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tv   FTC Chair Commissioners Testify on Consumer Protection - PART 4  CSPAN  July 30, 2021 5:23am-6:29am EDT

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you on many issues in a bipartisan way as time goes on. so thank you very much. we appreciate you. >> thank you madame chair. >> thank you so much. >> we need just about two minutes to set up for the next panel. then i will introduce them. thank you. >> thank you madame chair. [inaudible conversations]
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>> before i introduce the panel i want to thank you so much. i know this has been such a long day and you are still here. i appreciate it. we may not have too many members that we want you to know that everything is on the record. and will be here forever. so we just appreciate that. i am sure others will show up.
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i am happy to introduce the witnesses today. we have professor of law from georgetown university law center. and also the senior director for public policy at the association and the executive director of the national consumers league. and at this time the chair will recognize each of the witnesses for five minutes. i know you are pretty familiar with this but i will just say it because it is in my notes to make sure that you remember you have the series of lights. green will remain for four
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minutes lol show up at one minute and read means you need to conclude. so you are now recognized for five minutes. >> thank you chair and ranking member and members of the subcommittee. thank you for your invitation to come before you today to give you my views on the 16 ftc bills pending before the subcommittee. i would like to highlight two proposals that are paramount to the ftc. first come it is imperative that congress enact hr 447 the t century act and then the standard rulemaking authority.
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this should not be a heavy left virtually every other agency has this power now that rulemaking would authorize to have clear and specific rules of what acts and practices are deceptive and unfair. doing so would provide the certainty that business many claims that once to enable to have binding enforceable norms that will deter violations and effective enforcements. and the ftc no longer has to rely on the archaic resources enforcement that it is today we bring the cases one by one and essentially with the ftc has to do with the scams from
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the beginning of 2019 we brought a lot of cases but didn't make much headway once the ftc promulgated a regulation using its authority under the telemarketing consumer fraud and abuse act we could chase out all of the bad actors. why? because they are always in violation of the new rule they were worried about redress and civil penalties. with the ftc to replicate the success many times over and make enforcement so much more efficient the only argument against restoring rulemaking that the ftc might abuse it but of course that could be set of every agency. here there are strong safeguards in place to guard against that. first the bipartisan nature of the commission visible wart
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because if the agency if the commission breaks to be skeptical it also censures to judicial review if the ftc does over reason there is a congressional review act. so there are a lot of guardrails. in addition the ftc should ensure it has jurisdiction over the telecommunication and nonprofit entities the rationale for the common carrier that the ftc constantly regulates all activities of monopoly carriers no longer exist online between commentaries and other telecommunications services has been obliterated
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and the consumer faces real risks false claims of internet speed and unfair and deceptive acts. and the safe healthcare providers with the nonprofit status. and it's always difficult to urge the subcommittee to take on along with the point everyone has made all day that the ftc is resourced and has
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four times the number of employees of the 2 million-dollar budget 501 employees and that is time it had its reasonable share. thank you so much. >> you are recognized for five minutes. >> thank you chairwoman and ranking member and members of the subcommittee. i am senior director for public policy at the association the leading trade group with small connected device and mobile software companies one.$7 trillion sector that is global that supports five.9 million jobs in the us. i'm here to share the perspectives of app association members in your district with several measures you consider today to modernize the ftc. in the chicago area a custom
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map development company focus on transparent development cycle in the tampa area and after that helps develop writing skills and focus on how many billions of dollars of find needs to be to deter social media giants ignoring those on member companies and that the subcommittee carefully considers any proposal impact like that scale even though the primary impetus might involve much larger companies the last time congress we authorize the ftc was 1986 oh the subcommittee is right to consider updating the statute some argue the ftc must be more transparent and it's process and accountable to congress and constituents others point to the inadequacy of authority to pursue consumer protection harms we apply the subcommittee for the improve clarity around its
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authority the proposals you consider today are three related categories. expanding the regulatory capabilities and we agree with the intent to enhance the ability to punish consumer protection harms but we recommend rulemaking authority. and then to have 180 degrees shifts from administration to administration carrying out congresses intent. that sure act would codify those brought under the ftc. was small compliance and legal budgets. and then to understand as
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legal conduct and to be coupled with more authority to have privacy data security harm with direction from congress. number three reporting transparency requirements. many of these are welcome measures to have the oversight efforts and the on enforcement planning the protection act would help the commission to have a meaningful record on harmful activities with protected characteristics like race disability and others. and with the commission to make informed decision to have prioritized enforcement act was schemes against older americans. and then to fund that reporting entrance period just transparency requirements. on the competition side it has
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sparked understandable concerns there is an opportunity for the commission for the authority for those paths in a competitive abuse this is an example ftc guidance can help on the consumer protection side of the ftc to establish strong national privacy rules is especially important to app association members you want to help congress work toward a bipartisan agreement in february we sent a letter to this committee on the ftc with the flow at it highlighted lack of available tools at the ftc disposal to stop and prevent privacy harms. as the creation and transfer of health data under the hip the healthpro umbrella the ftc needs better privacy tools base what they propose to consumers congress is set forth the overarching purposes to specify the limits of ftc
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rules we hope the discussion has a path of a modernized ftc to better meet the challenges of the 21st century. thank you for the opportunity to share of views i look forward to your questions. >> thank you. now i welcome ms. greenberg for five minutes. >> . >> good afternoon chairwoman and ranking member and members of the subcommittee. i'm executive director of the national consumers league founded 1899 and was american consumer for more than a century the commission is
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administering more than 70 laws with allied privacy and data security. with the unique consumer protection charge of those bills currently before the subcommittee and then to give the ftc what it needs most one authority more capacity and then the broad mandate to consumers with that misinformation and then to hold wrongdoers accountable so to have that to truly deter criminals in the market place
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and then to reach have ill-gotten gains with that reap supreme court recent decision amg capital management for these reasons we strongly support congresswoman casters 21st century ftc act which would give the commission administrative procedure act rulemaking authority and first offense civil penalty authority also pleased to support the chairwoman's autonomy and to allow the commission more freedom to seek civil penalties to eliminate burdensome regulations to delay enforcement activity. like to turn to the reforms and expecting the ftc to adequately placed technology industry with the current staff resources is a can to
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bringing a water gun to a thermonuclear war it's has to consider extremely detailed regulation in the application store and data security spaces which can only be described as a skeleton crew. to oversee and rain in the tech sector the refusal to police its own platform the ftc must have highly qualified expertise on staff to do the detailed analysis necessary to produce effective enforcement and regulatory policies that's why we are pleased to support the ftc technology act this much-needed bill would authorize the ftc to establish an office of technology staff with more than two dozen effort experts on cybersecurity computer science and related fields. i also want to address the need for more ftc action to combat disinformation the
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dailies of this information online particularly with social media platforms is a constant threat to consumers. almost platforms prohibit information in their service the willingness to enforce the terms has been far too lax that allows fraudulent schemes costing billions of dollars to proliferate it fuels vaccine hesitancy costing lives every day and perhaps most troubling enables the most foulest elements of society white supremacist and extremist and other trolls to threaten our very democracy to proliferate. with that falsehood and conspiracy period to have those tools to oppress natural authority so current laws make
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it harder to protect consumers from disinformation congress should consider reforming those laws the online consumer protection action serve as a catalyst to engage in more robust debate. in conclusion my remarks focus on specific proposals to help the commission better protect consumers. they do not need new laws to burden not commission with the this redtape. instead they need a robust commission empowered to go after truly bad actors in the marketplace. chairwoman and ranking member and members of the subcommittee, thank you for including the consumer perspective in today's hearing. >> i think our witnesses so much. we had concluded with witness opening statements and at this time we will move to member questions. each member will have five minutes to ask questions and i will recognize myself at this time.
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we have heard a lot about the ways the ftc can update the authorities that it has and in order to do the job to protect consumers that we expect that's why i introduced the ftc economy act. allowing to bring enforcement actions and then to first consult so professor, how word independent litigation authorities for the ftc benefit consumers quick. >> it would shorten the time the ftc has for those that
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thought to violate a rule. so that current practice to estimate a reform the department of justice must agree to take the referral and does most of the drafting of the legal documents and ultimately the justice department will do that. so for the need to go to trial is an enormous implication and the justice department lawyers it is just an incredible waste of resources another part to consider the ftc was designed to be an independent agency. bipartisan not beholden to the president or the executive branch that if the ftc has to rely on the justice department to enforce its own orders then
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that independence can be compromised so this is an important step forward and to have authority and i would urge the subcommittee work this bill out. >> i went to ask around the same question. so we know that some stakeholders are critical of the idea that we are talking about now to give the ftc this authority to support the legislation, arguing that it could lead to the ftc overreach and unfairly harm businesses and i'm wondering how you word respond to those concerns raised?
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it seems to me we want to empower the ftc and the ways we just heard that professor mention. >> it is a critically important consumer protection agency and it punches above its weight we need to give it the power and authority that it needs to hold those bad actors accountable. and the authority it would provide the ftc in legislation i think will ultimately be more protective of consumers and the ftc unfortunately is hamstrung by the process procedures that other agencies do not have to confront. >> how word you respond to the critics professor? >> the criticism doesn't make
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sense but if they base their decision on the facts the department of justice standing before the court it doesn't really matter. and to be clear it is where the department of justice with the class of the enforcement agencies it's the incredible duplication of effort it just doesn't make sense. >> i think have to get my last question for the record but i will stated that the theme of today's hearing is to ensure the ftc has the tools that it needs to protect consumers in the modern marketplace into the future. this often means adapting our
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interconnected world. but i will submit for the record, how has the shift to online commerce and the proliferation of social media and the general dependence on the internet changed consumers expectations? i think this is an important area to explore. i will yield back and recognize the ranking member of the subcommittee. >> thank you madame chair. i don't mind if the witnesses want to answer that question i know how important it is. but i know we are running a little late today. >> maybe at least on outlines we can get more and writing.
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>> we have seen an uptick in the fraud center over the last several years with cases a fried through social media platforms and internet fraud. it has resulted in the ftc needing more resources to go after the's fraudsters and we need to properly resource this agency because consumers rely on it we heard several witnesses say it is under resourced and far fewer employees than they need to address the explosion of consumer fraud and bad actors out there. >> and the technologist would be very helpful. >> we really need to ramp up
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the technology side because the industry is very well-equipped on their end to defend against concerns about fraud and disinformation on the platforms. . . . . of statet
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question, can you speak to this growing patchwork of laws and how they may be impacting the commerce clause? >> thank you, congressman. that's right i think the commerce clause holds that even though congress is not more legislated that there is an area of government activity to sort of reserve the federal government rather than for the states and what the courts look at is whether or not the state law and whether they discriminate against business or commercial activity that occurs in other states. so whether or and all the law enacted in california or whether there is a privacy law enacted in florida unreasonably discriminates against commerce occurring in other states and so that is an open question, and i
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think it's going to be a question of growing importance as more states tip in. it's already been amended and you've also got the general applicability privacy law in colorado and virginia. a close call also in florida and connecticut so more and more states are going to be legislating in the coming years and so unless we have a single set of federal priority requirements thank you very much. i know it's a real concern do you think they are a stay at stk
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of the dormant commerce clause? >> i think it is a fair concern and i don't think we're quite there yet given the absence in the federal law. it looks not just to the factors that you mentioned but it's a question about whether these acts are so different that compliance with multiple laws would be possible. i don't think we are there yet. it may be very different from the california law and the possibility of the federal court and state privacy law and i think that is one of many good reasons for congress to finally
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enact a comprehensive policy. >> agreed. the next question in your testimony, you referred to hr 4447, the ftc act which would authorize to issue apa rulings and enable the commission to seek civil penalties for first-time offenses. something my colleagues seem to agree with. what are the consequences that may arise as a result of passing the legislation specifically i'm concerned about our other small businesses if you can elaborate on that i would appreciate it. >> congressman bill rakas, the problem that we see with the general rule making authority and the general ability to seek civil penalties for the first time offenses under the acts of
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practices is the law is intentionally broad. because the ftc has such broad jurisdiction that's probably why the congress initially made the decision not to give the commission a first time civil penalty. we don't want to see a situation that invites along with civil penalty which could have the effect of having i think a chilling effect on innovation in the market because now small businesses are wondering whether or not and to what extent they will be liable for up to $44,000 per violation per person civil penalties when they are considering going into something that is somewhat novel and now they are building back to their
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budgets and that causes whether they have investors or just the company leadership as they are looking at their 18 month plan and probably pay more in business insurance rather than going to new markets or expanding and hiring people. 2672 the reports act i'm going to submit my question for the record but i would like to hear from not right now but if you could answer my question, elaborate on this particular bill, hr 2672 has to do with protecting our elders and i will yield back. thank you. >> you are recognized for five minutes. >> thank you madam chair and to the witnesses for lending your opinions and expertise on these
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proposals. >> given the rule-making authority and first offense civil penalty of already to help the ftc hold back bad actors accountable. and it is imperative. i turned to say this would allow the apa rule-making would promote unchecked powers. that doesn't a job with me. what about you? >> the rule-making is a very
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slippery process. it has to notice a comment and small businesses may be affected. it requires all sorts of additional protections before the agency can finalize a rule. once the rule is adopted that would be a signal to the courts looking for regulation very carefully. the community feels the clear specific standards but it's a transparent open process every record used by the agency in
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formulating the rule has to be available and so if those are formulating the policies. >> you cited an example today when you went through the bill. can you provide a little more detail on that case or may be some other examples to help us understand what this would mean for the consumer and carrying out the mission? >> it is a violation of the rule for a telemarketer to call someone on the national register. that person risks a civil penalty because the stint of rule-making is public and crystal-clear and violators are
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subject to penalty. this manner is all enforceable so it's nothing new about that aspect. that's just the way things work. if rule-making, if you care about transparency, public participation, judicial reviews and real attention to the small business, it's your best option. >> who would oppose this, the 21st century ftc act to give the rule-making authority? >> the example of legislation last year laid the groundwork very nicely for the apa
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rule-making authority and the first offense civil penalty and it worked beautifully and it wasn't abused or overreached by the commission who would oppose i suppose those who don't want to see the commission be a strong consumer protection agency. >> they do not want to get into the crosshairs of the ftc. >> thank you very much and i will yield back. >> we have the vice chair of the full committee and i recognize
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the ranking member of the full committee and now i recognize the ranking member for five minutes ms. rogers. >> you have historical knowledge on the commission. how important is it for the commissioners to engage with staff and seek their input from the commission bureau? >> there was a robust discussion within the commission including the bureau of economics on any policy issue. the discussion was robust not top-down but bottom-up. >> have you been able to work with the offices and do you believe it is important to work in a bipartisan manner?
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>> i think one of the hallmarks has been its bipartisan working relationships and yes, we do go talk with all the commissioners over time on the consumer protection issues. >> as you know, republicans are committed to enacting a framework of this congress. would you speak to how important and explain what a national framework would mean for the small businesses? >> absolutely, congresswoman. a national framework should be very strong and should contain consumer rights so the rights to access corrections and information about themselves should be data immunization provisions and should be a single set of strong national rules and that's important for the member companies because they are trying to figure out how to comply with requirements simultaneously across the different states and a growing number of states. the state of washington
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considered privacy legislation in the last couple of legislative sessions in the state in the state of florida as well and now multiple other states are considering jumping in and regulating privacy generally. so for our member companies what they want to do is comply with a strong set of requirements. i always think of the one example that cost about 100 to come into compliance they were able to compete in europe. with each year that passes so compliance isn't necessarily just a matter of paying to come to compliance it's just unclear how much it will cost in the
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coming years. >> if congress passes a privacy law would you elaborate on what impact the data privacy rules will be offered and what it would mean for small businesses and their ability to comply with such rules? >> yes, congresswoman. if they conducted a rule-making on privacy on its own i think the concern for us would be with each administration you might see a completely different approach so you might see them sort of scrapped. i know there is judicial review for changes that the new administration would make to the rules but we would feel a little bit better if there were guardrails from congress that would make those rules quite frankly stronger because they have the statutory backing and they would have, they would be
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less mutable depending who inhabits. >> one of the reasons it is so important is because it would otherwise there is confusion by the patchwork being developed they need certainty across state lines. would you speak to the potential of the ftc writing a rule and how much they would be able to address, how much would they be able to accomplish versus what congress would be able to do? >> yes, congresswoman, there would be a number of things they could try to accomplish using the rule-making authority would take a little bit longer i think it would take longer than if they had apa rule-making authority granted by congress and that's why we were supportive of measures that would also authorize to make use
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of the rule-making procedures in the narrow circumstances to the extent that they can set guardrails and specify exactly what they want the commission to accomplish, the better off we are going to be and it leaves less of the question to the court. there is risk the court will go a little bit too far in removing the authority to the ftc and we would rather have congress with that authority. >> thank you all. i will yield back. >> the gentlewoman yields back and i recognize mr. mcnerney for five minutes. >> thank you for being here today and being patient. as i said over the last panel one we are considering today is the legislation that i offered which would establish it's critically important and already voiced the support of that bill.
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would you agree with the expertise having more technology on staff would help the agency carry out its mission? >> it is central. we didn't have a single one on the staff and let me just say two quick points. we need more technologists and we need people to maintain them. there is enormous competition for top-of-the-line technologists. the top-tier technologies would be challenged and so i applaud
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your bill and hope it's authorized but there is a broad government in terms of attracting and keeping the topline technologies. top line technologies. i think that that is an issue. >> in your testimony you discuss discussed whether the legislation is important with respect to the role as a nation in driving the global regulatory agenda. could you explain that a little bit? >> the office of technologies at the commission. >> we made the observation that we need to compete globally as well as with companies that are based here in the united states and we need to ramp up our level of expertise in the technology area and as the professor
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pointed out, we need to figure out how not to just hire technologists but to maintain them as well. i think that there is a certain personality type that likes public service and we can probably never compete with some of the salaries that we are going to see in the big tech companies but a competitive salary and opportunity to go with some of these is a very attractive job possibility for people with expertise but we just can't compete i think that it is essential for our ability to compete globally as well as across the united states. >> what potential risk do you see with respect to artificial intelligence and what steps can be taken to help address these
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risks? >> the risks are enormous. there is algorithmic bias and pricing decisions on the characteristics. they've been looking at this issue since 2010. but there are other challenges and part of the challenges are that the ftc does not have the technology so for the last year we may be high on the curve but not really understand some of the risks that are attached to it and enormous strides being
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made about the algorithms and the government regulations so we really need to get the resources to understand the ai i recognize for five minutes. >> thank you, chair schakowsky. hr 271, the shield act and the bill contains two provisions. the first prohibits the ftc from relying on guidelines or similar documents to prove a violation of law. this is simple the commission should only bring enforcement actions for violations of law. i know you have some concerns with the second portion of the
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bill that your testimony agrees with the first provision which essentially reaffirms the guidance on the provisions of law do not carry the forcible. >> that is correct. >> now the second provision clarifies the defendant may offer as evidence of compliance with the provision of law any guidelines, general statements of policy et cetera and your objection, you do object to this in your testimony you raised concerns that a guidance document they offered as evidence even though it is outdated or superseded. if the guidance is outdated or superseded it would no longer be useful and i would argue the burden should be on the commission to remove outdated guidance to provide the public with relevant information. is there anything that prevents the commission from removing that guidance?
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>> there is a tremendous amount. it's almost anything consuming -- it is a guidance and in order to sort of pull back they have to believe speeches. >> statements and guidance are not the same thing. the defendant may offer these kind of guidance documents but doesn't provide these as an affirmative defense which would negate to the defendant's liability. the defendant would have to demonstrate that the guidance supports its compliance with the provision of law. your concern pointing to any
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document is exculpatory might be sufficient as a defense that isn't how evidence works and it isn't what the bill says. the defendant cannot simply claim a document to provide absolution. it's only useful as evidence of compliance when it tends to prove there is a matter. >> is there any objection to allowing a defendant to offer the commission guidance? >> it seems to us to be a reasonable provision that simply completes the circle when it comes to this is a statement as to the commission's understanding of its own determination as to what is legal under its broad purview so that interpretation is meant to be relied upon, so this is just a statement that says if you are relying upon that guidance, then it is evidence and like you said it is not definitive and there are different ways you can
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assign evidence and so that does not negate the liability as you said. >> and i think i can give a little example of how outdated or superseded languages and always persuasive. there is a 2015 version of this bill that while similar had some cumbersome language and you testified against that bill and raised similar objections in 2016. the problem is your testimony today quotes the 2015 bill language that was amended prior to the introduction of hr 2617 and with that, i will yield back. >> i will yield five minutes to mr. soto. >> we had put forward a working draft privacy something that i
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applaud you. here we are a year or two later because of partisan bickering over this. we still see another year or two wasted. i am committing to you that we will keep up the fight together and try to bridge gaps with our colleagues including the ranking member, my dear friend and my fellow floridians that i get to work with all the time on a lot of these issues. the american people rely on the ftc to protect from fraud, scams and unfair deceptive trade practices and the first panel we hear from the commissioners about some of the things we are doing on behalf of american consumers but we heard about some of the constraints and need for the resources to improve the
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ability to protect consumers. would you agree they have things other agencies do not? >> yes, it is hampered by onerous obstacles that it must jump through to do it's important work of protecting consumers. >> for years we've advocated for giving authorities such as civil penalty of authorities and rulemaking. ms. greenberg, how would these improve the ability to fulfill its consumer protection mission? >> it's a transparent process and a very democratic process because it opens up the rulemaking process to comment and the final rules and a final rule could be challenged judicially but it's an open process and somewhat time-consuming process but it
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does take all perspectives and certainly civil penalty i think you just improve the agency's ability to protect consumers by providing both of those, civil penalties and apa rulemaking authorities. >> thank you. mr. vladeck, we know that it's increased the way for scams to happen. internet, cell phones, social media provide new opportunities for scammers. i know privacy is a key concern for both you and i and others on the committee. if used by the ftc?
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>> my hope is it will help slow the boundaries of the internet. law enforcement agencies when there is something that looks like a scam a foot so you can sort of get an enforcement case. how quickly before too many people are injured. to see these kind of tools for content moderation. >> we are talking about the commerce on the internet and all of the information and different
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transactions conducted. would you argue that the intelligence is essential in order to accurately be able to identify scams on the internet? >> the internet is the best friend, the best thing that ever happened to the scam artists. and the volume of what's going on the internet makes it impossible for individuals to control and it's a tool for law enforcement. a. >> with using code words and with going into the dark web among so many other abilities to push forth scams, we are also going to have to use technology
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to help build the good guys at the ftc and i will yield back, madam chair. >> the gentle man yields back and now i just want to thank the witnesses. i really, really appreciate the three of you being here but especially the two that were here pretty much all day. professor, you as well. i don't know if you were waiting around for us but i want to thank you so much for your participation. i appreciate your patience and the witnesses patients and the
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members particularly the chair so thank you for a very informative hearing. >> i want to remind the witnesses and convey that also before we adjourn the members will have ten business days to submit additional questions for the record. and we are asking you to respond in a timely way to that. i wanted to say that before i read all this because i think it is fair enough to say that you don't have to stick around for this, but i am going to read all of the communications that we have received, so thank you so very much. we have a letter from senator
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toomey to the commissioner chopra dated june the 17th, 2001, the letter from senator toomey to the commissioner the dissenting statement regarding section five the statement of enforcement, principles. we have a dissenting statement of commissioner phillips and wilson regarding the revision
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from the security industry association, and a letter from the chamber of commerce. with that, the subcommittee on consumer protection is adjourned.
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[inaudible conversations] [inaudible conversations] fronto
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democracy. >> earlier today president biden announced new mandates and incentives meant to encourage people to get vaccinated against covid-19. the president said the federal government will begin reimbursing employers who give staff time off to get vaccinated. he also asked states and local governments use of funds from the american rescue plan to provide $100 to newly vaccinated person as an incentive.


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