[Senate Hearing 116-625]
[From the U.S. Government Publishing Office]




                                                        S. Hrg. 116-625

                              OVERSIGHT OF
                      THE FEDERAL TRADE COMMISSION

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

                                HEARING

                               before the

                         COMMITTEE ON COMMERCE,
                      SCIENCE, AND TRANSPORTATION
                          UNITED STATES SENATE

                     ONE HUNDRED SIXTEENTH CONGRESS

                             SECOND SESSION

                               __________

                             AUGUST 5, 2020

                               __________

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




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                Available online: http://www.govinfo.gov

                               ______
                                 

                 U.S. GOVERNMENT PUBLISHING OFFICE

52-824 PDF                WASHINGTON : 2023












       SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION

                     ONE HUNDRED SIXTEENTH CONGRESS

                             SECOND SESSION

                  ROGER WICKER, Mississippi, Chairman

JOHN THUNE, South Dakota             MARIA CANTWELL, Washington, 
ROY BLUNT, Missouri                      Ranking
TED CRUZ, Texas                      AMY KLOBUCHAR, Minnesota
DEB FISCHER, Nebraska                RICHARD BLUMENTHAL, Connecticut
JERRY MORAN, Kansas                  BRIAN SCHATZ, Hawaii
DAN SULLIVAN, Alaska                 EDWARD MARKEY, Massachusetts
CORY GARDNER, Colorado               TOM UDALL, New Mexico
MARSHA BLACKBURN, Tennessee          GARY PETERS, Michigan
SHELLEY MOORE CAPITO, West Virginia  TAMMY BALDWIN, Wisconsin
MIKE LEE, Utah                       TAMMY DUCKWORTH, Illinois
RON JOHNSON, Wisconsin               JON TESTER, Montana
TODD YOUNG, Indiana                  KYRSTEN SINEMA, Arizona
RICK SCOTT, Florida                  JACKY ROSEN, Nevada

                       John Keast, Staff Director
                  Crystal Tully, Deputy Staff Director
                      Steven Wall, General Counsel
                 Kim Lipsky, Democratic Staff Director
              Chris Day, Democratic Deputy Staff Director
                      Renae Black, Senior Counsel







                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on August 5, 2020...................................     1
Statement of Senator Wicker......................................     1
Statement of Senator Cantwell....................................     3
Statement of Senator Fischer.....................................    25
Statement of Senator Klobuchar...................................    27
Statement of Senator Moran.......................................    29
Statement of Senator Blumenthal..................................    31
Statement of Senator Blackburn...................................    33
Statement of Senator Schatz......................................    35
Statement of Senator Capito......................................    36
Statement of Senator Udall.......................................    38
Statement of Senator Thune.......................................    40
Statement of Senator Baldwin.....................................    41
Statement of Senator Scott.......................................    43
Statement of Senator Peters......................................    45
Statement of Senator Lee.........................................    47
Statement of Senator Tester......................................    49
Statement of Senator Sinema......................................    51
Statement of Senator Rosen.......................................    54

                               Witnesses

Hon. Joseph J. Simons, Chairman, Federal Trade Commission........     4
    Prepared statement...........................................     5
Hon. Noah Joshua Phillips, Commissioner, Federal Trade Commission     7
    Prepared statement...........................................     9
Hon. Rohit Chopra, Commissioner, Federal Trade Commission........    11
    Prepared statement...........................................    12
Hon. Rebecca Kelly Slaughter, Commissioner, Federal Trade 
  Commission.....................................................    13
    Prepared statement...........................................    15
Hon. Christine S. Wilson, Commissioner, Federal Trade Commission.    17
    Prepared statement...........................................    19

                                Appendix

Letter dated August 11, 2020 to Hon. Roger Wicker and Hon. Maria 
  Cantwell from Tamra Kennedy, President, Twin City's T.J.'s, 
  Inc. and Chair, International Franchise Association Franchisee 
  Forum..........................................................    59








 
                              OVERSIGHT OF
                      THE FEDERAL TRADE COMMISSION

                              ----------                              


                       WEDNESDAY, AUGUST 5, 2020

                                       U.S. Senate,
        Committee on Commerce, Science, and Transportation,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 10 a.m., in room 
SR-254, Russell Senate Office Building, Hon. Roger Wicker, 
Chairman of the Committee, presiding.
    Present: Senators Wicker [presiding], Thune, Blunt, 
Fischer, Moran, Sullivan, Blackburn, Moore, Lee, Young, Scott, 
Cantwell, Klobuchar, Blumenthal, Schatz, Udall, Peters, 
Baldwin, Tester, Sinema, and Rosen [presiding].

            OPENING STATEMENT OF HON. ROGER WICKER, 
                 U.S. SENATOR FROM MISSISSIPPI

    The Chairman. Good morning. The meeting will come to order. 
And welcome to today's hearing on the oversight of the Federal 
Trade Commission, FTC. I extend a special welcome to our 
distinguished panel of witnesses and thank them for appearing. 
They will all appear remotely this morning, including FTC 
Chairman Joe Simons, Commissioner Noah Phillips, Commissioner 
Rohit Chopra, Commissioner Christine Wilson, and Commissioner 
Rebecca Slaughter.
    The FTC is the Nation's primary consumer protection agency. 
Established in 1914 by the Federal Trade Commission Act, the 
FTC is chiefly responsible for protecting consumers from 
unfair, deceptive, or fraudulent business practices in the 
marketplace. This includes protecting consumers' privacy and 
the security of their data, preventing harmful uses of 
technology, and combatting deceptive advertising and illegal 
robocalls among other issues. The FTC is also responsible for 
educating consumers about fraudulent activity and predatory 
business practices. Consumer education is an essential part of 
the FTC's mission and it is intended to inform customer choices 
and help prevent Americans from falling victim to scammers, 
fraudsters, cybercriminals, and other bad actors.
    As was recently discussed at Chairman Moran's subcommittee 
hearing on COVID-19 scams last month, the coronavirus has 
created a new avenue for scammers to take advantage of 
consumers. The surge in Internet usage, in particular, because 
of stay-at-home orders has been a prime target for 
exploitation. I appreciate the Commission's ongoing efforts to 
protect consumers from identity theft, e-mail phishing schemes, 
and other online dangers during this public health crisis. 
Today's hearing is an opportunity to discuss what more can be 
done to protect Americans from deceptive and unfair commercial 
practices. This work begins by ensuring the FTC has the proper 
authority and resources at its disposal to carry out its broad 
statutory mandate.
    The FTC's authority under the U.S. SAFE WEB Act, for 
example, empowers the agency to work with foreign law 
enforcement agencies to combat international crimes. This law 
has provided critical cross-border enforcement tools to the FTC 
to take swift action against criminal activity, such as 
Internet pyramid schemes and data theft. The reauthorization of 
this Act was favorably reported out of this committee in March 
and soon we will have a finalized committee report.
    Once this is completed, I urge Congress to reauthorize the 
U.S. SAFE WEB Act quickly before it expires next month. There 
have also been challenges to the scope of the FTC's authority 
under Section 13(b) of the FTC Act, which the Supreme Court 
plans to address in its next term. The Commission has long 
relied upon this section of the law to require scammers to give 
money back to those who have been defrauded. I look forward to 
examining how Congress can clarify the statute to empower the 
FTC not only to enjoin improper behavior, but also to 
compensate victims for their losses. The FTC's ability to 
protect the privacy and security of data is also essential. I 
hope we can all agree that the COVID-19 pandemic further 
underscores the need for strong, uniform national data privacy 
legislation. Such a law would provide all citizens with more 
transparency, choice, and control over their data. It would 
also provide certainty and clear, workable rules for businesses 
across all 50 states.
    I hope the Commissioners will discuss the scope of their 
existing authority to protect the privacy and security of 
personal data and outline additional tools that are needed to 
safeguard information from misuse and unauthorized access. I am 
sure Commissioners will also want to discuss the potential 
impact of the recently invalidated EU, U.S. Privacy Shield 
Framework. The Privacy Shield provided a method for companies 
to transfer personal data back and forth between the United 
States and the European Union in compliance with EU data 
protection requirements and in support of transatlantic 
commerce.
    The FTC has played a critical role in enforcing compliance 
with the Privacy Shield since it was established in 2016. 
Today's hearing is an opportunity to review how the FTC is 
working with the Department of Commerce to develop interim 
guidance for thousands of U.S. companies, including many small- 
and medium-sized businesses impacted by this recent decision. 
Finally, some policymakers are proposing that the FTC take a 
more active role in overseeing unfair or deceptive commercial 
practices with respect to issues ranging from Section 230 of 
the Communications Decency Act to compensating collegiate 
athletes for the use of their name, image, or likeness.
    I look forward to hearing more about the FTC's authority 
and expertise to address these matters, as well as whether it 
has sufficient tools to protect consumers engaging in these 
commercial activities. Clearly, with the FTC there is much to 
discuss. I thank the Commissioners again for their testimonies. 
And I now turn to my friend and the Ranking Member for her 
opening remarks. Senator Cantwell.

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

    Senator Cantwell. Thank you, Mr. Chairman, and thank you 
for holding this important hearing today as we invite the 
Commissioners to come before Congress to talk about the impacts 
of this pandemic on our constituents, the amazing impact that 
it is having on our economy and on our health care system. My 
view of the FTC is simple, you should be doing everything in 
your power to help Americans during this time of crisis.
    The mission is of extreme importance and our Nation 
continues to reel from one of the worst health emergencies and 
one of the biggest economic crises we have ever faced. And so, 
we have seen that the COVID-19 pandemic has attracted bad 
actors, and scam artists, including those who take advantage of 
people's fear and dire circumstances. I am sure every member of 
this committee has heard from their constituents on these 
issues about buying ineffective face masks or being subject to 
COVID-19 phishing attacks or seeing advertisements for miracle 
coronavirus cures. Thousands of people have reported sky high 
prices for goods and services from their family.
    And just like the spread of COVID-19, these scams are 
happening in every part of the state. There was a recent story 
in the Seattle Times about sanitizer for $150 for $7 sanitizer. 
So, price gouging and the issues related to price gouging 
continue to pile up. So just like the spread of COVID-19, these 
virus scams are happening everywhere. They are impacting rural 
communities, urban communities, and hurting Americans young and 
old. Certainly that is the case in my state of Washington where 
according to the FTC, people have been scammed out of over $2.5 
million since the pandemic began, and more than 3,500 reports 
of fraud.
    And while many of the Attorneys General have gone after 
these profiteers, I believe the FTC is holding back. You could 
be doing more. We must move beyond warnings and threats in 
response to these unconscionable scams. We must see the FTC 
exercising real enforcement with real consequences to protect 
consumers and families when they are most vulnerable. That is 
why I believe the FTC needs clear price gouging legislation to 
go after these scammers.
    We must not allow unscrupulous merchants to exchange 
exorbitant prices sometimes for life saving supplies like 
personal protective equipment or medical equipment simply 
because their families are desperate. And trust me, on the 
frontlines of the epidemic in Kirkland, Washington was 
Evergreen Hospital. And I can tell you it is not a good thing 
to get calls from emergency room doctors who were saying they 
are getting price gouged on essential equipment when they were 
at the front lines of this pandemic.
    So we need to make it clear that it is illegal to peddle 
defective masks or fake COVID cures and we need to empower our 
states' Attorneys General to go after these bad actors to 
buttress the argument and the FTC enforcement. So this is 
especially true, given our crisis today. So with many sales 
happening online, Internet sale platforms should also be 
working with the Federal and local law enforcement to identify 
price gouging. So, Mr. Chairman, I plan to introduce in the 
coming days Federal legislation to do two things, to move both 
on price gouging definition to make sure the law is clear that 
consumers can be protected in this area, and to enforce civil 
penalties for deceptive COVID scams.
    It is time for us to act on these important pieces of 
legislation. It is time for us to protect our consumers from 
these very important issues during the time of crisis. People 
need help and support. They don't need deception and schemes, 
and we need an FTC that will be more aggressive. Thank you, Mr. 
Chairman.
    The Chairman. Thank you, Senator Cantwell. And we look 
forward to seeing that legislation once you get it drafted and 
introduced. We now turn to testimony--summaries of testimony 
from our witnesses. Written testimony has been submitted and 
will be admitted into the record in full at this point. And we 
ask each member of the Commission to summarize testimony in 5 
minutes if possible. We begin with the Chair, the Honorable 
Joseph J. Simons, again, who joins us remotely along with all 
of the other members. Chairman Simons, you are recognized, sir.

         STATEMENT OF HON. JOSEPH J. SIMONS, CHAIRMAN, 
                    FEDERAL TRADE COMMISSION

    Chairman Simons. Thank you so much, Chairman Wicker, 
Ranking Member Cantwell, and members of the Committee. It is an 
honor to be with you today even if it is virtual and especially 
alongside my fellow Commissioners. Despite the challenges 
presented by the pandemic, the FTC has remained active, open, 
and aggressive. We are using every tool in our arsenal on 
COVID-related initiatives while simultaneously handling our 
everyday efforts to protect consumers' privacy and data 
security, to stop fraud, and to ensure that advertising claims 
are truthful and not misleading, and to combat illegal 
robocalls. And what is truly extraordinary, the Commission 
staff has accomplished this while quickly transitioning from 
nearly 100 percent office space work to nearly 100 percent 
telework.
    I want to take a moment to focus on one of my priorities, 
privacy and data security. Our enforcement in these areas, 
including cases against Facebook, Google and YouTube, and 
Equifax has been highly successful within the limits of our 
authority. But as I have said before, Section 5 is a 100 year 
old statute that is an imperfect tool for this purpose. We 
believe we need more authority, which is why I urge you to 
continue your hard work to enact privacy and data security 
legislation that would be enforced by the FTC. As policymakers, 
it is appropriate for you to make the difficult value based 
decisions underlying new privacy protections. From an 
enforcement perspective, I ask that the legislation give us 
three things, one, the ability to seek civil penalties, two, 
jurisdiction over nonprofits and common carriers as well as 
everybody else, and three, targeted APA rulemaking authority to 
ensure that the law keeps pace with changes in technology and 
the market.
    This is similar to the approach Congress took under COPPA. 
We will continue to vigorously enforce existing privacy 
statutes and we will use our extensive experience and expertise 
to enforce aggressively any new privacy or data security laws 
that you pass. We also need your help to clarify our authority 
under 13(b) of the FTC Act which is our principal means of 
getting money back for consumers. Using this authority as it 
has been interpreted for decades, the FTC has returned over $10 
billion to consumers in just the last 4 years. Recent court 
decisions, however, threaten this essential authority and this 
issue is now before the Supreme Court.
    So, I strongly urge you to clarify the law on 13(b). I want 
to thank the Committee for advancing legislation to reauthorize 
SAFE WEB which is an indispensable tool in combating cross-
border fraud. However, without further action, SAFE WEB will 
sunset on September 30. So I would really like your continued 
support in pushing this effort across the goal line and keeping 
SAFE WEB in our enforcement arsenal. Though I am asking for 
more help, please know how grateful I am for what you have 
already done on these issues. And I am very thankful for the 
financial support that Congress has given the FTC this year.
    The $20 million increase averted FTE reductions and instead 
allows us to hire more people for some of our most critical 
work. I also want to mention the recent EU ruling on Privacy 
Shield and that we are studying its effects. We stand ready to 
support the Administration's efforts in this area. But at the 
same time, we will continue to hold companies accountable for 
their privacy commitments including privacy promises made under 
the Privacy Shield. I will end by briefly highlighting our 
antitrust enforcement. We are on pace for the highest number of 
merger enforcement actions in 20 years since Fiscal Year 2000. 
We have brought four monopolization cases in the last two 
years.
    Last year we formed the Technology Enforcement Division, 
what we call TED, which is currently pursuing a number of very 
significant investigations involving big tech platforms. And we 
have used our study authority to issue special orders to 
Alphabet, Amazon, Apple, Facebook, and Microsoft, requiring 
them to provide information about prior acquisitions not 
reported under the HSR Act.
    We are committed to using every resource as effectively as 
we can to protect consumers and to promote competition, and we 
certainly look forward to continuing to work with you. And I 
would be happy to answer your questions. Thank you so much.
    [The prepared statement of Chairman Simons follows:]

      Prepared Statement of Hon. Joseph J. Simons \1\, Chairman, 
                        Federal Trade Commission
---------------------------------------------------------------------------
    \1\ These remarks reflect my own views. They do not necessarily 
reflect the views of the Commission or any other individual 
Commissioner.
---------------------------------------------------------------------------
    Chairman Wicker, Ranking Member Cantwell, and Members of the 
Committee, I am Joe Simons, and I am the Chairman of the Federal Trade 
Commission (``FTC'' or ``Commission''). It is an honor to be with you 
today, especially alongside my fellow Commissioners.
    Despite the challenges presented by the pandemic, the FTC has 
remained open, active, and aggressive. We have used every tool in our 
arsenal on COVID-related initiatives,\2\ while simultaneously handling 
our everyday efforts to protect consumers' privacy and data security, 
stop fraud, ensure that advertising claims are truthful and not 
misleading, and combat illegal robocalls. And--what is truly 
extraordinary--Commission staff has accomplished this while quickly 
transitioning from nearly 100 percent office-based work to nearly 100 
percent telework.
---------------------------------------------------------------------------
    \2\ See generally www.ftc.gov/coronavirus.
---------------------------------------------------------------------------
    I want to take a moment to focus on one of my top priorities: 
privacy and data security. Our enforcement in these areas--including 
cases against Facebook,\3\ Google and YouTube,\4\ and Equifax \5\--has 
been highly successful within the limits of our authority.\6\ But, as I 
have said before, Section 5 \7\ is a 100-year-old statute that is an 
imperfect tool for this purpose. I believe we need more authority, 
which is why I urge you to continue your hard work to enact privacy and 
data security legislation that would be enforced by the FTC. As 
policymakers, it is appropriate for you to make the difficult value-
based decisions underlying new privacy protections. From an enforcement 
perspective, I ask that the legislation give us: (1) the ability to 
seek civil penalties, (2) jurisdiction over non-profits and common 
carriers, and (3) targeted Administrative Procedure Act (``APA'') 
rulemaking authority to ensure the law keeps pace with changes in 
technology and the market. This is similar to the approach Congress 
took under the Children's Online Privacy Protection Act (``COPPA'').\8\ 
We will continue to vigorously enforce existing privacy statutes,\9\ 
and we will use our extensive expertise and experience to enforce 
aggressively any new privacy or data security laws that you pass.
---------------------------------------------------------------------------
    \3\ FTC Press Release, FTC Imposes $5 Billion Penalty and Sweeping 
New Privacy Restrictions on Facebook (July 24, 2019), https://
www.ftc.gov/news-events/press-releases/2019/07/ftc-imposes-5-billion-
penalty-sweeping-new-privacy-restrictions. In April 2020, a court 
approved the record-breaking $5 billion penalty the FTC negotiated with 
Facebook. FTC Press Release, FTC Gives Final Approval to Modify FTC's 
2012 Privacy Order with Facebook with Provisions from 2019 Settlement 
(Apr. 28, 2020), https://www.ftc.gov/news-events/press-releases/2020/
04/ftc-gives-final-approval-modify-ftcs-2012-privacy-order-facebook.
    \4\ FTC Press Release, Google and YouTube Will Pay Record $170 
Million for Alleged Violations of Children's Privacy Law (Sept. 4, 
2019), https://www.ftc.gov/news-events/press-releases/2019/09/google-
youtube-will-pay-record-170-million-alleged-violations.
    \5\ FTC Press Release, Equifax to Pay $575 Million as Part of 
Settlement with FTC, CFPB, and States Related to 2017 Data Breach (July 
22, 2019), https://www.ftc.gov/news-events/press-releases/2019/07/
equifax-pay-575-million-part-settlement-ftc-cfpb-states-related.
    \6\ See, e.g., FTC Press Release, FTC Releases 2019 Privacy and 
Data Security Update (Feb. 25, 2020), https://www.ftc.gov/news-events/
press-releases/2020/02/ftc-releases-2019-privacy-data-security-update.
    \7\ 15 U.S.C. Sec. 45.
    \8\ 15 U.S.C. Sec. Sec. 6501-6506.
    \9\ The Commission also enforces sector-specific statutes 
containing privacy and data security provisions, such as the Gramm-
Leach-Bliley Act (``GLB Act''), Pub. L. No. 106-102, 113 Stat. 1338 
(1999) (codified as amended in scattered sections of 12 and 15 U.S.C.), 
and the Children's Online Privacy Protection Act (``COPPA''), 15 U.S.C. 
Sec. Sec. 6501-6506.
---------------------------------------------------------------------------
    We also need your help to clarify our authority under Section 13(b) 
of the FTC Act,\10\ which is our principal means of getting money back 
for consumers. Using this authority as it has been interpreted for 
decades, the FTC has returned over $10 billion to consumers in just the 
last four years.\11\ Recent court decisions, however, threaten this 
essential authority, and this issue is now before the Supreme 
Court.\12\ I strongly urge you to clarify the law.
---------------------------------------------------------------------------
    \10\ 15 U.S.C. Sec. 53(b).
    \11\ See https://public.tableau.com/profile/
federal.trade.commission#!/vizhome/Refunds_15797
958402020/RefundsbyCase.
    \12\ See FTC v. Credit Bureau Center, 937 F3d. 764 (7th Cir. 2020), 
petition for cert. granted, 2020 WL 3865251 (July 9, 2020) (No. 19-
825); see also FTC Press Release, Statement of FTC General Counsel 
Alden F. Abbott regarding Supreme Court Orders Granting Review of Two 
FTC Matters (July 9, 2020), https://www.ftc.gov/news-events/press-
releases/2020/07/statement-ftc-general-counsel-abbott-regarding-
supreme-court.
---------------------------------------------------------------------------
    I want to thank the Committee for advancing legislation to 
reauthorize the U.S. SAFE WEB Act \13\--an indispensable tool in 
combatting cross-border fraud. However, without further Congressional 
action, SAFE WEB will sunset on September 30. I would like your 
continued support in pushing this effort across the goal line, and 
keeping SAFE WEB in our enforcement arsenal.
---------------------------------------------------------------------------
    \13\ 15 U.S.C. Sec. Sec. 41 et seq.
---------------------------------------------------------------------------
    Though I am asking for more help, please know how grateful I am for 
what you already have done on these issues. I am also very thankful for 
the financial support Congress has given the FTC this year. The $20 
million increase averted full-time employee reductions, and instead 
allows us to hire more people for some of our most critical work.
    I also want to mention the recent European Union (``EU'') ruling on 
the EU-U.S. Privacy Shield and note that we are studying its 
effects.\14\ We stand ready to support the administration's efforts in 
this area, but at the same time we will continue to hold companies 
accountable for their privacy commitments, including promises made 
under the Privacy Shield.
---------------------------------------------------------------------------
    \14\ See FTC Business Center, Update on the Privacy Shield 
Framework (July 21, 2020), https://www.ftc.gov/tips-advice/business-
center/privacy-and-security/privacy-shield.
---------------------------------------------------------------------------
    I will end by briefly highlighting our antitrust enforcement. We 
are on pace for the highest number of merger enforcement actions in 20 
years (since FY 2000). We have brought four monopolization cases in the 
last two years.\15\ Last year we formed the Technology Enforcement 
Division (``TED''),\16\ which is currently pursuing a number of very 
significant investigations involving big tech platforms, and we have 
used our study authority to issue special orders to Alphabet, Amazon, 
Apple, Facebook, and Microsoft requiring them to provide information 
about prior acquisitions not reported under the HSR Act.\17\
---------------------------------------------------------------------------
    \15\ FTC Press Release, FTC and NY Attorney General Charge Vyera 
Pharmaceuticals, Martin Shkreli, and Other Defendants with 
Anticompetitive Scheme to Protect a List-Price Increase of More Than 
4,000 Percent for Life-Saving Drug Daraprim (Jan. 27, 2020), https://
www.ftc.gov/news-events/press-releases/2020/01/ftc-ny-attorney-general-
charge-vyera-pharmaceuticals-martin; FTC Press Release, FTC Challenges 
Illumina's Proposed Acquisition of PacBio (Dec. 17, 2019), https://
www.ftc.gov/news-events/press-releases/2019/12/ftc-challenges-
illuminas-proposed-acquisition-pacbio; FTC Press Release, Reckitt 
Benckiser Group plc to Pay $50 Million to Consumers, Settling FTC 
Charges that the Company Illegally Maintained a Monopoly over the 
Opioid Addiction Treatment Suboxone (July 11, 2019), https://
www.ftc.gov/news-events/press-releases/2019/07/reckitt-benckiser-group-
plc-pay-50-million-consumers-settling-ftc; FTC Press Release, FTC 
Charges Surescripts with Illegal Monopolization of E-Prescription 
Markets (Apr. 24, 2019), https://www.ftc.gov/news-events/press-
releases/2019/04/ftc-charges-surescripts-illegal-monopolization-e-
prescription.
    \16\ FTC Competition Matters Blog, What's in a Name? Ask the 
Technology Enforcement Division (Oct. 16, 2019), https://www.ftc.gov/
news-events/blogs/competition-matters/2019/10/whats-name-ask-
technology-enforcement-division.
    \17\ FTC Press Release, FTC to Examine Past Acquisitions by Large 
Technology Companies (Feb. 11, 2020), https://www.ftc.gov/news-events/
press-releases/2020/02/ftc-examine-past-acquisitions-large-technology-
companies.
---------------------------------------------------------------------------
    We are committed to using every resource to effectively protect 
consumers and promote competition. We look forward to continuing to 
work with you, and I would be happy to answer your questions.

    The Chairman. Thank you very much, Mr. Chairman. And now we 
turn to Commissioner Noah Phillips. You are recognized.

 STATEMENT OF HON. NOAH JOSHUA PHILLIPS, COMMISSIONER, FEDERAL 
                        TRADE COMMISSION

    Commissioner Phillips. Thank you, Mr. Chairman. Chairman 
Wicker, Ranking Member Cantwell, members of the Committee, 
thank you for the opportunity to appear before you. I am 
honored to be with you today and to testify alongside my fellow 
Commissioners about the important work that we do at the FTC. I 
also want to thank you for your flexibility on format. It is 
always good to be back at the Senate, even if that means 
virtually. There is a lot to cover and I look forward to our 
discussion. But I want to take a moment to highlight an 
important issue, which I know is a focus for many of you, data 
security. Hardly a week goes by without Americans learning 
about another major cyber-attack, breach, or vulnerability.
    Accounts on a major social media platform were exploited 3 
weeks ago. Last week, researchers reveal the vulnerability on 
devices running Windows and Linux operating system, which could 
impact billions of devices. Consumers get this. A 2018 Commerce 
Department study showed identity theft as the number one 
privacy and security issue concerning Americans. Considering 
the harms Americans have in mind when they think about privacy, 
data security legislation is one of the best things that we can 
all do for privacy. The endemic use of data in our economy is 
not going away and it supports not only the new ways----
    The Chairman. OK. Commissioner, your video froze there for 
a moment so we want to make sure at that point we can iron out 
these technical difficulties and you can resume at that very 
point in the testimony. So we will just pause for a moment and 
rely on the advice of our technical experts.
    Commissioner Phillips. Can you hear me?
    The Chairman. We can now hear you.
    Commissioner Phillips. Thank you. My apologies. I am having 
some connectivity issues.
    The Chairman. OK, so if you could just back up a sentence 
or two there and we will hear you. We don't see you.
    Commissioner Phillips. My apologies.
    The Chairman. OK. Good.
    Commissioner Phillips. While the vast majority of attacks 
are thwarted, in 2019 there were still over 1,400 reported data 
breaches in the U.S. exposing over 160 million records. The 
loss, corruption, and ransoming of these data can pose serious 
harm to businesses, including identity and IP theft, exposure 
of sensitive data, years of expensive litigation, and so on. 
And of course, inadequate data security is a profound National 
Security issue.
    At the FTC, we investigate and bring actions against 
companies that fail to maintain reasonable data security or 
mislead consumers about it. Recent examples include our 
enforcement against DealerBuilt, an auto dealer management 
software provider Retina-X, a stalkerware app which also raised 
other profound privacy problems, and of course Equifax, the 
credit bureau we allege neglected to fix an Apache Struts 
vulnerability, resulting in a theft of records of over 145 
million Americans.
    We are also imposing new requirements for defendants and 
data security orders like certifications of compliance by 
senior officials and a better third-party assessor process. 
Statutes like COPPA and Gramm-Leach-Bliley give us data 
security authority in areas of heightened sensitivity, like 
kids and financial services, but the regime today has gaps 
including in areas of particular vulnerability. Consider the 
Internet of Things. The proliferation of connected devices is 
good for consumers and the economy but it creates risks. The 
manufacturer of a $15 device may not have adequate incentives 
to secure it. We grappled with this issue in a 2017 suit 
against the Wi-Fi router company D-Link, and again just a few 
months ago in our settlement with Tapplock, a maker of smart 
locks.
    The Department of Homeland Security's Cybersecurity and 
Infrastructure Security Agency, CISA, which builds up 
cybersecurity defenses in partnership with public and private 
entities is also active on IoT. We regularly consult with CISA 
and refer to them as a resource in our consumer and business 
education. We also view use of CISA's tools, such as those that 
help businesses identify risks, favorably in our data security 
investigations. I think we ought to go further, and consider 
carrots and sticks to encourage participation with CISA through 
mechanisms like integrating their work into our orders. Today, 
though, I want to stress the importance of the Commission's 
call for data security legislation.
    We need to be flexible to deal with rapid technological 
development, and mindful of the fact that defendants in data 
security cases are often themselves victims of felonies. But a 
specific Congressional mandate and additional incentives to 
protect data are critical.
    As a report issued just days ago about many large public 
companies still failing to patch known vulnerabilities showed, 
those who could most efficiently address data security problems 
often fail to do so. Data privacy is something on which many of 
you have been working hard and it is an important part of our 
mission and priority. Data security legislation is one of the 
best things I think we can do----
    The Chairman. OK, just so you will know, on that sentence 
about data privacy, that is when your video froze up, Mr. 
Commissioner. So perhaps we can iron that out. Well, let's see. 
Can you hear us now, sir?
    Commissioner Chopra. Commissioner Phillips, I believe the 
Chairman is addressing you.
    Commissioner Phillips. Forgive me, Mr. Chairman, I did not 
hear the question. Can you repeat it, please?
    The Chairman. Commissioner Phillips, you were in the middle 
of a sentence about data privacy and your screen froze up 
again. So if you could restart there at about the minute 2040 
mark----
    Commissioner Phillips.--Mr. Chairman. I believe that data 
security legislation is one of the most important things we can 
do for privacy.
    The Chairman. Very good. If you will just complete your 
statement then, we will appreciate it.
    Commissioner Phillips. Yes, thank you. And of course, I 
will submit a copy for the record.
    [The prepared statement of Commissioner Phillips follows:]

  Prepared Statement of Hon. Noah Joshua Phillips \1\, Commissioner, 
                        Federal Trade Commission
---------------------------------------------------------------------------
    \1\ This written statement, my oral testimony, and my responses to 
questions reflect my views and do not necessarily reflect the views of 
the Commission or any individual Commissioner.
---------------------------------------------------------------------------
    Chairman Wicker, Ranking Member Cantwell, Members of the Committee, 
thank you for the opportunity to appear before you. I'm honored to 
testify with my fellow Commissioners about the important work we do at 
the FTC. I also want to thank you for your flexibility on format. It is 
always good to be back at the Senate, even if that means virtually.
    There is a lot to cover, and I look forward to our discussion; but 
I want to take a moment to highlight an important issue, which I know 
is a focus for many of you: data security.
    Hardly a week goes by without Americans learning about another 
major cyberattack, breach, or vulnerability. Accounts on a major social 
media platform were exploited three weeks ago.\2\ Last week, 
researchers revealed a vulnerability on devices running Windows and 
Linux operating systems, which could impact billions of devices.\3\ 
Consumers get this: a 2018 Commerce Department study showed identity 
theft as the number one privacy and security issue concerning 
Americans.\4\ Considering the harms Americans have in mind when they 
think about privacy, data security legislation is one of best things we 
can do for privacy.
---------------------------------------------------------------------------
    \2\ Euirim Choi and Robert McMillan, Widespread Twitter Hack 
Reaches Bill Gates, Kanye West, Elon Musk, Joe Biden, and Barack Obama, 
the wall street journal (July 15, 2020), https://www.wsj.com/articles/
twitter-accounts-of-bill-gates-jeff-bezos-elon-musk-appear-to-have-
been-hacked-11594849077.
    \3\ Tim Starks, Billions of Windows, Linux devices at risk from 
vulnerability that could give hackers ``near total control,'' 
researchers say, politico (July 29, 2020), https://
subscriber.politicopro.com/article/2020/07/billions-of-windows-linux-
devices-at-risk-from-vulnerability-that-could-give-hackers-near-total-
control-researchers-say-3982874.
    \4\ Rafi Goldberg, Most Americans Continue to Have Privacy and 
Security Concerns, NTIA Survey Finds, national telecommunications and 
information administration (Aug. 20, 2018), https://www.ntia.doc.gov/
blog/2018/most-americans-continue-have-privacy-and-security-concerns-
ntia-survey-finds.
---------------------------------------------------------------------------
    The endemic use of data in our economy is not going away, and it 
supports not only the new ways that we all are working, worshiping, 
learning, and shopping, but countless jobs. Americans are putting an 
increasing amount of data online, a lot of which is sensitive. My view 
is that attempts broadly to roll back these trends are unlikely to 
succeed, and also would hurt consumers and the economy; so we need to 
focus on how to enjoy the fruits of progress while protecting 
Americans' data.
    The data we put online are targets for criminals and hostile 
states. While the vast majority of attacks are thwarted, in 2019 there 
were still over 1,400 reported data breaches in the U.S., exposing over 
160 million records.\5\ The loss, corruption, and ransoming of these 
data can pose serious harm to people and businesses, including identity 
and intellectual property (IP) theft, exposure of sensitive data, years 
of expensive litigation, and so on. And, of course, inadequate data 
security is a profound national security issue.
---------------------------------------------------------------------------
    \5\ 2019 End-of-Year Data Breach Report, identity theft resource 
center (Jan. 28, 2020), https://www.idtheftcenter.org/identity-theft-
resource-centers-annual-end-of-year-data-breach-report-reveals-17-
percent-increase-in-breaches-over-2018/.
---------------------------------------------------------------------------
    At the FTC, we investigate and bring actions against companies that 
fail to maintain reasonable data security, or mislead consumers about 
it. Recent examples include our enforcements against DealerBuilt, an 
auto dealer software provider\6\; Retina-X, a stalkerware app (which 
also raised other privacy problems)\7\; and Equifax, the credit bureau 
we allege neglected to fix an Apache Strutts vulnerability, resulting 
in the theft of records of over 145 million Americans.\8\ We're also 
imposing new requirements for defendants in data security orders, like 
certifications of compliance by senior officials and a better third-
party assessor process.\9\
---------------------------------------------------------------------------
    \6\ Lightyear Dealer Technologies, LLC, d/b/a DealerBuilt, No. C-
4687 (Sept. 6, 2019), https://www.ftc.gov/enforcement/cases-
proceedings/172-3051/lightyear-dealer-technologies-llc-matter-0 
(``DealerBuilt'').
    \7\ Retina X Studios, LLC, and James N. Johns Jr., No. C-4711 (Mar. 
27, 2020), https://www.ftc.gov/enforcement/cases-proceedings/172-3118/
retina-x-studios-llc-matter.
    \8\ FTC v. Equifax Inc., No. 1:19-cv-03297-TWT (N.D. Ga. July 23, 
2019), https://www.ftc.gov/enforcement/cases-proceedings/172-3203/
equifax-inc.
    \9\ See, e.g., Statement of the Federal Trade Commission, Regarding 
Unizix, Inc. d/b/a/i-Dressup.com, and Zhijun Liu and Xichen Zhang 
individually & James V. Grago Jr., d/b/a ClixSense.com (Apr. 24, 2019), 
https://www.ftc.gov/system/files/documents/cases/2019-03-
19_idressupclixsense_statement_final.pdf; DealerBuilt.
---------------------------------------------------------------------------
    Statutes like COPPA \10\ and Gramm-Leach-Bliley \11\ give us data 
security authority in areas of heightened sensitivity, like kids' data 
and financial services; but the regime today has gaps, including in 
areas of particular vulnerability. Consider the Internet of Things. The 
proliferation of connected devices is good for consumers and the 
economy, but it creates risks--the manufacturer of a $15 device may not 
have an adequate incentive to secure it. We grappled with this issue in 
our 2017 suit against the Wi-Fi router company D-Link \12\, and again 
just a few months ago in our settlement with Tapplock, a maker of smart 
locks.\13\
---------------------------------------------------------------------------
    \10\ 15 U.S.C. Sec. Sec. 6501-6506.
    \11\ Pub. L. No. 106-102, 113 Stat. 1338 (1999) (codified as 
amended in scattered sections of 12 and 15 U.S.C.).
    \12\ FTC v. D-Link Systems, Inc., No. 3:17-CV-39-JD (N. D. Cal. 
July 2, 2019), https://www.ftc.gov/enforcement/cases-proceedings/132-
3157/d-link.
    \13\ Tapplock, Inc., No. C-4718 (May 20, 2020), https://
www.ftc.gov/enforcement/cases-proceedings/192-3011/tapplock-inc-matter.
---------------------------------------------------------------------------
    The Department of Homeland Security's Cybersecurity and 
Infrastructure Security Agency (CISA), which builds up cybersecurity 
defenses in partnership with public and private entities, is also 
active on IOT. We regularly consult with CISA, and refer to them as a 
resource in our consumer and business education.\14\ We also view use 
of CISA's tools, such as those that help businesses identify risks, 
favorably in our data security investigations. I think we ought to go 
further, and consider carrots and sticks to encourage participation 
with CISA through mechanisms like integrating their work into our 
orders.
---------------------------------------------------------------------------
    \14\ Lisa Weintraub Schifferle, Free vulnerability scanning for 
your business, federal trade commission (Dec. 4, 2019), https://
www.ftc.gov/news-events/blogs/business-blog/2019/12/free-vulnerability-
scanning-your-business.
---------------------------------------------------------------------------
    Today, though, I want to stress the importance of the Commission's 
call for data security legislation. We need to be flexible to deal with 
rapid technological development, and mindful of the fact that 
defendants in data security cases are often themselves victims of 
felonies. But a specific congressional mandate and additional 
incentives to protect data are critical. As a report issued just days 
ago about many large public companies still failing to patch known 
vulnerabilities showed,\15\ those who could most efficiently address 
data security problems often fail to do so.
---------------------------------------------------------------------------
    \15\ National/Industry/Cloud Exposure Report (NICER) 2020, RAPID7 
(July 2020), https://www.rapid7.com/research/report/nicer-2020/.
---------------------------------------------------------------------------
    Data privacy is something on which many of you have been working 
hard; and it's an important part of our mission and a priority. Data 
security legislation is one of the best things we can do to advance the 
goal of privacy.
    Thank you, and I look forward to addressing your questions.

    The Chairman. Alright. Do you have do you have more of your 
written statement that you would like to--of your verbal 
statement that you would like to complete? I tell you, why 
don't we just go ahead then to the next witness because we have 
these difficulties. We thank you, Commissioner Phillips. And 
now we turn to Commissioner Chopra.

  STATEMENT OF HON. ROHIT CHOPRA, COMMISSIONER, FEDERAL TRADE 
                           COMMISSION

    Commissioner Chopra. Thank you, Chairman Wicker, Ranking 
Member Cantwell, and members of the Committee for this 
opportunity to appear before you today with my colleagues. The 
Federal Trade Commission's responsibilities are wide and far 
reaching with so many that directly relate to the crisis we 
face, healthcare and pharmaceuticals, disinformation and fake 
reviews, abuse and misuse of data, and so much more. But there 
is one area in particular that the FTC can and should 
prioritize that I want to emphasize today, which is protecting 
America's small businesses.
    According to a survey by the Society of Human Resource 
Management, 52 percent of small businesses believe that they 
are likely to fail due to the effects of COVID-19. And if this 
comes true, millions of businesses and many more millions who 
work for them could lose their livelihoods, devastating local 
economies in the process. The FTC has an important role to play 
to protect small businesses from abusive practices. First, we 
must crack down on small business loan sharking. Many small 
businesses are struggling to access credit, including through 
the Paycheck Protection Program, and this is giving an opening 
to bad actors that target restaurants, stores, and other local 
businesses with predatory loans.
    Many of these Wall Street affiliated lenders provide funds 
to businesses in exchange for future credit card receipts, but 
the terms often set those small businesses up to fail. In these 
contracts, small businesses must agree to confessions of 
judgment where borrowers automatically plead guilty if the 
lender sues them for payment. These clauses are illegal in 
consumer contracts, but are being unfairly weaponized against 
America's small business owners.
    The FTC is the only Federal agency with authority to crack 
down on these non-bank small business lending practices. And we 
have taken some important actions and we must look to 
systemically eliminate these illegal practices before it is too 
late. Second, the FTC must safeguard operators of franchised 
businesses from abusive practices by franchisors. Franchised 
businesses encompass a broad swath of businesses across the 
economy, from auto repair to real estate to fitness centers to 
fast food and so much more. Operators of franchised businesses 
employ millions of Americans and they are also more likely to 
be minority-owned compared to other small businesses.
    However, there are signs that franchisors may be using the 
pandemic to impose new policies that are exacting more economic 
pain on franchise operators. For example, Subway and 7-Eleven 
franchisees are fighting back against attempts by franchisors 
to gain more control and implement practices that ship more 
cost and risk to local business owners. The FTC administers the 
franchise rule and enforces laws that prohibit unfair business 
practices by franchisors. This responsibility is critical given 
the threats faced by so many operators of franchised businesses 
today.
    And finally, the FTC will need to police markets for anti-
competitive mergers that scoop up scores of small businesses. 
One common acquisition strategy is called a roll up. This is 
when a buyer, often a private equity fund, acquires a 
substantial number of small players in the market and combines 
them into a single large one. For example, many independent 
medical practitioners are seriously struggling right now and 
many believe they will need to sell their practices to an 
investment fund or a hospital system due to the dire economic 
straits they face.
    The slow extinction of independent physician practices in 
particular may have a serious impact on cost and quality of 
care due to diminished competition. Many of these deals are not 
subject to merger reporting because they are relatively small 
but when buyers acquire dozens or even hundreds of these small 
businesses, this can kill competition and make it more 
difficult for new players to enter the market. The FTC will 
need to use its authority to halt any anti-competitive 
acquisitions freeze or monopolization schemes that stamp out 
competition.
    In closing, we face unusual and extraordinary times for our 
economy and society, and the FTC needs to continue to sharpen 
its focus on the impact of the pandemic and the crisis on small 
businesses. Thank you again for the opportunity and I look 
forward to your questions.
    [The prepared statement of Commissioner Chopra follows:]

        Prepared Statement of Hon. Rohit Chopra, Commissioner, 
                        Federal Trade Commission
    Chairman Wicker, Ranking Member Cantwell, and Members of the 
Committee, thank you for the opportunity to appear before you.
    The Federal Trade Commission's responsibilities are wide and far-
reaching, with many directly relating to the crisis we face. Health 
care and pharmaceuticals, disinformation and fake reviews, abuse and 
misuse of data, and so much more. But, there is one area in particular 
that the FTC can and should prioritize: protecting America's small 
businesses.
    According to a survey by the Society of Human Resource Management, 
52 percent of small businesses believe that they are likely to fail due 
to the effects of COVID-19. If this comes true, millions of 
businesses--and many more millions who work for them--could lose their 
livelihoods, devastating local economies in the process. The FTC has an 
important role to play to protect small businesses from abuse.
    First, we must crack down on small business loan sharking. Many 
small businesses are struggling to access credit, including through the 
Paycheck Protection Program. This is giving an opening to bad actors 
that target restaurants, stores, and other local businesses with 
predatory loans. These lenders provide funds to businesses in exchange 
for future credit card receipts, but the terms often set the small 
businesses up to fail. In these contracts, small businesses must agree 
to ``confessions of judgment,'' where borrowers automatically plead 
guilty if the lender sues them for payment. These clauses are illegal 
in consumer contracts, but are being unfairly weaponized against small 
businesses.
    The FTC is the only Federal agency with authority to crack down on 
these nonbank small business lending practices. We have taken some 
important actions, and we must systemically eliminate these illegal 
practices before it's too late.
    Second, the FTC must safeguard operators of franchised businesses 
from abusive practices by franchisors. Franchised businesses encompass 
a broad swath of businesses across the economy, from auto repair to 
real estate to fitness centers to fast food and more. Operators of 
franchised businesses employ Americans across the country, and they're 
also more likely to be minority-owned, compared to other small 
businesses.
    However, there are signs that franchisors may be using the pandemic 
to impose new policies that are exacting more economic pain on 
franchise operators. For example, Subway and 7-Eleven franchisees are 
fighting back against attempts by franchisors to gain more control and 
implement practices that shift more cost and risk to local business 
owners.
    The FTC administers the Franchise Rule and enforces laws that 
prohibit unfair business practices by franchisors. This responsibility 
is critical, given the threats faced by operators of franchised 
businesses today.
    Finally, the FTC will need to police markets for anticompetitive 
mergers that scoop up scores of small businesses. One common 
acquisition strategy is called a ``roll up.'' This is when a buyer, 
often a private equity fund, acquires a substantial number of small 
players in a market and combines them into a single large firm.
    For example, many independent medical practitioners are seriously 
struggling, and many believe they will need to sell their practices to 
an investment fund or a hospital system, due to the dire economic 
straits they face. The slow extinction of independent physician 
practices, in particular, may have a serious impact on cost and quality 
of care.
    Many of these deals are not subject to merger reporting, because 
they're relatively small. However, when buyers are acquiring sometimes 
dozens or even hundreds of these small businesses, this kills 
competition and can make it more difficult for new players to enter the 
market. The FTC will need to use its authority to halt anticompetitive 
acquisition sprees and monopolization schemes that stamp out 
competition and small players.
    In closing, we face unusual and extraordinary times for our 
economy, and the FTC will need to sharpen its focus on the impact of 
the pandemic on small businesses. Thank you for again for the 
opportunity and I look forward to your questions.

    The Chairman. Thank you very much, Commissioner Chopra. And 
now we turn to Commissioner Rebecca Kelly Slaughter.

   STATEMENT OF HON. REBECCA KELLY SLAUGHTER, COMMISSIONER, 
                    FEDERAL TRADE COMMISSION

    Commissioner Slaughter. Thank you, Mr. Chairman. And thank 
you, Ranking Member Cantwell and members of the Committee for 
inviting me here today.
    The Chairman. Who is your guest?
    Commissioner Slaughter. Oh, this is Hattie. She is my new 
baby. She is 2 months old and like many Americans I am home 
with my kids so she is with me today.
    The Chairman. She seems very relaxed about your position on 
the issues.
    [Laughter.]
    Commissioner Slaughter. Well, hopefully. She is popping her 
head up right now so I am hoping she----
    The Chairman. And her name is now in the Committee record 
forever and ever.
    Commissioner Slaughter. She will be very proud. Let me 
start over so I can address the Committee. Thank you so much 
for having us here today. Like most Americans and yourselves, 
fallout from the coronavirus is front of mind for me these days 
so I am going to confine my oral remarks to that topic. I worry 
most about the burden borne by three groups in particular: 
kids, workers, and patients.
    As a working parent with four young children at home who 
has been struggling to manage distance learning for her kids 
even with the best circumstances and resources, I am especially 
sensitive to education issues. The pandemic has exacerbated the 
existing deep disparity in educational equity in this country. 
From day one, we saw well-resourced schools transition 
relatively seamlessly to online models with continued learning. 
Families with access to broadband and devices and the 
flexibility for a parent to be available at home muddled 
through. But for millions of America's kids from vulnerable 
communities, school simply stopped. As many as one in six kids 
lack the equipment necessary to participate in distance 
learning and nearly one-quarter of kids lack reliable Internet 
access, conditions that particularly affect rural, urban, and 
low-income families.
    The solutions parents and school districts are considering 
pose increased risks of privacy harm to kids, particularly kids 
in communities already battling the equity gap. We need to 
acknowledge that privacy and data issues are also equity and 
civil rights issues. Hybrid and in person learning models will 
require unprecedented collection of personal data to facilitate 
contact tracing, quarantines, and family choices. Online 
learning demands rapid adoption of a suite of technologies that 
may be unvetted and used without supervision. Where wealthy 
children's families can pay for privacy protective services, 
poor kids may pay by sacrificing their privacy. The FTC should 
help mitigate these potential harm. I was glad the agency 
worked quickly to put out guidance on how to protect student 
privacy.
    The FTC must aggressively use COPPA and general Section 5 
authority to hold companies accountable if the solutions 
offered to fill the education gap violate current law. But I 
want to be realistic about the best-case scenario many families 
face for the current Academic year, shared devices hastily 
filled with emerging apps and platforms being used by kids for 
hours with little oversight by adults. Current law provides 
very little protection in these circumstances, particularly for 
applications targeting teenagers and general audience. A need 
for comprehensive data privacy legislation with meaningful 
limitations on the collection and use of data, and prohibitions 
on discriminatory practices, dark patterns, and data abuses has 
never been greater.
    The FTC stands ready to enforce a Federal privacy law, and 
my hope is that the pandemic's catastrophic consequences for 
children will serve as the final push for such legislation. 
Until then, I believe the mounting data harms emerging from the 
crisis demand that the Commission consider instituting a 
rulemaking under Magnuson-Moss to identify and address serious 
data abuses. In addition 0 to supporting kids, we must support 
workers. I recognize how fortunate I am to navigate the 
challenges of child care and online learning from the 
privileged position of employment. At least eleven percent of 
my fellow Americans do not share that good fortune. I echo 
Commissioner Chopra's calls for the FTC to focus on supporting 
small businesses which are a significant source of employment 
and may be particularly squeezed right now.
    I believe the FTC must also use its competition authority 
to better protect our workforce by sharpening our attention on 
anti-competitive conduct and mergers that harm workers. 
Employers ought to compete to attract workers by providing the 
highest wages, most attractive benefits, and especially today, 
the most robust health and safety measures. We should focus on 
these issues in our enforcement action and also consider 
whether and how our rulemaking authority might be applied to 
address them. The most fundamental challenge we all face of 
course is how to help overcome the deadly Public health crisis, 
which we know has an outsized impact on seniors and communities 
of color.
    The FTC must continue to protect access to care by 
challenging problematic hospital and healthcare provider 
mergers that increase prices and limit patient choice. We must 
vigorously apply scrutiny to pharmaceutical mergers as well as 
address anti-competitive conduct involving healthcare service. 
We also must seek creative ways to challenge price gouging. 
Creativity is no substitute, however, for clear authority and I 
would ask Congress to give the FTC a direct mandate to stamp 
out abusive pricing practices. In conclusion, I want to 
acknowledge the dedicated public servants at the agency who 
have been working through this crisis in incredibly challenging 
circumstances.
    Working from home, especially for parents of young kids, is 
harder than I could have imagined. Chairman Simons deserves 
great credit for providing unmatched flexibility for staff 
across the agency to ensure they and their families remain 
safe. And the staff deserve equal credit for their tenacity, 
resilience, and unwavering commitment to the important work of 
the Commission. I look forward to answering your questions.
    [The prepared statement of Commissioner Slaughter follows:]

   Prepared Statement of Hon. Rebecca Kelly Slaughter, Commissioner, 
                        Federal Trade Commission
    Chairman Wicker, Ranking Member Cantwell, and Members of the 
Committee, thank you for inviting us here today.
    Like most Americans and yourselves, for me fallout from the 
coronavirus is front of mind these days, so I am going to confine my 
oral remarks to that topic. I worry most about the burden borne by 
three groups in particular: kids, workers, and patients.
Supporting Solutions for Educational Equity
    As a parent who has been struggling to manage distance learning for 
her kids, even with the best circumstances and resources, I am 
especially sensitive to education issues. The pandemic has exacerbated 
the existing deep disparity in educational equity in this country. From 
day one, we saw well-resourced schools transition relatively seamlessly 
to online models with continued learning. Families with access to 
broadband and devices, and the flexibility for a parent to be available 
at home, muddled through. But for millions of America's kids from 
vulnerable communities, school simply stopped.\1\ As many as one in six 
kids lack the equipment necessary to participate in distance 
learning,\2\ and nearly one quarter of kids lack reliable Internet 
access--conditions that particularly affect rural, urban, and low-
income families.\3\
---------------------------------------------------------------------------
    \1\ Emma Dorn, Bryan Hancock, Jimmy Sarakatsannis, and Ellen 
Viruleg, ``COVID-19 and Student learning in the United States: The Hurt 
Could Last a Lifetime,'' McKinsey (June 1, 2020) (collecting data 
showing that ``only 60 percent of low-income students are regularly 
logging into online instruction; 90 percent of high-income students do. 
Engagement rates are also lagging behind in schools serving 
predominantly black and Hispanic students; just 60 to 70 percent are 
logging in regularly.''), https://www.mckinsey.com/industries/public-
and-social-sector/our-insights/covid-19-and-student-learning-in-the-
unit ed-states-the-hurt-could-last-a-lifetime.
    \2\ Catherine E. Shoichet, ``These Kids are Getting Left Behind 
When Schools Go Online,'' CNN (July 31, 2020, 8:36 AM), https://
www.cnn.com/2020/07/31/us/distance-learning-inequality/index.html.
    \3\ Emily A. Vogels, Andrew Perrin, Lee Rainie, and Monica 
Anderson, ``53 percent of Americans Say the Internet Has Been Essential 
During the COVID-19 Outbreak,'' Pew Research Center (Apr. 30, 2020); 
see also John Kahan, ``It's time for a new approach for mapping 
broadband data to better serve Americans,'' Microsoft (Apr. 8, 2019), 
(estimating that about half of Americans, 163 million people, do not 
have high-speed Internet at home), https://blogs.microsoft.com/on-the-
issues/2019/04/08/its-time-for-a-new-approach-for-mapping-broadband-
data-to-better-serve-americans/.
---------------------------------------------------------------------------
    The solutions parents and school districts are considering pose 
increased risks of privacy harms to kids, particularly kids in 
communities already battling the equity gap; we need to acknowledge 
that privacy and data issues are also equity and civil rights 
issues.\4\ Hybrid and in-person learning models will require 
unprecedented collection of personal data to facilitate contact 
tracing, quarantines, and family choices. Online learning demands rapid 
adoption of a suite of technologies that may often be unvetted and used 
without supervision. Where wealthy children's families can pay for 
privacy-protective services, poor kids may pay by sacrificing their 
privacy. The FTC should help mitigate these potential harms.
---------------------------------------------------------------------------
    \4\ Hannah Quay-de la Vallee and Cody Venzke, ``Privacy and Equity 
in the New School Year: Steps for In-Person, Remote, or Hybrid 
Learning,'' Center for Democracy & Technology 
(July 2020), https://cdt.org/wp-content/uploads/2020/07/2020-07-16-
Privacy-Equity-in-the-New-School-Year-Guidance-FINAL-2.pdf.
---------------------------------------------------------------------------
    I was glad that the agency worked quickly to put out guidance on 
how to protect student privacy.\5\ The FTC must aggressively use COPPA 
and general Section 5 authority to hold companies accountable if the 
solutions offered to fill the education gap violate current law. But I 
want to be realistic about the best-case scenario many families face 
for the current academic year: shared devices, hastily filled with 
emerging apps and platforms, being used by kids for hours with little 
oversight by adults. Current law provides very little protection in 
these circumstances, particularly for applications targeting teenagers 
or general audiences.
---------------------------------------------------------------------------
    \5\ See, e.g., Lisa Weintraub Schifferle, COPPA Guidance for Ed 
Tech Companies and Schools during the Coronavirus, Fed. Trade Comm'n: 
Business Information Blog (Apr. 9, 2020), https://www.ftc.gov/news-
events/blogs/business-blog/2020/04/coppa-guidance-ed-tech-companies-
schools-during-co ronavirus; Lisa Weintraub Schifferle, Remote learning 
and children's privacy, Fed. Trade Comm'n: Business Information Blog 
(Apr. 9, 2020), https://www.consumer.ftc.gov/blog/2020/04/remote-
learning-and-childrens-privacy.
---------------------------------------------------------------------------
    The need for comprehensive data-privacy legislation with meaningful 
limitations on the collection and use of data and prohibitions on 
discriminatory practices, dark patterns, and data abuses has never been 
greater. The FTC stands ready to enforce a Federal privacy law, and my 
hope is that the pandemic's catastrophic consequences for children will 
serve as the final push for such legislation. Until then, I believe the 
mounting data harms emerging from the crisis demand that the Commission 
consider initiating a rulemaking under Magnuson-Moss to identify and 
address serious data abuses.
Supporting Workers
    In addition to supporting kids, we must support workers. As a 
parent with four young kids at home, I am fortunate to navigate the 
challenges of child-care and online learning from the privileged 
position of employment. At least 11 percent of my fellow Americans do 
not share that good fortune.\6\ I echo Commissioner Chopra's calls for 
the FTC to focus on supporting small businesses, which are a 
significant source of employment and may be particularly squeezed right 
now.\7\
---------------------------------------------------------------------------
    \6\ Employment Situation Summary, U.S. Bureau of Labor Statistics 
(July 2, 2020), https://www.bls.gov/news.release/empsit.nr0.htm.
    \7\ More than 40 percent of American workers are employed by small 
businesses and small businesses can be significant drivers of new jobs. 
See 2018 Small Business Profile, U.S. Small 
Bus. Admin., https://www.sba.gov/sites/default/files/advocacy/2018-
Small-Business-Profiles-US.pdf.
---------------------------------------------------------------------------
    I believe the FTC must also use its competition authority to better 
protect our workforce by sharpening our attention on anticompetitive 
conduct and mergers that harm workers. Employers ought to compete to 
attract workers by providing the highest wages, most attractive 
benefits, and, especially today, the most robust health and safety 
measures. We should focus on these issues in our enforcement actions 
and also consider whether and how our rulemaking authority might be 
applied to address them.
Supporting Access to Affordable Care
    The most fundamental challenge we all face, of course, is how to 
help overcome the deadly public-health crisis, which we know has an 
outsized impact on seniors and communities of color. The FTC must 
continue to protect access to care by challenging problematic hospital 
and healthcare-provider mergers that increase prices and limit patient 
choice.\8\ We must vigorously apply scrutiny to pharmaceutical mergers 
as well as address anticompetitive conduct involving healthcare 
services. We also must seek creative ways to challenge price-
gouging.\9\ Creativity is no substitute, however, for clear authority, 
and I would ask Congress to give the FTC a direct mandate to stamp out 
abusive pricing practices.
---------------------------------------------------------------------------
    \8\ See Remarks of Commissioner Rebecca Kelly Slaughter As Prepared 
for Delivery, Antitrust and Health Care Providers Policies to Promote 
Competition and Protect Patients, Center for American Progress (May 14, 
2019), https://www.ftc.gov/system/files/documents/public_statements/
1520570/slaughter_-_hospital_speech_5-14-19.pdf.
    \9\ See Concurring Statement of Commissioner Rebecca Kelly 
Slaughter Regarding the Matter of Federal Trade Commission and State of 
New York v. Vyera Pharmaceuticals, LLC; Phoenixus AG; Martin Shkreli; 
and Kevin Mulleady, Fed. Trade Comm'n (Jan. 27, 2020), https://
www.ftc.gov/system/files/documents/public_statements/1564517/
2020_01_27_final_rks_daraprim_concurring_statement.pdf.
---------------------------------------------------------------------------
    In closing, I want to acknowledge the dedicated public servants at 
the agency who have been working through this crisis in incredibly 
challenging circumstances. Working from home, especially for parents of 
young kids, is harder than I could have imagined. Chairman Simons 
deserves great credit for providing unmatched flexibility for staff 
across the agency to ensure they and their families remain safe, and 
the staff deserve equal credit for their tenacity, resilience, and 
unwavering commitment to the important work of the Commission.
    I look forward to answering your questions.

    The Chairman. Thank you, Commissioner. It is indeed ironic 
that just as you were speaking about online distance learning, 
we lost your video although we could hear you and on the screen 
was a text saying that we had lost the picture because of low 
bandwidth. So----
    Commissioner Slaughter. I apologize.
    The Chairman. Well, no. I think that points out the 
problems that we have. If a member of the Federal Trade 
Commission has problems with distance testimony, you can 
imagine what those students that are trying to do distance 
learning are experiencing. Also I want to tell you that Hattie 
has a beautiful head of hair there and she is well behaved. So 
thank you for that testimony. And now we turn to Commissioner 
Wilson. You are recognized.

 STATEMENT OF HON. CHRISTINE S. WILSON, COMMISSIONER, FEDERAL 
                        TRADE COMMISSION

    Commissioner Wilson. Thank you. Chairman Wicker, Ranking 
Member Cantwell, and members of the Committee, I am pleased to 
appear before you today. I would like to highlight two areas 
where I respectfully believe Congress could help the FTC 
fulfill its mission. First, by enacting privacy legislation, 
and second, by maintaining the focus on consumer welfare and 
economics driven enforcement in antitrust. As my colleagues 
have shared, Federal privacy legislation is necessary for 
several reasons. First, businesses need predictability in the 
face of a growing patchwork of State and international 
frameworks.
    Second, consumers need transparency regarding how their 
data is collected and shared but they currently face 
significant information asymmetries. Third, gaps have emerged 
in sectoral privacy laws. For example, HIPAA covers the privacy 
of health data collected by a doctor, but not by apps. The need 
is more urgent now giving COVID-19. For millions of Americans, 
work and school have moved online. Consumer data is being 
deployed to monitor compliance with quarantines and for contact 
tracing. While many view technology as key to safely easing 
quarantines and resuming normal life, these tools depend on 
sensitive health and location data. Though we now face many new 
and complex privacy issues, interestingly effective contact 
tracing requires widespread adoption, but digital trust is 
lacking.
    A Washington Post poll found that half of smartphone users 
who could use contact tracing apps won't because they don't 
trust tech companies. Privacy legislation would help build 
digital trust which is necessary to foster continued innovation 
and investment. Privacy legislation is also necessary to 
protect our Fourth Amendment rights. Courts employ a reasonable 
expectation of privacy tests in Fourth Amendment cases. 
Consumers surrender extensive data through their use of phones 
and other connected devices. If citizens know and accept that 
nothing is private, then they have no reasonable expectation of 
privacy and Fourth Amendment protections evaporate. While 
privacy is important, so is competition.
    Privacy legislation must be crafted so as to maintain 
competition and foster innovation. Research indicates the 
passage of GDPR in the EU led to decreased venture capital 
investment and entrenchment of dominant players in digital 
advertising. And compliance is costly for small businesses and 
new entrants. U.S. legislation should seek to avoid these 
pitfalls. With our dual mission in competition and consumer 
protection, the FTC is well situated to provide technical 
assistance to Congress on this issue. Four other considerations 
for privacy legislation. First, the FTC should be the enforcing 
agency given its decades of relevant experience.
    Second, like COPPA, legislation should include civil 
monetary penalties. Third, the FTC should have jurisdiction 
over nonprofits and common carriers which collect sensitive 
information. Finally, targeted APA rulemaking would permit the 
FTC to address technological development. I will turn now to 
the FTC's competition mission. The consumer welfare standard in 
antitrust which measures the impact of competitive conduct on 
consumers is under attack. Critics assert the standard suffers 
because it focuses only on price but the consumer welfare 
standard also addresses other important factors like quality 
and innovation. If people wanted only the cheapest product, we 
would still use flip phones instead of smartphones. But price 
does matter.
    Antitrust scholar Herbert Hovenkamp has written, attacking 
low prices as a central antitrust goal is going to hurt 
consumers, but it is going to hurt vulnerable consumers the 
most. Some conduct like price-fixing drives up prices without 
increasing quality or innovation, but most of the business 
practices and mergers that we review require closer scrutiny. 
Enforcers determine whether an action or a deal is legal based 
not on its label but on its competitive effects. Economic 
analysis helps us determine whether any harm to competition is 
outweighed by benefits to consumers.
    Without economic analysis, antitrust at best would be a 
series of per se rules resulting in business decisions that 
prioritize form over function, creating market distortions. At 
worst, antitrust untethered from economic analysis would be 
subjective and vulnerable to political manipulation. Companies 
would seek the favor of legislators and regulators instead of 
courting consumers. In closing, the FTC welcomes the 
opportunity to assist Congress on these issues. I am happy to 
answer any questions you may have.
    [The prepared statement of Commissioner Wilson follows:]

     Prepared Statement of Hon. Christine S. Wilson, Commissioner, 
                        Federal Trade Commission
Introduction
    Chairman Wicker, Ranking Member Cantwell, and Members of the 
Committee, I am pleased to appear before you today (albeit remotely).
    I would like to highlight two areas where I respectfully believe 
that Congress could assist the Federal Trade Commission in fulfilling 
its mission to protect consumers and competition: first, by enacting 
Federal privacy legislation; and second, by maintaining the focus on 
consumer welfare and economics-driven enforcement in antitrust.
Privacy Legislation
    With respect to privacy legislation, I agree with Chairman Simons' 
opening statement on this topic. Federal privacy legislation is 
necessary for several reasons. First, businesses need predictability in 
the face of a growing patchwork of state and international privacy 
regimes. Federal privacy legislation would provide needed certainty to 
businesses in the form of guardrails governing information collection, 
use, and dissemination. Second, consumers need clarity regarding how 
their data is collected, used, and shared so they can make informed 
decisions about which goods and services to use. Currently, there are 
significant information asymmetries with regard to consumers' knowledge 
of the privacy characteristics of various products, leaving consumers 
ill-equipped to evaluate the quality and value of those products. 
Third, there are growing gaps in the sectoral coverage of our existing 
privacy laws. For example, the Health Insurance Portability and 
Accountability Act (HIPAA) \1\ covers the privacy of sensitive health 
data collected by a doctor or pharmacist, but not by apps or wearables.
---------------------------------------------------------------------------
    \1\ The Health Insurance Portability and Accountability Act of 
1996, Pub.L. 104-191, 110 Stat. 1936 (1996).
---------------------------------------------------------------------------
    The need for Federal privacy legislation is even more urgent now, 
given the spread of Covid-19, which is driving data usage in ways not 
previously contemplated by consumers. For tens of millions of 
Americans, work, school, entertainment, and social interactions have 
moved online. Businesses, researchers, and government entities have 
deployed consumer data to monitor compliance with quarantines and to 
implement contact tracing. And many view technology, including both 
contact tracing and widespread health monitoring, as key to safely 
easing quarantines and resuming normal life. But these tools are fueled 
by sensitive data regarding people's movements and their health. These 
initiatives have raised new and complex issues regarding consumer 
privacy, and have laid bare both the lack of clear guidance for 
businesses and the absence of comprehensive privacy protections for 
consumers.
    Proposed contact tracing initiatives have also exposed the dearth 
of digital trust in this country. For disease containment initiatives 
to be effective, consumers must trust that government entities and 
businesses will be careful stewards of their data. But among those who 
use smartphones and can download contract tracing apps, a Washington 
Post poll found that more than half do not trust tech companies to 
ensure that people who report a coronavirus diagnosis using an app 
would remain anonymous.\2\ Privacy legislation would help build digital 
trust around data collection and use, which is necessary to foster 
continued innovation and investment in the tech arena.
---------------------------------------------------------------------------
    \2\ Craig Timberg, Drew Harwell and Alauna Safarpour, Most 
Americans are not willing or are able to use an app tracking 
coronavirus infections. That's a problem for Big Tech's plan to slow 
the pandemic, Washington Post (Apr. 29, 2020), https://
www.washingtonpost.com/technology/2020/04/29/most-americans-are-not-
willing-or-able-use-an-app-tracking-coronavirus-infections-thats-
problem-big-techs-plan-slow-pandemic/
---------------------------------------------------------------------------
    An additional imperative for Federal privacy legislation is 
protection of our rights under the Fourth Amendment. In applying the 
Fourth Amendment, courts employ a ``reasonable expectation of privacy'' 
analysis.\3\ Consumers have grown accustomed to surrendering extensive 
data through their daily use of phones, computers, digital assistants, 
and other connected devices. If citizens know and accept that nothing 
is private, then they have no reasonable expectation of privacy, and 
protections under the Fourth Amendment are eviscerated.
---------------------------------------------------------------------------
    \3\ Katz v. U.S., 389 U.S. 347 (1967).
---------------------------------------------------------------------------
    While privacy is important, so is competition. Federal privacy 
legislation must be crafted carefully to maintain competition and 
foster innovation. The General Data Protection Regulation in the EU 
(``GDPR'') may have lessons to teach us in this regard. Preliminary 
research indicates that GDPR may have created unintended consequences, 
including a decrease in venture capital investment and entrenchment of 
dominant players in the digital advertising market.\4\ Reports also 
indicate that compliance with GDPR is costly and difficult for small 
businesses and new entrants. U.S. legislation should seek to avoid 
these negative consequences. The FTC, with its dual mission in 
competition and consumer protection, is uniquely situated to provide 
technical assistance to Congress as it seeks to protect privacy while 
maintaining competition.
---------------------------------------------------------------------------
    \4\ See Jian Jia, Ginger Zhe Jin & Liad Wagman, The Short-Run 
Effects of GDPR on Technology Venture Investment (Nat'l Bureau of Econ. 
Research, Working Paper 25248, 2018), https://www.nber.org/papers/
w25248.pdf.; GDPR--What happened?, Whotracksme Blog (2018), https://
whotracksme/blog/gdpr-what-happened.html.
---------------------------------------------------------------------------
    There are four other elements that I believe should be included in 
Federal privacy legislation:

   First, the FTC should be the enforcing agency. We have 
        decades of experience in bringing privacy cases, and we have 
        the requisite expertise to tackle any new law effectively.

   Second, any legislation should include civil monetary 
        penalties, which Congress has included in other statutes 
        enforced by the FTC, including the Children's Online Privacy 
        Protection Act.\5\
---------------------------------------------------------------------------
    \5\ Children's Online Privacy Protection Act of 1998, 15 U.S.C. 
6501-05; see also Children's Online Privacy Protection Act Rule, 16 
C.F.R. Part 312, available at: https://www.ftc.gov/enforcement/rules/
rulemaking-regulatory-reform-proceedings/childrens-online-privacy-
protection-rule.

   Third, the FTC should be given jurisdiction over non-profits 
        and common carriers, which collect significant volumes of 
---------------------------------------------------------------------------
        sensitive information.

   Fourth, any law should include narrow and targeted APA 
        rulemaking authority, which will enable the FTC to promulgate 
        guidance and address technological developments.

    Finally, on a related note, I encourage Congress to enact data 
security and data breach notification legislation.
Consumer Welfare and Economics in Antitrust
    Let me turn now to the FTC's second mission, preserving 
competition. The consumer welfare standard in antitrust--in which 
competition in the markets for goods and services is measured by how 
well it serves consumers--has attracted criticism in recent years. 
Critics often over-simplify the standard by asserting that it is solely 
concerned with low prices. In fact, the consumer welfare standard 
encompasses other factors that consumers value, including quality and 
innovation; if people wanted only the cheapest product, we would still 
be using flip-phones instead of smartphones. But price does matter. As 
antitrust scholar Herbert Hovenkamp recently wrote, attacking ``low 
prices as a central antitrust goal is going to hurt consumers, but it 
is going to hurt vulnerable consumers the most.'' \6\ Many of us are 
fortunate enough today to be able to buy a higher quality, name-brand 
product--but most of us also can remember those early days when we were 
thankful for the availability of a no-frills, value-priced version.
---------------------------------------------------------------------------
    \6\ Herbert Hovenkamp, Is Antitrust's Consumer Welfare Principle 
Imperiled? 45 J. CORP. L. 101, 130 (2019) (``The neo-Brandeisian attack 
on low prices as a central antitrust goal is going to hurt consumers, 
but it is going to hurt vulnerable consumers the most. . . . As a 
result, to the extent that it is communicated in advance, it could 
spell political suicide. Setting aside economic markets, a neo-Brandeis 
approach whose goals were honestly communicated could never win in an 
electoral market, just as it has never won in traditional markets.'').
---------------------------------------------------------------------------
    Some conduct, like price fixing and market allocation, clearly 
drives up prices without any redeeming increase in quality or 
innovation. But most of the business practices and mergers that come 
before the antitrust agencies are more ambiguous in their effects. 
Enforcers determine whether a business practice is legal based not on 
its label, but rather by examining its empirical effects. For that 
reason, we need economic analysis to help us determine whether any harm 
to competition is outweighed by benefits to consumers. Fortunately, the 
FTC has a Bureau of Economics that provides the expertise and 
experience needed for such analysis, as well as for studies including 
merger retrospectives that help to inform our enforcement. We also can 
hire outside economists to testify at trial.
    In the absence of economic analysis, antitrust at best would be a 
series of per se rules. This system would result in business decisions 
that prioritize form over function, creating market distortions and 
inefficiencies. The U.S. experienced this phenomenon during the decades 
when many vertical restraints that had similar welfare effects could be 
either per se illegal or per se legal, and when merger decisions were, 
as Justice Potter Stewart put it, a ``counting-of-heads game'' that 
ignored the actual competitive dynamics in the relevant market. At 
worst, antitrust untethered from economic analysis would be subjective 
and vulnerable to political manipulation. Companies would devote 
themselves to seeking the favor of legislators and regulators, instead 
of courting consumers.
Conclusion
    In closing, the FTC would welcome the opportunity to provide 
technical assistance to Congress on these issues. Thank you for your 
assistance in strengthening the FTC's ability to fulfill its mission.
    I am happy to answer any questions you may have.

    The Chairman. Well, thank you very much. And before I begin 
my questions, another thing I wanted to mention after the 
testimony of Rebecca Kelly Slaughter was to thank her for 
pointing out what a wonderful job the staff of the FTC does. 
And I am sure each member of the Commission subscribes to that. 
We certainly, Senator Cantwell, can say the same for our hard-
working and talented and knowledgeable staff here in the 
Committee on both sides of the dais and that gives me a chance 
to say that. Let's start off, and I guess we will begin with 
the Chair.
    So Chairman Simons, let's talk about the FTC's role in 
overseeing the enforcement of Section 230 of the Communications 
Decency Act and in particular President Trump's Executive Order 
in May on preventing online censorship. Specifically, Section 4 
of this Order calls on the FTC to take action against online 
platforms that restrict speech in a manner inconsistent with 
their terms of service.
    What is your view, Mr. Chairman, on the FTC's 
responsibilities under the Executive Order? And have you seen 
any examples of the behavior described in the order and taken 
any action under your authority so far?
    Chairman Simons. Thank you, Mr. Chairman. We haven't taken 
any action according to the Executive Order. We get complaints 
from a wide variety of sources, from the public, from Congress, 
from competitors, from people in industry, from consumer 
watchdogs, and it is very important that we get those 
complaints and we pay attention to them. Lots of complaints 
have come from members of this committee and we are very 
thankful that you provide us with such thoughtful complaints. 
We are an independent agency so we review all of them 
independently.
    We have jurisdiction over commercial speech, particularly 
non deceptive and unfair and then some other statutes. So we 
look to see whether the complaints are subject to unfairness 
or--I am sorry, whether they are within our authority as I 
described, and our authority focuses on commercial speech not 
political content curation. If we see complaints that are not 
within our jurisdiction, then we don't do anything. If we see 
complaints that are, we take a closer look and figure out 
whether there is a violation, and then we determine whether it 
is appropriate for us to act.
    The Chairman. So, Mr. Chairman, you don't view political 
speech as within your jurisdiction?
    Chairman Simons. Correct.
    The Chairman. OK, and so if the public and members of the 
Senate are concerned about online platforms like Twitter and 
Facebook being inconsistent in the way they restrict political 
speech, you do not view that as within the purview of your 
statutory responsibilities and therefore the Executive Order 
does not instruct you in that specific area. Is that correct?
    Commissioner Simons. Yes, for political content curation. 
Yes.
    The Chairman. OK. Now who else would like to comment on 
this? I am going to take my whole 5 minutes on this so----
    Commissioner Chopra. Chairman Wicker, I am happy to weigh 
in. I think putting aside the Executive Order, the issue of 
Section 230 is one where of great concern, I think, and there 
is a growing bipartisan consensus that it has been abused. We 
see whether it comes to counterfeit and defective goods, an 
unlevel playing field between online platforms and brick-and-
mortar stores, and in general, I think the scrutiny is 
warranted when it comes to technology platforms abusing any 
liabilities and public privileges, and using that as regulatory 
arbitrage.
    I think many of these platforms do have too much power to 
dictate certain policies and regulations, and I don't want to 
see them continue, in my view, to overuse and abuse the legal 
immunities that Congress has provided and I think we need to 
take a hard look at that, particularly when it comes to the use 
of surveillance based behavioral advertising. I think that 
business model is inconsistent with the origins of Section 230.
    Section 230 is supposed to safeguard and promote speech, it 
is not supposed to, you know, prioritize certain types of 
things over the others based on what makes those companies more 
money.
    The Chairman. You know, Commissioner, I think you make some 
very good points there and I would observe that the hearing in 
the House of Representatives last week on a bipartisan basis 
indicated a real concern that these platforms are awfully big 
and too powerful, and that it is a matter of concern for the 
consuming public. So I appreciate your testimony there and----
    Commissioner Wilson. I also have a comment, Senator Wicker.
    The Chairman. Yes, please ma'am.
    Commissioner Wilson. You noted that this was a bipartisan 
issue in last week's hearing and I actually have Chairman 
Nadler's quotes in front of me. He asked whether the ability to 
make money in any way affect Google's algorithm in terms of 
what news appears in a typical users search results. He also 
noted that Facebook and Google have gravely threatened 
journalism in the United States. He noted, now we hear Google 
and Facebook are making money over what news they let the 
American people see. He said it is a very dangerous situation.
    And so I agree social media companies now provide a 
significant portion of America with its news and so there is 
concern about content curation. My colleague, Commissioner 
Chopra and I have previously asked the FTC in a public 
statement to prioritize 6(b) studies that explore how content 
curation and targeted advertising practices impact data 
collection use and sharing, and how the monetization of data 
impacts the creation and the refinement of algorithms that 
drive content curation and targeted advertising practices. And 
so I think this issue, as my colleague Commissioner Chopra 
noted, is a really important one for us to consider and to 
learn more about.
    The Chairman. And have those studies been authorized and 
commenced at this point?
    Commissioner Wilson. Nothing has been publicly announced, 
Senator.
    The Chairman. Thank you. Thank you very much. And 
undoubtedly, there will be more discussion.
    Commissioner. Senator?
    The Chairman. Yes? I hear a voice. Perhaps you are being 
censored at this point. Let me say, this will be a further 
topic of questions and I will not further intrude on my time at 
this point, but recognize the distinguished Ranking Member. We 
will get back to you for an answer once we get these kinks 
ironed out. Senator Cantwell.
    Senator Cantwell. Thank you, Mr. Chairman. And again, 
thanks for holding this important hearing and for all the 
feedback from the Commissioners. It has been quite interesting 
obviously on a breadth and depth, but I would like to go back 
to price gouging. In April, in the State of Washington, the 
Attorney General launched a ``see it, snap it, send it'' 
campaign to fight price gouging. The initiative followed 400 
price gouging related complaints, a round of cease and desist 
letters to Washington-based online sellers accused of price 
gouging, and upwards of 150 site visits to businesses that were 
subjects of these complaints.
    So this is a very important and timely issue as it relates 
to the crisis and we want to make sure that Americans are 
getting all the help that they deserve. Currently, the Federal 
agencies have very limited authority to prevent price gouging. 
The FTC, as the Chairman was just mentioning, go after unfair 
and deceptive practices, which really hasn't been used in cases 
of price gouging. So that is why I believe that we need a new 
definition, particularly during the time of an emergency.
    During the time of an emergency, we should not allow for 
these unconscionably excessive prices. And I think that we 
should do something about that. So I wanted to ask you, 
Chairman Simons, do you support Congress doing something 
specifically on price-gouging authority?
    ChairmanSimons. Senator, we agree that price gouging is a 
very serious problem, especially for PPE and the like. We 
currently work with this with the DOJ and the states to refer 
cases to them because as you said Section 5 really is not a 
good fit for price-gouging authority, but we would vigorously 
support and enforce legislation if Congress passed the law on 
price gouging. We think that legislation should include a 
triggering event and a time limit, should be National in scope, 
it should define the products that are covered, describe what 
constitutes an excessive price increase, and provide carve-outs 
for offsetting costs increase. Thank you.
    Senator Cantwell. Well, thank you for that list. I agree 
and I think particularly when you define a crisis, we have 
certainly been involved in what we think of being manipulations 
of oil markets and certainly people who took advantage of oil 
prices during a hurricane and certainly been involved in 
electricity rates and what we thought were manipulated 
electricity markets.
    So anyway, look forward to working with you on that. 
Commissioner Slaughter and Chopra--well first let me just thank 
you Commissioner Slaughter for mentioning, well, first of all 
enlightening our day with Hattie, thank you. That is very nice 
of you. But also for mentioning 4 broadband.
    And I know the Chairman agrees that we have an important 
opportunity in front of us with the next COVID package as we 
are seeing schools make decisions about what they are going to 
do on the education system for the fall. We really have to 
address this gap and we need to make sure that the dollars are 
there and the specific programs are there for broadband. So we 
look forward to working with everybody to make sure that gets 
in a package. But on this issue of price gouging, Commissioner 
Slaughter, you also mentioned, and Commissioner Chopra, what is 
your perspective about the core provisions of a price gouging 
law? We heard from the Chairman, but what do you believe needs 
to be in the legislation?
    Commissioner Slaughter. Thank you, Senator, for the 
question and you are right about broadband. As you can see with 
all of us struggling with our feeds occasionally in the best 
circumstances, we can see how important it is. In terms of 
price gouging, I agree with a lot of what the Chairman said in 
terms of what the parameters of price gouging legislation 
should look like.
    I would want to make sure that it wasn't too limited and 
didn't--excuse me, didn't put too high a burden on the agencies 
to establish that the circumstances have been met because when 
that's the case, then we can't really bring the cases 
effectively that we want to protect the public. And the last 
point I would make is, I agree also that Section 5 is very much 
an imperfect tool for addressing these kinds of problems, but I 
want to see us in all cases, including in the case of price 
gouging or maybe especially thinking about whether particular 
circumstances might give rise to a creative use of Section 5 
authority on this topic, and this is something Commissioner 
Chopra and I both talked about in terms of drug price spikes 
recently.
    So I think that we would really benefit from clear 
legislation from Congress, but very much share your view that 
this is a high priority and something that we can see the real 
life effects of for American people every day.
    Senator Cantwell. Thank you. Commissioner Chopra, did you 
want to say anything? I mean----
    Commissioner Chopra. Yes, that thank you. I agree. Just two 
quick points. I do not want to see any Federal law delete the 
State laws, the preemption of State laws. I don't think is 
appropriate when it comes to this issue. And I also hope, given 
some of the framework in the Defense Production Act as well, 
that you also consider criminal penalties in certain 
circumstances.
    Senator Cantwell. Yes, I certainly believe so. We have done 
effective work on this as it relates as I said to energy 
markets, and having criminal penalties has been giving the FTC 
really--I mean the Federal Energy Regulatory Commission the 
tool that they needed to police energy markets.
    So we certainly don't need any higher energy costs than 
what we should be paying. And just Mr. Chairman, I know my time 
has expired, but I just wanted to mention on Commissioner 
Wilson's point about content curation, this is really a very 
severe problem that is undermining the newspaper industry. The 
fact that these content creators are basically becoming the 
entry and point of delivery is limiting the options for our 
broadcast and content delivers and the newspaper business.
    And I so I look forward to seeing what the Commission comes 
out with on this but I think this is also a very important 
issue that needs to be addressed. Thank you.
    The Chairman. Thank you very, very much, Senator Cantwell. 
Senator Fischer is next.

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

    Senator Fischer. Thank you, Mr. Chairman. Chairman Simons, 
as I am sure you know, this committee has been evaluating paths 
forward on the name image likeness rules that have begun to 
take shape at the State level along with the proposal recently 
developed by the NCAA.
    I am interested to hear your perspective on this matter, 
particularly on the FTC's role in enforcing any new Federal NIL 
rules. As talks continue on a potential Federal framework, what 
new authorities and resources do you believe the Commission may 
or may not need to enforce added protections for student-
athletes? I think you have to unmute, sir. There you go.
    Chairman Simons. Alright. Can you hear me?
    Senator Fischer. Yes.
    Chairman Simons. Alright. Thanks for the question. I think 
I was unmuted and by mistake muted. So I am sorry for that. So 
I am a big believer that competition should function in almost 
every situation including college athletics. I have been very 
concerned for a long period of time that students are not 
getting what they should get in terms of compensation for what 
they do. This is particularly serious because it has a large 
effect on minority, disadvantaged communities particularly with 
the football and the basketball programs.
    And so I am very, very excited about what you are doing and 
I encourage you to go as far as you can. In terms of expertise, 
we don't really have very much expertise at all in this area as 
an institution. The DOJ has really been the one that has been 
interacting with colleges including college athletics. And so 
we don't really--we don't have that base that the DOJ has. But 
having said that, if you want to give us authority, we will of 
course enforce it.
    But depending on exactly what you pass, it might require a 
lot of increased manpower on our part in order to do that. And 
also depending on what you pass, if it looks something like a 
professional regulation like where you are regulating agents or 
things like that and any kind of certification or other type of 
way, I think that would be not particularly suited for our 
agency.
    Senator Fischer. Thank you. Over the past few months, we 
have seen the pandemic add new volatility to our food supply 
chain and that requires a massive shift in logistics. And amid 
the financial strain, consumers are trying to stock up on food 
while producers and retailers are doing their best to ensure 
that the grocery store shelves are stocked.
    The FTC has important responsibilities in helping safeguard 
America's food supply. Mr. Chairman, in terms of the FTC's 
rule, what policies do you feel would be most effective to 
focus on for maintaining a stable food supply chain during 
these unprecedented times?
    Chairman Simons. So our big focus on, with respect to food, 
is the retail aspect of it. And so we are very focused on that. 
We are making--we are doing our best to make sure that there 
are as competitive as possible and that the competition 
flourishes at the retail level. The DOJ is the one that focuses 
on the production of meat and things like that, and we are 
dealing with the agricultural side of it.
    So we would defer to them on that part. But on terms of the 
retail part, we are very focused on making sure that there is 
good competition for consumer benefit.
    Senator Fischer. You know, as you know, the Packers and 
Stockyards Act was drafted following an FTC report that 
highlighted abuses by major meatpacking companies at that time 
and leveraged their concentrated market power. Mr. Commissioner 
Chopra, I would be interested in your take on this as well, 
particularly on more recent concerns about vertical integration 
trends that we are seeing in the food industry.
    Commissioner Chopra. Thank you, Senator Fischer. I totally 
share those concerns. What we are seeing in the food industry 
from farm to table, including what Chairman Simon said on the 
retail side but also on the production side, there are serious 
issues with how certain large, powerful players are able to 
dictate terms in the lives of so many, whether they are poultry 
growers or livestock producers and ranchers. I am concerned 
that the USDA's rulemaking on the Packers and Stockyards Act is 
going to make matters worse. It is going to make it even harder 
to make sure that our food markets are competitive and fair.
    The FTC does have some limited authority under the Packers 
and Stockyards Act but as we have seen during this pandemic, 
just recently the JBS, Mountain States Rosen transaction, there 
is going to be a lot of issues when it comes to the stability 
of our food supply and I think we all as Federal agencies need 
to think about it, including our national security regulators 
as well.
    Senator Fischer. Right. You do have say over retail sales 
of meat and livestock products. And when you look at, as I know 
you have been focused on that vertical integration, obviously 
that has an impact on those retail sales, the vertical 
integration that takes place. So I thank you for your comments 
and hope that you--Thank you, Mr. Chairman.
    The Chairman. Thank you. Thank you, Senator Fischer. Let me 
just exercise a little discretion here and intrude on the next 
round of questioning. Mr. Chairman, you don't want this issue 
of athletic name image and likeness. You would rather the 
Justice Department have that, right?
    Chairman Simons. Yes, they have the expertise.
    The Chairman. OK. Does any member of the Commission 
disagree with the Chairman on that? Who wants this issue?
    Commission Chopra. Well, I would personally favor a private 
right of action for some of this. It is very hard to police 
some of these markets and in some cases the 1 players 
themselves may be well situated to vindicate their own rights.
    The Chairman. Would you like for the FTC to have 
jurisdiction over it?
    Commissioner Chopra. You know, that is really your choice. 
I don't think that we seem best situated, but we will do 
ultimately what Congress passes laws instructing us to do.
    The Chairman. OK. Well if anybody wants to comment----
    Chairman Simons. Mr. Chairman, can I just make a comment 
there? I agree with Commissioner Chopra that a private right of 
action would be appropriate.
    The Chairman. OK, and please submit, feel free to submit 
written responses expanding your position there. And Senator 
Klobuchar, I appreciate you letting me delay your questioning 
for a moment or two there. You are recognized.

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

    Senator Klobuchar. Well, thank you. Mr. Chairman. And 
again, thank you for conducting, along with Senator Cantwell, 
this really important hearing right now. You know, I have told 
many of you this before but I think that this pandemic has shed 
a big magnifying glass on some issues that we know are already 
out there with consolidation, with consumer scams, and the 
like, and I appreciate all the Commissioners being here.
    Start with following up with some of Senator Cantwell's 
questions. I am on her bill along with Senators Markey and 
Schatz on privacy and then Senator Kennedy and I have a 
separate bill. But I wanted to ask, I think it was in your 
opening statement, Chair Simons, that you mentioned you believe 
you need additional rulemaking authority. I think Commissioner 
Chopra is also taking this position. Could you just really 
briefly, because I have a lot of questions, answer that 
question in order to really do things on privacy outside of 
legislation, Chairman?
    Chairman Simons. Yes, thank you, Senator. So in terms of 
the rulemaking, what we are looking for is a targeted 
rulemaking authority. So not kind of pass a general statute 
that says we want Federal privacy legislation, let the FTC 
figure it out.
    No, we think that that is your job and you have done great 
efforts, as you have described, to the move that long and we 
really encourage you to go further and get across the finish 
line on that. In terms of us though, just like the Congress did 
with COPPA, they allowed us to have APA targeted rulemaking to 
do things such as change definitions to account for changes in 
technology or changes in business methods.
    One example from COPPA was there the original language did 
not include photos. So this was like in 1998 or 2000 and photos 
weren't a big thing in terms of being uploaded to the internet. 
Now, of course they are and they are really important and 
sensitive. That is just an example of targeted rulemaking.
    Senator Klobuchar. OK. Before I go to Commissioner Chopra, 
one other question of you because I don't think we have delved 
into this yet. On the front of the hearing in the House last 
week with the CEOs of Amazon, Facebook, Google, and Apple, do 
you, based on what you heard at the hearing, I assume you 
watched it or read the transcript, do you believe that the FTC 
should look back at consummated mergers not just to learn from 
them, but potentially to take more enforcement action given 
what we have seen with Instagram and WhatsApp with Facebook and 
some of these others and what the market is looking like right 
now?
    Chairman Simons. Yes, thank you, Senator. I don't think it 
would be appropriate for me to comment on any particular 
investigation or company. As I have said before that, yes, we 
have the ability to look back at consummated mergers and to 
undo them. And certainly we have done that many times in the 
past.
    We have a litigation going on now where we are doing that 
so that is something that is definitely on the table for us. In 
addition, what we have done is we have issued 6(b) orders to 
all the major tech platform companies to get information from 
them about acquisitions that were not reportable under the HSR 
Act and so we are looking at those too.
    Senator Klobuchar. And one thing you and I discussed in 
Judiciary before the antitrust--I cut you off.
    The Chairman. No, I think you are good.
    Senator Klobuchar. OK. OK, one thing you and I discussed at 
the antitrust subcommittee, and I guess you and the other 
Commissioners could briefly pitch in here, I look back 
historically at the staffing for the FTC. This is not about 
your decisions as Chairman. And when you look, you are like a 
shadow of yourselves from the 80s, from the Reagan 
Administration on down, and yet you are dealing with trillion 
dollar companies and are expected to be the counterweight to 
those companies and expected by the public and by all of us 
Democrats and Republicans to be looking at these things.
    So Grassley and I have a bill to, as you know, add more 
resources with some filing fee changes for the mega-mergers and 
the like. I think we should be doing more going into next year 
in a big way, but could you just briefly say whether more 
resources would be helpful.
    The public needs to understand and my colleagues need to 
understand this shift over time and how it is just literally 
going to be impossible for us to take on legions of lawyers and 
trillion dollar companies to do all the stuff everyone is 
talking about from Senator Hawley on, if we don't have the 
resources.
    Chairman Simons. Yes, we dearly need the resources. You 
make a very good point that in the 80s we were about twice the 
size we are now, and some of that has to do with 
computerization and more efficiency among the staff. But still 
we are, I think, we are behind and we do need more resources. 
We are busting at the seams. We are having trouble staffing the 
existing mergers as it is. Like I mentioned earlier, we are on 
a pace to have more merger enforcement actions than any time 
since Fiscal Year 2000.
    Senator Klobuchar. Exactly and here is the point that for 
my colleagues that want to be fiscally responsible, which we 
all do, is that you bring in money, the FTC and the antitrust 
division of the Justice Department brings in money with these 
fines and we got to look at all of this in that context. And 
what is happening to consumer prices in this new gilded age 
that we are entering and if we don't do something with this 
pandemic profiteering and other things that is going on.
    Chairman Simons. Yes, let me respond to one thing in 
particular about that, Senator. That is the way that the law, 
the HSR Act is currently determined, increasing the fees 
actually would not go into our budget but you could change that 
legislatively and we would ask that you do that.
    Senator Klobuchar. Got it. OK. I am just going to turn to, 
is that Commissioner Chopra's name, but I am running out of 
time quickly. Commissioner Slaughter, are you there?
    The Chairman. She was going to have to come and go, so 
maybe perhaps we can get back to her.
    Senator Klobuchar. OK, I was going to complement the baby. 
But I will ask this on the record, but it is just simply about 
the exclusionary practices bill that we have and they need to 
update our standards for these mergers in light of what is 
going on around the country with monopolies and the like. And I 
can do that on the record. Thank you, Mr. Chairman.
    The Chairman. Thank you so much, Senator Klobuchar. Senator 
Moran.

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

    Senator Moran. Chairman, thank you. Thank you for having 
this hearing. Your subcommittee had a hearing two weeks ago on 
the issue of consumer protection in the times of COVID-19 as 
well. So I will skip those questions today. Senator Blumenthal 
is in the room. It seems like I should be asking you about data 
privacy, but I am going to deal with at least for this round of 
questions with the U.S.-EU Privacy Shield.
    Chairman Simons, the court of justice at the--of the 
European Union in Schrems II recently invalidated the Privacy 
Shield arrangement as a basis for lawful transfers of data. 
With more than 70 percent of the nearly 5,300 Privacy Shield 
certified companies being small to medium sized businesses 
including many in my home state, I would understand this to be 
an extremely urgent matter for digital commerce in the United 
States. Just simply to begin with, do you agree with the 
significance of this?
    Chairman Simons. I am sorry. Yes, particularly for small 
businesses. I was muted, sorry.
    Senator Moran. Yes, thank you, Chairman. Your website, the 
FTC's website includes an update on the recent developments 
related to the Privacy Shield. It states in there and I quote, 
``continues to expect companies to comply with the ongoing 
obligations with respect to transfers made under the Privacy 
Shield framework.''
    This statement aligns with the FTC's previous discretions 
and refraining from bringing any enforcement action in 2015 
when the Privacy Shield's predecessor says Safe Harbor was 
invalidated in Schrems I. Can businesses expect a similar 
reasonable approach by the FTC in terms of enforcement in the 
aftermath of this invalidation of the Privacy Shield?
    Chairman Simons. Yes, basically we you know, they are 
making promises that they are following the Privacy Shield 
principles and if they don't, that is a problem under our Act, 
under Section 5. In addition, so companies could say, they 
could put on their website we are no longer certified under 
Privacy Shield. It has been overturned by the EU courts, but 
they would still be obligated to protect the data in a way that 
they promised going forward. So one thing they might have to 
delete it or otherwise just, you know, protect it in the way 
that they promised pursuant to the Privacy Shield principles.
    Senator Moran. And in that circumstance, how does the FTC 
respond to that business?
    Chairman Simons. You mean if they don't?
    Senator Moran. Yes, if they do--let me let me first start 
with if they do, then the FTC would take no action. Is that 
right?
    Chairman Simons. That is right.
    Senator Moran. OK. Commissioner Wilson, let me direct this 
to you. I would warn that the European's Court surveillance 
concerns in relation to Privacy Shield should not be conflated 
with the concerns about consumer data privacy. However, is it 
fair to say that the enactment of a pre-emptive Federal privacy 
framework might make achieving a future adequacy determination 
by the EU easier?
    Commissioner Wilson. Yes, thank you for the question. And I 
would agree with that statement.
    Senator Moran. And then let me ask all, in the case of--if 
that is the case, would you support enactment of the Consumer 
Data Privacy Security Act which provides a uniform National 
standard? And I have seen some of the Commissioners have 
answered that question in other Senators' dialogue, but that 
uniform National standard, I would ask for a yes or no from 
each of you.
    The Chairman. We will begin with Chairman Simons.
    Chairman Simons. Yes, sorry.
    Senator Moran. Commissioner Wilson?
    Commissioner Wilson. Yes, I think that one Federal privacy 
standard is incredibly important. The Internet does not stop at 
state or even international borders and businesses need the 
predictability and certainty of one Federal standard.
    Senator Moran. Are there any other Commissioners that have 
not spoken to this issue this morning in response to my 
colleagues' questions?
    Commissioner Slaughter. I don't believe I have. I don't 
know--can you hear me?
    Senator Moran. Yes.
    Commissioner Slaughter. Can you hear me? OK, great. Sorry, 
I would say I support the idea of a national floor. That makes 
a lot of sense to me, but I would be concerned about a law 
where that floor is too low or a law that invalidated stronger 
State privacy statutes or prohibited states from having the 
ability to innovate to fill gaps that aren't filled by the 
Federal law.
    Senator Moran. Thank you. Mr. Chairman, my time is almost 
expired.
    The Chairman. Let's go ahead those--since we have not 
specifically heard from Commissioner Phillips and Commissioner 
Chopra on that question.
    Senator Moran. OK. Thank you. I thought we had from 
Commissioner Chopra.
    Commissioner Chopra. Mr. Chairman, I agree that a national 
law would be helpful. I do have concerns about deleting all the 
State laws. The FTC has dealt with this in the past in terms of 
working with State laws, determining if there is conflicts, and 
then what is more protective, and I think we could go down that 
path again to make sure we don't delete states that decide they 
want higher levels of protection.
    Commissioner Phillips. Senator, this is Commissioner 
Phillips. Can you hear me?
    The Chairman. Yes.
    Commissioner Phillips. Thank you. I just want to echo what 
my colleagues, Chairman Simons and Commissioner Wilson said 
about the need for a coherent and singular Federal standard. 
Not only will this help businesses save costs and keep barriers 
down for smaller firms relative to large incumbents, it will 
also help with another critical privacy issue we face and that 
is consumer understanding. It is easier for consumers to 
understand one standard.
    Senator Moran. Let me thank the Commissioner for that 
answer. It is a point that has not been made often previously. 
Thank you.
    The Chairman. And thank you, Senator Moran. Senator 
Blumenthal.

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

    Senator Blumenthal. Thank you, Mr. Chairman. And thank you 
to Senator Moran for raising the privacy issue. We are 
continuing to strive for bipartisan solutions, which I think 
should be within reach at some point because clearly these 
questions and the answers we received, and most important, the 
feelings of the American people, are that we need stronger 
privacy protection and we should continue to work to that end. 
But as important as new legislation is the commitment to 
enforce the tools that the FTC has right now.
    On Monday, Twitter disclosed that it faces an FTC fine up 
to $250 million for its misuse of account security information 
for ad targeting. According to Twitter this breach of trust 
lasted between 2013 and 2019, 6 years. And this announcement 
follows Twitter's catastrophic and dangerous breach of dozens 
of high-profile accounts last month. Twitter has been under a 
consent order since 2011 for exactly these kinds of problems, 
an order that requires biannual audits and a comprehensive 
information security program.
    So I think that the public is rightly skeptical about the 
FTC's use of its existing tools and its inconsistent and 
inadequate enforcement of the laws already on the books, and I 
would like to hear what the FTC has to say about this issue at 
length, but I want to turn first to the issue of antitrust.
    The House hearings, I think, should give the FTC a greater 
sense of urgency about bringing an action based on antitrust 
against both Facebook and Amazon which are within its purview. 
I want to ask Chairman Simons, can we expect some kind of 
antitrust action against tech firms that have monopolistic 
power and may have abused that monopolistic power by the end of 
the year, and what is preventing action now?
    Chairman Simons. Thank you, Senator. I don't want to 
prejudge the outcome of an investigation, but let me say this, 
we are focused on and this is the most important thing that we 
are doing on the competition side at the FTC which is these 
investigations of the tech platforms. We formed a new group in 
the Bureau of Consumer--Bureau of Competition, the Technology 
Enforcement Division specifically dedicated to investigating 
these types of companies.
    And they are incredibly busy. They are very active and I 
have told them that what they are working on is the most 
important thing in the Bureau of Competition and that they 
should do it as quickly and as efficiently as possible, and I 
am very confident that they are doing that.
    Senator Blumenthal. Have you given them a mandate that is 
action oriented because I think the American people want to see 
action?
    Chairman Simons. Oh, yes. I have absolutely and I talk to 
them regularly.
    Senator Blumenthal. Let me ask you about some of the scams 
that have appeared in the wake of the pandemic. As you know, 
the FTC has issued 255 warning letters about these snake oil 
scams that have appeared promising cures. It is really the wild 
west out there. Warning letters simply lack the deterrent and 
enforcement value of actions. Do you plan more action to stop 
these kinds of consumer scams that exploit people's fears about 
the pandemic and their search for treatments and cures?
    Chairman Simons. Yes, thank you Senator. We try to do what 
is most effective and most efficiently--and efficient to get to 
the problematic advertising or claims off the internet. And so 
we are able to get out these warning letters very quickly and 
so far they have been extremely effective, extremely effective. 
Overwhelmingly, the companies take down the problematic 
language within 48 hours, and where they don't, then we 
initiate enforcement actions and we brought a number of those 
already. I think today in fact we announced three or four new 
ones. And so we have had seven of those already.
    Senator Blumenthal. Well, let me just interrupt because--I 
apologize my time is running out but we know from experience, I 
know as a former U.S. Attorney and a State Attorney General 
that a warning letter means that the company can just come back 
and you can do an enforcement action, but the better course is 
to have a judgment on the books that can be enforced rather 
than have to begin the case all over again.
    Let me just ask you finally on the issue of privacy, in his 
Dissent in the Facebook privacy settlement, Commissioner Chopra 
criticized the FTC for not deposing Facebook executives. Don't 
you believe that the FTC should depose Mark Zuckerberg in your 
ongoing antitrust investigation?
    Commissioner Simons. I can't comment on the specifics of 
any individual matter, but we--it depends on the circumstances. 
What we do is fact-specific. Sometimes it is important to 
depose the CEO and sometimes it is not necessary. But where it 
is important and helpful, we try to do it. And the other thing 
I would say is particularly with respect to Facebook, we got as 
much--we had e-mails from lots and lots of people, we did not 
need to get Mr. Zuckerberg in a deposition for that case.
    Senator Blumenthal. Don't you think in this antitrust 
investigation it will be necessary to depose both Zuckerberg 
and Jeff Bezos?
    Chairman Simons. Well, Mr. Bezos works for Amazon, but I 
can't comment on----
    Senator Blumenthal. I understand that is a separate 
antitrust investigation but shouldn't this investigation----
    Chairman Simons. I can't comment on what--sorry, I can't 
even comment on whether there is an investigation of Amazon. 
The only investigation that is publicly known that our TED 
group is doing is Facebook and that is only because they have 
disclosed it themselves and so we are able to confirm that. But 
other than that, we don't--we don't discuss individual cases.
    Senator Blumenthal. Fair enough. Let me just suggest 
because my time has expired that the credibility of this 
investigation is going to depend on its completeness and 
aggressiveness, and seems to me that the public will be 
satisfied only if you do depose the very top executives of 
whatever company you are investigating. Thank you, Mr. 
Chairman.
    The Chairman. Thank you very much, Senator Blumenthal. 
Senator Blackburn.

              STATEMENT OF HON. MARSHA BLACKBURN, 
                  U.S. SENATOR FROM TENNESSEE

    Senator Blackburn. Thank you to each of you for the time to 
be here today. Mr. Chairman, I think that--Chairman Simons, I 
think you know that Facebook compliance is very important to us 
and dealing with social media is very important to us. You are 
hearing a lot about it from letters and notes that are coming 
to you. We are hearing a good bit about it.
    So I have been jumping back and forth from the Judiciary 
hearing to this one and so let me ask you this. Just very 
briefly, when do you think you are going to bring this to a 
conclusion? And are you satisfied that we are going to be able 
to get to a conclusion with the issues with Facebook and all of 
this going back to the 2012 Order?
    Chairman Simons. OK, there we go, unmuted. So are you 
talking about the Facebook privacy order or you talking about a 
Facebook antitrust investigation?
    Senator Blackburn. Yes. Let's take privacy first and then 
we can go to antitrust.
    Chairman Simons. OK. Sure. So the order, the negotiated 
order settling the our order violation of Section 5 case 
against Facebook was finally entered I think on April 27 or 28 
of this past year. It was in litigation in front of a judge in 
the D.C. District Court----
    Senator Blackburn. We know all of that. Where are you? 
Where do you feel you are in compliance? Are they in 
compliance? And then are you satisfied with the progress? And 
then I will add something on it because the clock is ticking, 
what kind of legislative balance do you think we need to strike 
to make certain that you all can properly deal with this?
    Chairman Simons. Yes, I think, I don't--so, I can't comment 
any particular investigation of any particular company, but we 
are very focused on that Order in particular and compliance 
with it. If there is any problem with it, we will be on it. We 
will be active, but I can't talk about anything in particular 
about an existing, non-public----
    Senator Blackburn. Correct, but you are pleased with where 
you are in the process. Is that what you are saying?
    Chairman Simons. What I am saying is we are very happy with 
the Order. We think it really restructures aboard. It provides 
all kinds of----
    Senator Blackburn. OK. Speak to whatever kind of 
legislative balance we need to strike to empower you to conduct 
enforcement to hold big tech accountable, because when we hear 
from Tennesseans, they will say well there is a lot of 
conversation around this but what are you going to do about it? 
So what kind of legislative action needs to happen?
    Chairman Simmons. So I think what your colleagues, what you 
and your colleagues are doing in terms of a new Federal privacy 
legislation is absolutely critical because our hundred-year-old 
statute is not really up to the task and doesn't give us the 
authority that we need. We don't really have anything looking 
even remotely close to what the Europeans have with GDPR so it 
is really important that you, you know, through your work on 
the privacy, Federal privacy legislation to continue.
    Senator Blackburn. OK, I have got another question and I am 
not going to have time to get through this but looking at the 
invalidation of the Privacy Shield of the court of justice of 
the EU and some of the European data protection authorities, 
they have signaled that they do not foresee a grace period to 
allow data flows to continue during the negotiation of a 
successor agreement like that which occurred in 15-16.
    So I would be interested to know if any of you have had 
conversations with any of your DPA colleagues in Europe about 
the importance to both economies of allowing these data flows 
to continue? And, also if you have a sense of whether or when 
there might be a final or collective decision on allowing data 
transfers to continue while a successor framework is 
negotiated? And Chairman Simons, I will come to you first and 
anyone else that wants to weigh in on this just raise your 
hand.
    Chairman Simons. Thank you, Senator. So we are working with 
the Commerce Department and other parts of the Administration. 
We stand by ready to help them in whatever way we can be useful 
to them. They are carrying the water on this, and you know, we 
will have to see what direction they head in and will support 
them as much as we can.
    Commissioner Phillips. Senator, this is Commissioner 
Phillips. If I can just add----
    Senator Blackburn. Absolutely.
    Commissioner Phillips. Thank you so much. I really 
appreciate it. A little bit of context, back in, after the 
Schrems I decision when the Safe Harbor agreement was 
invalidated, the U.S. Government and the European Commission 
were already negotiating what became the Privacy Shield 
agreements.
    It was because of that ongoing negotiation that the 
European privacy authorities agreed to do what you are 
describing which is to standdown on enforcement and allows 
firms to continue to transact in data. I shared the 
disappointment of Secretary Pompeo and Secretary Ross at this 
decision.
    I do not think it is fair to hold the U.S. to a standard 
that other countries cannot meet. I think the transaction in 
this data is very important, in particular for small businesses 
and we are going to do whatever we can to support the Commerce 
Department in its efforts and to continue to hold companies 
accountable to the privacy promises that they make.
    Senator Blackburn. Thank you. Anyone else want to weigh in 
on this? I am over time, Mr. Chairman. I thank you and I yield 
back my time.
    The Chairman. Thank you, Senator Blackburn. Senator Schatz.

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

    Senator Schatz. Thank you, Mr. Chairman, Ranking Member, 
members of the Commission. First thing I want to say is I just 
want to thank the Commissioners for making it very difficult to 
determine who was a Republican appointee and who was a 
Democratic appointee. This is the way that these Commissions 
should operate. It is the way that the Commerce Committee likes 
to do it and it is a real pleasure to sort of dig into the 
issues without necessarily digging 1 into each other.
    My first question is for Chairman Simons on credit 
reporting. What actions is the FTC taking to verify that the 
credit reporting agencies are following the CARES Act 
provisions and what is the FTC doing to ensure that data 
furnishers are accurately reporting the data?
    Chairman Simons. So, thank you, Senator. So yes, so we have 
investigations open. We had a--and we brought some actions as 
well. We had a workshop that was specifically focused on 
accuracy with the CFPB and we are working with them as well. 
They have supervisory authority under the big three credit 
bureaus and so we work with them and talk to them about 
accuracy issues in that regard.
    Senator Schatz. Can you talk a little more about that 
because I had Ms. Kraninger in front of the Banking Committee 
and I was, you know, I don't mind a consultative educational 
process, but I am a little concerned as to where the 
enforcement stick is and to the degree and extent that the 
CARES Act specifically instructs the big three, you know, not 
to report say a forbearance as a negative credit event. I want 
to be satisfied that people have access to that information to 
know that the CARES Act is being complied with and that the big 
three are actually doing so.
    Chairman Simons. Yes. So, we are monitoring for that, and 
yes, I didn't understand your question. We are monitoring for 
that and if we see something that is problematic, that is a 
priority for us.
    Senator Schatz. Thank you. Commissioner Chopra, do you want 
to add anything just generally speaking about credit reporting 
and about the sort of public policy question of whether or not 
consumers should have access to their own credit reports?
    Commissioner Chopra. Yes, I really think we are long 
overdue for broader reforms of what I see as a broken oligopoly 
where consumers are the product, they are not the customer. The 
CFPB really is the lead on this because of their broader 
authorities, but I really want to see the FTC continue its 
focus on some of the tenant screening and employer background 
check abuses, because if we see some of this being misreported, 
you are going to see people who are trying to get to back to 
work, trying to get a new place if they can't afford their 
current one, and they might be blocked from doing it.
    So we have got a lot to do but we have got to really figure 
out what we are going to do long-term about Equifax, 
TransUnion, and Experian because it is just simply not working, 
the current system.
    Senator Schatz. I think that is right. And I think that, 
you know, some of the folks who are exasperated by the big 
three and their conduct to their incompetence and their 
unwillingness to give in any way are sometimes characterized as 
wanting to undermine the ability to do, you know, proper 
underwriting for mortgages and car loans and everything else. 
That is not what we are doing. We are trying to make sure that 
the error rate goes down and that consumers have access to 
their own information.
    I remember being in a Commerce Committee hearing and one of 
the representatives from the big three said well, our error 
rate is only three to five percent, which means many, many 
millions of people are being prevented from having a job or a 
mortgage or a car as a result of the errors of these companies 
and they just plug along profitably. Commissioner Chopra, what 
do you think you can do under the FTC's authority here?
    Commissioner Chopra. Well just to be candid with you, I 
think the Congress rightfully stripped the FTC of much of its 
authorities here and gave it to the CFPB. I have obviously been 
disappointed at the CFPB's actions in this regard because I 
think there is much more that they can be doing given the much 
broader panoply of authorities that they have.
    I do want us to enforce the FCRA, including with respect to 
whether certain large data brokers and tech platforms may be 
subject to its requirements but have been flouting it. But I 
agree, we need to reform the big three credit reporting 
agencies, and it is going to take time, but we need to 
introduce some real competition because it is just not working 
right now.
    Senator Schatz. Thank you very much, Commissioners. Thank 
you, Mr. Chairman.
    The Chairman. Thank you, Senator Schatz. Senator Capito.

            STATEMENT OF HON. SHELLEY MOORE CAPITO, 
                U.S. SENATOR FROM WEST VIRGINIA

    Senator Capito. Thank you, Mr. Chairman, and I thank all of 
you both for your testimony, but also for your service. I 
greatly appreciate the complexity of a lot of the issues that 
you are dealing with. In 2015, I launched my West Virginia 
Girls Rise Up program to encourage young women to take on 
leadership roles and to build and encourage the future leaders 
of America. There was a recent Wall Street Journal article that 
referenced a study that found that 78 percent of fifth through 
eighth graders, girls in particular, were lonely and isolated 
during this pandemic time and certainly understandably so.
    And so it was also quoted that girls between 10 and 14 are 
spending about three to four hours a day on TikTok, Snapchat, 
and Instagram to stay connected. So as children and teens turn 
to more social media platforms to stay connected, what is the 
Commission doing to ensure that companies who collect user data 
are not violating the Children's Online Privacy Protection Act 
and I will ask the Chairman that question?
    Chairman Simons. Thank you, Senator. So we are monitoring 
the market very carefully. We have given advice to ed tech 
providers. We have given advice to schools. We have given 
advice to parents, consumers. And so, let's see what--you know, 
I mean that is what we are doing so far. And one of the things 
I think that this points to is that we really need Federal 
privacy legislation. This is an area where it is not just a 
matter of are you doing what you say? It is a matter of what 
you are doing may not be proper even if you don't say anything 
about it.
    Senator Capito. Well, I think obviously and particularly 
nobody could have anticipated this and the availabilities 
obviously of online platforms to younger children, probably 
maybe were some parents might have prevented the use of it or 
limited the use of it, now it has become more difficult to do 
that because that is the only way that a lot of teens and pre-
adolescents and everything are keeping in touch.
    So I am concerned about that. I am going to shift to 
another issue and Commissioner Phillips on the Made in America 
provisions. I know that there has been some lack of clarity in 
terms of what does made in America mean? What does it mean to 
you? What does it mean to consumers for perception? I know you 
do studies on that.
    Where are we on that made in America? Obviously here again 
during this pandemic when we saw our PPE is was being made in 
China, the lack of availability very frustrating. We are going 
to try to do something about that here, hopefully in our next 
CARES package. So do you have a comment on that Commissioner 
Phillips?
    Commissioner Phillips. Sure, and Senator, let me just begin 
by following up briefly on your last question to the Chairman. 
It is important also to note that the COPPA enforcement under 
this FTC, the five Commissioners sitting here before you today, 
is as aggressive as it ever has been. That began with what was 
then a record settlement against a company that few Americans 
have heard up at the time, TikTok.
    We are very glad they are under order. It continued with 
our settlement with the New York Attorney General for $170 
million in the YouTube case. On ``made in the USA,'' we are 
continuing to do our enforcement. We had a big case recently 
against William Sonoma. We are also in the process of doing a 
rulemaking. I have to tell you I dissented from that.
    But the reason that I dissented is something very much 
within your power and that was I didn't think that we had the 
authority to make the rule that we were trying to make. That is 
a pretty easy legislative fix even though legislation as we all 
know is hard. That is certainly something that Congress can 
address and that I could work with you on going forward. Thank 
you.
    Senator Capito. Thank you. I am going to go to Commissioner 
Slaughter. She just gave me a little chat and said she had some 
comments. So that is the beauty of technology. Yes, 
Commissioner.
    Commissioner Slaughter. Thank you so much, Senator. I just 
wanted to echo your comments about the importance of thinking 
about how our children are being affected by all of the online 
activity that they are engaging in and particularly thank you 
for your leadership in addressing the mental health issues for 
young women. I have three daughters and this is something I 
think about all the time.
    And I just point out to you that COPPA does give us some 
specific authority for children's privacy, but only for kids 13 
and under, and only basically to give parents' permission and 
to require reasonable data security. It doesn't give us the 
same sort of general authority to engage in protection against 
abuse of privacy and data practices that you are referring to, 
especially for teenagers, so I really hope that this is 
something that Congress will think about as you continue to 
discuss data privacy legislation.
    Senator Capito. Well it certainly looks like the data 
coming forward over in the last several months would support 
something like that. Thank you very much. I think I probably 
used my 5 minutes. I appreciate it. Thank you all, and a cute 
little baby.
    The Chairman. Thank you, Senator Capito. Senator Udall.

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

    Senator Udall. Thank you, Mr. Chairman and Ranking Member. 
Mr. Chairman, you can hear me, I assume?
    The Chairman. You bet.
    Senator Udall. OK. Throughout the COVID-19 pandemic, we 
have seen Americans come together to support frontline workers. 
We have seen New Mexicans rally as communities to help their 
families and neighbors, but just as times of crisis can bring 
out the best in people, they can also bring out the worst who 
target vulnerable people. And that is why we have been seeing 
this I think a lot in numerous reports of harmful scams that 
put consumers at risk.
    As a former Attorney General in New Mexico, I know you 
recognize the need to work with partners outside of the agency. 
State Attorneys General have their ear to the ground. They hear 
directly from consumers. And many are strong protectors of 
State consumer laws. A working relationship with them is 
essential and that is why I introduced the ``Stopping COVID 
Scams Act'' in the Senate to empower Federal and State 
authorities to do more to deter scammers and hold them 
accountable.
    So my question is, my legislation would allow State 
Attorneys General to bring a civil action in District Court or 
State court to respond to COVID related fraud under the FTC 
Act. So a question for every Commissioner, do any of you oppose 
authorizing State Attorneys General to take action and respond 
to fraud under the FTC Act?
    Chairman Simons. Hi, this is Chairman Simons. No, I don't 
have any reservations about that at all. And I agree completely 
and want to echo what you said about the importance of our 
relationship with the State AGs. They are boots on the ground. 
They are terrific partners and we couldn't do what we do 
without cooperating with them.
    Senator Udall. Great. Thank you.
    Commissioner Slaughter. No concerns. I think it is a good 
idea.
    Senator Udall. Terrific. Thank you.
    Commissioner Chopra. Same.
    The Chairman. I think we want answers from Phillips, Chopra 
and Wilson also.
    Commissioner Phillips. Senator Udall, I would like to take 
a closer look at the legislation. A lot of our statutes do pair 
our State AG enforcement with ours and that tends to be a 
really good thing. A lot of states also have what we call baby 
FTC Acts so I am not sure how the statute, I mean the proposed 
bill will match up to that.
    Commissioner Wilson. Senator, I agree with your proposal.
    Senator Udall. Great. Thank you very much. We would like 
to--Commissioner Phillips, we would like to continue the 
discussion with you and hopefully get to a place where you feel 
comfortable with Attorneys General doing that. Now my----
    Commissioner Phillips. I appreciate it.
    Senator Udall. You bet. Now, my second question goes to 
civil penalty authority. My bill also enhances the FTC's civil 
penalty authority. This is the same bill we talked about with 
regard to the Attorneys General. Currently FTC enforcement 
begins with an administrative complaint against a potential 
scammer. Then there is a cease and desist order or a 
settlement. Under current law, the Commission can only then 
seek civil penalties in court if there is a further violation.
    This is months or potentially years of court action, but as 
we have seen the current health crisis moves quickly. New 
Mexicans have died due to contaminated hand sanitizers with 
false labeling, families fear for their health and are willing 
to spend their money on questionable products making false 
claims. Chairman Simons, would enhancing the FTC's authority to 
use civil penalty authority protect consumers in the current 
health crisis?
    Chairman Simons. Yes. We support that. The other thing I 
would say is we really need 13(b) because with 13(b), we can go 
into Federal court and get a TRO, preliminary injunction, and 
we can get an asset freeze for these fraudsters. Whereas civil 
penalties might take a while to get through the court system 
and we have to get the Justice Department involved too. So that 
would be important in the absence of 13(b) but 13(b) is really 
important.
    Senator Udall. Yes. Thank you for that answer. Commissioner 
Slaughter, is the FTC's current toolkit of enforcement actions 
up to the present challenge?
    Commissioner Slaughter. Well, I think as you point out, 
Senator, civil penalty authority would be enormously helpful. 
It is really hard for us to have to go in most cases through 
that iterative process to get to civil penalties and civil 
penalties are valuable because they put a big stick on the 
table in terms of potential money that companies will have to 
pay which has an important deterrent effect. So seeing that 
would be important.
    The Chairman pointed to an issue that I think is little-
noticed but is also very important, which is that when we have 
civil penalties, we usually have to go through DOJ. I would 
rather see those be coupled with independent litigating 
authority for us on the civil penalty front. And I also agree 
with the Chairman's point about 13(b) which is not only gives 
us those important tools to go into court, but it also allows 
us to return money directly to consumers and what we want to do 
at the end of the day is make harmed consumers whole.
    So I think civil penalties coupled with 13(b) authority 
that is clarified are really, really important to both give a 
big stick, help deter bad actions, punish companies that have 
wronged consumers, and also return money to consumers that have 
been wronged.
    Senator Udall. Thank you so much, Commissioner, and I have 
a couple of questions for the record that I hope you will 
answer with regards to refunds for flights and other travel 
arrangements and then some of these bots that are taking real 
advantage of consumers and the marketplace. So with that, I 
yield back, Mr. Chairman.
    The Chairman. Thank you, Senator Udall. Senator Thune.

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

    Senator Thune. Thank you, Mr. Chairman. Chairman Simons, as 
you know, reforming Section 230 of the Communications Decency 
Act has been hotly debated here in Congress. Section 230 is the 
law that prevents social media platforms like Facebook and 
Twitter from being sued for content that users post on their 
platforms. I have introduced a bipartisan bill with Senator 
Schatz on this issue known as the Platform Accountability and 
Consumer Transparency Act or the PACT Act which among other 
things would stipulate that the immunity provided by Section 
230 does not apply to civil enforcement actions brought by the 
Federal Government.
    The DOJ recommended this particular provision and it has 
recently published a list of recommendations for reforming 
Section 230. My question is how would consumers benefit from 
reforming Section 230 to ensure that the immunity provided by 
Section 230 does not apply to civil enforcement actions brought 
by the Federal Government such as the FTC?
    Chairman Simons. Thank you, Senator. So we have a number of 
instances, it is actually fairly common, for us to go into 
court and have a defense put on us relating to Section 230. So 
it would be very helpful to us to avoid having to deal with 
that and allow us the ability to go not only after the platform 
participants but in the right circumstances the platform 
itself.
    Senator Thune. OK. This I would direct all Commissioners 
and it has to do with the bill that Congress passed last year 
that the President signed into law. It is called the TRACE Act, 
and among other things, the TRACE Act required that the FTC 
register a single entity that conducts private lead efforts to 
trace back the origin of illegal robocalls, and I was pleased 
to see that the FTC did fulfill that requirement this last 
month. Can you speak to the FTC's efforts on engaging with 
industry initiatives like the U.S. Telecom Industry Traceback 
Group and whether this public-private partnership has been 
successful in identifying illegal robocallers? Let's start with 
the Chairman.
    Chairman Simons. Yes, Senator. Yes, so absolutely. This has 
been extremely helpful for us. The traceback organization is 
very effective and we use--you know, we are just overjoyed with 
what the with their progress. The other thing I will say is 
what we are doing is we are going after VoIP service providers 
who often serve as the entry point for scammers into the U.S. 
telephone network.
    And we sued a company in December of last year, Globex, and 
then we sent a whole bunch of warning letters to other VoIP 
service providers and said hey, look at this. You may be 
liable. These people are already being sued. You may be next. 
And we think that that may have had some impact on a decrease, 
on a substantial decrease in robocalls since that time.
    Senator Thune. Great. Thanks. Is there anybody else quickly 
or--yes, go ahead.
    Commissioner Phillips. Senator, just to add briefly, in the 
TRACE Act, as you know, it also calls for the FTC to convene 
the Hospital Robocall Protection Group to come up with best 
practices for State and local governments, for telecom, and for 
hospitals to help deal with the particular storage, in 
particular the public health, that robocalls present. We had 
our first meeting last week and meetings are continuing, and we 
hope to have a report out according to the timeline indicated 
by Congress.
    Senator Thune. Good. Excellent. Thank you. Last question 
very quickly. I think I have got a little bit of time left. And 
Mr. Chairman, do you expect to exercise discretion and refrain 
from bringing any enforcement actions with regard to Privacy 
Shield until after a new structure is negotiated and put in 
place to transfer data from Europe?
    Chairman Simons. I think what we are expecting to do, what 
we intend to do is make companies fulfill the promises they 
made under Privacy Shield. If they had made promises private--
excuse me, if they made promises, which if you sign up for 
Privacy Shield you have and you are going to protect the data 
in a certain way and when you are done with it, you are going 
to delete it. Those types of things. We are going to enforce 
with respect to that.
    Senator Thune. OK. And my understanding is that the issue 
of preemption and the California law has been covered 
extensively already. But so I will--my time has running out. I 
will defer that one and perhaps may have a question for the 
record about that.
    The Chairman. Thank you, Senator Thune. Senator Baldwin.

               STATEMENT OF HON. TAMMY BALDWIN, 
                  U.S. SENATOR FROM WISCONSIN

    Senator Baldwin. Thank you, Mr. Chairman. A recent FTC 
press release noted that online shopping complaints that the 
FTC has received during the pandemic have surged. The FTC has 
pointed out--or has put out a shopping online guide that 
recommends online shoppers get the sellers' physical address 
and inspect product descriptions closely. These common-sense 
suggestions seem aimed at ensuring that the buyer has the same 
information shopping online during the pandemic as they would 
if they were shopping in person. Before I go further, I would 
like to just ask each Commissioner if they agree that generally 
American consumers should seek the same information shopping 
online as they do in person? And if you could just briefly 
answer yes or no starting with Mr. Chairman.
    Chairman Simons. Yes.
    Senator Baldwin. Mr. Phillips?
    Commissioner Phillips. Yes, they generally seek the same 
information.
    Senator Baldwin. Mr. Chopra?
    Commissioner Chopra. Yes.
    Senator Baldwin. Ms. Slaughter?
    [No response.]
    Senator Baldwin. Ms. Wilson?
    Commissioner Wilson. Yes, I agree.
    Senator Baldwin. OK. I think I missed Ms. Slaughter, but 
let me carry on. I know that many consumers want to buy 
American-made products, but they can't verify the country of 
origin of items when they are shopping online. In order to 
ensure that online consumers get the same access to country of 
origin and seller location information that in-person shoppers 
have, I introduced the COOL Online Act with Senator Rick Scott 
back in May.
    The bill requires online sellers to provide buyers the 
country of origin label for products that they are selling. 
With more and more consumers buying their goods online during 
the pandemic, this transparency is more important than ever. 
Commissioner Chopra, can you please share that if you are 
supportive of the goals of my COOL Online Act and explain the 
role you see the FTC playing in this important issue for 
American consumers?
    Commissioner Chopra. Yes, there is no question that there 
are so many products where consumers want to know where they 
were made, particularly during the pandemic. I have had 
discussions with many major e-commerce platforms that been very 
concerned that they are not listing the country of origin 
except for textile wool and other things where they are 
required to and I think this needs to change. They should 
disclose country of origin for those goods, and in as much that 
they are lying about it, that can create some enforcement 
liability and I think this is a good way to create more 
information for consumers.
    Senator Baldwin. Thank you. In April, I joined my colleague 
Senator Hawley, in sending a letter to the Commission urging an 
investigation into the consolidation of the meat packing and 
processing industry, and its impact on consumers, farmers, 
workers, and our Nation's food supply. During the COVID-19 
pandemic, we have seen severe outbreaks of the virus among 
workers at meat packing facilities in Wisconsin and elsewhere 
in the country.
    Though the pandemic has brought many of the issues into 
starker relief, the concerns around consolidation have been 
simmering for years. Commissioner Chopra, I know there has been 
a previous question in this hearing about consolidation in the 
meat packing industry, but I want to hear if you agree that 
concentration has contributed specifically to workplace safety 
issues and pricing issues? And what do you believe the FTC as 
well as other Federal agencies can do to address these 
problems?
    Commissioner Chopra. Yes. I agree. It was 100 years ago 
that the FTC's reports exposed a lot of the abuses by the food 
and the meat packing industry in particular. In 1921, Congress 
stripped some of those authorities to enforce those laws for 
the FTC but we still retain our industry-wide investigation 
authority under Section 6(b).
    I really think the USDA needs to increase its enforcement 
and its rulemaking to change the undue preferences standards. I 
think they are going in the wrong direction and I think the 
DOJ, all of us need to really be cracking down on this. It has 
some real impact for those of us eating at the table as well as 
those working and everyone in our food industry.
    Senator Baldwin. I did note that Ms. Wilson said she had a 
comment on this issue. With the Chairman's indulgence can we--
--
    The Chairman. Ms. Wilson?
    Commissioner Wilson. Thank you, Senator Baldwin. I 
appreciate the opportunity to address this issue. I think 
actually while consolidation may be a concern, one of the 
significant issues that we may not perhaps be paying sufficient 
attention to is the fact that laws and regulations that are 
designed to apply to some of the larger food producers and meat 
producers impose significant costs and compliance issues when 
they are applied in the same way to smaller farmers.
    And so smaller farmers do need to grapple with these 
massive compliance costs not even designed for them and end up 
having to exit the business. There is a fantastic book on this 
topic called ``Everything I Want To Do is Illegal.'' So I think 
revisiting the way in which we regulate small farmers could 
perhaps help to reintroduce more competition into the food 
sector in the United States.
    The Chairman. Thank you. And thank you very much. Our next 
questioner will be Senator Scott. But we heard there was a 
question about the connection. Senator Scott, can you hear us?

                 STATEMENT OF HON. RICK SCOTT, 
                   U.S. SENATOR FROM FLORIDA

    Senator Scott. I can hear you perfectly.
    The Chairman. You are recognized.
    Senator Scott. Alright, thank you, Chairman Wicker. Just to 
follow up on what Senator Baldwin was talking about. I 
introduced the PRIME Act which is going to require online 
retailers to list the country of origin for each product they 
sell. Then I joined with Senator Baldwin to introduce the 
Country Of Origin Labeling Online Act which would give the FTC 
authority over such laws. The PRIME Act would also require app 
stores just to display the country of origin for apps sold in 
their marketplace.
    So consumers know where the apps they download to their 
phones are developed and you know, they can make good 
decisions. I think we have seen this just recently with TikTok. 
So I am concerned, as I think all of us are, about companies 
influenced and controlled by the Chinese government like TikTok 
because under Chinese law they have to adhere to the communist 
government's demands of spy, steal user data, or any content 
the government wishes and we have seen that with TikTok.
    I think we all would agree that no American should be 
subject to things like this and this sort of risk. And we will 
see if TikTok becomes owned by a U.S.-based company, but even 
if we do we have to be careful about back doors. So my question 
is, what enforcement measures and oversight does the FTC have 
to ensure a company operating in the United States with access 
to personal identifying information discloses to users where 
the company is housing the data and how they are using that 
data?
    Commissioner Simons. So this is one of the--thank you, 
Senator. This is one of the reasons we need Federal privacy 
legislation because there isn't a lot--there is a hundred year 
old statute is based on deception standard where somebody says 
here is what we are doing with your data and then they don't do 
it. But if they don't say anything and it is not untruthful and 
we are deceptive, then it is very challenging for us to deal 
with that.
    Senator Scott. Have you proposed legislation?
    Chairman Simons. I am m sorry. Say again.
    Senator Scott. Have you proposed legislation or do you--
have you seen legislation that you like?
    Chairman Simons. No, we have been relying on the Congress 
to do that, your new colleagues on the Committee and elsewhere.
    Senator Scott. OK. Have you seen any legislation that has 
been proposed that you like with regard to giving you the 
authority you need?
    Chairman Simons. I could get you something on that. We have 
given technical assistance on a bunch of statutes and we would 
be happy to provide that to you.
    Senator Scott. So, I mean first off what Senator Baldwin 
and I are doing with regard to looking at apps and products 
sold online, do you think it is the right approach or do you 
have suggestions that we should change to make sure that our 
goal is accomplished, assuming we can get that passed?
    Chairman Simons. I have to consult with the staff. I 
haven't had the opportunity to look at your legislation in 
detail, I am sorry, sir.
    Commissioner Chopra. Senator Scott, if I could add one 
challenge that--I support the goals. One challenge that is an 
emerging issue among the technology community is verifying the 
country of origin for software code.
    This is obviously something that the DOD and the Commerce 
Department have been thinking about. It is extremely difficult 
in certain circumstances to verify. It is not physical and it 
is going to be a more emerging problem as our whole industrial 
base as well as consumers are thinking more about supply chains 
and whether there might be back doors or theft from adversarial 
State and non-State actors.
    Senator Scott. That makes sense.
    Commissioner Phillips. Senator Scott, this is Commissioner 
Phillips and if I could just add briefly, whenever we are 
talking about enforcement, again, privacy and other 
enforcement, against companies that are abroad that have 
effects here in the United States, we would be remiss not to 
mention the SAFE WEB Act and the passage of that authority 
which is set to expire is very, very important for us, not only 
on our own but in particular working with our partners abroad 
on cases that--as cyber cases often do cross National 
boundaries.
    Senator Scott. OK, and when is that expiring?
    Commissioner Phillips. I believe later this month.
    Senator Scott. OK. Alright. Do anybody else want to 
respond? OK. Do you have--does the FTC have the ability to 
require online retailers to disclose the country of origin for 
either products or apps, understanding what you just said about 
the difficulty on the app side because of where codes are 
produced, do you have the ability to do this without 
legislation?
    Commissioner Chopra. Yes, Senator. My understanding is that 
we have certain rulemaking authorities that could be used for 
that. It may be potentially cumbersome. There are certain 
statutes that directly require country of origin labeling for 
textiles, wool, and other products, but there is not a general 
requirement. So legislation would obviously make it much more 
expedited.
    Senator Scott. OK.
    Commissioner Wilson. Senator, this is Commissioner Wilson. 
I do believe that more information available to consumers is 
always better. It will allow them to more accurately evaluate 
the quality and value that various product and services may 
offer to them. And so I think this is definitely a good idea.
    The Chairman. Thank you.
    Senator Scott. Go ahead.
    The Chairman. Thank you, Senator Scott.
    Senator Scott. Thank you. Thank you, Chairman Wicker.
    The Chairman. Thank you, sir. Senator Peters.

                STATEMENT OF HON. GARY PETERS, 
                   U.S. SENATOR FROM MICHIGAN

    Senator Peters. Thank you, Mr. Chairman, and thank you for 
putting this hearing together and each of the Commissioners. 
Appreciate your testimony here today as well. My first question 
is for Commissioner Phillips. On June 5, one of Michigan's 
largest healthcare providers finished investigating a data 
breach that occurred in January.
    They found that around 6,000 patients had information 
possibly exposed as a result of this breach. The system that 
assessed accounts contain personal and protected health 
information according to the system. This included patient 
names, dates of birth, diagnosis, the codes, procedures, 
treatment locations, treatment types, prescription information, 
patient account numbers, pretty extensive information.
    So my question to you because I know in your opening 
statement you discussed the need for data security in 
particular, knowing that this technology is constantly evolving 
in a rapid fashion, what can the FTC and Congress particular do 
to ensure that companies are doing all that they can to protect 
this data, especially when it comes to patient data?
    Commissioner Phillips. There are things we can do here. I 
think a regime that includes a very specific legal authority 
that captures some of the work we do already ensuring that 
companies undertake adequate processes to make sure that they 
are protecting the kind of data that they have. I do think 
rulemaking authority is appropriate here and I think civil 
penalty authority is appropriate here. My view is that 
unfortunately, we don't always have the people who could most 
efficiently protect data, adequately protecting it, that the 
cost is borne by others. There are externalities, and a civil 
penalty regime that helps sort of right that incentive 
structure.
    Senator Peters. Well----
    Commissioner Chopra. Senator, may I add something to that?
    Senator Peters. Absolutely.
    Commissioner Chopra. Yes, one of the things that I think we 
are going to need to confront is there has been a change in my 
view over the last 10 years that much of the impetus for 
stealing personal data was really identity theft to open up a 
credit card at a department store in someone else's name. But 
really what we are seeing is something very different. Equifax, 
Anthem, Marriott, the Justice Department and others have all 
said that these were not necessarily identity thieves.
    They were affiliated with State and non-State actors 
related to China. And I think we are now going to need to be 
thinking about really safeguarding our entire data security 
even in the commercial context to make sure that adversarial 
parties cannot collect detailed dossiers on each of us for the 
purposes of weaponizing it, interfering in our country, and 
manipulating us. So I think the stakes are much higher and the 
harms are on a different dimension than they were even just a 
few years ago.
    Commissioner Wilson. Senator, this is Commissioner Wilson. 
If I may, just one thought.
    Senator Peters. Yes, please.
    Commissioner Wilson. I think your question highlights one 
of the issues we need to confront. Privacy legislation and data 
security legislation essentially are two sides of the same coin 
and it is important to remember that many healthcare providers 
in the United States are classified as nonprofits and so in 
data security and privacy legislation, the FTC should gain 
jurisdiction to have authority over these nonprofits, because 
as you point out, they do have significant sensitive health 
data and so it is just another reason that we need to get 
privacy legislation coupled with data security legislation in 
place to protect consumers.
    Senator Peters. Yes, clearly. And really go online and 
follow those lines about more of this information. It is 
becoming available. Directed to Commissioner Slaughter 
initially, but others, please weigh in, you know, according to 
media reports, data brokers are buying and selling data 
collected from Americans phones and have even been tracking 
Americans at protest or at places of worship.
    And while smartphones allow customers to choose whether or 
not to allow an app to have access to their location data, 
Americans have no ability to control whether either the app 
developer or its partners sell that information to third 
parties. So my question is, do you believe that Americans have 
sufficient control over secondary uses and the sharing of very 
sensitive data? And if not, what is the FTC doing to address 
this problem?
    Commissioner Slaughter. Thank you so much for the question, 
Senator. I think this is a really, really good point. No, I 
don't believe Americans have enough control for a number of 
reasons. Our current framework is as you suggested basically a 
notice and consent framework that says companies are supposed 
to tell you what they are doing and you are supposed to be able 
to say yes or no. But as you know, often that notice is buried 
in really lengthy and unreadable privacy policies that 
consumers often have no choice but to click through to get 
access to the service.
    They can't go back and say yes, I agree to some provisions 
or not other provisions and almost none of that controls 
secondary uses or tertiary uses down the line. So one of my big 
concerns is that the current FTC authority, which as we have 
discussed is basically premised on deception in the privacy 
context with some unfairness authority, really doesn't reach 
that kind of behavior that is deeply concerning and deeply 
problematic.
    So I think you are highlighting a really important issue 
that should continue to be a focus for the Committee. And I do 
think in the meantime the Commission should think about where 
we can apply existing authorities that we have, whether it is 
standard UDAP enforcement or whether we dust off our Magma's 
rulemaking authority which we basically rarely use because it 
is as Commissioner Chopra pointed out, it is somewhat 
cumbersome. I think undertaking that process is really an 
important thing for us to start and not just wait for Congress 
to act because these things are happening now in real time and 
they are creating real peril for Americans.
    The Chairman. Senator Peters, could we let other members 
answer on the record since----
    Senator Peters. That would be great. Thank you.
    The Chairman. Thank you, Senator Peters. Senator Lee.

                  STATEMENT OF HON. MIKE LEE, 
                     U.S. SENATOR FROM UTAH

    Senator Lee. Thank you, Mr. Chairman. Thank you, 
Commissioners for being here today. The FTC first implemented 
the Contact Lens rule in 2004 after Congress passed the 
Fairness to Contact Lens Consumers Act. The Contact Lens rule 
at its heart is very simple. It simply requires prescribers to 
give consumers a copy of their contact lens prescriptions. The 
reason for this is also simple.
    That contact lens consumers, as Congress determined and as 
the FTC has reiterated, need to have the opportunity to shop 
around to find the best deal. Now, Senator Klobuchar and I 
wrote to the Commission raising concerns that Federal law was 
not being properly implemented and enforced and the consumers 
don't always have access to their prescription and I was 
grateful for your response. I want to thank each of you for 
your unanimous agreement to finalize the new Contact Lens rule 
to help protect consumers against this kind of protectionism. 
Unfortunately, I am hearing that there are some efforts 
underway to delay this important rule and so I want to ask a 
couple of questions about that.
    Chairman Simons, we will start with you. If this rule is 
delayed, particularly now when consumers are facing significant 
economic hardships in connection with the global pandemic and 
trying to socially distance, couldn't consumers end up being 
harmed and specifically couldn't it end up making it more 
difficult for consumers to shop around and to purchase contact 
lenses from their retailer of choice and at a lower cost?
    Chairman Simons. Thank you, Senator, for that question. 
Yes, absolutely. The whole purpose of this of this rule----
    Senator Lee. Chairman Simons, you still there? Sounds like 
we may have lost you.
    The Chairman. Chairman Simons, you were saying the whole 
purpose of the rule and then we lost the connection. Can you 
hear us, sir?
    Senator Lee. OK. Mr. Chairman----
    The Chairman. I think, Senator Lee, you were making such a 
poor point there that the technology went out----
    [Laughter.]
    Senator Lee. I know. I think it has much more to do with 
the fact that Chairman Phillips was emotionally overcome at the 
importance of this to Contact Lens consumers.
    The Chairman. OK, can the witness hear us because we do 
need to get an answer there.
    Senator Lee. OK. Maybe we can move along to some follow-up 
questions of other members of the panel and then we will move 
back to Chairman Simons if and when we hear back from him. 
Let's move to you then, Commissioner Phillips, optometrists 
argue in some cases not all cases, but some optometrists are 
arguing that the compliance costs associated with the rule are 
great.
    Some have even argued that they can't do patient signatures 
because that would require pens to be disinfected between uses. 
Putting aside for a moment the fact that during COVID-19 
optometrist should be practicing basic sterilization, did the 
Commission examine the compliance costs and if so, what were 
the findings?
    Commissioner Phillips. Absolutely, Senator. As you know, 
the Contact Lens rule that we recently promulgated was a very 
long process involving two proposed rules and taking into 
account some of the concerns about compliance costs about 
health. All of those things are reflected in the final version 
of the rule that we published. But as you noted earlier, the 
concerns that animated Congress and that animated us also 
include having a sufficient degree of competition in the 
market, allowing and making sure that consumers have available 
to them their prescriptions for contact lenses, and that sales 
for those lenses not only be done by the prescriber but also by 
other sellers.
    Senator Lee. Thank you. Commissioner Slaughter, in your 
statement regarding the Contact Lens rule, you actually noted 
that Congress could go further to empower consumers. What 
additional reforms do you think Congress should perhaps 
consider in order to stop this kind of market protectionism? 
Perhaps we have lost Commissioner Slaughter as well.
    I can move on to a subsequent question. We will pick up 
there if we pick them back up. I would next like to talk 
briefly about another issue. Our country is in a nationwide 
debate regarding online political bias and censorship among 
certain big tech firms. It is sad to think that Internet 
platforms, platforms that boast the ability to connect hundreds 
of millions of people and allow for the rapid dissemination of 
ideas and opinions believe that they know what is best for the 
American people, to read, to watch, and to listen, and to know 
what opinions are dangerous, even when they have no technical 
expertise in a particular field.
    In an effort to protect all viewpoints, a number of members 
including myself are asking whether Congress must amend current 
law as part of the solution and whether the FTC might play a 
new role in that. Chairman Simons, if you are back, I would 
like to ask you evaluating whether a tech company is following 
the terms of service is something that the FTC currently does, 
but having the FTC evaluate political viewpoints is much 
broader. Would FTC evaluation of online content for political 
bias or neutrality implicate the First Amendment and how would 
the FTC go about evaluating for such bias?
    The Chairman. We are informed, Senator Lee, that Chairman 
Simons had to log off and try to log back on. Are you back on, 
Mr. Chairman? That may not have been accomplished. Let's----
    Senator Lee. Can I ask the same question of Commissioner 
Phillips?
    Commissioner Phillips. Yes, Senator. Look, I think the 
process of content moderation is something that big firms face. 
It is something that a lot of small firms face. I am not sure 
if my answer was clear earlier in the hearing but we all recall 
with horror when press reports about the awful shooting at the 
Tree of Life synagogue in Pittsburgh included reports about 
communication on a platform called ``Gab'' so this isn't all 
just about large tech companies. It is a difficult question.
    At the end of the day though, when it comes to moderating 
speech, the First Amendment is implicated and that is something 
that we have always taken into account when we have done any of 
our work related to the content of speech with respect to a kid 
video games, going back decades. And of course, the First 
Amendment is something we have to keep in mind as we move 
forward.
    Senator Lee. Thank you. Thank you, Mr. Chairman.
    The Chairman. Thank you. Senator Tester.

                 STATEMENT OF HON. JON TESTER, 
                   U.S. SENATOR FROM MONTANA

    Senator Tester. Thank you, Mr. Chairman. I got to tell you 
I love this committee. This has been a great hearing and I 
appreciate the Commissioners. I just want to make a few 
statements, never going to get to my question. Number one, I 
cannot believe how concerned people are about textiles and 
electronics when it comes to country of origin labeling yet we 
don't give a damn about where the food that we put in our body 
comes from.
    So maybe I need to use you guys to be able to enforce a 
country of origin labeling for food at least online food. And 
the second thing is I want to go back to Commissioner Wilson's 
point on smaller companies. You are absolutely correct. And I 
will tell you that when the 2012 Food Modernization Act came by 
and I put an amendment in to exempt smaller companies and we 
got it passed, guess who came to Capitol Hill and acted like 
the world was going to end, the big food companies. And that is 
where I come to my question is for you, Mr. Chopra, and it 
deals with consolidation in the packer industry, but it is 
going to deal with it from a Packers and Stockyards Act 
perspective. Look, I am going to tell you a fact, this is an 
overstatement.
    We got kalkhoff operators and we got medium and small-sized 
feeders that are going broke and it is going to change the food 
chain for food for this country from a consumer standpoint and 
a for food production standpoint. We authorized the USDA to put 
forth some new rules on the Packers and Stockyards Act and they 
came back with a document that wasn't worth the paper it was 
written on.
    So my question to you, Mr. Chopra, what is your 
recommendations for improving the Packers and Stockyards Act so 
it actually works for folks in production agriculture and folks 
and consumers?
    Commissioner Chopra. Well, I just have to say that in the 
submission I made to the USDA, I think the rulemaking they are 
doing is going to legalize lots of the worst practices that 
allow them to do everything from rigging the weights and 
measures to giving poor product and then penalizing farmers for 
doing it. So there is--we need to do a real rework of how that 
whole thing is working.
    And we need to also more answers from the USDA about what 
is going to go on. There has almost been no enforcement on some 
of these things. So I also just add on country of origin 
labeling, even under the USDA guidelines, meat can come from 
overseas. And if it comes into a factory by a U.S. meat packer, 
it can be labeled as product of USA. It is totally inconsistent 
with every other country of origin standard and it just feels 
like a giveaway to me.
    Senator Tester. You are absolutely 100 percent correct. It 
is a giveaway and guess who suffers? The people in production 
ag suffer because you are bringing in crappy meat from Brazil 
or Argentina to put it with good U.S. product and the consumer 
doesn't know the difference. So we agree. The question I have 
for you, Mr. Chopra before I go to Commissioner Wilson is, is 
there anything the FTC can do about it or is it just the 
Congress has to get off their butt and do it?
    Commissioner Chopra. Well, I would push Congress but 
legally and I am happy to share more with you and your staff 
later. Our authorities are much different when it comes to 
poultry products and margarine versus other types of meat. The 
Justice Department does a lot of the antitrust work. Our 
efforts are really on retail, but we got to start looking at 
the whole food system, whether it is food delivery apps, 
whether it is supermarkets, or whether it is the exploitation 
of farmers.
    And I just want to share, you know, one of the reasons that 
we are seeing more poverty, more opioid issues in many of these 
communities is being unable to sell and make a livelihood. You 
know, last week we are seeing that a lot of those who raise 
lamb are not going to be able to get it to market and that is 
going to be devastating.
    Senator Tester. Well, let me tell you, I couldn't agree 
with you more. And the fact is that we are screwing things up 
by not enforcing the rules that have been put out 100 years 
ago. They still apply. They need some modification. We need to 
make them work or all we are going to turn into serfs working 
for the big man. OK, so thank you, Mr. Chopra, for your work.
    Ms. Wilson, I want to talk about something else is near and 
dear to my heart and that is right to repair, OK. When I went 
back to Montana this weekend, we harvested a little bit of 
peas, we harvested a little bit of winter wheats, and I had a 
rear beater bearing go out of my combine. I was able to replace 
it because my combine is about 15 years old, OK. Today, it is a 
different story when you buy this equipment because of the 
technology and by the way, this isn't about cell phones. You 
can throw this damn cellphone away. I don't care. I can go buy 
a new one for $300 bucks. It cost me $300,000 bucks to buy a 
combine if I can't repair the damn thing.
    So could you give me a little input on what we need to be 
doing on the ``right to repair'' stuff because it is going to 
put, once again for people in production agriculture, out of 
business. It will be consolidated at the ground. It will be 
consolidated at the packer level. It will be consolidated from 
top to bottom and it is going to ruin it for this country. You 
are muted.
    Commissioner Wilson. Sir, thank you for the question, and I 
completely agree with you. Obviously ``right to repair'' is an 
issue that the FTC has explored in a recent workshop. There are 
competition issues and a bedrock principle of competition is 
that you are not tied to a manufacturer to do repairs on your 
equipment. We have a Massey Ferguson tractor on our farm out 
here in West Virginia and my husband broke a couple of bands 
using the chipper and replaced the band himself, because 
frankly, the dealer here isn't great.
    And so the ``right to repair'' is important. I see you 
laughing. Yes, we have an issue with the Massey Ferguson dealer 
here. But at the same time, there are legitimate consumer 
protection concerns with respect to certain products. For 
example, if you put the wrong battery in a certain product, it 
might explode, so the FTC, as it has done with the contact lens 
rule, is looking to balance the benefit of competition with the 
protection of consumers from exploding products or products 
that are harmful to health.
    But I do believe, sir, that you are correct. There are 
manufacturers who invoke safety concerns, in fact, not to 
protect consumers but to prevent competition for repairs in the 
aftermarket and that is just another cost that our small 
farmers are facing and that we need to eradicate.
    Senator Tester. And unnecessary. And I want to echoed 
Senator Schatz saying I appreciate the bipartisan work that 
this Commission does. Thank you.

               STATEMENT OF HON. KYRSTEN SINEMA, 
                   U.S. SENATOR FROM ARIZONA

    Senator Sinema. Hi, it is Senator Sinema. I want to thank 
the Chairman for holding this hearing today and I want to thank 
our witnesses for being here. As the pandemic create 
significant challenges for American families and small 
businesses, scammers are using the pandemic as an opportunity 
to defraud Americans including our seniors. This week one of 
Arizona's major private lab companies Sonora Quest alerted 
patients that scammers are posing as Sonora Quest 
representatives to steal personal information from patients.
    This is just one troubling example of the thousands of 
COVID-related scams Arizonans reported to the Federal Trade 
Commission. These scams have cost millions of dollars in losses 
for Arizona families, but they are not just a financial 
concern. COVID scams also endanger the health of the public who 
can be defrauded into believing that certain products can 
prevent or cure COVID, which of course as we know is not true. 
I am looking forward to working with the FTC to make sure you 
have the tools you need to protect Arizona families and small 
businesses from deceit and abuse.
    I think Chairman Simons is not back on yet so I will direct 
my first question only to Commissioner Slaughter. I introduced 
the bipartisan Seas Act with Senators Gardner and Capito that 
expands FTC authority to stop false advertising and other 
deceptive ads during the Coronavirus pandemic by increasing 
civil and criminal penalties on scammers. This bill ensures 
that scammers face serious 1 Federal penalties for lying to the 
public about COVID. Do you support the goals of this 
legislation?
    Chairman Simons. Senator Sinema, this is Joe Simons. I 
actually showed up. I had a power outage at my house and I am 
on battery power.
    Senator Sinema. Oh, wonderful. I am so glad.
    Chairman Simons. I can--I am a little bit in the dark here 
as you can see because I have no light, but I do support the 
goals of that legislation absolutely, but I would have to say 
this, in terms of legislative priorities at least from our 
parochial standpoint, from my parochial standpoint at the FTC, 
your time is very valuable and----
    Commissioner Chopra. Senator Sinema, I never like to speak 
for the Chairman, but I will just--I believe what he is 
probably going to say is that he would welcome Congressional 
action on Section 13(b) to make sure that we can get the ill-
gotten gains and return money to consumers. And he can correct 
me later if I am wrong, but that is what I believe he was going 
to argue.
    Senator Sinema. Well, I appreciate it and thank you for 
stepping on that. We will follow up with him after the hearing 
to get those details. And is Commissioner Slaughter on?
    Commissioner Slaughter. I just tried to change my audio. 
Can you hear me now?
    Senator Sinema. Yes, I can.
    Commissioner Slaughter. OK, great. I don't know what the 
problem was. So I wanted to say, yes. I think the goals that 
you are talking about are extremely important. Stopping scams 
is part of the bread and butter of the FTC and it is never more 
important than in a moment like this where bad actors are 
really praying on vulnerable consumers and imperiling not only 
their wallets but their health and safety. So I really applaud 
you for working on that and look forward to continuing to work 
with your office and your colleagues on these issues.
    Senator Sinema. Thank you so much. Commissioner Chopra, due 
to the coronavirus pandemic, many Arizona small businesses are 
struggling to get by and entrepreneurs are doing everything 
they can to stay afloat. Some bad actors are using these 
difficult times to take advantage of small business owners with 
unfair and deceptive practices related to financial assistance. 
Can you tell me what the FTC has done to protect small 
businesses from abuse and what should small business owners 
know when looking for financial assistance right now?
    Commissioner Chopra. Thanks for that question. We have 
actually sued two actors in this space including one very 
recently that I think we believe were violating the law in 
order to profit off of small business owners' pain. One of the 
things that's really concerning to me is that the contract 
terms, some of them are completely unfair in how they are 
executed and essentially require that a small business owner 
automatically plead guilty when they are sued. This is called a 
``confession of judgment.''
    So I really hope that small business owners--I know they 
are struggling to work with many of the largest banks. A lot of 
the community banks have been much better in delivering PPP 
assistance, but really going after these high rates, sometimes 
4,000 percent loans, it is just setting small businesses up to 
fail, and we just can't have that.
    Senator Sinema. Thank you. I know my time is close to 
expiring. I am not sure if the Chairman is back so I am going 
to go forward and ask one more question to Commissioner 
Slaughter. As I referenced earlier, Arizonans are being 
targeted by COVID scams such as the Sonora Quest imposter scam 
and we need to make sure that our enforcement agencies have 
adequate resources to protect Arizona families and return 
stolen money to Arizonans. Given the increase in scams during 
the pandemic, how could the FTC best use additional resources 
to protect Arizonans? And what authorities do you need to 
insure that victims of fraud do get their money back?
    Commissioner Slaughter. Thank you, Senator. This is a 
really important question and I appreciate your attention to 
this issue. In terms of resources, as determined, and some of 
my colleagues have noted, the FTC has been doing its work in a 
very substantially underresourced way for several decades and 
that has never been felt more acutely than it is right now as 
we are trying to cope with all the pandemic related issues as 
well as the general underlying ongoing work of the Commission. 
So I think whatever appropriations the Congress felt fit to 
give us would be able to put to very good use on behalf of the 
American people. In terms of authority and returning money to 
harmed consumers in particular, there are two things that we 
are talking the most about, clarifying our authority under 
Section 5 of the FTC Act, the provision that allows us to 
discord ill-gotten gains and return money to consumers.
    I think that is one of the most important things that you 
do and right now that authority is under attack in the courts--
verification from Congress on that point is enormously 
important. And then civil penalty authorities also helpful for 
us to create leverage with companies--bad actions and help us 
in our negotiations, keep the fraud from happening in the first 
place. So we can't return civil penalties to consumers. That 
money goes into the Treasury, but I think it is still useful 
for us to have a bigger--in order to prevent the fraud from 
happening to begin with.
    Senator Sinema. Thank you so much. Thank you, Mr. Chairman, 
for holding this hearing today and I do yield back.

                STATEMENT OF HON. JACKY ROSEN, 
                    U.S. SENATOR FROM NEVADA

    Senator Rosen. Thank you, Senator Sinema. This is Senator 
Jackie Rosen from Nevada. I am not sure that Chairman Wicker is 
on so I believe that I am the last Senator and I will ask a few 
questions and we will close this hearing out. I want to thank 
you for being here today. And Commissioner Slaughter, I want to 
tell you that you really exemplify during this pandemic what so 
many families are going through trying to balance work and 
childcare and all of that and I appreciate you sharing your 
beautiful sleeping baby with us today. It reminds us of all the 
important work that we have to do to protect things for the 
next generations. But I want to talk just a little bit about 
notario scams.
    You know, Nevada, is home to thousands of immigrant 
families who make up a really diverse fabric of our state and 
of our Nation. Almost 30 percent of Nevadans identify 
themselves as Hispanic or Latino and scammers have targeted 
members of these communities as they go through the immigration 
process. Of course, we know one common form of deception are 
the so-called ``notario.'' While public notaries may perform 
the duties of attorneys in some Latin American countries, they 
cannot practice law, give legal advice, or accept legal 
consultation fees here in the United States.
    Nonetheless, bad actors will suggest that they can guide an 
individual through the U.S. immigration process, even though 
they are not qualified or authorized by Federal law to do so. 
We know that only a lawyer or federally accredited 
representative can provide someone with legal advice and so 
therefore so many in my state are falling prey to these scams. 
In response in 2015, the Federal Trade Commission, you released 
a fotonovela educational graphic novel to raise awareness about 
notario schemes in Latino community and since then Nevada's 
Chief Deputy Attorney General Mark Ruger indicated that notario 
scams are expanding even broader into our AAPI communities, our 
Ethiopian communities, and our Nigerian communities.
    So to Ms. Slaughter and Mr. Chopra, although the 2015 
campaign increased awareness about notario scams in our Latino 
community, like I said, we know fraud is rising in many of our 
minority communities. What other types of outreach or resources 
are you doing with the FTC to protect individuals from the 
notarios or other kinds of fraud? How are you working with 
their State agencies and communities to prevent this? Ms. 
Slaughter, you can go first.
    Commissioner Slaughter. Thank you, Senator, and I want to 
thank you for your kind words about the baby and I just want 
you to know on behalf of all of the working parents out there, 
appreciate everybody saying nice things about how easy this 
looks. It is really hard. So just a moment for all of the 
families who are trying to juggle childcare and their 
professional responsibilities and acknowledge that these are 
really, really challenging times--so I appreciate the support 
from everybody on the Committee and the understanding. In terms 
of your question, I think this is a hugely important issue.
    Paying attention to scams that target our most vulnerable 
communities should be among the highest priorities we have, and 
in addition to the outreach that we do, we can work with our 
State partners and we often host local events with community 
organizers and groups and work with State AGs to raise 
awareness in order to help prevent people from falling for 
these scams before they even come up. We need to do enforcement 
to stop them when they happen where it is possible but we would 
rather they not happen to begin with.
    Senator Rosen. Mr. Chopra, anything to add?
    Commissioner Chopra. Yes. Thank you, Senator Rosen. You 
know, when it comes to notario fraud, this has been actually an 
ongoing problem now. It is actually pretty difficult to enforce 
on a one-by-one basis, and one of the things I think we have to 
start thinking about is more criminal sanctions and also what 
are we going to do to go after the plumbing of some of these 
rings of mob-like fraudsters? We need to look at how they are 
moving money. I think we have to look at this more with 
cracking down on a mob mentality, an organized crime rather 
than one by one. So, you know, it is definitely a huge problem 
and it has been really worrisome to see how it is just invading 
so many states across the country. So we have to look at this 
systemically and not just one by one.
    Senator Rosen. Yes by the time sometimes we find out about 
it, the people that have been affected have just gone really 
through such a terrible experience. And I look forward to 
working with you and figuring out what we can do about that. 
But for the last question, I want to talk just what is on 
everybody else's mind too probably a little bit is unemployment 
and PII. You know, the Coronavirus, of course, hit Nevada's 
economy harder than any state in the Nation. I don't know if 
you know that.
    We had unemployment over 30 percent in April. It was a 
highest in the country. It is still I think the highest in the 
country. Our average is about 15 percent now. That was in June 
but we will wait to see what the numbers are coming back up. 
Over half a million Nevadans filed for unemployment insurance 
since March 14, of course. Again, we are seeing scammers. We 
are seeing criminals. They are trying to defraud people. They 
are trying to hack into the system. They are taking that 
personal identifiable information. They are doing phishing and 
impersonation scams and the impact of this cannot be 
underestimated in Nevada.
    Really thousands of families are waiting on their 
unemployment benefits because we are having to weed through 
some of these hackers and scammers, whatever you want to call 
them. And so as the agency charged with protecting consumers 
personal information, you at the FTC really have a significant 
role to play and we want to just quote a little bit from the 
FTC that using law enforcement policy initiatives, consumer, 
and business education to protect consumers personal 
information.
    That is what you are charged to do. So let me ask, I don't 
think Chairman Simons is on so I see you there, Mr. Chopra. I 
will ask you. First, how much time and resources is being 
devoted? Do you know or anybody that is still on? I can't see 
everything on my screen either.
    Commissioner Chopra. Sure. And I believe the Chairman has 
joined.
    Senator Rosen. OK, so whoever if that thinks they can 
answer. I see some blank screens, some initials. It is the joy 
of working this way. How much time are you devoting to this? 
Because it is not just a problem in Nevada. It is a problem 
everywhere and hardworking people are not able to pay their 
bills because we have to take so much time to stop the scammers 
from stealing the hard-earned tax dollars that we are using on 
unemployment benefits right now. Chairman Simons, are you on? I 
don't hear him----
    Chairman Simons. Can you hear me?
    Senator Rosen. Yes. Yes, we can now. Thank you.
    Chairman Simons. I can hear you. Like I said, the power 
went out and then my jetpack went out so but I got another 
battery supply so hopefully that will be OK. So we are doing at 
least two different types of things. One is we are actually 
suing people over this kind of stuff. And the other thing is 
that we have an incredible amount of outreach.
    On all levels, we are dealing with our--well, first of all 
we have an FTC website that deals with all these types of scams 
relating to coronavirus, including the financial ones. We have 
got--our folks are out all over the place doing media and they 
are doing meetings and town halls and that type of thing. They 
did one effort with the AARP that was participated--where 
800,000 people participated.
    So you know, it is all our regional offices. We have boots 
on the ground there. They are out there all the time doing this 
kind of thing. And then we are doing it online and then we are 
bringing enforcement actions.
    Senator Rosen. And do you think there is a role for you to 
partner--this is my final question for you Chairman. Is there a 
role for us to partner, for you to partner with our State 
unemployment agencies? Of course during this pandemic 
everything is turned on its head where you might not partner 
with them, but in this extreme case with every state, everybody 
applying, what is a role that you can do to help states like 
mine who are really suffering with a lot of--could be a lot of 
potential fraud?
    Chairman Simons. So one thing I would say is that we have 
all kinds of partners and they are very important in terms of 
making our work productive and effective and in using our 
scarce resources. And I don't see me, you know, why we wouldn't 
at least talk to the employment offices and see if there is 
something that we can do together to stop this type of horrible 
thing from happening.
    Senator Rosen. Well good. Well, I am going to have my team 
reach out to, maybe there are some ways we can get some help 
out there because it I know it is not just in my state but 
others. Well, I appreciate--you know, I am telling you the baby 
was good. The baby slept. You had your power up and down.
    We are all in and out, all the technical difficulties 
today, but I want to thank everyone for taking the time to be 
here today and for the hard work that you do. And I know you're 
probably all happy to hear this as considering with all the 
challenges we have had that that concludes our hearing. And the 
hearing record will remain open for two weeks. During this 
time, Senators are asked to submit any questions for the 
record, and upon receipt, the witnesses are requested to submit 
their written answers to the Committee as soon as possible.
    I thank you again. Please stay safe and healthy. And this 
hearing is adjourned.
    [Whereupon, at 12:43 p.m., the hearing was adjourned.]

                            A P P E N D I X

                        International Franchise Association
                                    Washington, DC, August 11, 2020

Hon. Roger Wicker,
Chair,
Committee on Commerce, Science, and Transportation,
U.S. Senate,
Washington, DC.

Hon. Maria Cantwell,
Ranking Member,
Committee on Commerce, Science, and Transportation,
U.S. Senate,
Washington, DC.

Dear Chairman Wicker and Ranking Member Cantwell:

    On behalf of the Franchisee Forum of the International Franchise 
Association (IFA), we appreciate the opportunity to comment for the 
record on how the franchise business model is a vehicle for achieving 
the American Dream, especially in the wake of COVID-19. Leveraging our 
experience as successful franchise business owners and mentors to 
prospective franchisees, we would like to offer a more comprehensive 
picture of franchising than the one painted at the Committee hearing by 
Commissioner Chopra and express our firm belief that participation in 
the franchise business industry helps unlock economic prosperity for 
all Americans.
    As the representative body for franchisees within the IFA, we are 
proud to be a clarifying voice for franchisees as legislative and 
regulatory issues impacting the franchise business model arise at the 
federal, state, and local levels. The view on franchisee 
dissatisfaction offered in Commissioner Chopra's testimony suffers from 
flawed reasoning. Without providing any factual analysis of concern, it 
is irresponsible to conclude that franchisors must be prevented from 
alleged abusive practices. While there may be instances when a 
franchisor behaves or takes action that is perceived to be unjust to a 
franchisee or prospective franchisee, they are rare.
    We know first-hand that small business franchise ownership is a 
viable pathway to achieving and maintaining economic success. With 
careful planning and execution, sound management of a franchise 
business can help grow the business and the franchisor's brand--
contributing to a successful relationship between the franchisee and 
the franchisor. Allowing someone who profits off the unfortunate 
circumstances of others to paint a one-sided picture of franchising 
does a disservice to the thousands of small franchise business owners 
in this country who work hard every day to grow their business and our 
economy.
    The story about franchising we wish had been aired at the hearing 
is one based in data rather than cherry-picked generalizations. A 
broader perspective is provided by Franchise Business Review, which 
surveyed over 6,500 franchisees over the last four months during the 
pandemic. Key findings from the comprehensive research include:

   55 percent of franchise owners surveyed said they are 
        (still) optimistic that they will meet their 90-day business 
        goals;

   80 percent said they feel very positive/mostly positive 
        about their association with their franchise brand; and

   83 percent said they have received valuable support from HQ 
        during COVID-19.
    Franchisee satisfaction with their franchisor has remained steady 
during the pandemic, and in some cases, has even risen. This data 
reflects the spirit of franchising: franchisors are vehicles for 
community, growth, and support for their franchisees, especially during 
a crisis. To ease franchisees' burdens and take steps to help the 
systems survive, there are numerous reports of franchisors taking 
proactive steps to provide flexibility to their franchisees during 
COVID-19. These actions include, but are not limited to:

   (1)  Royalty/ad fund deferrals, fee waivers, abatements, and other 
        cash-flow assistance to franchisees;\1\
---------------------------------------------------------------------------
    \1\ See ``Subway to Slash Royalty Payments by 50 Percent'' at 
https://www.qsrmagazine.com/franchising/subway-slash-franchise-royalty-
payments-50-percent; see also ``7-Eleven Ups Fran
chisee Support Amidst Coronavirus Pandemic'' at https://csnews.com/7-
eleven-ups-franchisee-support-amidst-coronavirus-pandemic; see also 
``Wyndham Continues Waivers on Franchise Fees'' at https://
www.asianhospitality.com/wyndham-continues-waivers-on-franchise-fees/; 
and see also ``Church's Chicken Franchisees Get Relief Plan'' at 
https://www.franchising.com/articles/
churchs_chicken_franchisees_get_relief_plan.html.

   (2)  Extensions of development schedules under development 
---------------------------------------------------------------------------
        agreements;

   (3)  Transitions to more ``e-learning'' and virtual learning as part 
        of initial training programs to minimize travel for franchisee 
        employees and related costs;

   (4)  Extensions of unit opening deadlines under existing franchise 
        agreements;\2\
---------------------------------------------------------------------------
    \2\ Scott Deviney, President & CEO, Chicken Salad Chick.

---------------------------------------------------------------------------
   (5)  Reductions of initial fees to incentivize new franchise sales;

   (6)  Changing the unit's footprint to lower development costs;

   (7)  Providing franchisees with frequent, if not daily, updates on 
        legislative assistance from the Federal government under CARES 
        Act;\3\
---------------------------------------------------------------------------
    \3\ See ``Stories from the Covid-19 Front Lines: CEO Q&A with Meg 
Roberts of The Lash Lounge'' at https://www.franchising.com/articles/
stories_from_the_covid19_front_lines_ceo_qa
_with_meg_roberts_of_the_lash_lo.html.

   (8)  Providing grants to employees suffering from pandemic-related 
        layoffs or furloughs;\4\
---------------------------------------------------------------------------
    \4\ See ``Self Esteem Brands Founders, Employees & Roark Capital 
Unveil $1 Million SEB Relief Fund to Financially Aid Employees of 
Clubs, Studios Impacted by COVID-19'' at https://cutt.ly/Od1o04A.

   (9)  Providing PPE to franchisees, local communities, front-line 
        workers;\5\
---------------------------------------------------------------------------
    \5\ See ``With PPE Shortages, BrightStar Care Creates Fulfillment 
Center for Franchisees'' at https://www.franchisetimes.com/news/May-
2020/With-PPE-Shortages-BrightStar-Care-Creates-Fulfillment-Center-for-
Franchisees/; see also ``KFC Implements Additional Health and Safety 
Measures in U.S. Restaurants'' at https://www.yum.com/wps/portal/
yumbrands/Yumbrands/kfc-newsroom/detail/Vertical+Content_3-SF/
additional-safety-measures-4-16-20; and see also ``Two Men and a Truck 
volunteers to deliver face shields to Detroit hospital'' at https://
www.mlive.com/coronavirus/2020/04/two-men-and-a-truck-volunteers-to-
deliver-face-shields-to-detroit-hospital.html.

  (10)  Providing franchisees with signage related to social 
        distancing, mask wearing and other Covid-19 prevention 
---------------------------------------------------------------------------
        operations procedures; and

  (11)  Providing guidance on safe re-opening, social-distancing, and 
        related practices to protect employees, consumers, and the 
        brand.\6\
---------------------------------------------------------------------------
    \6\ See ``McDonald's Engages Mayo Clinic to Advise on Continued 
Approach to Cleanliness and Safety'' at https://news.mcdonalds.com/
news-releases/news-release-details/mcdonalds-engages-mayo-clinic-
advise-continued-approach.

    The value of the franchise business model can be harnessed by 
Congress and provide a vehicle for sustained economic growth out of the 
pandemic. As a result of the significant economic impact of COVID-19, 
the number of unemployed individuals reached nearly 30 million workers. 
Given the dislocation in the economy, many of those jobs may not return 
forcing many individuals to find new employment or try entrepreneurial 
ventures, including starting a new franchise business. This has been 
the case following previous economic downturns, such as after the 2008 
financial crisis where interest in franchise ownership significantly 
increased, as out of work Americans explored new career opportunities. 
For example, the growth in employment in the franchise sector was 7.4 
percent from 2009 to 2012, while the total U.S. employment growth rate 
was only 1.8 percent.
    IFA also maintains its commitment and strong support of the FTC 
Franchise Rule, which will continue to ensure that prospective 
franchisees receive relevant and material information about their 
proposed franchise purchases sufficiently in advance of such purchases 
to enable them to make informed and unpressured purchase decisions. 
This rule has been essential to the continued growth and success of the 
franchise business model.'' \7\
---------------------------------------------------------------------------
    \7\ See IFA's April 24, 2019, Comments to the Federal Trade 
Commission regarding Disclosure Requirements and Prohibitions 
Concerning Franchising, available at https://bit.ly/2XpUIm7.
---------------------------------------------------------------------------
    We thank the Subcommittee for its attention to our views and the 
opportunity to comment.
            Sincerely,
                                              Tamra Kennedy
                               President, Twin City's T.J.'s, Inc.,
           Chair, International Franchise Association Franchisee Forum.
cc: Members, Senate Committee on Commerce

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