do not provide meaningful safeguards for 
consumers. The FTC must issue effective guidance and use its Section 5 
enforcement authority to ensure adequate protection of consumer privacy 
in the digital age.
---------------------------------------------------------------------------
    \32\ See, e.g., Fed. Trade Comm'n, Consumer Sentinel Network Data 
Book (Feb. 2016), https://www.ftc.gov/system/files/documents/reports/
consumer-sentinel-network-data-book-januarydec
ember-2015/160229csn-2015databook.pdf.
---------------------------------------------------------------------------
    Moreover, the FTC must promptly investigate business practices, 
pursue complaints, enforce existing Consent Orders, and modify proposed 
settlements to reflect public comments. The Commission's ongoing 
failure to fulfill these obligations is (1) contrary to the explicit 
purpose of the statutory provision that allows the Commission to 
request comments from the public;\33\ (2) contrary to the broader 
purpose of the Commission to police unfair and deceptive trade 
practices;\34\ and (3) contrary to the interests of American consumers.
---------------------------------------------------------------------------
    \33\ Commission Rules of Practice, 16 C.F.R. Sec. 2.34 (C) (2014).
    \34\ Federal Trade Commission Act, 15 U.S.C.. Sec. 46 (2006).
---------------------------------------------------------------------------
    We urge Congress to consider the Commission's use of Section 5 
authority in the context of the greater American legal landscape. 
Because the U.S. lacks a comprehensive privacy law or an agency 
dedicated to privacy protection, there are very few legal constraints 
on business practices that impact the privacy of Americans. The FTC's 
already modest Section 5 authority helps to deter and penalize the 
abuse of data. Any effort to limit the Commission's authority--coupled 
with Congress' failure to update America's privacy laws--is a 
disservice to the vast majority of Americans who are increasingly 
concerned about their loss of privacy and want their government to do 
more to protect this important democratic value.
    We look forward to working with you to improve the FTC's authority 
in this field and to develop rules to provide meaningful and much-
needed protections for consumer privacy.
            Sincerely,
                                            Marc Rotenberg,
                                                         President,
                                                                  EPIC.
                                           Claire Gartland,
                                                          Director,
                                         EPIC Consumer Privacy Project.

cc: The Honorable Jerry Moran, Chairman, U.S. Senate Subcommittee on 
Consumer Protection, Product Safety, Insurance & Data Security

The Honorable Richard Blumenthal, Ranking Member, U.S. Senate 
Subcommittee on Consumer Protection, Product Safety, Insurance & Data 
Security
                                 ______
                                 
                                                 September 26, 2016
Hon. Tom Wheeler,
Chairman,
Federal Communications Commission,
Washington, DC.

Dear Chairman Wheeler:

    The Information Technology Industry Council (``ITI'') and the 21st 
Century Privacy Coalition (``Coalition'') share the Federal 
Communications Commission's (``FCC'') interest in protecting the 
privacy and security of consumers' online information. Privacy and data 
security exist at the core of the trust relationship that all entities 
in the Internet ecosystem must establish with consumers. However, we 
continue to have concerns about the FCC's broadband privacy 
proposal.\1\ We therefore urge the FCC to modify the proposal so that 
it provides Americans with appropriate privacy protections while at the 
same time enabling consumers to fully benefit from the products and 
services our member companies are proud to provide.
---------------------------------------------------------------------------
    \1\ Protecting the Privacy of Customers of Broadband and Other 
Telecommunications Services, WC Docket No. 16-106, Notice of Proposed 
Rulemaking, FCC 15-138 (April1, 2016) (``NPRM'').
---------------------------------------------------------------------------
    Fundamentally, the FCC has proposed a series of burdensome privacy 
and data security requirements that are inconsistent with established 
law, policy, and practice in this area. These requirements do not 
reflect what is best for consumers. There is no evidence to indicate 
that consumers have been ill served under the traditional privacy 
framework currently administered by the Federal Trade Commission 
(``FTC'').
    Consumers have embraced today's thriving internet, fueled by 
responsible data practices, and they have come to expect a seamless 
online experience across multiple applications, services, and devices 
that delivers convenience while also protecting their privacy. The 
current online ecosystem supports online offerings that consumers 
value, promotes innovation, and contributes substantially to U.S. 
economic growth. As currently drafted, the NPRM could disrupt this 
healthy ecosystem.
    Rather than adopting a regime aligned with the FTC's well-
established, sensitivity-based approach to online privacy, the privacy 
regime proposed by the FCC in the NPRM departs from the FTC framework 
in significant and material respects. We are concerned that the 
prescriptive nature of the proposed regulatory approach could have 
precedential effects that would negatively impact the entire Internet 
ecosystem. We believe the FCC's primary objective should be to closely 
harmonize its rules with the existing FTC framework that has both 
protected consumers and enabled the Internet to flourish.
    Our additional concerns with the NPRM include its (1) overly broad 
definition of personally identifiable information;(2) unnecessary 
restrictions on first-party marketing that would deprive consumers of 
discounts and new product offerings that can save consumers money; (3) 
inflexible, strict-liability data security and breach notification 
requirements; and (4) an impractically short breach notification 
timeframe.
    Consistent with the FTC's enforcement framework, the FCC should 
modify its consent requirements to take into consideration whether the 
information is sensitive, rather than focusing on the use of such 
information and the entity engaged in such use. In addition, Internet 
protocol addresses or other unique identifiers necessary for the 
functioning of connected Internet devices, application usage data, and 
persistent online identifiers (cookies)--data that is highly unlikely 
to contribute to a risk of concrete harm such as identity theft--should 
not be subject to onerous consent requirements.
    The FCC's data breach proposal does not afford organizations 
adequate time to remediate any discovered vulnerabilities or to conduct 
thorough investigations to ascertain the nature and scope of any breach 
before notifying customers or government agencies of a breach of data. 
It also fails to include a risk analysis, and therefore will contribute 
to notice fatigue at best, or incite unnecessary panic at worst. If 
over-notification becomes commonplace, consumers will have difficulty 
distinguishing between notices and determining which ones warrant them 
to take action. Notification should be made to consumers if an 
organization has determined there is a significant risk of identity 
theft or financial harm.
    We support the goal of ensuring that consumers' online activities 
are subject to privacy and data security protections that comport with 
consumer expectations and long-standing policies that have protected 
consumers from harm while allowing the Internet to flourish. We hope 
that the FCC will modify its privacy proposal to ensure that this goal 
will be achieved.
            Sincerely,

Dean Garfield

ITI President and CEO

  

  

Mary Bono

Co-Chair

21st Century Privacy Coalition

Jon Leibowitz

Co-Chair

21st Century Privacy 
Coalition

cc: The Honorable Mignon Clyburn; The Honorable Michael O'Rielly;
The Honorable Ajit Pai; The Honorable Jessica Rosenworcel
                                 ______
                                 
                   Coalition for Patient Vision Care Safety
                                                 September 28, 2016
Hon. John Thune,
Chairman,
Committee on Commerce, Science, and Transportation,
United States Senate,
Washington, DC.

Hon. Bill Nelson,
Ranking Member,
Committee on Commerce, Science, and Transportation,
United States Senate,
Washington, DC.

Dear Mr. Chairman and Ranking Member Nelson:

    On behalf of the Coalition for Patient Vision Care Safety (the 
Coalition), we thank you for the opportunity to submit this letter as a 
part of the formal record accompanying yesterday's hearing ``Oversight 
of the Federal Trade Commission.'' Given that the Federal Trade 
Commission (FTC) is primarily charged with promoting consumer 
protection and ensuring competition in the marketplace, the Coalition 
writes today to encourage enhanced consumer protection and continued 
robust competition specifically in the eye contact lens marketplace.
    The Coalition was formed to ensure that the health and safety of 
the contact lens patient is promoted, preserved, and protected as the 
FTC undergoes its regular review of the Contact Lens Rule (Rule) and 
the underlying Fairness to Contact Lens Consumers Act (FCLCA) passed by 
Congress in 2003. While there have been significant technological and 
medical advances over the past 13 years, loopholes in the law, and 
noncompliance, have allowed some online retailers to use deceptive 
marketing practices that discourage regular eye care checkups.
    One important example involves online sellers that often circumvent 
the intent of the law and jeopardize patient protections by encouraging 
sales of contact lenses in quantities that would permit use well beyond 
the length of the prescription, in some cases for several additional 
years. Put another way, online sellers ignore or intentionally extend 
the practical length of a prescription far beyond the legal expiration 
date and outside the time-frame envisioned by the FCLCA. We would ask 
that the FTC end the sales of lenses in quantities that go well beyond 
a prescription's expiration date. This would help to ensure that 
patients are seeing their eye care professionals at frequencies 
recommended by such agencies as the Centers for Disease Control (CDC).
    Additionally, the proliferation of robocalling, the practice of 
contacting prescribers through recorded voice messages, denies the 
prescriber access to a live conversation and often makes impossible any 
capacity for confirming or even asking questions about the 
prescription. For these reasons, we believe that eliminating the use of 
robocalls will better ensure eye patient safety by ensuring that eye 
care providers have all appropriate information to accurately validate 
a prescription.
    Finally, the Coalition fully supports the authority of the FTC to 
enforce the FCLCA in a way that protects patients and allows for a 
robust and competitive marketplace. The Coalition recommends that the 
FTC promote ways to make eye patient and provider complaints about 
contact lenses more easily articulated to the FTC; it also encourages 
the FTC to investigate more rigorously instances of deceptive and 
fraudulent practices by some sellers.
    The Coalition submitted comments to the FTC in October 2015, during 
the FTC's review of the 2004 Rule. These comments are attached for the 
Committee's review. We respectfully request that the FTC use its 
authority over the contact lens marketplace to ensure that the patient-
provider relationship is safeguarded and we stand ready to assist you, 
the other Senators on the Committee, and the FTC in this endeavor. 
Thank you for your continued leadership on all issues related to the 
FTC.
            Sincerely,

                           The Coalition for Patient Vision Care Safety
                                                                AdvaMed
                                              Alcon--a Novartis Company
                                        American Optometric Association
                                                            Bausch+Lomb
                                                     CooperVision, Inc.
                                   Johnson & Johnson Vision Care, Inc. 
                    a member of Johnson & Johnson's Family of Companies
                                 ______
                                 
              The Coalition for Patient Vision Care Safety
  Comments Regarding the FTC's Regular Review of the Contact Lens Rule
                            October 26, 2015
                           Table of Contents
1. Introduction

2. Enforcement

        a. Noncompliance of the Act: Selling Lenses Without a 
        Prescription

        b. The Manner in Which the Market Works Misleads Patients

        c. Brand Substitution d. Enforcement Recommendations

3. Quantity and Length of Prescriptions

        a. Competition and Convenience Can Lead to Compromising Patient 
        Safety

        b. Limits on Quantity Can Preserve Competition and Promote 
        Patient Safety

        c. Lack of Quantity Limits Can Stifle Competition and Patient 
        Choice

4. Passive Verification

        a. Deceptive Practices from Sellers Regarding Prescription 
        Verification

        b. Should Robocalling be a Valid Method of Communication?

        c. Possible Changes to Passive Verification and Other Options 
        to Improve Patient Health Safeguards

5. Conclusion

6. Appendix--FTC Questions
                                 ______
                                 
                   Coalition for Patient Vision Care Safety
                                                   October 26, 2015
Federal Trade Commission,
Office of the Secretary,
Washington, DC.

RE: Contact Lens Rule, 16 CFR 315, Project No. R5119955

Dear Secretary Clark:

    The Coalition for Patient Vision Care Safety (the ``Coalition'') is 
pleased to submit comments on the Federal Trade Commission's (the 
``FTC'' or ``Commission'') review of its 2004 Final Rule (the ``Contact 
Lens Rule'' or ``Rule'') implementing the Fairness to Contact Lens 
Consumers Act (the ``Act''). Our Coalition, composed of manufacturers, 
eye care doctors, and medical device trade associations, seeks to 
ensure that the patient-doctor relationship is preserved and protected 
as the Commission undertakes this important review.\1\ Our aim is to 
improve the existing Rule to maintain pro-competitive intentions of the 
Act and Contact Lens Rule without allowing anticompetitive practices to 
undermine patient health and safety.
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    \1\ The Coalition consists of the following members: The American 
Optometric Association (AOA); Vision Care--a Johnson and Johnson 
Company; Bausch + Lomb; CooperVision, Inc.; Alcon--a Novartis Company; 
AdvaMed, and The Contact Lens Institute.
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Introduction
    The Coalition believes firmly that there is a continuing need for 
the Rule, and would be strongly opposed to significant changes that 
weaken the Rule or the statute. Since enactment, and the FTC's 
subsequent implementation, the market for contact lenses has become 
extremely competitive and is now one of the most heated markets in the 
country. This competition has led to increased investment in research 
and development, and a proliferation of innovation that has served to 
benefit the nearly 44 million Americans who use contact lenses every 
day. Today, the U.S. contact lens consumer has numerous choices as to 
how to procure and where to purchase their contact lenses, as well as 
competitive choices among manufacturers of these medical devices. Be it 
an online seller, a traditional retail store, or a doctor of optometry 
or ophthalmologist, patients do not lack for choices in their 
purchasing options. Because of the strength of the market and the 
accessibility of these medical devices to patients, the FTC should view 
its authority over the marketplace as a safeguard for patients seeking 
to fill their prescription for their contact lenses, which are 
regulated medical devices.
    While most FTC rules and related statutes are primarily concerned 
with prices and innovation for consumers, the Contact Lens Rule has a 
significant impact on the competition to supply contact lenses in a 
manner that enhances patient safety and the patient-doctor 
relationship, as well as the regulation of contact lenses, which are 
Class II and Class III medical devices as approved by the Food and Drug 
Administration (FDA). As such, any examination of the rules and their 
effectiveness should be viewed, at least in part, with an eye toward 
patient health and safety, and whether anticompetitive conduct fails to 
preserve and protect confidence in the patient-doctor relationship. As 
an FTC staff report from 2004 importantly noted:

        ``The primary health care concern with contact lenses appears 
        to be ensuring that contact lens wearers return to their 
        doctors regularly for eye examinations. . .Some individuals may 
        develop eye problems even if they follow the doctor's advice; 
        their eyes may develop problems simply in response to wearing 
        lenses. Contact lens wearers incur health risks if they forego 
        regular eye exams that would allow the optometrist or 
        ophthalmologist to spot emerging health problems in their early 
        stages. Consumers may thus endanger the health of their eyes if 
        they obtain and wear replacement contact lenses without a valid 
        prescription.'' \2\
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    \2\ Possible Anticompetitive Barriers to E-Commerce: Contact 
Lenses. A Report from the Staff of the Federal Trade Commission; March 
2004. pp. 8-9 (emphasis added).

    In the spirit of protecting patients' eye health, we would ask the 
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Commission to implement improvements in three areas of the Rule:

  1.  The FTC should strengthen enforcement of provisions of the 
        statute and Contact Lens Rule, and simplify the process where 
        patient and prescriber complaints are filed with the 
        Commission.

  2.  The FTC should impose reasonable limits with respect to 
        prescription expiration and to the quantity of contact lenses 
        permitted to be prescribed and sold so as to ensure patients:

     Receive appropriate professional supervision when using 
            these regulated medical devices;

     Receive contact lenses that are appropriate for the 
            patient's ocular health and needs;

     Receive contact lenses that match the lens brand and type 
            delineated on a valid prescription, regardless of where the 
            contact lenses are purchased; and

     Receive regular attention to their ocular health care 
            issues.

  3.  The FTC should enhance the verification process, to protect 
        against unverified sales of contact lenses and ensure that 
        patients receive the contact lenses prescribed by their doctor 
        of optometry or ophthalmologist.

    We believe that without undermining the Act, the Commission can 
make specific changes to its Rule to better protect the ocular health 
of the nearly 44 million Americans wearing contact lenses today, and to 
ensure that the desire for profits is not placed above the need to 
protect the eye health of patients.
Enforcement
    The Coalition believes the Commission should increase significantly 
the enforcement of the Act. The FTC has asked about the effects of the 
Rule on the flow of truthful and deceptive information to consumers. 
The Coalition believes noncompliance with and loopholes within the law 
have resulted in a deceptive flow of information to contact lens 
patients, and have the potential to compromise seriously the vision 
health of patients.
    The FTC, the FDA, and the Department of Justice (DOJ) all possess 
varying degrees of jurisdiction over the enforcement of legislation 
governing the contact lens marketplace; however, Congress gave the FTC 
explicit marketplace enforcement jurisdiction over the Act. The FTC has 
specific authority, under all appropriate enforcement provisions of the 
Federal Trade Commission Act, to issue complaints or bring actions 
against contact lens sellers who violate the Act. The Coalition 
understands that the FTC's jurisdiction is primarily related to 
enforcement against companies that make misleading claims about their 
products or services. Moreover, under its unfairness jurisdiction, the 
Commission can regulate marketing practices that cause or are likely to 
cause substantial consumer injury, are not reasonably avoidable by 
consumers, and are not outweighed by countervailing benefits to 
consumers or to competition.
    The Act's mandate is clear. As is the Rule, which states that any 
``person that engages in the manufacture, processing, assembly, sale, 
offering for sale, or distribution of contact lenses may not represent, 
by advertisement, sales presentation, or otherwise, there is evidence 
that contact lenses may be obtained without a prescription.'' \3\ In 
today's marketplace; however, contact lenses are often obtained either 
without an accurate and valid prescription or without any prescription 
at all. The opportunities for violating the prescription requirements 
in the Act are much greater than when the Act passed in 2003. These 
opportunities exist largely because the use of the Internet has 
increased exponentially in the last 11 years and overall product 
purchasing (and, in particular contact lenses product purchasing) is 
simpler than it once was. As a result, the Coalition members have all 
encountered increasing examples of noncompliance and exploitation in 
numerous areas.
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    \3\ Federal Register 40504; July 2, 2004.
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Noncompliance of the Act: Selling Lenses Without a Prescription
    Technological advances since the passage of the Act have made 
online contact lens purchases easier. But these advances have also 
occasioned competition-quashing and deceptive contact lens marketing 
from sellers. Increased website access and social media (through such 
sites as Facebook, eBay, Amazon, and others) offer illegal online 
traders and resellers a massive and often unsuspecting customer 
audience. Social media and the Internet have also helped foreign 
companies that promote the fact that they do not verify prescriptions 
easily reach thousands of consumers. The example below, 
NextDayLenses.com, is a U.K. company shipping contact lenses globally, 
``including the U.S.A.''

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Note that while this company does tell patients that ``it is 
important to ensure your prescription is kept up to date . . .'' they 
lead with ``As long as you are happy that your current prescription is 
correct, you can buy contact lenses online without a prescription . . 
.'' \4\
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    \4\ http://www.nextdaylenses.com/buy-contact-lenses-online-without-
a-prescription-last accessed on 10/24/2015
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    It is telling that a now seven-year-old Journal of Optometry study 
on the Act, and on online contact lens marketplaces, found poor eye 
care practices among patients who purchased contact lenses online and 
predicted additional unhealthy practices. The report concluded, in 
2008, that online contact lens purchasers ``are less likely to 
regularly visit their doctor and [are] at greater risk for unhealthy 
eye care practices.'' \5\ The significant increase in online lens sales 
growth has only exacerbated this risky behavior. Fast forward to 2015, 
and it is apparent to the Coalition that the 2008 predictions have come 
true. According to a 2015 APCO Insight Survey of contact lens wearers 
who purchase online, numerous consumers admit to ordering contact 
lenses with expired or close-to-expired prescriptions and online 
retailers are encouraging this practice.\6\ One-in-three (32 percent) 
purchasers admit to ordering contacts using an already expired 
prescription.\7\ The same survey found that, of those who believe a 
prescriber should be contacted directly by a lens retailer to fill a 
prescription, only 35 percent report that the retailer contacted their 
doctor directly to get the prescription.\8\
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    \5\ Journal of Optometry 2008 Report, p. 34 ``Contact lenses 
purchased over the Internet place individuals potentially at risk for 
harmful eye care practices.'' Joshua Fogel, PhD., and Chaya Zidile.
    \6\ From September 24 to October 2, 2015 APCO Insight conducted an 
online quantitative survey among U.S. consumers who purchased contact 
lenses online. APCO surveyed 500 contact lens wearers over 18 who had 
purchased online in the previous six months.
    \7\ Id.
    \8\ Id.
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    The American Optometric Association (AOA) also recently reported to 
the Coalition that it has identified several online contact lens 
retailers who, in the Coalition's view, inappropriately allow consumers 
to purchase contact lenses without a prescription, contravening either 
the intent or the Act itself. For example, during the order process 
AAlens.com does not request any prescriber information to verify a 
prescription and AAlens.com does not appear to request a copy of the 
patient's prescription. Rather, the retailer indicates, ``Our terms and 
conditions are simple: All customers who order replacement contact 
lenses must have a valid prescription which must be less than 24 months 
old. Your order must be for the same contact lenses that you are 
already successfully wearing. We accept no responsibility for our 
customers' lack of suitability to wear contact lenses.'' \9\ Similarly, 
Saveonlens.com does not request prescriber information to initiate the 
verification process and does not require the patient to provide a copy 
of a prescription to complete an order.\10\ There are also several 
retailers who sell cosmetic lenses seemingly without following the 
requirements of the Act.\11\ Therefore, it appears that there is a 
practice by some online retailers to either sell without a prescription 
or to avoid contacting a prescriber directly to obtain or confirm 
information required by the Act. We believe that these violations are 
going largely unchecked.
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    \9\ http://www.aalens.com/faq.html
    \10\ http://www.saveonlens.com/contact_lenses_no_prescription.html
    \11\ https://www.honeycolor.com; www.pinkyparadise.com; http://
thedolleye.com
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The Manner in Which the Market Works Misleads Patients
    According to the 2015 APCO Insight Survey, and from numerous 
anecdotal accounts provided to the Coalition, lens patients are 
ordering, and are being encouraged to order, large quantities of 
contact lenses, particularly just prior to a prescription's expiration 
in order to circumvent Federal prescription mandates. There are even 
online blogs offering advice as to how to do so, as detailed below:\12\
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    \12\ https://answers.yahoo.com/question/
index?qid=20130627093112AAEu68o

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Six-in-ten online purchasers (62 percent) say they have ordered 
contacts using a prescription less than a month from its expiration 
date.\13\ While not an outright violation of the Act, it is troubling 
that online contact lens sellers encourage and market the ``stocking 
up'' of contact lenses just prior to a prescription's expiration. While 
the Act does not limit the number of contact lenses that can be sold, 
it does require that, absent an outright prescription, the quantity of 
contact lenses be included in the verification request that is sent to 
the prescriber. In 2004, the FTC thought that providing such 
information would prevent the patient from receiving more contact 
lenses than are available through the remainder of the prescription. In 
the Rule, the FTC declared that ``the verification process itself . . . 
generally allows prescribers to prevent patients from ordering 
excessive contact lenses.'' \14\
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    \13\ APCO Insight Survey.
    \14\ Federal Register 40488; July 2, 2004.
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    In practice; however, patients are regularly ``ordering excessive 
contact lenses.'' \15\ This is despite the purported quantity reporting 
safeguard that the FTC believed would limit excessive ordering. Just 
because the quantity is required to be reported, does not mean that a 
consumer has to limit the number of contact lenses ordered.
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    \15\ Id.
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    Furthermore, if a patient provides a copy of a contact lens 
prescription to a retailer, that prescription is not required by the 
Rule to include any quantity information. Additionally, when a complete 
copy of a contact lens prescription is provided to a retailer, the 
verification process is not triggered. So, while the FTC previously 
believed that the verification system provided a safeguard against the 
purchase of excessive contact lenses, the FTC did not seem to account 
for retailers seeking to obtain a complete copy of the contact lens 
prescription to circumvent verification. Clearly, more needs to be done 
to ensure that retailers do not encourage the purchase of large numbers 
of contact lenses that might no longer meet the eye care needs of the 
patient and may allow threats to a patient's vision to fester.
    There are obvious examples of these practices. For example, 
Lens.com allows consumers to purchase up to 50 boxes of a 90-day pack 
of daily disposable contact lenses for each eye, which provides 4,500 
contact lenses per eye. This is more than a 12-year supply of contact 
lenses, well over a one year's supply, which if purchased virtually 
eliminates the doctor-patient relationship in its entirety.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Additionally, 1-800-CONTACTS allows a patient to purchase eight 
boxes of 90-day packs for each eye, which provides 720 contact lenses 
per eye, which is about a 2-year supply, stocking most patients with 
contact lenses well beyond their prescription's expiration date. With 
1-800-CONTACTS dominating the online market (the company itself asserts 
that is holds 75 percent of the online market),\16\ it is not 
surprising that patients are uneducated as to the need for regular 
visits to their eye doctor or the importance of maintaining an updated 
prescription.
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    \16\ http://www.judiciary.senate.gov/hearings/
watch?hearingid=12e98234-5056-a032-52ea-90f98e940d9b

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    The Coalition believes that the selling of excessive amounts of 
contact lenses unfairly disadvantages competition, discourages patients 
from seeking regular visits with their eye doctor and is not in the 
best interest of patient health. Regular visits allow doctors not only 
to determine changes in a patient's vision, but also serve as a forum 
to inform patients how dangerous some eye health habits can be, and 
assess whether their patients are engaging in such risky behavior. 
According to a recent report published by the Centers for Disease 
Control and Prevention (CDC), more than 99 percent of survey 
respondents reported engaging in at least one risky behavior with 
regard to contact lens habits.\17\ The CDC's research found that some 
of these riskier behaviors include:
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    \17\ http://www.cdc.gov/mmwr/preview/mmwrhtml/
mm6432a2.htm?s_cid=mm6432a2_w

   Patients keeping contact lens cases for longer than 
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        recommended (82.3 percent);

   Adding new solution to the existing solution instead of 
        emptying the case out fully before adding new solution (55.1 
        percent); or

   Patients wearing their contact lenses while sleeping (50.2 
        percent).

    As this survey data demonstrates, the importance of annual eye 
exams and the preservation of the patient-doctor relationship is 
critical not only to determine the patient's prescription needs, but 
also to examine their overall eye health habits, ensuring their safety 
when using contact lenses.
Brand Substitution
    An additional area of concern related to patient safety involves 
significant incidences of contact lens brand substitution, which is 
prohibited under the Act. Again, according to the 2015 APCO Insight 
Survey, consumers do not want brand substitutions, yet many say they 
have received a substitution without advance notice or that their 
online retailer has advised them to substitute when out of stock.\18\ 
One-in-four (24 percent) online purchasers reported having received--
without warning--a different brand of contact lenses than those which 
were ordered.\19\ Another three-in-ten (31 percent) reported having 
experienced supply issues with their online retailer and being advised 
to get another brand of contact lenses as a solution.\20\ While the Act 
allows for substitution of contact lenses by the same manufacturer if 
such contact lenses are the same but sold under a different label, 
substitutions from one manufacturer to another are prohibited and, yet, 
are routinely practiced by online sellers.\21\ This is potentially 
quite dangerous for the contact lens patient. A 2015 Ohio State 
University report showed clearly how the ocular response to each 
contact lens is significantly different and leads to a variety of 
physiological reactions, even when fitting the same patient with 
various contact lenses.\22\ Thus, maintaining and enforcing the current 
requirement that prescribers must include the specific brand and 
product name on patient prescriptions and prohibiting substitution is 
absolutely necessary to minimize the risk of potentially sight-
threatening complications.
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    \18\ APCO Insight Survey.
    \19\ Id.
    \20\ Id.
    \21\ 15 U.S.C. 7603; Sec. 4(f).
    \22\ Ohio State University 2015 Report. ``Are Contact Lenses 
Interchangeable?'' Jeffrey J. Walline, OD PhD.
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    The Coalition understands and supports the spirit of increased 
competition, small business opportunity, and patient convenience 
envisioned by the Act. But we strongly believe that some online contact 
lens sellers have sought to reduce competition among retail and medical 
eye care providers and manufacturers through noncompliance or outright 
violation of the Act. This can be prevented with stronger enforcement.
Enforcement Recommendations
    Operation Double Vision, a short-term program run primarily by U.S. 
Immigration and Customs Enforcement (ICE), seized 20,000 illegal pairs 
of contact lenses in 2014.\23\ And, yet, there is currently no 
dedicated office, online category, or phone number at the FTC assigned 
to Contact Lens Rule complaints. The FTC, in fact, routes eye contact 
complaints about non-compliance to its general complaint lines. These 
include complaints regarding:
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    \23\ U.S. Immigration Customs & Enforcement Press Release; 10-12-
2015.

   Sale or advertising of contact lenses without a 
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        prescription;

   Fake prescriptions;

   Filling of expired prescriptions;

   Supplying inappropriate and exorbitant quantities of contact 
        lenses;

   Ignoring the eight-hour passive verification period by 
        prescribers;

   Substituting contact lenses without the consent of 
        prescriber;

   Unintelligible recorded robocall messages; and

   Failure to provide reasonable access to any actual contact 
        person to verify the prescription.

    We believe the general routing of complaints both discourages 
reporting of complaints and does not provide the FTC with adequate and 
accessible information to enforce the Rule. We believe that dedicated 
personnel paired with, a dedicated website or phone number within the 
FTC, and/or a dedicated office, would go a long way toward protecting 
the contact lens patient. We also recommend:

   An analysis be conducted and made available by the FTC that 
        provides compliance and enforcement details about the Act--
        including, but not limited to, how many complaints the FTC 
        receives about the Act annually, the nature of those 
        complaints, how often the FTC processes complaints, and how 
        many investigations, complaints, and enforcement proceedings 
        and fines the FTC has completed to date;

   Significantly increased enforcement of the Act;

   A requirement that a live person be available for doctors to 
        verify or reject a prescription or information about a 
        prescription, with a phone number to such person clearly 
        identified, as part of the verification process; and

   A determination that robocalling is not a ``completed'' 
        communication for the purposes of the verification process.

    There is overwhelming evidence of continued deceptive and 
misleading practices by some in the online contact lens marketplace, 
and we urge the Commission to hold these entities accountable. We, 
therefore, urge the Commission to pursue our requested enforcement-
related recommendations.
Quantity and Length of Prescriptions
    The Act preempted state laws that specified prescription expiration 
dates ``less than one year after the issue date of the prescription.'' 
\24\ The Act permits prescriptions longer than one year to the extent 
the laws of the state in which the prescription was written permit 
longer terms.\25\ And the Act otherwise requires that prescriptions 
shall expire ``not less than one year after the issue date of the 
prescription.'' \26\ The exception in the statute pertaining to ocular 
health is not pertinent to these comments.
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    \24\ 15 U.S.C. 7604; Sec. 5(a)(2).
    \25\ 15 U.S.C. 7604; Sec. 5(a)(1).
    \26\ 15 U.S.C. 7604; Sec. 5(a)(2).
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    The Commission in its Contact Lens Rule essentially codified the 
above referenced statutory language, except for some added clarity with 
respect to prescriptions shorter than one year. The Coalition urges the 
Commission to retain the prescription limits imposed in the Rule and 
also strengthen the Rule to provide increased protections for patient 
eye safety and health.
    The reasoning behind the prescription limits in the Rule was, as 
the Commission noted in its publication of the Contact Lens Rule, to 
``prevent prescribers from selecting a short expiration date for a 
prescription that unduly limits the ability of consumers to purchase 
contact lenses from other sellers[.]'' \27\ The Coalition agrees that 
expiration dates should not be unduly restrictive; however, we do not 
believe that prescribers would have selected short expiration dates so 
as to limit consumer choice. The one-year rule now serves a separate 
yet equally important purpose which is not fully realized.
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    \27\ Federal Register 40504; July 2, 2004.
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Competition and Convenience Can Lead to Compromising Patient Safety
    To be specific, the one-year limit serves to make it more likely 
that patients requiring renewals of their prescriptions will undergo 
regular and annual eye exams. Any alteration to the Rule toward 
lengthening the time frame would undermine this vital health benefit. 
The competitive benefits behind the Rule have been mostly achieved but 
the health benefits that the Rule encourages need to be protected and, 
to some degree, have yet to be realized. As discussed earlier, some 
patients do not prioritize regular eye exams with their doctor, and 
retailers regularly encourage this behavior with misleading information 
about the importance of regular eye care. This is concerning as 87 
percent of contact lens patients had an eye exam last year, and of 
those, 94 percent reported a change in their prescription since their 
last visit.\28\
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    \28\ APCO Insight Survey.
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    As the above numbers suggest, around 13 percent of contact lens 
patients did not see a licensed practitioner for an exam last year. Put 
another way, around five million contact lens patients did not receive 
the care they need. Why is this? The Coalition believes there are two 
predominant factors: first, when the Commission crafted Rule 
Sec. 315.6, it did not, and perhaps could not, take into account the 
proliferation of sellers that deliberately or inadvertently ignore 
verification requirements and sell large supplies of contact lenses to 
patients after or close to the expiration of their prescription. 
Second, the Commission could not anticipate that many consumers would 
flock to such sellers, and that sellers would be willing to disseminate 
misleading information regarding the need for regular eye exams and 
valid, updated prescriptions with little concern about the health 
benefits the patient may be foregoing.
Limits on Quantity Can Preserve Competition and Promote Patient Safety
    Fortunately, the solution is quite simple. The Coalition urges the 
FTC to strengthen the Rule as implemented by adding quantity limits--
along with the enhanced verification standards we recommend below, to 
better protect patient safety and health.
    The Act gives the Commission the authority to impose quantity 
limits. In fact, 15 U.S.C. Sec. 7607 gives the FTC broad rulemaking 
authority ``to carry out this Act.'' Putting reasonable limits on 
prescriptions does not contravene the statute and is consistent with 
the goals of protecting consumers and competition. The Act contemplates 
quantity limits in its requirement that sellers include the specific 
quantity of contact lenses ordered in their verification requests.\29\
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    \29\ 15 U.S.C. 7603 Sec. 4(c)(3).
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    Consistent with the recommendations of the Contact Lens Rule, the 
majority of states have prescription expiration standards of one year. 
However, as cited above, sellers will often contact patients toward the 
end of their prescription and urge them to buy more, and in some cases, 
several years' supply of contact lenses. Also, consumers will often 
seek to buy contact lenses without a new prescription thinking they do 
not need a visit to their eye doctor. In both cases, the patients 
forego regular eye care, fail to receive a valid new prescription, and 
miss an important opportunity to be evaluated for other health 
conditions. For example, doctors of optometry and ophthalmologists are 
often the first health care practitioners to examine persons with 
undiagnosed diabetes mellitus or ocular manifestations of diabetes.\30\ 
These providers also identify other chronic conditions such as multiple 
sclerosis, Crohn's disease, and juvenile rheumatoid arthritis.
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    \30\ http://aoa.uberflip.com/i/374890-evidence-based-clinical-
practice-guideline-diabetes-mellitus
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    The Coalition urges the FTC to adopt several complementary quantity 
limits to address these interrelated problems. In light of the fact 
that most prescriptions are one-year in length, the Coalition urges the 
FTC to forbid retailers to sell in a single transaction a quantity of 
contact lenses that exceeds a single year's supply. An alternative 
approach could be for the FTC to require that sellers only provide a 
supply equal to the length of the underlying prescription. During the 
initial comment period after the Act was passed, commenters expressed 
concern that patients lose or damage their contact lenses and therefore 
argued against such limits. In such circumstances; however, patients 
can always buy more contact lenses, so long as their prescription is 
still valid. However, to avoid the practice of sellers and/or consumers 
attempting to get a year or more of contact lenses toward the end of 
their prescription, the Coalition recommends the Commission prohibit 
the sale of a quantity of contact lenses that exceeds the length of 
time before the prescription will expire.
    In the 11 years since the publication of the Rule, a significant 
number of patients have ordered and received contact lenses that were 
never verified and never in fact even prescribed. Oftentimes, sellers, 
in sending these contact lenses, are not technically violating the 
rules in the sense that they are sending the new supply while the 
original prescription is still valid (usually in the final month of the 
prescription). But they are violating the spirit of the rules in the 
sense that they are sending quantities well beyond the amount left on 
the original prescription. Given that 94 percent of patients require a 
change in their prescription when they actually have an eye exam; this 
practice seems to do a disservice to the patient.
Lack of Quantity Limits Can Stifle Competition and Patient Choice
    With respect to competition, an area the FTC is charged with 
protecting and promoting, there is a subtle, anticompetitive effect at 
play, particularly in the online market for contact lenses. That effect 
would be mitigated should the Commission adopt the rule changes urged 
in these comments. In the online market, one player, 1-800-CONTACTS, 
dominates the playing field, by its own estimates, controlling 75 
percent of online sales.\31\ When any merchant sends patients a year or 
more supply of contact lenses toward the end of their year's 
prescription, they are in essence locking up that patient for the 
foreseeable future, and forestalling competition for that patient's 
loyalty. Instead, as the data shows, a large percentage of patients 
that do receive regular eye exams actually learn of changes with their 
eyes, changes that result in changes to their prescriptions, and 
changes that should lead to competition for their purchasing dollar. 
Instead, when 1-800-CONTACTS simply sends a two years' supply to a 
patient, that practice ``unduly limits the ability of patients to 
purchase contact lenses from other sellers[.]'' \32\
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    \31\ http://www.judiciary.senate.gov/hearings/
watch?hearingid=12e98234-5056-a032-52ea-90f98e940d9b
    \32\ Federal Register 40504; July 2, 2004.
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    In its explanation of the Contact Lens Rule in 2004, the FTC opined 
that ``[t]he verification process itself thus generally allows 
prescribers to prevent patients from ordering excessive contact 
lenses.'' \33\ In reaching this conclusion, the Commission deduced that 
because verification requests were required to include the quantity of 
contact lenses ordered, prescribers would have ample opportunity to 
``treat a request for verification of a prescription as `inaccurate.' 
'' \34\ But as these comments and the data in the field demonstrates, 
it is possible that a significant number of Americans are getting large 
quantities of contact lenses beyond the length of their initial 
prescription, without getting a new prescription, despite the fact that 
their initial prescription would most likely change had they in fact 
gone for an eye exam.
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    \33\ Federal Register 40488; July 2, 2004.
    \34\ Id.
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    The FTC should impose reasonable limits with respect to the 
quantity of contact lenses permitted to be prescribed as well as sold. 
The Coalition makes the following recommendations to the Commission 
regarding quantity limits:

   Require the inclusion of quantity limits on the patient's 
        prescription to ensure patients receive appropriate and regular 
        medical supervision when using these regulated medical devices;

   Permit retailers to provide a quantity of contact lenses 
        equal to a single year's supply in a single transaction;

   Prohibit the sale of a quantity of contact lenses that 
        exceeds the amount reasonably necessary for use before the 
        prescription will expire; and restrict the sale of contact 
        lenses on a prescription that is nine months after issuance or 
        older to up to 25 percent of the prescription's course; and

   Prohibit sellers from acting as outright agents of patients 
        in terms of filling a prescription thereby requiring patients 
        to take a more active and ongoing role in their eye care 
        health.
Passive Verification
    When the Act was originally considered by the Congress, some 
versions of the draft legislation did not adopt a specific approach to 
prescription verification, recognizing benefits to both passive and 
active verification processes. Former FTC Consumer Protection Director 
Howard J. Beales testified before the House Energy and Commerce 
Committee in 2003 during a Committee hearing on the bill, and noted--
``Proponents of passive verification favor this approach because it 
allows the seller to presume verification if the eye care practitioner 
does not take affirmative action to correct any errors in the 
prescription . . . By contrast, proponents of active verification 
systems express concern that passive verification may allow sellers to 
ship contact lenses even if the customer has an invalid or incorrect 
prescription . . . [C]ustomers may face serious health risks if they 
obtain and wear contact lenses based on such a prescription.'' \35\
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    \35\ Fairness to Contact Lens Consumers Act: hearing before the 
Subcommittee on Commerce, Trade, and Consumer Protection of the 
Committee on Energy and Commerce, House of Representatives, One Hundred 
Eighth Congress, first session, on H.R. 2221, September 12, 2003.
---------------------------------------------------------------------------
    As passed by Congress, the Act adopted a passive verification 
mechanism--which may help the contact lens consumer, but adversely 
affect the contact lens patient. Subsequently, the FTC's intent in 
designing the verification process in the Rule was to provide 
flexibility and choice to consumers in purchasing contact lenses, but 
also put in place a critical safeguard that patients receive the 
correct contact lenses as prescribed by their eye care professional. 
Importantly, the FTC also sought to ensure that individuals are not 
able to circumvent the prescription expiration requirements.
    The Coalition does not believe that these safeguards have been 
achieved and, therefore urges the FTC to reexamine the passive 
verification system to ensure that patients are receiving contact 
lenses that are tied to an accurate and valid prescription. There are 
several areas of particular concern for the Coalition, over which we 
believe the Commission has the authority to act, including taking steps 
to:

  1.  Ensure, through enforcement, that online sellers are not able to 
        advertise or communicate that they sell contact lenses without 
        a valid prescription, or advertise reorders of prescription 
        contact lens prescription after the prescription has expired;

  2.  Examine the various methods of communication between a seller and 
        provider, including robocalling, and in particular look at 
        whether existing methods actually constitute ``direct 
        communication''; and

  3.  Study how the current passive verification system could be 
        modified to better protect patients' health.
Deceptive Practices from Sellers Regarding Prescription Verification
    After 11 years of the Rule, it has become clear that the passive 
verification process can vary substantially in practice. The Coalition 
has heard reports from patients and prescribers of instances in which 
consumers have received contact lenses based on expired prescriptions; 
stockpiled contact lenses that last well beyond the prescription 
expiration; or duplicate orders of contact lenses. Not only do these 
examples raise concerns around patient health and safety, but they also 
suggest that the safeguards that Congress and the FTC created aren't 
protecting patients as intended.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    The Coalition is aware of multiple online sellers that advertise 
their ability to provide contact lenses without a valid prescription. 
These sellers include DaySoft.com, a contact lens company that markets 
to patients in the United States. DaySoft's business practices are in 
violation of the Act because it does not require a verified 
prescription. Instead, the company directs patients to enter in the 
brand of contact lenses they were previously prescribed and then 
DaySoft replaces them with what they deem to be an adequately 
equivalent lens.\36\ We are aware of individuals who were personally 
able to purchase contact lenses through this site, and also received 
contact lenses that were other than those that were prescribed by their 
eye care professional. The homepage of their website includes a 
testimonial from a patient in New York;\37\ these sites are clearly 
reaching patients in the United States.
---------------------------------------------------------------------------
    \36\ https://www.daysoftcontactlenses.com/US/Buy.aspx#.Vh-qrdKrSM8
    \37\ http://www.daysoftcontactlenses.com/US/
CountryHomepage.aspx#ThisMonth
---------------------------------------------------------------------------
    The Coalition urges the FTC to examine these deceptive practices, 
and consider enforcement actions against these online sellers who are 
endangering the eye health of many Americans who purchase their contact 
lenses online. According to the Rule, ``The Commission emphasizes that 
the sale of contact lenses based on a verification request which does 
not contain all of the required information constitutes a Rule 
violation.'' \38\ The FTC has the authority and the responsibility to 
act against these bad actors.
---------------------------------------------------------------------------
    \38\ Federal Register 40496; July 2, 2004.
---------------------------------------------------------------------------
Should Robocalling be a Valid Method of Communication?
    Another area of increasing concern to the Coalition is the growth 
of robocalling by retailers is leading to more and more prescriptions 
being verified passively. According to the Rule, once the eye care 
professional receives the request to verify the prescription, they have 
eight business hours to verify the information. If the eye care 
professional fails to verify the prescription within eight business 
hours, the patients' prescription is automatically filled.\39\
---------------------------------------------------------------------------
    \39\ Federal Register 40483; July 2, 2004.
---------------------------------------------------------------------------
    The Rule allows for a variety of methods of communication for 
sellers to verify prescriptions, ranging from outdated communication 
via fax to seller-initiated robocallers leaving voice messages on 
prescriber's office phone lines, often after hours and without a return 
number or seller contact. As a result, prescribers are often unable to 
provide the proper verification of the patient's prescription 
information within eight business hours.
    With regard to the definition of ``direct communication,'' the 
Commission ultimately decided in the Rule that an automated phone call 
would qualify as a completed communication to verify a prescription, 
even though the Commission received a ``substantial'' \40\ number of 
comments opposed to the use of automated telephone systems. That 
decision should be revisited. There is an important amount of critical 
patient information that must be communicated by the seller and 
verified by the prescriber, and that is very difficult to communicate 
in a robocall.\41\ In fact, the AOA has received numerous complaints 
from doctors of optometry that robocalls from online sellers, such as 
1-800-CONTACTS, are difficult to understand or do not include all of 
the legally required patient information to verify the prescription. As 
a result, patients may receive contact lenses that are based on 
outdated or incorrect prescription information. The Coalition believes 
that the FTC and the FDA share the responsibility for the health and 
safety of contact lens patients. The fact that patients are receiving 
contact lenses based on incorrect, outdated, or unverified prescription 
information runs counter to the FDA's medical device safety standards, 
and can also lead to serious vision issues.
---------------------------------------------------------------------------
    \40\ Federal Register 40489; July 2, 2004.
    \41\ ``(1) The patient's full name and address; (2) The contact 
lens power, manufacturer, base curve or appropriate designation, and 
diameter when appropriate; (3) The quantity of lenses ordered; (4) The 
date of patient request; (5) The date and time of verification request; 
(6) The name of a contact person at the seller's company, including 
facsimile and telephone numbers; and (7) If the seller opts to include 
the prescriber's regular business hours on Saturdays as ``business 
hours'' for purposes of paragraph (c)(3) of this section, a clear 
statement of the prescriber's regular Saturday business hours.'' 
Federal Register 40496; July 2, 2004.
---------------------------------------------------------------------------
    Additionally, in the FTC's 2004 publication, The Contact Lens Rule: 
A Guide for Prescribers and Sellers, the FTC states that ``direct 
communication by telephone requires reaching and speaking to the 
intended recipient, or leaving a voice message on the telephone 
answering machine of the intended recipient.'' \42\ This definition 
runs counter to the inclusion of automated phone calls (which do not 
allow for human feedback) as a valid method of verification. For 
example, a voice mail box may have a time limit within which to leave a 
message, and yet an autodialed message cannot by its very nature adapt 
to time constraints, and may therefore be cut off before conveying in 
entirety the patient's information. As such, prescribers often get 
calls without information, or without a return phone number; this 
invariably leads to sales when in fact the prescription has never been 
fully received or verified.
---------------------------------------------------------------------------
    \42\ The Contact Lens Rule: A Guide for Prescribers and Sellers. 
Federal Trade Commission, Bureau of Consumer Protection, Office of 
Consumer and Business Education. October 2004. pp. 3-4. (emphasis 
added).
---------------------------------------------------------------------------
    The FTC wrote in the Rule that ``the Commission will continue to 
monitor whether full, valid requests for verification of a prescription 
are being made through the use of automated telephone systems. If 
evidence demonstrates that sellers are not making valid verification 
requests but are providing consumers with contact lenses despite 
deficient requests, the Commission may revisit this issue.'' \43\ The 
Coalition requests that the FTC publish its findings, if any, in this 
regard. The Coalition believes that the FTC will find that there is 
substantial evidence that sellers' attempts to verify vital patient 
information are deficient, and the Commission should ban the use of 
automated phone systems.
---------------------------------------------------------------------------
    \43\ Federal Register 40489; July 2, 2004.
---------------------------------------------------------------------------
Possible Changes to Passive Verification and Other Options to Improve 
        Patient Health Safeguards
    Given that Congress permitted a passive verification system in the 
Act, we recognize that the Commission is unlikely to alter 
significantly this portion of the rule without Congressional action. 
While the Coalition supports the elimination of passive verification, 
we believe that modifications to the passive verification standards 
under the FTC jurisdiction could be made to provide a better baseline 
for patient safety standards. In a 2004 staff report, the FTC 
recommended that ``prescription release requirements and prescription 
verification requirements ensure that both consumers' health and 
consumers' economic interests are protected, especially given that 
consumers are more likely to adhere to recommended replacement 
schedules if contact lenses are less expensive and/or more conveniently 
available.'' \44\ To meet this standard while ensuring that patients 
are receiving optimum vision care, we support the following 
modifications:
---------------------------------------------------------------------------
    \44\ Possible Anticompetitive Barriers to E-Commerce: Contact 
Lenses. A Report from the Staff of the Federal Trade Commission; March 
2004. Page 31.

   Completion of the study on how the passive verification 
---------------------------------------------------------------------------
        system affects patients' eye health;

   Modification of the eight-hour period of communication when 
        the initial communication begins prior to a holiday or on a 
        weekend when a doctor is not conducting normal office hours; 
        and

   Rejection of any weakening of the current prescription 
        verification standards.
Conclusion
    On behalf of the Coalition, we have suggested in this submission 
ways for the Commission to both maintain certain protections and make 
needed changes to the Contact Lens Rule in order to accommodate 
appropriately all the technological and medical advances that have 
occurred over the last 11 years. To summarize, our suggestions are as 
follows:

  1.  The FTC should strengthen the enforcement of provisions of the 
        statute and Contact Lens Rule. To accomplish this, the 
        Coalition recommends the following actions:

     Simplify the process whereby patient and prescriber 
            complaints are filed with the Commission, including 
            dedicated personnel tasked with receiving and reviewing 
            these complaints;

     Conduct and publish an analysis providing compliance and 
            enforcement details about the Act--including, but not 
            limited to the annual totals of complaints the FTC receives 
            regarding violations of the Act, the nature of the 
            complaints, how often the FTC processes complaints, and how 
            many investigations, enforcement proceedings and fines the 
            FTC has completed to date; and

     Increase enforcement penalties to deter retailers from 
            advertising that they are able to sell contact lenses 
            without an accurate and valid prescription.

  2.  The FTC should impose reasonable limits with respect to the 
        quantity of contact lenses permitted to be prescribed as well 
        as sold. The Coalition makes the following recommendations to 
        the Commission regarding quantity limits:

     Require the inclusion of quantity limits on the patient's 
            prescription to ensure patients receive appropriate and 
            regular medical supervision when using these regulated 
            medical devices;

     Permit retailers to provide a quantity of contact lenses 
            equal to a single year's supply in a single transaction, or 
            the length of the underlying prescription; and

     Prohibit the sale of a quantity of contact lenses that 
            exceeds the amount reasonably necessary for use before the 
            prescription will expire.

  3.  The FTC should enhance the verification process, to protect 
        against unverified sales of contact lenses and ensure that 
        patients receive the contact lenses prescribed by their doctor 
        of optometry or ophthalmologist. The Coalition makes the 
        following recommendations regarding the communication between 
        retailers and doctors:

     Examine the various methods of communication between a 
            seller and provider to determine whether existing methods 
            actually constitute ``direct communication'';

     Issue a determination that robocalling is not considered a 
            ``completed'' communication for the purposes of the 
            verification process;

     Study how the current passive verification system could be 
            modified to better protect patients' health; and

     Reject any weakening of current prescription verification 
            standards.

    We are hopeful that the Commission will adopt our suggested 
modifications with regard to enforcement, length and quantity of 
prescriptions; and passive verification; we believe these modifications 
comport with the underlying Act and will create an environment for 
contact lens patients that will promote truthful interactions with 
sellers and providers. It is our ultimate goal to promote better eye 
health and safety with regard to the prescription and dispensing of 
contact lenses, while retaining a robust market for patients. We 
believe that the changes we suggest will also create a more level and 
competitive playing field for all those involved in the contact lens 
business--whether those involved be medical professionals, 
manufacturers, online retailers or small and large bricks and mortar 
retailers.
    We stand ready to provide additional comments or any other material 
the Commission deems necessary to inform the best policies to protect 
patients and consumers of contact lenses.
                                 ______
                                 
                        Appendix--FTC Questions
    1. Is there a continuing need for the Rule? Why or why not?
    According to the Fairness to Contact Lens Consumers Act (P.L. 108-
164), the FTC is tasked with prescribing rules under its jurisdiction 
to carry out the Act. The Coalition believes firmly that there is a 
continuing need for the Rule, and would be strongly opposed to 
significant changes that weaken the Rule or the statute. In the years 
prior to the enactment of the Act, significant advances in medical 
technology were achieved that made the wearing of contact lenses more 
appealing and available to patients. In the years since the Contact 
Lens Rule was finalized, even more technological advances have occurred 
both in the contact lens medical device industry as well as in the 
contact lens marketplace. Because of the strength in the market and the 
accessibility of these medical devices to patients, the Coalition urges 
the Commission to view its authority over the marketplace as a 
safeguard for the contact lens patient, rather than the contact lens 
consumer.

    2. What benefits has the Rule provided to consumers? What evidence 
supports the asserted benefits?
    The Coalition believes that the Act led to numerous choices for 
patients regarding how and from whom they purchase their contact 
lenses. The nearly 44 million Americans that wear contact lenses have a 
robust marketplace that includes online sellers, traditional retail 
stores, or a doctor of optometry or ophthalmologist. However, this is 
only beneficial to patients when their ocular health is also protected 
within the marketplace. Because of the growth in the market and the 
accessibility of these medical devices to patients, the FTC must now 
view its authority over the marketplace as a safeguard from unfair 
business practices for patients seeking access to necessary regulated 
medical devices from entities that might care more about sales than 
safety.

    3. What modifications, if any, should be made to the Rule to 
increase its benefits to consumers?

    a. What evidence supports the proposed modifications?

    b. How would these modifications affect the costs the Rule imposes 
on businesses, including small businesses?

    c. How would these modifications affect the benefits to consumers?
    As referenced in our comments, the Coalition believes that the FTC 
should approach the review of the Act with an eye toward patient 
safety, and examine whether the sanctity of the prescriber-patient 
relationship is being preserved to ensure patients are truly 
benefitting from the protections of the Act. To that end, we have 
identified three improvements to the rule that would be beneficial to 
patients in this marketplace.
    First, the FTC must enforce the statute and Contact Lens Rule and 
ease the process whereby patient complaints could be filed with the 
Commission, thereby enhancing enforcement on the front end. This will 
allow patients to better inform the Commission when their eye health 
has potentially been compromised.
    Second, the FTC should include reasonable quantity limits of 
contact lenses to be dispensed on a single prescription. This 
enhancement will ensure patients are receiving the quality of eye 
health care that they expect and deserve, and will reduce the burden on 
the patient to know if they are receiving the most recent version of 
this complex medical device.
    Finally, the Commission should improve the prescription 
verification process. This modification would protect patients from 
unverified sales of contact lenses and ensure the accuracy of the 
prescriptions provided to them.

    4. What impact has the Rule had on the flow of truthful information 
to consumers and on the flow of deceptive information to consumers?
    The Act has effectively expanded the marketplace to retailers that 
do not have face to face interactions with the patient seeking to 
obtain these medical devices. This allows for deceptive information to 
flood the market regarding the need for a prescription to obtain 
contact lenses, the importance of adherence to the prescription, 
including the brand, and diminishes the importance of the doctor-
patient relationship. As our comments reflect, the Coalition believes 
that the Act contains within it the authority granted to the FTC, the 
ability to reprimand and penalize those that disseminate this 
misinformation. We urge the Commission to consider enhancing its 
enforcement in an effort to reduce the incidences of deception we 
outline in our comments.

    5. What significant costs, if any, has the Rule imposed on 
consumers? What evidence supports the asserted costs?
    The improper use of contact lenses can lead to several serious 
conditions which require intensive treatment by doctors, adding not 
only additional monetary costs to the patient, but also impose serious 
health costs as well. The CDC estimates that, in 2014, costs associated 
with emergency room visits for keratitis alone, an impairment 
associated with the improper wearing of contact lenses added more than 
$175 million to the overall health care system.\45\ In addition to the 
medical costs incurred by the patient, there are additional costs 
related to loss of productivity as well as long term health 
consequences.
---------------------------------------------------------------------------
    \45\ http://www.cdc.gov/media/releases/2014/p1113-eye-
infections.html

    6. What modifications, if any, should be made to the Rule to reduce 
---------------------------------------------------------------------------
any costs imposed on consumers?

    a. What evidence supports the proposed modifications?

    b. How would these modifications affect the benefits provided by 
the Rule?
    As the FTC reviews and modifies the Act, the Coalition strongly 
opposes significant changes that would weaken the Rule or the statute. 
Since enactment, and the FTC's subsequent implementation, the market 
for contact lenses remains extremely competitive. Today, the U.S. 
contact lens consumer has numerous choices as to how to procure and 
where to purchase their contact lenses, as well as competitive choices 
among manufacturers of these medical devices. Be it an online seller, a 
traditional retail store, or a doctor of optometry or ophthalmologist, 
patients do not lack for choices in their purchasing options. While 
most FTC statutes and rules are primarily concerned with prices, the 
Contact Lens Rule has a significant impact on competition for patient 
safety and the patient-doctor relationship, as well as the regulation 
of contact lenses, which are Class II and Class III medical devices. As 
such, any examination of the rules and their effectiveness should be 
viewed in part with an emphasis on patient health and safety, and 
whether the sanctity of the patient-doctor relationship is being 
preserved and protected adequately.

    7. What benefits, if any, has the Rule provided to businesses, 
including small businesses? What evidence supports the asserted 
benefits?
    The Act and the Contact Lens Rule were established to increase 
access by patients to medical devices. Since its implementation, the 
online retail market for contact lenses has grown exponentially, 
however, by its own admission, 1-800-CONTACTS maintains 75 percent 
market share of the online retail market.\46\ Therefore there is little 
additional room for small businesses or other online retailers to reach 
these patients.
---------------------------------------------------------------------------
    \46\ http://www.judiciary.senate.gov/hearings/
watch?hearingid=12e98234-5056-a032-52ea-90f98e940d9b

    8. What modifications, if any, should be made to the Rule to 
---------------------------------------------------------------------------
increase its benefits to businesses, including small businesses?

    a. What evidence supports the proposed modifications?

    b. How would these modifications affect the costs the Rule imposes 
on businesses, including small businesses?

    c. How would these modifications affect the benefits to consumers?
    As we outline in our comments, the Coalition believes that there 
are several modifications that can be made to the Rule that will 
increase its benefits to patients as well as small businesses such as 
independent practices owned by a doctor of optometry or 
ophthalmologist. We believe that streamlining the process by which 
doctors, which are often also small business owners, communicate with 
these large online retailers by requiring a dedicated channel of 
communication and eliminating ``robocalling'' would ease the burdens on 
small eye care practices. We also believe that simplifying the process 
by which patients and eye care professionals are able to report 
potentially dangerous and misleading activities by large online 
retailers would serve the dual purpose of increasing patient safety and 
benefit these small practices.

    9. What significant costs, if any, including costs of compliance, 
has the Rule imposed on businesses, including small businesses? What 
evidence supports the asserted costs?
    Many of the practices discussed in our comments reflect costs to 
small practices that are focused on serving and treating patients. When 
any doctor substitutes time they should focus on patient care with time 
spent unsuccessfully attempting to reach a retailer in order to correct 
an incorrect or false prescription or report potentially dangerous 
activity to the FTC, that time results in costs to that business, 
whether large or small.

    10. What modifications, if any, should be made to the Rule to 
reduce the costs imposed on businesses, including small businesses?

    a. What evidence supports the proposed modifications?

    b. How would these modifications affect the benefits provided by 
the Rule?
    As we address in our comments, the Coalition believes that the 
overall review of the Contact Lens Rule should focus on patient safety 
and maintaining the relationship between the patient and their doctors, 
which are often also small business owners. The resulting savings in 
cost to a small business should only be a byproduct of policies that 
protect patient's vision health.

    11. What evidence is available concerning the degree of industry 
compliance with the Rule?
    The Act was intended to allow sufficient patient access to their 
prescribed contact lenses. The Act specifically preempted state laws 
with respect to prescription expiration dates of fewer than one year 
after the issue date, and allows for states to permit prescriptions 
longer than one year. However, it is clear that some, if not many 
retailers are misleading patients as to the need for a prescription at 
all, or are encouraging patients to purchase large amounts of contact 
lenses beyond what is reasonably necessary for the duration of a 
prescription. The Coalition urges the FTC to strengthen the Act by 
adding reasonable quantity limits to the prescription to correct this 
practice and protect the patients served by this FTC regulated 
industry. The Coalition urges the FTC to consider enforcement 
mechanisms that provide meaningful deterrents to bad actors in the 
system that will greatly decrease the number of improper dispensing of 
contact lenses and the associated ocular health conditions. As laid out 
in our comments, the Coalition believes that the FTC should utilize its 
enforcement authority to protect patients by increasing the 
investigations and associated penalties assessed to violators of the 
Act.

    12. What modifications, if any, should be made to the Rule to 
account for changes in relevant technology or economic conditions? What 
evidence supports the proposed modifications?
    The Coalition urges the FTC to redesign the passive verification 
process to ensure that retailers are not able to readily circumvent the 
prescription expiration requirements. Our comments reflect our belief 
that the passive verification system could be ``modernized'' to reflect 
the changes in the contact lens marketplace. We believe the FTC should 
exercise its authority to define the ``communication'' between a seller 
and a provider to not include the practice of robocalling. The 
Coalition also believes that providing doctors and patients with a more 
streamlined, dedicated complaint process will enable them to alert the 
FTC to potentially dangerous practices before the harm, and cost, is 
inflicted.

    13. Does the Rule overlap or conflict with other federal, state, or 
local laws or regulations? If so, how?

    a. What evidence supports the asserted conflicts?

    b. With reference to the asserted conflicts, should the Rule be 
modified? If so, why, and how? If not, why not?
    The Coalition believes that the FTC and the FDA share the 
responsibility for the health and safety of contact lenses and contact 
lens wearers. Evidence of this overlap exists in the FDA's website. In 
its Contact Lens section, it states: ``If you find a Website you think 
is illegally selling contact lenses over the Web, you should report it 
to FDA.'' The FDA allows for the reporting of unlawful sales of medical 
products on the Internet.
    The FDA evaluates these medical devices for safety and efficacy 
assuming that the contact lenses will be marketed as a prescription 
medical device. The FDA can only make reliable determinations about the 
utilization of these devices with certainty that the FTC is utilizing 
its jurisdiction to ensure that contact lenses are not misbranded by 
online retailers as an over-the-counter device dispensed without a 
valid prescription.
    Currently, the FTC requests all complaints regarding contact lenses 
be submitted through a ``generic'' Complaint Assistant online form. To 
file report related to contact lenses, individuals must first know to 
select ``other'' and then ``health and fitness.'' Should they 
appropriately make these selections, the FTC asks if the individual has 
a concern with telemarketing practices as it relates to the National Do 
Not Call registry. It is only after navigating the gauntlet of these 
selections and questions that the patient or doctor is asked about the 
retailer specifically. This can be a confusing and onerous process for 
confused patients as well as busy doctors. The Commission should work 
with the FDA to design a more streamlined complaint system.
                                 ______
                                 
     Response to Written Questions Submitted by Hon. John Thune to 
                           Hon. Edith Ramirez
    Question 1. Before the Committee, you testified that ``substantial 
injury'' is not limited to actual or likely economic harm, and that 
while most of the Commission's unfairness cases assert tangible 
economic harm, there are instances where intangible harms, including 
privacy harms, would constitute substantial harm. The Commission had 
previously assured this Committee that, in its unfairness analysis, it 
would recognize substantial injury in cases in which economic, health 
and safety harms exist.\1\ It also has stated that, in ``extreme 
cases,'' broader forms of harm such as emotional effects, could be 
considered as a basis for a finding of unfairness, but only where 
``tangible injury could clearly be demonstrated.'' \2\
---------------------------------------------------------------------------
    \1\ Letter from Hon. Michael Pertschuk, Chairman, Fed. Trade Comm'n 
(FTC), et al., to Hon. Wendell Ford, Chairman, & Hon. John Danforth, 
Ranking Member, Consumer Subcomm., S. Comm. on Commerce, Sci. & 
Transp., Commission Statement of Policy on the Scope of Consumer 
Unfairness Jurisdiction (Dec. 17, 1980), reprinted in International 
Harvester Co., 104 F.T.C. 949, 1070, 1073 (1984) (``UNFAIRNESS POLICY 
STATEMENT'') (``the injury must be substantial . . . not . . . trivial 
or merely speculative;'' that ``[i]n most cases a substantial injury 
involves monetary harm . . . [but that] unwarranted health and safety 
risks may also support a finding of unfairness;'' and that 
``[e]motional impact and other more subjective types of harm . . . will 
not ordinarily make a practice unfair''); Letter from FTC to Hon. Bob 
Packwood & Hon. Bob Kasten, S. Comm. on Commerce, Sci. & Transp., 
reprinted in 42 FTC ANTITRUST & TRADE REG. REP. (BNA) 1055 (1982), at 
568-570 (stating that ``[a]s a general proposition, substantial injury 
involves economic or monetary harm and does not cover subjective 
examples of harm such as emotional distress of offenses to taste or 
social belief'').
    \2\ UNFAIRNESS POLICY STATEMENT at n.16 (``[i]n an extreme case, 
however, where tangible injury could be clearly demonstrated, emotional 
effects might possibly be considered as the basis for a finding of 
unfairness'') (emphasis added)
---------------------------------------------------------------------------
    A. Does your position represent a departure from the long-standing 
unfairness policy that does not include intangible harm?
    Answer. The FTC's position is not a departure from Section 5(n) of 
the FTC Act or the Unfairness Policy Statement. Neither forecloses the 
possibility that intangible harms such as privacy harms may constitute 
substantial injury. The FTC stated in the Unfairness Policy Statement 
that emotional effects would support a finding of unfairness in an 
extreme case where tangible injury could be clearly demonstrated, 
citing as an example harassing latenight phone calls by debt 
collectors. UNFAIRNESS POLICY STATEMENT at n.16. But a privacy harm 
such as the disclosure of sensitive health or medical information, 
though intangible, is not merely an emotional effect or impact. To the 
contrary, such a disclosure is inherently and objectively harmful. This 
harm has been broadly recognized under Federal and state statutes and 
tort law, e.g., Fair Credit Reporting Act, 15 U.S.C. Sec. Sec. 1681 
a(i), 1681b(g)(1) (prohibiting inclusion of medical information in 
credit reports); Ga. Code Ann. Sec. 31-33-2(d) (prohibiting medical 
records' release without patient's authorization); acknowledged by 
Federal and state courts, e.g., Maracich v. Spears, 133 S. Ct. 2191, 
2202 (2013) (noting sensitivity of ``medical and disability history''); 
and recognized in a number of FTC cases, e.g., Compl.  13, 21-22, GMR 
Transcription Servs., Inc., Docket No. C-4482, 2014 WL 4252393, at *3-4 
(Aug. 14, 2014).

    B. If economic harm is not required, is there a predictable 
limiting factor on the types of harm that will result in FTC 
enforcement actions?
    Answer. Yes. As required by the first prong of Section 5(n) of the 
FTC Act and noted in the Unfairness Policy Statement, the harm in 
question must constitute a substantial injury. Trivial, speculative, or 
certain subjective harms, such as those that offend the tastes or 
social beliefs of particular consumers do not meet the first prong of 
Section 5(n). Unfairness Statement, 1984 FTC Lexis 2, at *307. As an 
example, the disclosure of the most sensitive health and medical 
information of the type at issue in the GMR case, including medical 
information about psychiatric disorders, alcohol use, drug abuse, and 
pregnancy loss, is the type of widely-recognized, substantial injury 
that Section 5(n) was designed to address. In addition, for there to be 
a violation, the other prongs of Section 5(n) must also be satisfied, 
i.e., the harm must not be reasonably avoidable by consumers or 
outweighed by countervailing benefits to consumers or competition.

    C. In support of your argument that there is no economic harm 
requirement for unfairness cases, you referenced the FTC's enforcement 
action In the Matter of Aaron's, Inc. In that case, however, the 
Commission alleged the defendant's practices were unfair, in part, 
because they placed consumers' financial accounts at risk of 
exposure.\3\
---------------------------------------------------------------------------
    \3\ Complaint  16, In the Matter of Aaron's, Inc., F.T.C. No. 122-
3264 (Mar. 11, 2014).
---------------------------------------------------------------------------
    Can you provide an example of an FTC unfairness case that does not 
include such a tangible economic harm nexus?
    Answer. The FTC has alleged that a company's practices were unfair 
without a nexus to economic harm in a number of cases:

   Making material retroactive changes to privacy policies 
        without consent. Facebook, Inc., FTC File No. 0923184 (Aug. 10, 
        2012), available at https://www.ftc.gov/sites/default/files/
        documents/cases/2012/08/120810facebookcmpt.pdf; Gateway 
        Learning Corp., Docket No. C-4120 (Sept. 17, 2004), available 
        at https://www.ftc.gov/sites/default/files/documents/cases/
        2004/09/040917comp0423047.pdf;

   Exposing images from home cameras. Trendnet, FTC File No. 
        122 3090 (Feb. 7, 2014), https://www.ftc.gov/enforcement/cases-
        proceedings/122-3090/trendnet
        -incmatter;

   Publicly disclosing health information. GMR Transcription 
        Services, FTC File No. 122 3095 (Aug. 21, 2014), https://
        www.ftc.gov/enforcement/casesprocee
        dings/122-3095/gmr-transcription-services-inc-matter; and

   Posting intimate, sexually-explicit photographs and personal 
        information of individuals online without their consent. Craig 
        Brittain, FTC File No. 132 3120 (Jan. 8, 2016), available at 
        https://www.ftc.gov/system/files/documents/cases/
        160108craigbrittaincmpt.pdf.

    D. In establishing the substantial harm requirement of Section 5(n) 
of the Federal Trade Commission Act, 15 U.S.C. Sec. Sec. 41-58, as 
amended, Congress sought to limit the Commission's authority over 
unfair acts or practices by codifying the principles of the FTC's 
policy statement on unfairness.\4\ In doing so, this Committee intended 
to ``enable the FTC to proceed in its development of the law of 
unfairness with a firm grounding in the precedents decided under this 
authority and consistent with the approach of the FTC and the courts in 
the past.'' \5\
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    \4\ S. REP. NO. 103-130, at 12 (1993) (``SENATE REPORT'') 
(explaining that Section 5(n) ``amends section 5 of the FTC Act to add 
a new subsection limiting the FTC's authorizing over `unfair acts or 
practices' '' and that it ``is intended to codify, as a statutory 
limitation on unfair and deceptive acts or practices, the principles of 
the . . . policy statement on unfairness'') (emphasis added).
    \5\ SENATE REPORT at 12-13 (emphasis added).
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    Please provide examples of prior precedent supporting your view 
that intangible harm alone may constitute substantial injury.
    Answer. In addition to the text of the Unfairness Policy Statement 
and the cases described above, below is a list of Federal court 
decisions that support the proposition that intangible harms can 
constitute substantial injury under Section 5(n):

   FTC v. Accusearch, Inc., No. 06-CV-105-D, 2007 WL 4356786, 
        at *8 (D. Wyo. Sept. 28, 2007), aff'd, 570 F.3d 1187 (10th Cir. 
        2009) (finding that the loss of privacy caused by defendant 
        resulted in a ``host of emotional harms that are substantial 
        and real and cannot fairly be classified as either trivial or 
        speculative'');

   Orkin Exterminating Co. v. FTC, 849 F.2d 1354, 1364-65 (11th 
        Cir. 1988) (affirming Commission grant of summary judgment 
        where injury included in part ``intangible loss'' relating to 
        loss of the certainty of contract terms); and

   Am. Fin. Servs. Ass'n v. FTC, 767 F.2d 957, 975 (D.C. Cir. 
        (1985) (affirming FTC's adoption of Credit Practices Rule, 
        which considered substantial emotional and subjective harms as 
        part of analysis of substantial injury, 49 Fed. Reg. 7740, 7744 
        (Mar. 1, 1984)).

    Question 2. One issue that the Committee is currently examining 
involves student privacy. In particular, the Safeguarding American 
Families from Exposure by Keeping Information and Data Secure (SAFE 
KIDS) Act, S. 1788, would extend additional privacy protections to pre-
K through 12th grade students with respect to educational applications 
and software they may use, even outside the classroom. Two harms that 
this legislation seeks to prohibit are (1) the sale of student data to 
third parties and (2) the use of student data for the purposes of 
targeted advertising.
    A. Please provide the number of complaints the Commission has 
received to its Consumer Sentinel network, in the past five years, as 
well as case summaries, regarding the following practices:

  i.  the sale of student data, collected through educational online 
        services or applications, to third parties; and

  ii.  the use of such student data for the purposes of targeted 
        advertising.

    B. Of these complaints, how many involve websites or online 
services currently subject to the Children's Online Privacy Protection 
Rule?
    Answer. The FTC Consumer Sentinel database does not contain readily 
extractable data on these categories of complaints. However, over 
decades of enforcement experience, we have found that our Consumer 
Sentinel database is often an imperfect tool for measuring consumer 
concerns. This is especially so in an area like privacy where neither 
parents nor students may be aware that student data is being sold to 
third parties or used for targeted advertising. For this reason, the 
consumer complaints we receive are often only one factor in our 
analysis of potential consumer concerns.
    We know from other data that the privacy of student information is 
a significant concern. For example, in a 2014 survey conducted by 
Common Sense Media, 90 percent of respondents said they were concerned 
about how private companies with non-educational interests are able to 
access and use the personal information of students. Seventy-seven 
percent of respondents were in favor of making it illegal for schools 
and education technology companies to sell students' private 
information to advertisers, and 74 percent were in favor of restricting 
companies from engaging in targeted advertising to students. See Common 
Sense Media Student Privacy Survey, available at https://
www.commonsensemedia.org/sites/default/files/uploads/about
_us/student_privacy_survey.pdf.
    Concerns about how private companies may be using children's 
personal information led the Commission to significantly revise the 
FTC's Children's Online Privacy Protection Rule (``COPPA Rule'') in 
2012. The revised Rule requires companies to give parents notice of, 
and control over, among other things, marketers' use of persistent 
identifiers to track their children for purposes of targeting 
advertising or compiling a profile. The FTC has brought several cases 
against companies who allegedly have collected personal information 
from children for behavioral advertising without obtaining parental 
consent. In settlements in December 2015 with LAI Systems, LLC and 
Retro Dreamer, for example, the Commission alleged that in violation of 
the COPPA Rule the companies allowed third-party advertisers to collect 
persistent identifiers from children under 13 and use it to serve 
targeted advertising, without parental consent. In a settlement in 
January 2016 with InMobi PTE, Ltd., the Commission alleged that an ad 
network unlawfully collected geolocation information from children's 
apps for behavioral targeting, without obtaining parental consent.

    Question 3. The FTC is an agency with broad investigative and 
enforcement powers. Commission investigations can involve considerable 
discovery requests, and enforcement actions frequently result in 
settlements through consent decrees. While there are often legitimate 
reasons for settlements, this reliance on the administrative process 
has resulted in a lack of judicial review of agency enforcement 
decisions. This lack of case law means there may be fewer bright lines 
to guide the Commission, companies, and courts with respect to 
enforcement. Does this absence of clear guidance concern you? Please 
explain.
    Answer. When the Commission determines that (1) it has reason to 
believe that an entity has engaged in unfair or deceptive acts or 
practices in violation of the FTC Act or violated another statute 
enforced by the Commission and (2) that an enforcement action against 
that entity is in the public interest, the Commission issues an 
administrative complaint or authorizes staff to file a complaint in 
Federal district court. The Commission determines to issue a complaint 
and place an entity under order only after a rigorous vetting process 
to ensure the evidence is strong and the case is appropriate under this 
standard. If a party chooses to settle prior to the Commission issuing 
the complaint, the Commission will issue the complaint along with the 
settlement and place both documents on the court docket and on the 
Commission's website. Accordingly, whether a case is litigated fully 
before a trier of fact or settled pre- or post-complaint, I believe the 
Commission provides ample guidance about what conduct it has found 
reason to believe violated a statute it enforces. Moreover, the 
majority of the Commission's consumer protection cases are filed in 
Federal court, and any settlement is subject to approval by a Federal 
court judge. Additionally, many of our cases do not settle, and there 
is a robust body of case law analyzing the specific facts of a case and 
evaluating whether and how the defendant's conduct violates the FTC Act 
or other statutes the Commission enforces.
    In order to prevent deceptive or unfair acts before they cause, or 
are likely to cause, harm, the Commission provides a host of materials 
that explain the Commission's positions on a myriad of legal issues. 
For example, the Commission provides detailed advice in formal 
guidance. Currently, the agency has published and updated thirteen 
Guides in areas ranging from Environmental Marketing Claims to 
Endorsements and Testimonials. See 16 CFR Subchapter B. The Commission 
also publishes a library of business education materials on its 
website. These materials address advertising and marketing generally, 
credit and finance, privacy and security, and issues within a number of 
select industries. See https://www.ftc.gov/tips-advice/businesscenter. 
The agency currently has 120 of these plain-language business guidance 
publications available to businesses. Additionally, over the last year 
alone, FTC staff have published 185 blog posts, providing advice on 
compliance with the FTC Act as well as other statutes and rules for 
which the Commission is responsible. Finally, the Commissioners and 
staff make dozens of annual appearances before industry groups to 
explain the law and the Commission's interpretation of it.

    Question 4. You indicated recently that you ``believe that it's 
appropriate to require opt-in consent when you have . . . sensitive 
information like financial information, geo-location, children's 
information, health information, content, but in areas outside of that, 
we think opt-out choice would suffice.'' The comments filed by the FTC 
staff to the Federal Communications Commission (FCC) recommended that 
the FCC take this approach as well in adopting its broadband privacy 
rules. Why do you think this is the best approach?
    Answer. The FTC's general approach to consumer choice has focused 
on whether the collection and use of information is consistent with the 
context of a consumer's interaction with a company and the consumer's 
reasonable expectations. For practices that are inconsistent with 
consumer expectations, the FTC has advocated that companies provide 
meaningful choices to consumers, with the level of choice being tied to 
consumer expectations. The FTC has supported the approach of using opt-
in for the collection, use, and sharing of sensitive information 
because the more sensitive the data, the more consumers expect it to be 
protected and the less they expect it to be used and shared without 
their consent.

    Question 5. Before the Committee, you testified that you would 
welcome the opportunity to review the latest version of the FCC's new 
privacy proposal and publicly comment on it before the FCC votes on it. 
Commissioner Ohlhausen testified that further comment on this proposal 
would be beneficial to consumers. Commissioner McSweeny testified that 
the FTC ``stand[s] ready to work with the FCC'' on this matter.
    A. Has FCC requested additional comment from FTC, or have you 
requested that the FTC have an opportunity to review the latest version 
of this proposal and provide additional public comment before the FCC 
votes on it?

    B. If not, does the FTC intend to make such a request? If so, when?
    Answer. The FCC did not request additional comment from the FTC, 
nor did the FTC request to provide additional public comment. The FTC's 
staff comment filed with the FCC on May 27, 2016 responded in detail to 
specific questions from the FCC and offered suggestions regarding the 
regulatory text based on the FTC's decades of experience protecting the 
privacy and security of consumers' data. I am pleased that the FCC 
adopted many of our recommendations in its final rule. We look forward 
to continuing to work with the FCC to protect consumers' privacy across 
the Internet.

    Question 6. In June 2016, the FTC held a workshop entitled 
Something New Under the Sun: Competition & Consumer Protection Issues 
in Solar Energy, to address competition and consumer protection issues 
related to solar distributed generation. Around the same time, the 
White House issued a report entitled Incorporating Renewables into the 
Electric Grid that focused on expanding opportunities for smart markets 
and energy storage, including variable energy resources.
    A. Why did the FTC choose to focus its workshop on solar projects, 
rather than to examine the broader smart energy market, that includes 
other competing resources and technologies?
    Answer. Our solar workshop grew out of the FTC's longstanding 
general interest in electricity markets and our competition advocacy 
work in this important area.\6\ The FTC focused this workshop on solar 
distributed generation (DG), rather than the broader smart energy 
market, for two main reasons. First, the competition and consumer 
protection issues that arise when consumers install solar panels and 
generate electric power at their homes are a particularly good fit for 
the FTC's competition and consumer protection mandate and expertise. 
For example, solar DG and the changing regulatory environment 
surrounding electricity pricing present significant questions of 
consumer protection, such as whether solar firms are making truthful 
and non-deceptive claims about their products and electricity pricing. 
While the broader smart energy marketplace raises important and 
interesting policy issues, the FTC's expertise is not in energy policy 
more generally. Second, given that a one-day workshop was planned, we 
believed a narrower focus on solar DG would yield the most useful, in-
depth discussion.
---------------------------------------------------------------------------
    \6\ In the early 2000s, the FTC issued two staff reports discussing 
competition and consumer protection issues in the broad electric power 
industry. FTC Staff Report, Competition and Consumer Protection 
Perspectives on Electric Power Regulatory Reform: Focus on Retail 
Competition (Sept. 2001); FTC Staff Report, Competition and Consumer 
Protection Perspectives on Electric Power Regulatory Reform (July 
2000). More recently, states have been exploring ways to reform 
electricity markets at the distribution and retail levels of the supply 
chain. The FTC has submitted comments in connection with a number of 
these state efforts and regulatory reviews, including multiple comments 
to the New York State Public Service Commission. See FTC Staff Reply 
Comment Before the State of New York Public Service Commission in the 
Reforming Energy Vision Proceeding, Responding to ThirdParty Comments 
on the NY PSC Benefit-Cost Analysis (Sept. 10, 2015), https://
www.ftc.gov/policy/policyactions/advocacy-filings/2015/09/ftc-staff-
reply-comment-state-new-york-public-service; FTC Staff Reply Comment to 
the New York State Public Service Commission on ``Reforming the Energy 
Vision'' Project (Oct. 23, 2014), https://www.ftc.gov/policy/policy-
actions/advocacy-filings/2014/10/federal-trade-commission-staff-
replycomment-new-york; FTC Staff Comment Before the Massachusetts 
Department of Public Utilities Regarding its Investigation of Time-
Varying Retail Rates for Electric Power (Mar. 10, 2014), https://
www.ftc.gov/policy/policyactions/advocacy-filings/2014/03/ftc-staff-
comment-massachusetts-department-public; FTC Staff Reply Comment Before 
the District of Columbia Public Service Commission Concerning a 
Proposed Program for Dynamic (Variable) Pricing of Electricity for 
Residential Customers (Jan. 13, 2014), https://www.ftc.gov/policy/
policyactions/advocacy-filings/2014/01/ftc-staff-reply-comment-
district-columbia-public.
---------------------------------------------------------------------------
    We will continue to monitor the energy industry, including the 
smart energy marketplace, to identify potential competition and 
consumer protection issues that may fall within the FTC's core areas of 
expertise.

    B. Now that the comment period for this workshop has closed, what 
next steps does the FTC intend to take with respect to these issues, 
including consumer protection concerns? When can we expect these next 
steps to take place?
    Answer. We are continuing to examine the workshop record, including 
more than 200 filed public comments, and evaluate potential next policy 
steps. For example, we may look for additional opportunities to file 
advocacy comments relating to the regulation of the electric power 
industry. We may also prepare a policy paper addressing some of the 
main pricing and competition issues discussed during the workshop. No 
specific decision has been made at this time.
    With regard to consumer protection concerns, the FTC remains 
vigilant and will take action against any unfair or deceptive business 
practices that occur in the solar DG industry. The FTC will also 
continue education efforts in this area, such as the guidance we have 
provided to consumers.\7\
---------------------------------------------------------------------------
    \7\ Federal Trade Commission, Solar Power for Your Home, https://
www.consumer.ftc.gov/articles/0532-solar-poweryour-home.

    Question 7. I would like to ask you some questions about 
competition in the market for prescription eyewear. In particular, I 
wish to know how the FTC plans to encourage greater competition and 
consumer choice in this market.
    A. Now that the public comment period for the Eyeglass Rule has 
ended, when do you anticipate the FTC will move forward with any 
modifications?
    Answer. As you know, the Commission published an advance notice of 
proposed rulemaking in September 2015 soliciting comments on whether 
the Commission should modify the Eyeglass Rule, a rule promulgated in 
1978 using the Commission's Magnuson-Moss rulemaking authority. The 
Commission received 831 comments prior to the comment period closing on 
October 26, 2015. Should the Commission determine that any modification 
to the Rule is justified, the Commission would then issue a notice of 
proposed rulemaking (NPRM), which, pursuant to 15 U.S.C. 
Sec. 57a(b)(2)(C), the relevant congressional committees would receive 
at least 30 days prior to its publication in the Federal Register. 
While I cannot comment in detail on a pending rule review, the 
Commission currently anticipates making a decision on whether to 
recommend a modification to the Rule in early 2017. Any NPRM would 
again solicit public comment.\8\ If the Commission decides to issue an 
NPRM, the Commission would also provide an opportunity for public 
hearings.\9\
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    \8\ 15 U.S.C. Sec. 57a(b)(1)(B).
    \9\ 15 U.S.C. Sec. 57a(b)(1)(C), (c).

    B. The Contact Lens Rule requires prescribers to verify the 
accuracy of prescriptions within eight hours when asked by a provider 
to do so. The Eyeglass Rule, however, has no such requirement.
    Does the FTC believe that this disparity between the Eyeglass Rule 
and the Contact Lens Rule should be remedied, and that the Eyeglass 
Rule should require prescribers to verify prescriptions within a short 
period of time?
    Answer. The Contact Lens Rule contains a verification process 
whereby an authorized seller can sell contact lenses eight business 
hours after providing a prescriber with a complete verification 
request, if the seller has not heard from the prescriber.\10\ We 
believe this provision has served its purpose in spurring competition 
among sellers of contact lenses and enabling comparison shopping by 
consumers, leading to both price and non-price benefits for consumers. 
As you note, the Eyeglass Rule has no analogous verification provision. 
The Commission specifically asked for public comment concerning whether 
the Eyeglass Rule should contain a similar verification provision, and 
some of the comments we received did address this issue.\11\ Under the 
Magnuson-Moss rulemaking process that governs the Eyeglass Rule, the 
Commission would need to meet certain statutory requirements before it 
could propose to modify the rule by adding a verification framework. 
Notably, the Commission would need to have reason to believe that the 
unfair or deceptive acts or practices that are the subject of the 
proposed rulemaking are prevalent. By contrast, the Commission 
promulgated the Contact Lens Rule pursuant to a statute, the Fairness 
to Contact Lens Consumers Act (``FCLCA''), which specifically set forth 
many details of the verification framework.\12\ These different 
procedural contexts could lead to a different outcome with respect to 
whether the Commission determines that the Eyeglass Rule should include 
a verification provision and, if so, how it should operate. We expect 
that this issue will be addressed in any forthcoming NPRM as part of 
the rule review process for the Eyeglass Rule.
---------------------------------------------------------------------------
    \10\ See 16 C.F.R. Sec. 315.5.
    \11\ Ophthalmic Practice Rules (``Eyeglass Rule''); Request for 
comment, 80 Fed. Reg. 53,274, 53,276 (Sept. 3, 2015).
    \12\ 15 U.S.C. Sec. Sec. 7601-7610.

    C. Eyewear providers require certain information in order to fill a 
prescription accurately. The Contact Lens Rule requires that all 
prescriptions ``contain sufficient information for the complete and 
accurate filling of a prescription.'' The Eyeglass Rule has no such 
requirement, and prescribers often do not include all necessary 
information to allow a consumer to purchase eyeglasses elsewhere, 
including, for example, the measurement for ``Pupillary Distance.''
    Answer. Does the FTC believe that this disparity between the 
Eyeglass Rule and the Contact Lens Rule should be remedied, and that 
the Eyeglass Rule should require prescribers to provide consumers with 
``sufficient information for the complete and accurate filling of a 
prescription''?
    The Eyeglass Rule defines a prescription as the written 
specifications for lenses for eyeglasses, which are derived from an eye 
examination, including all of the information specified by state law, 
if any, necessary to obtain lenses for eyeglasses. In its current 
review of the Eyeglass Rule, the Commission specifically asked for 
comment concerning whether the Eyeglass Rule should require that the 
definition of prescription be modified to explicitly include pupillary 
distance.\13\ A number of the comments we received addressed this 
issue. The Commission must consider the evidence proffered on this 
point in the context of the standards of prevalence and unfairness. 
Specifically, as part of the unfairness inquiry, the Commission must 
balance the costs and benefits the requirement would have on 
prescribers, consumers, and competition.\14\ Because the Commission 
promulgated the Contact Lens Rule pursuant to the FCLCA, which 
specifically set forth the requirement that all prescriptions contain 
sufficient information for the complete and accurate filling of a 
prescription,\15\ the Commission could arrive at a different outcome 
with respect to its determination whether the Eyeglass Rule should 
require that a prescription include information such as pupillary 
distance. As the Eyeglass Rule review process continues, we anticipate 
that any forthcoming NPRM will examine this issue.
---------------------------------------------------------------------------
    \13\ Ophthalmic Practice Rules (``Eyeglass Rule''); Request for 
comment, 80 Fed. Reg. 53,274, 53,276 (Sept. 3, 2015).
    \14\ An act or practice is unfair if it causes or is likely to 
cause substantial consumer injury which is not reasonably avoidable by 
consumers themselves and which is not outweighed by countervailing 
benefits to consumers or competition. 15 U.S.C. Sec. 45(n); FTC, 
Commission Statement on the Scope of the Consumer Unfairness 
Jurisdiction (Dec. 17, 1980) (appended to Int'l Harvester Co., 104 
F.T.C. 949, 1070 (1984).
    \15\ 15 U.S.C. Sec. 7610.

    D. Today some states allow short-term prescriptions, requiring 
consumers to go back to their eye care provider to get another 
prescription whenever they want to get new eyeglasses, even when their 
vision has not changed at all. Does the Commission believe that the 
Eyeglass Rule and the Contact Lens Rule should be modified to address 
the issue of prescription duration?
    Answer. As your question recognizes, state law provides for the 
length of contact lens and eyeglass prescriptions. Under the FCLCA and 
the Contact Lens Rule, contact lens prescriptions cannot expire in less 
than one year unless, based on medical judgment, a prescriber specifies 
a different date and documents the reasoning for the shorter 
prescription length.\16\ In contrast, the Eyeglass Rule currently is 
silent on prescription length. Commenters in both rule review 
proceedings have raised issues about the length of prescriptions. We 
are considering these comments, as well as the evidence proffered in 
support of any proposed modifications to the rules. In the Contact Lens 
Rule review, the Commission is examining how any proposed modifications 
would fit within the framework set forth by the FCLCA and its goal of 
promoting competition among contact lens sellers and facilitating 
consumers' ability to comparison shop for contact lenses. In the 
Eyeglass Rule review, as described above, the Commission must consider 
whether there is a widespread pattern of unfair or deceptive practices 
involving short-term prescriptions that impacts consumers' ability to 
comparison shop for eyeglasses.
---------------------------------------------------------------------------
    \16\ 15 U.S.C. Sec. 7604; 16 C.F.R. Sec. 315.6(a)(1).

    Question 8. The annual independent evaluations of the effectiveness 
of Commission information security programs under the Federal 
Information Security Modernization Act show that the FTC has taken 
robust steps to protect Federal information and systems. Yet, it must 
increase its governance and oversight efforts to institutionalize and 
mature its security program. Will you commit to implement information 
security-related recommendations from the FTC Office of Inspector 
General (OIG) and independent auditors fully and in a timely manner?
    Answer. The Commission is committed to robustly protecting its 
information systems and has worked collaboratively with the OIG to 
identify opportunities to enhance the Commission's security and 
governance practices. We welcome this collaboration with the OIG and 
intend to continue it. The Commission evaluates all information-
security related recommendations within the framework of the 
Commission's IT strategic plan to assess the long-term impact to the 
Commission's IT program, services, budget and process. The goal is to 
ensure implementation plans enhance security and provide sustained 
improvement. This approach is reflected in the Commission's response to 
the OIG and independent auditors' recommendations and milestones for 
implementation of the recommendations.

    Question 9. The FTC OIG has recommended improvements to the 
Commission's information technology governance processes for the past 
several years. Most recently, the OIG's review of the FTC's information 
technology governance practices found that the Commission failed to 
follow the Federal Acquisition Regulation, resulting in increased costs 
and diminished performance for the e-Discovery Support System and 
mobile device Messaging Infrastructure Modernization project.
    A. What steps has the Commission taken to increase accountability 
and oversight over its information technology investments?
    Answer. The FTC's review revealed opportunities for improving the 
deployment and stability of our IT tools, as well as some discrepancies 
in following the internal Office of the Chief Information Officer 
(OCIO) Acquisition Strategy Plan. To improve our controls over future 
IT deployments, the Commission established the Risk and Policy 
Management (RPM) and Vendor and Program Management (VPM) divisions 
within OCIO to focus on process improvements with IT investments. The 
RPM division focuses on the areas of risk management, policy, 
procedure, and governance. The VPM division works closely with the 
Financial Management Office (FMO) and serves as the central review and 
coordination point for all IT acquisitions and related contract 
management processes and practices.

    B. What is the status of agency's implementation of the 
recommendations from the OIG evaluation of the Office of the Chief 
Information Officer from December 2015? Are they closed? If so, please 
provide specific dates.
    Answer. The Commission has taken significant steps to implement the 
OIG's December 2015 recommendations, including:

   Extending voting rights to the Chief Information Officer on 
        the FTC IT Governance board and the IT Business Council 
        (recommendation 1);

   Reorganizing the Office of the Chief Information Officer 
        (recommendation 4);

   Establishing two new OCIO divisions--Strategic Planning and 
        Vendor Program Management--and recruiting additional IT program 
        managers to lead these divisions (recommendation 4);

   Developing and distributing new positions descriptions to 
        all OCIO employees (recommendation 5);

   Publishing an IT Strategy and Transition Plan;

   Reprioritizing the IT budget to support the Commission's 
        strategic IT objectives; and

   Making acquisitions and contract management process 
        improvements to streamline procurement of IT services and 
        ensure contract services provide value.

    Based on actions taken by the Commission, including some of those 
listed above, the OIG closed recommendations 1, 4, and 5 on February 
11, 2016, September 8, 2016, and September 29, 2016, respectively. In 
September 2016, OCIO submitted documentation to the OIG to support 
closure of the five remaining recommendations.

    C. How often do you meet personally with the FTC's Chief 
Information Officer (CIO)? What specific steps have you taken to ensure 
that the CIO has the adequate level of support?
    Answer. I have monthly meetings with the CIO and will sometimes 
meet more often with him, as needed. I work closely with the CIO to 
evaluate IT security, IT strategy, risk management, and related issues. 
Additionally, the Chief Privacy Officer (CPO) and Chief of Staff, both 
members of my office staff, are active participants in the IT 
Governance Board's work to ensure decisions regarding IT projects 
address risks or other impediments to meeting the agency's strategic 
objectives. In FY 2016, the Commission approved the reprioritization of 
IT funding to focus on improving e-discovery services and development 
of the IT modernization strategy. In September, we launched an IT 
modernization project, which will improve the performance of the FTC's 
network, security, and services.

    Question 10. The OIG has also identified areas for improvement of 
the agency's controlled unclassified information program. Given the 
fact that the FTC obtains a large amount of sensitive information, 
including propriety business information, law enforcement sensitive 
information, and consumer personal information, what steps are you 
taking to safeguard this information pursuant to new guidance from the 
National Archives and Records Administration and the National Institute 
of Standards and Technology?
    Answer. The Commission has long placed great importance on its 
mandate to protect controlled unclassified information (CUI) from 
insider and other threats and strives to regularly update and adjust 
its practices to ensure the security of all non-public data in its 
control. Under the FTC Act, FTC employees who disclose non-public 
information without authorization are subject to possible criminal 
prosecution. Moreover, the FTC has adopted an extensive framework of 
protections for sensitive, but unclassified, information held by the 
Commission. This framework includes documented internal policies, 
procedures, and staff and contractor training concerning safeguarding 
sensitive personally identifiable information and business confidential 
information. As part of this ongoing effort to protect the non-public 
information in its possession, the FTC is reviewing the rule recently 
issued by the National Archives and Records Administration regarding 
the handling of CUI. See Final Rule, Controlled Unclassified 
Information, 81 Fed. Reg. 63324 (Sept. 14, 2016).
    As part of this process, the Commission will address the OIG's 
recommendation to consider expanding the scope of the agency's insider 
threat program (ITP) beyond the protection of classified materials to 
all sensitive holdings, and how the Commission might leverage its ITP 
to protect CUI. The ITP allows the FTC to gather, share, integrate, 
identify, and report relevant insider threat information from offices 
across the agency, including security, information security, and human 
resources. The FTC has already established a multi-office working 
group, chaired by the Records and Filings Office (RFO) and that 
includes the Chief Privacy Officer (CPO), the Chief Information 
Security Officer, representatives from Physical and Personnel Security, 
the Office of General Counsel and others, to develop plans to implement 
the requirements of the final CUI rule and consider how these changes 
may be incorporated into the ITP. The CPO works with the ITP to ensure 
a balance between a robust and effective ITP, using NIST's risk 
management framework analysis, and the privacy rights of FTC employees 
under the Privacy Act and other Federal laws. Additionally, our Office 
of the CIO (OCIO) is reviewing the agency's FISMA and Risk Management 
and Governance policies to ensure that the control requirements of the 
CUI program, as identified in NIST security special publications, are 
taken into consideration when planning for systems and selecting 
information safeguards. OCIO will review capabilities for CUI marking 
and metadata analysis, and verify and validate that potential 
technology acquisitions, when feasible, address these requirements.

    Question 11. According to the OIG's top management challenges, the 
Commission continues to face challenges with contract management. Given 
that the FTC obligated approximately one-third of its operating budget 
on contracts for goods and services in Fiscal Year 2014, how do you 
plan to update agency processes and policies to increase oversight over 
contracts in order to improve stewardship of taxpayer dollars?
    Answer. The Commission is committed to effectively managing our 
contracts to ensure that the FTC obtains the quality goods and services 
we need on schedule, within contracted prices, and consistent with 
expected quality performance. To this end, we are taking the following 
steps to improve our contract oversight and management:
COR Education
    Contracting Officer Representative (COR) education continues to be 
a priority for the Commission, with primary oversight by the Financial 
Management Office (FMO) management and the Chief Acquisitions Officer 
(CAO). In FY 2016, FMO planned to hold quarterly COR training, but 
expanding it from quarterly to bi-monthly in February 2016 to address 
not only COR core competencies but also specific, tailored training. 
These efforts will mature and expand the capacity of the FTC's CORs to 
work effectively with contracting officers to procure and manage 
vendors and manage internal controls. To complement its in person 
training, the Acquisitions Division has posted a wide variety of COR 
resources online for easy access, including templates, sample 
documents, and Procurement Action Lead Time requirements for the most 
common acquisitions, including new task orders, open market contracts, 
sole source contracts, and supplies/services contracts through GSA.
    The Records and Filings Office and FMO have also published 
additional tools to help CORs understand and meet relevant 
recordkeeping requirements. The tools include a new contract records 
tip sheet, an updated model performance standard, an updated COR 
appointment letter, a new receiving report form for contractor invoice 
payment that allows for electronic signatures and submissions, and 
policy revisions.
Customer Outreach and Support
    The Acquisitions Division is also working to improve the quality of 
agency acquisitions by improving customer communications via targeted 
customer meetings and by obtaining acquisition liaison support for 
certain customers. The CAO customer meetings, first initiated in FY 
2015, ensure standard topics are discussed, and new requirements are 
being addressed in an agreed-upon priority order. This process better 
supports the Acquisitions Division and the program offices to engage in 
integrated acquisition planning.
    Additionally, the Acquisitions Division has contracted for three 
acquisition liaisons who will assist assigned program offices beginning 
in early FY 2017, by providing hands on guidance on the acquisition 
process; assisting customers with initiating contract actions; ensuring 
the adequacy of acquisition packages; and ensuring that both the 
Acquisitions Division and the customer maintain visibility and 
confidence throughout the entire process. The liaisons will also assess 
the current state of services received, so that they can structure 
subsequent acquisitions to improve the quality of contractor services. 
The liaisons' goal will be to provide acquisition assistance that 
ensures the customer-based performance management measures are built 
into the acquisitions package at the requirements definition phase. FMO 
anticipates that the liaison support will improve the quality of the 
acquisition packages, which will lead to better management of 
contractor performance and the delivery of improved services to the 
Commission.
Revised Policies and Procedures
    Finally, the CAO has continued to review all acquisition-related 
policies and procedures to ensure consistency with the latest Federal 
regulations. The first phase of this effort includes a review and 
revision of acquisition policies. For example, review and revision of 
the policy on Market Research and Acquisition Planning will be 
completed in the second quarter of FY 2017. The Acquisitions Division 
will continue to identify areas of concern that need established policy 
and procedures in FY 2017 and beyond. Through this continuous 
assessment process, the Acquisitions Division will have legally 
compliant and standardized policies and procedures that will govern 
contracting actions and provide consistency and efficiency in operation 
and output of the Acquisitions Division, as well as clear guidance for 
the program offices. Establishment of policies and procedures is an 
ongoing effort of continuous review, revision, and tested compliance, 
as the Federal Acquisition Regulation and industry standards are 
constantly changing in the acquisitions environment.

    Question 12. The American Medical Association (AMA) recently 
adopted a resolution supporting a ``requirement that attorney 
advertising, which may cause patients to discontinue medically 
necessary medications have appropriate and conspicuous warnings that 
patients should not discontinue medications without seeking the advice 
of their physician.'' \17\ The AMA's resolution notes that 
``[t]elevision commercials that seek plaintiffs regarding new 
medications are rampant on late-night television,'' that ``[o]ften 
potential complications are spoken about in an alarming way,'' and that 
``[a]s a result of these ads, some patients have endangered themselves 
by stopping prescribed medications without speaking to a physician.'' 
\18\ The AMA resolution concludes that advertisements ``are 
`fearmongering' and dangerous to the public at-large because they do 
not present a clear picture regarding the product.''
---------------------------------------------------------------------------
    \17\ AM. MED. ASS'N, Res. 208 (Apr. 25, 2016).
    \18\ Id.
---------------------------------------------------------------------------
    A. How would the Commission address whether such advertisements 
constitute unfair acts or practices under Section 5 of the FTC Act?
    Answer. Section 5 of the FTC Act prohibits ``unfair or deceptive 
acts or practices in or affecting commerce.'' 15 U.S.C. Sec. 45(a). 
Pursuant to Section 5(n) of the Act, an act or practice may be deemed 
unfair if (1) it ``causes or is likely to cause substantial injury to 
consumers''; (2) the injury ``is not reasonably avoidable by consumers 
themselves''; and (3) the injury is ``not outweighed by countervailing 
benefits to consumers or competition.'' 15 U.S.C. Sec. 45(n). Whether 
an advertisement seeking plaintiffs who might have been injured by 
medication that fails to disclose that patients should not discontinue 
their medication without seeking the advice of their physician would 
constitute an unfair act or practice under this standard is a factual 
question that can only be answered on a case-by-case basis.
    The first element of unfairness is that the act causes or is likely 
to cause substantial injury to consumers. Accordingly, an inquiry would 
consider how likely is it that a particular ad would cause consumers to 
discontinue their medication and what consequences would likely follow 
if that happened, in order to obtain an overall understanding of the 
level of risk and harm to which consumers are exposed in a particular 
case. These factors would likely vary depending on the particular 
claims made in the ad, as well as the type of medication at issue.
    The next element asks whether the injury would be reasonably 
avoidable by consumers themselves. Again, the answer to this question 
would likely depend on the claims made in the advertising, the 
medication involved, and the condition at issue. It is conceivable that 
in some cases the risk of stopping medication without consulting with a 
physician would be apparent to the patients themselves.
    The final element is whether the consumer injury is outweighed by 
countervailing benefits to consumers or competition. Attorney 
advertising advising consumers who might have suffered injury to seek 
legal consultation can serve an important public purpose. Moreover, 
required disclosures impose at least some cost on advertisers. However, 
when there is a substantial injury to health, or the likelihood of such 
injury, that is not reasonably avoidable by consumers, a cost-benefit 
analysis will generally favor disclosure if such disclosure will 
mitigate the injury.

    Question 13. In issuing invitations to witnesses to testify before 
the Committee, it is our practice to request that they submit written 
testimony two business days prior to the hearing and to allow each 
witness five minutes at the hearing to present his or her oral remarks. 
Prior to this hearing, I sent an invitation to you, individually, as 
well as to Commissioners Ohlhausen and McSweeny, requesting such 
testimony on, among other things, you views on regulatory reform, 
efforts to promote innovation, and consumer protection. The Committee 
received a single document representing a consensus view of the 
Commission rather than individual testimony. Prior to the hearing, the 
Commission also informed the Committee that, rather than deliver 
individual oral testimony, the Commissioners had coordinated their 
testimony rather than provide individual views.
    A. What is the Commission's policy with respect to complying with 
Committee requests for testimony?
    Answer. When invited to testify, the Commission's longstanding 
practice has been to submit written testimony that is approved and 
voted on by all of the Commissioners. As a bipartisan independent 
agency operating in a political environment in which partisanship can 
sometimes overwhelm substance, I believe that the FTC's ability to 
engage in meaningful internal deliberations, and operate by consensus 
wherever possible, distinguishes the agency in a positive way. In 
addition, I note that we coordinated with respect to the subject matter 
of our individual oral testimony in order to avoid duplication.
                                 ______
                                 
     Response to Written Questions Submitted by Hon. Roy Blunt to 
                           Hon. Edith Ramirez
    Before I proceed, I want to clarify that my questions should not be 
viewed as speaking favorably or negatively about any potential merger 
under consideration by the Federal Trade Commission (FTC).

    Question 1. Can you describe how the FTC evaluates the impact of 
mergers on Federal programs such as the 340B Drug Pricing Program?
    Answer. Section 7 of the Clayton Act prohibits mergers and 
acquisitions when the effect ``may be substantially to lessen 
competition, or to tend to create a monopoly.'' A key question the FTC 
asks is whether the proposed merger is likely to create or enhance 
market power or facilitate its exercise. When the FTC evaluates any 
merger, we consider what aspects of competition may be impacted by the 
merger. This process includes defining a relevant product and 
geographic market and evaluating the likely anticompetitive effects of 
the proposed transaction. Depending on the type of commerce involved in 
the merger, a Federal agency or program may be impacted by the merger, 
for example as a customer in the relevant market. The FTC would 
evaluate the impact on such Federal agencies or programs.

    Question 2. What safeguards does the FTC look for in mergers to 
ensure the equities and financial integrity of Federal programs like 
the 340B Drug Pricing Program are protected?
    Answer. The goal of the FTC's merger enforcement program is to 
preserve the competition that would otherwise be lost as a result of a 
merger, either by engaging in litigation to block the merger or 
ordering the merging parties to divest assets to an appropriate buyer 
to restore the competition that would be lost with the merger. The 2010 
Horizontal Merger Guidelines issued by the Department of Justice and 
FTC set out the agencies' analytical framework for reviewing a proposed 
merger pursuant to Section 7 of the Clayton Act and determining whether 
a merger is likely to substantially lessen competition. While a Section 
7 analysis would not include the equities and financial integrity of 
Federal programs as direct factors in a decision to prohibit a merger, 
to the extent that Federal agencies or programs would likely be harmed 
by a reduction in competition, the FTC typically would take that 
information into account in its enforcement decisions and when 
designing merger remedies.
    For example, in 2008, the Commission challenged an exclusive 
agreement between Fresenius, the Nation's largest provider of dialysis 
services, and the manufacturer of an intravenous (IV) iron drug used in 
dialysis clinics to treat patients with end-stage renal disease. The 
Commission was concerned that this exclusive agreement would allow 
Fresenius to inflate the price it paid itself for using the IV iron 
drug, and that Fresenius would report these inflated prices to the 
Center for Medicare & Medicaid Services (CMS). If that happened, the 
inflated prices would drive up the Average Selling Price calculated by 
CMS and paid by CMS to reimburse Medicare when the drug was used to 
treat dialysis patients covered by Medicare. In order to mitigate the 
risk that the exclusive agreement would lead to higher Medicare 
reimbursement costs, the Commission barred Fresenius from reporting 
higher prices to CMS until CMS adopted new rules to address intra-
company transfer prices.\19\
---------------------------------------------------------------------------
    \19\ FTC Press Release, FTC Challenges Vertical Agreement between 
Fresenius and Daiichi Sankyo (Sept. 15, 2008), https://www.ftc.gov/
news-events/press-releases/2008/09/ftc-challenges-vertical-agreement-
between-fresenius-anddaiichi.

    Question 3. Many community hospitals, clinics, and other entities 
are beneficiaries of the 340B Drug Pricing Program due to their role in 
providing needed care to poor and disadvantaged populations. Does the 
FTC consider whether pharmacy mergers might result in increased costs 
for local safety-net providers who meet the needs of poor and 
disadvantaged populations?
    Answer. While I cannot discuss the details of any non-public 
investigation, the Commission is aware of the 340B Drug Pricing Program 
and its importance to the many community hospitals, clinics, and other 
entities that provide care to the poor and disadvantaged populations. 
In the past, the FTC has considered whether a merger of pharmacy chains 
was likely to substantially lessen competition by leading to higher 
prices and lower quality service. For example, in 2007, the FTC 
challenged Rite Aid's proposed acquisition of Brooks and Eckerd 
pharmacies, alleging that the acquisition would harm competition in 23 
local markets in the northeast United States. To resolve these concerns 
and restore competition that would otherwise be lost, the FTC ordered 
Rite Aid to divest stores to Commission-approved buyers.\20\ The order 
ensured that consumers would continue to have a choice in where they 
shopped for prescription drugs.
---------------------------------------------------------------------------
    \20\ FTC Press Release, FTC Challenges Rite Aid's Proposed $3.5 
Billion Acquisition of Brooks and Eckerd Pharmacies from Canadas Jean 
Coutu Group, Inc. (Jun. 4, 2007), https://www.ftc.gov/news-events/
pressreleases/2007/06/ftc-challenges-rite-aids-proposed-35-billion-
acquisition-brooks.
---------------------------------------------------------------------------
    Similarly, in 2012, the Commission took action to block a merger of 
the two largest long-term care pharmacies, Omnicare and PharMerica, 
over concerns that the merged firm could demand higher reimbursement 
rates for Medicare Part D prescription drugs administered in skilled 
nursing facilities supplied by the merged firm. If allowed to proceed, 
the combined firm would have become a ``must have'' for Medicare Part D 
drug plans, which are responsible for providing subsidized prescription 
drug benefit coverage for most residents of skilled nursing facilities 
and other Medicare beneficiaries.\21\ After the FTC filed a complaint 
alleging the merger violated the antitrust laws, the companies 
abandoned their merger plans.
---------------------------------------------------------------------------
    \21\ FTC Press Release, FTC Sues to Block Omnicare's Bid to Buy 
Rival Pharmacy Provider PharMerica (Jan. 27, 2012), https://
www.ftc.gov/news-events/press-releases/2012/01/ftc-sues-block-
omnicares-bid-buy-rival-pharmacyprovider.

    Question 4. Do you anticipate the FTC may examine whether continued 
market consolidation in the pharmacy sector will adversely impact 
patients who benefit from the 340B Drug Pricing Program?
    Answer. I can assure you that in determining whether under Section 
7 of the Clayton Act a merger may substantially lessen competition or 
tend to create a monopoly, the FTC considers all aspects of competition 
in a market. The FTC strives to protect consumers from mergers whose 
effect may be substantially to lessen competition. In a merger review, 
the FTC would consider the impact of competition on Federal programs 
and customers, if applicable in that industry.
                                 ______
                                 
    Response to Written Questions Submitted by Hon. Marco Rubio to 
                           Hon. Edith Ramirez
    Question 1. According to the most recent statistics, there are 
currently 728 travel related cases and 147 non-travel related cases of 
Zika in my home state of Florida. With the increase in cases, and the 
threat of mosquitos spreading around the Miami Beach area and to other 
parts of the United States and our territories, many are concerned with 
contracting the virus. Feeding into consumer concerns, many companies 
are marketing products that say they provide protection from the Zika 
virus.
    A. Please speak to the FTC's efforts to seek out these fraudulent 
companies that are capitalizing off of consumer concerns about Zika, 
and hold them accountable.
    Answer. The Commission is very concerned about the health risks 
posed by Zika virus and other vector-borne diseases, and about the 
deceptive marketing of some products advertised to prevent them. The 
Commission's prior experience in similar situations (e.g., the H1N1 
virus) has been that after the news media report a significant public 
health concern, questionable products claiming to address that concern 
appear on the market. We were therefore concerned that reports about 
the serious potential health implications of Zika virus would give rise 
to advertising claims for products purporting to repel the mosquitoes 
that carry Zika, or otherwise to prevent consumers from contracting 
Zika. Accordingly, we conducted Internet surfs for online marketers 
making Zika protection claims early last summer, which culminated in 
the issuance on August 4, 2016 of warning letters to ten online 
marketers of wearable products (such as wristbands and stickers) for 
which such claims were being made.\22\
---------------------------------------------------------------------------
    \22\ See https://www.ftc.gov/news-events/press-releases/2016/08/
ftc-sends-warning-letters-online-sellers-makingzika-virus.
---------------------------------------------------------------------------
    The warning letters reminded the marketers in question that their 
claims must be supported by competent and reliable scientific evidence 
in the form of well-controlled human clinical testing. The letters 
further explained that the testing must use the mosquito species that 
carry the virus and demonstrate that the repellent effects last as 
advertised. The FTC urged the marketers to review their claims and 
immediately delete or change them if the claims were not substantiated 
by scientific evidence. In an effort to notify other marketers who were 
or might be considering making Zika protection claims (or similar 
claims), we also issued a business blog post discussing the content of 
the warning letters and explaining what evidence marketers should have 
to substantiate their health claims.\23\
---------------------------------------------------------------------------
    \23\ See https://www.ftc.gov/news-events/blogs/business-blog/2016/
08/ftc-staff-sends-warning-letters-about-anti-zikaclaims.

    B. What can we do to educate my constituents back home in Florida, 
and across our nation, about what to look for to ensure they are not 
buying into falsely advertised products, and make sure they are 
protected as consumers?
    Answer. The Commission agrees that consumer education is of utmost 
importance in helping consumers identify products that will be 
effective in helping to repel mosquitoes that might carry Zika virus 
and, at the same time, avoid wasting money on ineffective insect 
repellent products. The Commission advises consumers to seek 
information from knowledgeable and reputable sources, including 
government agencies, rather than just rely on claims made by marketers. 
To that end, the Commission released a consumer education blog in both 
English and Spanish discussing the warning letters and informing 
consumers about what they could do to protect themselves and their 
families from Zika virus and other insect-borne diseases.\24\ The blog 
links to the websites of the Environmental Protection Agency and the 
Centers for Disease Control, both of which have published materials 
designed to educate the American public about how to protect 
themselves. In particular, the EPA has registered as safe and effective 
certain skinapplied insect repellent ingredients (DEET, Picaridin, 
IR3535, Oil of Lemon Eucalyptus, and 2-undecanone), and both the EPA 
and the CDC recommend using skin-applied products containing those 
ingredients. The EPA also has found clothing treated with the 
insecticide permethrin to be effective. The FTC's consumer blog also 
links to advice from EPA on how to use insect repellents safely and 
effectively; tips from the CDC on protecting oneself and family 
members; and what to consider when you are in a location where Zika has 
been found. The Commission hopes that centralizing this information 
will make it easier for consumers to make educated decisions about how 
to protect themselves and their families from Zika.
---------------------------------------------------------------------------
    \24\ See https://www.consumer.ftc.gov/blog/will-those-insect-
repellents-protect-you-zika.

    Question 2. The Federal Communication Commission (FCC) is scheduled 
to vote on its proposed broadband consumer privacy rule on October 27.
    A. Will you speak to the FTC's comments on the proposed rule 
related to transparency, consumer choice and data security?
    Answer. The FTC's comment commended the FCC's focus on the core 
privacy values of transparency, consumer choice, and data security, 
which mirror the FTC's privacy priorities. The FTC's many privacy 
initiatives have consistently emphasized the core principles of 
transparency and consumer choice. In addition, to promote strong data 
security practices, the FTC has brought approximately sixty enforcement 
actions, and launched numerous business education initiatives.
    On transparency, the FTC generally supported the FCC's NPRM 
requirement that ISPs provide clear and conspicuous notice of their 
privacy policies. On choice, the FCC would have required opt out for 
marketing of communications-related services, and opt in for all other 
uses. The FTC suggested that opt in consent is important before (1) 
collecting sensitive information, (2) making material retroactive 
changes to privacy policies, or (3) collecting content of consumers' 
communications, through technologies such as deep packet inspection. 
For other categories, the FTC suggested that opt out would be 
sufficient. The FCC's final rule generally adopted this approach. 
Finally, on security, we generally supported the approach articulated 
in the NPRM, which was to require ISPs to maintain reasonable security. 
The FTC also generally supported the inclusion of a breach notification 
requirement for ISPs.

    B. Prior to this ruling, how has the FTC regulated data privacy?
    Answer. The FTC has protected privacy, and will continue to protect 
privacy, using a three-pronged approach. The first is enforcement, 
which is the linchpin of the FTC's approach to privacy protection. The 
FTC enforces a wide range of laws to protect the privacy and security 
of consumer data. The FTC also enforces sector-specific statutes that 
protect certain health, credit, financial, and children's information, 
and has issued regulations implementing each of these statutes. To 
date, the FTC has brought over 500 cases protecting the privacy and 
security of consumer information. The FTC's ongoing enforcement actions 
send an important message to companies about the need to protect 
consumers' privacy and data security.
    Second, the FTC has pursued numerous policy initiatives designed to 
enhance consumer privacy. For example, the FTC has hosted workshops and 
issued reports to improve privacy disclosures in the mobile ecosystem, 
maximize the benefits of big data while mitigating the risks, and 
highlight the privacy and security implications of facial recognition, 
and the Internet of Things.
    Finally, the FTC has engaged in consumer and business education to 
increase the impact of its enforcement and policy initiatives. The FTC 
uses a variety of tools--brochures, online resources, workshops, and 
social media--to distribute educational materials on a wide range of 
topics including mobile apps, children's privacy, and data security. 
Most recently, on the business education front, the FTC released ``Data 
Breach Response: A Guide for Businesses'' providing advice on 
implementing a plan to protect consumers' personal information, to 
prevent breaches and unauthorized access. For consumer education, the 
FTC recently announced the rollout of its enhanced IdentityTheft.gov 
website, a free, one-stop resource consumers can use to report and 
begin the process of recovery from identity theft.

    C. In your opinion, is the FTC better equipped to regulate data 
privacy than the FCC?
    Answer. While the FCC has important expertise in crafting and 
enforcing rules applicable to certain information held by common 
carriers, the FTC has expertise in enforcing privacy protections across 
online and offline ecosystems. Consumers would further benefit from FTC 
enforcement because the FTC Act provides for consumer redress. Whereas 
the FCC traditionally has exercised its authority to fine companies for 
noncompliance, the FTC focuses on putting money back in the pockets of 
consumers. It is important that both agencies have the tools to protect 
consumer privacy, so that there are no gaps in consumer protection. To 
that end, the FTC has long called for the repeal of the common carrier 
exception. This carve-out no longer makes sense in today's deregulated 
environment where the lines between telecommunications and other 
services are increasingly becoming blurred. Removing the exception from 
the FTC Act would enable the FTC to bring its extensive law enforcement 
experience to bear in protecting consumers of common carriage services 
against unfair and deceptive practices in the same way that it can 
protect against unfair and deceptive practices for other services. If 
the exemption were repealed, we would work alongside the FCC to protect 
consumers in the common carrier space, as we do in other areas.

    Question 3. As a top travel destination in the nation, and the 
world, Florida is home to thousands of hotels. As technology continues 
to move forward in the 21st Century, booking travel arrangements 
through third-party hotel booking sites offers enormous conveniences 
and potential cost savings to consumers. However, there have been 
allegations that certain companies or their affiliates are engaging in 
travel booking practices that mislead and harm consumers booking hotel 
rooms online. In June 2015, I joined Senator Nelson in sending a letter 
to the FTC urging investigation into allegations of fraudulent online 
hotel bookings through third-parties. The entire Florida House 
delegation sent a similar letter.
    A. How many consumer complaints on this issue have been filed with 
the FTC?
    Answer. The Commission's Consumer Sentinel complaint database 
includes complaints received directly by the FTC as well as complaints 
contributed by the Better Business Bureau and other agencies. It 
contains approximately 60 complaints since 2012 indicating that 
consumers had booked a hotel through a third-party site when they 
thought they were booking directly with a hotel. As noted in response 
to Sen. Thune, consumer complaints we receive are often only one factor 
in our analysis of potential consumer concerns.

    B. Can you all speak to the efforts FTC has made to investigate 
these fraudulent bookings, and how the FTC is working to protect 
consumers from this fraud?
    Answer. The Commission has a strong interest in protecting consumer 
confidence in the online marketplace for travel and other services. In 
July 2015, the FTC issued consumer education cautioning consumers about 
third-party websites that may deceptively mimic hotel websites.\25\ We 
have also met with members of Congress to discuss the issue of 
deceptive travel sites and have proposed technical assistance and 
comments on proposed legislation. Although the existence and details of 
investigations are non-public, I can assure you that the FTC staff will 
carefully monitor the marketplace and take enforcement action if 
appropriate.
---------------------------------------------------------------------------
    \25\ See https://www.consumer.ftc.gov/blog/did-you-book-night-
hotels-site and https://www.ftc
.gov/newsevents/blogs/business-blog/2015/07/business-travelers-check-
it-out-you-check.

    Question 4. Florida is a top travel destination in both the United 
States and the world, and is home to hundreds of hotels and resorts. 
Orlando, Miami, the Florida Keys, and Fort Lauderdale are some of the 
most popular destinations with hotels charging resort fees for 
additional amenities. It has come to my attention that the FTC is 
looking to alter previous guidance, released in 2012, related to the 
mandatory disclosure of hotel resort fees. The 2012 guidance requires 
hotels to fully disclose all resort fees so that consumers know 
throughout the booking process exactly how much they are paying and 
which amenities they are receiving. Please speak to what has prompted 
the FTC to discuss reversing the 2012 guidance and moving towards 
``total price'' guidance.
    A. How many consumer complaints has the FTC received on resort fee 
disclosures since it issued its guidance on this issue in 2012?
    Answer. The Federal Trade Commission received 401 complaints on 
resort fee disclosures between November 29, 2012, when staff issued its 
warning letters, and the beginning of July 2016. As noted in response 
to Sen. Thune, consumer complaints we receive are often only one factor 
in our analysis of potential consumer concerns.

    Is there any empirical or legal evidence of actual consumer 
confusion or harm that demonstrates that the 2012 guidance needs to be 
altered? If so, please describe.
    Answer. Partitioned pricing and drip pricing research has 
highlighted the need for companies to add resort fees into advertised 
room rates.\26\ Partitioned pricing harms consumers because they are 
likely to ignore mandatory fees altogether or to underestimate the 
total price they must pay for their hotel stays. For example, the 
seminal study on partitioned pricing found that consumers shown a 
partitioned price recalled a significantly lower price than those shown 
an all-inclusive price. Some consumers ignored the surcharge. See Vicki 
G. Morwitz et al., Divide and Prosper: Consumers' Reactions to 
Partitioned Prices, 35 J. Marketing Research 453, 458 (1998); see also 
Eric A. Greenleaf et al., The Price Does Not Include Additional Taxes, 
Fees and Surcharges: A Review of Research on Partitioned Pricing, 26 J. 
Consumer Psychol. 105 (2015). Drip pricing causes consumers to search 
less, as the initial disclosure of only part of the price has an 
enduring effect on their purchase decisions. Consumers behave as if the 
price is lower than it is, even if they later learn about the 
additional fees and see the total price before finalizing the 
transaction. Steffen Huck & Brian Wallace, The Impact of Price Frames 
on Consumer Decision Making, in Advertising of Price Market Study 
Report, Office of Fair Trading, Dec. 2010. Because they search less, 
consumers may miss offers that are more suitable to them.
---------------------------------------------------------------------------
    \26\ Partitioned pricing entails dividing a price into multiple 
components without disclosing the total sum of the components. Drip 
pricing is the practice of advertising only part of a product's price 
upfront and revealing additional charges later as consumers go through 
the buying process.
---------------------------------------------------------------------------
    In addition, consumers today increasingly use online travel agents, 
metasearch, and mobile platforms to comparison shop for hotels. These 
platforms allow consumers, at the start of the booking process, to sort 
hotel rooms by price. Sorting results are distorted if they are based 
on room rates that exclude resort fees. Consumers are then forced to 
click through multiple pages in the booking process for individual 
hotels to learn the true total cost for their hotel stays, and then go 
back and compare the various total rates.

    B. Further, do any of those studies look at consumer understanding 
of current disclosures, specifically?
    Answer. I am not aware of any research that has specifically 
examined consumer understanding of current resort fee disclosures.

    Question 5. In November 2012, the FTC issued 22 warning letters to 
hotel operators on resort fee disclosures. The 2012 guidance was 
largely embraced by the industry. In 2013, the FTC issued additional 
warning letters. However, it is my understanding that the FTC has not 
taken enforcement action against hotel or resort operators since 
sending these warning letters. Why didn't the FTC take enforcement 
action?
    Answer. The FTC has worked with the travel industry since November 
2012 to improve hotel price transparency for consumers. Nevertheless, 
the research and marketplace developments described in response to 
Question 4 have called into question the effectiveness of the resort 
fee disclosures currently used by numerous industry players in various 
travel destinations. At this time, law enforcement actions against a 
small subset of players are unlikely to achieve the necessary industry-
wide adoption of displays that quote room rates that include resort 
fees. For this reason, I have met with a diverse group of industry 
stakeholders, urging them to come up with a solution that best protects 
consumers and promotes competition.
                                 ______
                                 
    Response to Written Question Submitted by Hon. Kelly Ayotte to 
                           Hon. Edith Ramirez
    Question. Competitive marketplaces form the foundation of a 
thriving economy:
    A. What is the Commission doing to ensure that the digital economy 
market remains open and competitive?

    B. How is the Commission approaching issues concerning platform 
technology companies?
    Answer. The Commission seeks to promote an open and competitive 
digital economy market through vigorous law enforcement, competition 
policy research, competition advocacy, and consumer and business 
education. Antitrust enforcement supports robust competition, which in 
turn promotes innovation. Unreasonable restraints of trade and other 
anticompetitive conduct can threaten market forces, leading to higher 
prices, lower quality products and services, and less innovation. The 
Commission's mission is to stop anticompetitive conduct. The Commission 
also takes enforcement against transactions that may substantially 
lessen competition and lead to higher prices, lower quality, or reduced 
innovation. The antitrust laws are flexible and apply across industries 
and market settings, including ``high tech'' industries and markets. 
Applying a balanced, fact-based approach to law enforcement is key to 
the Commission's mission to preserve and promote competition in this 
vital market.
    For example, the Commission acted to preserve competition in the 
emerging market for syndicated cross-platform audience measurement 
services in its review of the merger of Nielsen and Arbitron.\27\ 
Before the merger, each company was developing a new product which 
would allow media companies and advertisers to measure audiences across 
multiple platforms, such as TV and online. At the time, Nielsen was the 
leading provider of TV audience measurement services while Arbitron 
provided similar measurements for radio audiences. Based on our review, 
we determined Nielsen and Arbitron were best positioned to develop 
cross-platform measurement service because they were the only two 
companies that operated large and demographically representative panels 
that are capable of reporting television programming viewership. We had 
reason to believe that the elimination of future competition between 
Nielsen and Arbitron would likely cause advertisers, ad agencies, and 
programmers to pay more for national syndicated cross-platform audience 
measurement services. To preserve competition, the Commission required 
Nielsen to sell and license, for at least eight years, certain assets 
related to Arbitron's cross-platform audience measurement services to 
the FTC-approved buyer, comScore.
---------------------------------------------------------------------------
    \27\ FTC Press Release, ``FTC Puts Conditions on Nielsen's Proposed 
$1.26 billion Acquisition of Arbitron,'' (Sept. 20, 2013), https://
www.ftc.gov/news-events/press-releases/2013/09/ftc-puts-conditions-
nielsens-proposed-126billion-acquisition.
---------------------------------------------------------------------------
    The Commission has long been at the forefront of competition policy 
research on the application of the antitrust laws to high tech 
industries. In the 1990s, back when ecommerce was in its infancy, 
former Chairman Pitofsky held a series of workshops that carefully 
assessed the applicability of antitrust principles to new industries. 
The Commission's current research agenda continues to place a high 
priority on understanding how high tech markets work, as well as the 
competition and consumer protection issues that arise as technology-
enabled industries evolve.
    For example, last year, the FTC held a workshop to explore issues 
relating to emerging Internet peer-to-peer platforms and the economic 
activity these platforms facilitate--often referred to as the 
``sharing'' economy.\28\ We are seeing a dramatic growth in products 
and services that are built on peer-to-peer platforms, such as ride-
sharing and property rentals, as more entrepreneurs harness the power 
of technology to reach more consumers. These innovative business models 
have great potential to benefit our economy, market participants, and 
all consumers, not only by stimulating economic growth, encouraging 
entrepreneurship, and promoting more productive and efficient use of 
assets, but also by incentivizing suppliers of traditional economy 
services to improve quality in response to new forms of competition. 
However, the rapid expansion of commercial activity involving smaller 
suppliers on these platforms may tax the abilities and resources of 
regulators, who are confronted with the challenge of applying 
regulations that were written with conventional suppliers in mind. Last 
week, the FTC issued a report summarizing and synthesizing what we 
learned from the workshop and the related public comments we received. 
We believe the report will advance the understanding of these virtual 
marketplaces and provide insights on the competition, consumer 
protection, and regulatory issues that they raise.
---------------------------------------------------------------------------
    \28\ FTC Press Release, ``FTC to Examine Competition, Consumer 
Protection, and Economic Issues Raised by the Sharing Economy at June 
Workshop'' (Apr. 17, 2015), https://www.ftc.gov/news-events/press-
releases/2015/04/ftcexamine-competition-consumer-protection-economic-
issues. All of the materials from the workshop are available on the 
workshop webpage: The ``Sharing'' Economy: Issues Facing Platforms, 
Participants, and Regulators, Fed. Trade Comm'n (Jun. 9, 2015), https:/
/www.ftc.gov/news-events/events-calendar/2015/06/sharing-economy-
issuesfacing-platforms-participants-regulators.
---------------------------------------------------------------------------
    The Commission also engages in advocacy to promote and protect 
competition in the digital economy and in platform technology markets. 
We encourage policymakers to adopt policies that do not unnecessarily 
inhibit competition, dampen entry, or foreclose innovative companies or 
business models. For example, in June, the FTC and the DOJ Antitrust 
Division submitted a joint comment, in response to a request from North 
Carolina State Senator Bill Cook, on the impact on competition and 
consumers of interactive websites for generating legal forms.\29\ 
Proposed legislation would exclude from the statutory definition of the 
practice of law the operation of websites that generate legal documents 
based on consumer responses to questions presented by interactive 
software, provided certain conditions are satisfied. The joint comment 
encouraged the North Carolina General Assembly to consider the benefits 
of interactive websites for consumers and competition, while 
recognizing that such products may raise legitimate consumer protection 
issues.
---------------------------------------------------------------------------
    \29\ Letter from FTC Staff to the Honorable Bill Cook, North 
Carolina Senate, regarding North Carolina HB 436 (Jun. 10, 2016), 
https://www.ftc.gov/policy/policy-actions/advocacy-filings/2016/06/
joint-comment-federal-tradecommission-staff.
---------------------------------------------------------------------------
    As another example, in August, the FTC submitted letters to two 
state boards in Delaware concerning regulations governing telemedicine. 
The FTC's comment to the Delaware Board of Occupational Therapy 
Practice related to a proposed regulation that would allow licensed 
occupational therapists (OTs) to determine whether telehealth is an 
appropriate level of care for a patient, and allow OTs to determine the 
level of supervision required for the provision of telehealth services 
by OT assistants. The FTC wrote that by not imposing rigid and 
unwarranted in-person care and supervision requirements, the proposed 
telehealth regulation would likely benefit Delaware consumers.\30\ In a 
second letter to the Delaware Board of Dietetics/Nutrition, the FTC 
commented on a proposed telehealth regulation that would require in-
person initial evaluations of patients, and then allow licensed 
dietitians and nutritionists to determine whether to use telehealth 
thereafter. The FTC noted that by allowing licensed dietitians/
nutritionists to determine whether telehealth is an appropriate level 
of care for a patient, the proposed regulation could promote the use of 
telehealth, potentially enhancing competition in the provision of 
nutrition services, as well as reducing patient travel costs.\31\ 
However, because the proposed regulation would also require that all 
initial evaluations be conducted in person, it may unnecessarily 
discourage the use of telehealth and restrict consumer choice.
---------------------------------------------------------------------------
    \30\ Letter from FTC Staff to the Delaware Board of Occupational 
Therapy Practice (Aug. 3, 2016), https://www.ftc.gov/system/files/
documents/advocacy_documents/ftc-staff-comment-del
aware-board-occupationaltherapy-concerning-its-proposed-telehealth-
regulation/v160014_delaware_ot_proposed_advocacy.pdf.
    \31\ Letter from FTC Staff to LaTonya Brown, Administrator of the 
Delaware Board of Dietetics/Nutrition (Aug. 16, 2016), https://
www.ftc.gov/system/files/documents/advocacy_documents/ftc-staff-
comment-delaware-boarddietetics/nutrition-regarding-its-proposed-
telehealthregulation/staff_comment_delaware_diet_telehealth_signed.pdf.
---------------------------------------------------------------------------
                                 ______
                                 
    Response to Written Questions Submitted by Hon. Deb Fischer to 
                           Hon. Edith Ramirez
    Question 1. I have heard from constituents in Nebraska who raised 
concerns about card networks potentially circumventing the routing 
rights of merchants at the point of sale by implementing new prompt 
screens. Merchants and smaller PIN debit networks assert that some 
consumers are confused by the new prompt screens, which direct 
consumers to choose how to route a debit transaction (for example, to 
choose ``Visa Debit'' or ``US Debit''), and that consumers often pick 
the name they recognize because terms like ``US Debit'' are unclear to 
them. As you are aware, Regulation II, which the FTC enforces, intended 
to bring competition to the debit marketplace by allowing multiple 
network routing options for the merchant at the point of sale. 
Regulation II specifically prohibits all issuers and networks from 
inhibiting a merchant's ability to direct the routing of a debit 
transaction over any network that the issuer has enabled to process it. 
Do you believe that deployment of these new prompt screens could 
constitute a violation of Regulation II by shifting the routing 
decision at the point of sale from the merchant to the consumer? Is 
this something that the FTC plans to look into?
    Answer. The FTC's primary responsibility under the Durbin Amendment 
and Regulation II is to monitor compliance of the payment card networks 
with rules designed to eliminate network exclusivity and give merchants 
routing choice for processing electronic debit card payments. We track 
developments in this industry to ensure that the networks do not 
inhibit merchant routing choice. We are aware of concerns raised about 
the effect of the new prompt screens on merchant routing choice. The 
FTC this week closed its investigation of Visa following changes to the 
company's debit routing rules.\32\ A number of statutory prohibitions 
and Commission Rules prevent me from disclosing the existence or 
details of nonpublic Commission investigations. I can assure you, 
however, that the Commission is dedicated to protecting competition and 
consumers and will take appropriate action against acts or practices in 
the marketplace that violate the statutes we enforce.
---------------------------------------------------------------------------
    \32\ Letter from FTC Bureau of Competition Staff to Julie B. 
Rottenberg, Esq. SVP, Deputy General Counsel, Chief Counsel, North 
America, Risk and Merchant Solutions, Visa Inc. (November 22, 2016) 
https://www.ftc.gov/system/files/documents/closing_letters/nid/
closing_letter_from_james_frost_to_visa_-_11-2216.pdf

    Question 2. I understand that competition authorities in some 
foreign countries are proposing to impose antitrust enforcement 
conditions on U.S. companies that could have the effect of regulating 
patents issued domestically. I am concerned that this could be a means 
for these countries to try and undermine the strong intellectual 
property protections that we have here in the U.S., so they might 
acquire our innovations more cheaply or put U.S. companies at a 
disadvantage when competing abroad. Does the FTC share these concerns? 
Should there be limits on the power of competition authorities to 
mandate remedies for the licensing of IP rights of other countries?
    Answer. The FTC has heard concerns that some foreign jurisdictions 
may use competition enforcement and remedies as a means of advancing 
other policy goals. We share the concern that it is inappropriate to 
use competition enforcement to further industrial policy goals or to 
advantage domestic competitors, including with respect to IP licensing. 
We have advocated and will continue to advocate internationally that 
competition law should be used to maximize consumer welfare and should 
be applied in a non-discriminatory manner. Consumers are best served 
when competition enforcement is based solely on sound economic analysis 
of competitive effects. We recognize that many high-technology markets, 
particularly in the information and communications technology sector, 
are global and are often built upon global licensing arrangements 
between their participants. The strategies firms employ in these 
negotiations can affect competition and innovation across 
jurisdictions. Recognizing the international scope of this conduct, the 
FTC has taken a number of steps to promote coordination and cooperation 
with our foreign counterparts in a variety of contexts, including 
ongoing investigations, comments on proposed rules and guidelines, 
workshops, and technical assistance. Nevertheless, we believe it is 
appropriate for competition agencies to engage in antitrust enforcement 
only when there is a sufficient connection between the anticompetitive 
conduct and the jurisdiction in which the antitrust laws are to be 
applied. The FTC operates within these parameters when challenging 
global or extraterritorial anticompetitive conduct. We believe that 
foreign counterparts should likewise limit their enforcement to conduct 
that harms competition and consumers within that country's 
jurisdiction. Moreover, if a foreign agency were to find harm to 
competition and consumers within that country's jurisdiction stemming 
from global IP licensing conduct, we believe that any remedy should be 
tailored to address those harms, and should not be expanded to address 
other policy goals or to advantage domestic competitors.
                                 ______
                                 
     Response to Written Question Submitted by Hon. Ron Johnson to 
                           Hon. Edith Ramirez
    Question. The FTC has made a tremendous effort to weigh in against 
proposed state regulations that are anticompetitive or create 
unjustified barriers to entry, including in the health care and 
technology industries. Led by the staff of the Office of Policy 
Planning, the FTC staff has written over 40 letters in the last two 
years on issues ranging from taxi and ride-sharing rules to telehealth 
to direct-to-consumer vehicle sales. These letters make clear that 
innovators can offer tremendous benefits to consumers, but entrenched 
incumbents often try to use the regulatory process to keep the 
innovators out of the marketplace. Can the FTC commit to this Committee 
that it will continue to make reducing anticompetitive behavior by 
states a priority through letters to state lawmakers and regulators?
    Answer. We fully intend to continue our competition policy and 
advocacy efforts, which serve as an important complement to our 
enforcement work. The FTC will continue to promote competition 
principles and analysis in comments to state lawmakers, regulators, and 
regulatory boards.
                                 ______
                                 
    Response to Written Questions Submitted by Hon. Steve Daines to 
                           Hon. Edith Ramirez
    Question 1. Are there any Federal laws on the books today that 
apply to technology companies and specifically prevents them from using 
the data they collect about students through educational technologies 
for commercial purposes?
    Answer. The Children's Online Privacy Protection Act (``COPPA'') 
prohibits operators of websites or online services directed to 
children, and any operator that has actual knowledge that it is 
collecting or maintaining personal information from a child, from 
collecting personal information from children under the age of 13 
without first obtaining verifiable parental consent. COPPA does not 
apply to the collection of personal information from students thirteen 
and older. Additionally, it applies only to information collected from 
children, and not to personal information collected about them, such as 
from a teacher or school administrator.
    Section 5 of the FTC Act, which prohibits unfair and deceptive 
trade practices, also applies to technology and other companies' use of 
student data. For example, in a 2003 settlement with The National 
Research Center for College and University Admissions, Inc., the 
Commission alleged that the company engaged in a deceptive practice 
because it collected extensive personal information from high school 
students, claiming the information would only be shared with third 
parties providing education-related services. The Commission charged 
that, contrary to this representation, the company sold the information 
to commercial marketers. Generally, however, if a technology company's 
practices are truthful and non-misleading, Section 5 does not prevent 
the company from using data for non-educational purposes unless the 
Commission can demonstrate that the conduct is unfair. Unfair conduct 
is conduct that causes or is likely to cause substantial injury that is 
not outweighed by countervailing benefits to consumers or competition 
and that could not reasonably have been avoided.

    Question 2. In your opinion, is it appropriate for technology 
companies to collect student data, or to use information in students' 
education records, to target advertising to them? For example, to use 
information about whether a student has a learning disability to target 
ads for soda, or video games, or other non-educational products to the 
student?
    Answer. One of the significant revisions the Commission made to the 
COPPA Rule in 2012 was to give parents notice of, and control over, 
marketers' use of persistent identifiers to track their children for 
purposes of targeting advertising or compiling a profile. In the 
educational sphere, many school districts contract with third-party 
companies to offer online educational programs for their students. The 
Commission has long recognized the authority of schools to consent, as 
an agent or intermediary of the parent, to the collection of personal 
information from students under 13, provided the information is used 
for educational purposes. In other words, schools can partner with and 
share students' personal information with technology companies for 
educational uses, but those companies cannot then turn around and use 
information about students under the age 13 for commercial purposes, 
such as for behavioral advertising. While the protections COPPA 
provides are important, as noted above, COPPA's protections apply only 
to children under 13, and only to information collected from children, 
and not about children. I believe it is vital to protect the privacy of 
students in the educational setting. I therefore support the goal of 
the SAFE KIDS Act, which would extend important protections to 
teenagers, as well as prohibit targeted advertising based on 
information collected about children, rather than only information 
collected from them.

    Question 3. Over 300 companies have signed the student privacy 
pledge which safeguards student privacy by setting parameters for the 
collection, maintenance, and use of student personal information. Is 
the privacy pledge enforceable by the FTC? Can a company who signs the 
privacy pledge revoke at any time?
    Answer. To the extent a company signs on to the pledge and fails to 
live up to its promises, this may constitute a deceptive practice that 
would violate Section 5 of the FTC Act. However, companies that sign on 
to the pledge can revoke their pledge at any time. They would 
nonetheless need to abide by the pledge with respect to any information 
they collected during the time they were subject to the pledge, unless 
they obtained affirmative express consent from consumers to do 
otherwise.

    Question 4. Most of the headlines we see surrounding data breaches 
are focused on the harm to adults when their data security is 
compromised. What unique harms do children face when they are victims 
of a data breach?
    Answer. Children who are victims of a data breach, and who may 
therefore become victims of identity theft, face unique challenges. 
Children may experience greater harm because their identities may be 
more useful to identity thieves. Most significantly, a child's identity 
can often be used for many years before a parent or affected child 
becomes aware of the identity theft. They may not learn of the identity 
theft until the first time they apply for credit, which may be years 
after the identity theft occurred, making it all the more difficult to 
unwind. The Commission discussed these issues in a workshop addressing 
identity theft issues affecting children. See https://www.ftc.gov/news-
events/events-calendar/2011/07/stolen-futures-forum-child-
identitytheft. The FTC has also provided information to consumers about 
child identity theft. See https://www.consumer.ftc.gov/articles/0040-
child-identity-theft.
    Also, while the Commission considers location data to be sensitive 
generally, parents may be concerned that their children's location 
might be available to child predators and others. Children's location 
information is specifically protected under COPPA. Earlier this year in 
the InMobi case, the Commission challenged a mobile ad network's use of 
information from smartphones to derive users' locations, including for 
users of child-directed apps, as a violation of COPPA. (See https://
www.ftc.gov/news-events/press-releases/2016/06/mobile-
advertisingnetwork-inmobi-settles-ftc-charges-it-tracked.) We alleged 
that InMobi's software tracked location in thousands of child-directed 
apps with hundreds of millions of users without obtaining parental 
consent as required by COPPA.

    Question 5. There are concerns that antitrust enforcement actions 
by foreign governments may be used to undermine U.S. companies abroad 
and effectively regulate U.S. issued patents. The FTC already 
collaborates with competition and consumer protection agencies around 
the world. In your view, what steps can or should the FTC take to limit 
the extraterritorial application of a nation's competition law when 
those actions may impact U.S. intellectual property?
    Answer. The FTC has a robust program of international engagement 
with foreign counterpart agencies. Through senior level dialogues and 
staff level interactions, we stress with our counterparts the 
importance of pursuing consumer welfare--and the problems associated 
with pursuing other goals, such as industrial policies and the 
protection of domestic competitors--through competition law 
enforcement. We advocate for these principles through speeches,\33\ 
directly with our foreign agency counterparts, through our active 
technical assistance program, and in multilateral bodies such as the 
International Competition Network and the OECD. The FTC has engaged, 
and will continue to engage, with our counterparts in a number of 
jurisdictions on these specific issues, in an effort to build consensus 
on policies that will benefit competition and consumers globally and 
prevent undermining the incentives for innovation that intellectual 
property systems are designed to provide. As appropriate, the FTC also 
works with other U.S. government agencies, including the U.S. Patent 
and Trademark Office, on these important policy issues at the 
intersection of antitrust and IP law. In short, we believe that the FTC 
is taking the appropriate steps to engage on these issues, and we 
intend to continue to do so.
---------------------------------------------------------------------------
    \33\ See, e.g., Edith Ramirez, Chairwoman, Fed. Trade Comm'n, Core 
Competition Agency Principles: Lessons Learned from the FTC, Keynote 
Address at the Antitrust in Asia Conference, Beijing, China (May 22, 
2014), available at https://www.ftc.gov/system/files/documents/
public_statements/314151/140522abachinakeynote.pdf; Edith Ramirez, 
Chairwoman, Fed. Trade Comm'n, Keynote Address, Seventh Annual Global 
Antitrust Enforcement Symposium (Sept. 25, 2013), available at https://
www.ftc.gov/sites/default/files/documents/public_statements/7th
annual-global-antitrust-enforcement-symposium/
130925georgetownantitrustspeech.pdf.

    Question 6. In your recent remarks to the Global Antitrust 
Enforcement Symposium, you stated that competition leads to lower 
prices, higher quality, and innovation. You stated, ``at the FTC we 
must keep a watchful eye on markets to ensure fair competition that 
enhances consumer welfare . . . our job is to enforce the rules that 
safeguard vigorous competition if we see them being broken.'' With 
those sentiments in mind, Congress in 2003 enacted the Fairness to 
Contact Lens Consumers Act to promote competition in the sale of 
contact lenses--a law whose implementing regulation is currently under 
review at the Commission. Despite the law's requirement that consumers 
receive copies of their prescriptions, there is evidence of wide-spread 
non-compliance. Specifically, a recent survey conducted on behalf of a 
national retailer found that only 35 percent of consumers automatically 
receive their prescription, and 36 percent left the office without a 
copy.
    In reviewing the Rule, will you place focus on this law's goal of 
promoting competition, and take action to assure consumers are 
receiving their prescriptions as required by law?
    Answer. While I cannot comment in detail on a pending rule review, 
I can confirm that promoting competition and examining the 
effectiveness of the prescription release requirement are two key areas 
of interest during our ongoing review of the Contact Lens Rule (CLR), 
the regulation that implements the Fairness to Contact Lens Consumers 
Act. Both the Act and the CLR promote competition in retail sales of 
contact lenses by fostering consumers' ability to comparison shop. The 
prescription release requirement is central, because consumers cannot 
buy lenses without a prescription. Consumers are not likely to 
comparison shop if they cannot purchase lenses from competing vendors. 
Likewise, sellers of contact lenses are not likely to compete on price 
or other aspects of sales and service if consumers cannot or do not 
comparison shop among them.
    When the Commission requested public comments on the CLR,\34\ we 
noted at the outset that the CLR ``is intended to facilitate the 
ability of consumers to comparison shop for contact lenses,'' and that 
the CLR ``requires that eye care prescribers provide a copy of a 
prescription to the consumer upon completion of a contact lens 
fitting.'' \35\ We asked, in particular, for evidence on the degree of 
industry compliance with the CLR \36\ and have been reviewing the 
available evidence. We recently issued a Notice of Proposed 
Rulemaking,\37\ which proposes amending the Contact Lens Rule to 
require that after providing a copy of the prescription, prescribers 
request patients sign an acknowledgment form indicating receipt of the 
prescription. The Commission believes that implementation of signed 
acknowledgments would best serve several important objectives: 
reminding prescribers to release prescriptions, informing patients of 
their rights, and improving the Commission's verification and 
enforcement ability.
---------------------------------------------------------------------------
    \34\ Contact Lens Rule, Request for Comment, 80 FR 53272 (Sep. 3, 
2015).
    \35\ Id. at 53773.
    \36\ Id. at 53774.
    \37\ 16 CFR Part 315: Contact Lens Rule; Notice of Proposed 
Rulemaking; Request for Public Comment (Nov. 10, 2016), https://
www.ftc.gov/policy/federal-register-notices/16-cfr-part-315-contact-
lens-rule-notice-proposedrulemaking-request.
---------------------------------------------------------------------------
    In addition, the Commission has taken some recent steps to achieve 
better compliance with the CLR. For example, in April 2016, the 
Commission sent warning letters to 45 contact lens prescribers after 
receiving consumer complaints alleging that the prescribers had 
violated the Rule, often by failing to provide patients with their 
prescriptions automatically.\38\
---------------------------------------------------------------------------
    \38\ Press Release, Fed. Tr. Comm'n, FTC Issues Warning Letters 
Regarding the Agency's Contact Lens Rule (Apr. 7, 2016), https://
www.ftc.gov/news-events/press-releases/2016/04/ftc-issues-warning-
letters-regarding-agencyscontact-lens-rule.
---------------------------------------------------------------------------
                                 ______
                                 
    Response to Written Questions Submitted by Hon. Bill Nelson to 
                           Hon. Edith Ramirez
    Question 1. Chairwoman Ramirez, can you bring us up to date on the 
Commission's work on card networks under Regulation II? Specifically, I 
am interested in how merchants are able to route debit transactions and 
their implications on consumers, business competition, and data 
security.
    Answer. The FTC's primary responsibility under the Durbin Amendment 
and Regulation II is to monitor compliance of the payment card networks 
with rules designed to eliminate network exclusivity and give merchants 
routing choice for processing electronic debit card payments. We track 
developments in this industry to ensure that the networks do not 
inhibit merchant routing choice. We are aware of concerns raised about 
the effect of the new prompt screens on merchant routing choice. The 
FTC this week closed its investigation of Visa following changes to the 
company's debit routing rules.\1\ A number of statutory prohibitions 
and Commission Rules prevent me from disclosing the existence or 
details of nonpublic Commission investigations. I can assure you, 
however, that the Commission is dedicated to protecting competition and 
consumers and will take appropriate action against acts or practices in 
the marketplace that violate the statutes we enforce.
---------------------------------------------------------------------------
    \1\ Letter from FTC Bureau of Competition Staff to Julie B. 
Rottenberg, Esq. SVP, Deputy General Counsel, Chief Counsel, North 
America, Risk and Merchant Solutions, Visa Inc. (November 22, 2016) 
https://www.ftc.gov/system/files/documents/closing_letters/nid/
closing_letter_from_james_frost_to_visa_-_11-22-16.pdf

    Question 2. As you know, I represent a state with a large 
population of older Americans. Since 2005, the FTC has brought more 
than 30 cases against scam artists who have gone after older consumers.
    Chairwoman Ramirez, could you talk about the type of frauds you see 
that specifically target seniors and discuss the consumer outreach--in 
addition to bringing law enforcement cases--the Commission engages in 
to educate consumers about how to avoid becoming victims?
    Answer. As the population of older Americans continues to grow, the 
FTC's efforts to identify illegal marketing impacting seniors and to 
bring aggressive law enforcement action, as well as provide useful 
advice to seniors, become increasingly vital.
    Based on research conducted by the FTC, older Americans are not 
necessarily defrauded at higher rates than younger consumers. However, 
certain types of scams are more likely to impact older Americans, such 
as prize promotion and lottery or sweepstakes schemes, technical 
support scams, and certain telemarketing schemes. In the past two 
years, the FTC has brought 15 actions involving conduct that 
significantly affected older adults. Seven of the matters involved 
alleged scams such as an investment opportunity fraud, sweepstakes and 
lottery scams, technical support scams, and robocalls pitching interest 
rate reduction schemes and medical alert systems. Eight of the matters 
alleged unsubstantiated advertising in the sale of brain training 
programs and products that made anti-aging claims, or otherwise aimed 
their advertising at seniors.
    The Commission's education and outreach programs reach tens of 
millions of people a year through our website, the media, and partner 
organizations that disseminate FTC consumer information to their 
communities. The FTC delivers actionable, practical, plain language 
materials on dozens of issues, and updates its consumer education 
whenever it has new information to share. The Commission's library of 
articles in English and Spanish includes numerous pieces of particular 
relevance to seniors, including those specifically describing 
grandparent scams, prize and lottery fraud, medical alert scams, 
Medicare scams, technical support scams, veterans' benefits scams, and 
government imposter fraud.
    In 2014, the FTC launched its Pass It On campaign, an innovative 
education effort aimed at active, older adults. This campaign seeks to 
arm older people with information that they can ``pass on'' to family 
and friends who might need it. The materials and videos available at 
www.ftc.gov/PassItOn are direct and to the point, with a friendly and 
respectful tone informed by research about the target community's 
preferences. The materials cover topics such as imposter and health 
care scams, charity fraud, and identity theft, all of which are 
available in print in both English and Spanish. In 2016, the FTC added 
new materials on specific imposter scams: IRS, tech support, 
grandparent and romance scams.

    Question 3. The FTC is one of the crown jewels of this Committee's 
jurisdiction. It's the premier consumer protection agency in the 
Nation. The FTC is tasked with protecting average Americans from scams 
and frauds that steal their hard-earned money. However, I have always 
felt that the FTC has been chronically underfunded and understaffed 
given its vast mission.
    Chairwoman Ramirez, do you have the resources you need to go after 
all of the crooks out there that are ripping people off? How much do 
you have to pick-and-choose when it comes to your enforcement actions 
given the FTC's limited resources?
    Answer. Like other government agencies, the Commission seeks ways 
to do more with less. Resource constraints, despite a growing workload, 
remain a constant challenge. The FTC will continue to leverage its 
resources through careful case selection and by partnering with law 
enforcement and other partners on enforcement and educational efforts. 
We focus on having efficient internal processes to expedite our work, 
and improving our own IT infrastructure to allow our staff to work more 
effectively.

    Question 4. What can we do in Congress to better help the 
Commission fulfill its mission, fight fraud, and protect consumers?
    Answer. One area in which the FTC could use additional authority is 
data security, which is a crucial part of the FTC's work. To date, the 
Commission has brought approximately 60 cases alleging that companies 
failed to implement reasonable safeguards for the consumer data they 
maintain. We reiterate our longstanding, bipartisan call for Federal 
legislation that would (1) strengthen our existing data security 
authority and (2) require companies, in appropriate circumstances, to 
provide notification to consumers when there is a security breach. 
Legislation in both areas--data security and breach notification--
should give the FTC the ability to seek civil penalties to help deter 
unlawful conduct, jurisdiction over non-profits, and rulemaking 
authority under the Administrative Procedure Act. We would be happy to 
work with your staff on such an initiative.
    In addition, while the FTC has worked to keep pace with the ever-
changing marketplace, two particular challenges are of concern: 
jurisdictional limitations over common carriers and non-profits.
    The FTC has long called for the repeal of the common carrier 
exception. This carve-out no longer makes sense in today's deregulated 
environment where the lines between telecommunications and other 
services are increasingly becoming blurred. Removing the exception from 
the FTC Act would enable the FTC to bring its extensive law enforcement 
experience to bear in protecting consumers of common carriage services 
against unfair and deceptive practices in the same way that it can 
protect against unfair and deceptive practices for other services.
    We also recommend that our jurisdiction be extended to non-profit 
entities. In healthcare provider markets, where the Commission has 
particular expertise, the agency's inability to reach conduct by 
various non-profit entities has prevented the Commission from taking 
action against potentially anticompetitive behavior of non-profits 
engaged in commercial activities. These concerns also apply to our 
consumer protection mission. For example, despite many publicized data 
breaches at non-profit hospitals and universities, the FTC cannot 
challenge unfair or deceptive data security or privacy practices of 
these entities. These breaches have exposed the sensitive data of 
millions of consumers, yet the Commission cannot act due to the non-
profit status of these entities.

    Question 5. I am a firm believer that two cops on the beat are 
better than one. In that regard, I see no reason to pit one agency 
against another. In this Committee, we have had a debate as to whether 
the FCC or FTC should protect consumer privacy. I think this debate 
misses the point. There is no reason why both the FTC and FCC can't 
play prominent roles.
    To all of the Commissioners, the FTC has overlapping jurisdiction 
with numerous agencies, such as the Department of Justice and the Food 
and Drug Administration. Your relationships with these agencies and 
overlapping jurisdictions have never been a problem. Don't you think 
you can have a similar cooperative relationship with the FCC? Shouldn't 
there be two cops on the beat?
    Answer. Given the breadth of its jurisdiction, the FTC has 
cooperated frequently with a number of other agencies on areas of 
mutual concern. For example, the FTC has worked with the Department of 
Health and Human Services on health privacy and competition issues and 
with the Department of Education on student privacy issues. The 
Commission's goal in working with other agencies is to use its 
complementary authority to protect consumers as effectively and 
efficiently as possible, to avoid duplication, and to promote 
consistency.
    The Commission also has a long history of successful cooperation 
with the FCC on consumer protection issues, including issues related to 
privacy and data security. In 2015, the agencies affirmed and 
formalized this collaboration by entering into a Memorandum of 
Understanding agreeing to coordinate on our respective consumer 
protection efforts.\2\
---------------------------------------------------------------------------
    \2\ Memorandum of Understanding on Consumer Protection Between the 
Federal Trade Commission and the Federal Communications Commission 
(Nov. 2015), available at https://www.ftc.gov/policy/cooperation-
agreements/memorandum-understanding-consumer-protection-between-
federal-trade.
---------------------------------------------------------------------------
    One example of our privacy collaboration is the Federal Do Not Call 
registry, created in 2003. The FTC and FCC Do Not Call teams hold 
regular conference calls to discuss enforcement issues, targeting, 
litigation, and complaint trends. The teams share data when 
investigations overlap. And the FCC has participated in the FTC's 
various robocall initiatives, including the FTC's Robocall Summit and 
the FTC's Robocall Challenges.
    In addition, in the FTC case against T-Mobile,\3\ the FCC and state 
authorities played an important role in negotiating a major settlement 
providing for injunctive relief and at least $90 million in consumer 
redress for allegedly unauthorized third party charges on mobile 
phones, a practice known as mobile cramming. This settlement 
demonstrates how the FTC and FCC use complementary tools to remedy 
harms and deter future non-compliance. While the FTC's focus is 
typically to put money back in the pockets of consumers, the FCC 
traditionally has exercised its authority to fine companies for 
noncompliance.
---------------------------------------------------------------------------
    \3\ FTC v. T-Mobile USA, Inc., No. 2:14-cv-0097-JLR (W.D. Wash. 
filed Dec. 19, 2014), available at https://www.ftc.gov/enforcement/
cases-proceedings/132-3231/t-mobile-usa-inc.
---------------------------------------------------------------------------
    Earlier this year, the FTC and FCC announced separate but 
coordinated studies of security in the mobile ecosystem.\4\ The FTC is 
seeking information from mobile device manufacturers and operating 
systems about how they provide security updates to address 
vulnerabilities in smartphones, tablets, and other mobile devices. At 
the same time, the FCC is examining common carriers' policies regarding 
mobile device security updates. Given the complexity of the mobile 
ecosystem and the number of entities involved in developing and 
deploying security patches, it is difficult to discern how carriers, 
operating systems, and handset manufacturers determine when any 
specific device model receives a security update and on what timeline. 
The responses to the studies should provide important information about 
who is responsible for providing mobile security patches to consumers.
---------------------------------------------------------------------------
    \4\ FTC To Study Mobile Device Industry's Security Update 
Practices, May 9, 2016, available at https://www.ftc.gov/news-events/
press-releases/2016/05/ftc-study-mobile-device-industrys-security-
update-practices.
---------------------------------------------------------------------------
    Finally, in response to the FCC's request for comment on its 
proposed rules governing the privacy of consumer information collected 
by broadband Internet access services providers, the FTC filed a 
comment recommending certain changes including with respect to how 
personally identifiable information is defined, the structure of 
privacy notices, the role of consumer notice and choice in various 
business practices, and the proposed regulations on data security and 
breach notification. Based on our decades of experience and leadership 
on consumer privacy issues, we believe the Commission can provide 
unique insights to the FCC.
                                 ______
                                 
   Response to Written Questions Submitted by Hon. Maria Cantwell to 
                           Hon. Edith Ramirez
    Question 1. The era of autonomous cars is upon us. Self-driving 
cars and other vehicle technologies that have some degree of automation 
have entered the marketplace and their use is only going to become more 
widespread in the years to come. Right now, Google is testing its self-
driving cars in Kirkland and some have even suggested dedicating a 
portion of I-5 from Seattle to Vancouver simply for self-driving cars.
    Last week, the National Highway Traffic Safety Administration 
issued proposed guidance on the regulation of autonomous vehicles. 
While the guidance focused on the vehicles themselves, it's also 
important that manufactures of autonomous vehicles accurately relay 
information on these machines to consumers. As recent as July of this 
year, Mercedes-Benz had to pull advertising for its autonomous 
technology after Consumer Reports filed a complaint with the Federal 
Trade Commission.
    Question 1a. How many complaints have been brought against auto 
manufactures for advertising claims for self-driving cars?
    Answer. The FTC is aware of one complaint filed with the agency by 
a consumer advocacy group regarding advertising claims for self-driving 
cars. We have not received any consumer complaints regarding this 
issue.

    Question 1b. Has the FTC made any enforcement actions?
    Answer. The FTC has not taken an enforcement action regarding 
deceptive advertising for self-driving vehicles.

    Question 1c. Will the FTC be issuing guidance for the advertisement 
of self-driving cars?
    Answer. We do not believe separate guidance for the advertising of 
self-driving cars is warranted at this time. The FTC recognizes that 
the technology required to develop and manufacture self-driving 
vehicles in the future is rapidly evolving and may provide useful 
benefits to the consumer. We also recognize that consumer perceptions 
about the capabilities of self-driving cars may vary. For these 
reasons, I believe applying the FTC's traditional deception analysis on 
a case-by-case basis is the best approach in this area.
                                 ______
                                 
 Response to Written Questions Submitted by Hon. Richard Blumenthal to 
                           Hon. Edith Ramirez
    Question 1. In the last fiscal year alone, the Federal Trade 
Commission (FTC) estimates that it saved consumers over $3.4 billion 
through its competition enforcement efforts and over $717 million 
through its consumer protection law enforcement actions.
    Chairwoman Ramirez, can you explain to me how the recent Ninth 
Circuit decision on FTC v. AT&T could affect the FTC's ability to take 
actions that protect consumers and save their money? How could this 
decision create uncertainty for businesses, who rely on the 
Commission's oversight to maintain a level playing field for 
competition and entrepreneurship, and to stop invitations to collude?
    Answer. The Ninth Circuit's recent decision in FTC v. AT&T calls 
into question the FTC's ability to enforce Section 5 of the FTC Act 
against any unlawful activities engaged in by an entity with the mere 
``status'' of a common carrier.\5\ The decision would bar the FTC from 
bringing cramming cases against wireless telephone carriers. Over the 
past 10 years, the FTC has brought 23 such cases and has provided or 
will be providing $161 million in refunds directly to consumers.
---------------------------------------------------------------------------
    \5\ See Federal Trade Comm'n v. AT&T Mobility LLC, No. 15-16585 
Slip Op. (9th Cir. Aug. 29, 2016).
---------------------------------------------------------------------------
    Furthermore, many companies provide both common-carrier and non-
common-carrier services, and companies that are not common carriers 
today may gain that status by offering new services or through 
corporate acquisitions. Under the AT&T decision, any company that has 
or acquires the ``status'' of a common carrier can use the decision to 
argue that it is immune from FTC enforcement against any of its lines 
of business by virtue of its common carrier status.
    Telecommunications and technology companies hold enormous amounts 
of personal data that can inflict substantial harm if not properly 
safeguarded. If the FTC can no longer enforce the FTC Act against these 
companies' non-common carrier activities, consumers may be unprotected 
from breach or misuse of their personal information. In addition, 
millions of consumers would lose protection against garden-variety 
deception, such as false advertising or improper billing. The AT&T 
decision also threatens the FTC's ability to enforce other important 
consumer protection statutes including the Children's Online Privacy 
Protection Act, the Telemarketing and Consumer Fraud and Abuse Act, and 
several others in which the FTC's enforcement authority is tied to 
Section 5 of the FTC Act.
    We are concerned that no other Federal agency can fill this gap. 
The authority of the FCC, the CFPB, and other agencies is limited. For 
example, the FCC lacks authority to provide redress for consumer 
harm.\6\ The FTC is the only Federal agency with consumer protection 
authority throughout the economy that can obtain monetary redress for 
consumers as well as behavioral relief.
---------------------------------------------------------------------------
    \6\ See 47 U.S.C. Sec. 504.
---------------------------------------------------------------------------
    The AT&T decision can disrupt the level playing field by making the 
same service subject to different enforcement mechanisms depending on 
whether or not it is provided by a company that has the ``status'' of a 
common carrier. Take two e-mail providers, one owned by a telephone 
company and the other freestanding. Under the Ninth Circuit's approach, 
the freestanding one would be subject to the FTC's data security 
requirements and restrictions on deceptive practices, but the 
telephone-company-owned one would not. That could cause economic 
distortion by itself. It also provides an incentive for businesses to 
become part of a common carrier operation whether or not doing so is 
economically desirable.
    On the antitrust side, the AT&T decision means that the Department 
of Justice would have to handle any cases involving companies with 
common carrier status. Not only would shifting the workload burden 
DOJ's resources, but enforcement could suffer if the FTC is unable to 
bring antitrust enforcement cases in areas in which it has developed 
substantial expertise over many years, including, for example, matters 
involving pipelines. Additionally, there would be an enforcement gap 
involving invitations to collude because the Department of Justice 
cannot bring cases involving invitations to collude, nor can third 
parties.

    Question 2. As I have written to the FTC already, I am very 
concerned about the public safety implications of the FTC's recent 
proposed settlement with used car dealers regarding their advertising 
of vehicles that have been ``certified'' even if the vehicle has 
unrepaired safety recalls.
    Chairwoman Ramirez, doesn't the FTC have authority under Section 5 
of the FTC Act to prohibit a dealer from falsely advertising a vehicle 
with an unrepaired recalled dealer as ``safe,'' ``repaired for 
safety,'' or having passed a ``rigorous inspection''?
    One of the triggers for a motor vehicle recall is the vehicle's 
failure to comply with a Federal Motor Vehicle Safety Standard. Is it 
your position that dealers should be allowed to advertise that an 
unrepaired recalled car is ``safe'' and ``repaired for safety,'' passed 
a ``rigorous inspection,'' and qualified to be sold as ``certified,'' 
when it fails to comply with a Federal Motor Vehicle Safety Standard?
    Answer. Under Section 5 of the FTC Act, the Commission has 
authority to bring actions to combat deceptive acts or practices and 
obtain orders prohibiting deceptive conduct. The Commission's proposed 
complaints against General Motors Company, Jim Koons Management 
Company, and Lithia Motors, Inc. allege that these companies made 
general advertising claims promoting the rigorousness of their 
inspections of large categories of used cars, but failed to disclose 
that some of the cars were subject to open safety recalls. It is well-
established under the FTC Act that a deceptive omission occurs ``where 
a seller fails to disclose qualifying information necessary to prevent 
one of his affirmative statements from creating a misleading 
impression.'' See In re International Harvester Co., 104 F.T.C. 949, 
1057 (1984). In these complaints, we allege that, while the companies 
may have been inspecting these vehicles, absent additional information 
in those advertisements, reasonable consumers would likely believe that 
the inspections included repairing open recalls. We allege that the 
failure to disclose adequately that some cars were subject to open 
recalls, in light of the identified advertising representations, was a 
deceptive act or practice in violation of Section 5 of the FTC Act.
    The proposed orders in these three matters address the allegedly 
deceptive omissions identified in the complaints and also impose 
additional requirements to prevent respondents from engaging in other 
deceptive conduct. Among other things, the proposed orders would 
prohibit the respondents from representing that their used motor 
vehicles are safe, have been repaired for safety issues, or have been 
subject to an inspection for safety issues unless the vehicles are 
recall-free or, alternatively, the respondents clearly and 
conspicuously, in close proximity to the representation, disclose at 
least two key facts to consumers: first, that the vehicles may be 
subject to open recalls and, second, how consumers can determine 
whether an individual car is subject to an open recall. Those 
requirements would apply regardless of whether recalls arise from a 
defect or a failure to meet a vehicle safety standard. Accordingly, 
under the proposed orders, consumers would receive important 
information about open recalls whenever respondents make these kinds of 
claims, including when consumers see advertisements prior to visiting a 
dealership. At the same time, by allowing the respondents to promote 
their inspection programs with clear and conspicuous disclosures 
regarding recalls, the proposed orders would allow them to provide 
truthful information that is material to consumers, rather than scaling 
back or potentially stopping inspection programs altogether to the 
detriment of consumers. We are continuing to review the comments we 
received to our proposed complaint and order, and expect to make a 
final determination in these matters in the coming weeks.
    Let me emphasize that I share your concerns regarding the safety 
issues raised by recalls in the used automobile marketplace. I also 
agree that all recalls pose safety risks to consumers, and that open 
recalls should be repaired. While Federal law does not prohibit car 
dealers from selling used cars subject to open recalls, I support 
efforts by Congress to enact such a ban. In the meantime, the 
Commission will continue to enforce the FTC Act to curb deceptive 
conduct regarding recalls.

    Question 3. It has recently been brought to my attention that 
manufacturers of pet medications can, and do offer inducements to 
veterinary clinics to prescribe and sell their medications. For 
example, the MERIAL Rewards Program Website offers Visa debit cards 
loaded with cash to veterinarians who prescribe and sell their pet 
medications.
    Chairwoman Ramirez, do you consider this a kickback? How prevalent 
is this practice of drug manufacturers offering inducements to 
veterinarians? What evidence do you have that manufacturers may protect 
veterinarians who prescribe and sell their products from price 
competition by refusing to market their medications to anyone who is 
not a veterinarian? How does this practice affect consumer prices?
    Answer. FTC staff is aware that most manufacturers have a policy of 
only selling pet medications through the veterinary channel. The FTC 
does not have data regarding the impact of these exclusive distribution 
practices on consumer prices, and has not taken a formal position on 
these practices. The FTC has, however, compiled substantial information 
regarding these practices, as discussed in detail in FTC staff's report 
on the pet medications industry.\7\ Some non-veterinary retailers have 
suggested that they could offer lower prices to consumers with portable 
prescriptions if they could obtain products directly from 
manufacturers, rather than through secondary distribution. Although 
exclusive distribution practices may dampen competition and could have 
adverse effects, they may also benefit consumers in some situations, 
and pet medications manufacturers claim to have legitimate business 
reasons for engaging in these practices. Under most circumstances, it 
is not illegal for manufacturers to unilaterally limit to whom they 
sell their products. As a general matter, if we become aware of 
distribution-related conduct that might constitute an antitrust 
violation, the FTC would take appropriate action.
---------------------------------------------------------------------------
    \7\ Competition in the Pet Medications Industry (May 2015), 
available at https://www.ftc.gov/system/files/documents/reports/
competition-pet-medications-industry-prescription-portability-
distribution-practices/150526-pet-meds-report.pdf

    Question 4. In addition, it has come to my attention that there are 
examples of veterinarians requiring clients sign a waiver or pay an 
additional fee as a prerequisite to receiving a copy of the 
prescription. Would you consider these practices to be violations of 
Section 5 of the FTC Act?
    Answer. The FTC has not taken a position on the legality of 
liability waivers or prescription fees for veterinary prescriptions.
    We are aware that some veterinarians require clients to sign a 
waiver of liability before providing them with a portable prescription. 
The waivers typically state that the prescribing veterinarian is 
released from any potential liability stemming from the purchase and 
administration of medications from alternative retail sources, as well 
as any complications that may arise from the use of these medications. 
Often, these waivers also describe alleged safety concerns that could 
be associated with purchasing pet medications from retail sources other 
than the prescribing veterinarian.
    Some veterinarians have expressed concerns about possible liability 
when pet medications are dispensed by retail pharmacists. For example, 
they worry that a veterinarian might be held responsible (or, at least, 
face litigation costs) if a pharmacist were to dispense an incorrect, 
counterfeit, or otherwise adulterated pet medication. FTC research has 
not uncovered situations where a veterinarian has been held liable for 
a pharmacist's dispensing error. Some pharmacy boards have expressly 
indicated that pharmacists, not veterinarians, are responsible for any 
prescription misfills. As long as an animal is properly examined and 
diagnosed, and a prescription is written properly, it is unlikely that 
liability would attach to a veterinarian in the event a retail 
pharmacist incorrectly dispensed a medication. Moreover, the practice 
of veterinarians asking for liability waivers may unnecessarily chill 
consumers' willingness to ask for and use portable prescriptions.
    With respect to prescription fees, the FTC report on the pet 
medications industry acknowledges that veterinarians might face some 
administrative burden and cost (even if minimal) associated with 
greater prescription portability, including automatic prescription 
release. Prescription fees might be economically justified if they 
represent reasonable compensation for the actual cost of providing 
portable prescriptions (which might include, for example, reviewing 
patients' medical files, verifying prescriptions, and answering 
pharmacists' questions). But given the difficulty in determining a 
reasonable fee, some stakeholders have suggested that the 
procompetitive goals of prescription portability would be better 
served--and clients would face fewer real or perceived barriers to 
receiving portable prescriptions--if veterinarians simply charged 
clients a single professional services fee that encompassed all 
administrative activities, including providing prescriptions. This 
approach would, however, shift costs to clients who are not obtaining a 
prescription drug or who purchase medications directly from the 
veterinarian.

    Question 5. In the Dodd-Frank Act of 2010, Congress gave the FTC 
extensive authority over the sale, servicing, and leasing of 
automobile--charging it to protect consumers from abusive auto lending 
practices and granting it exclusive authority to draft rules governing 
unfair or deceptive acts or practices by automobile dealers.
    Chairwoman Ramirez, how does the Commission plan to use the 
rulemaking authority it was granted in the Dodd-Frank Act, to rein in 
unfair or deceptive acts or practices by automobile dealers?
    Answer. The Commission considers various approaches as part of its 
ongoing efforts to address unfair or deceptive acts or practices by 
automobile dealers, consistent with its authority under the FTC Act and 
the Dodd-Frank Act. This includes enforcement activities, policy 
initiatives, consumer and business education, and rulemaking. On the 
enforcement front, since 2012, the FTC has brought 29 cases against 
auto dealers to address allegedly unlawful practices in connection with 
auto transactions. Enforcement actions include the Operation Ruse 
Control sweep, announced in 2015, which included six FTC cases among 
252 cases overall brought in the United States and Canada, as well as a 
recent Federal court action against the Sage Auto group of dealerships, 
alleging unlawful ``yo-yo'' financing and add-on practices in addition 
to deceptive advertising and marketing claims. The FTC also announced 
the Operation Steer Clear sweep in 2014, which included 10 FTC cases 
against dealers alleging deceptive and unlawful advertising claims.
    On the policy front, the FTC has held three roundtables bringing 
together consumer advocates, industry representatives, and other 
stakeholders to discuss key consumer protection issues in auto 
transactions, and it recently published a second Federal Register 
Notice proposing to conduct a qualitative study to learn about consumer 
experiences in buying and financing automobiles at dealerships. The 
Commission also continues to engage in business and consumer education, 
including the July 2016 release of four new short videos, in English 
and Spanish, to help consumers shopping for cars. Finally, the FTC has 
not made a determination at this point whether to issue any new rules. 
As a general matter, the type of evidence leading to an FTC rulemaking 
can vary. We look at a number of factors, and we continue to evaluate 
the marketplace. The FTC will continue to consider what additional 
steps may be appropriate in the auto area.

    Question 6. Earlier this year, the FTC finally successfully cracked 
down on four sham charities that had bilked more than $187 million from 
donors. According to the FTC complaint, their misappropriation of 
consumer donations dated back to at least 2008. Chairwoman Ramirez, 
Commissioner McSweeny, and Commissioner Ohlhausen: How were these sham 
charities able to rob donors of so much money and for so long?
    Answer. As you note, in March 2016, the FTC, all 50 states and the 
District of Columbia resolved litigation against the remaining 
defendants in Cancer Fund of America, resulting in, among other things, 
a dissolution of the sham charities and a ban on the president's 
ability to profit from any charity fundraising in the future.\8\ The 
four sham outfits were quite adept at masking their charade. For 
example, in our complaint, we charged that the sham cancer charities 
hid their wrongdoing by manipulating their financial reporting and 
using deceptive and invalid accounting techniques to claim huge 
donations of gifts-in-kind. We alleged that this allowed them to 
inflate their reported revenue and program spending by $223 million and 
had the effect of making the organizations appear to be both larger and 
more efficient with donors' money than they really were. As charged in 
the complaint, it was not obvious from their public financial reports 
to the IRS or the states that less than 3 percent of donated cash was 
being spent on any program services (collectively).
---------------------------------------------------------------------------
    \8\ See https://www.ftc.gov/news-events/press-releases/2016/03/ftc-
states-settle-claims-against-two-entities-claiming-be-cancer.
---------------------------------------------------------------------------
    The challenge is that charity fraud is easy to miss and 
underreported. For example, the average donation to the sham cancer 
charities was less than $30, and the vast majority of those donations 
were made in response to telephone solicitations. Consumers who gave in 
response to the promise that their donation would help cancer patients 
never knew that, as we alleged in the complaint, their donation did not 
go to that cause. That is why consumers did not complain. Further, 
based on our experience, we believe that few donors take the time to 
research a $20 to $30 donation before giving, and in this case, the 
sham charities' allegedly false reporting would have hidden the red 
flags from even the most diligent consumers.

    Question 7. In what way has the nonprofit exemption in the FTC Act 
hamstrung the Commission's ability to act swiftly to protect consumers?
    Answer. We recommend that our jurisdiction be extended to non-
profit entities to further protect consumers. For example, despite many 
publicized data breaches at non-profit hospitals and universities, the 
FTC cannot challenge unfair or deceptive data security or privacy 
practices of these entities. These breaches have exposed the sensitive 
data of millions of consumers, yet the Commission cannot act due to the 
FTC Act's non-profit exemption. Further, while the Commission can use 
Section 5 to reach ``sham'' non-profits, such as shell non-profit 
corporations that actually operate for profit and sham charities, these 
investigations require resource-intensive fact finding to satisfy this 
standard. For example, proving that a charity is a sham requires 
significant probing into the internal operations of the organization, 
including reviewing bank records, board meeting minutes, employment 
practices and other things. Typically, we cannot discover the 
information without contacting the charity and obtaining documents from 
it. After getting the documents, a detailed financial analysis is 
necessary. Only with an understanding of how the money is spent and how 
the charity operates can we allege that it is a sham. Developing this 
kind of threshold evidence is time consuming and limits our ability to 
act swiftly to protect consumers in this area.
    The non-profit exemption also prevents the Commission from taking 
action against potentially anticompetitive conduct of non-profits in 
the healthcare sector. The Commission actively promotes competition in 
health care markets, but it cannot reach the conduct of non-profits 
engaged in the business of health care, including non-profit health 
maintenance organizations (HMOs), health plans, and standard-setting 
organizations. For instance, the Commission generally cannot challenge 
price-fixing, boycotts, and other anticompetitive conduct by non-profit 
hospitals, even if we charge other parties to the illegal agreements. 
See Piedmont Health Alliance, 138 F.T.C. 675 (2004); Tenet Healthcare 
Corp./Frye Regional Medical Center, Inc., 137 F.T.C. 219 (2004); Maine 
Health Alliance, 136 F.T.C. 616 (2003) (enforcement actions involving 
unlawful price-fixing arrangements brought against physicians and a 
for-profit hospital but not non-profit hospitals).
    This has been especially limiting in our review of hospital mergers 
involving non-profit hospitals. Although the FTC has jurisdiction under 
the Clayton Act to challenge non-profit hospitals' merger plans, the 
FTC does not have jurisdiction under the FTC Act to challenge those 
hospitals' anticompetitive conduct. Such a case would have to be 
initiated by the Department of Justice, even if the Commission reviewed 
the merger.

    Question 8. Last year, FTC staff released a comprehensive report on 
``Competition in the Ped Medications Industry.'' In the report, the 
Commission found that ``some veterinarians refuse to provide portable 
prescriptions to their clients or engage in behaviors intended to 
discourage clients from requesting portable prescriptions and filling 
them elsewhere.'' The report also noted that spending by families on 
their pets has doubled over the last decade, with Americans spending 
$7.6 billion on prescription and over-the-counter pet medications in 
2013, and projected to spend $10.2 billion by 2018. It has been 
estimated that pet owners who can get a copy of their pet's 
prescription and shop around, could save 20 to 30 percent on branded 
medications and 50 percent when they purchase generics--suggesting that 
prescription portability can save pet owners billions of dollars every 
year. In May of last year, I introduced the Fairness to Pet Owners Act, 
which would ensure consumers have the freedom to choose where they buy 
prescription pet medication.
    Chairwoman Ramirez, Commissioner McSweeny, and Commissioner 
Ohlhausen: Given the findings of the Commission's report, do you 
support the Fairness to Pet Owners Act? Do you believe that providing 
pet owners with the right to their pets' prescriptions will help ensure 
consumers have access to pet medications at the most affordable prices?
    Answer. The FTC has not taken a formal position on the Fairness to 
Pet Owners Act. However, we believe prescription portability likely 
benefits consumers by empowering them to make informed choices about 
where to purchase their pet medications. For this reason, we generally 
support policies that would increase both consumer awareness and 
veterinarian release of prescriptions for pet medications.
    As discussed extensively in the FTC staff report \9\, it appears 
that some consumers do not always receive portable prescriptions from 
their veterinarians or are uncomfortable requesting one. Likewise, it 
appears that at least some consumers are not aware that they have this 
option. Federal legislation requiring automatic prescription release 
would go further than current state laws and regulations that require 
prescription release only upon request, which could benefit consumers. 
Automatic prescription release is arguably a more effective way to 
raise consumer awareness about the option to obtain portable 
prescriptions from their veterinarians and comparison shop when 
purchasing pet medications. In addition, automatic prescription release 
likely would help to address situations where veterinarians are 
reluctant to provide portable prescriptions or try to discourage 
clients from requesting one, or where consumers are uncomfortable 
requesting one.
---------------------------------------------------------------------------
    \9\ Competition in the Pet Medications Industry (May 2015), 
available at https://www.ftc.gov/system/files/documents/reports/
competition-pet-medications-industry-prescription-portability-
distribution-practices/150526-pet-meds-report.pdf
---------------------------------------------------------------------------
    Federal legislation requiring automatic prescription release also 
could impact manufacturer distribution policies to a greater degree 
than the current patchwork of state laws. If greater prescription 
portability were to increase consumer demand for purchasing pet 
medications from non-veterinary retail pharmacists, the potential for 
increased sales opportunities might incentivize manufacturers to change 
their distribution policies in ways that would promote competition 
among different distribution channels and be more responsive to 
consumer choice.
                                 ______
                                 
    Response to Written Questions Submitted by Hon. Cory Booker to 
                           Hon. Edith Ramirez
    Question 1. Changes in technology seem to be making it ever easier 
to deceive and defraud consumers with phone calls. Many New Jerseyans 
have told me that the number of fraudulent calls they receive is 
increasing, particularly on their cell phones. Last Congress, I joined 
with Ranking Member Nelson on legislation to help curb the use of so-
called ``spoofing'' technology. This technology is used to trick 
recipients into answering the call by scrambling the phone number on 
the recipient's caller identification display, but spoofing is just one 
of numerous practices used to defraud and harass recipients. This trend 
is especially concerning because my constituents frequently receive 
overtures from callers fraudulently claiming to represent government 
entities including the Internal Revenue Service (IRS) and the Federal 
Bureau of Investigation (FBI).
    Question 1a. What steps is the Federal Trade Commission (FTC) 
taking to protect consumers from fraudulent calls?
    Answer. The FTC uses every tool at its disposal to combat 
fraudulent and deceptive calls to consumers, including aggressive law 
enforcement, regulatory action, robust consumer education and outreach, 
and initiatives to spur technological solutions. We have brought more 
than 126 law enforcement actions shutting down operations responsible 
for billions of illegal calls, as well as numerous enforcement actions 
targeting fraudulent ``impostors.'' The FTC also amended the 
Telemarketing Sales Rule to ban payment methods favored by many 
robocallers and telemarketing scammers, such as remotely created checks 
and payment orders, ``cash-to-cash'' money transfers, and certain cash 
reload mechanisms for prepaid cards.
    We also arm consumers with the tools and information they need to 
protect themselves against fraudulent calls. The FTC provides consumer 
information in English and Spanish in many forms including print and 
online articles, fact sheets, blog posts, brochures and videos with 
tips for avoiding scams and unwanted calls. One of our most popular 
features is a ``Scam Alert'' page that is frequently updated with blog 
posts about new scams.\10\ More than 192,000 people subscribe to the 
FTC blogs, including scam alerts.
---------------------------------------------------------------------------
    \10\ See https://www.consumer.ftc.gov/scam-alerts.
---------------------------------------------------------------------------
    The exponential growth in unwanted and all too often fraudulent 
calls is the result of technological advances in telecommunications. 
Just as these changes have lowered costs and improved services to the 
benefit of consumers, they have also lowered costs and barriers to 
entry for scammers. Widespread use of caller ID spoofing by fraudsters 
to lend credibility to the caller is just one of the outgrowths of 
these technological advances. Recognizing that technology is at the 
heart of this issue, the FTC has led four public challenges to spur 
industry initiatives to develop solutions to help both consumers and 
law enforcement combat illegal and unwanted robocalls.
    The FTC's first challenge called upon innovators to develop a 
consumer-facing solution that blocks illegal robocalls, applies to 
landlines and mobile phones, and operates on proprietary and non-
proprietary platforms.\11\ In response, we received nearly 800 
submissions and partnered with experts in the field to judge the 
entries. One of the winners, ``Nomorobo,'' was on the market and 
available to consumers by October 2013--just 6 months after being named 
one of the winners. To date, Nomorobo reports blocking over 150 million 
calls and is currently rolling out a mobile platform.\12\
---------------------------------------------------------------------------
    \11\ For more information on the first FTC Robocall challenge, see 
https://www.ftc.gov/news-events/press-releases/2013/04/ftc-announces-
robocall-challenge-winners.
    \12\ See http://www.nomorobo.com/(last visited October 21, 2016).
---------------------------------------------------------------------------
    The FTC launched a second challenge--Zapping Rachel--which called 
upon information security experts to help create a robust robocall 
honeypot.\13\ A robocall honeypot is an information system designed to 
attract robocallers and help investigators and academics understand and 
combat illegal calls. Sixty teams and individuals registered to 
participate and FTC staff obtained new insights that improved current 
robocall honeypot designs and connected new partners and stakeholders.
---------------------------------------------------------------------------
    \13\ For more information on the Zapping Rachel challenge, see 
https://www.ftc.gov/news-events/contests/zapping-rachel.
---------------------------------------------------------------------------
    In 2015, the FTC sponsored two more challenges, DectectaRobo \14\ 
and Robocalls: Humanity Strikes Back.\15\ The DetectaRobo challenge 
called upon the public to analyze call data to create algorithms that 
could predict which calls were likely robocalls. Finally, in our most 
recent challenge, contestants built tools consumers could use to block 
and forward robocalls automatically to a honeypot. The winning mobile 
app, RoboKiller, allows users to block and forward unwanted robocalls 
to a crowd-sourced honeypot.
---------------------------------------------------------------------------
    \14\ For more information on the DetectaRobo challenge, see https:/
/www.ftc.gov/news-events/contests/detectarobo.
    \15\ For more information on the Robocalls: Humanity Strikes Back 
challenge, see https://www.ftc.gov/news-events/contests/robocalls-
humanity-strikes-back.
---------------------------------------------------------------------------
    The FTC also engages with technical experts, academics, and others 
through industry groups, such as the Messaging, Malware and Mobile 
Anti-Abuse Working Group (``M\3\AAWG'') and the Voice and Telephony 
Abuse Special Interest Group (``VTA SIG''). The FTC serves in a 
leadership role in VTA SIG, which currently works to support various 
initiatives that tackle voice spam, including anti-spoofing 
authentication efforts.

    Question 1b. How can Congress help to address this issue?
    Answer. We believe that Federal and international partnerships and 
technological initiatives, coupled with our ongoing law enforcement 
efforts, are critical to reducing the volume of illegal telemarketing 
calls that consumers receive. We recommend advising constituents to 
visit our consumer education website, where they can find more helpful 
information about the problem of unwanted calls.\16\
---------------------------------------------------------------------------
    \16\ See https://www.consumer.ftc.gov/topics/limiting-unwanted-
calls-e-mails.

    Question 1c. What information should consumers have to better 
protect themselves from these practices?
    Answer. There are several key messages that we convey to consumers 
facing unwanted and illegal calls. The first message is that consumers 
cannot trust the information contained in their caller ID display 
because, as you mentioned, fraudsters often ``spoof'' their number to 
make it appear that it is from a trustworthy source. In addition, when 
a consumer picks up and hears an unwanted call or robocall they should 
hang up; consumers should not press one or provide or confirm any 
information. We also try to highlight for consumers the call blocking 
options that are available to them to reduce the number of unwanted 
calls they receive.\17\ Finally, in addition to providing frequent 
updates about new scams for consumers to be on the lookout for, we 
emphasize the critical role consumers have in stopping future fraud by 
passing on their experiences or near-misses to others and reporting 
potential fraud to the FTC and our state and Federal partners.
---------------------------------------------------------------------------
    \17\ See https://www.consumer.ftc.gov/articles/0548-blocking-
unwanted-calls.

    Question 1d. Is the FTC working in partnership with other Federal 
agencies to help educate the public and to protect them from giving 
away sensitive personal or financial information?
    Answer. The FTC works with many Federal agencies to help educate 
the public and to protect them from giving away sensitive personal or 
financial information, including DOJ, the U.S. Postal Inspection 
Service, the IRS, U.S. Treasury Inspector General for Tax (TIGTA), the 
FCC, and DHS. The FTC also works closely with state and international 
partners. In June of 2016, the FTC led a multinational robocall sweep 
that took action against operations estimated to be responsible for 
billions of illegal robocalls. The sweep included 39 actions taken by 
the FTC, the Canadian Radio-television and Telecommunications 
Commission, the United Kingdom's Information Commissioner's Office, as 
well as DOJ, the FCC and Attorneys General or consumer protection 
offices from Colorado, Florida, Indiana, Kansas, Mississippi, Missouri, 
North Carolina, Ohio, Washington, and Tennessee.\18\
---------------------------------------------------------------------------
    \18\ https://www.ftc.gov/news-events/press-releases/2016/06/ftc-
florida-attorney-general-take-action-against-illegal-robocall
---------------------------------------------------------------------------
    The FTC has broadened its efforts to focus on international 
partnerships, which are particularly valuable as a growing number of 
fraudulent calls originate overseas. For example, many of the tech-
support and imposter-related cases, including the IRS scams, have been 
traced to India. Because the calls, malware and pop-up ads that promote 
these scams come from India, we have recognized the need to find 
partners there, on the ground, to discourage, disrupt and disable these 
frauds. Indian law enforcement has pledged its support to joint 
enforcement action, and has already shut down call center operations 
linked to IRS scam calls. These operations are tremendously profitable, 
so we will continue to strengthen our efforts across borders.
    To combat scams from India targeting Americans, we have worked with 
the Indian Business Process Outsourcing (``BPO'') industry over the 
last three years, bringing together leaders in the call center, 
technology, financial, and law enforcement sectors in three roundtable 
events to develop a road map for identifying and shutting down the 
rogue call centers. The first two meetings were in New Delhi, and the 
most recent event, held here in Washington, D.C. in May, attracted 
about 70 participants, including U.S. law enforcement from DOJ, FBI, 
CFPB, and state Attorneys General's offices; India's Cyber Coordinator; 
representatives from NASSCOM (the trade association that represents the 
BPO industry); the Embassy of India; Indian businesses; U.S. industry, 
including Microsoft, Google, Yahoo, Facebook, and Apple; and consumer 
advocacy groups.

    Question 1e. Is more cross-agency collaboration needed to serve the 
public when it comes to identifying, exposing, and preventing 
telemarketing fraud?
    Answer. The FTC has had great success working with its federal, 
state, local and international partners in this area and regards 
collaboration as a vital component to tackling telemarketing fraud.
                                 ______
                                 
    Response to Written Questions Submitted by Hon. Gary Peters to 
                           Hon. Edith Ramirez
    Question 1. The Federal Trade Commission (FTC), Food and Drug 
Administration (FDA), and Department of Justice each possess a portion 
of jurisdiction over the contact lens marketplace. The FTC has the 
authority, under the Federal Trade Commission Act, to bring enforcement 
actions against sellers of contact lenses whose practices violate the 
law. My office has been made aware of the fact that there are online 
retailers who advertise that they dispense contact lenses, which are a 
FDA-regulated medical device, without verifying a patient's 
prescription.
    Question 1a. What process does the FTC have in place for 
individuals to submit complaints regarding prescriber practices and how 
many complaints has the FTC received?
    Answer. The FTC encourages consumers, as well as prescribers and 
retailers, to report suspected violations of the Contact Lens Rule. The 
primary avenue for reporting complaints is the FTC Complaint Assistant, 
ftc.gov/complaint, a link to which is featured prominently on the 
ftc.gov homepage. Consumers also may file a complaint by calling 1-877-
FTC-HELP (382-4357). We also receives e-mail messages reporting 
suspected instances of prescribers and retailers not complying with the 
Rule. The FTC receives a few hundred complaints a year about prescriber 
and retailer practices: these complaints describe a wide variety of 
alleged conduct, some of which is outside the purview of the Contact 
Lens Rule (for example, complaints about billing practices or insurance 
issues).

    Question 1b. Has the FTC brought enforcement action against any 
retailers due to their prescribing practices? How many enforcement 
actions have been brought?
    Answer. In April 2016, the Commission issued warning letters to ten 
contact lens retailers that potentially violated the Rule by dispensing 
contact lenses without a valid prescription, and 45 eye care 
prescribers that potentially violated the Rule by failing to comply 
with automatic prescription release requirements, thus impeding 
consumers' ability to comparison shop.\19\ These letters reminded 
prescribers and sellers of their obligations under the Rule and warned 
them that violations of the Rule may result in legal action, including 
civil penalties of up to $16,000 per violation.\20\ In tandem with the 
warning letters, the FTC initiated an outreach campaign designed to 
increase prescriber, seller, and consumer awareness of the Contact Lens 
Rule, which included newly-revised consumer educational guidance, 
Prescription Glasses and Contact Lenses, and social media outreach to 
prescribers and sellers.\21\ The FTC is also working with state law 
enforcement agencies and consumer advocacy groups to improve industry 
compliance and increase public awareness regarding the Rule.
---------------------------------------------------------------------------
    \19\ FTC Issues Warning Letters Regarding the Agency's Contact Lens 
Rule, FTC News Release (Apr. 7, 2016), available at: https://
www.ftc.gov/news-events/press-releases/2016/04/ftc-issues-warning-
letters-regarding-agencys-contact-lens-rule.
    \20\ As of August 1, 2016, the maximum civil penalty amount 
increased to $40,000 per violation. See FTC Raises Civil Penalty 
Maximums to Adjust for Inflation, FTC News Release (June 29, 2016), 
available at: https://www.ftc.gov/news-events/press-releases/2016/06/
ftc-raises-civil-penalty-maximums-adjust-inflation.
    \21\ Prescription Glasses and Contact Lenses (Apr. 2016), available 
at: https://www.con
sumer.ftc.gov/articles/0116-prescription-glasses-and-contact-lenses. 
See also Buying contacts? You should see a prescription first (Apr. 7, 
2016), available at: https://www.consumer.ftc.gov/blog/buying-contacts-
you-should-see-prescription-first and An Rx for compliance with the 
Contact Lens Rule (Apr. 7, 2016) available at: https://www.ftc.gov/
news-events/blogs/business-blog/2016/04/rx-compliance-contact-lens-
rule.
---------------------------------------------------------------------------
    The FTC has also taken law enforcement action against ten contact 
lens sellers for allegedly selling cosmetic contact lenses without 
obtaining consumers' contact lens prescriptions and failing to maintain 
records of consumers' prescriptions.\22\ Our settlement orders have 
imposed civil penalties and provided injunctive relief that, among 
other things: prohibited the defendants from selling contact lenses 
without obtaining a prescription from a consumer; selling contact 
lenses without verifying prescriptions by communicating directly with 
the prescriber; and from failing to maintain records of prescriptions 
and verifications. We will continue to monitor the marketplace and will 
take action against violations of the Contact Lens Rule as appropriate.
---------------------------------------------------------------------------
    \22\ See United States v. Gene Kim, No. 1:11-cv-05723 (E.D.N.Y. Feb 
7, 2012) (consent); United States v. Royal Tronics, Inc., No. 0:11-cv-
62491 (S.D. Fla. Jan. 27, 2012) (consent); United States v. Thy Xuan 
Ho, No. 1:11-cv-03419 (D. Minn. Dec. 27, 2011) (consent); United States 
v. Gothic Lens, LLC, No. 1:11-cv-00159 (N.D. Ga. Feb. 3, 2011) 
(consent); United States v. Jokeshop USA, LLC, No. 1:11-cv-11221 (D. 
Mass. Nov. 28, 2011) (consent); United States v. Contact Lens Heaven, 
Inc., No. 0:08-cv-61713 (S.D. Fla. Dec. 3, 2008) (consent); United 
States v. Chapin N. Wright, II, No. 1:08-cv-11793 (D. Mass. Oct. 31, 
2008) (consent); United States v. BeWild, Inc., No. 2:07-cv-04896 
(E.D.N.Y. Dec. 3, 2007) (consent); United States v. Pretty Eyes, LLC, 
No. 1:07-cv-02462 (D. Colo. Nov. 28, 2007) (consent); United States v. 
Walsh Optical, Inc., No. 2:06-cv-03591 (D.N.J. Aug. 30, 2006) 
(consent).

    Question 2. Under current law, most states require that patients 
get updated contact lens prescriptions every year in order to buy more 
lenses. Yet, some online retailers are selling multiple years' worth of 
contact lenses.
    In conducting the 10-year review of the Contact Lens Rule, has the 
FTC taken into account the safety implications of prescribers that sell 
multiple years' worth of contact lenses? Has the FTC found any safety 
concerns associated with this practice and could you list them if so?
    Answer. As you mention in your question, the Commission is 
currently conducting a review of the Contact Lens Rule. As part of this 
process, the Commission solicited public comments regarding the Rule 
and, among other topics, the effect of any technological, economic, or 
other industry changes on the Rule since it was promulgated.\23\ A 
number of the 660 comments we received addressed the issue you raise: 
the quantity of contact lenses that some online retailers may be 
selling to consumers. We are examining this issue, as well as others, 
as part of our ongoing rule review process to ensure that the Contact 
Lens Rule operates as intended to promote competition in the contact 
lens industry and does so consistent with patient health and safety.
---------------------------------------------------------------------------
    \23\ Contact Lens Rule; Request for comment, 80 Fed. Reg. 53,272, 
53,273 (Sept. 3, 2015).
---------------------------------------------------------------------------
    On November 10, 2016, we issued a Notice of Proposed Rulemaking 
(``NPRM'')\24\, setting forth our preliminary findings and 
recommendations for the Contact Lens Rule and requesting additional 
public comment. Among other things, the NPRM discusses quantities of 
contact lenses obtained by patients. After reviewing the comments and 
evidence produced by interested stakeholders, we determined not to 
propose to amend the Rule to adopt any of the contact lens quantity 
proposals put forth by commenters. First, the Commission does not 
believe that there is sufficient evidence in the rulemaking record to 
support amending the Rule to impose the quantity limit proposals 
suggested by commenters. Although some commenters conducted and 
submitted data from online surveys for the proposition that consumers 
are purchasing contact lenses as their prescriptions are about to 
expire, this data does not show the quantity of lenses that consumers 
are actually purchasing. Second, regardless of the evidence, or lack 
thereof, in the record to support the quantity limit proposals, the 
Commission believes that it would be difficult to administer the 
proposed limits, and that rather than increasing patient eye health and 
safety, such proposals could have the opposite effect. For example, if 
a consumer is running out of contact lenses and does not have time to 
see a prescriber promptly, there is a significant chance that the 
consumer will not adhere to the recommended contact lens replacement 
schedule and will instead try to ``stretch out'' their lenses by re-
wearing them until they can visit a prescriber. The failure to replace 
lenses is a well-documented cause of many contact-lens-related health 
issues. Absent empirical evidence that a substantial number of 
consumers are obtaining excessive amounts of contact lenses, or are not 
returning to their prescribers for eye examinations, we believe that 
the risk of not replacing lenses outweighs the harm of consumers 
obtaining more lenses than strictly anticipated by the length of a 
contact lens prescription.
---------------------------------------------------------------------------
    \24\ 16 CFR Part 315: Contact Lens Rule; Notice of Proposed 
Rulemaking; Request for Public Comment (Nov. 10, 2016), https://
www.ftc.gov/policy/federal-register-notices/16-cfr-part-315-contact-
lens-rule-notice-proposed-rulemaking-request
---------------------------------------------------------------------------
    Nevertheless, we are concerned about anecdotal reports that sellers 
are contacting patients and encouraging them to stockpile contact 
lenses prior to the expiration of their prescriptions in order to avoid 
visiting their eye care professionals. Such practices run counter to 
the spirit of the Act, and we will look closely at these alleged 
practices.

    Question 3. Current law requires a seller to verify a patients' 
contact lens prescription. One of the allowable forms of communication 
are automated and non-live calls--commonly referred to as 
``robocalling.'' I have heard from optometrists in Michigan that 
understanding and/or verifying required information from robocalling is 
nearly impossible.
    Question 3a. Has the FTC heard similar concerns about the use of 
robocalling to verify a patient's contact lens prescription?
    Answer. In the course of our rule review, the FTC has received some 
comments from prescribers highlighting concerns about the use of 
automated telephone systems to verify contact lens prescriptions.\25\ 
Some prescribers have stated that automated telephone calls are 
difficult to understand, while other prescribers have voiced issues 
with the length or timing of automated calls. We are examining these 
issues and considering how best to ensure that the Rule's verification 
system operates as intended by the Fairness to Contact Lens Consumers 
Act, 15 U.S.C. Sec. Sec. 7601-7610. As mentioned above, we recently 
issued a NPRM for the Contact Lens Rule. In that NPRM, we discuss 
automated telephone calls for prescription verification and request 
comment on modifications to automated telephone calls that the 
Commission should consider to address the concerns raised by 
prescribers.
---------------------------------------------------------------------------
    \25\ Contact lens seller verification calls are not sales calls 
covered by the Telemarketing Sales Rule (``TSR''), 16 C.F.R. Part 310, 
which prohibits certain robocalls. In addition, the TSR does not apply 
to most business-to-business communications. 16 C.F.R. 
Sec. 310.6(b)(7).

    Question 3b. In its review of the Contact Lens Rule has the FTC 
examined the safety implications of allowing robocalling for 
verification purposes? If so, what did the FTC find?
    Answer. The FTC is examining all concerns raised about the current 
operation of the Rule, including the safety implications of automated 
telephone systems and the evidence proffered by commenters in support 
of their proposed Rule amendments. In the recent NPRM, we discuss the 
safety concerns raised by some commenters about the use of automated 
calls: namely, that if the prescription is not properly verified, 
patients may be receiving contact lenses based on outdated or incorrect 
prescription information. However, commenters did not provide any 
empirical data regarding the frequency of these various practices, 
average or aggregate costs associated with automated calls in 
particular, or the number of illegal or otherwise deficient contact 
lens sales that result from such calls. Furthermore, we did not receive 
evidence indicating whether these problems occur with automated calls 
generally or are chiefly associated with only one or a small group of 
sellers. In the NPRM, we request additional comment on modifications to 
automated telephone calls that the Commission should consider.
    The FTC encourages consumers, as well as prescribers and retailers, 
to report suspected violations of the Contact Lens Rule. The primary 
avenue for reporting complaints is the FTC Complaint Assistant, 
ftc.gov/complaint, a link to which is featured prominently on the 
ftc.gov homepage. Consumers also may file a complaint by calling 1-877-
FTC-HELP (382-4357). We also receives e-mail messages reporting 
suspected instances of prescribers and retailers not complying with the 
Rule. The FTC receives a few hundred complaints a year about prescriber 
and retailer practices: these complaints describe a wide variety of 
alleged conduct, some of which is outside the purview of the Contact 
Lens Rule (for example, complaints about billing practices or insurance 
issues).

    Question 3d. Has the FTC considered allowing other forms of 
electronic communication that might improve or complement robocalling? 
If so, what are they?
    Answer. The Fairness to Contact Lens Consumers Act specifies that a 
seller must provide the prescriber with a verification request through 
``direct communication.'' 15 U.S.C. Sec. 7603(a)(2). The Act defines 
direct communication as including ``telephone, facsimile, or electronic 
mail.'' 15 U.S.C. Sec. 7603(g). The Contact Lens Rule, promulgated 
pursuant to the Act, contains the same language. 16 C.F.R. Sec. 315.2. 
Accordingly, for purposes of verifying contact lens prescriptions, 
sellers may communicate with prescribers via telephone, facsimile, or 
electronic mail. In addition, in the course of the rule review 
described above, the FTC is considering the impact and use of other 
evolving technology as it relates to the Rule, including the 
verification framework set forth by the Act.
                                 ______
                                 
    Response to Written Questions Submitted by Hon. Marco Rubio to 
                       Hon. Maureen K. Ohlhausen
    Question 1. According to the most recent statistics, there are 
currently 728 travel related cases and 147 non-travel related cases of 
Zika in my home state of Florida. With the increase in cases, and the 
threat mosquitos spreading around the Miami Beach area and to other 
parts of the United States and our territories, many are concerned with 
contracting the virus. Feeding into consumer concerns, many companies 
are marketing products that say they provide protection from the Zika 
virus.
    A. Please speak to the FTC's efforts to seek out these fraudulent 
companies that are capitalizing off of consumer concerns about Zika, 
and hold them accountable.
    Answer. The Commission has been diligent in seeking out and holding 
accountable fraudulent companies that are exploiting consumer concerns 
about Zika. Shortly after the Zika outbreak, the Commission issued 10 
warning letters to online marketers selling products that purportedly 
provide protection from the Zika virus. The letters warned the 
marketers that any false or misleading claims may violate the FTC Act 
and subject the companies to legal action. In addition, the letters 
urged the marketers to review the claims that they and their affiliates 
and distributors are making for their products, and delete or change 
the claims immediately if they cannot be substantiated by scientific 
evidence. The warning letters also required each company to report back 
to the Commission detailing the specific actions they have taken to 
remove or change potentially false, misleading, or unsupported claims.

    B. I understand the FTC has reached out to some of these online 
marketers and requested reports back on actions they have taken to 
remove or change false advertising claims. What is the status of these 
reports?
    Answer. The Zika warning letter recipients promptly responded to 
the letters, and FTC staff continues to monitor their sites. Although I 
am not able to comment on whether the FTC has ongoing investigations in 
this area, the FTC remains vigilant and will take swift legal action 
against companies who make false promises about products they claim 
protect consumers from the Zika virus.

    C. What can we do to educate my constituents back home in Florida, 
and across our nation, about what to look for to ensure they are not 
buying into falsely advertised products, and make sure they are 
protected as consumers?
    Answer. In addition to our enforcement efforts, the Commission also 
developed helpful consumer education materials on its website. These 
materials discuss the Commission's efforts to combat false or 
misleading Zika-related claims and inform consumers about how they can 
protect themselves to ensure they are not buying into falsely-
advertised Zika-related products. https://www.consumer.ftc.gov/blog/
will-those-insect-repellents-protect-you-zika. The website tells 
consumers to look for insect repellents registered with the EPA and to 
take extra precautions when considering all-natural repellants that are 
not registered with the EPA. The website also refers consumers to 
additional tips from the Centers for Disease Control on protecting 
themselves from Zita-related viruses. We encourage those with 
constituents potentially impacted or concerned about Zika to link to 
this website.

    Question 2. The Federal Communication Commission (FCC) is scheduled 
to vote on its proposed broadband consumer privacy rule on October 27.
    A. Will you speak to the FTC's comments on the proposed rule 
related to transparency, consumer choice and data security?
    Answer. The FTC's bipartisan, unanimous comments on the FCC's 
original privacy rule proposal was supportive of the FCC's goals of 
protecting consumer privacy but offered several strong criticisms of 
the FCC's approach. On transparency, the FTC generally supported the 
goal but recommended developing model notices. On data security, the 
FTC suggested clarifying the rule to preclude interpreting it as 
imposing strict liability for a breach. We also recommended requiring a 
written security program, exploring the idea of a safe harbor, and 
revising the breach notification proposal to make it more useful for 
consumers.
    Most importantly, the FTC fundamentally disagreed with the FCC's 
approach to consumer choice. Specifically, the FTC criticized the FCC's 
failure to distinguish between sensitive and non-sensitive data in 
applying opt in and opt out choice. The FCC's proposed rules would in 
some cases have allowed ISPs to use highly sensitive information 
without express permission. At the same time, the rules would hinder 
ISPs' use of non-sensitive data, even though other companies like 
Google and Facebook can use that same data to offer innovative--and 
often free--services.
    The FCC has since issued final rules that nominally distinguish 
between sensitive and nonsensitive data. Yet, the new rules still 
differ from the FTC's approach in important ways. Most obviously, the 
rules define an overly broad swath of data as ``sensitive,'' without 
justification and in a manner that is inconsistent with the FTC's 
approach. For instance, the FCC's new rules treat all web browsing and 
application usage history data as sensitive, while the FTC does not.
    The differences between the FCC's and FTC's approaches will have 
significant unintended consequences. For instance, the FCC's broader 
definition of sensitive information could lead to an uneven playing 
field for competitors because it would restrict ISPs' ability to 
collect information that edge providers and others have collected for 
years. The FCC's approach also is unlikely to reflect average consumer 
preferences and may confuse consumers who will not be able to easily 
assess which rules apply as they act online.

    B. Prior to this ruling, how has the FTC regulated data privacy?
    Answer. The FTC protects consumer privacy and information using a 
broad array of statutes, including Section 5 of the FTC Act, Gramm-
Leach-Bliley, the Children's Online Privacy Protection Act (COPPA), and 
the Fair Credit Reporting Act (FCRA). The FTC has brought approximately 
60 data security cases, 50 general privacy cases, more than 20 COPPA 
cases, and over 100 FCRA cases.
    The FTC's approach to privacy recognizes that the use of data about 
consumers is extremely valuable--both to companies and to consumers. It 
also recognizes that consumers have a strong interest in controlling 
access to sensitive data about them. Thus, the FTC seeks to maximize 
effective consumer choice in a manner that is least intrusive into 
consumer and businesses transactions. This approach respects the 
autonomy of all consumers, including those with privacy preferences 
that differ from those of the regulator. As such, we seek to enable 
consumers to efficiently match their privacy preferences with a 
company's privacy practices. In pursuit of this goal, the FTC protects 
privacy with a two-pronged approach, seeking to prevent both deception 
and unfairness.
    For types of data and uses where consumers have widely varying 
privacy preferences--such as advertising--we use our deception 
authority to promote marketplace competition to satisfy this wide range 
of consumer preferences. A functioning market requires companies to 
keep their promises. Under our deception authority, we bring a case 
when a company makes privacy promises to consumers that materially 
affect consumers' actions, but the company does not keep those 
promises. This deception-based approach encourages companies to develop 
privacy practices that accommodate widely varying consumer privacy 
preferences.
    Under our unfairness authority, we have found certain privacy 
practices to be unfair, even if a company has made no promises to a 
consumer. Specifically, our unfairness authority prohibits practices 
that cause substantial harm that is unavoidable by consumers and which 
is not outweighed by benefits to consumers or competition. Practices 
that the FTC has found unfair consistently match practices that most 
consumers generally reject. For example, we brought an unfairness case 
against a data broker that sold sensitive financial information to 
individuals whom the data broker knew or should have known were 
identity thieves. Other privacy violations with substantial harm 
involve accessing medical information, real time location data, and 
information about children without consumers' express consent.
    Thus, unfairness establishes a baseline prohibition on practices 
that the overwhelming majority of consumers would never knowingly 
approve. Above that baseline, consumers are free to find providers that 
match their preferences, and our deception authority governs those 
arrangements.

    C. In your opinion, is the FTC better equipped to regulate data 
privacy than the FCC?
    Answer. Yes. The FTC's long experience applying our Section 5 and 
other statutory authorities to individualized cases has built 
institutional practices and topical knowledge that make the FTC 
uniquely capable. First, our emphasis on a case-by-case application of 
general principles requires far less speculation about the future and 
encourages a focus on addressing real consumer injury. Second, in 
addition to our enforcement expertise, the FTC actively immerses itself 
in new technologies and business models through workshops and public 
comments. Using these tools the FTC gathers and synthesizes information 
into reports and consumer and business education that summarizes the 
issues at hand and formulates the appropriate FTC response. A prime 
example of this kind of careful investigation is the 2012 Privacy 
Report, which was the result of more than two years of research, 
multiple rounds of public comment (including comments on a public 
preliminary draft), and many meetings with stakeholders. Third and 
finally, the FTC's institutional structure provide strong advantages. 
For example, the Bureau of Economics is an independent voice within the 
agency that advises on whether and how proposed consumer protection 
actions, including privacy-related actions, will benefit consumers. The 
FTC's experience on the topic of privacy and our legal and 
institutional structures provide us with significant capabilities in 
overseeing data privacy.

    Question 3. As a top travel destination in the nation, and the 
world, Florida is home to thousands of hotels. As technology continues 
to move forward in the 21st Century, booking travel arrangements 
through third-party hotel booking sites offers enormous conveniences 
and potential cost savings to consumers. However, there have been 
allegations that certain companies or their affiliates are engaging in 
travel booking practices that mislead and harm consumers booking hotel 
rooms online. In June 2015, I joined Senator Nelson in sending a letter 
to the FTC urging investigation into allegations of fraudulent online 
hotel bookings through third-parties. The entire Florida House 
delegation sent a similar letter.
    A. How many consumer complaints on this issue have been filed with 
the FTC?
    Answer. The Commission's Consumer Sentinel complaint database 
includes complaints received directly by the FTC as well as complaints 
contributed by the Better Business Bureau and other agencies. It 
contains approximately 60 complaints since 2012 indicating that 
consumers had booked a hotel through a third-party site when they 
thought they were booking directly with a hotel.

    B. Can you all speak to the efforts FTC has made to investigate 
these fraudulent bookings, and how the FTC is working to protect 
consumers from this fraud?
    Answer. The FTC has a strong interest in protecting consumer 
confidence in the online hotel-booking marketplace. For example, in 
July 2015, the FTC issued consumer education cautioning consumers about 
third-party websites that may deceptively mimic hotel websites. FTC 
staff has also met with members of Congress to discuss the issue of 
deceptive travel sites and has provided technical assistance and 
comments on the proposed legislation. Although I cannot comment on the 
existence of any non-public investigations, I can assure you that the 
FTC takes consumer deception in this marketplace very seriously. We 
will apprise you of any other public developments.

    Question 4. Florida is a top travel destination in both the United 
States and the world, and is home to hundreds of hotels and resorts. 
Orlando, Miami, the Florida Keys, and Fort Lauderdale are some of the 
most popular destinations with hotels charging resort fees for 
additional amenities. It has come to my attention that the FTC is 
looking to alter previous guidance, released in 2012, related to the 
mandatory disclosure of hotel resort fees. The 2012 guidance requires 
hotels to fully disclose all resort fees so that consumers know 
throughout the booking process exactly how much they are paying and 
which amenities they are receiving. Please speak to what has prompted 
the FTC to discuss reversing the 2012 guidance and moving towards 
``total price'' guidance.
    A. How many consumer complaints has the FTC received on resort fee 
disclosures since it issued its guidance on this issue in 2012? Is 
there any empirical or legal evidence of actual consumer confusion or 
harm that demonstrates that the 2012 guidance needs to be altered? If 
so, please describe.
    Answer. The FTC has received approximately 400 complaints on resort 
fee disclosures since it issued its 2012 guidance. There is some 
empirical research that has found that separating mandatory fees from 
baseline prices can be harmful to consumers. Eric A. Greenleaf et al., 
The Price Does Not Include Additional Taxes, Fees and Surcharges: A 
Review of Research on Partitioned Pricing, 26 J. Consumer Psychol. 105 
(2015). Another consumer preference study about resort fees found that 
67 percent of consumers preferred a bundled room rate versus 
partitioned pricing. Tom Repetti et al., Pricing Strategies for Resort 
Fees: Consumer Preferences Favor Simplicity, 27 Int'l J. Contemporary 
Hosp., 790, 800, 804 (2014) (``As resort fees become more common, 
customers still prefer them bundled into the room rate than paying them 
separately.'').

    B. Further, do any of those studies look at consumer understanding 
of current disclosures, specifically?
    Answer. I am unaware of any specific studies examining current 
resort fee disclosures.

    Question 5. In November 2012, the FTC issued 22 warning letters to 
hotel operators on resort fee disclosures. The 2012 guidance was 
largely embraced by the industry. In 2013, the FTC issued additional 
warning letters. However, it is my understanding that the FTC has not 
taken enforcement action against hotel or resort operators since 
sending these warning letters. Why didn't the FTC take enforcement 
action?
    Answer. The FTC has a strong interest in protecting consumer 
confidence in the online marketplace, including the robust online 
market for hotel and travel services. Many hotels and other members of 
the travel industry have improved their disclosures of resort fees in 
response to Staff's earlier warning letters. Despite these 
improvements, the FTC wants to ensure that newer technological 
platforms, such as mobile applications on smaller screens and OTA and 
metasearch websites allowing for comparison shopping, continue to 
provide accurate and complete information at the time of booking. 
Although I am not able to comment on whether the FTC has any ongoing 
investigations, we continue to work with industry and other 
stakeholders to promote accurate disclosure of resort fees at the time 
of initial booking.

    Question 6. If the Federal Communication Commission (FCC) adopts 
its proposed rules on Internet Service Providers (ISPs) on October 27, 
do you think consumers will understand that edge providers will still 
be subject to a different regime?
    A. Will the FCC's rules confuse consumers about their control over 
their personal information?
    Answer. I am concerned that the rules as proposed may confuse 
consumers. Many consumers do not distinguish between ISPs, ISP-owned 
companies, and other companies in the Internet ecosystem. Consumers 
should not need to know the intricacies of corporate structure, network 
topologies, and business arrangements to understand how data about them 
may be used. Subjecting different parts of the Internet to different 
default rules, particularly without any evidence that consumers see 
ISPs as different from other companies on the internet, is likely to 
create consumer confusion.

    Question 7. In regard to the FTC potentially moving forward to 
alter the 2012 mandatory disclosure of hotel resort fee guidance:
    A. Do you believe current disclosures are deceptive?
    Answer. I believe many hotel and online travel sites prominently 
disclose resort fees early in the booking process and have added the 
resort fee to the ``total'' price shown for the stay. This practice, 
however, may not be consistent throughout the entire travel industry.

    B. What level of evidence do you think is appropriate when 
determining advertising standards? Has the FTC produced this evidence 
with respect to its new position on resort fees?
    Answer. The Commission acts in the interest in consumers to prevent 
deceptive or unfair act or practices, pursuant to the FTC Act, 15 
U.S.C. Sec. 45. An act or practice is deceptive if it is likely to 
mislead consumers acting reasonably under the circumstances, and if it 
is material, meaning, likely to affect a consumer's purchasing 
decision. An act or practice is unfair if it causes or is likely to 
cause substantial injury that consumers cannot reasonably avoid, and 
that is not outweighed by the benefits to consumers or to competition. 
The FTC has not yet articulated any new official position on resort 
fees but all Commission guidance is founded on these guiding and time-
tested principles.

    C. Do you support the practice of the FTC releasing guidance that 
is, in effect, a regulation that has not been subject to a formal 
notice and comment period?
    Answer. I have long encouraged the FTC to focus on identifying and 
addressing real consumer harm that the market and private arrangements 
cannot address on their own. I support transparency in government 
regulation and enforcement, including providing the opportunity for 
notice and comment on formal guidelines, by which interested 
stakeholders can provide input formally or informally to the Commission 
and Commissioners on matters, guidance, or any emerging issues.

    D. Do you think the benefits of the FTC's proposed resort fee 
standards outweigh the costs? Do you think that Commission guidance 
should take into account benefits and costs?
    Answer. I believe that any Commission guidance should take into 
account benefits and costs.

    E. If you disagree with Chairwoman Ramirez's final proposal, will 
you inform this Committee and the public of your position and how it 
differs with the action the Commission takes?
    Answer. Yes.
                                 ______
                                 
     Response to Written Question Submitted by Hon. Bill Nelson to 
                       Hon. Maureen K. Ohlhausen
    Question. I am a firm believer that two cops on the beat are better 
than one. In that regard, I see no reason to pit one agency against 
another. In this Committee, we have had a debate as to whether the FCC 
or FTC should protect consumer privacy. I think this debate misses the 
point. There is no reason why both the FTC and FCC can't play prominent 
roles.
    To all of the Commissioners, the FTC has overlapping jurisdiction 
with numerous agencies, such as the Department of Justice and the Food 
and Drug Administration. Your relationships with these agencies and 
overlapping jurisdictions have never been a problem. Don't you think 
you can have a similar cooperative relationship with the FCC? Shouldn't 
there be two cops on the beat?
    Answer. Given the breadth of its jurisdiction, the FTC has 
cooperated frequently with other agencies on areas of mutual concern, 
including many areas of cooperation with the FCC. The Commission's goal 
in working with other agencies is to use its complementary authority to 
protect consumers as effectively and efficiently as possible, to avoid 
duplication, and to promote consistency.
    Having ``two cops on a beat'' can be beneficial, but only if two 
conditions are satisfied. First, the dual efforts must be complementary 
rather than conflicting--the cops' rulebooks must be the same or at 
least complement each other. Second, the dual efforts ought to reflect 
each agency's respective expertise, else risk unnecessarily diverting 
an agency's attention away from its areas of comparative advantage.
    Many areas of FTC/FCC overlap meet both of these conditions, and 
thus the agencies have often been able to cooperate successfully. For 
example, the FCC and FTC coordinate on Do Not Call matters, robocall 
research, enforcement matters, and research such as our separate but 
complementary studies of security in the mobile ecosystem. Last year, 
the agencies affirmed and formalized certain collaborations by entering 
into a Memorandum of Understanding agreeing to coordinate on their 
respective consumer protection efforts.
    However, the FCC's recently adopted privacy rules appear to 
establish a framework that does not meet either test for successful 
``two cops on the beat.'' First, the rulebooks are different and 
incompatible. The FCC's new privacy rules conflict with the FTC's 
longstanding approach. Specifically, the FCC's rules treat web browsing 
history and app usage data as sensitive and require an opt-in from 
consumers. The FTC has not typically treated such data as sensitive, 
and has allowed an opt-out approach to collecting such data. (Web 
history or app usage that itself consists of sensitive data, such as 
health information, financial information, etc., is already treated by 
the FTC as sensitive.) In adopting this different approach, the FCC 
offered no evidence that the FTC's approach--which had previously 
governed ISPs--was failing to protect ISP consumers.
    The differences between the FCC's and FTC's approaches will have 
significant unintended consequences. For instance, the FCC's broader 
definition of sensitive information could lead to an uneven playing 
field for competitors because it would restrict ISPs' ability to 
collect information that edge providers and others have collected for 
years. It also is unlikely to reflect average consumer preferences, and 
it may confuse consumers who will not be able to easily assess which 
rulebook applies.
    Second, the duplicative efforts on consumer privacy do not 
capitalize on each agency's relative strengths. The FCC cannot match 
the FTC's long experience in case-by-case enforcement in the privacy 
area, our expert economic analysis of existing and likely consumer 
harm, and our focus on redress of consumer harm. The FCC's expertise 
lies in many other areas, such as spectrum policy and technical rules.
    However, despite this new challenge, the FTC will continue to 
pursue productive cooperation with the FCC in order to protect 
consumers as effectively and efficiently as possible.
                                 ______
                                 
 Response to Written Questions Submitted by Hon. Richard Blumenthal to 
                       Hon. Maureen K. Ohlhausen
    Question 1. Earlier this year, the FTC finally successfully cracked 
down on four sham charities that had bilked more than $187 million from 
donors. According to the FTC complaint, their misappropriation of 
consumer donations dated back to at least 2008. Chairwoman Ramirez, 
Commissioner McSweeny, and Commissioner Ohlhausen: How were these sham 
charities able to rob donors of so much money and for so long?
    Answer. As you note, in March 2016, the FTC, all 50 states and the 
District of Columbia resolved litigation against the remaining 
defendants in Cancer Fund of America, resulting in, among other things, 
a dissolution of the sham charities and a ban on the president's 
ability to profit from any charity fundraising in the future. The four 
sham outfits were quite adept at masking their charade. For example, 
the complaint charges that the sham cancer charities hid their 
wrongdoing by manipulating their financial reporting and using 
deceptive and invalid accounting techniques to claim huge donations of 
gifts-in-kind. This allegedly allowed them to inflate their reported 
revenue and program spending by $223 million and had the effect of 
making the organizations appear to be both larger and more efficient 
with donors' money than they were. As charged in the complaint, it was 
not obvious from their public financial reports to the IRS or the 
states that in reality less than 3 percent of donated cash went towards 
program services (collectively).
    In addition, charity fraud is easy to miss and is underreported. 
The average donation to the sham cancer charities was less than $30, 
the vast majority in response to telephone solicitations. Consumers who 
gave in response to the promise that their donation would help cancer 
patients never knew that--as alleged in the complaint--it did not go to 
that cause. For this reason, consumers did not complain. Further, based 
on our experience, we believe that few donors take the time to research 
a $20 to $30 donation before giving, and in this case, the sham 
charities' allegedly false reporting would have hidden the red flags 
from even the most diligent consumers.
    To help educate consumers, the FTC has issued consumer education 
materials to inform consumers how they can protect themselves against 
sham charities, including by, researching the charity before donating 
and tips on signs of a charity scam.\1\
---------------------------------------------------------------------------
    \1\ FTC Charity Scams, FTC Consumer Information, https://
www.consumer.ftc.gov/features/feature-0011-charity-scams; FTC and 
States Wrap Up Largest Charity Enforcement Action Ever, FTC Consumer 
Information (Mar. 30, 2016), https://www.consumer.ftc.gov/blog/ftc-and-
states-wrap-largest-charity-enforcement-action-ever.

    Question 2. In what way has the nonprofit exemption in the FTC Act 
hamstrung the Commission's ability to act swiftly to protect consumers?
    Answer. The Commission has long advocated that our jurisdiction be 
extended to non-profit entities to further protect consumers and 
preserve competition. For example, despite many publicized data 
breaches at non-profit hospitals and universities, the FTC cannot 
challenge unfair or deceptive data security or privacy practices of 
these entities. These breaches have exposed the sensitive data of 
millions of consumers, yet the Commission cannot act due to the non-
profit status of these entities. Further, while the Commission can use 
Section 5 to reach ``sham'' non-profits, such as shell non-profit 
corporations that actually operate for profit and sham charities, these 
investigations require resource-intensive fact finding to satisfy this 
standard. For example, proving that a charity is a sham requires 
significant probing into the internal operations of the organization, 
including reviewing bank records, board meeting minutes, employment 
practices and other things. Typically, we cannot discover the 
information without contacting the charity and obtaining documents from 
it. After getting the documents, a detailed financial analysis is 
necessary. Only with an understanding of how the money is spent and how 
the charity operates can we allege that it is a sham. Developing this 
kind of threshold evidence is time consuming and limits our ability to 
act swiftly to protect consumers in this area.
    The non-profit exemption also prevents the Commission from taking 
action against potentially anticompetitive conduct of non-profits in 
the healthcare sector. The Commission actively promotes competition in 
health care markets, but, aside from mergers or other transactions 
covered by the Section 7 of the Clayton Act, 15 U.S.C. Sec. 17, it 
cannot reach the conduct of non-profits engaged in the business of 
health care, including non-profit health maintenance organizations 
(HMOs), health plans, and standard-setting organizations. For instance, 
the Commission generally cannot challenge price-fixing, boycotts, and 
other anticompetitive conduct by non-profit hospitals, even if we 
charge other parties to the illegal agreements. See Piedmont Health 
Alliance, 138 F.T.C. 675 (2004); Tenet Healthcare Corp./Frye Regional 
Medical Center, Inc., 137 F.T.C. 219 (2004); Maine Health Alliance, 136 
F.T.C. 616 (2003) (enforcement actions involving unlawful price-fixing 
arrangements brought against physicians and a for-profit hospital but 
not non-profit hospitals).
    This has been especially limiting in our review of hospital mergers 
involving non-profit hospitals. Further, although the FTC has 
jurisdiction under the Clayton Act to challenge non-profit hospitals' 
merger plans, the FTC does not have jurisdiction under the FTC Act to 
challenge those hospitals' anticompetitive conduct. Such a case would 
have to be initiated by the Department of Justice, even if the 
Commission reviewed the merger.

    Question 3. Last year, FTC staff released a comprehensive report on 
``Competition in the Ped Medications Industry.'' In the report, the 
Commission found that ``some veterinarians refuse to provide portable 
prescriptions to their clients or engage in behaviors intended to 
discourage clients from requesting portable prescriptions and filling 
them elsewhere.'' The report also noted that spending by families on 
their pets has doubled over the last decade, with Americans spending 
$7.6 billion on prescription and over-the-counter pet medications in 
2013, and projected to spend $10.2 billion by 2018. It has been 
estimated that pet owners who can get a copy of their pet's 
prescription and shop around, could save 20 to 30 percent on branded 
medications and 50 percent when they purchase generics--suggesting that 
prescription portability can save pet owners billions of dollars every 
year. In May of last year, I introduced the Fairness to Pet Owners Act, 
which would ensure consumers have the freedom to choose where they buy 
prescription pet medication.
    Chairwoman Ramirez, Commissioner McSweeny, and Commissioner 
Ohlhausen: Given the findings of the Commission's report, do you 
support the Fairness to Pet Owners Act? Do you believe that providing 
pet owners with the right to their pets' prescriptions will help ensure 
consumers have access to pet medications at the most affordable prices?
    Answer. While the FTC has not taken a formal position on the 
Fairness to Pet Owners Act, I believe prescription portability likely 
benefits consumers by empowering them to make informed choices about 
where to purchase their pet medications. For this reason, I generally 
support policies that would require veterinarian release of pet 
medication prescriptions and increase consumer awareness.
    As discussed extensively in the FTC staff report, it appears that 
some consumers do not always receive portable prescriptions from their 
veterinarians, are uncomfortable requesting the prescription, or are 
not aware that they have this option. Federal legislation requiring 
automatic prescription release would go further than current state laws 
and regulations that require prescription release only upon request, 
which could benefit consumers. Automatic prescription release is 
arguably a more effective way to raise consumer awareness about the 
option to obtain portable prescriptions from their veterinarians and 
comparison shop when purchasing pet medications. In addition, automatic 
prescription release likely would help to address situations where 
veterinarians are reluctant to provide, or discourage clients from 
requesting, portable prescriptions, or when consumers are uncomfortable 
requesting portable prescriptions for pets.
    Federal legislation requiring automatic prescription release also 
has the potential to positively impact manufacturer distribution 
policies. If greater prescription portability were to increase consumer 
demand for purchasing pet medications from non-veterinary retail 
pharmacists, the potential for increased sales opportunities might 
incentivize manufacturers to change their distribution policies in ways 
that would promote competition among different distribution channels 
and be more responsive to consumer choice.
                                 ______
                                 
    Response to Written Questions Submitted by Hon. Gary Peters to 
                       Hon. Maureen K. Ohlhausen
    Question 1. The Federal Trade Commission (FTC), Food and Drug 
Administration (FDA), and Department of Justice each possess a portion 
of jurisdiction over the contact lens marketplace. The FTC has the 
authority, under the Federal Trade Commission Act, to bring enforcement 
actions against sellers of contact lenses whose practices violate the 
law. My office has been made aware of the fact that there are online 
retailers who advertise that they dispense contact lenses, which are a 
FDA-regulated medical device, without verifying a patient's 
prescription.
    Question 1a. What process does the FTC have in place for 
individuals to submit complaints regarding prescriber practices and how 
many complaints has the FTC received?
    Answer. The FTC encourages consumers, as well as prescribers and 
retailers, to report suspected violations of the Contact Lens Rule. The 
primary avenue for reporting complaints is the FTC Complaint Assistant, 
ftc.gov/complaint, featured prominently on the ftc.gov homepage. 
Consumers also may file a complaint by calling 1-877-FTC-HELP (382-
4357). FTC staff also receives e-mail messages reporting suspected 
instances of prescribers and retailers not complying with the Rule.
    The FTC receives a few hundred complaints a year about a variety of 
prescriber and retailer practices, some outside the scope of the 
Contact Lens Rule, such as billing practices and insurance issues.

    Question 1b. Has the FTC brought enforcement action against any 
retailers due to their prescribing practices? How many enforcement 
actions have been brought?
    Answer. The FTC has taken a multi-faceted approach to ensure 
retailers and consumers are cognizant of their obligations and rights 
under the Contact Lens Rule.
    For example, we have taken law enforcement action against ten 
contact lens sellers for allegedly selling cosmetic contact lenses 
without obtaining consumers' contact lens prescriptions and failing to 
maintain records of consumers' prescriptions. Our settlement orders 
have imposed civil penalties and provided injunctive relief that, among 
other things, prohibited the defendants from: (1) selling contact 
lenses without obtaining a prescription from a consumer, (2) selling 
contact lenses without verifying prescriptions by communicating 
directly with the prescriber; and (3) failing to maintain records of 
prescriptions and verifications.
    In addition, in April, 2016, FTC staff sent 45 warning letters \2\ 
to contact lens prescribers and 10 to contact lens sellers warning them 
of potential violations of the agency's Contact Lens Rule, which is 
intended to facilitate the ability of consumers to comparison shop for 
contact lenses while ensuring that sales occur only in accordance with 
a valid prescription. These letters reminded prescribers and sellers of 
their legal obligations and warned them that violations of the Contact 
Lens Rule may result in legal action, including civil penalties of up 
to $16,000 per violation. Since we sent those letters, the civil 
penalty amount has increased up to $40,000 per violation.
---------------------------------------------------------------------------
    \2\ FTC Issues Warning Letters Regarding the Agency's Contact Lens 
Rule, FTC News Release (Apr. 7, 2016), available at: https://
www.ftc.gov/news-events/press-releases/2016/04/ftc-issues-warning-
letters-regarding-agencys-contact-lens-rule.
---------------------------------------------------------------------------
    The agency has also increased its efforts to work with industry and 
educate the public concerning their rights and responsibilities. For 
example, FTC staff initiated an outreach campaign designed to increase 
prescriber, seller, and consumer awareness of the Contact Lens Rule, 
which included newly-revised consumer educational guidance, 
Prescription Glasses and Contact Lenses, and social media outreach to 
prescribers and sellers.\3\ Additionally, the FTC is working with other 
Federal agencies, state law enforcement agencies and consumer advocacy 
groups to improve industry compliance and increase public awareness 
regarding the Rule.
---------------------------------------------------------------------------
    \3\ Prescription Glasses and Contact Lenses (Apr. 2016), available 
at: https://www.con
sumer.ftc.gov/articles/0116-prescription-glasses-and-contact-lenses. 
See also Buying contacts? You should see a prescription first (Apr. 7, 
2016), available at: https://www.consumer.ftc.gov/blog/buying-contacts-
you-should-see-prescription-first; and An Rx for compliance with the 
Contact Lens Rule (Apr. 7, 2016), available at: https://www.ftc.gov/
news-events/blogs/business-blog/2016/04/rx-compliance-contact-lens-
rule.
---------------------------------------------------------------------------
    We will continue to monitor the marketplace and will take action 
against violations of the Contact Lens Rule as appropriate.

    Question 2. Under current law, most states require that patients 
get updated contact lens prescriptions every year in order to buy more 
lenses. Yet, some online retailers are selling multiple years' worth of 
contact lenses.
    In conducting the 10-year review of the Contact Lens Rule, has the 
FTC taken into account the safety implications of prescribers that sell 
multiple years' worth of contact lenses? Has the FTC found any safety 
concerns associated with this practice and could you list them if so?
    Answer. The Contact Lens Rule mandates that sellers dispense 
contact lenses only in accordance with a valid prescription that is 
either presented to the seller or verified by direct communication with 
the prescriber.\4\ The Rule sets out the information that must be 
included in a seller's verification request, and directs that a 
prescription is only verified under the Rule if: (1) a prescriber 
confirms the prescription is accurate; (2) a prescriber informs the 
seller that the prescription is inaccurate and provides an accurate 
prescription in its stead; or (3) the prescriber fails to communicate 
with the seller within eight business hours after receiving a compliant 
verification request.\5\ The Rule states that if the prescriber informs 
the seller within eight business hours of receiving the verification 
request that the prescription is inaccurate, expired, or invalid, the 
seller shall not fill the prescription. The Rule requires that the 
prescriber specify the basis for the inaccuracy or invalidity of the 
prescription, and if the prescription is inaccurate, the prescriber 
must correct it.\6\
---------------------------------------------------------------------------
    \4\ 16 CFR 315.5(a).
    \5\ 16 CFR 315.5(b)-(c).
    \6\ 16 CFR 315.5(d).
---------------------------------------------------------------------------
    As part of its rule review process, the Commission received 
comments addressing the quantity of contact lenses that some online 
retailers may be selling to consumers, however, the comments varied 
widely on approach to address this issue. Based on a thorough review of 
the comments, the FTC made the initial determination that there was 
insufficient evidence in the rulemaking record to support amending the 
Rule to impose a quantity limitation but is seeking additional public 
comment concerning this initial determination.

    Question 3. Current law requires a seller to verify a patients' 
contact lens prescription. One of the allowable forms of communication 
are automated and non-live calls--commonly referred to as 
``robocalling.'' I have heard from optometrists in Michigan that 
understanding and/or verifying required information from robocalling is 
nearly impossible.
    Question 3a. Has the FTC heard similar concerns about the use of 
robocalling to verify a patient's contact lens prescription?
    Answer. In the course of our rule review, the FTC received various 
comments from prescribers. Some prescribers have stated that automated 
telephone calls are difficult to understand, while other prescribers 
voiced issues with the length or timing of automated calls. However, 
commenters did not provide any empirical data regarding the frequency 
of these various practices, average or aggregate costs associated with 
automated calls in particular, or the number of illegal or otherwise 
deficient contact lens sales that result from such calls. We are 
examining these issues and considering how best to ensure that the 
Rule's verification system operates as intended by the Fairness to 
Contact Lens Consumers Act, 15 U.S.C. Sec. Sec. 7601-7610. We recently 
issued a NPRM for the Contact Lens Rule where we discuss automated 
telephone calls for prescription verification and request comment on 
modifications to automated telephone calls that the FTC should consider 
to address the concerns raised by prescribers.

    Question 3b. In its review of the Contact Lens Rule has the FTC 
examined the safety implications of allowing robocalling for 
verification purposes? If so, what did the FTC find?
    Answer. The FTC is examining all concerns raised about the current 
operation of the Rule, including the safety implications of automated 
telephone systems and the evidence proffered by commenters in support 
of their proposed Rule amendments. In the recent NPRM, we discuss the 
safety concerns raised by some commenters about the use of automated 
calls: namely, that if the prescription is not properly verified, 
patients may be receiving contact lenses based on outdated or incorrect 
prescription information. However, commenters did not provide any 
empirical data regarding the frequency of these various practices, 
average or aggregate costs associated with automated calls in 
particular, or the number of illegal or otherwise deficient contact 
lens sales that result from such calls. Furthermore, we did not receive 
evidence indicating whether these problems occur with automated calls 
generally or are chiefly associated with only one or a small group of 
sellers. In the NPRM, we request additional comment on modifications to 
automated telephone calls that the FTC should consider.

    Question 3c. Has the FTC examined robocalling to determine whether 
or not it effectively allows vendors to verify a patient's 
prescription? If so, what did the FTC find?
    Answer. As described above, the FTC is currently in the process of 
conducting the Rule review. This process involves both reviewing 
comments received from all interested stakeholders as well as examining 
the empirical evidence produced by such parties in support of their 
positions. Incomplete or incoherent verification requests are not valid 
verification requests. As discussed in the recently issued NPRM, at 
this time, we have not seen convincing evidence that these practices 
frequently result in illegal sales of contact lenses. If the FTC 
receives evidence of a compelling widespread problem, it may revisit 
its position on the use of automated verification requests.

    Question 3d. Has the FTC considered allowing other forms of 
electronic communication that might improve or compliment robocalling? 
If so, what are they?
    Answer. The FTC is considering the impact and use of other evolving 
technologies as they relate to the Rule, including the verification 
framework set forth by the Fairness to Contact Lens Consumers Act. The 
FTC is seeking further public comment on this issue.\7\
---------------------------------------------------------------------------
    \7\ See FTC Press Release, FTC Seeks Comment on Proposed Changes to 
Contact Lens Rule (Nov. 10, 2016), https://www.ftc.gov/news-events/
press-releases/2016/11/ftc-seeks-comment-proposed-changes-contact-lens-
rule.
---------------------------------------------------------------------------
                                 ______
                                 
     Response to Written Question Submitted by Hon. John Thune to 
                         Hon. Terrell McSweeney
    Question. The FTC is an agency with broad investigative and 
enforcement powers. Commission investigations can involve considerable 
discovery requests, and enforcement actions frequently result in 
settlements through consent decrees. While there are often legitimate 
reasons for settlements, this reliance on the administrative process 
has resulted in a lack of judicial review of agency enforcement 
decisions. This lack of case law means there may be fewer bright lines 
to guide the Commission, companies, and courts with respect to 
enforcement. Does this absence of clear guidance concern you? Please 
explain.
    Answer. All of our enforcement actions are grounded in Section 5 of 
the FTC Act which gives the Commission the mandate to police ``unfair 
or deceptive acts or practices in or affecting commerce.'' Congress 
created this broad instruction out of a realization that the FTC needed 
broad authority to protect consumers in a dynamic marketplace. Over the 
years, the FTC has used its authority to pursue a range of harmful 
practices from diploma mills to lax data security to deceptive privacy 
policies. Section 5 has allowed the FTC to keep pace with changes in 
the American marketplace and protect consumers where they are--from the 
corner store to a handheld smart phone. I am sensitive to the need to 
make sure businesses know how we use our authorities and what it means 
for them. That's why when we resolve a case through a consent decree 
settlement we publish it along with a detailed complaint. The FTC also 
issues press releases and blog posts, and engages with industry through 
a variety of workshops and forums. I believe it is important for the 
FTC to continue to provide guidance--especially through initiatives run 
by its Division of Business and Consumer Education. For example, the 
``Start with Security'' initiative, synthesizes best practices from the 
Commission's data security cases and explains our approach to assessing 
reasonable security practices. This guidance should continue to be 
regularly updated.
                                 ______
                                 
    Response to Written Questions Submitted by Hon. Marco Rubio to 
                         Hon. Terrell McSweeney
    Question 1. According to the most recent statistics, there are 
currently 728 travel related cases and 147 non-travel related cases of 
Zika in my home state of Florida. With the increase in cases, and the 
threat mosquitos spreading around the Miami Beach area and to other 
parts of the United States and our territories, many are concerned with 
contracting the virus. Feeding into consumer concerns, many companies 
are marketing products that say they provide protection from the Zika 
virus.
    A. Please speak to the FTC's efforts to seek out these fraudulent 
companies that are capitalizing off of consumer concerns about Zika, 
and hold them accountable.
    Answer. Like my colleagues, I am concerned about the risks of the 
Zika virus. Unfortunately, when public health crises arise, they are 
usually followed by scammers who try to take advantage of public 
concern by peddling products of dubious value. As Chairwoman Ramirez 
informed you, when Commission staff was made aware of these problematic 
Zika-related products, they investigated and contacted the companies 
marketing the products. These communications informed the companies of 
their obligations and reminded them of the law. We also informed the 
public of these letters on one of our blogs and explained the evidence 
that is needed to make claims that products provide protection from 
infection. We are continuing to monitor the situation carefully.

    B. I understand the FTC has reached out to some of these online 
marketers and requested reports back on actions they have taken to 
remove or change false advertising claims. What is the status of these 
reports?
    Answer. I believe that Chairwoman Ramirez provided an answer to 
this question. I have nothing to add substantively. I believe the quick 
action by FTC staff is emblematic of the quality of the Commission's 
work and the level of seriousness our staff bring to their job of 
protecting the American consumer and American marketplace.

    C. What can we do to educate my constituents back home in Florida, 
and across our nation, about what to look for to ensure they are not 
buying into falsely advertised products, and make sure they are 
protected as consumers?
    Answer. The Commission posted a blog in English and Spanish about 
our warning letters to the companies and informing consumers about what 
they could do to protect themselves and their families from Zika. The 
blog included links to the EPA and the CDC that are quite informative 
about the steps consumers can take to protect themselves and their 
families. The FTC's consumer blog also links to advice from EPA on how 
to use insect repellents safely and effectively, and to tips from the 
CDC on protecting oneself and family members, and what to consider when 
you are in a location where Zika has been found. We want to centralize 
this information so we can make it easier for consumers to make 
educated decisions about how to protect themselves and their families 
from Zika.

    Question 2. The Federal Communication Commission (FCC) is scheduled 
to vote on its proposed broadband consumer privacy rule on October 27.
    A. Will you speak to the FTC's comments on the proposed rule 
related to transparency, consumer choice and data security?
    Answer. The FTC staff comment commended the FCC's focus on the core 
privacy values of transparency, consumer choice, and data security. The 
FTC's privacy program has long focused on transparency and consumer 
choice.
    The FTC staff generally supported the NPRM's requirement that ISPs 
provide clear and conspicuous choices and notices of privacy policies 
to their consumers. On choice, the FCC would have required opt out for 
use for use of consumer information for marketing of communications-
related services, and opt in for all other uses of customer's private 
information. The FTC's comment suggested that opt in consent is 
important before (1) collecting sensitive information, (2) making 
material retroactive changes to privacy policies, or (3) collecting 
content of consumers' communications through technologies such as deep 
packet inspection. For other categories, the FTC staff suggested that 
opt out would be sufficient. The FCC's final rule adopted this 
approach. Regarding security, the FTC staff agreed with the approach 
that ISPs have reasonable security in place. The staff comment favored 
a breach notification requirement for ISPs.

    B. Prior to this ruling, how has the FTC regulated data privacy?
    Answer. I believe that Chairwoman Ramirez's statement captures the 
scope of how the FTC approaches privacy. Our approach is grounded in 
the FTC's authority to protect consumers from ``unfair and deceptive 
acts and practices.'' As the Nation's chief privacy enforcer we have 
brought hundreds of cases concerning the protection of consumer 
privacy. Our enforcement based approach has enabled the FTC to keep 
pace with technology while giving American innovators plenty of room to 
do what they do best-providing innovative products and services to 
consumers around the globe.
    Through our workshops and business education program we engage with 
cutting edge issues, particularly around consumer privacy.

    C. In your opinion, is the FTC better equipped to regulate data 
privacy than the FCC?
    Answer. I want to echo the Chairwoman's words about the FTC's long 
history of enforcement and the institutional knowledge housed within 
the Commission. I agree that the outdated common carrier exemption 
should be repealed. It is important to note, however, that the Federal 
Communications Commission also has a real role to play because it has 
expertise in areas like Deep Packet Inspection and network 
architecture,that are necessary to properly protecting consumer privacy 
in our hyperconnected world.

    Question 3. As a top travel destination in the nation, and the 
world, Florida is home to thousands of hotels. As technology continues 
to move forward in the 21st Century, booking travel arrangements 
through third-party hotel booking sites offers enormous conveniences 
and potential cost savings to consumers. However, there have been 
allegations that certain companies or their affiliates are engaging in 
travel booking practices that mislead and harm consumers booking hotel 
rooms online. In June 2015, I joined Senator Nelson in sending a letter 
to the FTC urging investigation into allegations of fraudulent online 
hotel bookings through third-parties. The entire Florida House 
delegation sent a similar letter.
    A. How many consumer complaints on this issue have been filed with 
the FTC?
    Answer. I have nothing to add to the information provided by 
Chairwoman Ramirez.

    B. Can you all speak to the efforts FTC has made to investigate 
these fraudulent bookings, and how the FTC is working to protect 
consumers from this fraud?
    Answer. Protecting consumers wherever they are is our mandate. Last 
year, our staff issued consumer focused materials to educate the public 
about the problems with these websites. FTC staff also met with members 
of Congress to discuss this issue. Although any investigations are non-
public, I can assure you that the FTC staff will carefully consider 
whether enforcement or other action is appropriate.

    Question 4. Florida is a top travel destination in both the United 
States and the world, and is home to hundreds of hotels and resorts. 
Orlando, Miami, the Florida Keys, and Fort Lauderdale are some of the 
most popular destinations with hotels charging resort fees for 
additional amenities. It has come to my attention that the FTC is 
looking to alter previous guidance, released in 2012, related to the 
mandatory disclosure of hotel resort fees. The 2012 guidance requires 
hotels to fully disclose all resort fees so that consumers know 
throughout the booking process exactly how much they are paying and 
which amenities they are receiving. Please speak to what has prompted 
the FTC to discuss reversing the 2012 guidance and moving towards 
``total price'' guidance.
    A. How many consumer complaints has the FTC received on resort fee 
disclosures since it issued its guidance on this issue in 2012?
    Answer. I have nothing to add to the Chairwoman's answer on the 
number of complaints received by the FTC on resort fees.

    Is there any empirical or legal evidence of actual consumer 
confusion or harm that demonstrates that the 2012 guidance needs to be 
altered? If so, please describe.
    Answer. I have nothing to add to the response from the Chairwoman.

    B. Further, do any of those studies look at consumer understanding 
of current disclosures, specifically?
    Answer. I am not aware of any research that has specifically 
examined consumer understanding of current resort fee disclosures.

    Question 5. In November 2012, the FTC issued 22 warning letters to 
hotel operators on resort fee disclosures. The 2012 guidance was 
largely embraced by the industry. In 2013, the FTC issued additional 
warning letters. However, it is my understanding that the FTC has not 
taken enforcement action against hotel or resort operators since 
sending these warning letters. Why didn't the FTC take enforcement 
action?
    Answer. I was not a Commissioner when the guidance was communicated 
and have no comment beyond what has been submitted by the Chairwoman.
                                 ______
                                 
     Response to Written Question Submitted by Hon. Deb Fischer to 
                         Hon. Terrell McSweeney
    Question. The FTC has long used an unfair and deceptive practices 
standard for data security and considers whether practices are 
reasonable in light of a business's size and complexity. By doing so, 
the FTC recognizes that the data security standards that a large 
company can employ may be unreasonable for a small company with only a 
handful of employees and limited resources. From your perspective, does 
the FCC's proposed data security standard properly reflect the varying 
capabilities of companies of different sizes?
    Answer. The most recent proposal from the Federal Communications 
Commission reflects the standards used by the Federal Trade Commission 
in assessing the reasonableness of an organization's cybersecurity 
practices.
                                 ______
                                 
     Response to Written Question Submitted by Hon. Bill Nelson to 
                         Hon. Terrell McSweeny
    Question. I am a firm believer that two cops on the beat are better 
than one. In that regard, I see no reason to pit one agency against 
another. In this Committee, we have had a debate as to whether the FCC 
or FTC should protect consumer privacy. I think this debate misses the 
point. There is no reason why both the FTC and FCC can't play prominent 
roles.
    To all of the Commissioners, the FTC has overlapping jurisdiction 
with numerous agencies, such as the Department of Justice and the Food 
and Drug Administration. Your relationships with these agencies and 
overlapping jurisdictions have never been a problem. Don't you think 
you can have a similar cooperative relationship with the FCC? Shouldn't 
there be two cops on the beat?
    Answer. Yes. I think the American public is better off with as many 
effective cops on the consumer protection beat as possible--this is 
particularly true in areas like privacy and security where our 
increasing connectivity is raising new consumer protection issues for 
expert regulators. For example, the FTC has issued supportive comments 
to NHTSA regarding privacy and security considerations associated with 
automatous vehicles and to the FCC in setting the rules to govern 
common carriers' privacy obligations. Given that the FTC is the premier 
consumer protection agency in the Federal government we collaborate 
with many agencies from the Department of Education on for-profit 
education and diploma mills, to the Consumer Financial Protection 
Bureau and our work with various financial frauds, to our work with the 
IRS and tax identity frauds. All of these issues are better policed 
because of the dedication from multiple agencies. It is no different 
with the FCC. In an age where so many companies have business lines 
that cross traditional regulatory jurisdictions it is important that 
the FTC continue to have an excellent working relationship with other 
government agencies. Consumer protection issues like privacy and 
security will become more important as the lines between industries 
continue to evolve and blur thanks to our growing connectivity.
                                 ______
                                 
 Response to Written Questions Submitted by Hon. Richard Blumenthal to 
                         Hon. Terrell McSweeny
    Question 1. Earlier this year, the FTC finally successfully cracked 
down on four sham charities that had bilked more than $187 million from 
donors. According to the FTC complaint, their misappropriation of 
consumer donations dated back to at least 2008. Chairwoman Ramirez, 
Commissioner McSweeny, and Commissioner Ohlhausen: How were these sham 
charities able to rob donors of so much money and for so long?
    Answer. I believe Chairwoman Ramirez provides an accurate narrative 
of how and why these charities were able to perpetuate their fraud for 
so long. I would like to add that the example offered by the Cancer 
Fund for America cases is a reason--along with privacy and data 
security--that the FTC should have our jurisdiction extended to non-
profits.

    Question 2. In what way has the nonprofit exemption in the FTC Act 
hamstrung the Commission's ability to act swiftly to protect consumers?
    Answer. On both the competition and consumer protection side, the 
non-profit exemption has hurt consumers. In the last few years, 
universities have been one of the biggest targets for data breaches but 
the FTC cannot challenge unfair or deceptive data security or privacy 
practices of these entities. It also creates challenges when we 
investigate sham non-profits like Cancer Fund for America.
    The Commission also actively promotes competition in health care 
markets, but it cannot reach the conduct of non-profits engaged in the 
business of health care, including non-profit health maintenance 
organizations (HMOs), health plans, and standard-setting organizations.
    The exemption has been limiting in our review of hospital mergers 
involving non-profit hospitals. Although the FTC has jurisdiction under 
the Clayton Act to challenge non-profit hospitals' merger plans, the 
FTC does not have jurisdiction under the FTC Act to challenge those 
hospitals' anticompetitive conduct.

    Question 3. Last year, FTC staff released a comprehensive report on 
``Competition in the Ped Medications Industry.'' In the report, the 
Commission found that ``some veterinarians refuse to provide portable 
prescriptions to their clients or engage in behaviors intended to 
discourage clients from requesting portable prescriptions and filling 
them elsewhere.'' The report also noted that spending by families on 
their pets has doubled over the last decade, with Americans spending 
$7.6 billion on prescription and over-the-counter pet medications in 
2013, and projected to spend $10.2 billion by 2018. It has been 
estimated that pet owners who can get a copy of their pet's 
prescription and shop around, could save 20 to 30 percent on branded 
medications and 50 percent when they purchase generics--suggesting that 
prescription portability can save pet owners billions of dollars every 
year. In May of last year, I introduced the Fairness to Pet Owners Act, 
which would ensure consumers have the freedom to choose where they buy 
prescription pet medication.
    Chairwoman Ramirez, Commissioner McSweeny, and Commissioner 
Ohlhausen: Given the findings of the Commission's report, do you 
support the Fairness to Pet Owners Act? Do you believe that providing 
pet owners with the right to their pets' prescriptions will help ensure 
consumers have access to pet medications at the most affordable prices?
    Answer. Like the Chairwoman, I generally support policies that 
would encourage prescription portability, introduce competition, and 
empower consumers to make informed choices about where to purchase pet 
medications.
                                 ______
                                 
    Response to Written Questions Submitted by Hon. Cory Booker to 
                         Hon. Terrell McSweeny
    Question 1. Changes in technology seem to be making it ever easier 
to deceive and defraud consumers with phone calls. Many New Jerseyans 
have told me that the number of fraudulent calls they receive is 
increasing, particularly on their cell phones. Last Congress, I joined 
with Ranking Member Nelson on legislation to help curb the use of so-
called ``spoofing'' technology. This technology is used to trick 
recipients into answering the call by scrambling the phone number on 
the recipient's caller identification display, but spoofing is just one 
of numerous practices used to defraud and harass recipients. This trend 
is especially concerning because my constituents frequently receive 
overtures from callers fraudulently claiming to represent government 
entities including the Internal Revenue Service (IRS) and the Federal 
Bureau of Investigation (FBI).
    Question 1a. What steps is the Federal Trade Commission (FTC) 
taking to protect consumers from fraudulent calls?
    Answer. We employ every tool we have to combat fraudulent and 
deceptive calls to consumers including: aggressive law enforcement, 
regulatory action, robust consumer education and outreach, and even 
using grants authorized by the America COMPETES Act to develop 
solutions for consumers. As the Chairwoman stated, we have brought 126 
enforcement actions against these scammers.
    New technologies have made it easier for scammers to get around the 
consumer protections we have in place. Just as these changes have 
lowered costs and improved services to the benefit of consumers, they 
have also lowered costs and barriers to entry for fraud. Widespread use 
of caller ID spoofing by scammers is a product of these advances.
    I have personally met with technologists and researchers to 
encourage them on to create technological solutions for this problem.

    Question 1b. How can Congress help to address this issue?
    Answer. I would like to see Congress continue to support the FTC in 
our law enforcement and education mission as well as the authority to 
run competitions through challenge grants.

    Question 1c. What information should consumers have to better 
protect themselves from these practices?
    Answer. The steps outlined by the Chairwoman are a good checklist 
of appropriate measures consumers should take.

    Question 1d. Is the FTC working in partnership with other Federal 
agencies to help educate the public and to protect them from giving 
away sensitive personal or financial information?
    Answer. We have great working relationships with many agencies to 
help educate consumers such as DOJ, the U.S. Postal Inspection Service, 
the IRS, U.S. Treasury Inspector General for Tax (TIGTA), the FCC, and 
DHS. We are also working to implement President Obama's Executive Order 
that directed Federal agencies that guard consumer data to work 
together to enhance protections and educate the public on identity 
theft. As part of that initiative, we redesigned and enhanced 
IdentityTheft.gov to make it a one stop resource for consumers looking 
for help when a breach or hack compromises their personal data. The FTC 
also works closely with state Attorneys General and international 
consumer protection authorities. As Chairwoman Ramirez described, we 
led a multinational robocall sweep that took action against operations 
responsible for billions of illegal robocalls.

    Question 1e. Is more cross-agency collaboration needed to serve the 
public when it comes to identifying, exposing, and preventing 
telemarketing fraud?
    Answer. I agree with Chairwoman Ramirez's statement on this 
subject.
                                 ______
                                 
    Response to Written Questions Submitted by Hon. Gary Peters to 
                         Hon. Terrell McSweeny
    Question 1. The Federal Trade Commission (FTC), Food and Drug 
Administration (FDA), and Department of Justice each possess a portion 
of jurisdiction over the contact lens marketplace. The FTC has the 
authority, under the Federal Trade Commission Act, to bring enforcement 
actions against sellers of contact lenses whose practices violate the 
law. My office has been made aware of the fact that there are online 
retailers who advertise that they dispense contact lenses, which are a 
FDA-regulated medical device, without verifying a patient's 
prescription.
    Question 1a. What process does the FTC have in place for 
individuals to submit complaints regarding prescriber practices and how 
many complaints has the FTC received?
    Answer. I have nothing to add to the answer provided by Chairwoman 
Ramirez.

    Question 1b. Has the FTC brought enforcement action against any 
retailers due to their prescribing practices? How many enforcement 
actions have been brought?
    Answer. I have nothing to add to Chairwoman Ramirez's statement.

    Question 2. Under current law, most states require that patients 
get updated contact lens prescriptions every year in order to buy more 
lenses. Yet, some online retailers are selling multiple years' worth of 
contact lenses.
    In conducting the 10-year review of the Contact Lens Rule, has the 
FTC taken into account the safety implications of prescribers that sell 
multiple years' worth of contact lenses? Has the FTC found any safety 
concerns associated with this practice and could you list them if so?
    Answer. The FTC staff is examining this issue, as well as others, 
as part of our review process to ensure that the Contact Lens Rule 
operates as intended to promote competition and affordable prices in 
the contact lens industry consistent with patient health and safety.

    Question 3. Current law requires a seller to verify a patients' 
contact lens prescription. One of the allowable forms of communication 
are automated and non-live calls--commonly referred to as 
``robocalling''. I have heard from optometrists in Michigan that 
understanding and/or verifying required information from robocalling is 
nearly impossible.
    Question 3a. Has the FTC heard similar concerns about the use of 
robocalling to verify a patient's contact lens prescription?
    Answer. As the Chairwoman said, we are examining this issue and 
will take this, and other issues, into account as we do more work on 
the Contact Lens Rule.

    Question 3b. In its review of the Contact Lens Rule has the FTC 
examined the safety implications of allowing robocalling for 
verification purposes? If so, what did the FTC find?
    Answer. Our staff is examining all aspects of the Rule.

    Question 3c. Has the FTC examined robocalling to determine whether 
or not if effectively allows vendors to verify a patient's 
prescription? If so, what did the FTC find?
    Answer. As described above, the FTC staff is currently in the 
process of conducting a review of the rule. This will involve both 
reviewing comments received from all interested stakeholders as well as 
examining the empirical evidence produced by such parties in support of 
their positions.

    Question 3d. Has the FTC considered allowing other forms of 
electronic communication that might improve or compliment robocalling? 
If so, what are they?
    Answer. I have nothing to add to Chairwoman Ramirez's statement on 
this matter.

                                  [all]
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