[House Hearing, 114 Congress]
[From the U.S. Government Publishing Office]


                  LEGISLATIVE HEARING ON 17 FTC BILLS

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

                                 HEARING

                               BEFORE THE

           SUBCOMMITTEE ON COMMERCE, MANUFACTURING, AND TRADE

                                 OF THE

                    COMMITTEE ON ENERGY AND COMMERCE
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED FOURTEENTH CONGRESS

                             SECOND SESSION

                               __________

                              MAY 24, 2016

                               __________

                           Serial No. 114-148
                           
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                    COMMITTEE ON ENERGY AND COMMERCE

                          FRED UPTON, Michigan
                                 Chairman
JOE BARTON, Texas                    FRANK PALLONE, Jr., New Jersey
  Chairman Emeritus                    Ranking Member
ED WHITFIELD, Kentucky               BOBBY L. RUSH, Illinois
JOHN SHIMKUS, Illinois               ANNA G. ESHOO, California
JOSEPH R. PITTS, Pennsylvania        ELIOT L. ENGEL, New York
GREG WALDEN, Oregon                  GENE GREEN, Texas
TIM MURPHY, Pennsylvania             DIANA DeGETTE, Colorado
MICHAEL C. BURGESS, Texas            LOIS CAPPS, California
MARSHA BLACKBURN, Tennessee          MICHAEL F. DOYLE, Pennsylvania
  Vice Chairman                      JANICE D. SCHAKOWSKY, Illinois
STEVE SCALISE, Louisiana             G.K. BUTTERFIELD, North Carolina
ROBERT E. LATTA, Ohio                DORIS O. MATSUI, California
CATHY McMORRIS RODGERS, Washington   KATHY CASTOR, Florida
GREGG HARPER, Mississippi            JOHN P. SARBANES, Maryland
LEONARD LANCE, New Jersey            JERRY McNERNEY, California
BRETT GUTHRIE, Kentucky              PETER WELCH, Vermont
PETE OLSON, Texas                    BEN RAY LUJAN, New Mexico
DAVID B. McKINLEY, West Virginia     PAUL TONKO, New York
MIKE POMPEO, Kansas                  JOHN A. YARMUTH, Kentucky
ADAM KINZINGER, Illinois             YVETTE D. CLARKE, New York
H. MORGAN GRIFFITH, Virginia         DAVID LOEBSACK, Iowa
GUS M. BILIRAKIS, Florida            KURT SCHRADER, Oregon
BILL JOHNSON, Missouri               JOSEPH P. KENNEDY, III, 
BILLY LONG, Missouri                     Massachusetts
RENEE L. ELLMERS, North Carolina     TONY CARDENAS, California
LARRY BUCSHON, Indiana
BILL FLORES, Texas
SUSAN W. BROOKS, Indiana
MARKWAYNE MULLIN, Oklahoma
RICHARD HUDSON, North Carolina
CHRIS COLLINS, New York
KEVIN CRAMER, North Dakota

           Subcommittee on Commerce, Manufacturing, and Trade

                       MICHAEL C. BURGESS, Texas
                                 Chairman
                                     JANICE D. SCHAKOWSKY, Illinois
LEONARD LANCE, New Jersey              Ranking Member
  Vice Chairman                      YVETTE D. CLARKE, New York
MARSHA BLACKBURN, Tennessee          JOSEPH P. KENNEDY, III, 
GREGG HARPER, Mississippi                Massachusetts
BRETT GUTHRIE, Kentucky              TONY CARDENAS, California
PETE OLSON, Texas                    BOBBY L. RUSH, Illinois
MIKE POMPEO, Kansas                  G.K. BUTTERFIELD, North Carolina
ADAM KINZINGER, Illinois             PETER WELCH, Vermont
GUS M. BILIRAKIS, Florida            FRANK PALLONE, Jr., New Jersey (ex 
SUSAN W. BROOKS, Indiana                 officio)
MARKWAYNE MULLIN, Oklahoma
FRED UPTON, Michigan (ex officio)
  
                             C O N T E N T S

                              ----------                              
                                                                   Page
Hon. Michael C. Burgess, a Representative in Congress from the 
  State of Texas, opening statement..............................     1
    Prepared statement...........................................     3
Hon. Janice D. Schakowsky, a Representative in Congress from the 
  State of Illinois, opening statement...........................     4
Hon. Marsha Blackburn, a Representative in Congress from the 
  State of Tennessee, opening statement..........................     6
Hon. Frank Pallone, Jr., a Representative in Congress from the 
  State of New Jersey, opening statement.........................     7
Hon. Fred Upton, a Representative in Congress from the State of 
  Michigan, prepared statement...................................   226

                               Witnesses

Edith Ramirez, Chairwoman, Federal Trade Commission..............     8
    Prepared statement...........................................    11
Joshua Wright, University Professor, Antonin Scalia Law School, 
  George Mason University........................................    59
    Prepared statement...........................................    62
Abigail Slater, General Counsel, the Internet Association........    78
    Prepared statement...........................................    80
David Vladeck, Professor of Law, Georgetown Law School...........    88
    Prepared statement...........................................    90
Geoffrey Manne, Founder and Executive Director, the International 
  Center for Law and Economics...................................   110
    Prepared statement...........................................   112
Daniel Castro, Vice President, Information Technology and 
  Innovation Foundation..........................................   134
    Prepared statement...........................................   136
Richard Hendrickson, President and CEO, Lifetime Products........   158
    Prepared statement...........................................   160
Greg O'Shanick, President and Medical Director, the Center for 
  Neurorehabilitation Services...................................   163
    Prepared statement...........................................   165
Stephen Shur, President, Travel Technology Association...........   168
    Prepared statement...........................................   170
Robert Arrington, President, the National Funeral Directors 
  Association....................................................   178
    Prepared statement...........................................   180
John Breyault, Vice President of Public Policy, 
  Telecommunications, and Fraud, the National Consumers League...   185
    Prepared statement...........................................   187
Gil Genn, Maryland Sports and Entertainment Industry Coalition...   199
    Prepared statement...........................................   201
Jamie Pena, Vice President, Revenue Strategy and Global 
  Distribution, Omni Hotels & Resorts............................   204
    Prepared statement \1\.......................................   206
Michael Best, Senior Policy Advocate of Consumer Federation of 
  America........................................................   213
    Prepared statement...........................................   215

                           Submitted material

Statement of the Brain Injury Association of America.............   227
Statement of the American Society of Association Executives......   229
Statement of the National Sporting Goods Association.............   231
Statement of joint associations..................................   232
Statement of Ashford.............................................   234
Statement of Delta...............................................   235
Statement of the Chamber of Commerce.............................   261
Statement of the American Academy of Pediatrics..................   263
Statements of Consumers Union....................................   264
Statement of the Retail Industry Leaders Association.............   269
Statement of Safe Kids Worldwide.................................   271
Statement of the National Association of State Head Injury 
  Administrators.................................................   272
Article entitled, ``In dark move, Congress considers rolling back 
  transparency for meetings,'' Sunlight Foundation Blog, May 23, 
  2016...........................................................   273
Statement of various stakeholders................................   278

----------
\1\ The addendum to Ms. Pena's testimony is available at: http://
  docs.house.gov/meetings/IF/IF17/20160524/104976/HHRG-114-IF17-
  Wstate-PenaJ-20160524.pdf.

 
                  LEGISLATIVE HEARING ON 17 FTC BILLS

                              ----------                              


                         TUESDAY, MAY 24, 2016

                  House of Representatives,
Subcommittee on Commerce, Manufacturing, and Trade,
                          Committee on Energy and Commerce,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 10:00 a.m., in 
room 2123 Rayburn House Office Building, Hon. Michael Burgess 
(chairman of the subcommittee) presiding.
    Members present: Representatives Burgess, Lance, Blackburn, 
Harper, Guthrie, Olson, Pompeo, Kinzinger, Bilirakis, Brooks, 
Mullin, Schakowsky, Clarke, Kennedy, Cardenas, Rush, 
Butterfield, Welch, and Pallone (ex officio).
    Also present: Representatives McNerney and Tonko.
    Staff present: Leighton Brown, Deputy Press Secretary; 
Rebecca Card, Assistant Press Secretary; James Decker, Policy 
Coordinator, Commerce, Manufacturing, and Trade; Graham 
Dufault, Counsel, Commerce, Manufacturing, and Trade; Melissa 
Froelich, Counsel, Commerce, Manufacturing, and Trade; Giulia 
Giannangeli, Legislative Clerk, Commerce, Manufacturing, and 
Trade; Paul Nagle, Chief Counsel, Commerce, Manufacturing, and 
Trade; Tim Pataki, Professional Staff Member; Olivia Trusty, 
Professional Staff, Commerce, Manufacturing, and Trade; Dylan 
Vorbach, Deputy Press Secretary; Michelle Ash, Minority Chief 
Counsel, Commerce, Manufacturing, and Trade; Jeff Carroll, 
Minority Staff Director; Lisa Goldman, Minority Counsel, 
Commerce, Manufacturing, and Trade; Rick Kessler, Minority 
Senior Advisor and Staff Director, Energy and Environment; Dan 
Miller, Minority Staff Assistant; Caroline Paris-Behr, Minority 
Policy Analyst; Tim Robinson, Minority Chief Counsel; Matt 
Schumacher, Minority Press Assistant; Andrew Souvall, Minority 
Director of Communications, Outreach and Member Services; and 
CJ Young, Minority Press Secretary.

OPENING STATEMENT OF HON. MICHAEL C. BURGESS, A REPRESENTATIVE 
              IN CONGRESS FROM THE STATE OF TEXAS

    Mr. Burgess [presiding]. The subcommittee on Commerce, 
Manufacturing, and Trade will come to order.
    The Chair recognizes himself for 5 minutes for the purpose 
of an opening statement.
    I want to welcome everyone here this morning. This is going 
to be a very productive morning and, certainly, we have been 
looking forward to it for some time. It has been 20 years since 
Congress last reauthorized the Federal Trade Commission. I 
don't need to remind you that that was in the Dark Ages. People 
still carried pagers; they dialed into the internet, if they 
were lucky enough to have one, let alone multiple, e-mail 
accounts. The world was very much a different place.
    We are long overdue to revisit the FTC Act and to ponder 
some of the targeted adjustments. We are guided by many new 
products and services that we have examined in this 
subcommittee in our Disruptor Series. Mobile payments and 
connected devices, for example, pose new policy questions. Some 
of these questions have inspired technophobia, but there is 
something that is actually more frightening than new 
technology, the prospect of never realizing the jobs and 
prosperity that result from the inventive industry because of 
fear of production.
    A key takeaway from the Disruptor Series is that, if the 
law lags behind technology, capital shrinks and new products 
and services do not emerge. Certainty, on the other hand, 
begets investment, which, in turn, delivers more progress for 
consumers and, finally, does answer the questions that many 
Americans are still asking, where are the jobs?
    Many members of the subcommittee have introduced bills that 
make general reforms to the Commission's activities under 
Section 5 of the FTC Act, and I thank them for their 
involvement and their leadership in this area. The basic FTC 
framework for policing unfair or deceptive conduct after the 
fact is a good one. However, the Federal Trade Commission faces 
tough decisions when it encounters cases presented by new 
products and new services in evolving markets.
    For example, it must revisit the length of consent decrees 
against the speed of businesses and what other agencies do. 
Twenty-year consent decrees easily move away from after-the-
fact remedies to a prospective ``Mother May I''-type 
regulation.
    Other areas need fortification. It is widely understood 
that informal policy guidelines are helpful and do not create 
liability independent of enforceable rules or statutes. 
Clarifying that the Federal Trade Commission will not use them 
to pressure a settlement would provide incremental definition 
to a company's liability while maintaining the Federal Trade 
Commission's current authority.
    Similarly, providing analyses showing why the Federal Trade 
Commission believes certain investigations reveal no liability 
would also help define legality under Section 5. Along with 
policy guidance, previous complaints, and consent orders, this 
additional information would be another strong signal for the 
market.
    The second thing this morning deals with specific 
industries or services under the Federal Trade Commission's 
jurisdiction. The bills in this category focus on specific 
conduct that has been observed and has felt to possibly harm 
consumers. The Federal Trade Commission is likely familiar with 
many of these issues.
    The Reinforcing American-Made Products Act recognizes the 
Federal Trade Commission's work on made-in-the-USA labeling and 
establishes it as a nationwide standard. Differing standards 
among states as to what is an American product has not always 
been helpful. This legislation would be especially impactful to 
a company back in Texas. In Justin, Texas, surprisingly, is the 
home of Justin Boots. They make handcrafted leather cowboy 
boots. The various patchwork state standards of made-in-America 
regulations throughout the country have made it difficult for 
Justin Boots to sell its products in all 50 states. And 
certainly, this morning I look forward to supporting 
legislation that will unburden this historic and great company 
from the amount of red tape imposed on it through these 
regulations. This bill is a critical step in making it 
worthwhile for United States manufacturers to make their 
product in America.
    The Consumer Review Fairness Act builds on the Federal 
Trade Commission's work in the Roca Labs case, which was an 
enforcement action brought by the FTC against a company which 
producing a line of weight-loss supplements who allegedly made 
baseless claims for its products and, then, threatened to 
enforce gag clause provisions against consumers to stop them 
from posting negative reviews and testimonials online. A 
company should never be in the business of preventing American 
consumers from speaking honestly.
    In summary, the bills we put forward today are designed to 
make some adjustments to ensure that innovation can thrive in 
order to provide consumer benefits and create jobs.
    I now yield to the ranking member of the subcommittee, Ms. 
Schakowsky, for 5 minutes.
    [The prepared statement of Mr. Burgess follows:]

             Prepared statement of Hon. Michael C. Burgess

    It has been 20 years since Congress last reauthorized the 
Federal Trade Commission. Back then, people still carried 
pagers, dialed into the Internet and were lucky to have one, 
let alone multiple, email accounts. The world was a different 
place.
    Thus, we are long overdue to revisit the FTC Act and ponder 
some targeted adjustments.
    We are guided by the many new products and services 
examined in our Disrupters Series of hearings.
    Mobile payments and connected devices, for example, pose 
new policy questions. Some of these questions have inspired 
`technophobia.' But there is something more frightening than 
new technology: The prospect of never realizing the jobs and 
prosperity that result from inventive industry, simply because 
of fear.
    A key takeaway from the Disrupters Series is that if the 
law lags behind technology, capital shrinks and new products 
and services will not emerge. Certainty, on the other hand, 
begets investment-which in turn delivers progress for consumers 
and help the many Americans still asking, ``Where are the 
jobs?''
    Many members of our Subcommittee introduced bills that make 
general reforms to the Commission's activities under Section 5 
of the FTC Act, and I thank them for their leadership in this 
area.
    The basic FTC framework for policing unfair or deceptive 
conduct after the fact is a good one. However, the FTC faces 
tough decisions when it encounters cases presented by new 
products or services in fast evolving markets.
    For example, it must revisit the length of its consent 
decrees against the speed of business and what other agencies 
do. 20 year consent decrees easily move away from after the 
fact remedies to prospective, ``Mother May I'' regulation.
    Other areas need fortification. It is widely understood 
that informal policy guidelines are helpful do not create 
liability independent of enforceable rules or statutes. 
Clarifying that the FTC will not use them to pressure a 
settlement would provide incremental definition to a company's 
liability while maintaining the FTC's current authority.
    Similarly, providing analyses showing why the FTC believes 
certain investigations reveal no liability would also help 
define legality under Section 5. Along with policy guidance, 
previous complaints, and consent orders, this additional 
information would be another strong signal for the market.
    The second theme deals with specific industries or services 
under the FTC's jurisdiction. The bills in this category focus 
on specific conduct that has been observed to harm consumers.
    The FTC is likely familiar with many of these issues. The 
Reinforcing American Made Products Act recognizes the FTC's 
work on `Made in the USA' labeling and establishes it as the 
nationwide standard. Differing standards among states as to 
what is an American product is not a helpful approach. This 
legislation would be especially impactful to a company in my 
district, Justin Boots, which makes handcrafted leather cowboy 
boots. The various patchwork state standards of ``Made in 
America'' regulations throughout the country have made it 
difficult for Justin Boots to sell its products in all 50 
states, and I look forward to supporting legislation that will 
unburden this great company from the myriad of red tape imposed 
on it through these regulations.
    This bill is a critical step in making it worthwhile for 
U.S. manufacturers to make their products here in America. The 
Consumer Review Fairness Act builds on the FTC's work in the 
Roca Labs case, which was an enforcement action brought by the 
FTC against a company which produces a line of weight-loss 
supplements who allegedly made baseless claims for its 
products, and then threatened to enforce ``gag clause'' 
provisions against consumers to stop them from posting negative 
reviews and testimonials online. A company should never be in 
the business of preventing American consumers from speaking 
honestly.
    In summary, the bills we put forward today are designed 
make some adjustments to ensure that innovation can thrive in 
order to provide consumer benefits and create jobs. I thank all 
of the witnesses for being here and helping guide our inquiry 
today. I look forward to their testimony.

       OPENING STATEMENT OF HON. JANICE D. SCHAKOWSKY, A 
     REPRESENTATIVE IN CONGRESS FROM THE STATE OF ILLINOIS

    Ms. Schakowsky. OK. All right. Thank you, Chairman Burgess, 
for holding this, our first legislative hearing in the 
subcommittee since September.
    We have a long list of bills to discuss today, enough to 
fill several legislative hearings, and the connecting theme is 
the Federal Trade Commission.
    The FTC is critical to consumers and businesses. It 
protects consumers from unfair and deceptive practices. At the 
same time, it defends fair competition. In just the past few 
months, the FTC has stopped organizations falsely claiming to 
help cancer patients in order to steal from unsuspecting 
donors. It has stopped a debt-relief organization that was 
targeting struggling homeowners and charging illegal fees.
    We have talked a lot in this subcommittee about new 
technology, and the FTC has been fully engaged. Last month the 
FTC put out guidance for mobile health apps, encouraging 
companies to protect consumers' privacy as they develop these 
new products.
    The FTC track record as a consumer and competition watchdog 
is impressive. As Chairman Ramirez shares with us in her 
written testimony, last year the FTC's consumer protection 
efforts yielded over $700 million in savings and its 
competition efforts saved consumers $3.4 billion. This agency 
works, and this subcommittee should be working to strengthen 
the FTC, not disrupt it.
    Unfortunately, the bills put forth by Republicans in this 
hearing go in the wrong direction. They tie the hands of the 
FTC under the guise of so-called process reform. I have 
concerns with each of the eight Republican process bills.
    For instance, the FTC uses consent decrees to protect 
consumers from repeated bad behavior by companies. One bill 
would cut the maximum length of these consent decrees by more 
than half, leaving consumers more vulnerable.
    Suppose the FTC issues a consent decree against a company 
that fails to protect a consumer's credit card information. 
Under this bill, the company could put consumers' finances back 
at risk in as little as five years.
    This and other proposals would effectively bog down the FTC 
by forcing it more frequently to review and renew its actions. 
Stretching the agency's resources would mean less protection, 
more consumers falling victim to deceptive ads and unfair 
business practices.
    Under these bills when the FTC does take action, it would 
have to jump through additional hoops to protect consumers. It 
would be harder for the FTC to pursue actions to prevent harm 
to consumers, and when the FTC would want to take action under 
its now-narrowed authority, it would have to wait for a time-
consuming economic analysis, even on minor actions. Instead of 
protecting consumers, these bills would protect companies that 
victimize consumers.
    The so-called SHIELD Act would provide a safe harbor for 
companies that comply with FTC guidance at the same time it 
says that FTC cannot use noncompliance with guidance as proof 
that the law was violated. You can't have it both ways. 
Guidance is not the law and it definitely should not be treated 
as the law only when it works to the company's advantage.
    I don't have enough time to go through all the problems 
with these bills one by one, but I think you have got the 
picture. These eight bills reflect an effort to prioritize the 
interest of industry above the interest of consumers.
    Meanwhile, Democrats have introduced bills to empower the 
FTC. Congressman McNerney's bill would allow the FTC to go 
after deceptive practices by telecom companies such as lying 
about data, speed, or service that consumers will receive. 
Congressman Rush's bill would allow the FTC to more easily go 
after sham nonprofits.
    In this hearing we will also be considering seven bills 
directed at specific areas of commerce such as tickets, 
sporting goods, hotels, funeral services, consumer reviews, and 
American manufacturing.
    I look forward to hearing from supporters and opponents of 
each of these bills. I worry we won't have enough time to give 
each individual bill a thorough examination in this hearing, 
but I am glad that we are finally giving them a closer look.
    We have a lot to discuss today, but, as we look at the 
bills today, I hope we focus on how we can best fulfill the 
FTC's mission of protecting consumers and competition.
    I thank all our three panels of witnesses, and I look 
forward to your testimony.
    I yield back right on time.
    Mr. Burgess. Thank you very much, Congresswoman.
    The Chair now recognizes the Vice Chair of the full 
committee, Congresswoman Blackburn of Tennessee.

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

    Mrs. Blackburn. Thank you, Mr. Chairman.
    Ms. Ramirez, we appreciate that you would take the time; 
also, appreciate your testimony and the fact that you have 
given a review to the legislation that we are bringing before 
you today. As Ms. Schakowsky said, we are going to have 
questions. We do want your input, and we look forward to moving 
ahead with the legislation and the bills that would really 
bring some additional and needed transparency to the FTC's 
consumer protection mission and get into addressing some 
industry-specific concerns. That is always helpful to industry. 
It is helpful to us, and I know you all as regulators, it is 
helpful to you.
    I want to speak briefly about H.R. 5104, which Congressman 
Tonko and I have introduced, the Better On-Line Ticket Sales 
Act of 2016, or the BOTS bill as it is commonly called. This is 
important to many of my constituents who are in Tennessee who 
are concert performers and entertainers.
    What this will do, simply, it to disallow the use of some 
of this hacking software that we see the scalpers use, and they 
bundle up all the tickets, purchase all the tickets before fans 
and our constituents and consumers have the ability to, from 
their laptop or mobile device or PC, get onto that online 
ticket sales portal and make their purchase.
    So, as more of this moves online, it is important that we 
look at this. As a label head said to me yesterday, this is 
about keeping the marketplace fair and about allowing consumers 
to exercise online commerce and ecommerce. So, we do seek your 
input there.
    I also want to welcome Robert Arrington, a fellow 
Tennessean who is here for the National Funeral Directors and 
say welcome to the committee. We look forward to hearing from 
you later on the bill.
    With that, I yield my time to the Vice Chair of the 
subcommittee, Mr. Lance.
    Mr. Lance. Thank you very much, Congresswoman.
    This hearing is a product of our ongoing Disruptor Series, 
and the package of bills we are considering today is the result 
of what we have learned from these hearings and aims to bring 
the Federal Trade Commission into the 21st century.
    For my part, I have introduced H.R. 5111, the Consumer 
Review Fairness Act, with my colleague from Massachusetts, 
Congressman Kenned. Today it is easier than ever for consumers 
to make informed choices on which business or service to use by 
conducting Web sites and apps that publish crowdsourced reviews 
of local businesses. Easy access to reliable product and 
service evaluations has reduced transactions costs and helped 
contribute to an enormous consumer surplus estimated in the 
billions of dollars.
    Unfortunately, a number of businesses have become 
frustrated by what they perceive as unfair criticism, and some 
have turned to the questionable legal remedy known as non-
disparagement clauses, often buried in nonnegotiable form 
contracts. These clauses prohibit their customers from writing 
negative reviews about their businesses. It is essential we 
protect consumers' right to free speech and remove any doubt in 
potential consumers' minds that the reviews they are reading 
online are anything other than fair and accurate.
    This bill would void non-disparagement clauses in form 
contracts. It would also provide the FTC with the enforcement 
tools it needs to combat the bad actors who try to use these 
onerous clauses.
    And I yield the balance of my time to Mr. Pompeo of Kansas.
    Anyone else on our side?
    [No response.]
    Thank you very much.
    I next recognize the ranking member of the full committee, 
Mr. Pallone.
    Mr. Pallone. Thank you. It is good to see you in the chair.
    Mr. Lance. Thank you, Mr. Pallone. New Jersey has to stick 
together.

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

    Mr. Pallone. Today the subcommittee will attempt to review 
17 bills. I say ``attempt'' because we cannot possibly expect a 
thorough review of each piece of legislation on the agenda. 
While I am pleased that the majority agreed to add six bills 
authored by Democrats, unfortunately, it was to an already-too-
long list of 11 Republican bills.
    Mr. Chairman, as you know, I am a big proponent of regular 
order. To me, that means engaging in real deliberation, not 
just having a check-the-box hearing. Since I can't possibly 
cover all the bills being considered, I am going to focus my 
comments on those that are intended to inhibit the ability of 
the Federal Trade Commission from carrying out its mission of 
protecting consumers. This attack on the FTC is notable, in 
light of the majority's recent praise of the FTC's privacy and 
data security expertise, both recently in the Communications 
and Technology Subcommittee and last year during this 
subcommittee's markup of data security legislation.
    But the Republican process bills before us today just 
confirm the majority's true intention, I believe, and that is 
across-the-board deregulation. Republicans say privacy should 
be only in the purview of the FTC. Yet, they are simultaneously 
introducing bills to gut the FTC of even its limited 
authorities.
    Among their many deficiencies, these bills would encourage 
stall tactics by bad actors, burden the staff with 
unconstructive tasks, and effectively obstruct important 
information exchanges between Congress and the FTC. These 
initiatives also would limit the FTC's ability to assist local, 
state, federal, and other countries' governments in their 
efforts to help consumers. They would also undermine the FTC's 
ability to be flexible and nimble in addressing emerging 
problems.
    Republicans claim that these bills would promote 
innovation, but, in reality, they would actually hurt 
companies. For example, two of these bills could lead to 
confidential investigations being inadvertently revealed before 
the FTC has decided whether to take action or after the 
Commission has decided not to take any action. And businesses 
do not want the FTC being discouraged from providing guidance 
to help those companies ensure that they are complying with the 
law.
    These eight bills put the FTC on the wrong track. If we 
want to help consumers, we should be giving the FTC additional 
tools, not raiding their toolshed.
    And that is why I support the bill authored by Mr. Rush 
that would give the FTC authority over nonprofits. That bill 
would increase the ability of the FTC to protect consumers. For 
example, it would allow the FTC to pursue scammers that have 
formed faked veterans' charities to scam Americans who want to 
help veterans.
    And I support Mr. McNerney's bill, also, the Protecting 
Consumers in Commerce Act of 2016, which would give the FTC the 
authority to bring enforcement actions against communications 
common carriers. Enforcement should be based on the activity, 
not the entity. If a company in the telecommunications industry 
acts unfairly or deceptively in advertising, marketing, or 
billing, the FTC should act to protect consumers. For example, 
if a wireless company promises unlimited data, but deceptively 
slows the data speeds of high-usage customers, the FTC should 
be able to act.
    So, Mr. Chairman, I would like to move several of the bills 
under discussion forward with the limited time that we have 
left before the summer recess, but I would strongly urge that 
we only advance those bills that can garner true bipartisan 
support, because together I know we can move the ball forward 
for consumers.
    I don't know that anybody on my side would like some time. 
If not, I will yield back the balance of the time.
    Thanks, Mr. Chairman.
    Mr. Burgess. The gentleman yields back. The Chair thanks 
the gentleman.
    That concludes member opening statements. The Chair would 
remind members that, pursuant to committee rules, all members' 
opening statements will be made part of the record.
    We do want to thank our witnesses for being here today and 
for taking time to testify before the subcommittee.
    Today's hearing will consist of three panels. Each panel of 
witnesses will have the opportunity to give a summary of their 
opening statement, followed by a round of questions from 
members. Once we conclude with questions from the first panel, 
we will take a brief recess and set up for the second panel 
and, then, subsequently, the third panel.
    Our first witness panel for today's hearing is Ms. Edith 
Ramirez, the Chairwoman at the Federal Trade Commission. We 
appreciate your being here today and thank you for the time and 
attention that you have always given to the subcommittee when 
we have called. It is certainly appreciated.
    We will begin the panel with you, 5 minutes to summarize 
your opening statement, please.

     STATEMENT OF EDITH RAMIREZ, CHAIRWOMAN, FEDERAL TRADE 
                           COMMISSION

    Ms. Ramirez. Thank you. Dr. Burgess, Ranking Member 
Schakowsky, and members of the subcommittee, I appreciate the 
opportunity to appear before you today to present the Federal 
Trade Commission's testimony on the 17 bills under 
consideration by the subcommittee. My fellow Commissioners and 
I appreciate the subcommittee's commitment to protecting both 
consumers and innovation.
    As you know, the FTC is an independent and highly-effective 
bipartisan agency. We are the only agency with the jurisdiction 
to protect consumers and promote competition in most sectors of 
the economy.
    As a civil law enforcer, we guard against business 
practices that are unfair or deceptive to consumers and we aim 
to do so without impeding legitimate business activity. We also 
enforce the antitrust laws to ensure a competitive marketplace 
in which law-abiding businesses can flourish.
    In addition to our law enforcement, the FTC engages in 
extensive research and policy work. The FTC also educates 
consumers and businesses to encourage informed consumer 
choices, compliance with the law, and public understanding of 
the competitive process.
    We are particularly committed to addressing the impact of 
technology and changing business practices as part of our law 
enforcement, policy, and education efforts. We work to enhance 
our understanding of how technology affects consumers and the 
functioning of the marketplace through research and engagement 
with consumer advocates, industry, academics, and other 
experts.
    Over the last several years, we have also deepened our 
internal technical expertise. We hired our first Chief 
Technologist in 2010 and have continued to attract prominent 
experts to serve in that role. And last year we created the 
Office of Technology, Research, and Investigation to support 
our law enforcement efforts and explore cutting-edge technical 
and policy issues relating to big data, the internet of things, 
and other emerging technologies.
    But, even as commerce and technology continue to evolve, 
many of the fundamental problems we see in the marketplace 
remain the same: fraudulent schemes, deceptive advertising, 
unfair practices, as well as mergers and conduct that harm or 
threaten to harm competition. The agency tackles these 
challenges through targeted law enforcement. Our structure, 
committed staff, and research capacity enable the FTC to meet 
its mandate of protecting consumers and competition in an ever-
changing marketplace.
    I appreciate the opportunity to comment on the 17 proposed 
bills before the subcommittee. While the Commission generally 
supports several of the bills, we believe that other measures 
may unintentionally hamper the FTC's ability to continue to 
fulfil its mission to protect consumers and competition. Our 
written testimony addresses each of the bills, but let me 
provide a brief overview.
    House bills 5111, 5092, 4460, 4526, 5212, 5245, and 5104, 
if enacted, would identify and address specific acts or 
practices that Congress proposes to include in the Commission's 
consumer protection agenda. We generally share the 
subcommittee's goals in these areas. For example, to prevent 
companies from silencing truthful consumer reviews, to stop 
deceptive safety claims in the sale of sports equipment, to 
promote fairness and transparency in sale of concert tickets, 
and to prohibit online travel sites from deceiving consumers 
about their affiliations with hotels.
    The Commission also shares the subcommittee's goal of 
facilitating deliberations and highlighting important agency 
work. To this end, H.R. 5116 would give a bipartisan majority 
of Commissioners another way to meet and deliberate, and 
portions of H.R. 5098 would require an annual report to 
Congress on the important problem of elder fraud.
    As to several other bills, specifically H.R. 5093, 5097, 
5109, 5118, 5136, 5115, and the remaining portions of 5098, we 
do have certain concerns. We recognize and support the 
objectives of these bills, the avoidance of undue burdens on 
business, transparency of agency operations and its application 
of the law, and assurance that agency actions are based on 
sound analysis and evidence.
    But the agency already has a variety of processes in place 
to advance these important values. As explained in our written 
statement, we are concerned that the measures could have 
unintended consequences for our work and, ultimately, for 
consumers.
    Finally, House bills 5239 and 5255 would repeal the common 
carrier and nonprofit exemptions to the FTC Act. The Commission 
supports these measures which would allow us to protect 
consumers and competition more broadly and to ensure the 
consistent application of laws across economic sectors.
    In closing, I want to reiterate that we are committed to 
finding ways to enhance our effectiveness, anticipate and 
respond to changes in the marketplace, and meet current and 
future challenges.
    Thank you very much.
    [The prepared statement of Ms. Ramirez follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]                           

    
    Mr. Burgess. The Chair thanks the gentlelady for her 
testimony, and we will move to the question-and-answer portion 
of the hearing. I will begin the questioning by recognizing Mr. 
Lance of New Jersey for 5 minutes, please.
    Mr. Lance. Thank you, Mr. Chairman, and good morning to 
you, Commissioner.
    I understand that the FTC settled a case with Roca Labs 
that resulted in an injunction that prohibits the company from 
using form contract provisions punishing consumers for giving 
negative reviews. And I am the sponsor the legislation in this 
regard, H.R. 5111, and I am pleased that you commented 
favorably upon it.
    I would like to know, based on your expertise, what 
additional tools would the Consumer Review Fairness Act give 
the Commission to stop these kinds of deceptive practices.
    Ms. Ramirez. Congressman, thank you for your question. This 
is an issue that is of concern to us in connection with the 
case that you mentioned, Roca Labs. That case involved 
deceptive advertising with regard to weight-loss products, but 
the company also threatened lawsuits against consumers who 
wrote negative reviews in connection with those products.
    We believe that it is important for consumers to have 
access to truthful information, and we believe that the bill 
that you are cosponsoring would, in fact, permit that. We can't 
address these kinds of issues individually as effectively as 
legislation like the kind that you are sponsoring. So, we see 
this as something that would be beneficial.
    Mr. Lance. I don't recall the details. Was this a decision 
of one of the United States Circuit Courts in that case?
    Ms. Ramirez. This was a settlement that was reached by the 
Commission and it did address this issue of non-disparagement 
clauses that we believe have the effect of impeding accurate 
and truthful information about products.
    Mr. Lance. And generally, how do companies entrap consumers 
so as not to be able to be honest in their reviews?
    Ms. Ramirez. What could happen is that there might be a 
non-disparagement clause that is included as a term in a 
contract that consumers may potentially not be aware of. In any 
event, it does impede the ability of consumers to provide 
useful reviews online. We think that that is an important 
avenue for consumers to be aware of reviews of products, and we 
promote the need for consumers to have access to truthful and 
accurate information, regardless of whether it is a negative 
review, so long as it is truthful.
    Mr. Lance. And the average consumer might sign some sort of 
form when he or she purchases a product and not realize that he 
or she is signing a form with a non-disparagement clause in it?
    Ms. Ramirez. That certainly could be a scenario that we 
might encounter, yes.
    Mr. Lance. I think it is essential that the American people 
have the right to speak their minds in this area, and I hope 
that the bill I am sponsoring, with the cosponsorship of 
Congressman Kennedy, will be able to garner unanimous support 
here. And I certainly want to work with the FTC because I think 
it is nothing short of a scandal that the American people 
cannot freely and fairly express their points of view regarding 
products and services for which they have contracted.
    Thank you, Mr. Chairman, and I yield back the balance of my 
time.
    Mr. Burgess. The gentleman yields back. The Chair thanks 
the gentleman.
    The Chair recognizes Ms. Schakowsky of Illinois, the 
ranking member of the subcommittee, for 5 minutes for 
questions, please.
    Ms. Schakowsky. Thank you, Mr. Chairman.
    Much of the discussion from the majority in today's hearing 
is about how the FTC is holding back innovation by overreaching 
on its enforcement. At the same time, they are ignoring, I 
think, the need for the FTC to be innovative and flexible, to 
adapt to innovation in industry.
    So, let me refer to H.R. 5098, which requires the FTC to 
publish an annual plan of its projected activities for the 
year. The bill may seem innocuous to some people, but I know 
the FTC has concerns about publishing such a report. What are 
some of the concerns, Mr. Ramirez?
    Ms. Ramirez. Thank you, Ranking Member.
    I would highlight at least two concerns. One is that we are 
already quite transparent about the priorities and work that 
the agency undertakes. I mean, I will just offer you just a few 
examples of that. That includes the fact that we include our 
priorities and plans for the upcoming year in connection with 
our congressional budget justification. We also go through a 
strategic planning process that we are required to do at the 
outset of every administration. We last published a strategic 
plan, a 5-year plan, back in 2014 covering the years 2014 
through 2018.
    Also, in connection with our regulatory matters, we on 
annual basis publish upcoming rule reviews or rulemakings that 
we are undertaking. That is apart from the significant 
communication that we have on our Web site where we list 
upcoming events. Our law enforcement actions, of course, are 
confidential, but when we do take enforcement action, we 
absolutely publicize those.
    So, No. 1, I believe that we are fully transparent when it 
comes to our priorities and upcoming plans. And secondly, I 
worry about the added burden that would be placed on the agency 
doing more than we already do with existing reporting 
requirements.
    Ms. Schakowsky. Well, let me raise a concern I have, that 
it would inhibit in some way the agency's ability to react to 
emerging trends. So that, if you have to issue a report more 
than a year in advance, that it could, and I would be 
concerned, that it would make the Commission less flexible.
    Ms. Ramirez. I completely concur. We, for instance, hold a 
number of workshops over the course of a year. Oftentimes, we 
may not know in December what all of the workshops that we may 
be hosting the following year. We want to be flexible. We want 
to make sure that we stay on top of emerging trends, and we 
want to have the flexibility to decide on those going forward. 
I think the more burdened that we are with reporting 
requirements, we may feel compelled to stick to a particular 
framework that has been set out when, in fact, it is more 
important for the agency to remain nimble and flexible.
    Ms. Schakowsky. Right. H.R. 5097 automatically closes 
investigations after 6 months unless the FTC acts through 
communications with the company being investigated or the 
Commissioners vote to keep the investigation open. Why would 
investigations take longer than 6 months? And I wonder if you 
have any examples of investigations that may have been idle for 
some or just taken longer and why.
    Ms. Ramirez. It is not uncommon for an investigation to 
take longer than 6 months. A lot of the investigations that we 
handle are complex. The competition investigations that we 
handle are certainly difficult and complex and do require time.
    Let me note that there is regular communication as a 
general practice with companies that are under investigation. 
So, any concern about there being a company who may not know 
the status of an investigation, we generally endeavor to stay 
in contact with them.
    I think that it would be a very severe consequence that 
would penalize consumers if the measure that you note were to 
pass. To automatically terminate an investigation for failure 
to communicate with a company would, in my mind, be far too 
severe and really would undermine our ability to protect 
consumers. There could easily be an oversight where there might 
not be communication, and in my mind, it is a disproportionate 
consequence, a failure to communicate.
    Let me also just note that we already have processes in 
place. We have a rule that requires any company that is subject 
to an obligation to preserve materials, if there has not been 
any communication with the agency over the course of one year, 
that duty to maintain information expires.
    So, we already have rules in place to ensure that there is 
regular contact with companies that are under investigation, 
but I think it would unduly harm consumers if this measure were 
to be adopted.
    Ms. Schakowsky. Thank you for clarifying that.
    I yield back.
    Mr. Burgess. Thanks to the gentlelady. The gentlelady 
yields back.
    The Chair recognizes the gentlelady from Tennessee, Mrs. 
Blackburn, and Vice Chair of the full committee, for 5 minutes 
for questions, please.
    Mrs. Blackburn. Thank you, Mr. Chairman, and it looks like 
your allergies are under control. I am happy to see you sitting 
back there with the gavel.
    Ms. Ramirez, I do want to come to you with just a couple of 
questions on the BOTS Act. As I said earlier, I appreciate your 
comments on this. Of course, it is a simple three-page bill. It 
would make an unfair and deceptive practice under the Federal 
Trade Commission Act to violate the terms and conditions of a 
ticketing site and the use of a bot to do that. And the third 
section would create a private right of action with a clear 
federal standard to allow parties harmed by bots to sue 
botsters under that clear federal standard.
    So, our goal--and I think you share this goal--is to say, 
how can we help ticket-sellers protect themselves against 
scalpers who use this circumvention software? And if a ticket-
seller is the victim of a ticket bot scheme, how should they 
report that unlawful activity to the Commission?
    Ms. Ramirez. Generally supportive of this measure. So, 
thank you for sponsoring it. We share the concerns that you 
have about the use of software in connection with the sale of 
online tickets.
    In connection with this bill, we would only have just a 
couple of comments to ensure that the bill only prohibits 
unlawful activity and doesn't unintentionally ensnare 
legitimate activity. And that would be to make sure that it 
doesn't punish general purpose software and only software that 
is designed for the activities that you note.
    We would also suggest that the bill clarify that consumers 
could be permitted to resell tickets. Again, our goal would 
simply be to make sure that only unlawful activity is captured 
by the bill. But generally, we are supportive and share the 
concerns that you have articulated.
    Mrs. Blackburn. OK. And then, if a ticket-seller is the 
victim of a bot scheme, how do they go about reporting that to 
you? I want you to discuss just a little bit about your record 
of work in combating the illegal activities of ticket scalpers.
    Ms. Ramirez. We take all complaints. People who have been 
afflicted and victimized by unlawful activity can report 
complaints to us online or also via telephone. This is an area 
that we are concerned about, and I think this measure would 
allow us to be even more active in an area that we certainly do 
care about.
    Mrs. Blackburn. Well, we will look forward to moving the 
legislation forward. We know that scalpers using the bots and 
really putting themselves at the head of the line ahead of 
consumers ends up costing consumers to have to pay higher 
prices. So, we want to make certain that we are specific, that 
there is that clear federal standard, and we will look forward 
to moving the bill through the process and working with you.
    And then, Mr. Chairman, I am going to yield my time back.
    Mr. Burgess. The Chair thanks the gentlelady. The 
gentlelady yields back.
    The Chair recognizes the gentleman from Massachusetts, 5 
minutes for your questions, please.
    Mr. Kennedy. Thank you, Mr. Chair. I appreciate the chance 
to have an important hearing.
    And to the Chairwoman, thank you very, very much for 
appearing before us.
    Last month I was pleased to join my colleague, Congressman 
Lance of New Jersey, in introducing the Consumer Review 
Fairness Act. And I appreciate the comments on the proposed 
legislation that you were helpful with.
    I would also like to commend a friend of mine, Eric 
Swalwell, who has been working on this issue for several years 
as well.
    I think we can all agree that truthful consumer reviews are 
an invaluable tool for prospective consumers in making an 
informed decision. Like you, I am concerned about companies 
hiding non-disparagement clauses in their terms of service in 
an effort to bar consumers from posting negative reviews of a 
product, service, or experience.
    Ms. Ramirez, can you briefly discuss the current tools at 
the FTC's disposal to combat these types of non-disparagement 
clauses and how the FTC has dealt with these cases in the past 
using these clauses?
    Ms. Ramirez. We have our enforcement tools available to us. 
I mentioned in my earlier comments a case, Roca Labs, in which 
we encountered this issue. It was a weight-loss case where the 
company was making deceptive weight-loss claims.
    But, as part of that, they have included terms and 
conditions that included a non-disparagement clause, and the 
company was threatening to sue consumers who had included 
negative reviews about this what we alleged was a bogus 
product.
    So, we do have law enforcement tools. We can go case by 
case, on a case-by-case basis, in an effort to address this 
issue. I think legislation would enhance our ability to tackle 
these types of non-disparagement clauses.
    Mr. Kennedy. And I appreciate that. If you are looking for 
additional legislation, do you think the Consumer Review 
Fairness Act would address and provide you with sufficient 
authority to prevent future use of those clauses from 
intimidating----
    Ms. Ramirez. I think it would be beneficial for us to have 
the additional authority under this measure, yes.
    Mr. Kennedy. Great. Thank you.
    And shifting gears for a quick second, I was hoping you 
might be able to discuss the FTC's approach to made-in-the-USA 
labeling. How is it enforced and what are the benefits of ``all 
or substantially all'' that standard, if you can just 
articulate that?
    Ms. Ramirez. Sure. This is a standard that the agency has 
been applying for some time now. It is derived from research 
that the agency has done to understand how consumers interpret 
made-in-the-USA claims. And so, based on this understanding of 
the net impression that consumers take away from those types of 
claims, we have determined that a product, in order to make an 
unconditional, unqualified made-in-the-USA claim, that the 
product in question must be all or virtually all, it should all 
be made in the USA, in the U.S., rather.
    So, as a result, we have been quite active in this area. 
This particular measure that would apply a consistent federal 
standard we think would be beneficial. The one comment that I 
would make here is that I believe that state enforcement is an 
important complement to the tools that the agency has used in 
this area. So, that would be something that we would encourage.
    Mr. Kennedy. So, I agree, and it is my understanding that 
the chief goal of this legislation is, just as you said, to 
create a singular uniform federal standard for made-in-the-USA 
manufactured products. I think that is a great goal. But I 
share the reservation when it comes to blanket preemption of 
all state laws in that area. In many cases states are far more 
effective at implementing these types of standards and serve as 
a great partner and complement some of your efforts.
    Can you discuss concerns you have with the bill as it is 
currently written? And if that is the main concern, preemptive 
concerns, if you would just go into a little bit more detail, 
and about the ability of states to be able to actually enforce 
that standard as well?
    Ms. Ramirez. My principal concern here, as in a number of 
other areas, is that I find state enforcement to be beneficial. 
I think it would be very unfortunate if we were to lose state 
activity when it comes to enforcing claims, made-in-the-USA 
claims. So, in my mind, it is something that I would urge the 
members of the committee to consider adding ``state''. That is 
my primary concern.
    Mr. Kennedy. And what about a private right of action? I'm 
sorry. Excuse me. What about a private right of action?
    Ms. Ramirez. The Commission hasn't taken a position on a 
private right of action. I think my main concern would be 
ensuring that there is enforcement by state law enforcers.
    Mr. Kennedy. Great.
    In your view, would blanket preemption, as the bill is 
currently drafted, cause any shortfalls in consumer protection? 
Would it limit the ability of consumers to ensure products are 
labeled truthfully if only the FTC has the authority to enforce 
it?
    Ms. Ramirez. Again, I do. I believe that, as an agency, we 
have limited resources. We do our best to tackle deceptive 
claims in this area, but I believe that it is important to have 
other enforcers in the space. In my mind, state attorney 
general offices have done tremendous work in this and other 
areas. So, I view, as a general matter and here as well, state 
enforcement to be important.
    Mr. Kennedy. Thank you, ma'am.
    I yield back.
    Mr. Burgess. The gentleman yields back. The Chair thanks 
the gentleman.
    The Chair recognizes the gentleman from Mississippi, Mr. 
Harper, 5 minutes for your questions, please.
    Mr. Harper. Thank you, Mr. Chair.
    And thank you, Chairwoman Ramirez, for being here.
    H.R. 5092, the Reinforcing American-Made Products Act, 
would establish a national standard on marketing products made 
domestically with the label ``Made in USA''. The bill aims to 
provide that consistency and clarity for manufacturers and 
businesses and, hopefully, for consumers as well. It would also 
help manufacturers avoid legal risk and additional regulations 
caused by conflicting labeling requirements for individual 
states and, thereby, I believe, help consumers by reducing 
those costs.
    And I certainly appreciate the work that the Commission has 
done to develop its guidance on made-in-USA labeling. The FTC 
has worked with American manufacturers to ensure they 
understand what it means to source all or virtually all of 
their inputs domestically. As you noted in your testimony, the 
FTC standard is based on consumer understanding, and this is 
the touchstone that matters most because the purpose of the 
label is to inform rather than to confuse consumers.
    What is the danger in having differing standards throughout 
the United States on made-in-USA labeling?
    Ms. Ramirez. As a Commission, we haven't explored the 
dangers of different standards. I think we are generally 
supportive of the measure applying what we believe is a robust 
standard that the FTC applies. My only comment here would be, 
again, the focus that we not lose state enforcement. So, we 
haven't opined. I am not an expert in all of the various state 
standards. I can certainly see the benefits of having one 
federal standard. I think the standard that we employ is a 
robust one that does adequately protect consumers. So, as a 
result, we are generally supportive of this measure.
    Mr. Harper. Of course, the word I used was ``danger''. Had 
I said ``impact,'' maybe that would have been a better word. 
But doesn't that create, by having different standards in 
different states, that is what you believe this would improve 
on?
    Ms. Ramirez. I think there are benefits to having a 
consistent standard. Again, my principal concern would be to 
ensure that states continue to play an active role in this 
area. They have done, I think, a good job, and I think it is 
always important to have complementary law enforcement.
    Mr. Harper. So you are saying play an active role based on 
a single standard?
    Ms. Ramirez. That is right.
    Mr. Harper. A uniform standard? Versus having all the 
different states with different impacts that may be in 
compliance or differing from what FTC would prefer?
    Ms. Ramirez. Generally, in support of there being a single 
standard that applies the FTC standard, yes.
    Mr. Harper. If states begin legislating in this area, what 
happens if they conflict and compliance with one means being 
out of compliance with another?
    Ms. Ramirez. Again, I can see there would be benefits to 
having one standard. So, generally supportive of your measure.
    Mr. Harper. The Commission has brought a mandate to enforce 
all deceptive marketing practices, not just those dedicated to 
made-in-USA labeling. Fortunately, however, the Commission has 
dedicated a fair amount of resources to this issue. The 
Commission brought a complaint against a company in February 
for deceptive marketing with a made-in-USA label. Continuing to 
ensure that companies are playing by the rules is important to 
guarantee that consumers can rely on made-in-USA labeling. Is 
the Commission committed to continuing its robust enforcement 
on this issue?
    Ms. Ramirez. Absolutely, we are.
    Mr. Harper. I certainly appreciate your time here. I guess 
one of the concerns that we would have, as we look at your 
suggestion on this, is, yes, it would move us away from a 
single standard, but you could still have a broad 
interpretation by 50 different states of state enforcement of 
an FTC standard versus FTC doing that. But I appreciate your 
input on it and your testimony, and we think this would be a 
step in the right direction. Thank you.
    I yield back.
    Mr. Burgess. The gentleman yields back. The Chair thanks 
the gentleman.
    The Chair recognizes the gentleman from New Jersey, the 
ranking member of the full committee, 5 minutes for your 
questions, please.
    Mr. Pallone. Thank you, Mr. Chairman.
    Ms. Ramirez, H.R. 5136 would require the FTC's Bureau of 
Economics to conduct a cost/benefit analysis for all 
recommendations for legislative or regulatory actions submitted 
by the Commission. Can you provide some background on the 
Bureau of Economics, what its function is now, and if the 
Bureau were forced to devote time and resources to preparing 
the kind of economic analysis required by this bill, would 
resources have to be redirected away from the Bureau's current 
work?
    Ms. Ramirez. Yes, happy to. There are Bureau of Economics 
supports all over the work that the agency undertakes. So, 
there is no Commission action without the input of our Bureau 
of Economics. So, already, they are involved in review, our 
enforcement work, our policy work. They play a very active 
role. Economic thinking is an important issue that we want to 
take into account as we consider any of the work that the 
agency undertakes.
    We are both a competition agency as well as a consumer 
protection agency. So, we are always mindful of the signals 
that we are sending to the marketplace, and we want to 
encourage companies to protect consumers and to----
    Mr. Pallone. Well, what about the resources, because our 
time is limited?
    Ms. Ramirez. Yes.
    Mr. Pallone. And whether this bill would force a 
redirection?
    Ms. Ramirez. So, my concern about this particular bill is 
that it would, frankly, impede our ability to comment on a 
number of actions, legislative actions at both the federal and 
state level, as well as regulatory actions by other agencies.
    We frequently provide our thinking, including our economic 
thinking, on proposed action by Congress and other 
policymakers. However, what the bill calls for is a 
comprehensive cost/benefit analysis that we may not be in a 
position to undertake.
    No. 1, our expertise is limited to competition and consumer 
protection. So, oftentimes, we will comment on a proposed bill 
that may have other impacts, including health and safety. We 
will not comment on those, but we will simply comment and ask 
policymakers to consider the competition or consumer protection 
aspects of those bills.
    If we are required to undertake a comprehensive cost/
benefit analysis, we would be impeded from commenting on those 
types of bills. Even beyond that, the types of resources that 
it would take for us to do a type of cost/benefit analysis of 
the kind required by the measure would really impede our 
ability to comment on a number of things. So, I think the 
measure unintentionally would hinder our ability to provide 
very useful comments, and I don't believe that that is the 
intent.
    Mr. Pallone. Well, you listed a number of activities that 
the Commission would no longer be able to do. Let me ask, how 
does the FTC provide recommendations to state lawmakers or 
foreign governments? And under this bill, will you be able to 
assist states or foreign governments on these crucial consumer 
protection or competition matters or is that going to be 
limited, too?
    Ms. Ramirez. I think it would dramatically limit our 
ability to do that because we would not have the ability to 
undertake a full cost/benefit analysis. And, also, it would 
dramatically even limit the types of bills on which we could 
comment, again, if they implicate areas of expertise that are 
beyond competition and beyond consumer protection, we would 
feel that we could not opine on the impacts on that side of the 
equation. So, I am very concerned about this, and I think, 
again, that it does not accomplish its intended objective.
    Mr. Pallone. The last thing is my concern that the bill 
could prevent the Commission from providing recommendations to 
Congress. You are here today to provide comments on 17 bills 
that would fundamentally affect the operations of the FTC. Your 
written testimony was 22 pages, including a number of comments 
and recommendations regarding each of the 17 bills. But, under 
this bill, the Bureau of Economics would have to conduct a full 
economic analysis of each recommendation you are sharing with 
us about each bill. So, would these burdensome analyses 
required, would they have even prevented you from being here 
today or limited what your ability would have been to even 
comment on what you did today, for example?
    Ms. Ramirez. We would be severely hampered in our ability 
to provide useful comments by this measure, yes.
    Mr. Pallone. And other than testifying before Congress, 
when else does the FTC provide recommendations? And again, 
would that hinder the abilities of the Commission to assist 
Congress in these types of things, day-to-day interactions, 
whatever?
    Ms. Ramirez. We provide both formal comments as well as 
informal comments to a host of policymakers, including state 
legislators, sister federal agencies. So, this would really 
impede our ability to provide, I think, very useful 
observations that the agency can convey.
    Mr. Pallone. All right. Thank you so much.
    Thank you, Mr. Chairman.
    Mr. Burgess. The Chair thanks the gentleman. The gentleman 
yields back.
    And the Chair recognizes the gentleman from Houston, Texas, 
Mr. Olson, 5 minutes for your questions, please.
    Mr. Olson. I thank my friend from Texas.
    Good morning, Chairwoman Ramirez.
    As Chairman Burgess mentioned in his opening statement, 
this hearing is very important to me and the people of Texas, 
too. FTC's actions threatened Justin Boots in Justin, Texas. 
That gets my attention because I walked into this hearing with 
a pair of black ostrich, form-fitting Justin boots made in 
Justin, Texas. Don't mess with Texas.
    [Laughter.]
    But, to be serious, I do want to talk about the best bill 
in the FTC pack, H.R. 5116, the FREE Act. This bill corrects 
misapplication of open meeting initiatives, and thank you for 
your support.
    I have seen this problem firsthand back at home in 
Pearland, Texas. Under Texas Open Records laws, I could not 
meet with our members of the city council to talk about flood 
control, expanding Highway 288, or our team playing baseball in 
the Little League World Series. I could not do that because of 
Texas Open Records.
    So, to get around that, well, we had to meet in public, 
have an audience, engage the whole apparatus of the city to 
record that meeting for the record. We solved that problem by 
meeting two-by-two for half-an-hour, very inefficient, without 
enjoying discussions with the full council.
    It appears we have strapped the FTC with similar 
constraints. H.R. 5116 fixes that problem. My question is, how 
does FTC's work see needless constraints on meetings among 
Commissioners because of the Open Records Act? I mean, are 
there times when this would be helpful? You have three 
Commissioners right now. If two sought to meet informally, it 
would trigger Open Records. How about making this stop and just 
having open and free discussion?
    Ms. Ramirez. I can certainly understand the aim of the 
Sunshine Act to ensure transparency in government. There are 
moments when I agree that the Sunshine Act does create 
problems. Certainly, in our situation right now where we have 
three Commissioners, I can no longer speak with another one of 
my fellow Commissioners without implicating in certain 
circumstances the Sunshine Act.
    I appreciate your measure, Congressman, that would add 
another way for us to deal with the Sunshine Act and allow us 
to deliberate. There are constraints. At the same time, we are 
moving forward and we are complying with the Sunshine Act and 
believe that we can still certainly fulfill our duties.
    Mr. Olson. How can you do your job effectively if you can't 
sit down with another Commissioner, two of you, and discuss 
what is going forward, not discussing some new rules or 
something, but just discussing what the FTC does? How does that 
hurt you? Because we have got to stop that. That is just 
insane. Any examples, specific ones, you would like to share 
with us?
    Ms. Ramirez. No. Again, I think right now, given our 
current composition and the fact that we do have two vacancies, 
it has made it more challenging. What it means is that we now 
have to notice meetings in advance. I used to be able to pick 
up the phone and speak to at least one other fellow 
Commissioner. We now have to notice that.
    Again, we are certainly working within the confines and 
meeting our obligations under the Sunshine Act, but there are 
challenges that it presents.
    Mr. Olson. So, say it takes you hours/days to fix a problem 
as opposed to minutes/seconds with an email, a phone call. You 
can't do that. It just seems, in the cafeteria, hey, another 
Commissioner, ``Let's chat about this issue.'' You can't do 
that without triggering this whole Open Records law, is that 
correct?
    Ms. Ramirez. It has made it more challenging. Again, we are 
working again in compliance with our obligations.
    Mr. Olson. Thank you.
    And I will close by letting the Chair know that I will 
support or introduce some comments for the record for the third 
panel from the funeral directors back home over H.R. 5212. It 
is coming from the Settegast-Kopf Funeral Home in Sugar Land, 
Texas; the Davis-Greenlawn and Hernandez homes there in 
Rosenberg, Texas; the Froberg Funeral Home in Alvin, Texas, and 
the South Park Funeral Home in Pearland, Texas. They have some 
concerns they want to address. I may not be here. So, I will 
ask permission to submit those for the record.
    Mr. Burgess. OK.
    Mr. Olson. And one more time, don't mess with Texas boots.
    [Laughter.]
    I yield back.
    Mr. Burgess. The Chair thanks the gentleman. The gentleman 
yields back.
    The Chair recognizes the gentleman from Illinois, Mr. Rush, 
5 minutes for your questions, please.
    Mr. Rush. I want to thank you, Mr. Chairman, and I want to 
thank Chairman Ramirez for her appearance today.
    Chairwoman Ramirez, currently, the FTC Act applies only to 
companies ``organized to carry on business for its own profit 
or that of its members,'' which means that the FTC cannot 
protect consumers from nonprofit companies that committee 
unfair or deceptive acts.
    I introduced H.R. 5255, which would amend the FTC Act to 
give the FTC authority to cover nonprofits. If a company kind 
of runs afoul of the FTC Act, consumers, in my opinion, must be 
protected, even if that company is a nonprofit.
    Chairwoman Ramirez, in your written testimony, you discuss 
how H.R. 5255 would allow the FTC to pursue enforcement of 
deceptive data security and privacy practices at not-for-
profits that have been involved with data breaches. I just want 
you to take this one sliver of what H.R. 5255 is aimed at, and 
could you please expand on the importance of this authority 
specifically as it relates to better security and privacy 
practices?
    Ms. Ramirez. Absolutely. This is a gap that I have serious 
concerns about. The fact is that a lot of nonprofits, including 
hospitals and universities, hold a significant amount of 
consumer information, personal information, that needs to be 
protected. And we simply don't have the ability to reach 
nonprofits. There are a few exemptions, but for the most part 
it is a gap that I think we ought to close in order to provide 
more complete consumer protection. So, I think it is an 
incredibly important area. The data security side, it is 
crucial, but it also impacts us in a number of other areas, 
including, frankly, in connection with our competition work, 
where we can't reach certain nonprofit hospitals, for instance.
    Mr. Rush. Shifting to the unfair or deceptive acts and 
practices, what are some cases that the FTC could bring if it 
were able to bring cases against nonprofits that are committing 
unfair and/or deceptive acts or practices?
    Ms. Ramirez. Well, you cited an important area, which is 
the data security/privacy arena. Another area that we do often 
find that certain charities who avail themselves of nonprofit 
status do engage in fraudulent or deceptive conduct, we can 
reach that kind of conduct if we can establish that the entity 
is, in fact, a sham nonprofit. But sometimes it can be 
difficult to establish that, and this measure would close, I 
think, an important gap and allow us to be more fulsome in our 
protection.
    Mr. Rush. Can you expound a little on if the authority at 
FTC were expanded to cover not-for-profits? Tell us a little 
bit more about how it would protect consumers.
    Ms. Ramirez. Again, the examples that you offered are 
significant to me. Data security is one of the most significant 
issues that we face as a nation. And so, being able to reach 
conduct by just universities, for example, or hospitals I think 
is deeply important. Fraud in connection with charitable 
organizations is another significant area that is of concern to 
us. And while we have had some limited activity, where the 
facts have warranted it and where we are able to establish that 
a supposedly nonprofit organization is, in fact, one of the 
top-rating for-profits, we can reach that conduct.
    The case of hospital mergers is another example where we 
would benefit from having jurisdiction over nonprofits. Because 
of the current jurisdictional limitation, those matters have to 
go to the Department of Justice for handling, even though we 
have significant expertise when it comes to ensuring that 
healthcare provider consolidation isn't anti-competitive. So, I 
think those are just three different examples of ways that it 
would be very beneficial for us to have jurisdiction over 
nonprofits.
    Mr. Rush. Well, thank you, Mr. Chairman. I yield back.
    Mr. Burgess. The Chair thanks the gentleman. The gentleman 
yields back.
    The Chair recognizes Mr. Guthrie from Kentucky, 5 minutes 
for questions, please.
    Mr. Guthrie. Thank you.
    Thank you, Commissioner, for being here.
    A particular piece of legislation that I have that we are 
looking at today is the CLEAR Act, and I understand that 
closing letters are sometimes provided when an investigation 
has taken place and you decide that there wasn't an illegal 
act. So, the closing letters are provided, but these do not 
include information that would be helpful for companies to 
determine behavior that is not illegal.
    The CLEAR Act provides a framework for illustrating fair 
and truthful practices. But you noted your concern in testimony 
that the descriptions required in the bill may identify a 
company even though the bill prohibits the Commission from 
including information that identifies the company at issue. And 
I understand your concern to mean that, even if no information 
identifies the company in the description, the company could 
be, nonetheless, identified.
    So, my first question is, do you believe the Commission is 
unable to describe the legal activities of a company without 
providing sufficient information for the company to be 
identified? Because what we are hoping is that in the course of 
your investigation you can say, ``We looked at these practices. 
They are legal,'' and other companies could use that to guide 
themselves as guidance. Is there a possibility of doing that? I 
know when you asked about the CLEAR Act, your concern on the 
CLEAR Act was you would disclose companies, and we think it 
could be done without.
    Ms. Ramirez. I have at least two concerns in connection 
with this measure, Congressman. The first is that companies, as 
you can imagine, would much rather that we not do anything that 
could risk identifying that they were the subject of an 
investigation if we determine that it is appropriate the close 
the investigation without any enforcement action.
    One concern that we have is that being required to identify 
and explain the basis for not taking action and being sector-
specific does risk, as you lay out particular facts, does risk 
the potential that companies, one could make an inference about 
the identity of companies. So, in my mind, that is a very 
substantial risk that I think companies would much rather 
avoid.
    Another significant concern that I have here has to do with 
burden. I think it is important for the agency to be able to, 
in a very nimble and flexible way, be able to close 
investigations. Just to give you a sense of the volume of work 
that we do, in the last year we completed approximately 250 
investigations, many of which did not, in fact, result in any 
type of formal enforcement action.
    So, the burden, also, that would be entailed would be very 
significant. When it comes to providing guidance, we really do 
endeavor to provide guidance to companies about ways that they 
can stay on the right side of the law. In my mind, this measure 
would not accomplish, I think, its intended objectives.
    Mr. Guthrie. But if you were doing an investigation on the 
company, obviously, something brought you into the company to 
do the investigation. And if you do the investigation and you 
realize that they are complying with the law, then I think it 
would be useful information for other people to have. I think 
it would be good guidance to say, ``Hey, we found these 
practices are within what we are describing.''
    But would this concern about disclosure be mitigated if the 
company could request that particular disclosure for that 
company not be made before the final CLEAR Act report is 
completed?
    Ms. Ramirez. I would still be concerned about this measure 
in all candor. I think in order to describe a basis for not 
taking action, I think one would have to describe certain facts 
that, again, raises the same risk of potentially identifying a 
company. So, I think that concern would persist.
    Again, I think in my conversations with companies and our 
interactions with them, they would much prefer the ability of 
the agency to much more nimbly close the investigation. I will 
note that, when we think it is important for us to convey 
information about the closing of an investigation, we do have 
closing letters that are posted to our Web site. Last year we 
had approximately 40 closing letters, to give you an example. 
So, sometimes we might encounter a particular business practice 
that we feel, while it did not rise to a violation, we think it 
would be useful to notify industry about the concerns and, 
then, also just explain why we decided not to take action. So, 
we certainly do do that when it is appropriate. But I think to 
require that that be done in every single instance when the 
agency closes an investigation would place an undue burden and 
would not achieve----
    Mr. Guthrie. Well, what if you could make out a company the 
end result was make out this company and say, ``They're 
complying with the law.''? That is when you do the closing.
    But, Rule 3.2.4.2 of the Staff Manual provides that, if no 
violation of laws or regulations is revealed in the initial 
phase of the investigation, it shall be submitted for closing. 
You must have some kind of information that you send back to 
say, ``Hey, the Staff Manual says we are going to look at 
this.''
    My point is that you are already doing the work. It seems 
like that would suffice for the report on the CLEAR Act.
    Ms. Ramirez. We do communicate with companies, but it is 
not necessarily in written form. And when we do have a formal 
closing letter, those are posted to the Web site. Again, in our 
experience, companies really would prefer to maintain our 
current practice. I have not heard complaints, any significant 
complaints, about this area.
    Mr. Guthrie. OK. Well, thank you. My time has expired and I 
yield back.
    Mr. Burgess. The gentleman yields back. The Chair thanks 
the gentleman.
    The Chair recognizes the gentlelady from New York, Ms. 
Clarke, 5 minutes for your questions, please.
    Ms. Clarke. I thank the chairman and I thank our ranking 
member.
    And I thank the Chairwoman for her testimony here this 
morning.
    We all need to remember that the FTC exists not to attack 
companies, but to protect consumers. Enforcement actions have 
happened when a company or a person is committing unfair or 
deceptive acts or practices that harm consumers.
    Chairwoman Ramirez, in my view, a number of the bills we 
are discussing today could have detrimental effects on the 
FTC's ability to carry out its consumer protection mission. For 
example, H.R. 5115 codifies select portions of the FTC's 
statement on unfairness. The bill focuses on portions of the 
statement that discusses substantial injury, but ignores other 
portions of the statement, including a discussion of 
circumstances in which public policy concerns will 
independently support action by the FTC.
    So, can you tell us a bit more about some cases in which 
the Commission relied on public policy standards?
    Ms. Ramirez. What we do when we apply our unfairness 
authority is to apply that three-pronged test under Section 
5(n) of the FTC Act. We have used that standard now for many 
years, since the 1980s. I think that it provides a very solid 
framework for analysis in which we focus on whether or not 
there is likely substantial harm to consumers, whether 
consumers can reasonably avoid that harm, and then, also, calls 
for us to also weigh potential benefits to either competition 
or to consumers from the practice that we are examining.
    So, in my mind, that standard has provided a solid 
analytical framework and the cases in which we have applied our 
unfairness authority are ones that we have looked at very 
seriously and very carefully. And so, we generally don't simply 
look to general public policy considerations, although that may 
be a factor that is examined. But I think that we have applied 
its authority in a very careful and serious way.
    Ms. Clarke. So, if this bill becomes law, would the 
Commission be able to bring those types of cases in the future?
    Ms. Ramirez. My worry is that it would create uncertainty 
when it comes to applying our unfairness authority, and I have 
a couple of concerns, in particular. One is that it could 
operate to prevent the agency from taking action when harm has 
yet to happen, but could happen in the future.
    And let me just give you a very simple example that is 
cited in the unfairness statement itself that the agency issued 
back in the 1980s. There we had a case, and the Commission 
cited it, the Philip Morris case which involved a defendant 
that distributed free samples of razor blades in a way that 
could potentially cause danger, particularly if small children 
opened a package, as you can imagine.
    My worry is that, in that kind of an instance because the 
harms happens in the future, that kind of situation and others 
could potentially be hampered. And I think the current 
framework operates well, and I worry about creating 
uncertainty. And that is just one example of the concerns I 
have about this particular measure.
    Ms. Clarke. Let me turn your attention to FR 5118 that 
prohibits the FTC from taking enforcement action based on 
noncompliance with agency-issued guidance. Does the FTC do that 
now and are enforcement actions brought based on companies' 
failure to follow guidance?
    Ms. Ramirez. Guidance is an administrative interpretation, 
of the law. It is not the law. And we, in order to bring an 
enforcement action, always have to show, and to prevail, we 
need to show that there has been a violation of the law.
    My concern with that particular measure is that, on the one 
hand, it allows companies to be able to rely on guidance as a 
safe harbor, but at the same time reinforces this idea that 
guidance is not the law. So, in my mind, the existing law is 
the right approach to take. Companies can certainly point to 
guidance and argue that they have fully complied with the law, 
but does not provide for a safe harbor, which I think, in my 
mind, could raise concerns. It could also lead the agency, 
frankly, to provide less guidance than we currently do, for 
fear that a company that we believe has engaged in unlawful 
activity could on a post-hoc basis cling to a statement that is 
made in some form of guidance.
    Another question that this particular measure raises is how 
one actually defines guidance.
    Ms. Clarke. Correct. I was going to ask that.
    Ms. Ramirez. There is a multitude of work product that is 
out there that we put out, whether it is in business education, 
blogs, as well as more formal forms of guidance that we put 
out.
    Ms. Clarke. Thank you. I yield back, Mr. Chairman.
    Mr. Burgess. The Chair thanks the gentlelady., The 
gentlelady yields back.
    The Chair recognizes the gentleman from Florida, Mr. 
Bilirakis, 5 minutes for your questions.
    Mr. Bilirakis. Thank you, Mr. Chairman. I appreciate it. 
Thanks for holding this very important hearing.
    Chairwoman Ramirez, I want to thank you and the Commission 
for your great efforts on behalf of the past on the campaign to 
educate seniors on schemes that could affect them.
    I am also supportive of the Commission's effort to identify 
and bring enforcement actions against bad actors that 
specifically target older Americans. Although the FTC has not 
yet seen increased rates of fraud in older Americans versus 
other populations, I am concerned that, as the population ages 
and more older Americans begin using the internet regularly, 
that these trends will be accompanied by fraud targeting 
seniors.
    It has been about 2 years since the Pass It On Campaign 
began. Do you have any thoughts as to what has worked best in 
this outreach campaign and what lessons other outreach 
organizations might learn from the Commission's experiences 
along the way?
    Ms. Ramirez. Absolutely. I mean, we certainly have found 
that outreach is an incredibly important tool in order to make 
sure that consumers have information available to them, so that 
they can avoid becoming victims. The Pass It On Campaign is one 
of our incredibly successful campaigns.
    One thing that inspired us to go in that direction was the 
fact that we learned that consumers, in particular older 
consumers, don't like to be told what to do or what not to do. 
And what this campaign taught us is that, if we can pass 
information, if we get information to consumers and ask them to 
pass that information on to their friends and family, consumers 
tend to be, all of us tend to be more receptive to receiving 
that information and passing it on to others, as opposed to 
being dictated to. So, that campaign has proven very effective.
    I agree with you that making sure that we address the needs 
of older Americans is incredibly important. So, in addition to 
the law enforcement efforts that we undertake, we are very much 
engaged when it comes to outreach and education.
    Mr. Bilirakis. Well, thank you for focusing on that.
    Your testimony also states that the Commission already 
reports on its performance base for the following year and its 
strategic plan, as required by the GPRA. This is a useful 
document that provides some of the highlights of the 
Commission's plans. However, is the FTC currently required by 
statute to specifically list its planned workshops, 
rulemakings, and plans to develop guidelines as far as a 
strategic plan? If you can answer that question, I would 
appreciate it.
    Ms. Ramirez. So, when it comes to rulemakings, actually, 
twice a year we publish a chart of information about all 
upcoming rulemakings. What we aren't obligated to do is that we 
aren't required to identify specific workshops that we may 
decide to do over the course of an ensuing year. I think that 
that is a good thing not to be required to do that because it 
gives us a lot of flexibility to undertake workshops and 
participate in other forums that address issues that we may not 
have thought about, that we see as emerging trends that need to 
be addressed.
    At the same time, I think the proposed measure to provide 
additional information about the work that we do in connection 
with protecting older Americans, that is something that we 
would be happy to provide information about. So, we are happy 
to do that. But my worry is on being forced to identify, for 
instance, workshops. I think it might have the unintended 
consequence of eliminating the flexibility that we currently 
have.
    Mr. Bilirakis. Again, staying on this topic, the FTC's 
strategic plan states that the Commission conducts workshops as 
a form of research, stakeholder outreach, and to advance the 
agency's understanding of certain issues. Again, how does the 
Commission decide which topics to pursue in workshops? Who is 
part of that decisionmaking process? Does the Commission 
solicit any public feedback in determining what topics to cover 
in its workshops?
    Ms. Ramirez. We do. It is an agencywide endeavor, and we 
are consistently engaging with industry, with consumer 
advocates, with academics and other experts. Technology is an 
area where we want to make sure that we stay current. So, when 
we develop ideas for workshops, we will also not only make a 
decision about a particular workshop, but we will also announce 
it oftentimes months in advance and solicit input from experts 
and other stakeholders to get their views about what topics we 
ought to cover within the scope of a particular workshop.
    So, we really do endeavor to provide a balanced approach to 
the topics that we cover. Our aim with our workshops is to 
learn, and we take that very seriously. So, we come at it with 
an open mind and really do solicit a lot of input before we 
proceed with an agenda.
    Mr. Bilirakis. Thank you very much. It is very informative. 
I appreciate it.
    I yield back, Mr. Chairman.
    Mr. Burgess. The Chair thanks the gentleman. The gentleman 
yields back.
    The Chair recognizes Mr. McNerney, 5 minutes for your 
questions, please.
    Mr. McNerney. Well, I thank the chairman. I thank the 
chairman for allowing me to sit in on this hearing.
    Ms. Ramirez, as you know, my bill, H.R. 5239, the 
Protecting Consumers in Commerce Act of 2016, would lift the 
common carrier exemption from the FTC's jurisdiction. Lifting 
this exemption would have the effect of directing the FTC to 
prevent common carriers from engaging in unfair and deceptive 
practices against consumers.
    Would you briefly explain what the common carrier exemption 
is and what it means?
    Ms. Ramirez. Sure. The common carrier exception to the FTC 
Act is an exception that was part of our original statute back 
in 1914. It does not allow the agency to take action with 
regard to common carriers. One example of that would be 
carriers that provide voice service. Today, in light of the 
FTC's reclassification of broadband service as a common carrier 
service, that also means that today we cannot take action 
against internet service providers.
    So, this is an area where another example where we at the 
Commission feel that it creates a gap in our jurisdiction that 
ought to be addressed. This particular exception is one that is 
quite antiquated, that in our view no longer makes sense in 
today's environment, where there has been significant 
deregulation and where the roles that common carrier services 
play in today's environment, that no longer makes sense. And 
so, it is something that we would like to see eliminated.
    Mr. McNerney. Well, what are some examples of the exemption 
harm? What are some examples of how the exemption harms 
consumers?
    Ms. Ramirez. Well, it doesn't allow us to take action. Let 
me give you one example. We have brought actions involving data 
throttling where a carrier that is providing internet service 
will reduce the speeds, will set certain thresholds for 
consumers, and if they go beyond a particular threshold, reduce 
their internet speed, which basically would hamper the ability 
of a consumer to download certain information without having to 
wait endlessly.
    By example, we have litigation that is pending against AT&T 
involving what we consider to be deceptive data-throttling 
practices in light of the FTC's reclassification of broadband 
service as a common carrier. That would be a type of action 
that we would no longer be able to bring prospectively. So, 
that is just, generally speaking, an example.
    Mr. McNerney. What type of redress does the FTC provide to 
consumers?
    Ms. Ramirez. Generally speaking, there are various remedial 
tools that we have. One is an injunction relief in order to put 
a stop to unlawful activity. What we also try to do is to 
obtain consumer redress, which would be to put money back in 
the hands of consumers who have been defrauded, who have, for 
instance, paid a particular premium as a result of deceptive 
conduct. So, one of our significant aims is to get money back 
in the hands of consumers who have been victimized.
    Mr. McNerney. Well, how do the redress tools that the FTC 
has differ from those that FCC?
    Ms. Ramirez. I think that the FCC has a different 
congressional mandate. We are, first and foremost, a law 
enforcement agency. The FCC, for instance, has an ability to 
get civil penalties. We have also brought enforcement actions 
in cooperation with the FCC.
    We had two actions that I will mention, AT&T and T-Mobile, 
involving the practice of what is known as cramming, where 
unauthorized charges are placed on a consumer's cell phone 
bill. And in connection with that, our principal aim was to get 
money back in the hands of consumers. The FCC obtained civil 
penalties.
    So, I think there are different congressional sets of 
objectives and different mandates. Ours is to primarily seek 
redress and put a stop to unlawful conduct.
    Mr. McNerney. And there has been cooperation between the 
two agencies?
    Ms. Ramirez. Absolutely. We have cooperated in a number of 
areas over the years, including the area of telemarketing. So, 
yes, there has been significant cooperation, and we have a 
history of cooperating not only with the FCC, but with a number 
of other agencies. We share, for example, competition 
jurisdiction with the Department of Justice. We have a long 
history of being able to work effectively with other agencies.
    Mr. McNerney. Very good.
    Thank you, Mr. Chairman.
    Mr. Burgess. The gentleman's time has expired. The Chair 
recognizes the gentleman from Oklahoma, Mr. Markwayne Mullin, 5 
minutes for your questions, please.
    Mr. Mullin. Thank you, Mr. Chairman.
    Ma'am, thank you for being here.
    What I am wanting to focus on a little bit first is a bill 
that we have. My legislation, the SURE Act, would build that by 
qualifying additional portions of the policy statement. My goal 
is to provide more clarity as to the consideration at play in 
the unfairness cases without altering the FTC authority. It 
seems my bill simply clarifies current language.
    My question to you, ma'am, how does codifying a statement 
that the FTC currently uses to guide its unfairness case take 
away any authority?
    Ms. Ramirez. First of all, I think the current standard 
that has been codified works well, as I noted earlier. 
Secondly, my concern is that, by codifying certain pieces of 
what is in the unfairness statement, leads to a certain 
emphasis that I worry would ultimately impede our ability to 
effectively protect consumers.
    If you look at the track record that we have in applying 
our unfairness standard, I think that we have applied it in a 
very even-handed way. We always look very carefully and ensure 
that the three prongs of the standard are met, and the key 
issue is always looking to protect consumers against 
substantial injury. But we undertake a cost/benefit analysis.
    Mr. Mullin. Well, my legislation doesn't alter current 
statutory authority for the Commission to prohibit acts or 
practices that are likely to cause substantial injury. It 
doesn't alter any of that. It just helps clarify it.
    Ms. Ramirez. My concern is that, in that effort to clarify, 
I think it has the potential to create uncertainty that could 
limit us.
    Mr. Mullin. Well, my biggest concern is, ma'am, that all we 
are trying to do is clarify something. It doesn't alter it. And 
what we are afraid of is change. I mean, there is always room 
for an improvement. I have been in business my whole adult 
life. One thing we always do is look for better practices. And 
so, we are sitting here saying that it doesn't need change or 
there is no point in looking at it because we think everything 
is working perfectly, can you really tell me that your agency 
is working perfectly?
    Ms. Ramirez. I wouldn't say that we are working perfectly, 
but I would say----
    Mr. Mullin. OK. So, what we are trying to do----
    Ms. Ramirez. But I would say that we are working 
effectively. And my concern is----
    Mr. Mullin. Well, effectively is OK, but improving is 
better. There is always room for improving. I mean, we used to 
do debriefs all the time in a different line of work I used to 
do, and we would do it after every situation because we always 
looked to tweak the practices we were using because there is 
always a better opportunity and a better way to do things.
    And so, it concerns me when we are not even willing to 
change. Ma'am, I am not here getting onto you at all. I am just 
concerned about the FTC, by you simply saying that, ``No, we're 
good,'' because that is basically what I am hearing.
    Ms. Ramirez. With all due respect, I believe and I would 
ask, what problem has been identified in connection with our 
application of the unfairness standard? My serious concern is 
that, while I understand the effort to clarify, my worry is 
that it creates greater uncertainty----
    Mr. Mullin. There is already uncertainty out there.
    Ms. Ramirez [continuing]. More litigation that ultimately I 
think will consume agency resources, and not to the benefit of 
consumers. So, that is my----
    Mr. Mullin. But it is so broad right now that people are 
left to wonder what it is; whereas, it is only within the 
agency's hands to determine to clarify. All we are trying to do 
is just to make sure everybody is on the same page. Is that 
wrong?
    Ms. Ramirez. Again, I appreciate the effort. My worry is 
that this will lead to uncertainty that could impede our 
ability to be effective when----
    Mr. Mullin. How? What is it that you are saying? How could 
it impede it? Just give me an example of why you are concerned 
about it.
    Ms. Ramirez. I think it has the potential to create 
difficulties for the agency when we seek to prevent/correct 
wrong.
    Mr. Mullin. Specifically, how does the language do that to 
you?
    Ms. Ramirez. I have already noted that. I believe that by 
expressing a concern about speculative harm, it has the 
potential to lead to a situation where it might make it 
difficult for us to prevent----
    Mr. Mullin. In which way?
    Ms. Ramirez [continuing]. Prevent future harm by creating 
uncertainty about how that applies.
    Let me also give you another example, if I may.
    Mr. Mullin. OK.
    Ms. Ramirez. I also think that it elevates, in doing the 
cost/benefit analysis of the third prong, to use a shorthand, I 
think that it elevates the impact that our efforts might have 
on consumers who are not injured, to the detriment of those who 
might be injured.
    Mr. Mullin. But, ma'am, in all due respect back, you are 
making an assumption, and we really don't know because there 
was already uncertainty. All we are trying to do is improve it. 
If there is already uncertainty in it and we are trying to 
improve the uncertainty, but yet, we are OK with the way that 
it is, we move nowhere; there is no change. When we already are 
trying to help a situation out, trying to make a subtle change 
to it, it doesn't hurt the situation. It tries to improve it. 
And next year or later on down the road, if we need to improve 
some more, we will.
    Thank you for your time.
    Mr. Chairman, I yield back.
    Mr. Burgess. The Chair thanks the gentleman. The gentleman 
yields back.
    The Chair recognizes the gentleman from Kansas, Mr. Pompeo, 
5 minutes for your questions, please.
    Mr. Pompeo. Thank you, Mr. Chairman.
    And thank you, Chairwoman Ramirez, for being here today.
    You had a discussion with Mr. Pallone about H.R. 5136 that 
had to do with publishing the work of the Bureau of Economics. 
The bill is pretty simple. It requires the Bureau of Economics 
to point to a problem with your recommendation that it seeks to 
solve, and then, requires the Bureau to say why the market and 
public institutions are inadequate to take on that problem.
    Your primary criticism was that it was going to impose a 
burden, that you might not be able to do some other things you 
do because of this burden. Did I understand that correctly?
    Ms. Ramirez. Yes, my concern is that the requirement that a 
comprehensive cost/benefit analysis be conducted prior to the 
agency providing any form of comments on legislative action, 
for instance, that would be my main concern, that it would be 
resource-prohibitive and would impede our ability to provide 
very useful comments to policymakers.
    Mr. Pompeo. What is the budget for the Bureau of Economics 
today?
    Ms. Ramirez. I can give you our budget as a whole is 
approximately $300 million.
    Mr. Pompeo. For the Bureau of Economics, though, what is 
your budget, the people that would be impacted by this?
    Ms. Ramirez. I would have to give you that information. I 
don't have a specific figure. But what I can tell you is that 
my economists have very serious concerns about this proposal 
because our resources, as you can imagine, are limited.
    Mr. Pompeo. Fair enough. Fair enough. Fair enough.
    I am trying to find out--you said it is an enormous 
burden--I am trying to translate that to reality, because we 
might provide the additional funding for that.
    How many economists do you have today?
    Ms. Ramirez. We have approximately 80 economists.
    Mr. Pompeo. And so, how many additional economists would it 
take, in your judgment, to comply with this? Because you said 
it was an enormous burden, so you have obviously done some work 
thinking about this. So, tell me how many more than 80 we would 
need to fund in order to comply with it.
    Ms. Ramirez. Well, sitting here right now, I couldn't 
answer that question. But let me also just note a related 
concern, which is that, by requiring that there be a full and 
comprehensive cost/benefit analysis, we would also be inhibited 
from commenting on a matter that would be outside of our 
expertise. So, for instance, we may comment on a particular 
legislation that may have health and safety implications, but 
we will comment and note and ask policymakers to take into 
account the competitive impact in that situation because we 
don't have expertise when it comes to health and safety, for 
instance. So, we comment a lot in connection with scope of 
practice in the healthcare sector, by way of example.
    We are not equipped to comment on health and safety pieces 
of the equation. But this measure, again, while I think it has 
a good intention, would impede our ability to provide any 
comment there because we would not be able to assess the health 
and safety part of the equation. That would be a related 
concern.
    Mr. Pompeo. All the more reason you should do it, in my 
judgment, but I digress.
    If you just took what they were doing today and published 
that, what would be the harm there? So, they are already 
providing, they are doing something, right? You are doing a 
recommendation. The Bureau of Economics is doing something. 
They are providing that to you, correct?
    Ms. Ramirez. Yes. These are----
    Mr. Pompeo. So, that you can provide your recommendation or 
your blog post, or whatever it is, or your testimony here 
today. Why couldn't we just publish that, no additional burden?
    Ms. Ramirez. Ultimately, it is the responsibility of the 
Commission to decide what action they----
    Mr. Pompeo. But why couldn't you publish the underlying 
data? What would be wrong----
    Ms. Ramirez. Because, in my mind, we get input from various 
parts of our agency. We take economic thinking into account. 
But, ultimately, the people who are accountable, it would be 
myself and my fellow Commissioners. And it is up to us, taking 
into account the recommendations made by our staff. With all 
due respect to them, ultimately, we are the ones to be held 
accountable. And what we, then, do, any action that we take, 
then, becomes public.
    Mr. Pompeo. It just seems, as the consumer protection 
agency, you would want consumers to have a chance to see your 
economic analysis. Perhaps we just disagree about that.
    I want to go on to the SHIELD Act. Is it the FTC's position 
that a company's compliance with guidelines should not be 
admissible as evidence, compliance to a statute?
    Ms. Ramirez. I think that may be a relevant consideration, 
and we certainly would take that into account. My concern is 
that it not be a safe harbor.
    Mr. Pompeo. Right. There is no dispute. That is fine. The 
SHIELD Act doesn't propose that it become a safe harbor. It 
simply says that you will not, that the FTC will not argue 
against a company submitting their compliance with your 
guideline as evidence that they have complied with a statute. 
Do you find that acceptable?
    Ms. Ramirez. Again, I think it would be a relevant 
consideration, certainly something that we would consider 
relevant. But my worry is that that would be tantamount to 
creating a safe harbor for post-hoc reliance on guidance.
    Mr. Pompeo. Fair enough.
    I yield back.
    Mr. Burgess. The gentleman yields back. The Chair thanks 
the gentleman.
    The Chair recognizes the gentlelady from Indiana, Ms. 
Brooks, 5 minutes for your questions, please.
    Mrs. Brooks. Thank you, Mr. Chairman. I also want to thank 
you for holding this hearing.
    As the chairman and others may know, Sunday is going to be 
the 100th running of the Indianapolis 500. As you might 
imagine, this garners a lot of attention, not only at home, but 
across the country and the world. In fact, over 300,000 people 
are expected to come from around the world to our great city 
this weekend to witness the greatest spectacle in racing.
    But our Indianapolis area hotels have been sold out since 
March 15th and people are booking hotels as far away as South 
Bend, which is about three hours away. And so, while demand is 
high, there is, unfortunately, some who seek to take advantage 
of this and other major sporting events to deceive or mislead 
the race fans for a quick buck. Last week my office met with a 
constituent from Shockett Hotels who told us that third-party 
sites take payments from visitors and promise a room in return. 
And then, this comes as news for the hotel that has not 
contracted with these entities and is left to deal with 
legitimate rage of a visitor who is showing up when they, the 
hotel, has to break the news that they are booked and that that 
visitor does not have a room. It can be a huge problem for us 
this weekend.
    That is why I am interested in examining my good friend Ms. 
Frankel and Ms. Ros-Lehtinen's bill 4526 today that seeks to 
strengthen the vital safeguards, increase consumer protections, 
and bolster the enforcement efforts necessary to stop scammers 
from mimicking legitimate Web sites. So, I am interested in 
hearing about the benefits of the legislation and how we might 
improve their legislation because, obviously, the backbone of 
Hoosier hospitality relies on getting these types of things 
right. We don't want a lot of angry visitors and race fans. It 
is not a pretty picture when that happens.
    So, Ms. Ramirez, according to the hotel industry, this type 
of scam, close to 15 million reservations were made on such 
deceptive Web sites and cost U.S. travelers upward of $1.3 
billion. Forty-one thousand people every day are getting 
scammed by these types of Web sites.
    Are you aware of this and seeing this kind of fraud in the 
hotel market? And what kind of numbers are you seeing, if not?
    Ms. Ramirez. We certainly are aware of this concern, and I 
have certainly engaged with the online travel industry to 
address this. I can't give you any specific numbers, and I can 
try to get you additional information following the hear.
    But what I can tell you is that this is certainly a 
concern, and we would certainly want consumers to be able to 
access hotel reservations free of deception. I think that this 
particular measure does have benefits. One concern that I would 
have is that we would want to make sure that legitimate 
businesses that are not deceiving consumers are not captured by 
the measure. And so, one suggestion we have is that, rather 
than imposing disclosure requirements, that there be a 
prohibition on misrepresentations. But, generally speaking, it 
is a concern that I certainly share and would be happy to 
continue to work with you and the members of the subcommittee.
    Mrs. Brooks. I am curious about that because that is what I 
think I read in your written testimony. And so, you indicate 
mainstream third-party online travel agencies generally do not 
generate that kind of deception. Of course they don't. That is 
why they have been so incredibly successful. And, of course, 
this bill is not meant to impede companies like Expedia and 
others.
    But what is it that you actually think a company, a 
deceptive company would be--how do we get a deceptive company 
from operating? What are you suggesting? I am confused by your 
written testimony and even this testimony.
    Ms. Ramirez. It is, generally, we are supportive of the 
measure.
    Mrs. Brooks. OK.
    Ms. Ramirez. However, we think that, rather than specifying 
particular disclosures, that a better way to tackle the problem 
would be to prohibit misrepresentations. Again, I think getting 
to your point that a fraudulent site may not comply with law, 
in our mind, it would be better to bar misrepresentations. It 
also would not place undue burden on legitimate sites.
    Mrs. Brooks. Is that not inherent, that companies like this 
should not make misrepresentations on their Web sites?
    Ms. Ramirez. I think the objective is the same. Our 
preference would just simply be to word it differently and bar 
misrepresentations rather than seeking to specify disclosures.
    Mrs. Brooks. And you have authority currently to enforce 
unfair and deceptive practices, correct? And are you 
prosecuting any? Are you pursuing any?
    Ms. Ramirez. We do. I can't comment on any specific 
investigation, but it is an issue that I, personally, have met 
with----
    Mrs. Brooks. Can you answer yes or no whether or not you 
are pursuing any right now?
    Ms. Ramirez. It is a matter that we are looking into and 
are aware of. That is all I can say----
    Mrs. Brooks. So, you cannot say whether or not you are 
pursuing any investigations of these deceptive Web sites, yes 
or no? That is a yes or no, without going into details.
    Ms. Ramirez. It is an issue that we are looking at. I can 
tell you that.
    Mrs. Brooks. Then, that----
    Ms. Ramirez. I can tell you that.
    Mrs. Brooks. That is certainly a deceptive answer. Thank 
you.
    I yield back.
    Mr. Burgess. The Chair thanks the gentlelady. The 
gentlelady yields back.
    I would recognize myself for 5 minutes.
    And, Chairwoman, again, I do want to thank you for being 
here and thank you for your forbearance today.
    I just have a couple of questions on the consent orders, 
consent decrees. Is it fair enough to use those two terms 
interchangeably, consent decree and consent order?
    Ms. Ramirez. Yes.
    Mr. Burgess. So, for people who are not lawyers who are 
watching this, what does a consent decree or a consent order, 
what does that entail? When you enter into a consent decree 
with the FTC, as a business, what is the practical effect of 
that?
    Ms. Ramirez. Generally speaking, our primary remedial tool 
is an injunction. So, a consent decree will oftentimes prohibit 
the unlawful conduct that we were targeting. The consent decree 
may also include monetary provisions. Other provisions that 
also are typical of our consent decrees would be recordkeeping 
requirements, so that that would allow us to ensure that a 
company is, in fact, complying with our order.
    Mr. Burgess. And how long will these orders typically run? 
What is the lifespan of one of these orders?
    Ms. Ramirez. Federal court orders are indefinite. An 
injunction that would be in place, put in place by a federal 
district court would be indefinite. Under our administrative 
process, an administrative consent order would be generally in 
place for 20 years, although the Commission certainly does have 
flexibility to modify that and impose a different timeframe.
    Mr. Burgess. And as a practical matter, is that flexibility 
employed or are generally consent decrees through the Federal 
Trade Commission going to exist for 20 years?
    Ms. Ramirez. Most of them are for 20 years, but we have 
modified that timeframe in certain instances. So, to give you a 
couple of examples, we have certain data security cases where 
we imposed a requirement that there be data security audits. I 
can cite to you two examples of the Twitter case and the 
investor case. There the requirements of a data security audit 
lasts only 10 years rather than 20.
    Mr. Burgess. Yes, having been in business before I came 
here, I mean, 20 years is an enormous timeframe in the life of 
a business. Most businesses don't last 20 years. I don't know 
if you have noticed. So, I do worry about the fact that the 
default position tends to be 20 years.
    Now what do other agencies do? If the Federal 
Communications Commission is going to issue a consent decree, 
what is the timeline likely to be there?
    Ms. Ramirez. Dr. Burgess, in all candor, we don't keep 
track. I couldn't tell you, sitting here right now, what the 
typical approach is by other agencies.
    Mr. Burgess. Do you feel your agency is in line with what 
other agencies are performing?
    Ms. Ramirez. I can't speak to that. What I can tell you is 
that I think that what the agency does or what the Federal 
Trade Commission does is appropriate, and it is an important 
tool. Our consent decrees are an important tool to ensure that 
consumers are protected. An injunction tends to be our primary 
remedial tool that we use. We don't have the authority to 
impose civil penalties, and a good number, most of our cases 
don't entail any form of consumer redress or other monetary 
relief. And so, I think it is important as a matter of 
deterrence to be able to have a tool that can be long lasting 
and that protects consumers.
    Mr. Burgess. Now you bring cases both on the 
anticompetitive front and the consumer protection front. Is 
there a difference in the consent decree for either one of 
those subjurisdictions?
    Ms. Ramirez. Sure. We do tailor consent decrees to the 
particular facts. And so, just by way of example, an order in 
connection with a settlement in a competition matter would 
require a divestiture, and in that context the requirements of 
the order would only last so long as it would take to 
effectuate divestiture. So, they do vary because of the 
different set of circumstances.
    Mr. Burgess. Let me ask you this: just as a practical 
consideration for a business that is under a consent decree, 
are they required to obtain permission from the Federal Trade 
Commission before they were to roll out a new product or 
service if they are under a consent decree?
    Ms. Ramirez. Certainly not, Dr. Burgess. The aim and the 
predominant form of our injunctions is to prohibit violations 
of law. So, there are a number of companies that continue to 
innovate. This includes Google, Facebook, Apple. They continue 
to innovate. They are operating just fine under our orders. I 
think our orders are tailored to the particular circumstances 
of a case, tailored to address the consumer harm that we have 
identified. And I think that we do a good job of ensuring that.
    Let me also just note that we also have flexibility to 
modify and even terminate an order. So, a company, if it finds 
that there are changed conditions, can always come to us and 
make a request to modify or even terminate an order.
     Mr. Burgess. I have some questions, and in the interest of 
time, I am going to submit those questions for the record in 
writing.
    Seeing no further members wishing to ask questions, I do 
want to thank the Chairwoman for being here, for answering our 
questions, and being our witness today.
    This will conclude the first panel, and the committee will 
take a brief recess while we assemble for the second panel.
    [Recess.]
    Mr. Burgess. The subcommittee will come to order.
    Welcome back. Thank you for your patience, and thank you, 
again, for taking the time to be here today.
    We are moving into the second panel for today's hearing. We 
are going to follow the same format as the first panel. Each 
witness will be given 5 minutes for an opening statement, 
followed by questions from members.
    For our second panel, we have the following witnesses: Mr. 
Joshua Wright, University professor, Antonin Scalia Law School, 
George Mason University; Ms. Abigail Slater, general counsel at 
The Internet Association; Mr. David Vladeck, professor of law 
at Georgetown; Mr. Geoffrey Manne, founder and executive 
director at the International Center for Law and Economics, and 
Mr. Daniel Castro, vice president for Information Technology 
and Innovation Foundation.
    We appreciate each of you being here today. We will begin 
our panel with you, Mr. Wright. You are recognized for 5 
minutes for an opening statement.

  STATEMENTS OF JOSHUA WRIGHT, UNIVERSITY PROFESSOR, ANTONIN 
  SCALIA LAW SCHOOL, GEORGE MASON UNIVERSITY; ABIGAIL SLATER, 
   GENERAL COUNSEL, THE INTERNET ASSOCIATION; DAVID VLADECK, 
   PROFESSOR OF LAW, GEORGETOWN LAW SCHOOL; GEOFFREY MANNE, 
 FOUNDER AND EXECUTIVE DIRECTOR, THE INTERNATIONAL CENTER FOR 
     LAW AND ECONOMICS, AND DANIEL CASTRO, VICE PRESIDENT, 
        INFORMATION TECHNOLOGY AND INNOVATION FOUNDATION

                   STATEMENT OF JOSHUA WRIGHT

    Mr. Wright. Thank you, and thank you for the invitation to 
testify today.
    Chairman Burgess, Ranking Member Schakowsky, and members of 
the subcommittee, thank you for the opportunity to appear 
before you today, in particular, to discuss those proposed 
bills aimed at improving the FTC's processes and consumer 
protection enforcement.
    My name is Josh Wright, and I am a university professor at 
the Antonin Scalia Law School at George Mason University and 
senior counsel at Wilson Sonsini Goodrich & Rosati.
    Until August 2015, I was Commissioner of the Federal Trade 
Commission. During my career as an economist and lawyer, I have 
been fortunate enough to enjoy four separate positions at the 
FTC, ranging from a teenaged intern in the Bureau of Economics 
to Commissioner.
    Before diving into the subject of today's hearing, I want 
to make clear that the views I express here today are my own. 
In my written statement I discuss in greater detail a number of 
the 17 bills that are the subject of today's hearing.
    In my opening remarks I would like to discuss what I view 
as the key institutional challenge facing the FTC and its 
consumer protection mission, to more deeply integrate economic 
analysis at all levels of decisionmaking from staff members to 
the Commission. With this in mind, I would like to begin with a 
brief discussion of the role of economics and the Bureau of 
Economics at the FTC.
    The Bureau of Economics provides guidance and support to 
the agency's competition and consumer protection activities. It 
is a separate unit from the Bureaus of Competition and Consumer 
Protection and, thus, provides independent economic advice to 
the Commissioners. Working within the Bureaus of Competition 
and Consumer Protection, the Bureau of Economics participates 
in the investigation of mergers and alleged anticompetitive, 
deceptive, and unfair acts or practices. It also conducts 
rigorous economic analyses of various markets and industries.
    The FTC's success has been attributable in large part to 
its flexible enforcement authority that allows it to adapt 
quickly to changes in technology and business practices, its 
commitment to integrating independent economic analysis to 
guide the use of those enforcement tools, and the remarkably 
high quality of its staff of PhD economists in the Bureau of 
Economics. I have written elsewhere, and I think it's worth 
repeating here, that the economists assembled within the Bureau 
of Economics are simply the best team in any regulatory agency 
in the United States.
    Where the FTC has been mindful of integrating economic 
thinking and research into its new enforcement and policy 
endeavors, it has performed very well. When the agency's 
enforcement priorities have become untethered from economic 
analysis, it has faltered, overreached, and become the subject 
of significant criticism.
    As technology evolves and the FTC's consumer protection 
shifts into digital markets, privacy regulation, the internet 
of things, and the world of big data, it is more important than 
ever that rigorous economic analysis anchors the FTC's 
activities. With that in mind, I do want to specifically 
acknowledge Chairwoman Ramirez for her leadership on these 
issues and commitment to ensuring that economic analysis 
remains a priority for the agency.
    The Commission, however, does occasionally fail to tether 
itself sufficiently to rigorous economic analysis in its 
reports, recommendations, and enforcement actions. Consider the 
Commission's application of its unfairness authority and its 
recent action against Apple. The Commission issues an 
administrative complaint alleging that Apple engaged in an 
unfair act or practice because Apple's 15-minute window which 
allowed consumers to void entry of a password a second time 
after an initial purchase did not allow parents the opportunity 
for express informed consent.
    Apple's product design choices, including the nature of 
these disclosures and its choice to integrate the 15-minute 
window to enhance the user experience are a product of 
considerable investment and innovation. And as most consumers 
with smartphones know, this feature provides substantial 
benefits for consumers who don't want to experience excessive 
disclosures or enter passwords every time they make a purchase. 
Yet, the FTC cursorily dismissed Apple's design decisions and 
disclosures having zero benefits for consumers and only 
imposing harm.
    To be clear, while cases like Apple are relatively rare, 
they are likely to be an increasing part of the FTC's 
portfolio. Rigorous economic analysis is the best tool the FTC 
has available to protect consumers against a risk of 
erroneously condemning business practices that benefit 
consumers. For example, in Apple, greater attention to economic 
analysis would, in my view, have kept the FTC from a harmful 
second-guessing of product design decisions in ways that might 
damage innovation.
    I would like to mention one specific suggestion to the 
subcommittee concerning a proposal that would facilitate 
greater incorporation of economic analysis into Commission 
decisionmaking. Specifically, I would propose the subcommittee 
consider amending the SURE Act to mandate that the Bureau of 
Economics publish a separate explanation of the economic 
analysis of its cost and benefits of the Commission's action 
whenever it enters into consent decrees.
    The primary benefit of this proposal would be to provide 
the economists within the FTC a greater role in the development 
of the agency's consumer protection enforcement priorities in 
this era of increasingly-complex cases involving rigorous 
analysis of policy tradeoffs.
    Thank you very much for your time, and I am happy to answer 
any questions.
    [The prepared statement of Joshua Wright follows:]
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    Mr. Burgess. The Chair thanks the gentleman.
    The Chair recognizes Ms. Slater for 5 minutes for your 
opening statement, please.

                  STATEMENT OF ABIGAIL SLATER

    Ms. Slater. Thank you. Chairman Burgess, Ranking Member 
Schakowsky, and members of the subcommittee, thank you for the 
opportunity to testify before you today.
    My name is Gail Slater, and I am the General Counsel at The 
Internet Association. The Internet Association represents over 
40 of the world's leading internet companies. As the voice of 
the internet economy, part of our job is to ensure that all 
stakeholders understand the benefits the internet brings to our 
society.
    Today I will highlight three issues for the committee which 
my written testimony provides greater detail on. First, the 
Federal Trade Commission plays an important and respected role 
in our society. However, there is always room for modernization 
and increased transparency at any agency.
    Second, one FTC process bill, in particular, the TIME Act, 
is important to The Internet Association's members. The 
internet is a fast-moving and dynamic marketplace, and the 
framework for FTC consent orders should recognize this reality.
    Lastly, the Consumer Review Fairness Act will protect 
consumers nationwide from meritless attempts to silence free 
speech, in addition to bolstering the growing online economy.
    Regarding FTC process, it is important, first, to 
acknowledge the valuable role the FTC plays in promoting 
competition and protecting consumers in our society. Beyond our 
borders, the FTC plays an equally important role, most recently 
in the extensive negotiations around the U.S.-EU Privacy Shield 
with which the committee is familiar.
    The Internet Association thanks Chairwoman Ramirez for her 
leadership of the agency, both here in the U.S. and overseas. 
However, while we recognize the FTC for the important work that 
it does, there is always room for modernization and increased 
transparency at a 100-year-old agency.
    Although FTC consumer protection and substantive law and 
policy commands most of the spotlight, Commission process can 
be equally important to stakeholders, which brings me to my 
second point. Of the bills before the committee today, the TIME 
Act is of particular importance to Internet Association 
members. The TIME Act would create an 8-year cap on consent 
orders the FTC enters into; whereas, under current agency 
practice, consent orders expire only after 20 years.
    To put 20 years in context for internet companies, it might 
be helpful for the committee, first, to cast their memories 
back to the year 1996, if they can, and then, to fast-forward 
to the year 2036. In 1996, AOL and CompuServe were the largest 
internet platforms in the world. Facebook founder Mark 
Zuckerberg was 12 years old, and Google was still just a 
research project for two Stanford grads. Dumb mobile phones 
barely existed, and smartphones were a figment of Steve Jobs' 
imagination. In 2036, it is hard to even begin to predict the 
ways in which we will use the internet.
    This time travel exercise is a lighthearted way of 
illustrating that the internet changes a lot in 20 years. Yet, 
while internet markets are highly-dynamic, the FTC consent 
orders applied to them are static. This matters because 20-year 
consent orders serve to slow down the pace of innovation of the 
companies involved and are often outstripped by marketplace 
developments during their term. The TIME Act corrects this 
imbalance by creating a presumptive 8-year limit on FTC consent 
orders.
    The third and final topic I wish to address today is the 
Consumer Review Fairness Act, also known as CRFA, which will 
protect consumers nationwide from meritless attempts to silence 
free speech online, in addition to bolstering the growing 
online economy. The FTC would play an important role in the 
CRFA as backstop enforcer.
    To put the CRFA in context, it may be helpful, first, to 
talk about the importance of online reviews to consumers. 
Included in the benefits the internet brings to our economy is 
the so-called consumer surplus, which exists because the 
internet empowers consumers to make smarter and quicker choices 
about how and where they spend their money. This consumer 
surplus is calculated to be valued at billions of dollars per 
year.
    A great example of the consumer surplus in action is 
consumer reviews. Every day Internet Association members like 
Amazon, Trip Advisor, and Yelp democratize purchasing and 
access to information by crowdsourcing the experiences of 
others in consumer reviews.
    In today's digital economy, nearly 70 percent of consumers 
rely on online consumer reviews for information on where to 
eat, shop, travel, and more. However, although most businesses 
have come to accept this shift in consumers' knowledge, a 
minority of holdouts refuse to let consumers share their 
experiences online through onerous contractual terms.
    Consumers usually have no idea they are signing up for 
contracts attempting to limit speech, which are usually only 
provided in small print at the moment of check-in or purchase. 
A patchwork of state laws, court decisions, and federal agency 
actions, including the FTC's, have attempted to protect 
consumers subject to non-disparagement clauses. However, we 
must address the issue on a national level to ensure the 
protection of all consumers online.
    The CRFA, which would prohibit the use of these onerous 
clauses, will protect consumers nationwide from meritless 
attempts to silence free speech. The Internet Association 
strongly supports this legislation's effort to protect online 
reviewers of goods and services from clauses that inhibit 
honest reviews, and commends the committee for examining this 
issue during today's hearing.
    I welcome your questions on these important topics. Thank 
you.
    [The prepared statement of Abigail Slater follows:]
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    Mr. Burgess. The Chair thanks the gentlelady.
    Mr. Vladeck, you are recognized for 5 minutes for your 
opening statement, please.

                   STATEMENT OF DAVID VLADECK

    Mr. Vladeck. Thank you. Thank you very much, Dr. Burgess, 
Ranking Member Schakowsky.
    I am David Vladeck. I teach at Georgetown Law School, and I 
served as Director of the Federal Trade Commission's Bureau of 
Consumer Protection from 2009 until 2012.
    I thank you for inviting me to be here this morning. You 
have my written statement which addresses many of the proposals 
pending before this committee. I want to focus my remarks on 
three particular bills.
    And I want to start off by urging the committee to first do 
no harm. There are a number of these bills that I think are, no 
doubt, well-intentioned, but would hobble the agency's ability 
to effectively protect consumers.
    I want to start with the TIME Act which would overturn by 
statute a carefully-considered, balanced, bipartisan view of 
the Commission that consent decrees ought to last for 20 years, 
absent some change in circumstance that warrants their 
modification.
    Now one thing to keep in mind is, if we sue in District 
Court, those injunctions last in perpetuity until they are 
modified or otherwise rescinded. And so, 20 years I understand 
sounds like a long time, but it is the only remedy the 
Commission has in virtually all of the cases. So, the proposed 
bill would turn a 20-year consent decree into an eight-year 
one, renewable only if the Commission can meet the standards 
set out in the statute. It turns meaningful restraint into what 
lawyers would call somewhat of a glorified slap on the wrist. 
And it is particularly inapt here because the data breach cases 
that the agency litigates and settles are really the only 
economic incentive for companies to really have robust data 
security.
    So, let's look at the facts. In 2015, there were nearly 
half a million complaints filed with the FTC about identity 
theft. Identity theft is the debris of an internet economy that 
does not take data security seriously enough.
    The Department of Justice estimates that more than 17 
million people, 7 percent of American adults, were victims of 
at least one incident of identity theft in 2014, and this is 
big business. The last statistics the Justice Department 
compiled come from 2012, but there identity theft cost the U.S. 
economy $24 billion, $10 billion more than all of the losses 
attributable to property loss through crimes.
    So, this is the one real tool the agency has. I don't 
believe any of the companies under consent order have ever been 
recidivists. And, you know, the argument is this is going to 
stifle innovation. Well, look at the companies under order. Not 
one has experienced any sort of speed bump in innovation. 
Facebook, Twitter, Google, small companies like Chitika, 
FrostWire, they are thriving.
    And the reason is our consent decrees are tailored not to 
stifle innovation. If you look at the Google order, it requires 
the company don't lie; if you are going to change your data-
sharing practices, get the consent of the consumer first, and 
give the agency audits every other year.
    In data security cases the fundamental consent decree is do 
what is reasonable; do what a reasonable company in your shoes 
would do, and help keep us informed. Those are the nuts and 
bolts of these FTC orders.
    There is a lot of rhetoric here about stifling innovation. 
I would like to see a case in which some company made a 
credible claim that was true.
    Next, I would like to talk about the changes to the 
unfairness statement. Contrary to the remarks earlier, the 
unfairness statement would substantially amend existing law. 
There are no two ways about it. It would cherry-pick certain 
provisions to the unfairness statement and make them the law, 
and it would add others.
    Congress has deliberated on this issue for 100 years, and 
Congress has decided not to do what has been proposed, which is 
to rigidify and take off the table options for the agency 
simply because the marketplace changes. We could not have 
conceived of unfair acts like what took place in DesignerWare 
where people devised devices that you take into your home and 
surreptitiously photograph you, your family, and your loved 
ones. This is something that we didn't anticipate in 1980, but 
it is true today. And this recodification of the unfairness 
standard jeopardizes those kinds of cases.
    The last point I want to make is the SHIELD Act. It may be 
that the intent of the bill is simply to allow evidence of 
compliance introduced as compliance with guidance documents, 
but that is not the way the bill is written. Compliance with a 
guidance document would be viewed as compliance with the law, 
and it would serve as an absolute defense liability. This may 
simply be a drafting problem, but the way it is written now, it 
is a get-out-of-jail-free card for companies that have violated 
the law, simply because they can find somewhere in the agency's 
archives a statement from a guidance document that might 
support its position in litigation. That doesn't protect anyone 
that we want to protect. It certainly doesn't protect 
consumers.
    I see my time has expired. Thank you very much.
    [The prepared statement of David Vladeck follows:]
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    Mr. Burgess. The Chair thanks the gentleman.
    Mr. Manne, you are recognized for 5 minutes for an opening 
statement, please.

                  STATEMENT OF GEOFFREY MANNE

    Mr. Manne. Thank you. Thank you, Chairman Burgess and 
Ranking Member Schakowsky, and members of the subcommittee. 
Thank you for the opportunity to appear today.
    I am the executive director of the International Center for 
Law and Economics, a nonprofit, nonpartisan research center; a 
formerly law professor. I used to work at Microsoft. And I had 
what I like to call the most illustrious FTC career ever 
because, at approximately two weeks, it was probably the 
shortest.
    I am not typically one to advocate for active engagement by 
Congress in anything, no offense, but the FTC is different. The 
FTC is unique. Despite some congressional reforms, the FTC 
remains the closest thing we have to a second national 
legislature. People don't see it that way, but its jurisdiction 
really does cover nearly every company in America. Section 5, 
the heart of the FTC, the substantive part runs about 20 words. 
That leaves an enormous amount of discretion for the Commission 
to use in a way that is effectively making policy decisions 
that are essentially legislative.
    The courts were supposed to keep the agency on course, but 
they haven't. As former Chairman of the FTC Muris has written, 
the agency has traditionally been beyond judicial control.
    So, it is up to Congress to monitor the FTC's progress, to 
tweak them when the FTC goes off-course, which is inevitable. 
That is not a condemnation of the FTC's dedicated staff. It is 
just that this one-way rachet of ever-expanding discretion is 
simply the nature of the beast.
    Yet, too many people lionize the status quo. They see any 
effort to change the agency from the outside as an affront. It 
is as if Congress was struck by a bolt of lightning in 1914 and 
the perfect platonic agency sprang forth and there is nothing 
we can do to improve it.
    But in the real world an agency with such massive scope and 
discretion needs oversight and feedback on how its legal 
doctrines evolve. So, why don't the courts play that role? 
Well, it turns out companies essentially always settle with the 
FTC in its consumer protection work because of its 
exceptionally-broad investigatory powers, its relatively-weak 
standard for voting out complaints, and the fact that those 
decisions effectively aren't reviewable in federal court.
    And then, there is the fact that the FTC sits in judgment 
of its own prosecutions. So, even a company that doesn't settle 
and actually wins before the administrative law judge, even in 
those cases, when the FTC staff comes back to the Commission on 
appeal, it wins 100 percent of the time. Well, able, though, 
the FTC staffers are, this cannot be from sheer skill alone.
    So, whether by design or neglect, the FTC has become a 
largely unconstrained agency, again in Tim Muris' words. But 
please understand, I say this out of love. To paraphrase 
Churchill, the FTC is the worst form of regulatory agency 
except for all the others.
    Eventually, Congress did, of course, have to course-correct 
the agency, to fix the disconnect, to apply its own pressure to 
try to refocus this evolution of Section 5 doctrine. A heavily 
Democratic Congress pressured the Commission to adopt the 
unfairness policy statement. The FTC promised to restrain 
itself by balancing the perceived benefits of its actions, of 
its unfairness actions against the costs, not acting when an 
injury was insignificant or consumers could have reasonably 
avoided the injury on their own. This was inherently an 
economic sort of calculus.
    But, while the Commission certainly pays lip service to 
this test, you would be hard-pressed to identify or even know 
whether it is being implemented in practice. Meanwhile, the 
agency has essentially nullified the materiality requirement 
that it volunteered in its 1983 deception policy statement.
    Worst of all, Congress failed to anticipate that the FTC--
not the omniscient Congress of 1914, this was later--Congress 
failed to anticipate that the FTC would resume exercising its 
vast discretion through what it now proudly calls its common 
law of consent decrees in data security cases. Combined with a 
flurry of recommended best practices and reports that function 
as quasi-rulemakings, these settlements have enabled the FTC to 
circumvent both congressional rulemaking reforms and meaningful 
oversight by the courts.
    The FTC's data security settlements aren't an evolving 
common law. They are a static restatement of reasonable 
practices repeated about 55 times over the past 14 years. At 
this point, it is reasonable to assume that they apply to all 
circumstances, kind of like a rule would, which is more or less 
the opposite of the common law.
    Congressman Pompeo's SHIELD Act would help curtail this 
practice, especially if amended to include consent orders and 
reports within its scope. It would also help focus the 
Commission on the actual elements of an unfairness policy 
statement. Those should, indeed, be codified through 
Congressman Mullin's SURE Act. Mr. Vladeck and I will have some 
words about that, I suspect.
    Significantly, only one data security case has actually 
gone before the court, an Article III Court, one. The FTC 
trumped its Wyndham as an out-and-out win, but it wasn't. In 
fact, the court agreed with Wyndham that prior consent orders 
were of little use in trying to understand the requirements of 
Section 5.
    More recently, the FTC suffered another rebuke. While it 
won its product design suit against Amazon, the Court rejected 
the Commission's fencing-in request to permanently hover over 
the company and micromanage practices that Amazon had already 
ended.
    As the FTC grapples with the cutting-edge legal issues of 
today, it is drifting away from the balance it promised 
Congress. Congress can't fix these problems simply by telling 
the FTC to take its bedrock policy principles more seriously. 
Congress must regularly reassess the process that has allowed 
the FTC to avoid meaningful judicial scrutiny. The FTC requires 
significant course correction, and significant course 
correction over time, if its model is to move closer to a true 
common law.
    Thank you.
    [The prepared statement of Geoffrey Manne follows:]
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    Mr. Burgess. The Chair thanks the gentleman.
    Mr. Castro, you are recognized for 5 minutes, please.

                   STATEMENT OF DANIEL CASTRO

    Mr. Castro. Thank you. Chairman Burgess, Ranking Member 
Schakowsky, and members of the subcommittee, I appreciate the 
chance to discuss the opportunity Congress has to modernize the 
FTC, so that it better protects consumers from harm while 
minimizing regulatory cost and better enabling robust 
innovation in the U.S. economy.
    The FTC's actions send important signals to the private 
sector about how it should allocate its resources to comply 
with federal regulations. Ideally, these signals should 
encourage business to take actions that protect consumers, 
discourage actions that harm consumers, and not interfere with 
the private sector risk-taking that underpins innovation. 
Unfortunately, that is not always the case. Let me provide two 
examples.
    In 2014, the FTC entered a consent decree with Apple over 
complaint that the company had charged consumers millions of 
dollars for charges incurred by children without their parents' 
consent. The key fact in this case was that Apple did not 
inform customers that, once they enter their password, they 
opened a 15-minute window during which further charges could be 
made without additional verification from the account-holder. 
As part of the consent decree, Apple agreed to stop this 
practice.
    However, for many users, not having to enter their password 
repeatedly was a convenient feature, not a bug. After all, only 
a tiny fraction of Apple's customers are children making 
purchases without their parents' permission. Thus, on balance, 
it is unlikely that there is even a net harm. It is even 
possible that the FTC's actions made consumers worse off, since 
users who are forced to enter their password too frequently may 
choose to use simpler and, thus, weaker passwords, and thereby 
increase their risk of a data breach.
    These types of unintended consequences happen when 
government is put in charge of product design. My fellow 
panelists ask how consent decrees impact innovation. This is 
exactly how it does it.
    As a second example, consider the FTC's case against Nomi. 
Nomi ran into trouble because it misstated in its privacy 
policy that customers had the option to opt out of its in-store 
retail analytic service at its partners' stores. To be clear, 
the FTC did not object to the tracking itself and the company 
was under no obligation to provide this additional opt-out 
feature. Moreover, the FTC could not find any evidence that a 
single consumer actually suffered any harm. Therefore, the FTC 
ultimately chose to use its regulatory authority to take action 
against the company for what was possibly a lawyer's mistake in 
drafting Nomi's privacy policy, despite no evidence that any 
consumers were actually harmed.
    By formally taking action when there is no injury to 
consumers, the FTC has signaled to companies that they should 
spend more time on corporate lawyers and less time delivering 
value to consumers, including through developing privacy- and 
security-enhancing technologies. After all, companies like Nomi 
would be better off providing no privacy guarantees to their 
consumers, so they will not fall victim to ``gotcha''-style 
regulatory enforcement actions. Rather than bringing a case and 
settlement against Nomi, the FTC should have shown some 
regulatory restraint by simply notifying the company of the 
problem and verifying that it had been corrected.
    There are a number of changes that Congress should make to 
the FTC, so as to avoid these types of perverse outcomes and 
unintended consequences. First, the FTC should not take 
enforcement actions against companies for acts or practices 
unless the FTC can show substantial injury that is more than 
trivial or merely speculative. Instead, the FTC should focus 
its resources on cases where there is a direct and tangible 
consumer harm. Doing so will incentivize companies to 
prioritize internal actions that can actually prevent consumer 
injury.
    Second, the FTC should publicly disclose when it decides to 
not pursue an investigation. This information would help the 
private sector better understand how the FTC is enforcing its 
policies and allow businesses to better comply with the law.
    Third, the FTC should stop its practice of using 20-year 
terms for its consent decrees. By almost any standard, this is 
an extraordinary amount of time. Most states do not even 
require sex offenders to register for this long. And there does 
not appear to be any legitimate reason for this length. This is 
a waste of time and money for all parties and an avenue for 
backdoor rulemaking.
    Finally, when making policy recommendations, the FTC tends 
to focus disproportionately on speculative harms while ignoring 
the tangible benefits for both consumers and businesses and the 
cost of overly-restrictive regulations. The FTC should only 
make evidence-based policy recommendations that include a cost/
benefit analysis.
    If Congress does not address the FTC's approach to consumer 
protection, compliance may become either a check-the-box 
activity or, worse, interfere with business practices that 
would make consumers better off and increase innovation in the 
U.S. economy.
    Thank you for the opportunity to share with you my thoughts 
on how to transform the FTC into a more modern, innovation-
friendly regulatory agency. I look forward to your questions.
    [The prepared statement of Daniel Castro follows:]
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    Mr. Burgess. The Chair thanks the gentleman, thanks all of 
our panelists for your forbearance today and for your 
testimony.
    I would like to recognize Mr. Olson of Texas for 5 minutes 
for questions, please.
    Mr. Olson. I thank the Chair.
    And welcome to panel two.
    My questions will focus on one bill, the FTC package, my 
bill, the FREE Act, H.R. 5116. It appears from you all's 
opening comments I am batting 400. Two of five have mentioned 
my bill in your opening statements, Mr. Wright and Mr. Castro. 
So, my questions will be largely for them, but to the other 
three, if the spirit moves you, please feel free to jump in.
    Mr. Wright and Mr. Castro, current rules and three 
Commissioners forced the FTC Commissioners to forego most 
direct communications and communicate through staff playing 
telephone. What are the consequences of playing telephone on 
the efficiency of the FTC? Mr. Wright?
    Mr. Wright. Thank you, and I appreciate the question, and 
will say, as I did in my testimony, that I am fully supportive 
of the bill. As a former Commissioner, I can certainly testify 
to the fact that the limitations placed on communication 
between Commissioners by the Sunshine Act, for all of its other 
virtues, are a real drag, I think, on the type of collegial 
decisionmaking that Congress envisioned when they put the FTC 
together. The idea of the five-person Commission and bipartisan 
Commission is to encourage precisely those types of 
communications, especially in case--I was here for the exchange 
with Chairwoman Ramirez, but I would like to add to her 
concerns. It is not just when it is three Commissioners; when 
it is four Commissioners, when it is five Commissioners, and 
one is recused or there is a vacant seat, even when the 
Commission has its full complement, I think there are 
considerable virtues to the bill that arise on a regular basis.
    Mr. Olson. Thank you.
    Mr. Castro, if two FTC Commissioners meet at Starbucks for 
coffee, they could wave at each other, say, ``How was your 
weekend? How is the family?'', complain about the Nats and the 
Redskins, the Capitals, whatever, but they can't talk about the 
job at all, risking some violation of this Open Records Act. 
How does this hurt the FTC in terms of making sure they are 
efficient at protecting consumers, their No. 1 job? How does 
this impact their ability to do their job?
    Mr. Castro. I think this is a very important proposal 
because, when we look at the types of Commissioners that we 
want, we want those that are very engaged with each other, that 
are able to collaborate and work through problems, that are 
constantly in communication. The digital age that we live in, 
that is how you do business.
    This bill is so important because it really gets to that 
fundamental problem that is arising, obviously, right now. It 
arises in situations, as my colleague just mentioned, when 
Commissioners recuse themselves. And it will certainly arise in 
the future when there are vacancies.
    And so, this is the kind of issue where we want to fix it 
now because we expect the FTC to be fast and responsive and 
able to deal with problems as they arise, and you can't do that 
if you can't talk among leadership. And so, this will, I think, 
move us in that right direction while still preserving the 
goals of the Sunshine Act, so we are not losing those 
opportunities.
    Mr. Olson. Thank you.
    Back to you, Mr. Wright. You mentioned some amendments to 
my bill, the FREE Act, that I am curious about. One would 
redefine ``bipartisan majority'' to ``any bipartisan 
combination of Commissioners.'' Enlighten me. What does that 
do? How does that improve the bill?
    Mr. Wright. I think what it does, as I read the current 
bill, bipartisan majority is defined as a group of three or 
more. In my mind, the modification to any bipartisan 
combination of Commissioners would free situations to allow 
one-on-one communications.
    Mr. Olson. So, No. 3 is the issue there? Just wipe out the 
No. 3? Just put ``majority of Commissioners''?
    Mr. Wright. Yes. So that, when I see a colleague at 
Starbucks, I can grab them and talk to them or, if I walk into 
the parking garage, I don't have to leave.
    Mr. Olson. Yes, sir.
    And finally, questions for you, Mrs. Slater. I will get it 
here. How do you think the FREE Act will add greater disclosure 
and collaboration among Commissioners? How would it streamline 
the decisionmaking process going forward?
    Ms. Slater. Thank you for the question. Although I didn't 
address in oral remarks, I think the FREE Act is a very 
important piece of legislation before the Committee.
    Some context on me. I worked for the FTC for 10 years prior 
to my current job. The last three years I spent as an attorney 
advisor to a Commissioner. So, I am quite familiar with the 
process that Commissioner Wright also was familiar with.
    I would say that, when you take a step back and look at the 
statute of design of the FTC, the Commissioners were intended 
by Congress as the board of directors. Given the vagaries of 
the Sunshine Act, they are often inhibited from acting like a 
board of directors. And it is sometimes the case that the power 
devolves from the Commissioners to Bureau Directors, to 
attorney advisors. I was one. I need to be a little bit careful 
because we are sitting next to a former Bureau Director here.
    [Laughter.]
    Mr. Olson. We're all friends here.
    Ms. Slater. But I don't think that was the actual intent of 
Congress. And so, I see in your Act measures to course-correct 
back to the original design for the Commission, which is a good 
thing.
    Mr. Olson. The panacea is the FREE Act, H.R. 5116.
    I yield back.
    Mr. Burgess. The gentleman yields back. The Chair thanks 
the gentleman.
    The Chair recognizes the gentlelady from Illinois, Ms. 
Schakowsky, the ranking member of the subcommittee, for 5 
minutes for questions, please.
    Ms. Schakowsky. I thank all of you for your testimony.
    Mr. Vladeck, I just wanted to start by asking if you had 
any reaction--and I know that you have been sitting here--to 
some of the questions that were asked by my colleagues during 
the first panel or other things that were on your mind to say?
    Mr. Vladeck. Well, again, there are parts of these 
proposals that I think make great sense. Certainly, there needs 
to be reform of the common carrier exception. There needs to be 
reform in terms of the exception for bonafide nonprofits 
because that exemption really seriously impairs a lot of our 
antifraud work, nonprofits only in name, but scams in practice. 
The anti-disparagement provision I think is really an important 
step forward.
    But there are a number of concerns I have. For example, 
requiring BE to vet any public pronouncement the agency may 
make to Congress, to state legislatures, to state regulators, 
the clear impact of that provision, put aside its intent, will 
be to muzzle the FTC. And why would want to restrain the FTC 
from simply giving its views, when, of course, the state or 
Congress can disregard them, just doesn't make sense. To 
perform a real cost/benefit analysis of the kind contemplated 
in the statute would drain very scarce resources.
    And part of that is we are an under-resourced agency. My 
job was to do triage. Even though we were the largest component 
of the FTC, my job was to figure out what matters we would 
proceed with and which ones we would let go. And so, I am very 
sensitive to the resource constraints the agency has, and I 
would urge you to avoid placing additional constraints, unless 
there was enormous bang for the buck, unless we were getting 
something seriously out of it.
    Ms. Schakowsky. Well, do you think that this tips the 
balance to less consumer protection? Who is the winner? Who are 
the winners and the losers in these process changes, by and 
large, that have been recommended?
    Mr. Vladeck. Oh, the American consumer will be the loser. 
Each of these provisions drains agency resources or gives 
people who violate the law an out. Termination of 
investigations because we miss a six-month deadline, really? No 
matter how egregious the conduct was, no matter what 
justification was there for missing a deadline? It seems 
utterly disproportionate to an agency that has got many matters 
in place simply for missing a deadline. I mean, there is no one 
here who wins other than lawbreaker, and there is no one here 
who loses other than the American people.
    Modifying the unfairness doctrine will constrain the 
agency. There is just no question about it. It amends the 
unfairness standard. It adds components that will make it more 
difficult to bring actions to prevent harm, which, of course, 
has been the agency's mission since its founding. And it will 
make it difficult to do cases where, like DesignerWare, you 
have people engaged in immoral, unscrupulous conduct, but the 
conduct does not cause economic harm.
    So, yes, I think there are many, many difficulties with 
some of these proposals.
    Ms. Schakowsky. So, not causing economic harm? I think you 
definitely did talk about this, but I am also particularly 
concerned about the fact that one of the bills does require now 
the Bureau of Economics, as you mentioned, to conduct an 
economic analysis for every recommendation provided by the 
Commission. It doesn't matter who the recommendation is for or 
whether the recommendation affects American business or 
American consumers. All recommendations require a detailed 
cost/benefit analysis.
    You mentioned a number of times in your written testimony 
that some of these bills are a solution in search of a problem. 
And so, in your experience at the FTC, was the Bureau of 
Economics ignored?
    Mr. Vladeck. Oh, the Bureau of Economics is involved in 
every matter that goes before the Commission. Every case I 
worked on, there was a BE economist assigned to it. Every 
policy, the paper that we generated, a BE economist was 
assigned to work on that. Every workshop that we held, much of 
the important reports that the agency generates were largely 
generated by BE. We did a huge report on the debt buyer 
industry, a very important report, which was done by BE. And 
so, it is a constant presence and powerful force within the 
agency.
    Ms. Schakowsky. Thank you. I appreciate that.
    I yield back.
    Mr. Burgess. The Chair thanks the gentlelady. The 
gentlelady yields back.
    And the Chair recognizes Mr. Guthrie of Kentucky, 5 minutes 
for your questions, please.
    Mr. Guthrie. Thank you, Mr. Chairman.
    I thank the panel for being here today, the second panel.
    A first question for Mr. Wright: the FTC used to issue 
closing letters indicating why it closed investigations without 
taking formal agency action. Could you explain how an analysis 
of why something is not legal is different from complaints 
which lay out what activities are legal?
    Mr. Wright. Sure. So, I am a law professor. I teach the 
common law to my students all the time. And one of the things 
that is sort of the first lesson that they learn in contract 
law, or what have you, is to understand where the line is, you 
need to know something that falls on each side of it.
    And so, I have been occasionally frustrated with the 
perception that, when the FTC puts out a pile of consent 
decrees that come through a process, it looks a little bit 
different, like the process in front of an Article III judge, 
that we can refer to those as having the virtues of a common-
law-type process.
    I think for parties to understand quite simply where the 
line is, it is critical that the agency be transparent, both 
with respect to its views on what violates the law and what 
does not. And to the FTC's credit, on many instances the FTC is 
sort of on the right side of promoting transparency with 
respect to standards. Just a year ago, the agency put forth 
guidance on its unfair methods of competition statute, policy 
statement, which I think some had been asking for for decades 
and decades.
    Merger guidelines, the unfairness statement, the deception 
statement, the agency has been on the right side of this for 
some time. I do think, as the economy shifts into digital 
markets, privacy regulation, the internet of things, more 
complicated business practices that involve tradeoffs, that 
involve costs and benefits--they are not simple fraud cases 
that are all harms, no benefits--as we increasingly shift into 
those areas, I think it is more important now than ever that 
the agency continue that trend and maybe even extend it more 
strongly in those areas where I think guidance is especially 
needed.
    Mr. Guthrie. OK. Thanks.
    I also have H.R. 5109. Well, H.R. 5109 specifically applies 
to unfair or deceptive acts or practices. But I have introduced 
a related bill with a colleague on the Judiciary Committee, 
with Chairman Burgess, that would also require CLEAR Act 
disclosures for investigations of unfair methods of 
competition. In your opinion, would adding this layer of 
disclosure also be valuable for companies?
    Mr. Wright. Yes, I think adding information with respect 
to--it is true I did hear the answer on the earlier panel. The 
FTC does disclose some of this information already.
    In my view, some form of aggregated disclosure, so as to 
avoid some of the confidentiality concerns that arise, some 
sort of aggregated information that would tell companies these 
are the types of characteristics of cases where we close, these 
are the types of characteristics. You can get the other side or 
you can read the complaints and say, ``I understand the types 
of characteristics that lead the agency to bring a case.''
    In my view, while we do this sometimes, I think we are a 
little short of the mark at the FTC in terms of providing some 
aggregated information to give a sense of when we do not bring 
cases or when we close. To the extent that the bill furthers 
that, I think that it is a step in the right direction.
    Mr. Guthrie. Thank you.
    And based on your first answer leads me to my next 
question, Mr. Castro. We talked about common law, and you teach 
common law. So, Mr. Castro, do you believe there is a true 
common law created by the FTC's published consent orders? 
Please explain why you believe that or not believe it.
    Mr. Castro. So, I believe there shouldn't be. I believe 
what we are seeing is that there are a number of avenues aside 
from official rulemaking where the FTC is making policy through 
its guidelines, through its consent orders.
    As I said in my statement, these are the signals that 
industry is interpreting about what they should do, and they 
matter as much as any formal rules they create. The problem is, 
when you don't go through these formal rulemaking processes, I 
think we subvert the democratic processes that we intended to 
create.
    And so, if we want to have effective rules, if we want to 
have full participation and an open, transparent process to do 
it, we need to have a process that we all agree is the right 
process. And so, that is why I think it is bad for innovation, 
it is bad for consumers if we are using these other avenues to 
create these rules.
    Mr. Guthrie. In just a couple of seconds, Mr. Manne, if I 
can get it in real quick, what value do you see in adding 
transparency to the FTC's closed process of any investigations 
where companies have not engaged in unfair or deceptive acts? 
And, of course, how would the CLEAR Act improve the current 
state of affairs at the FTC? Mr. Manne, yes?
    Mr. Manne. You said that last part so fast, I couldn't hear 
what you said, but I got the first part.
    Mr. Guthrie. OK. How would the CLEAR Act improve the 
current state of affairs at the FTC?
    Mr. Manne. Well, I think an important source of guidance 
that is often neglected--Josh may have just mentioned this--
which is the reasons that a case is closed, right? That, in and 
of itself, is actually extremely informative guidance. As Josh 
said, you can certainly convey that information in a way that 
doesn't disclose any confidential information and would be 
particularly useful. It used to be done that way at the 
Commission. Even when you didn't have an incredibly fulsome 
sort of closing letter, there are examples of closing letters 
that at least would enumerate the bases on which the 
investigation was closed, sort of the issues that they looked 
at. Well, that in itself is huge.
    Now I could suggest a whole welter of more things that 
should have been asked in that letter and that should be looked 
at. This is the kind of situation--I am not saying we would 
have to do it here--where economists, as with pretty much 
everything at the agency, are incredibly useful. And despite 
Mr. Vladeck's claims to the contrary--I believe he said 
something to the effect that it would be enormous cost and no 
gain--I tend to believe, especially in an agency of the sort 
like the FTC where in the unfairness context it is asked to 
take on an essentially economic calculation, that having some 
economists actually help with that calculation would be 
particularly useful. I think it would be enormously useful, but 
I certainly think I could identify positive value to it.
    The fact that there may be a cost to it is not a reason not 
to do it. There are tradeoffs to everything, right? I think, 
well, that is what economists would say, I guess.
    Mr. Guthrie. Thank you. I am out of time.
    Mr. Burgess. The gentleman's time has expired.
    Mr. Guthrie. My time has expired. I appreciate it.
    Mr. Burgess. The Chair recognizes Mr. Rush, 5 minutes for 
your questions, please.
    Mr. Rush. Thank you, Mr. Chairman.
    Mr. Vladeck, I introduced a bill that will give the FTC the 
authority to protect consumers from unfair and deceptive 
practices by nonprofit organizations. And we heard the 
Chairwoman earlier testify that the Commission supports 
repealing the nonprofit exemption. You also testified that you 
support repealing the nonprofit exemption.
    How do you see, me repealing this exemption, how do you see 
it being of benefit to consumers?
     Mr. Vladeck. This is an enormously important area because 
often fraudsters, people who are scamming, fake health 
insurance, they hide under the shield of being a nonprofit. So, 
one of the first major sweeps I worked on when I got to the FTC 
involved collaboration with state insurance commissioners, 
state attorneys general, to go after dozens and dozens and 
dozens of fake insurers and health providers. And the principal 
objection we found as a jurisdiction threshold was we don't 
have any authority because we are organized as a nonprofit. 
That is a showstopper. If we don't have jurisdiction, we can't 
proceed. We can't proceed with our investigations. We certainly 
can't proceed with litigation. And so, the first and important 
point about this, this will take away a devise scammers and 
others intent on stealing people's money use to hide from the 
agency.
    Second, we have seen a lot of very serious data breaches by 
entities that are essentially unregulated, colleges, 
university, nonprofit healthcare providers. The nonprofit 
healthcare corporations may have some obligations under HIPAA, 
but they are not regulated elsewhere.
    Time and again, we see massive data breaches involving very 
sensitive information, health records, education records, and 
there is no remedy. We did a peer-to-peer sweep to find out 
what kinds of information were available from unsecure 
networks. And many of the most egregious problems were with 
hospitals, nonprofit hospitals, and with state universities. 
Yes, we let them know they had vulnerabilities on their system, 
but we had no leverage to force them to upgrade their systems 
or to do a better job protecting highly-sensitive data.
    And so, this is a very important reform. I urge your 
colleagues to give this the most careful consideration. It 
really is essential to enable the FTC to better protect 
consumers in this space.
    Mr. Rush. On the flip side, I have heard of concerns from 
the nonprofit community that FTC jurisdiction could lead to 
increased regulation and increases in the cost of doing 
business. Do you agree with this statement? How accurate do you 
believe this statement is? And also, do you believe that the 
increase in consumer protection would justify these costs if 
any exist?
    Mr. Vladeck. Thank you for the question. I am calling on my 
economist friends on the panel to do the cost/benefit analysis, 
but I have no--this was a joke.
    [Laughter.]
    But there is no question that better regulation will 
ultimately serve the economy. A level playing field, consumer 
protection, the cost of data breach and identity theft are an 
enormous strain on the economy, partly because institutions can 
externalize their cost on the consumers, who are stuck with the 
bill.
    And so, I think ex-ante regulation makes a whole lot of 
sense, more than ex-post consumer cost, in trying to restore 
their credit. If it is a medical facility, medical ID theft has 
skyrocketed, and there is no easy way to restore your identity. 
You have to go provider by provider to prove who you are and to 
get the benefits that you are paying for.
    And so, anything that we can do to place at least some 
market discipline on these actors I think is really critical, 
and I think this is a very important measure that I urge the 
committee to seriously consider.
    Mr. Rush. Thank you, Mr. Chairman. I yield back.
    Mr. Burgess. The Chair thanks the gentleman. The gentleman 
yields back.
    The Chair recognizes Mr. McNerney for 5 minutes for your 
questions, please.
    Mr. McNerney. Well, I thank the chairman.
    And I apologize that I missed your testimony.
    Professor Vladeck, in your testimony you mentioned that the 
FTC has long asked Congress to lift the common carrier 
exemption. What are the justifications for this prior to the 
FCC's Title II reclassification of broadband internet services 
common carrier?
    Mr. Vladeck. So, the FTC and the FCC share jurisdiction in 
most of the consumer protection issues involved in providing 
these kinds of telecommunication services. So, a lot of what we 
did were cases involving false or deceptive advertising, 
improper marketing claims, billing abuses such as cramming, 
forcing unauthorized charges onto consumer bills, privacy, data 
security. These were spaces that we occupied jointly. We 
collaborated very closely on enforcement.
    But with the common carrier exception, and particularly the 
reclassification under Title II of internet services, the 
agency is threatened with losing some of that authority. I 
think it is very important for consumers to have a consumer 
protection agency in that space.
    The FCC is essentially a regulatory agency. It has a very 
short statute of limitations. It can collect civil penalties. 
It does not do consumer redress. The FTC puts money back in the 
hands of consumers. The FCC does not.
    Consumers deserve better in this space, and repealing this 
archaic common carrier exception, which is really an artifact 
of a different time when monopolies were regulated by the FCC, 
is long overdue. This is a measure the Commission on a 
bipartisan basis has urged Congress to take for decades, and 
the time really is now.
    Mr. McNerney. Well, if the common carrier exemption is not 
lifted, what are some of the abuses that we would be seeing?
    Mr. Vladeck. So, for example, AT&T and TracFone were 
throttling consumers. They promised unlimited data, but they 
didn't tell them that, after a certain setpoint, they would get 
data; they would just get it one grain of sand at a time.
    It was incredibly frustrating for consumers. They 
complained to both agencies. The FTC sued both AT&T and 
TracFone over this throttling. We got substantial redress for 
consumers which will go back into their wallets.
    This is the sort of thing that the FTC has historically 
done. We do it well. We certainly did it in cooperation with 
the FCC. These were investigations that were jointly conducted, 
but we managed to both stop the practice and to return money to 
consumers' wallets for a service they did not get.
    Mr. McNerney. So, throttling, for example, do you think 
that was intentional? Do you think they intentionally misled?
    Mr. Vladeck. Well, the throttling was intentional.
    Mr. McNerney. Right. Well, couldn't it have been the 
broadband limitations or some other technical limitations?
    Mr. Vladeck. Well, for example, I think it is fair to say 
the Commission took a very hard look at advertised rates of 
delivery of broadband service. We did this in collaboration 
with the FCC. We did not bring enforcement actions, but this is 
the sort of issue that the Commission, prior to 
reclassification, took a very hard look at. Post-
reclassification our authority to do that, I think, is in some 
doubt.
    Mr. McNerney. Well, I think we agree that the FTC has the 
expertise in protecting consumer privacy. Would lifting the 
common carrier exemption lead to better privacy protections?
    Mr. Vladeck. Well, again, I think that the FTC has had 
enormous success in developing a reasonable privacy program 
that protects consumers' expectations without putting a speed 
bump on the road to innovation. And I think that we are well-
equipped to do that. We have worked jointly with the FCC on all 
sorts of things ranging from mobile apps to investigations on 
these kinds of issues. I think there ought to be overlapping 
jurisdiction here, just the way the FTC has overlapping 
jurisdiction with the FDA, the SEC, the Commodities Future 
Trading Commission, and virtually every other agency in the 
city. We play well, but we also do a very good job of 
protecting consumers because that is our only mission, unlike 
the FCC which has the mission of making sure the industry 
delivers the services it does.
    Mr. McNerney. Thank you, Mr. Chairman.
    Mr. Burgess. The Chair thanks the gentleman. The gentleman 
yields back.
    I recognize myself for 5 minutes for questions. These are 
going to be questions regarding the 20-year lengths on the 
consent decrees, the consent orders.
    Mr. Manne, let me just start with you. Even though your 
tenure at the FTC was very brief, are you aware of any factors 
that went into the Federal Trade Commission's decision to set 
the duration of consent orders at 20 years? Should it be a one-
size-fits-all program?
    Mr. Manne. Well, yes, you hit on what is the real problem. 
To my knowledge--David and Josh can correct me if this isn't 
right--to my knowledge, there isn't a set 20 years for 
everything, but that is what it effectively is. It is not a 20-
year program, as far as I know. It is just that, miraculously 
somehow, all of these companies that are wildly divergent, 
engaged in wildly different activities, different sizes--
sometimes you have got deception cases and, then, you have 
unfairness cases. You have situations that it is sort of begs 
belief to think that they would entail precisely the same 
remedy.
    If you cared about getting your remedy right, so if you had 
some economists talking to you--apologies--they might say 
something like you want your remedy to lead to an appropriate 
optimal level of deterrence. You want the right level of 
punishment. Because you want to deter the bad conduct, you 
don't want to overdeter the good conduct, right? You know, 
everyone sort of understands this stuff.
    It cannot be the 20 years is appropriate in every single 
one of those situations.
    Mr. Burgess. So, you think there are variables that should 
be considered in the negotiation process?
    Mr. Manne. Well, yes, of course. It is one of the elements 
that should be considered, just like every other element should 
be considered. Now it happens that, actually, these consent 
decrees, at least in the data security cases, they pretty much 
all look identical. Never mind all of those differences that I 
mentioned, they all look at least extraordinarily similar. And 
that strikes me as problematic, too.
    Now it is possible. It is possible that, when the FTC 
adopted the Safeguards Rule under Gramm-Leach-Bliley, to relate 
to data security issues at financial institutions, it is 
possible that they hit upon the optimal menu of data security 
practices for every company that has ever come in front of the 
FTC. It is possible. I think it is really unlikely, though.
    And I could take three days talking about what I think is 
going on here; I will try not to.
    Mr. Burgess. Please.
    Mr. Manne. But I don't think it is what we want to be going 
on.
    Mr. Burgess. And I agree. That is one of the reasons we are 
having this panel and this discussion.
    Mr. Wright, let me just ask you, if a company is under a 
consent order, they have probably got a lot of stuff to do to 
be in compliance with that order. Is that a fair statement?
    Mr. Wright. Yes, that is a fair statement.
    Mr. Burgess. So, what is the practical effect of a 20-year 
compliance or 20-year consent agreement with having to produce 
documentary evidence that they are behaving by the guidelines 
that have been set out? Is there a cost to having to comply 
with the 20-year length of time on the consent decree?
    Mr. Wright. Sure. You are talking to an economist. So, 
there is a cost to everything. Most of my students would tell 
you there is a big cost of being in my classroom.
    Mr. Burgess. One of my fondest fantasies is to have a group 
of doctors on this panel and ask them how economists should be 
paid.
    [Laughter.]
    But that is another story. Carry on.
    Mr. Wright. I will tell you when the microphone is not on.
    [Laughter.]
    So, there is certainly a cost to consent orders. There is a 
cost to compliance. There is a cost to injunctive relief that 
changes behavior that is in the consent order. Sometimes we 
want to incur those costs because we are getting, as Professor 
Vladeck said, a big bang for the buck in terms of consumer 
return. We are stopping fraud.
    Sometimes, whether it is competition or consumer 
protection, we are stopping behavior that we are really not 
sure about what its effects on consumers are. We are sort of 
drawing a big fence around the firm's behavior and hoping for 
the best. This is the reason, precisely the reason, you want 
economists in the room who are trained, sort of by definition, 
to think about those tradeoffs. If you start from the premise 
that everything the agency does is good for consumers, this is 
a really easy hearing. Just do more of all the things.
    Mr. Burgess. Well, let me ask you a question. You heard the 
Chairwoman testify. I mean, I asked her, are we asking a 
company to ask permission before it rolls out a new good or 
service? And her answer was the essentially negative. But do 
you agree with that answer that she gave?
    Mr. Wright. I agree that most of the time our consents 
don't necessarily ask the firms to get prior permission from 
the agency, but sometimes they do. The Apple consent, the line 
of consents that comes from those inapt purchase cases do 
exactly that. Those are product design cases that say, if you 
want to change your product in a particular way, either you 
can't or you must get permission. That is precisely what those 
do.
    And I think something for the committee to consider is 
those types of cases I think are going to be an important and 
increasing part of the agency's portfolio over time. If you go 
back 20 years, most of what the agency did was fraud, and 
frauds are relatively easy cases. Fraud is bad. You don't need 
a PhD economist to write you a 20-page memo on fraud, right? 
You need them to write it once and, then, copy it every time.
    But the types of activities where the agency is applying 
its enforcement authority are different. They are complicated. 
There are tradeoffs. There may well be harm in these inapt 
purchase cases with disclosures, but there may also be benefits 
to the 15-minute window. And that is precisely where you need 
some sort of calibration, where you need economic analysis to 
have a bigger seat at the table within the agency than it did 
10 years ago, 20 years ago, or probably ever.
    And I will say one small point, if I may, which is I have 
been following the FTC since I was intern in the Bureau of 
Economics. I pay pretty close attention to what the Bureau of 
Economics does. In my view, since I have followed the agency, 
contrary to some of the remarks that I have heard, while they 
may perform an input into most of the cases, I can't bring 
myself to say ``all,'' my own view is BE right now is less 
influential than it has been over the past three decades.
    Mr. Burgess. Well, I just really want to thank all of our 
panelists for being here today.
    Seeing no other members wishing to ask questions, we will 
conclude the second panel. And we take the briefest of brief 
recesses to set up for the third panel.
    This panel is adjourned.
    [Recess.]
    Mr. Burgess. Well, welcome back, and thank you all for your 
patience and taking time to be here today.
    We will move into the third panel for today's hearing. We 
are going to follow the same format as the first and second 
panel. Each witness will be given 5 minutes for an opening 
statement, followed by questions from members.
    For our third panel we have the following witnesses: Mr. 
Richard Hendrickson, the President and CEO of Lifetime 
Products; Dr. Greg O'Shanick, President and Medical Director 
for the Center for Neurorehabilitation Services; Mr. Steven 
Shur, President of Travel Technology Association; Mr. Robert 
Arrington, President of the National Funeral Directors 
Association; Mr. John Breyault, Vice President of Public 
Policy, Telecommunications, and Fraud, the National Consumers 
League; Mr. Gil Genn, Maryland Sports and Entertainment 
Industry Coalition; Ms. Jamie Pena, Vice President, Revenue 
Strategy and Global Distribution, Omni Hotels & Resorts, and 
Mr. Michael Best, Senior Policy Advocate of Consumer Federation 
of America.
    We appreciate you all being here today.
    We will begin the panel with you, Mr. Hendrickson. You are 
recognized for 5 minutes to give a summary of your opening 
statement, please.

STATEMENTS OF RICHARD HENDRICKSON, PRESIDENT AND CEO, LIFETIME 
 PRODUCTS; GREG O'SHANICK, PRESIDENT AND MEDICAL DIRECTOR, THE 
    CENTER FOR NEUROREHABILITATION SERVICES; STEPHEN SHUR, 
  PRESIDENT, TRAVEL TECHNOLOGY ASSOCIATION; ROBERT ARRINGTON, 
  PRESIDENT, THE NATIONAL FUNERAL DIRECTORS ASSOCIATION; JOHN 
BREYAULT, VICE PRESIDENT OF PUBLIC POLICY, TELECOMMUNICATIONS, 
 AND FRAUD, THE NATIONAL CONSUMERS LEAGUE; GIL GENN, MARYLAND 
 SPORTS AND ENTERTAINMENT INDUSTRY COALITION; JAMIE PENA, VICE 
   PRESIDENT, REVENUE STRATEGY AND GLOBAL DISTRIBUTION, OMNI 
 HOTELS & RESORTS, AND MICHAEL BEST, SENIOR POLICY ADVOCATE OF 
                 CONSUMER FEDERATION OF AMERICA

                STATEMENT OF RICHARD HENDRICKSON

    Mr. Hendrickson. Thank you, Chairman Burgess and Ranking 
Member Schakowsky, committee members.
    As CEO of Lifetime Products, it is an honor to appear 
before you today and address the Reinforcing Made-in-America 
Act of 2016, H.R. 5092.
    Lifetime Products is a wonderful example of the American 
dream made in the USA. It was started 30 years ago by a father 
who wanted to build a better basketball hoop for his children. 
Today we employ over 1900 people in the U.S. and work hard 
every day to keep those jobs here in the United States of 
America. It isn't easy, as you can imagine, when your key 
competitors are taking advantage of lower labor and material 
cost in other countries around the world. However, by investing 
large amounts of capital, vertically-integrating our factory, 
we have been able to keep the majority of our manufacturing 
jobs here in the U.S.
    Data shows that 78 percent of Americans, if given the 
choice, prefer to purchase made-in-the-USA products. Consumers 
want to support American manufacturing and believe that 
American-made goods are generally of higher quality and 
supportive of American jobs.
    Since 1997, the Federal Trade Commission has enforced a 
stringent national labeling standard that requires products 
marked ``Made in the USA'' to be all, or virtually all, 
manufactured in the U.S. While providing the necessary consumer 
protection, it also gives companies a slight, but necessary 
amount of leeway, permitting them to import negligible or de 
minimis components for their products. However, the 
manufacturing process must always take place in the U.S., and 
vital components for the product's core function must also be 
domestically-produced.
    Today, currently, one of a state's laws has upended really 
the FTC labeling system. A 50-year-old California State statute 
held that products bearing the ``Made in USA'' label had to be 
composed of 100 percent domestic content. This really rendered 
the USA FTC label impossible for many companies like us to use.
    Companies like Lifetime had no idea that we were in 
violation of the State's labeling law and were unexpectedly 
sued, which resulted in multimillion dollar settlements based 
on infractions as insignificant as a 50-cent net suspended from 
a $500 made-in-the-USA basketball system.
    Now, as companies try to choose whether to follow the FTC's 
federal guidelines or the California State statute, many USA 
companies, like ourselves, have decided not to use the made-in-
USA label mark at all on the majority of our products, even 
though they are, indeed, made in the USA. And this really 
leaves the consumer ill-informed with regard to a product's 
origin.
    Despite continued efforts over the last 3 years to amend 
the California statute, it is now even more confusing, inviting 
more opportunities for the California State statute and the FTC 
rule to clash. The FTC made-in-the-USA standard is robust, it 
is meaningful, it is difficult to meet. It challenges 
manufacturers to source and manufacture domestically and it 
conveys a clear unified message to consumers in the United 
States and around the world.
    The FTC's made-in-the-USA standard requires significant 
investment in American manufacturing and in American jobs. As 
such, when consumers choose products marked ``made in the 
USA,'' they can feel confident that they are supporting 
American manufacturing and American jobs.
    About 15 years ago, our main competitor in the basketball 
industry decided to pack up and leave the U.S. They relocated 
to Asia, began lowering prices with less-expensive labor and 
materials. After a great deal--and I mean a great deal--of 
deliberation, we chose to stay. We stayed committed to made in 
the USA. Had we known then that the FTC standard did not create 
a unified standard and the potential of California lawsuits to 
follow, we may have made a different decision at that time. Why 
invest millions in capital to manufacture in the U.S. if you 
are not allowed to tell the consumer ``made in the USA''?
    Thank you for your time. Thank you for the time you give to 
serve our country, and thank you for your efforts in helping 
keep manufacturing alive in the United States of America.
    [The prepared statement of Richard Hendrickson follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]                           

    
    Mr. Burgess. The Chair thanks the gentleman.
    Dr. O'Shanick, you are recognized for 5 minutes for your 
opening statement, please.

                  STATEMENT OF GREG O'SHANICK

    Dr. O'Shanick. Thank you. Chairman Burgess, Ranking Member 
Schakowsky, and members of the subcommittee, good afternoon and 
thank you for the opportunity to provide testimony on the 
important issue of protecting our nation's youth from 
concussion. I commend Chairman Upton and Ranking Member Pallone 
and members of the committee for their ongoing investigation 
into concussion.
    As stated, my name is Dr. Greg O'Shanick, and I am the 
president and medical director of the Center for Neurorehab 
Services in Richmond, Virginia. I am also the medical director 
emeritus of the Brain Injury Association of America, the 
nation's oldest and largest brain injury patient advocacy 
organization.
    Today I am here to discuss the Youth Sports Concussion Act, 
H.R.4460, sponsored by Congressman Bill Pascrell, Jr., and 
Congressman Thomas J. Rooney, Co-Chairs of the Congressional 
Brain Injury Task Force.
    The Brain Injury Association of America and 35 
organizations submitted a letter to the committee in support of 
this legislation. I would like to submit this letter for the 
record.
    [The information appears at the conclusion of the hearing.]
    Dr. O'Shanick. The Youth Sports Concussion Act would help 
ensure that safety standards for sports equipment are based on 
the latest science and curb false-advertising claims made by 
manufacturers to increase protective sports gear sales.
    An extensive National Academy of Sciences report previously 
found a lack of scientific evidence that helmets and other 
protective devices designed for young athletes reduced 
concussion risk. Yet, some manufacturers continue to use false-
advertising claims that prevent athletes, parents, and coaches 
from making informed safety decisions.
    In 2012, the FTC warned nearly 20 sports equipment 
manufacturers that they might be making deceptive concussion 
prevention claims, but the FTC's actions thus far have not 
deterred companies from making these claims. The Youth Sports 
Concussion Act would empower the FTC to seek civil penalties in 
such cases.
    As parents and grandparents, we want to do our best to 
educate ourselves to protect our children while they are 
competing in sports. Companies that claim they protect a child 
from a concussion with their sporting goods equipment when they 
cannot should be prevented from using this tactic while 
advertising their product to the American public.
    In my clinical practice, every day I see children and 
adolescents who have sustained a concussion whose parents are 
torn between wanting to encourage their child's physical 
activity in team sports, but simultaneously are fearful of what 
we are now recognizing as the immediate and long-term risk of 
concussive injury in the developing brain.
    Effective coaching and adult supervision of these 
activities by individuals who understand and have themselves 
been trained in concussion protocols is one element of this 
prevention and awareness process. And while we have solid data, 
for example, regarding the benefits of helmets in the 
prevention of bicycle-related concussions, my patients' parents 
are being bombarded with a host of misleading and false claims 
that allow other manufacturers to financially capitalize on 
these fears.
    My advice to these parents is typically, if it seems too 
good to be true, it most likely is. For the kids, education, 
awareness, proactive planning are the elements I encourage in 
both their return-to-learn and return-to-play activities.
    The Brain Injury Association of America has a Concussion 
Information Center that is located at www.biausa.org. This 
information is designed to shed further light on concussion-
related issues to help families, individuals, educators, 
healthcare professionals, and others to be more mindful of the 
signs of a concussion, how to respond accordingly, and to 
identify resources to assist following a concussion, also known 
as a mild traumatic brain injury.
    BIAA is launching a concussion certificate for 
professionals this fall. Awarding the concussion certificate 
demonstrates that the individual responsible for return-to-
work, learn or play decisions has acquired the requisite 
knowledge base needed to make sound, informed decisions.
    Prevention is important in reducing concussion in our 
youth, and safety equipment is a key component of prevention. 
States have enacted several measures designed to reduce 
fatalities and brain injuries, including seatbelt legislation, 
distracted driving laws, drunken driving laws, and return-to-
play laws with regard to sports-related concussions.
    Individuals can take several measures designed to reduce 
the risk of brain injury. These include wearing protective gear 
such as helmets when bicycling, motorcycling, snowboarding, 
riding a horse, skiing, riding, diving, ATVs, or playing 
sports; wearing seatbelts when driving or riding in vehicles; 
ensuring that living areas for seniors and young children are 
free of trip hazards and have sufficient barriers for stairs, 
and maintaining physical activity to improve lower body 
strength and balance.
    Your efforts to prevent mild traumatic brain injury in our 
nation's youth are needed and welcomed. Thank you, and I look 
forward for your questions.
    [The prepared statement of Greg O'Shanick follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]                           

    Mr. Burgess. The Chair thanks the gentleman for his 
testimony.
    Mr. Shur, you are recognized for 5 minutes for your opening 
statement, please.

                   STATEMENT OF STEPHEN SHUR

    Mr. Shur. Thank you, Chairman Burgess, Ranking Member 
Schakowsky, and all members of the subcommittee.
    My name is Steve Shur. I am the president of Travel Tech. 
The association represents online travel agents, global 
distribution systems, and short-term rental platforms.
    Our online travel agent members, OTAs as they are known, 
have created the marketplace where consumers can shop for all 
aspects of travel in a single platform. Travelers have 
benefitted immeasurably from the ability to search, compare, 
and book hotels through the technology created and operated by 
the members of Travel Tech.
    When suppliers have to compete in a dynamic marketplace, 
consumers benefit in the form of lower prices and better 
service offerings. The scale and popularity of third-party 
online booking sites illustrates consumers' preferences and 
confidence. Last year Expedia helped travelers book over 200 
million room nights. Trip Advisor reaches 340 million unique 
monthly visitors and hosts more than 350 million reviews. 
Priceline partners with over 370,000 hotels in 170 countries.
    Integrity in the hotel booking marketplace is critical. 
Without it, companies that fail to deliver reliable customer 
service and seamless transactions with their hotel partners 
will not survive. OTAs thrive on ensuring that customers have a 
positive experience every time they book. Each of our members 
has 24-hour customer service teams ready to assist travelers 
who choose to book on their platforms.
    Travel Tech strongly opposes H.R. 4526 on all fronts. We 
categorically reject the premise of a need for such 
legislation. This bill would impose new, burdensome 
requirements on online travel sites without any justification 
for doing so. Online travel companies would needlessly have to 
provide additional notification to the consumer that they are 
``not affiliated with'' the hotel with which the consumer is 
about to book his stay. However, online travel companies are 
absolutely affiliated with hotels. Hotels willingly sign 
contracts with OTAs to take advantage of this very effective 
marketing and distribution channel. Further, it is unclear why 
this heightened standard for intermediaries or distributors is 
needed for online hotel bookings, but not for the online 
purchase of any other goods.
    H.R. 4526 would authorize the FTC to study whether the new 
disclosure requirements are necessary and if consumers are, 
indeed, confused about where they are booking their hotel 
rooms. It seems illogical to apply new, onerous regulations on 
American businesses without a demonstrable record of consumer 
harm, while simultaneously acknowledging that a study is needed 
to confirm whether these regulations are necessary in the first 
place.
    H.R. 4526 would amend the Restore Online Shoppers' 
Confidence Act, a bill that was passed several years ago to 
address a practice in which people were truly harmed by 
companies sharing credit card information with other entities 
without their knowledge or consent. Associating an entire 
reputable industry with this activity addressed in the Restore 
Online Shoppers' Confidence Act is a gross misappropriation of 
the facts and an assault on our industry's reputation and 
integrity.
    There is no tangible record of consumer complaints 
justifying any part of this legislation, only unsubstantiated 
claims offered by the hotel industry in an effort to scare 
consumers into booking direct. We have all seen the book-direct 
advertising campaigns by the hotel chains. The motivations here 
are clear.
    The hotel lobby claims that 15 million Americans are 
scammed every year by third-party booking sites. Fifteen 
million, that is 41,000 Americans every day showing up at a 
hotel, only to find that their reservation was lost and that 
they were scammed. Where are these numbers coming from? Where 
is the evidence?
    The FTC has no record that such complaints have been 
lodged. The nation's leading consumer groups are not aware of 
fraud, certainly not at this level. Bloggers and reporters who 
root out issues like this have no record of such activity 
taking place.
    According to the hotel lobby, 41,000 people every day have 
been scammed by third-party booking sites, and the only place 
you have heard about this problem is from the trade association 
representing the largest hotel chains. The hotel lobby is 
fabricating a problem as a means to boost its members' margins 
by scaring consumers into thinking that booking anywhere other 
than direct is risky and riddled with fraud. It is just not 
true. It is insulting to consumers.
    Any government action in this regard should be predicated 
on a tangible record of consumer harm, rather than anecdotes 
provided by a trade association that wants to dismantle the 
transparency of a marketplace where consumers can compare 
prices and services across brands.
    I urge the members of the subcommittee not to wade into 
what is essentially a contractual battle between the hotel 
industry and their own distribution partners. OTAs are proud to 
offer consumers a safe, effective, and transparent marketplace 
where hotel properties compete on price and service.
    Thank you for the opportunity to speak in opposition to 
H.R. 4526. I look forward to your questions.
    [The prepared statement of Stephen Shur follows:]
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    Mr. Burgess. The Chair thanks the gentleman for his 
testimony.
    Mr. Arrington, you are recognized for 5 minutes for an 
opening statement, please.

                 STATEMENT OF ROBERT ARRINGTON

    Mr. Arrington. Mr. Chairman and members of the 
subcommittee, thank you for the opportunity to testify this 
afternoon.
    I am Bob Arrington, founder and president of Arrington 
Funeral Directors in Jackson, Tennessee. I am honored to be 
serving as the president of the National Funeral Directors 
Association, referred to as NFDA.
    Over the years, I have served my community and my 
profession by taking on leadership roles with the Tennessee 
Funeral Directors Association. I was appointed to a 4-year term 
by the governor of the State of Tennessee to serve on the 
Tennessee State Board of Funeral Directors and Embalmers, and I 
served the last year of my term as president of this State 
regulatory board.
    I am testifying today on behalf of the nearly 20,000 
funeral directors who are members of NFDA. Together, we 
represent more than 10,000 funeral homes in the United States 
and 39 countries worldwide.
    NFDA is the world's leading and largest funeral service 
association, a trusted leader, a beacon for ethics, and the 
strongest advocate for the profession and the families we are 
called to serve.
    I want to thank Congressman Rush for his efforts to protect 
consumers. Like the Congressman, NFDA members were horrified at 
the illegal activity that was discovered in 2009 at Burr Oak 
Cemetery in Illinois. In the findings section of this 
legislation, two other incidents involving a cemetery and a 
crematory are mentioned, Tri-State Crematory in Georgia and 
Menorah Gardens in Florida.
    There is no doubt these were criminal and vile acts by a 
few bad apples, but I must state my profession, the profession 
that I love and have dedicated my life to, should not be cast 
in a disparaging light because of three incidents in the last 
15 years which were handled appropriately by each state.
    NFDA works closely with state associations to improve state 
laws governing the profession, ensuring they reflect the 
evolving needs of consumers and the funeral professionals that 
serve them. Over the last several years, states have continued 
to provide oversight and increased protections for the 
deceased, their families, and the providers of funeral 
services.
    Therefore, it is the belief of the NFDA and its members 
that state regulation of the funeral profession is sufficient. 
There is no need for further regulation by the federal 
government at this time.
    While we applaud Congressman Rush's concern for grieving 
families, a concern that is equal to our own, we oppose H.R. 
5212 because we believe it is not the best way to address the 
illegal and immoral activities I previously described.
    Next year the FTC is scheduled to begin a comprehensive 
review of the funeral rule, something that happens on a regular 
basis. NFDA feels this review offers a better alternative to 
H.R. 5212, which would merely expand a rule that is already 
flawed. In NFDA's opinion, the funeral rule needs to be 
redesigned and redrafted, not simply expanded.
    While the funeral rule offers important consumer 
protections, it is a not a one-stop-shop solution. When the FTC 
reviews the funeral rule next year, everyone who has a concern 
about the funeral rule will be able to make their voice heard. 
NFDA is confident that the review will produce an updated 
funeral rule that protects consumers in today's market. And in 
NFDA's opinion, the funeral rule is far too important to be 
expanded without a full exploration of the complex issues 
involved, something that may not happen in Congress.
    NFDA is dedicated to ensuring this review process will 
result in positive changes for both families and funeral 
service. We wholeheartedly agree with Congressman Rush that 
changes need to be made, but we feel the funeral rule needs to 
be redesigned and clarified to address the realities of the 
funeral market in 2016. It would be better to do this through a 
comprehensive rulemaking process where all interested parties 
can be heard rather than through a congressional mandate.
    I am sure many of you know funeral directors in your 
community. You probably have been served by some. What we do is 
for the good of others, not for the good of us. We dedicate 
ourselves that families have one mother that is going to die 
one time and we are going to have one funeral. Our dedication 
is to do that one time because we have only one opportunity. 
The last thing we want is to do that wrong.
    I thank you for the opportunity to be here, and I look 
forward to your questions.
    [The prepared statement of Robert Arrington follows:]
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    Mr. Burgess. The Chair thanks the gentleman for his 
testimony.
    The Chair recognizes Mr. John Breyault for 5 minutes for 
your opening statement, please.

                   STATEMENT OF JOHN BREYAULT

    Mr. Breyault. Good afternoon, Chairman Burgess, Ranking 
Member Schakowsky, and members of the subcommittee.
    My name is John Breyault, and I am the vice president of 
public policy, telecommunications, and fraud at the National 
Consumers League.
    Founded in 1899, NCL is the nation's pioneering consumer 
organization. Our nonprofit mission is to advocate for social 
and economic justice on behalf of consumers and workers in the 
United States and abroad.
    Thank you for giving us the opportunity to speak today on 
the important issue of live event ticketing fairness. The 
modern ticket-buying experience is rigged and it is too often 
an exercise in frustration for millions of fans that simply 
want to see their favorite artist or sports teams at a fair 
price.
    Consumers trying to buy tickets at general on sale to 
popular events are almost always competing without knowing it 
against secret insider sales and scalpers who use special 
software to electronically cut in line. This leads to 
considerable frustration when consumers are shut out of the box 
office and anger when resale markets immediately have hundreds 
of tickets available at inflated prices.
    A little publicized fact about tickets is that artists, 
promoters, and venues often make only a small percentage of 
tickets available to the general public. For example, of the 
750,000 tickets for Adele's 2016 North American Tour, fewer 
than 300,000 were made available to the general public.
    According to the New York Attorney General, less than half, 
46 percent, of tickets to the most popular events are ever made 
available to public on sale. Most tickets, 54 percent on 
average, are diverted to fan club and premium credit card 
presales and holds for industry insiders. These diverted 
tickets often make their way to the secondary market, where 
they typically fetch a price far above face value.
    For example, at a January 2013 Justin Bieber show in 
Nashville, Tennessee, 90 percent of the tickets were set aside 
for presales and insiders. Many of the tickets allocated to 
Bieber's management company were later listed on ticket resale 
Web sites at hugely-inflated prices.
    These examples are just the tip of the iceberg. Artists of 
every type from rap to rock, country to comedy, hold back 
tickets. We think the system is rigged against average 
consumers. We don't believe artists should have the right to 
hide how many tickets are to be made available to the general 
public, so they can trumpet quick saleouts that hype their 
events; that they, then, often take advantage of their fans by 
anonymously reselling tickets, often for several multiples of 
face value, while blaming scalpers for their fans' inability to 
get tickets, is the height of Chutzpah.
    Undisclosed ticket allocations are not the only way that 
consumers find themselves at a disadvantage at the box office. 
Fans must also compete against ticket brokers employing 
sophisticated ticket-buying software known as bots. Bots allow 
brokers to purchase tickets at lightning-fast speeds, helping 
them acquire hundreds or thousands of tickets in minutes or 
even seconds. These are, then, listed on resell Web sites, 
often at outrageous markups.
    Evidence of rampant abuses by ticket bots abound. One bot 
was used to purchase 1,012 tickets in one minute to U2's July 
2015 show at Madison Square Garden. That same day two bots were 
used to purchase more than 15,000 tickets in 24 hours for 
several performances on the same U2 tour.
    Between 2002 and 2009, one bot operator, Wiseguys Tickets, 
Inc., bought more than 1.5 million tickets and netted more than 
$25 million in profit when tickets were resold to brokers who, 
then, resold them to fans.
    Ticketmaster has stated that ticket bots can account for as 
much as 90 percent of the traffic to its Web site and 60 
percent of sales for the most desirable seats to some shows.
    To address the broken ticket marketplace for popular 
concert tours and many sporting events nationwide, 
congressional action is sorely needed. Both the BOSS Act and 
the BOTS Act crack down on robotic ticket-buying software. 
However, only Congressman Pascrell's BOSS Act offers 
comprehensive solutions that collectively will significantly 
improve fans' ticket-buying experiences. By requiring greater 
transparency in the primary ticketing market, prohibiting 
egregious broker practices like undisclosed speculative 
selling, and limiting the ability of connected insiders to 
surreptitiously divert tickets to the secondary market, the 
BOSS Act would lead to beneficial reforms in the ticketing 
marketplace.
    To conclude, it is clear to us, and to millions of fans, 
that the ticket-buying experience is rigged. All too often 
buying a ticket is an exercise in frustrations for fans that 
simply want to see their favorite artist or sports teams at a 
fair price. To this end, we urge the subcommittee to support 
Congressman Pascrell's common-sense pro-consumer bill.
    Chairman Burgess and Ranking Member Schakowsky, thank you 
again for inviting NCL to speak today. I look forward to 
answering your questions.
    [The prepared statement of John Breyault follows:]
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    Mr. Burgess. The Chair thanks the gentleman for his 
testimony.
    Mr. Genn, you are recognized for 5 minutes for your opening 
statement, please.

                     STATEMENT OF GIL GENN

    Mr. Genn. Thank you, Chairman Burgess, Ranking Member 
Schakowsky, members of the subcommittee. Thank you for allowing 
me to testify in support of H.R. 5104, the BOTS Act.
    I am testifying today on behalf of the Maryland Sports and 
Entertainment Industry Coalition, a coalition of diverse 
players in the live entertainment business, including 
professional sports teams, large and small musical and 
theatrical venues, and providers of live entertainment shows.
    The sports and entertainment industry is a huge source of 
pride in Maryland, and hundreds of millions of dollars have 
been invested in venues, sporting events, concerts, and other 
live productions in the State, significantly contributing to 
the employment of thousands of Maryland residents.
    Our coalition brings some experience to your debate, as we 
were instrumental in recently enacting legislation in Maryland 
similar to the BOTS Act. While we are grateful to our state 
legislatures for enacting that legislation, we recognize the 
limits of its effectiveness.
    The underground industry that uses BOTS to hack ticketing 
Web sites is clearly an interstate business. Interstate 
commerce transactions require federal solutions, and H.R. 5104 
is a substantial solution to the problem of ticket bots.
    As you know, for most live entertainment events, there is a 
restriction on the number of seats one purchaser can buy, 
usually in the four-to-eight-ticket range. It is often the case 
that during the opening minutes of the on sale for a 
championship game or a premier entertainment show the Web site 
of the ticketing agent is overwhelmed by hundreds or thousands 
of requests for tickets placed by computer programs pretending 
to be real fans.
    These bots, as they are called, seize up substantial 
portions of the ticket inventory. Their software is 
sophisticated enough to recognize which tickets are the best 
tickets that wills fetch the highest resale price on the 
secondary market. Once the botsters have the tickets they want, 
they release the others back into the on-sale pool.
    When people use bots to violate the terms and conditions of 
ticketing Web sites to buy up large blocks of tickets and 
resell them at a markup on the secondary market, they are 
effectively stealing that investment. H.R. 5104 at least 
provides a clear civil remedy for this abuse. The bipartisan, 
pro-consumer BOTS Act would create a dual enforcement mechanism 
to stop that theft. It would make it an unfair and deceptive 
practice to use a bot to hack a ticketing Web site and allow 
the FTC to enforce against people who do. It would also create 
a private right of action by which any affected party, an 
artist team, an agent, a fan could sue a botster under a clear 
federal standard and recover damages.
    Bruce Springsteen, Paul McCartney, Taylor Swift, and others 
don't come to Washington, D.C., every year or your 
congressional districts. It is unfair to the younger fans who 
have discovered these legends to have to pay exorbitant prices 
to secondary ticket sellers when they are also concerned about 
their first job salary, saving for college, even paying off 
student loans, and other life expenses.
    We are hopeful that the dual threat of FTC enforcement and 
private litigation will serve as a deterrent against people who 
use bots and help restore the ability of real fans to get good 
tickets at face value.
    This hearing is also examining legislation that more 
extensively regulates the primary ticketing market, requiring 
inventory disclosures of proprietary business information and 
prohibiting restrictions on resale of tickets. Many states have 
looked at adopting such policies, and nearly all of them have 
rejected them. Legislators realize that these bills, while 
well-intentioned, would only empower scalpers at the expense of 
real fans.
    In recent years, Maryland considered and rejected 
legislation that would prohibit restrictions on the resale of 
tickets from the primary ticket-seller. One of those 
restrictive provisions would have prohibited making tickets 
non-transferrable. This is similar to what is in Congressman 
Pascrell's draft on page 5, lines 12 through 15.
    Think of all the times when you may have attended an event 
with the Speaker of the House, the Cabinet officials, or even 
the President. One of the reasons these tickets are non-
transferrable is because of security. Taking away the right of 
the primary ticket-seller to restrict tickets could lead to 
anyone getting those tickets on the secondary market. In such a 
case, it would be a very bad policy for obvious security 
reasons.
    I hope Congress will enact H.R. 5104, the BOTS Act, and 
refrain from adding controversial and burdensome measures to 
regulate the primary ticketing marketplace.
    Once again, thank you, Congressmen Blackburn and Tonko for 
sponsoring and the cosponsors for introducing this legislation.
    I look forward to your questions.
    [The prepared statement of Gil Genn follows:]
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    Mr. Burgess. The Chair thanks the gentleman for his 
testimony.
    The Chair now takes great pleasure in recognizing a 
constituent, Ms. Pena, 5 minutes for your opening statement, 
please.

                    STATEMENT OF JAMIE PENA

    Ms. Pena. Thank you. Chairman Burgess, Ranking Member 
Schakowsky, and members of the subcommittee, thank you for the 
opportunity to speak to you today about addressing deceptive 
hotel booking Web sites.
    My name is Jamie Pena, the vice president of revenue 
strategy and global distribution for Omni Hotels, located in 
Dallas, Texas. As Mr. Burgess mentioned, I am also a proud 
constituent of Chairman Burgess.
    I am here today representing the over 18,000 employees and 
associates of Omni Hotels. Omni Hotels is a proud member of the 
American Hotel and Lodging Association, which represents 2 
million employees of the lodging industry.
    It is an honor to appear here before your committee to 
discuss the need for Congress to pass the Stop On-Line Booking 
Scams Act, H.R. 4526. I would like to thank the 18 bipartisan 
cosponsors for their leadership on this issue as well.
    I am here today to discuss the growing problem of deceptive 
hotel booking Web sites that are scamming customers and the 
need for legislation to address this issue. The ever-evolving 
online channels for booking hotel rooms from desktops to mobile 
phones and internet-enabled devices like tablets have 
transformed the way guests book their hotel rooms and at the 
same time created new customer-facing business models.
    Amid these transformations, the lodging industry continues 
to put guests and customers first. We are focused on educating 
consumers on how to avoid being victimized by these scam Web 
sites.
    It is with that purpose that we can bring to the committee 
the growing problem of misleading scam Web sites that deceive 
customers into thinking they are making a legitimate booking 
directly with the hotel company. They use pictures and graphics 
and other unique images from the hotel. They even set up 800-
number call centers where the guest calls and the agent answers 
in a way that leads the customer to believe they are talking 
directly to the hotel.
    Further, as customers increasingly move to mobile booking, 
smaller screens make it even more difficult for them to discern 
between the hotel's Web site and the URL of these scammed Web 
sites. Customers are definitely harmed and the result is we get 
different complaints from lost reservations, incorrect 
accommodations, loss of hotel loyalty program benefits, and 
simply the customers are confused.
    By AHLA's estimates, these scams are impacting 15 million 
online bookings a year in the U.S. Omni customers have 
certainly fallen victim to these scams. I have two specific 
examples that I would like to share with you that are very 
recent.
    One is a guest that was booking at the Omni Parker House in 
Boston. They called our call center to add an accompanying 
guest name to their reservation that she thought she booked on 
omnihotels.com. However, our agent was unable to assist her 
because, unknowingly, she had booked with a third party. She 
was very upset that her credit card information was in the 
hands of strangers since she thought she had booked directly 
with our hotel.
    Another example comes from the Omni Houston Hotel. We had a 
similar scenario where the guest realized after the fact that 
they had clicked on a link and booked their reservation with 
one of these third-party rogue Web sites. To her surprise, it 
was not booked direct with us. I was able to get the 800 number 
from the Web site myself that the lady had spoken with, and the 
agent even continued to insist to me that he was an agent of 
Omni Hotels, which he was not.
    These are not just problems for customers trying to book 
with Omni. No ordinary customer would be able to realize that 
these are fake Web sites. And make no mistakes, these Web sites 
are designed to deceive consumers.
    Thankfully, the hotel industry is one of many voices 
concerned about this growing problem. The Federal Trade 
Commission, AAA, and the Better Business Bureau have all issued 
formal alerts warning consumers of these scams, and the hotel 
industry is also working on better methods of tracking the 
expansive nature of this program.
    Many times the instances where consumers are frauded are 
not formally reported because the front desk agents just take 
care of the customer and they just make it right for them at 
their expense.
    Congress has a role. So, to better quantify this issue, we 
are beginning a pilot program in three states to better train 
the front desk personnel to report these instances of fraud 
directly to the states' attorney general office. But Congress 
has a role to play as well, and that is why I am here today to 
express our support for H.R. 4526.
    This bill is narrowly tailored to address only the 
unscrupulous sites that purposely deceive the customers. The 
bill simply requires online travel Web sites who do not have 
direct contracts with hotels to clearly disclose that they are 
not the actual hotel property.
    Because it is directed only at non-affiliated third-party 
Web sites, it excludes our partner OTAs. These OTAs we have 
direct relationships with design their Web sites in a manner 
that distinguishes their site from our hotels. In addition, our 
partner OTAs are very quick to address instances of confusion 
and they are very transparent on their Web sites that they are 
not the actual hotel.
    As you can see, H.R. 4526 is a targeted bill to address a 
serious problem for U.S. consumers.
    Thank you for the opportunity to testify here, and I look 
forward to answering your questions.
    [The prepared statement of Jamie Pena follows:]
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    [The addendum to Ms. Pena's testimony has been retained in 
committee files and can be found at: http://docs.house.gov/
meetings/IF/IF17/20160524/104976/HHRG-114-IF17-Wstate-PenaJ-
20160524.pdf.]
    Mr. Burgess. The Chair thanks the gentlelady for her 
testimony.
    Mr. Best, you are recognized for 5 minutes, please.

                   STATEMENT OF MICHAEL BEST

    Mr. Best. Thank you, Chairman Burgess, Ranking Member 
Schakowsky, and other members of the Commerce, Manufacturing, 
and Trade Subcommittee.
    I am Michael Best, senior policy advocate for the Consumer 
Federation of America. CFA is a nonprofit association of more 
than 250 pro-consumer, not-for-profit groups that was 
established in 1968 to advance the consumer interest through 
research, advocacy, and education.
    The Funeral Consumers Alliance is a nonprofit organization 
with more than 70 local educational groups that was founded in 
1963 to protect the consumer's right to choose a meaningful and 
affordable funeral. CFA and FCA appreciate this opportunity to 
provide testimony on H.R. 5212, the Bereaved Consumers Bill of 
Rights Act of 2016. I would like to outline our support of H.R. 
5212 and, also, urge you to call on the Federal Trade 
Commission to modernize its funeral rule.
    For consumers, funeral and cemetery services are not 
discretionary. Everyone will die and require performance of 
some kind of service, and it will be a large expense for many 
households. In 2014, the median cost of a funeral with viewing 
and burial was $7,181. Yet, according to a 2011 study, about 
half of all households in the country would have difficulty 
paying an unexpected expense of $2,000. This expense is also 
often incurred at a time when we are all especially vulnerable 
and disinclined to undertake a careful search involving 
different types of services and service providers.
    The bill would, among other things, extend the consumer 
benefits of the FTC funeral rule to all death-related 
businesses and codify that rule, establish minimum standards 
and a culture of accountability for the cemetery industry, and 
give the FTC and states attorneys general additional tools to 
ensure the marketplace for funeral and burial services is truly 
competitive.
    We are aware of and not unsympathetic to the claims of some 
nonprofit providers of cemetery services, particularly 
individual churches, that they would have difficulty complying 
with some requirements of the bill. Therefore, we did not 
oppose the amendment that sought to ease requirements on some 
of the small nonprofits.
    We also would not object to the FTC ensuring that any rules 
that were written were informed by an understanding of the 
different types of service providers, from large for-profits at 
one end of the continuum to individual churches operating 
nonprofit services at the other end.
    Both CFA and FCA support H.R. 2212 because it would provide 
stronger and broader protection to consumers of funeral and 
burial services. High cost, vulnerable consumers, and changing 
markets are also why the FTC needs to modernize its funeral 
rule to include online disclosures. The rule worked well for a 
long time and it was even supported by industry.
    Randall L. Earl, in his capacity as an elected officer of 
the National Funeral Directors Association, testified before 
this committee about a previous version of H.R. 2212 stating 
``Many NFDA members have reported that the rule has made them 
better businessmen and women.''
    But the rule needs to reflect how consumers now shop. The 
rule requires written disclosures, but as far back as 2010, 97 
percent of consumers used the internet when searching for local 
products or services. The FTC, in its consumer information web 
pages, also touts internet search as a way to get the best 
product and deal.
    The cost to consumers of antiquated disclosure requirements 
of the funeral rule were evident in a survey of funeral home 
services undertaken and released last year by CFA and FCA. The 
price information we needed to accurately price services was 
found on the Web site of only about one-quarter, 38, of the 150 
funeral homes we surveyed.
    In the absence of a requirement to offer complete online 
disclosures, some funeral businesses that do post prices online 
mislead consumers and directly contradict the intent of the 
funeral rule. Those businesses in our survey that did post 
prices online usually posted only all-inclusive packages and 
failed to alert consumers that they have the right to buy a la 
carte and to decline any unwanted goods or services.
    If the same funeral home offered this incomplete 
information on a paper price list, that would be a violation of 
the federal rule. But, because the rule does not contemplate 
online transactions, these omissions are legal.
    In our study, prices for the same funeral services within 
individual areas almost always varied by at least 100 percent, 
and often varied by more than 200 percent. For example, right 
here in D.C., prices among 15 funeral homes for a full-service 
funeral ranged from $3,770 to $13,800. That variation would be 
difficult to sustain at a market with easy-to-research prices.
    Thank you for the opportunity to support H.R. 2212 and 
explain why the federal rule needs to be updated, and I look 
forward to your questions.
    [The prepared statement of Michael Best follows:]
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    Mr. Burgess. The Chair thanks the gentleman. The Chair 
thanks everyone for their testimony today, and we are going to 
move into the members' questions portion of the hearing.
    I wish to yield 5 minutes to Ms. Schakowsky of Illinois, 
ranking member of the subcommittee, 5 minutes for questions, 
please.
    Ms. Schakowsky. Thank you, Mr. Chairman.
    Dr. O'Shanick, I have been involved in this issue of brain 
injury. I asked the question of the NFL about the connection 
between CTE and brain injury.
    First of all, do you do research, also, on sub-concussive 
brain trauma?
    Dr. O'Shanick. No, ma'am. My job is a clinical practice. I 
take care of sick folks on a daily basis. I was in academics 
for a decade. That was 20 years ago.
    Ms. Schakowsky. OK, but you are testifying today about 
brain trauma, no?
    Dr. O'Shanick. Yes, ma'am.
    Ms. Schakowsky. Yes. OK.
    Dr. O'Shanick. That is correct.
    Ms. Schakowsky. OK. So, studies have shown that children 
and teens are more likely than adults to get a concussion and 
that they take longer to recover. What explains the difference 
in concussion risk and recovery between children and adults, 
and what can we do to guarantee children's brains are protected 
while they engage in youth contact sports?
    Dr. O'Shanick. Thank you very much for the question and for 
your support in terms of this area.
    Children are not just small adults. Unfortunately, for too 
long, the type of information we have been using to look at 
kids has been extracted from the adult literature, both in 
terms of the brain development--frontal lobes of the brain 
start developing in utero, aren't fully developed until 25-26 
years of age. In that situation, what you are doing 
fundamentally with any type of insult or injury is you are 
damaging a developing brain and you are slowing down and 
causing an ultimate loss of full attainment of what they can 
ultimately achieve. They never literally catch up with their 
age-mates.
    So, the issue relates to one of being appropriate in terms 
of minimal types of issues of concussive tackling before a 
certain age. It relates to effective coaching. It requires, 
also, more vigilance in terms of the sideline staff.
    Ms. Schakowsky. So, you were testifying in support of 
legislation that would prevent claims for protective gear that 
are false. Is that right?
    Dr. O'Shanick. Correct. One of the issues that my patients 
and their families have is how do you allow your kids to 
participate in activities and yet have them be safe. Quite 
honestly, much of the information that they read on the 
internet or the Web sites that they visit to try to protect 
their kids simply has misleading information, incomplete 
information, and at times, frankly, erroneous information. Many 
places are more concerned about the colors that they offer, and 
offer one size adult, one size child, as opposed to really 
looking at the science and investing in what is going to be 
protective.
    Ms. Schakowsky. So, we had a hearing on this subject of 
brain injury, and Dr. Tom Talavage, a witness at that hearing, 
testified that current helmet designs prevent massive trauma, 
like skull fracture. They do not, however, according to him, 
prevent the brain from moving around inside the skull, which 
results in a concussion. Is that true?
    Dr. O'Shanick. Absolutely correct, yes. What we are looking 
at is kind of the same concept as airbags. Airbags do not 
prevent concussion or do not prevent brain injury. They prevent 
catastrophic brain injury. The abbreviated injury scale for 
airbags is designed so you can still be rendered unconscious 
for 30 minutes and it meets the current federal standards.
    So, what we are looking at is the prevention of a 
catastrophic injury. However, we know, especially in the 
developing brain, that sub-concussive and other concussive 
injuries that would be relatively innocuous for an adult with a 
fully-developed brain are much differently managed----
    Ms. Schakowsky. And over time?
    Dr. O'Shanick. Exactly, the exposure over time.
    Ms. Schakowsky. Right. Some have suggested narrowing the 
bill to only youth sporting equipment, but I am concerned that 
the bill would no longer cover sporting equipment used by all 
young athletes. Some younger players are wearing adult-sized 
helmets, for example.
    So, I wondered, Dr. O'Shanick, if you share my concern and 
if you have seen young athletes who are grown out of the so-
called youth sporting equipment.
    Dr. O'Shanick. Absolutely. Very astute observation, 
especially when you get into high school and some of the middle 
school kids. I mean, I am not sure where these kids come from, 
but they look like full-grown adults. I want to check their 
driver's license.
    But the issue is that, whenever it is going to be used by a 
child, whenever it is going to be used by somebody of an age 
where we are responsible for protecting them and their brain, I 
think this needs to be the policy that we exhibit.
    Ms. Schakowsky. Thank you. I want to thank all of the 
witnesses. There is so much richness here, that I could ask 
about all of these. So, thank you so much. I listened carefully 
to all your testimony. Thank you.,
    Dr. O'Shanick. Thank you.
    Mr. Burgess. The Chair thanks the gentlelady. The 
gentlelady yields back.
    Unfortunately, we do have a vote on the floor. So, the 
committee is going to take a recess while we vote, and we will 
reconvene immediately after the vote series concludes.
    Ms. Schakowsky. Mr. Chairman, may I ask permission to 
insert these letters from the minority into the record?
    Mr. Burgess. Without objection, so ordered.
    [The information appears at the conclusion of the hearing.]
    Mr. Burgess. We stand in recess.
    [Recess.]
    Mr. Burgess. I call the subcommittee back to order.
    We will resume where we were with member questions of the 
third panel. I would like to recognize Mr. Harper of 
Mississippi for 5 minutes for his questions, please.
    Mr. Harper. Thank you, Mr. Chairman, and I appreciate the 
opportunity.
    And thank you to each one of you for being here. This is 
some very important issues, obviously. And thanks for what each 
of you deals with in the arena of these important pieces of 
legislation.
    Mr. Hendrickson, I would like to ask you a few questions, 
if I may. And specifically, we are discussing some things that 
are very important to us. One of those, of course, is the 
Reinforcing American-Made Products Act of 2016.
    A nice tie, by the way.
    Mr. Hendrickson. Thank you very much. I picked that out 
special today.
    Mr. Harper. There you go.
    If other states begin instituting their own made-in-America 
labeling standards, as California has done, how would that 
impact the manufacturing sector broadly and specifically?
    Mr. Hendrickson. Thank you, Congressman Harper, and thank 
you for your work on this bill.
    We have been very troubled with the addition of another 
state, and especially the potential of additional states after 
that, taking up their own definition of made-in-America. Our 
experience, and just a slight bit of background about us, we 
are a very, very vertically-integrated factory, meaning we 
don't just make the basketball hoops, but we actually make the 
tubing that goes into the basketball hoops. We manufacture the 
plastic bases for the portable portion of it. And beyond that, 
we have a tooling facility that manufactures the tools to make 
the parts and oftentimes even the automated equipment beyond 
that. So, extremely vertically-integrated.
    Yet, with separate state laws and a separate approach and a 
different definition of made-in-USA, it leaves even a company 
like ours, as vertical as we are and as 100-percent made-in-
America as we are, unable to make that claim because we don't 
have the ability to meet multiple litmus tests or multiple 
definitions of made-in-USA.
    And so, the outcome of that is, frankly, we don't get to 
tell the consumer that it is made in America. Our people who 
work every day to make the products and keep them in the USA 
don't get to see ``made in America'' on the boxes that they 
know they produced right here in America. And it takes away 
just one more element of manufacturing in the U.S., which is 
extremely important.
    You know, the significance of manufacturers here in the 
United States of America has impacts all across the country. 
And so, confusion in this area is just one more detriment to 
those of us who are fighting so hard to keep those jobs in the 
U.S.
    So, this Reinforcement Act allowing us to abide by what is 
a very, very strong test, a very demanding made-in-USA 
definition that the FTC holds, it allows us to meet that and, 
then, be able to properly and accurately communicate to the 
consumer where the product was made.
    Mr. Harper. Right, and I think it is very appropriate, if 
you are manufacturing basketball equipment, that it be 
vertically-integrated.
    [Laughter.]
    Mr. Hendrickson. Thank you. I think you are absolutely 
correct.
    Mr. Harper. So, those go very well together.
    Do consumers prefer that products be made in the United 
States?
    Mr. Hendrickson. You know, I referred to in my testimony 78 
percent. That came from a Consumer Reports test that was 
conducted in 2013. If given the opportunity and it is a similar 
product, there is an understanding and a belief that not only 
should it be a very respectable and, hopefully, even higher 
quality many of the times, but it also allows them to say, yes, 
I am spending my dollars in a way that supports the nation, 
that supports the jobs, my neighbor, my friends, my families. 
And so, the consumer does care, and they should be able to 
accurately be notified if it has been made in the U.S., and 
that has been very difficult for us to have to remove ``made in 
the USA'' from products that we have fought for decades to keep 
in the USA.
    Mr. Harper. So, obviously, consumers would prefer to buy it 
with that label and it would benefit manufacturers if you can 
display that. How would a uniform national standard, as we are 
discussing, for made-in-America labels help strengthen the 
manufacturing sector in the United States?
    Mr. Hendrickson. Well, there are certain national retailers 
that are actually pushing marketing campaigns of made in USA. 
If those of us who are manufacturers in the U.S. can't 
communicate that to the consumer nor to the retailer, then we 
miss out on those opportunities for growth. So, this unified 
standard by the FTC allows manufacturers to benefit from the 
increased demand and from the consumer desire to seek out and 
purchase made-in-the-USA products.
    Mr. Harper. Regrettably, my time has expired. I am going to 
yield back.
    But thank you so much for your testimony, what your company 
is doing, and we hope for resolution that will help you and 
many others. Thank you.
    Mr. Hendrickson. Thank you very much, Congressman.
    Mr. Burgess. The Chair thanks the gentleman. The gentleman 
yields back.
    The Chair recognizes Mr. Rush of Illinois, 5 minutes for 
your questions, please.
    Mr. Rush. Again, I want to thank you, Mr. Chairman, for 
this panel.
    I want to welcome the witnesses.
    The funeral industry, Mr. Chairman, is a mystery to most 
people. The vast majority of consumers arrange only one or at 
most two funerals during their lifetime. And, generally, they 
do this at a time of much grief and duress.
    In the eighties, the FTC recognized the opportunity for 
consumer abuse and issued a, quote, ``funeral rule'' containing 
disclosures to consumers at the funeral homes.
    Mr. Best, I want to ask you how have prices at funeral 
homes evolved since the rule was enacted back in the early 
eighties? Have you seen any improvements in the transparency of 
this kind of business arrangement with consumers?
    Mr. Best. Thank you, Mr. Rush.
    I mean, I think our research showed that, while there is 
good enforcement of the current rule, it is very much, as you 
said, in the eighties and nineties, it is about written price 
lists and doesn't reflect how consumers now shop, which is 
through the internet, and they want to quickly compare prices 
across a broad variety of businesses in their area, especially 
when they are under this duress.
    We see a huge a variation in the price within localities, 
and we think that that is in no small part because it is very 
hard for consumers now with the way they shop to find out what 
the prices are because there is no requirement to disclose 
funeral home prices on the web, sir.
    Mr. Rush. So, you would agree that very fine sellers of 
funeral services such as caskets and monuments and cemeteries 
that do not have an onsite funeral home are not covered by the 
funeral rule? Is that right?
    Mr. Best. That is correct, sir, and we agree that more and 
more the entities not covered by the funeral rule are 
interacting with the public as part of the funeral services 
industry and should be covered by the same disclosure 
requirements, absolutely.
    Mr. Rush. Would you also agree that consumers seeking any 
type of funeral goods or services would stand to benefit from 
the FTC's protection from unfair and deceptive acts?
    Mr. Best. Absolutely, sir, and we feel that your bill was 
very well-drafted and it is a really good, balanced approach to 
that.
    Mr. Rush. You mentioned the use of the internet when 
researching local products and services. Can you provide any 
information on how consumers use the internet to purchase 
products and services from outside of their local area?
    Mr. Best. From outside their local area, I am not sure. In 
preparation for this testimony, I looked up statistics for 
within your local area because I imagine that is generally how 
people procure funeral services. I mean, within the local area, 
it is over 96 percent of consumers use the internet to do that 
kind of research and price comparison. I don't have exact 
numbers, but I imagine it is quite high, no matter what. I 
mean, I know I certainly use the internet to price everything 
at this point.
    Mr. Rush. The funeral rule also covers some aspects of pre-
need contracts which allow complete payment for all their own 
funeral needs, including caskets and burial plots and funeral 
services. It seems that most people would buy these prepaid 
services to provide a sense of peace of mind and ease the 
burden on their family members without an instance of fraud and 
financial mismanagement surrounding premium contracts that led 
to services in this area maybe being misguided. Do you think 
that H.R. 5212 would give some sense of relief and safety and 
give a sense of comfort to some of these consumers?
    Mr. Best. I absolutely do, sir. I mean, I think this is 
going to go a long way to setting a good, solid floor of 
requirements that are easy to understand for consumers and 
businesses both.
    Mr. Rush. Mr. Chairman, I see that my time has expired.
    Mr. Burgess. Indeed, it has. The gentleman yields back. The 
Chair thanks the gentleman.
    Mr. Rush. You didn't have to say it like that, Mr. 
Chairman.
    [Laughter.]
    Mr. Burgess. The Chair thanks the gentleman.
    I am going to recognize myself, finally, for 5 minutes for 
questions. I have deferred and let all members go first. So, I 
am not taking extra time.
    It occurs to me that my first term on this subcommittee 
some 10 years ago Mr. Rush was the chairman of the 
subcommittee, sat here. I sat way down there on the minority 
side.
    And we had a hearing on some problem with toys that were 
coming in from China and the yellow paint on the toys 
apparently had more lead in it than the law allowed. And we had 
an executive from one of the major manufacturers sitting here 
at the desk. And I remember when it finally came my time to 
question, I said, ``I just simply do not understand. I think if 
you marketed your toys with made in the USA, had a little 
American flag on the bottom of that truck or duck,'' or 
whatever it was, ``that those things would fly off the shelves. 
And if you even went one step further and said made in Ft. 
Worth, Texas, and had a little Texas flag on the bottom, those 
things, you know, they would be collectors' items the day they 
went on the shelves.'' He didn't agree with me.
    But, Mr. Hendrickson, I feel the same way you do. I think 
there is value to being made in America. And I just want to ask 
you a question because most things that I buy--and I am not 
even sure what the rules are governing this--will have ``made 
in China,'' ``made in Mexico,'' not that I buy things made in 
China, but, I mean, you look at packages and there is a country 
of origin.
    So, if you are not allowed to put ``made in the USA'' on 
your basketball hoop, what does it say, ``made nowhere''?
    Mr. Hendrickson. Now previous to our incident and lawsuit 
in California, we had ``made in the USA,'' obviously, on there. 
Today we don't claim where it is made. However, products that 
do come from other countries, some of our products that come 
from another country will represent that country. Today--and it 
is very unfortunate--the products that we have fought the 
hardest to keep in the U.S., we are unable to claim where they 
are made, for fear of additional negative impact lawsuits.
    And we are very pleased to see H.R. 5092 come through 
because I think the U.S. manufacturing needs it, and it is 
going to help us. I think it is at the same time protecting the 
consumer because today they don't get to see that it was made 
in the U.S. and they deserve to know that.
    Mr. Burgess. I couldn't agree more.
    Ms. Pena, how do people fall into the trap that you have 
laid out for us that they think they are booking on a reputable 
site and they are actually booking--they have gone through the 
looking glass and they are booking in a different dimension? 
How does that happen?
    Ms. Pena. Typically, in my experience, it happens when the 
customer uses a search engine and types in the name of the 
hotel. And the top few listings, they appear to be genuine Omni 
hotels, and in some cases they actually use our name in their 
URL to trick the customer. And then, they go to that Web site, 
assuming that they clicked on our Web site, and make the 
reservation.
    Mr. Burgess. But the transaction does not go through the 
hotel's registry? It is going through something else?
    Ms. Pena. Sometimes we receive it and that they had onward 
from somebody we are partners with. And sometimes we don't 
receive the reservation at all. Most of the time, we receive it 
through another party that we are contracted with.
    Mr. Burgess. And then, what is the bottom line for the 
consumer when they go to check in?
    Ms. Pena. Well, there are times where we don't have--if we 
have the reservation, sometimes we don't have the right request 
from them. Maybe they need two beds, and we didn't know. Or 
maybe they wanted to get their loyalty benefit rewards and they 
can't now. Maybe their payment information, they need to change 
payment, and we weren't the ones that took their money, so it 
is we are unable to assist them. So, it causes a lot of 
frustration.
    Mr. Burgess. I see.
    And, Mr. Genn, let me just ask you briefly, the ticket 
sales issue, a lot of states have state laws around this. Why 
wouldn't this just remain a state issue? Why is it necessary to 
do something at a federal level?
    Mr. Genn. Mr. Chairman, thank you for the question.
    Because of interstate issues. Or I will give you a good 
example. I contacted the Consumer Affairs Division of our 
attorney general in Maryland yesterday and I said, ``What 
complaints have you received since we passed the BOTS Act?'' 
And they said, ``We have received a raft of complaints about 
the Bruce Springsteen concert being held at Nats Park September 
1st, and we cannot do anything because the people complained.'' 
They said they went online, just all the testimony you heard. 
It wasn't accessible. A couple of hours later, it was on the 
secondary market.
    The Maryland attorney general said, ``Well, I can take the 
complaint, but it is jurisdictional issues. This is out of D.C. 
I don't have jurisdiction to act.'' And that is exactly why 
H.R. 5104 is a necessary remedy to deal with this at the 
federal level.
    Mr. Burgess. Very well.
    Well, once again, I want to thank all of you for your 
testimony today. It has been a long day, but I think it has 
been very, very informative.
    And seeing there are no further members wishing to ask 
questions of this panel, I want to say before we conclude I do 
have the following documents that I want to submit for the 
record by unanimous consent:
    A letter from the American Society of Association 
Executives; a letter from the National Sporting Groups 
Association; a letter from the Joint Association of H.R. 4460; 
a letter from Ashford, Incorporated; a letter from Delta 
Airlines; a letter from the United States Chamber of Commerce; 
a letter from the American Academy of Pediatrics; a letter from 
the Consumer Review on H.R. 5111; a letter from Consumer Review 
on FTC process; a letter from the Brain Injury Association of 
America; a letter from the Retail Industry Leaders Association; 
a letter from Safe Kids Worldwide; a letter from the National 
Association of State Head Injury Administration; a blog posting 
from the Sunlight Foundation; a letter from the medical 
stakeholders on the Youth Sports Concussion Act; a letter from 
the California Hotel and Lodging Association.
    [The information appears at the conclusion of the hearing.]
    Mr. Burgess. Pursuant to committee rules, I will remind the 
members that they have 10 business days to submit additional 
questions for the record, and I ask that our witnesses submit 
their responses in a timely fashion.
    Mr. Best. With that, the subcommittee again thanks the 
panel for their forbearance today. Again, it has been a long 
day, but I think we have gotten a lot of information.
    And the subcommittee now stands adjourned.
    [Whereupon, at 3:09 p.m., the subcommittee was adjourned.]
    [Material submitted for inclusion in the record follows:]

                 Prepared statement of Hon. Fred Upton

    Across the House of Representatives, committees are 
constantly addressing new technologies. And as part of the 
Majority Leader's Innovation Initiative, we are collectively 
taking a fresh look at how technology interacts with 
regulation, how we can modernize federal agencies for the 21st 
century, and promote jobs and the economy.
    This subcommittee in particular has taken a deliberative 
approach through the Disrupter Series by examining the 
continual unsettling of industries and governmental roles 
caused by novel technologies and business models.
    The task is different depending on the nature of the 
agencies and industries affected. In the case of the FTC, the 
agency is a technology-forward and creative agency. So our work 
is more focused on future-proofing the commission and keeping 
it focused on after the fact enforcement.
    This may mean prompting more input from economists and more 
participation at the commissioner level. It may also mean 
making sure that if the concern is only possible harms, we are 
also examining possible benefits and treading carefully.
    Needed certainty requires that everyone understand both the 
legal theories that do and those that do not give rise to an 
enforcement action. We are looking at a combination of these 
approaches with our process and transparency reform bills 
today. However, sometimes specific problems do develop that 
must also be addressed. For example, hackers have taken 
advantage of ticket sellers for too long, robbing consumers of 
an opportunity to see their favorite musical acts or sports 
teams.
    It is hard enough to get a ticket for Hamilton or a 
postseason Cubs game. It is time to give the FTC some 
additional tools and put a federal enforcer on the beat in this 
area.
    In 1994, when the most recent statutory changes were made 
to the FTC's general Section 5 authority, spirited disagreement 
yielded a solid compromise. Where the Senate sought to ban all 
advertising rules under FTC ``unfairness'' authority, the House 
disagreed and the compromise yielded the statutory 
``unfairness'' balancing test.
    Codifying this test was a positive advancement and over 
twenty years later, we seek to build on it. As the FTC 
encounters new technologies and is incentivized to prevent new 
harms to further its consumer protection purpose, there must be 
countervailing incentives not to thwart innovation. It cannot 
be overstated that hindering innovation is often the same thing 
as hindering consumer welfare.
    Many of the bills we unveiled are a step forward and an 
invitation to begin the real work of reconciling differences. 
We commit to honest and open inquiry with the commission, 
experts, and industry and to consider all options to achieve 
our shared goals of protecting consumers, competition, and 
innovation. These thoughtful solutions that modernize the FTC 
for the 21st century and put innovation first will greatly 
benefit folks in Michigan and across the country. I thank the 
witnesses and look forward to testimony.
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