[House Hearing, 118 Congress]
[From the U.S. Government Publishing Office]


            FISCAL YEAR 2024 FEDERAL TRADE COMMISSION BUDGET

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

                                HEARING

                               BEFORE THE

             SUBCOMMITTEE ON INNOVATION, DATA, AND COMMERCE

                                 OF THE

                    COMMITTEE ON ENERGY AND COMMERCE
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED EIGHTEENTH CONGRESS

                             FIRST SESSION
                               __________

                             APRIL 18, 2023
                               __________

                           Serial No. 118-21
                           
                  [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

     Published for the use of the Committee on Energy and Commerce

                   govinfo.gov/committee/house-energy
                        energycommerce.house.gov
                        
                               __________

                    U.S. GOVERNMENT PUBLISHING OFFICE
                    
54-689 PDF                 WASHINGTON : 2024                           
                        
                    COMMITTEE ON ENERGY AND COMMERCE

                   CATHY McMORRIS RODGERS, Washington
                                  Chair
MICHAEL C. BURGESS, Texas            FRANK PALLONE, Jr., New Jersey
ROBERT E. LATTA, Ohio                  Ranking Member
BRETT GUTHRIE, Kentucky              ANNA G. ESHOO, California
H. MORGAN GRIFFITH, Virginia         DIANA DeGETTE, Colorado
GUS M. BILIRAKIS, Florida            JAN SCHAKOWSKY, Illinois
BILL JOHNSON, Ohio                   DORIS O. MATSUI, California
LARRY BUCSHON, Indiana               KATHY CASTOR, Florida
RICHARD HUDSON, North Carolina       JOHN P. SARBANES, Maryland
TIM WALBERG, Michigan                PAUL TONKO, New York
EARL L. ``BUDDY'' CARTER, Georgia    YVETTE D. CLARKE, New York
JEFF DUNCAN, South Carolina          TONY CARDENAS, California
GARY J. PALMER, Alabama              RAUL RUIZ, California
NEAL P. DUNN, Florida                SCOTT H. PETERS, California
JOHN R. CURTIS, Utah                 DEBBIE DINGELL, Michigan
DEBBBIE LESKO, Arizona               MARC A. VEASEY, Texas
GREG PENCE, Indiana                  ANN M. KUSTER, New Hampshire
DAN CRENSHAW, Texas                  ROBIN L. KELLY, Illinois
JOHN JOYCE, Pennsylvania             NANETTE DIAZ BARRAGAN, California
KELLY ARMSTRONG, North Dakota, Vice  LISA BLUNT ROCHESTER, Delaware
    Chair                            DARREN SOTO, Florida
RANDY K. WEBER, Sr., Texas           ANGIE CRAIG, Minnesota
RICK W. ALLEN, Georgia               KIM SCHRIER, Washington
TROY BALDERSON, Ohio                 LORI TRAHAN, Massachusetts
RUSS FULCHER, Idaho                  LIZZIE FLETCHER, Texas
AUGUST PFLUGER, Texas
DIANA HARSHBARGER, Tennessee
MARIANNETTE MILLER-MEEKS, Iowa
KAT CAMMACK, Florida
JAY OBERNOLTE, California
                                 ------                                

                           Professional Staff

                      NATE HODSON, Staff Director
                   SARAH BURKE, Deputy Staff Director
               TIFFANY GUARASCIO, Minority Staff Director
             Subcommittee on Innovation, Data, and Commerce

                       GUS M. BILIRAKIS, Florida
                                 Chairman
LARRY BUCSHON, Indiana               JAN SCHAKOWSKY, Illinois
TIM WALBERG, Michigan, Vice Chair      Ranking Member
JEFF DUNCAN, South Carolina          KATHY CASTOR, Florida
NEAL P. DUNN, Florida                DEBBIE DINGELL, Michigan
DEBBIE LESKO, Arizona                ROBIN L. KELLY, Illinois
GREG PENCE, Indiana                  LISA BLUNT ROCHESTER, Delaware
KELLY ARMSTRONG, North Dakota        DARREN SOTO, Florida
RICK W. ALLEN, Georgia               LORI TRAHAN, Massachusetts
RUSS FULCHER, Idaho                  YVETTE D. CLARKE, New York
DIANA HARSHBARGER, Tennessee         FRANK PALLONE, Jr., New Jersey (ex 
KAT CAMMACK, Florida                     officio)
CATHY McMORRIS RODGERS, Washington 
    (ex officio)
                             C O N T E N T S

                              ----------                              
                                                                   Page
Hon. Gus M. Bilirakis, a Representative in Congress from the 
  State of Florida, opening statement............................     1
    Prepared statement...........................................     4
Hon. Jan Schakowsky, a Representative in Congress from the State 
  of Illinois, opening statement.................................     6
    Prepared statement...........................................     8
Hon. Cathy McMorris Rodgers, a Representative in Congress from 
  the State of Washington, opening statement.....................     9
    Prepared statement...........................................    11
Hon. Frank Pallone, Jr., a Representative in Congress from the 
  State of New Jersey, opening statement.........................    14
    Prepared statement...........................................    16

                               Witnesses

Lina M. Khan, Chair, Federal Trade Commission....................    18
    Prepared statement \1\
    Answers to submitted questions \2\
Rebecca Kelly Slaughter, Commissioner, Federal Trade Commission..    20
    Prepared statement \1\
    Answers to submitted questions...............................   139
Alvaro M. Bedoya, Commissioner, Federal Trade Commission.........    21
    Prepared statement \1\
    Answers to submitted questions...............................   153
    Additional responses submitted for the record................   169

                           Submitted Material

Inclusion of the following was approved by unanimous consent.
List of documents submitted for the record.......................    66
Letter of April 17, 2023, from Engine, to Subcommittee Members...    68
Report of Engine and the University of Michigan Ford School of 
  Public Policy, ``Privacy Patchwork Problem: Costs, Burdens, and 
  Barriers Encountered by Startups,'' March 2023\3\
Article of March 16, 2023, ``FTC Lawyers Leave at Fastest Rate in 
  Years as Khan Sets New Tone,'' Bloomberg Law...................    71
Article of December 15, 2021, ``A Hostile Takeover of the FDIC,'' 
  by Jelena McWilliams, Wall Street Journal......................    74
Article of February 14, 2023, ``Why I'm Resigning as an FTC 
  Commissioner,'' by Christine Wilson, Wall Street Journal.......    77
Editorial of April 3, 2023, ``The FTC's Unholy Antitrust Grail,'' 
  Wall Street Journal............................................

80----------

\1\ The joint Federal Trade Commission statement of Ms. Khan, Ms. 
Slaughter, and Mr. Bedoya has been retained in committee files and is 
available at https://docs.house.gov/meetings/IF/IF17/20230418/115716/
HHRG-118-IF17-Wstate-KhanL-20230418.pdf.
\2\ Ms. Khan's responses have been retained in committee files and are 
available at https://docs.house.gov/meetings/IF/IF17/20230418/115716/
HHRG-118-IF17-Wstate-KhanL-20230418-SD010.pdf.
\3\ The report, attached to the Engine letter, has been retained in 
committee files and is included in the Documents for the Record at 
https://docs.house.gov/meetings/IF/IF17/20230418/115716/HHRG-118-IF17-
20230418-SD030.pdf.
Letter of September 28, 2021, from Ms. Khan to Hon. David 
  Cicilline and Hon. Ken Buck....................................    83
Letter from Andi Search, et al., to Mrs. Rodgers, et al..........    86
Letter of September 21, 2022, from Hon. Chris Pappas, et al., to 
  Ms. Khan.......................................................    88
Press release of July 19, 2022, ``Federal Trade Commission, 
  National Labor Relations Board Forge New Partnership to Protect 
  Workers from Anticompetitive, Unfair, and Deceptive 
  Practices,'' Federal Trade Commission..........................    92
Press release of September 6, 2022, ``NLRB Issues Notice of 
  Proposed Rulemaking on Joint-Employer Standard,'' National 
  Labor Relations Board..........................................    95
Letter of April 12, 2023, from Asheesh Agarwal, et al., to 
  General Counsel Anisha Dasgupta, Federal Trade Commission......    97
Press release of March 30, 2023, ``FTC, Justice Department, and 
  European Commission Hold Third U.S.-EU Joint Technology 
  Competition Policy Dialogue,'' Federal Trade Commission........   101
Letter of March 7, 2023, from Mr. Duncan and Hon. Michael Guest 
  to Gina Raimondo, Secretary, Department of Commerce and 
  Katherine C. Tai, U.S. Trade Representative....................   104
Blog post of February 27, 2023, ``Keep your AI claims in check,'' 
  Federal Trade Commission.......................................   107
Letter of October 13, 2022, from Hon. Tom O'Halleran, et al., to 
  Ms. Khan.......................................................   114
Letter of April 18, 2023, from Neil L. Bradley, Executive Vice 
  President, U.S. Chamber of Commerce, to Mrs. Rodgers and Mr. 
  Pallone........................................................   122
Letter of September 20, 2022, from Asheesh Agarwal, et al., to 
  Ms. Khan, et al................................................   125
Report of the Office of Inspector General, Federal Trade 
  Commission, ``Audit of the Federal Trade Commission's Unpaid 
  Consultant and Expert Program,'' August 1, 2022\4\
Letter of April 18, 2023, from Merve Hickok, President, and Marc 
  Rotenberg, Executive Director, Center for AI and Digital 
  Policy, to Mrs. Rodgers, et al.................................   130
Letter of April 3, 2023, from Marc Rotenberg, President and 
  General Counsel, and Merve Hickok, Chair and Research Chair, 
  Center for AI and Digital Policy, to Ms. Khan, et al...........   133
Complaint submitted by the Center for Artificial Intelligence and 
  Digital Policy to the Federal Trade Commission in the matter of 
  OpenAI, Inc., March 30, 2023\4\
Letter to the Editor, ``Regulating A.I.: The U.S. Needs to Act,'' 
  by Marc Rotenberg and Merve Hickok, Center for AI and Digital 
  Policy, New York Times.........................................   134
Letter of April 13, 2023, from U.S. Senator Kevin Cramer to 
  Kenichiro Yoshida, Chairman, President, and Chief Executive 
  Officer, Sony..................................................   136

----------

\4\ The information has been retained in committee files and is 
included in the Documents for the Record at https://docs.house.gov/
meetings/IF/IF17/20230418/115716/HHRG-118-IF17-20230418-SD030.pdf.

 
            FISCAL YEAR 2024 FEDERAL TRADE COMMISSION BUDGET

                              ----------                              


                        TUESDAY, APRIL 18, 2023

                  House of Representatives,
    Subcommittee on Innovation, Data, and Commerce,
                          Committee on Energy and Commerce,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 10:03 a.m. in 
the John D. Dingell Room 2123, Rayburn House Office Building, 
Hon. Gus Bilirakis (chairman of the subcommittee) presiding.
    Members present: Representatives Bilirakis, Bucshon, 
Walberg, Duncan, Dunn, Lesko, Pence, Armstrong, Allen, Fulcher, 
Harshbarger, Cammack, Rodgers (ex officio), Schakowsky 
(subcommittee ranking member), Castor, Dingell, Kelly, Blunt 
Rochester, Soto, Trahan, Clarke, and Pallone (ex officio).
    Also present: Representatives Carter and Joyce.
    Staff present: Michael Cameron, Professional Staff Member, 
Jessica Herron, Clerk; Tara Hupman, Chief Counsel; Peter 
Kielty, General Counsel; Emily King, Member Services Director; 
Tim Kurth, Chief Counsel; Brannon Rains, Professional Staff 
Member; Lacey Strahm, Fellow; Teddy Tanzer, Senior Counsel; 
Hannah Anton, Minority Policy Analyst; Ian Barlow, Minority FTC 
Detailee; Waverly Gordon, Minority Deputy Staff Director and 
General Counsel; Daniel Greene, Minority Professional Staff 
Member; Tiffany Guarascio, Minority Staff Director; Lisa Hone, 
Minority Chief Counsel, Innovation, Data, and Commerce; Joe 
Orlando, Minority Professional Staff Member; and C.J. Young, 
Minority Deputy Communications Director.
    Mr. Bilirakis. The subcommittee will come to order. The 
Chair recognizes himself for an opening statement.

OPENING STATEMENT OF HON. GUS M. BILIRAKIS, A REPRESENTATIVE IN 
               CONGRESS FROM THE STATE OF FLORIDA

    Good morning, everybody. I want to thank the Chair of the--
and the Commissioners of the FTC for being here today. Thank 
you so much for being here.
    The last time the FTC Commissioners were before this 
committee was for a single combined legislative and oversight 
hearing in July of 2021. Given that, there will be no shortage 
of questions today I'm sure, from both sides.
    Sadly, we have no Republican Commissioners on the panel to 
provide balanced views on what the FTC is doing in its current 
actions. That's regrettable. I'm sure you are not surprised, of 
course, that I would lead into that.
    But no FTC watcher can look at what has gone over over the 
last 2 years at the Commission and conclude that things are on 
the right track. The stretching of authorities and resources 
has led some to question what authorities should be stripped or 
whether it should even exist.
    I am not in that camp. I wanted--I want this to be the most 
respected protector of our children, our seniors, and, of 
course, the ultimate enforcer of our privacy and data security. 
However, it has become clear that these things are on the wrong 
course as, again, the priorities are diverted down a path of 
progressive pursuits that has led to career employees leaving 
the institution. That's unacceptable.
    So let me be clear, it is time that you focus on the 
authority that Congress has provided you. You have a laundry 
list of distractions from this mission with the many new 
rulemakings and requests for information, 6(b) studies that 
have begun and never concluded, all while continuing to lose 
constantly in Federal court.
    This is not what success looks like when you are tasked 
with protecting consumers from harms, especially at a time when 
your Commission released findings showing consumers reportedly 
lost almost $9 billion to scams in 2022, a 30 percent increase 
from previous--the previous year. That includes over half a 
billion in dollars lost in my State alone, the great State of 
Florida.
    Maybe instead of carrying out President Biden's leftist 
crusade, unsuccessfully, you could instead prioritize resources 
we give you to help vulnerable Americans.
    Sadly, we have raised these concerns before. I have 
continually been troubled by the FTC's unwillingness to provide 
substantive answers to questions from this committee regarding 
its decision-making process on this and other matters. You 
attempt to block us out like you did to your former Republican 
Commissioners, one of whom resigned in a showing of contempt of 
your management and lack of due process.
    At the same time, you have asked for a budget increase. How 
does one justify this when we hear how staff has been diverted 
from mission-critical functions and pulled from bureaus to 
focus on merger reviews?
    In fact, there has been such a mass exodus of career staff 
at the agency, you seem to be squandering away the resources 
that we currently give you in favor of pursuing unprecedented 
progressive legal theories. I'm submitting for the record an 
article from Bloomberg Law on March 16 titled, ``FTC Lawyers 
Leave at Fastest Rate in Years as Khan Sets New Tone.''
    Without objection, so ordered.
    [The information appears at the conclusion of the hearing.]
    Mr. Bilirakis. Perhaps the nowhere more--it's nowhere more 
evident that there's a drain on the consumer protection mission 
is that, of course, the lengths the FTC has gone to block 
Illumina's reacquisition of GRAIL. The FTC, in an unprecedented 
move, overturned an earlier decision by the agency's chief 
administrative law judge which allowed the merger to move 
forward. This decision could literally delay new and lifesaving 
screening technology from getting to consumer--to cancer 
patients. I am submitting for the record an editorial regarding 
that decision from the Wall Street Journal on April 3rd titled, 
``The FTC's Unholy Grail.''
    Without objection, so ordered.
    [The information appears at the conclusion of the hearing.]
    Mr. Bilirakis. In closing, I implore you to please get back 
to what you can do best, which is to support and protect 
consumers. That's the goal. That's the mission. To do that, you 
must work within the constraints that Congress has set, rather 
than abusing the authorities we have provided. I look forward 
to our conversation and any followup. Thank you.
    [The prepared statement of Mr. Bilirakis follows:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
    Mr. Bilirakis. And now I recognize the gentlelady from 
Illinois, Ms. Schakowsky, for 5 minutes for her opening 
statement, our ranking member.

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

    Ms. Schakowsky. Thank you so much, Mr. Chairman. I want to 
warmly welcome the Federal Trade Commission Chair, Lina Khan, 
and the Commissioners Slaughter and Bedoya to be here. I think 
we're going to have a very different opinion of what the FTC 
has accomplished and the direction that it is going on in. We 
know that two of the Republicans--you mentioned that there 
weren't any now--both retired before their terms expired.
    And we know that the Federal Trade Commission for a hundred 
years has been protecting consumers, and that has not stopped 
now. The agency has accomplished a number of very important 
achievements. In the past 2 years--in the past 2 years alone, 
the FTC protected consumers in a number of ways.
    One, returned over $670 million to defrauded consumers and 
behind the--let me see--defrauded Americans. Began four 
sectoral investigations, including into Big Tech, which we know 
needs to happen. And every dollar that the--that is returned--
that the FTC was able to get is returned in dividends for 
American consumers.
    In just one example, the FTC protected millions of app 
users by--I'm sorry--by prohibiting the sharing of secret--of 
sensitive information. Last year, the FTC--help me out--the--
last year, the FTC fined Epic Games $520 million for violating 
the children's privacy laws. We know that the agency returned 
more than $64 million to the patients of pharmacy benefit 
managers and health companies. So one after another, we're 
seeing how the FTC is putting money back into people's pockets.
    Consumer privacy rights has been a big issue, of course, 
for Americans, and the FTC has taken notice. Last year, the 
agency proposed rules to protect consumers' privacy and 
security. However, the FTC needs additional authorities and 
resources in order to provide the consumers what they actually 
need.
    We know that, Mr. Chairman, you and I were able to pass the 
INFORM Consumer Act, which absolutely was helpful in making--in 
giving the FTC a tool to ensure that trustworthy online 
marketplaces are thriving. And I plan to reintroduce 
legislation, the Online Consumer Protection Act, which will 
give the FTC tools to hold tech companies and platforms 
accountable, and I'm also going to introduce the FTC 
Whistleblower Act, which will protect whistleblowers.
    And finally, the 21st Century FTC Act introduced by 
Representative Castor and my FTC Autonomy Act will give the 
FTC--will give the Commission rulemaking and civil penalty 
authorities.
    So let me just end with this having reached my time. I just 
want to say that Big Tech has been fighting back against 
efforts to rein them in, and one of the ways that they've been 
doing it is to target with the Chairwoman herself, which I 
resent deeply. Chair Khan and the FTC is standing for working 
families, for small businesses, and is holding the corporate 
wrongdoers accountable. This is exactly what we need, and I 
appreciate the work of the current Federal Trade Commission.
    [The prepared statement of Ms. Schakowsky follows:]

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    Ms. Schakowsky. I yield back.
    Mr. Bilirakis. The gentlelady yields back. Thank you.
    I know recognize the Chair of the full committee, Mrs. 
Rodgers, for her 5 minutes. Thank you.
    Mrs. Rodgers. Good morning.
    Mr. Bilirakis. Good morning.

      OPENING STATEMENT OF HON. CATHY McMORRIS RODGERS, A 
    REPRESENTATIVE IN CONGRESS FROM THE STATE OF WASHINGTON

    Mrs. Rodgers. I'd like to start by welcoming the 
Commissioners. As you all know, the FTC has historically been a 
very bipartisan agency for solutions around consumer 
protection, data privacy, and antitrust law. Unfortunately, 
this tradition is currently under attack.
    Chair Khan, under your tenure as Chair, the integrity and 
effectiveness of this independent agency has been repeatedly 
questioned. You've suffered many losses in court at all Federal 
levels of the judiciary branch. You've drastically reduced 
transparency and accountability by cutting out key voices at 
the agency.
    Both Republican Commissioners have resigned during your 
tenure. Senior staff have quit in record numbers, with reports 
in the New York Post describing you as abusive and a tyrant. 
There's been a 34 percent decline in employee confidence in 
senior leadership's respect for them and motivation at work. 
Former Commissioner Christine Wilson cited your disregard for 
the law, for the rule of law, as one of the reasons for her 
resignation.
    Time and time again you prioritized a personal and 
political agenda over the integrity of the FTC and the interest 
of Americans. Despite numerous letters of concern from this 
committee, you've continued to ignore these in a dangerous and 
misguided consolidation of power.
    When you appeared before us in July of 2021, I asked about 
your decision to remove ``without unduly burdening legitimate 
business activity'' from the FTC mission statement. It was a 
longstanding bipartisan tradition at the FTC to include this in 
the mission to protect Americans and businesses. Eliminating 
this guardrail, which prevents Government overreach, was even 
more startling given the timing.
    People across the country were working to reopen their 
businesses after the COVID-19 lockdown. This meant bringing 
their employees back to work so that they could make a living 
and provide for their families. Instead, they faced 
intimidation from the Federal Government. This was not a one-
off situation. The FTC is still sending hundreds of penalty 
notice letters to businesses even when they've done nothing 
wrong. This violation of due process will not be tolerated.
    Regarding the FTC's budget request, the concerns raised by 
current and former employees at your agency do not reassure us 
that you'll put the American people first. Leadership matters. 
Before I even entertain any additional funds or authority for 
the FTC, first you need to convince us that the mission of 
protecting Americans isn't taking a backseat to the Biden 
administration's radical agenda.
    We want you to be the preeminent data protection agency in 
the world, and that must be your focus, at the direction of 
Congress. And given these abuses of power, what is clearly 
needed before Congress considers any new authorities or funding 
are reforms, more guardrails, and increased transparency to 
ensure that you're accountable to the American people.
    This includes for how the FTC will protect the privacy and 
data security of the American people. The single best way we 
can protect Americans in today's digital ecosystem is a 
national standard. In August last year, this committee voted 
overwhelmingly to advance the American Data Privacy and 
Protection Act. Shortly after, your Commission voted on 
partisan lines to act unilaterally on your own rules.
    I want to be clear. Our goal continues to be for Congress 
to enact a national standard with the expectation the FTC, with 
guardrails, will play a critical role in this effort. 
Establishing a national data privacy and data security standard 
is bigger and more important than any one person or any single 
agency to act unilaterally and risk losing people's trust. More 
than 80 percent of Americans say they're looking for Congress 
to act. It is a top priority for their own privacy, for their 
kids' privacy, and to rein in Big Tech.
    We, the people's representatives, take this responsibility 
seriously because we're accountable to them. We're accountable 
to the people, and we have no intention of losing sight of 
that.
    I want to thank former Commissioners Phillips and Wilson 
for their service to the country and the American people. I'm 
saddened that they're no longer at the Commission. Chair Khan, 
Commissioner Slaughter and Bedoya, thank you for being with us 
here today. I look forward to your testimony.
    [The prepared statement of Mrs. Rodgers follows:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
    Mrs. Rodgers. And I yield back.
    Mr. Bilirakis. The gentlelady yields back. And now I 
recognize the ranking member of the full committee for his 5 
minutes, opening statement, the gentleman from New Jersey. 
You're recognized, sir.

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

    Mr. Pallone. Thank you, Mr. Chair. Let me start by 
expressing my support for Chair Khan. I don't agree with Chair 
Rodgers' criticism of her. The problem is that the GOP doesn't 
like the FTC enforcement role. They would simply gut the FTC at 
the expense of consumers.
    The Federal Trade Commission has one of the broadest 
purviews of any Federal agency: fighting deceptive and unfair 
business practices and anticompetitive conduct across the 
entire economy. Managing this portfolio with less than 1,400 
employees is no small feat. And in order to ensure the FTC can 
continue its important work, Congress must approve its 
requested budget to further support much-needed staffing.
    It's clear the Republicans don't like when the--what the 
FTC does. They don't seek to protect consumers. Whenever the 
Republicans are in charge in Congress or at the administration 
level, they seek to cut the legs of the FTC. And that's 
unfortunate because the FTC brings enforcement actions to 
prevent companies from misusing consumers' personal 
information, failing to properly protect consumer data, and 
profiting from deceptive advertising and other telemarketing 
schemes. This important work comes at a time when the FTC is 
facing coordinated attacks from Big Tech aimed at evading the 
FTC's challenges to its business model. For years, Big Tech has 
been putting profits ahead of consumer privacy, and the 
opportunity to maximize advertising revenue ahead of our 
children's safety and well-being.
    The FTC is also committed to protecting seniors, veterans, 
communities of color, and non-English speakers who have all 
historically been targets for fraudsters and deceptive 
businesses.
    The FTC also protects consumers during some of the most 
important times of their lives, often when they are at their 
most vulnerable. The Funeral Rule protects grieving family 
members form predatory pricing. The Mortgage Assistance Relief 
Rule protects consumers who are seeking services to avoid 
foreclosure. And the Used Car Rule requires that used car 
dealers display essential information on the window of every 
car they're selling.
    The FTC does all of this with fewer employees than it had 
45 years ago when the American economy was smaller and simpler. 
Back then, a deceptive advertising case often focused on a 
single print or TV ad. Today, the FTC needs even more resources 
in a complex economy where targeted advertising presents 
consumers with different ads and prices based on personal 
characteristics.
    In addition to making sure the FTC is properly staffed, we 
should restore the FTC's full legal authority. Last Congress, 
this subcommittee led legislation that passed the House to 
restore the FTC's authority to go to court to seek to have 
money returned to consumers. Unfortunately, that legislation 
never passed the Senate.
    We must also resume our historic work on bipartisan, 
comprehensive privacy legislation, as Chair Rodgers mentioned, 
which could help the FTC give consumers substantive data 
privacy protections beyond the current notice and consent 
regime.
    And finally, given the frequency of Big Tech's repeat 
violations, we should also consider providing the FTC with 
additional tools to fight repeat corporate offenders. Just 
months after Twitter's second settlement with the FTC for 
privacy violations, media reporting suggested that Twitter may 
be violating that settlement by having engineers, rather than 
high-level officers, certify compliance and privacy controls.
    And Twitter isn't the only Big Tech repeat offender. In 
2019, the FTC obtained a $5 billion civil penalty from Facebook 
for violating a 2012 consent order governing Facebook's privacy 
practices. The FTC has also brought five consumer protection 
enforcement actions against Google since 2011.
    Now based on Big Tech's past performance, we should not do 
anything to undermine the FTC's enforcement against Big Tech. I 
am concerned by false claims that the FTC's Twitter compliance 
investigation is partisan. In truth, it would be a dereliction 
of duty if the FTC did not thoroughly investigate Twitter's 
compliance.
    I also urge skepticism about coordinated partisan calls for 
Chair Khan's recusal based on her prior academic views. We 
shouldn't forget that this was well known by the 69 Senators, 
including 20 Republicans, who voted to confirm her and lauded 
her for being tough on social media platforms and other Big 
Tech companies.
    Unsurprisingly, within weeks of Chair Khan's confirmation, 
Amazon and Facebook campaigned to undermine her enforcement 
efforts, in part by calling for her recusal. In October, a 
Federal judge rejected such a motion, and independently of 
Chair Khan, the Commission did the same in February.
    So I look forward to hearing from the Chair and the 
Commissioners today, but before yielding I want to recognize 
that Commission Slaughter has joined us wearing a mask because 
she was ill earlier this week. The Republicans pushed a rule 
that prevents witnesses from appearing remotely. Rather than 
taking advantage of the technological tools that allows us to 
engage as Americans wherever they are, this rule requires her 
to choose between appearing in person or not appearing at all. 
I think this rule should be reconsidered because it limits 
participation by witnesses.
    [The prepared statement of Mr. Pallone follows:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
    Mr. Pallone. And with that, I yield back, Mr. Chairman.
    Mr. Bilirakis. The gentleman yields back. So we'll get 
started with the witnesses now for their testimony. Our first 
witness is the Honorable Lina Khan, Chairman of the FTC. You're 
recognized for 5 minutes.

 STATEMENT OF LINA M. KHAN, CHAIR, AND REBECCA KELLY SLAUGHTER 
 AND ALVARO M. BEDOYA, COMMISSIONERS, FEDERAL TRADE COMMISSION

                   STATEMENT OF LINA M. KHAN

    Ms. Khan. Thank you. Chairman Bilirakis, Ranking Member 
Schakowsky, and members of the subcommittee. Thank you for 
inviting me to testify. It's an honor to be here with you 
alongside my colleagues, Commissioners Slaughter and Bedoya.
    I'd like to take a few minutes to share some of the 
Commission's accomplishments during this last year. None of 
this work would have been possible without the extraordinary 
efforts of the FTC staff who day after day fight for the 
American people, even when it means taking on some of the most 
powerful corporations in our economy. Although this oral 
testimony is mine alone, I know I speak for all of us when I 
say how lucky we are to work with the talented, dedicated 
professionals of the Federal Trade Commission.
    The FTC is firing on all cylinders to fully execute on our 
mandate to promote fair competition and protect Americans from 
unfair or deceptive practices. We are redoubling our efforts in 
traditional areas of enforcement like protecting Americans' 
privacy and combating fraud while also activating additional 
authorities that Congress has given us. In the last year alone, 
we've broken ground by bringing actions in a number of areas, 
including our first action under the Opioid Addiction Recovery 
Fraud Prevention Act, our first action under the Health Breach 
Notification Rule, our first action under the Military Lending 
Act, and our first action under the Made in USA Rule.
    In the meantime, we've also been racking up record monetary 
judgments, including the largest-ever judgment to protect kids' 
privacy, the largest monetary judgment in a fair-lending case, 
and the largest administrative judgment ever.
    Privacy and data security remain a major focus for the FTC, 
and I applaud this committee's continued efforts to enact 
comprehensive Federal privacy legislation. For our part, 
Commission staff have brought critical actions to protect 
Americans' data, including kids' data and sensitive information 
like health data.
    We brought an action against Fortnite, the maker of Epic 
Games, for undermining children's privacy. We secured a record-
breaking fine for the company's violation of the Childrens 
Online Privacy Protection Act while also securing important 
changes in the company's privacy practices. We also published a 
policy statement to put market participants on notice that we 
will vigorously protect children's privacy in the educational 
technology world, and we have followed up through our 
enforcement work, including through a recent action against 
Chegg, an ed tech company.
    The Commission also recently brought two seminal health 
privacy actions against BetterHelp and GoodRx, two online 
healthcare providers that we found had committed to keeping 
users' sensitive health information private but ended up making 
it available for firms to use for advertising. In the 
settlement resolving these actions, staff negotiated outright 
bans prohibiting these companies from disclosing health data to 
third parties for advertising.
    Finally, Commission staff are currently litigating a 
privacy case against Kochava, a location data broker that was 
selling users' sensitive location data, including information 
that could be used to identify whether people were going to 
addiction facilities, visiting reproductive health clinics, or 
going to religious services.
    Another major effort at the Commission this year has been 
stopping the scourge of junk fees or the unwanted charges that 
can drain Americans' pocketbooks. The FTC brought enforcement 
actions against companies that trick consumers into spending 
money that they didn't intend or want to spend, including 
through manipulative online interfaces. We also sued car 
dealers for sneaking on junk fees for made-up or unwanted 
services.
    And we brought enforcement actions against companies that 
have trapped consumers into renewing payment plans through 
making cancellation intentionally difficult. Our hundred-
million-dollar settlement with the internet phone provider 
Vonage, which we claim was creating obstacles for consumers and 
small businesses trying to cancel their services, is a key 
example of this work.
    Beyond these enforcement actions, the Commission has also 
begun several rulemaking proceedings to address these--this 
conduct more systematically. This does include through seeking 
comment on proposed junk fees rulemaking and proposing our 
Click to Cancel rule, which would require that companies make 
it as easy to cancel a subscription as they do to sign up for 
one.
    The FTC has also been working to preserve the integrity of 
the Made in USA label by halting companies from making false 
Made in USA claims. In 2021, the Commission finalized a rule 
that prohibits misuse of the Made in America label triggering 
stiff civil penalties, injunctive relief, and other remedies 
for those who violate it. The Commission is already taking 
action to enforce this rule, and these actions help protect 
honest businesses and true domestic manufacturers while 
ensuring the consumers can trust the Made in USA label.
    Consumers and independent businesses have also benefited 
from the Commission staff working to defend Americans' right to 
repair. The FTC has targeted unlawful repair restrictions which 
could make consumer products more difficult to fix and can 
close off the market to independent repair shops. Since issuing 
our 2021 policy statement committing the agency to this work, 
we've brought three major actions against companies for 
imposing unlawful repair restrictions and required them to 
eliminate restrictive warranty terms.
    Our fraud enforcement efforts also remain a critical part 
of our work. Over the last year, we've been particularly 
focused on fraud that harms veterans, service members, and 
older Americans. For example, our first action under the 
Military Lending Act, which we brought together with 18 States, 
required a national retailer to pay over $10 million in refunds 
for cheating military families with illegal financing and sale 
tactics.
    We've also been very active in preventing and remediating 
fraud against elder Americans, and this remains a core part of 
our work. Many of these successes reflect years or work by 
Commission staff, and I'm honored to call them colleagues.
    Thank you so much for the opportunity to testify, and I 
look forward to your questions. 1A\1\
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    \1\ The joint Federal Trade Commission statement of Ms. Khan, Ms. 
Slaughter, and Mr. Bedoya has been retained in committee files and is 
available at https://docs.house.gov/meetings/IF/IF17/20230418/115716/
HHRG-118-IF17-Wstate-KhanL-20230418.pdf.
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    Mr. Bilirakis. I thank the Chair.
    Our next witness is the Honorable Rebecca Slaughter, 
Commissioner of the FTC, and we appreciate you appearing today, 
and you're recognized for 5 minutes.

              STATEMENT OF REBECCA KELLY SLAUGHTER

    Ms. Slaughter. Thank you, Chairman Bilirakis, Ranking 
Member Schakowsky, Chair McMorris Rodgers, and Ranking Member 
Pallone, and members of the subcommittee. I'm grateful for your 
invitation to testify today about the vital work of the Federal 
Trade Commission.
    As you know, I'm somewhat under the weather, but I'm 
committed to being here if I could, because of the value I 
place on the oversight work of this committee.
    The two themes I will emphasize today are resources and 
authorities. Our talented staff have extremely full plates 
policing everything from dark patterns and data abuses in novel 
digital markets to old-school deceptive advertising and 
hardcore fraud across nearly the entire economy.
    I meet regularly with our staff, and the top concern I hear 
from them is that we lack adequate resources to do the job. 
This has been true in each and every year of my service, 
especially as we take on the biggest and richest firms on 
behalf of the American people. One salient data point: We had 
50 percent more employees at the beginning of the Reagan 
administration than we do today.
    But today, I have a new message about FTC resources: Thank 
you. Thank you, Congress, for investing in the Commission's 
work, enabling us to retain expert staff, conduct complex 
investigations, deepen our market expertise, and even have a 
more fair shot in litigation against some of the wealthiest 
companies in the world. The appropriation authorized at the end 
of last year gave this Commission a significant budget 
increase, for which we are deeply grateful. This wise 
investment is a crucial downpayment on empowering the FTC to 
police modern markets, but yes, more is needed.
    Just consider that our Division of Privacy and Identity 
Protection has around 50 staff, whereas, for example, the 
Information Commissioner's office in the UK boasts a staff of 
nearly 1,000. That's about 20 times as many staff in a nation 
with about a fifth of our population. So thank you and please 
continue to invest in the FTC. Americans deserve no less.
    In addition to more resources, more robust authorities are 
necessary for the FTC to effectively protect American 
consumers. I will touch on two that are well-known to this 
subcommittee. The first is the opportunity before you to pass a 
comprehensive national privacy law. Thank you for your hard 
work on this project, which included passing a bill out of the 
full committee on a bipartisan basis during the last Congress. 
I continue to believe that the passage of such a bill 
represents the best possible path for protecting Americans from 
data abuses.
    As you know, last year we launched an advanced notice of 
proposed rulemaking on commercial surveillance and lax data 
security under Section 18 of the FTC Act. The record we develop 
in that process may allow us to promulgate rules to address 
prevalent practices that violate the FTC Act. This is more than 
we've been able to do through one-off enforcement actions but 
substantially less than Congress could do with a new bill.
    I heartily recommend to you and your staff the large 
comment record our rulemaking has already developed as an 
important historic purpose in the privacy field. And I know 
that, as our work continues, we stand ready and willing to 
support your efforts to enact a comprehensive national privacy 
law.
    Even as we look forward to the day when Americans are 
better protected from the novel harms of the 21st century's 
data-driven economy, we must not lose sight of the urgent need 
to restore one of the 20th century's best tools for protecting 
consumers, Section 13(b) of the FTC Act. As you know, for more 
than 40 years under bipartisan administrations and with the 
blessings of eight circuit courts, the FTC brought actions in 
Federal court to return money to consumers from whom it was 
unlawfully taken.
    Unfortunately, 2 years ago the Supreme Court decided in AMG 
Capital Management that Section 13(b) does not authorize 
equitable monetary relief. I am grateful to this subcommittee 
for your urgent work to fix Section 13(b) to make explicit that 
courts can order law violators to return the money they 
wrongfully took.
    While Congress continues to work on this issue, the 
Commission is using every available tool to deliver justice to 
harmed consumers. We are partnering wherever possible with 
State enforcers who have redress authority. We are exploring 
new rulemakings which can enable consumer redress, and we are 
bringing actions under Section 19 which allows limited redress.
    I applaud these heroic efforts of our aggressive and 
creative staff and terrific enforcement partners, but make no 
mistake, it is not enough. We need a Section 13(b) fix, so I 
implore you to keep at it. Your constituents deserve to be made 
whole when they get ripped off.
    Thank you, and I look forward to your questions.
    Mr. Bilirakis. I thank the Commissioner.
    And now our final witness is the Honorable Alvaro Bedoya, 
again a Commissioner of the FTC. You're recognized, sir, for 5 
minutes.

                 STATEMENT OF ALVARO M. BEDOYA

    Mr. Bedoya. Thank you. Mr. Chairman, Ranking Member 
Schakowsky, Chair Rodgers, Ranking Member Pallone, members of 
the subcommittee, good morning. I'm really grateful for the 
chance to appear before you, particularly alongside my 
colleagues, Chair Khan and Commissioner Slaughter.
    I want to echo first of all their gratitude to you for your 
support of our mission, and I want to echo their gratitude for 
our staff. All that work you're going to hear about today, 
that's staff work, career staff, nonpartisan staff working 
overtime despite some pretty substantial ongoing resource 
constraints to protect the American public.
    I'd love to focus on one priority that is front of mind for 
parents across the country, and that's the teen mental health 
crisis, and specifically the role of social media in that 
crisis. This is a bipartisan priority for members of the 
subcommittee and the full committee. You are leading many of 
the key efforts to address it, and so I want to tell you about 
the work we're doing at the Commission on that front.
    The first thing we're doing is digging deep into the 
research. Just this last week, staff and I met with leaders at 
the National Institute of Health to discuss that research, the 
existing findings. We've also met with the top psychologists in 
the field to learn from them. We've met with leaders at the 
American Psychological Association, American Academy of 
Pediatrics. And here is what I've learned. There is evidence 
that some uses of social media do, in fact, hurt certain groups 
of children and teenagers. Now, yes, there's important nuances 
and more targeted research is necessary, but this is not 
[indiscernible] panic. There is a there there.
    The second thing we're doing is building our expert 
capacity on this issue. One of the many reasons I was proud to 
support the bipartisan comprehensive privacy bill put forward 
by your committee, Mr. Chairman, was because it called on the 
Commission to create a division focused on youth privacy and 
marketing and also directed the Commission to hire 
psychologists to study precisely this issue. And I want to get 
that done now. And so I'm pleased to share that it is now part 
of the Commission's strategic plan to explore hiring 
psychologists on staff, and we are actively working on doing 
that.
    I've also started conversations with regulators in the 
United Kingdom and the Netherlands and elsewhere to understand 
how they are enforcing their own laws in the area and how they 
use psychologists in their own work.
    Third, we are bringing cases against companies we allege 
are exacerbating this crisis. Research has shown that one of 
the drivers of the teen mental health crisis online is the 
harassment and verbal abuse they experience online. Chair Khan 
mentioned the Commission's landmark case against the makers of 
Fortnite, and in that case we allege that Fortnite preset its 
privacy settings in a way that allowed adults to harass kids 
and teens. And our actions shut that down and sent a message, a 
clear message in my view, to all companies that that is not OK.
    If the members of the committee and subcommittee are able 
to pass a comprehensive privacy bill which includes additional 
protections for kids and teens, that will strengthen our hand 
and we will use every bit of that authority. In the meantime, 
I'll just say that I personally believe that we do have 
substantial authority to sue companies who are designing their 
products in a way that harms kids and teens' mental health.
    Until that day, I want to say unequivocally to any company 
that makes money by tracking where people go to the doctor, 
where they go for counseling, the medicine they take, or for 
that matter where they worship or where they go for addiction 
treatment, the Commission is watching and has brought several 
recent actions against companies that we alleged broke the law 
by making money off of this sensitive data.
    That's most of what I wanted to share. I'll end on another 
note. I was just sharing with some of the members of the 
subcommittee before we started that we spend a lot of time with 
our family in Louisiana, and so one thing I've tried to as a 
Commissioner is prioritize getting out of the beltway and to 
visit small business leaders in rural America. In the last 
year, I met with grocers in South Dakota, in Utah, pharmacists 
in West Virginia, corn growers and cattlemen in Iowa.
    I am personally profoundly worried about what's happening 
to grocery, pharmacy, and agriculture in small-town America, 
and I'm trying to do everything I can to understand and to 
help. That's why I was proud to support our study into pharmacy 
benefit managers, our recent action against pesticide 
manufacturers, and our recent right-to-repair cases. And that's 
why I feel strongly that we should reinitiate enforcement of 
laws intended to provide a level playing field for small-town 
retailers.
    Thank you for the opportunity to appear before you today. 
I'm looking forward to your questions and--on these or any 
other subjects. Thank you, Mr. Chairman.
    Mr. Bilirakis. Thanks so much. Now I'll begin the 
questioning, and I recognize myself for 5 minutes.
    Chair Khan, we have been troubled by the redirection of FTC 
resources away from consumer protection, such as from 
consumer--again, such as a focus on fraud and scams to 
competition rulemakings, merger reviews, and suits that do not 
appear to be very successful. The statistics back this up, as 
FTC data shows U.S. consumers have suffered billions of dollars 
in losses due to fraud.
    By your own numbers, Madam Chair, a staggering $8.8 billion 
in losses last year, which is 30 percent--it's a 30 percent 
increase over the previous year. The resources for your policy 
agenda are eating up valuable career staff time and energy that 
could otherwise be used on protecting consumers.
    Why are--the question is why are you wasting away the 
resources we give you with new rulemakings, and will you 
instead commit to work with your colleagues, and hopefully your 
future Republican colleagues, to move away from your current 
direction of progressive legal theories and focus back on the 
fraud program at the FTC in bringing down this sad statistic? 
So that's the first question, please.
    Ms. Khan. Chairman, addressing and taking on fraud remains 
a core part of the FTC's work. Since I joined the Commission, 
we've brought over 60 law enforcement actions targeting scams 
and frauds across the economy, be it pyramid schemes, 
healthcare fraud, Made in USA fraud. This remains a core part 
of our work.
    As you know, given the setback that we received in the 
Supreme Court, it is much more difficult for us to return money 
back to consumers when they have been defrauded. Our staff has 
been working heroically to activate other authorities to make 
sure that we have hooks to get money back in people's pockets. 
But there's no doubt that that was a big setback in the courts, 
but we continue to focus on our frauds--addressing frauds and 
combatting frauds, and this is going to continue to be a part 
of our work.
    One change that we've also pursued is to be able to----
    Mr. Bilirakis. Well, thank you for very much. Let me go 
ahead and move on because you mentioned the 13(b) issue. We 
both believe there should be a fix to ensure that defrauded 
consumers should get money returned to them. Obviously, we both 
agree on that. And you had mentioned the Supreme Court case.
    After all, I led the only bipartisan effort in the 
committee process last Congress to provide FTC with the 
authority under 13(b) to seek monetary relief. I know you 
remember that. This effort, though, was ultimately rejected by 
the majority at the time and the Rules Committee, surely at the 
behest of Speaker Pelosi.
    Based on how the agency has abused other existing statutory 
authorities, there's no doubt we must provide crystal-clear 
guidelines on how the FTC pursues monetary relief in its 
consumer protection cases. That kind of clarity will go a long 
way in furthering the 13(b) dialogue.
    So the question is, will you commit to pursuing a sensible 
policy here that works in unison with standards of your other 
statutes and the history of cases previously Chairs have 
pursued? Yes or no, please.
    Ms. Khan. I would be thrilled to work with Congress to get 
a fix to 13(b), and I know our staffs have been working with 
your teams.
    Mr. Bilirakis. OK. Will you commit to working with the 
Bureau of Economics to issue a monetary policy statement to 
shed more light on how the FTC calculates monetary relief and 
civil penalties in consumer protection matters? Yes or no, 
please.
    Ms. Khan. There is a set of legal considerations that we 
take into account.
    Mr. Bilirakis. Can you please answer yes or no?
    Ms. Khan. We're happy to provide more information about how 
we go about making those calculations. This is anchored in law. 
We have to follow the law when we're making these calculations.
    Mr. Bilirakis. Well, I want to work with you on this, but 
we've got to get it done. Will you commit to ensuring 
procedural due process with this policy and with all other 
enforcement actions your agency takes? Yes or no, please.
    Ms. Khan. Of course, due process is critical, and the FTC 
vigorously follows due process.
    Mr. Bilirakis. All right, let me go ahead and answer--ask 
you one more question since I have the time. Chair Khan, last 
year the Office of Inspector General conducted an audit of the 
FTC's unpaid consultant and expert program. Unfortunately--and 
I know you're aware of this and the entire Commission is. 
Unfortunately, it found that there were limited controls in 
place to mitigate the risk involved in the program and that 
these unpaid academics were doing essential Government 
functions which should only be reserved for Federal employees 
under law. I think you know that too.
    OIG put three significant recommendations in its report, 
all of which are still considered open. Why is that, and what 
are you doing to address the independent watchdog's concerns? 
Have you addressed this? Are you in the process of addressing 
this? Please, because we need an answer.
    Ms. Khan. Yes, Congressman, we've addressed all of the 
process improvements that the IG had identified. As you know, 
we have--we followed longstanding Government authorities to 
bring on outside experts to pursue critical work, including 
work relating to AI, work relating to children's privacy. These 
experts are a critical part of being able to make sure we have 
the technical expertise in key areas.
    Mr. Bilirakis. Well, I would like for you to--I'd like 
additional questioning with regard to that because, again, as 
you know, not being Federal employees, they don't really have 
the right to do--I think they're overreaching. So we do need to 
address this issue even more, and I understand it's considered 
open.
    So let me go ahead and conclude. I'll yield back, and I'll 
recognize the ranking member of the subcommittee, Ms. 
Schakowsky, for her 5 minutes, please.
    Ms. Schakowsky. Thank you so much. I wanted to ask Chair 
Khan this question. The issue of privacy--comprehensive privacy 
legislation has come up, and you do have some--have engaged in 
some rulemaking on that. What I wanted to ask you: Why do you 
think it's important, despite the role of the FTC, for us to 
have comprehensive privacy legislation, and how would it fit 
with what the FTC does to protect consumer privacy?
    Ms. Khan. There's no question that Congress passing strong, 
comprehensive Federal privacy legislation is the best option 
here. We, through our work, see day after day that the cost of 
privacy violations are real, they're serious, they lead to 
stalking, stigmatization, people's sensitive information being 
exposed, huge hacks. And so action in this area is critical.
    Of course, what that legislation ended up looking like, the 
details would matter in terms of our subsequent work, but we 
would--we stand ready to enforce any privacy law that Congress 
passes and would be happy to continue working with you all on 
that.
    Ms. Schakowsky. Thank you.
    Commissioner Slaughter, you were talking about 13(b), and 
you heard from the Chair that we are very concerned about the 
fact that now consumers can't be made whole in any way. Do you 
have any estimate of how much money would actually be returned 
to consumers, I don't know, with any particular period that you 
could cite, if 13(b) did not prevent that from happening?
    Ms. Slaughter. Thank you. I can give you one data point, 
which is that in the 10 years prior to AMG, the Commission 
returned about $10 billion to consumers in redress. It's very 
difficult to calculate what we are missing now, in part because 
of our creative efforts to fill the gap and in part because in 
addition to making it harder to get money back to consumers, 
the lack of 13(b) authority actually makes it harder for us to 
get companies to enter into settlement, because there isn't a 
monetary cost to them for violating the law if they're only 
subject to injunctive relief.
    So it's hard to make a prospective number, but the data 
from the past indicates that we were able to return many, many, 
many times the agency's annual budget to consumers every year.
    Ms. Schakowsky. Ten billion dollars that now fraudsters, 
you know, that--that there's no help for consumers. This is 
really, I think, an urgent situation.
    I also wanted to ask about FTC whistleblowers. Any one of 
you could answer. I am interested in passing legislation that 
would protect whistleblowers. I don't know if----
    Ms. Khan. I'm happy to----
    Ms. Schakowsky [continuing]. Mr. Bedoya would want to, or 
Chairman Khan.
    Ms. Khan. I'll just say briefly, whistleblowers play an 
incredibly important function, shedding light on wrongdoing, 
oftentimes, at great personal expense. And so giving the FTC 
the ability to grant protections to whistleblowers would be 
really important.
    Ms. Schakowsky. Also, Chair Khan, can you describe some of 
the recent FTC privacy cases and protections that you've been 
involved in?
    Ms. Khan. Yes, I'd be happy to. So one of the key areas of 
focus for us has been protecting Americans' privacy when it 
comes to sensitive information. That can include sensitive 
health information, it can include sensitive geolocation 
information. One of the companies that we sued last year was 
Kochava, a data broker that was allowing others to buy 
information that identified in granular detail where people 
were going, whether Americans were going to addiction 
facilities, whether they were going to church, and this was 
information that was pretty easily available for sale. So we 
took a law enforcement action. We're still litigating that 
case, basically alleging that that was an unfair practice.
    We've also recently brought actions against two healthcare 
companies, GoodRx and BetterHelp. These were companies that 
collected sensitive health information from consumers on the 
pretext of using it for providing health-related services but 
then ended up turning around and actually making it available 
for advertising and effectively making it easy to monetize that 
sensitive information. So that was another area where we've 
been bringing actions, and we remain devoted to fully 
protecting Americans' privacy.
    Ms. Schakowsky. Thank you so much. And my time is up, I 
yield back.
    Mr. Bilirakis. I thank the ranking member, and now I 
recognize the chairwoman of the full committee, Ms. Rodgers, 
for her 5 minutes.
    Mrs. Rodgers. Thank you, Mr. Chair and Chair Khan. As you 
know, Ranking Member Pallone and I have been working on privacy 
data security legislation. Last year I expressed to you my 
concerns on your so-called commercial surveillance rulemaking 
on data privacy. It was announced just weeks after this 
committee had passed the bill 53 to 2.
    I wanted to ask, once we've enacted our legislation--it is 
a top priority for this Congress--do we have your commitment 
that you will suspend this proceeding and focus FTC's resources 
on implementing the laws enacted as well as stick to the narrow 
contours of the rulemaking authority that we prescribe? Yes or 
no.
    Ms. Khan. Congresswoman, absolutely.
    Mrs. Rodgers. Thank you.
    Ms. Khan. We stand ready to enforce any privacy legislation 
that Congress passes.
    Mrs. Rodgers. Thank you.
    Commissioner Slaughter and Bedoya, do we--do you agree? Yes 
or no.
    Ms. Slaughter. Yes.
    Mrs. Rodgers. Thank you.
    Mr. Bedoya. Yes.
    Mrs. Rodgers. Thank you.
    Chair Khan, I'd like to pivot to ethics, which are 
essential to maintaining public trust in Government officials 
like yourself. Do you recall the Senate questionnaire you 
filled out for the position you're in now? Yes or no.
    Ms. Khan. Yes.
    Mrs. Rodgers. Within that document, you recall a 
referendum--or a reference to a commitment on seeking advice 
from the FTC's Designated Agency Ethics Official, known as 
DAEO, yes or no?
    Ms. Khan. Yes.
    Mrs. Rodgers. Do you recall the nature of what that 
commitment would be?
    Ms. Khan. Sorry, could you repeat----
    Mrs. Rodgers. Do you recall the nature of what that 
commitment would be?
    Ms. Khan. Consulting with the ethics official, yes.
    Mrs. Rodgers. Can you confirm that it relates to conflicts 
of interest?
    Ms. Khan. Yes.
    Mrs. Rodgers. Are there any instances where you've not 
followed DAEO's advice? Yes or no, and could you list any?
    Ms. Khan. No, I've--in instances where companies like 
Facebook or Amazon petition for my recusal, I have consulted 
with the DAEO and have taken actions that are consistent with 
the legal statements that the DAEO has made.
    Mrs. Rodgers. Thank you.
    Commissioner Slaughter, and I'd like to--you to respond 
each to these questions as well, Commissioner Bedoya. Would you 
have concerns with an FTC Commissioner not following the 
recommendations of DAEO? Yes or no.
    Ms. Slaughter. Thank you, Congresswoman. I think our job in 
all instances is to consult with our expert staff, including 
the DAEO, study the underlying law, the underlying ethics 
rules, and come to our own conclusions.
    Mrs. Rodgers. Would you have concerns? I guess my--going 
back to my question, would you have concerns with an FTC 
Commissioner not following the recommendations of DAEO?
    Ms. Slaughter. I would have huge concerns with an FTC 
Commissioner not following the requirements of the law----
    Mrs. Rodgers. OK.
    Ms. Slaughter [continuing]. And the requirements of the 
ethics rules.
    Mrs. Rodgers. Thank you. I'm just going to reclaim my time 
because I got a lot to get through here. Bedoya--Commissioner 
Bedoya?
    Mr. Bedoya. Thank you, Chair Rodgers. As Commissioner 
Slaughter said, I'd have concerns if someone didn't consult 
with ethics officials, and it's my understanding and belief 
that Chair Khan did, in fact--has, in fact, complied with her 
ethics obligations.
    Mrs. Rodgers. OK, thank you. Again, to both of the other 
commissioners: When voting for a redaction on a recommendation 
for a recusal issue, are you aware that Congress can act--ask 
for that unredacted version? Yes or no.
    Ms. Slaughter. Yes.
    Mrs. Rodgers. Bedoya? OK.
    Mr. Bedoya. Yes.
    Mrs. Rodgers. OK. You were both senior congressional 
staffers, and I appreciate your work on the Hill. How would you 
have advised your boss to respond to reports that a senior 
political appointee was ignoring ethics guidance from an ethics 
official of an agency she or he led? Commissioner Slaughter.
    Ms. Slaughter. Well, I think the oversight work of this 
committee and all congressional committees is really vital to 
ensuring that agencies are acting properly, so any time 
Congress hears of a concern, I think it's appropriate for 
Congress to look into it.
    Mrs. Rodgers. OK, thank you. Commissioner Bedoya.
    Mr. Bedoya. Same, Chair Rodgers. I would urge them to ask 
questions.
    Mrs. Rodgers. OK, thank you.
    Chair Khan, you've told me how ``congressional oversight is 
incredibly important,'' so we certainly agree on that. And in 
your Senate confirmation questionnaire, you include your own 
congressional oversight experience. On page 18 of that 
questionnaire, you said that you would ``ensure that your 
department complies with deadlines for information set by 
congressional committees'' and that your department ``endeavors 
to timely comply with requests for information from individual 
Members of Congress.''
    Do you feel like you have upheld this commitment to 
Congress? Yes or no.
    Ms. Khan. Yes, I do.
    Mrs. Rodgers. I and members of this committee and other 
committees have asked you on multiple occasions for detailed 
answers to your--to our questions. Yes or no, do you believe 
that you've sufficiently answered these requests?
    Ms. Khan. Yes. I know those conversations are ongoing, but 
we have been engaging in good faith and already provided 
significant information.
    Mrs. Rodgers. That seems inconsistent with the letters that 
you've sent back to us. For instance, in a letter that this 
committee sent to you on December 8, 2021, the committee asked 
you why you proposed deleting ``without unduly burdening 
legitimate business activity'' from the FTC's mission 
statement, the guardrail that has existed under both Republican 
and Democrat administrations.
    When the committee asked about the consultation you had 
with other Commissioners to reach this consensus, you responded 
with, ``The agency is currently considering the comments 
received on the draft strategic plan, including some comments 
that raise questions about the elimination.'' You go on to say, 
``The Commission will consider these comments carefully when it 
votes on the strategic plan.''
    You know, it seems to me that you had--you've already made 
up your mind, irrespective of the concerns that are shared. And 
this is just one example of vague or misleading answers that do 
not tell the whole story, and I just urge you to be responsive 
to the people's House, this committee in particular. We are the 
representatives of the people.
    I yield back, Mr. Chairman.
    Mr. Bilirakis. The Chairwoman yields back. Now I'll 
recognize the ranking member of the full committee, Mr. 
Pallone, for his 5 minutes of questioning.
    Mr. Pallone. Thank you, Chairman Bilirakis.
    Last Congress, our subcommittee made historic progress on a 
comprehensive data privacy bill, and that legislation focused 
on data minimization rather than notice and consent, as the 
best way to protect consumers' privacy, and it passed out of 
our committee on a 53 to 2 bipartisan basis. The FTC's written 
testimony acknowledges that the traditional notice-and-consent 
framework for protecting consumer privacy is insufficient.
    So let me ask, Chair Khan, do you agree that data 
minimization is an important bedrock principle for ensuring 
consumers have meaningful privacy protections in the modern 
online economy?
    Ms. Khan. Absolutely. I think time and time again we've 
seen how minimizing the data the companies are collecting on 
the front end is critical to ensuring that consumers' privacy 
is protected and also has huge benefits for data security 
because, if there's less data collecting they are collecting on 
the front end, that means there is less opportunity for major 
hacks that would expose significant data.
    Mr. Pallone. Thank you. Now I understand that, in the 
absence of a comprehensive Federal privacy statute, the FTC has 
historically protected consumer data privacy using the FTC's 
general authority to enforce against unfair and deceptive 
business practices. But my question is, can you discuss what 
challenges the FTC faces using that ``unfair and deceptive'' 
practice as authority to protect consumer privacy?
    Ms. Khan. Yes. First of all, I'll say, I mean, any instance 
in which Congress is providing greater specification, including 
through bright-line rules and clear restrictions, that's always 
the best course. For us, we have been using our unfair-and-
deceptive-acts-or-practices authority for some time with great 
success. Of course, in the wake of the Supreme Court's decision 
to say we can no longer get monetary equitable relief through 
Section 13(b) of the FTC Act, it means that our opportunities 
for remedies are quite limited, and so that would be one area 
where I think we see significant shortfalls.
    Mr. Pallone. Thank you. Now let me say that I appreciate 
the breadth and importance of the FTC's consumer protection 
work. And in your written testimony, you estimate that for 
fiscal year 2022 every dollar of the FTC's cost returned an 
estimated $30 in FTC-provided benefits to consumers. So let me 
ask you that question: Can you please elaborate on your return-
on-investment analysis, and what sorts of benefits do consumers 
receive from the FTC's consumer protection work?
    Ms. Khan. Yes, absolutely. I mean, we really are a small 
agency, but we punch above our weight. I think those numbers 
really speak for themselves. And despite set--getting the 
setback that we did, our staff have been able to activate other 
authorities to make sure that, if companies are, for example, 
scamming the American people or trapping them into unwanted 
subscriptions or engaging in Made in USA fraud, these are all 
the types of instances in which we can actually get money back 
in people's pockets, and so these are all important areas of 
our work.
    Mr. Pallone. OK. Now how will the increase in funding and 
staff that you're requesting help expand the Commission's 
consumer protection work?
    Ms. Khan. So this is something we've been thinking about 
quite significantly, especially in light of the additional 
funds that we were very grateful to receive this time around. 
There are a few areas that we're really focused on. One is 
making sure that we have in house the expertise needed to fully 
understand how these technologies are working, fully grasping 
really the inners of how these tools are functioning. And to 
that end, we were really thrilled to be able to launch an 
Office of Technology earlier this year.
    We've already doubled the number of technologists that 
we've had in house. As my colleague mentioned, Commissioner 
Bedoya, we're also thinking about other types of expertise that 
we need to be bringing onboard alongside our terrific lawyers 
and our terrific economists, and, of course, growing their 
ranks, as my fellow Commissioner, Commissioner Slaughter, noted 
including in the context of our privacy and security work, that 
would be a key priority for us in this area as well.
    Mr. Pallone. Thank you. I'm just going to go back because I 
have another minute. If either of the other Commissioners could 
discuss my previous question about challenges the FTC faces 
using unfair and deceptive practices authority to protect 
consumer privacy. Probably only have time for one of you to 
answer. Who wants to answer?
    Ms. Slaughter. I'm happy to answer. So, as you know, the 
FTC Act lays out a prohibition on unfair and deceptive acts and 
practices and says that for an act to be unfair it must cause 
substantial injury that's not reasonably avoidable and not 
offset by countervailing benefits. That's an important test, 
and it's one that allows us to reach some problematic data 
practices, but not all of them.
    And we cannot by rule--I think it's really important to 
remember this--we cannot by rulemaking address practices that 
are not prohibited under the FTC Act. So we can't do a rule 
that would target something that we can't target through an 
independent enforcement action.
    What you, this committee, did with your privacy bill last 
Congress was attack a whole--a much broader swath of 
problematic practices than we might likely be able to reach 
under the FTC Act's prohibitions, and that's really important. 
So we have seen our rulemaking effort as an important way to do 
more than we could do before and provide clarity to markets, 
and especially the small businesses and honest businesses who 
want to know what the law prohibits, but it is not nearly what 
you can achieve in terms of passing a law.
    Mr. Pallone. Thank you.
    Thank you, Mr. Chairman.
    Mr. Bilirakis. All right, thank you. The gentleman yields 
back. Now I'll recognize Dr. Bucshon for his 5 minutes of 
questioning.
    Mr. Bucshon. Thank you, Chairman Bilirakis, for calling 
today's hearing.
    When this committee last spoke with the Federal Trade 
Commissioners 2 years ago, I asked Commissioner Chopra about 
rebate walls and other practices that stunt innovation and 
competition. Maybe perhaps I should have asked about the FTC's 
policies on zombie votes by a departed Commissioner, gag orders 
on staff, or sidelining of the minority Commissioners, since we 
don't have any. For all of the statements being made and the 
rulemaking in the name of ensuring competition, it seems like 
the FTC, within its own ranks, have prioritized sidelining 
ideological competition to the progressive views of the current 
Commissioners.
    I also want to say this, that fraud against seniors is out 
of control in this country. My--I know this. My father passed 
away. About 6 months later I recognized my mother could not 
manage her finances, and when I--it took me 2 years to unravel 
it, and the amount of fraud that she had committed against her 
financially and otherwise was unbelievable. It's out of 
control, and whatever, you know, we can do about it is 
important.
    The FTC obviously has done a lot of positive things, but 
let me focus on some of the concerns that I have, OK? Chair 
Khan, last September I cosigned a letter for you expressing--to 
you expressing support for the renewal of the FTC's Franchise 
Rule in its current form, as franchises create a path to--
pathway to entrepreneurship for my constituents, especially 
among women and people of color. On March 10th the FTC put out 
a request for information on the business practices of 
franchises in relation to the rule amidst growing concern 
around unfair and deceptive practices in the franchise 
industry.
    First, I'll note the franchise--franchising is a business 
model, not an industry. More importantly, what are the specific 
unfair and deceptive franchising practices this refers to?
    Ms. Khan. Thanks, Congressman. So we have been hearing for 
over a year now from franchises about a set of practices that 
are quite troubling. Month after month, franchises come to our 
open Commission meetings where they can speak directly to 
Commissioners and raise issues of concerns.
    And so we thought it was important not just to be 
collecting this information anecdotally but to actually do a 
systematic look at what's really going on here. What is the 
relationship between the franchisees and the franchisors? Are 
there types of practices that we should be taking a closer look 
at? Are there practices that may be unlawful?
    And so that's why we issued the RFI. We've already started 
getting some submissions and really look forward to taking a 
close look at whatever comes in.
    Mr. Bucshon. OK. Do you plan on pursuing a rule governing 
the franchise relationship with the--this RFI as a basis?
    Ms. Khan. So, as you know, we already have the Franchise 
Rule in place----
    Mr. Bucshon. Right.
    Ms. Khan [continuing]. Which governs the disclosures the 
franchisor----
    Mr. Bucshon. Well, you're--you want to change it. So I 
understand----
    Ms. Khan. Well, we have a----
    Mr. Bucshon. So you're going to use the RFI to justify 
changing that, right?
    Ms. Khan. No, these are separate procedures. And one reason 
why we launched the RFI is because there were issues we were 
hearing about that are not governed by the Franchise Rule. So 
it was really in order to make sure that, if we need to do 
subsequent enforcement activity separate from what's covered by 
the Franchise Rule, that we have the information we need.
    Mr. Bucshon. OK. And I think, I mean, if we're honest with 
ourself, I mean, obviously I have a certain viewpoint but, I 
mean, this is about organized labor wanting to organize all the 
employees at franchisees across the country. We all know that. 
I mean, it's about--yes, there are--there might be some 
problems, but what it's about is taking a large organization 
that has noncorporate restaurants that are franchised 
restaurants and the Democrat Party and the organized labor are 
unhappy that they can't organize all these people, say, at 
Company X because one place may have 40 employees, 50 
employees, and put it under one corporate--force it under one 
corporate head so they have 25,000 employees that can be 
organized by organized labor.
    I mean, this--I bet--this has been an issue for years and 
years and years. And if that's the goal, you know, then using a 
Federal agency to assist organized labor in this effort is 
wrong.
    Ms. Khan. Congressman, respectfully, this is about small 
business owners. The types of people that we are hearing from 
are hotel owners, owners of fast food franchises. This is 
really about the potentially abusive practices that they've 
been suffering. It really is not connected to the some of the 
issues----
    Mr. Bucshon. Well, the ones I talk to, it--they want--
they're concerned that they want to have three or four 
different worker unions within their local McDonald's. And 
look, I've said for years and years publicly that if we want to 
spend $25 for a hamburger and fries and Coke at McDonald's, 
then I'm all--I'm--go ahead, because that's what's going to 
happen if you use the FTC to force organized labor's agenda. I 
yield back.
    Mr. Bilirakis. The gentleman yields back. Now I'll 
recognize Representative Kelly for her 5 minutes of 
questioning.
    Ms. Kelly. Thank you, Chair Bilirakis and Ranking Member 
Schakowsky, for holding this very important hearing. I also 
want to commend and thank our three witnesses for your service 
at our Nation's chief consumer protection agency as well as 
your staff.
    Last Congress when the FTC testified before the committee, 
we discussed several challenges the agency was facing, notably 
the uptick in consumer complaints to the agency about a broad 
range of pandemic-related marketplace abuses. I found this 
dialogue particularly concerning because I often heard from 
constituents, many of them seniors living in my district, about 
how the pandemic put a squeeze on their finances, as my 
colleague just talked about.
    At a time when seniors had so much to worry about, I felt 
moved to introduce legislation to help stop our vulnerable 
populations from falling victim to scam callers. That led me to 
introduce the Protecting Seniors from Emergency Scams Act, 
which requires your agency to report on an increased awareness 
regarding scams targeting older adults.
    Chair Khan, do you think it would be beneficial to 
consumers if there was a known centralized location to receive 
current information about scams and contact information for law 
enforcement and adult protective services agencies?
    Ms. Khan. Thanks, Congresswoman. There's no doubt that, 
whenever you make it easier for consumers to access that type 
of information, that's a benefit for consumers but also to us 
from an enforcement perspective.
    Ms. Kelly. Thank you for your response. I find these scams 
troubling and am looking forward to reintroducing this bill 
this Congress so the House may once again pass it out of the 
chamber.
    Now I would like to shift focus to another FTC-related bill 
that I introduced last Congress, the Consumer Equity Protection 
Act, which would establish a Federal task force to advise the 
FTC on issues of equity impacting consumers of protected 
classes. This bill is important because we know that many times 
folks are targeted based on their identity as a member of a 
certain protected class like age, race, religion, sexual 
orientation, or disability, which I can relate to now.
    Chair Khan, I'm aware that over the years the FTC has 
released a few reports, notably the Serving Communities of 
Color and Combating Fraud in African American and Latino 
Community reports that detailed fraud and consumer issues that 
have a disproportionate negative impact on communities of 
color. And last Congress, when you and then-Commissioner Chopra 
testified, you all acknowledged the method of discrimination 
has become more sophisticated and subtle as technological tools 
are enabling discrimination in targeting of individuals 
belonging to protected classes.
    So given this growing threat, how would creating a task 
force help the FTC to protect minorities from fraud and abuse?
    Ms. Khan. This is absolutely a big area of concern. One 
thing that we do as part of our Every Community Initiative is 
actually do some data analysis to see what are the consumer 
complaints coming in, and are those mapping onto greater abuse 
or greater fraud being targeted at particular communities, and 
we absolutely see that those trends continue.
    We've been able to pursue enforcement actions in this area. 
Last year we brought our action involving Passport, this auto 
dealer that had been charging higher fees to Black consumers, 
to Latino consumers, and raising costs for them as well as 
attaching all sorts of junk fees. So we're taking enforcement 
actions in this area as well as continuing to identify trends.
    You're absolutely right that the growing digitization of 
our economy is creating all sorts of additional, covert ways 
that companies can be engaging in discrimination. As we bring 
on additional expertise, including technologic--technologists, 
this is an additional area that we're hoping to dig more into.
    Ms. Kelly. So it's funny you brought up the Passport Auto 
case because I was going to ask you about that and what you 
intend to do to further emphasize the--this application of 
unfairness doctrine and why this is important.
    Ms. Khan. Yes, absolutely. In this case, we saw that there 
was substantial injury stemming from the fact that Black and 
Latino consumers were being charged more fees than their White 
counterparts and that this was not reasonably avoidable and 
that there were no countervailing benefits to this 
discrimination. So we thought it was important to put the 
market on notice that we viewed this as an unfair practice, and 
this is absolutely an area that we're going to continue to be 
looking at.
    Ms. Kelly. Thank you. And I yield back.
    Mr. Bilirakis. Thank you, I appreciate that. And now I'll 
recognize the vice chairman of the subcommittee, Mr. Walberg 
from the great State of Michigan, for 5 minutes of questioning.
    Mr. Walberg. Thank you, Mr. Chairman. And thanks to the 
Commission members for being here, and appreciate some of your 
updates on some of the successes you had. I think successes, to 
some degree, we could agree with.
    Commissioner Khan, you and I talked about child online data 
security and my concerns with that, and I appreciate efforts 
there, consumer subscription cancellations and concerns that 
are there, and other things. We certainly would expect you to 
give us some wins.
    But here in the committee, we're going to be talking about 
what we think are losses and some concerns that we've received 
not only from businesses and consumers but even from staff--
former staff members and Commissioners of the FTC. So with that 
acknowledgement of the filter that we have, I'd--I want to ask 
some pointed questions.
    Chairwoman Khan, I want to follow up on some things that 
Chair Rodgers referenced earlier regarding your decision to 
strike those words in the FTC's mission statement, namely 
``without unduly burdening legitimate business activity.'' The 
message that I believe that that sent to an already challenged 
American private sector struggling to rebound from COVID-19 
shutdowns was quite simply--and these would be my words--
``Consider yourself guilty of accusations from the FTC unless 
you can prove otherwise.''
    That's a concern. If that isn't a reality, it's still an 
assumption that many could make. Legitimate businesses 
shouldn't have to worry about receiving a letter from the FTC 
warning them of significant fines because you are not properly 
dedicating resources to go after a specific bad actor. On 
multiple occasions now, the FTC has sent in bulk over 700 
letters to companies, including just last week, putting them 
into the interrogation spotlight as they perceive, and 
potentially imitating--intimidating them into submission.
    Now, I don't think this is the best way to protect 
consumers, and it may have even caused more harm than good. 
Some could even say it's becoming evident that the present 
mission statement is not to protect consumers but rather to 
advance a radical, woke, progressive Biden administration 
scheme to make every sector in our economy and to punish the 
private sector, when the law does not allow for such 
punishment. You have used process to make legal activity 
difficult to achieve and a means of punishment.
    Not surprisingly, this bulk mail approach to the private 
sector has now led to scammers making the most of the FTC's new 
unorthodox practice. Last week, the FTC tweeted out a warning 
to be on lookout for--from--fake letters from Sam Levine, 
Director of the FTC's Bureau of Consumer Protection, 
threatening to take action against them. One should wonder, was 
this threat to America's private sector created by the 
Commission's own actions?
    And so, Chair Khan, this apparent attempt to become the 
national overlord has caused more harm than good. Do you plan 
to extend or end these actions?
    Ms. Khan. Congressman, first of all, I'll just say on our 
strategic plan, that phrase that you mentioned remains in our 
strategic plan. It was really a question of the mission 
statement, what is the term--you know, what is a statement that 
best represents the essence of what the FTC does?
    There was a really terrific cross-agency working group made 
up of staff. They really spent a lot of time thinking about 
that question and determined that we really wanted to focus on 
who were the communities that we're focused on protecting, what 
are the legal authorities we're enforcing.
    On the second issue, Section 5(m)(1)(B) of the FTC Act 
gives us the authority to put companies on notice when there's 
a particular practice that the FTC has determined is unlawful 
and issued a cease-and-desist order. So if--by many measures, 
to my mind, this is a good government practice because we're 
putting market participants on notice about----
    Mr. Walberg. But if I could jump in here and say the fact 
that, you know, the aggressive approach has not been effective 
to the point that you have not won on a number of those cases, 
and that's one of the biggest concerns that we address. As 
you've perceived, this is your purpose, yet underlying it are 
failures at that level. Let's----
    Ms. Khan. Congressman, respectfully, we haven't actually 
lost any litigations relating to a notice of penalty offense 
authority.
    Mr. Walberg. But many losses because of the perception of 
the aggressive nature that you've taken that's been outside of 
what your purpose is, and especially when you attempted to take 
those phrases--that phrase out of your mission statement.
    I wish we could go on, but I see my time has ended, so I 
yield back.
    Mr. Bilirakis. The gentleman yields back. I'll recognize 
Representative Castor from the great State of Florida for her 5 
minutes of questioning.
    Ms. Castor. Well, thank you, Mr. Chairman, and thank you to 
our FTC Commissioners for being here today.
    Members, it is urgent that the Congress pass a 
comprehensive data privacy law that protects the personal 
privacy of Americans, especially our kids. Luckily, we have a 
bipartisan bill to do just that, the American Data Privacy and 
Protection Act, and I urge Chair Rodgers and Ranking Member 
Pallone to introduce a markup of the ADPPA as soon as possible.
    Congress is late to the game here. Other countries have 
acted. We are behind. But, fortunately, the FTC has used its 
powers to protect Americans from unfair trade practices in this 
area.
    But I'm particularly concerned about the impact on 
children, and I know you are too, based upon what you've done. 
For many years, I've called attention to the ways in which Big 
Tech platforms are surveilling, tracking, and collecting our 
most private information in pursuit of profits. This is 
especially concerning for children.
    I've raised the alarm again and again about how these 
surveillance practices harm kids and teens and how Big Tech 
platforms use the manipulative design to addict kids to their 
products and funnel them towards harmful content. That's why 
I'm planning on reintroducing the Kids Privacy Act to ensure 
tech platforms build in privacy and safety in kid-directed 
products during their design. The FTC is also working to 
protect children online--and thank you for that, but you need 
to do more.
    Chair Khan, could you please give us an update on the 
Children's Online Privacy Protection Act rule review and the 
6(b) investigations the FTC is conducting into social media and 
video streaming services?
    Ms. Khan. Thanks, Congressman, and thanks for your 
leadership on this issue.
    So both of these are currently ongoing. When we initiated 
the rule review, we ended up getting over 170,000 comments as 
part of our public record, so our staff has been diligently 
reviewing those comments and identifying what potential 
revisions to the rule could look like. Of course, that hasn't 
stopped us from continuing to enforce COPPA, and we've been 
really thrilled to be able to see strong enforcement actions on 
that front.
    In terms of the 6(b), that work also continues. As you 
know, these orders went out to several large companies that 
have significant resources to try to thwart the FTC from 
getting the information that we need, so we've been engaged in 
various back and forth there but hope we'll be able to show 
progress publicly in short order.
    Ms. Castor. And last year, the FTC published a policy 
statement on education technology and COPPA. The statement 
described how the Commission intends to scrutinize compliance 
with the full breadth of the substantive prohibitions and 
requirements of the COPPA rule and statutory language. I'm very 
heartened by this approach. The statement specifically 
discusses COPPA's prohibition against mandatory collection, use 
prohibitions, retention prohibitions, and security 
requirements.
    Chair Khan, please discuss how those prohibitions currently 
in COPPA are informing the Commission's strategy and 
enforcement actions.
    Ms. Khan. Yes, this policy statement really laid out what 
are the key provisions of COPPA that go beyond the notice-and-
consent framework and actually identify substantive limitations 
on what companies can do. And so that includes, as you 
mentioned, you know, what they can do in terms of retention, 
what they can do in terms of collecting data in the first 
place.
    One of the things that the policy statement highlighted was 
Section 3127 of COPPA, which basically says that covered 
companies cannot condition access to their technologies on 
people having to surrender to endless data collection. And we 
thought that, especially in an era where kids are having to do 
their homework online, right, during the pandemic, that it was 
especially important for ed tech providers to be on notice 
about that, so these are all provisions that we're fully 
committed to enforcing.
    Ms. Castor. Thank you very much.
    And, Commission Slaughter, you've also been active in this 
area. What do you have to add on this--on the COPPA rule?
    Ms. Slaughter. Well, thank you. I think of these issues not 
just as an FTC Commissioner but as a parent of four young kids 
who, candidly, are probably responsible for the fact that I am 
sick today. And I think I see how hard I as a parent struggle 
and my kids struggle with managing their interactions with 
technology, so I think it is really important.
    COPPA was a groundbreaking, revolutionary statute when it 
was passed, but as you yourself has--have noted, its primary 
provisions, which are putting parents in the driver's seat and 
operating on a notice-and-consent framework, are pretty 
outdated when it comes to today's economy. So we really are 
grateful for the work that you and your colleagues are doing to 
update this really important law and make sure it's fit for 
purpose in the 21st century.
    Ms. Castor. Thank you. It's overdue, and I look forward to 
action by this committee and the Congress. Thank you. I yield 
back.
    Mr. Bilirakis. The gentlelady yields back. Now I'll 
recognize Mr. Duncan from the great State of South Carolina. 
Thank you. You're recognized for 5 minutes of questioning, sir.
    Mr. Duncan. Thank you. Chair Khan, I wrote a letter last 
month urging Secretary Raimondo and Ambassador Tai to deter 
foreign governments from pursuing policies or actions that 
target U.S. businesses and industries where the United States 
is a global leader. I ask unanimous consent to put that letter 
in the record.
    Mr. Bilirakis. Without objection, so ordered.
    [The information appears at the conclusion of the hearing.]
    Mr. Duncan. The EU Digital Marking Act is designed to harm 
U.S. tech companies and ultimately help Chinese companies take 
their place within the European market. The EU has done a 
terrible job, overregulating their own companies into oblivion, 
and now they seek to harm the U.S. companies who have filled 
that void to the benefit of Chinese market entrance. This is a 
March 30, 2023, press release from the FTC which seems to brag 
about the Commission's cooperation with the European Union's 
implementation of the deeply problematic DMA. I ask unanimous 
consent to enter that in the record.
    Mr. Bilirakis. Yes, without objection, so ordered.
    [The information appears at the conclusion of the hearing.]
    Mr. Duncan. We cannot allow foreign jurisdictions to harm 
U.S. companies under the guise of competition policy. But in an 
interview you gave back in 2021, you stated, ``I think it's no 
doubt the U.S. has been behind the curve, especially with 
regards to the European Commission.'' And you noted that you 
were in close--you were close to--in close touch with both 
folks at the CMA and European Commission on competition 
matters.
    Chair Khan, under what legal authority do you send staff to 
implement the DMA, which is not antitrust law from the U.S. but 
regulations targeting U.S. companies?
    Ms. Khan. Congressman, I'm proud of the international 
cooperation that the FTC has long pursued under many, many 
Chairs far preceding me. This has been a core part of the FTC's 
work to make sure that we are able to share with other 
jurisdictions the work that we are doing and also able to 
understand the different paths that other jurisdictions are 
taking.
    Mr. Duncan. I get that.
    Ms. Khan. That type of information makes us----
    Mr. Duncan. You've also sought to undermine U.S. companies 
in the current negotiating round of the Indo-Pacific Economic 
Framework. The IPEF is used--has used a U.S. MCA as the basis 
no-go negotiations.
    Yes or no, Chair Khan, did you and Jonathan Kanter of the 
Department of Justice send a letter to Ambassador Tai objecting 
to the competition chapter and the digital trade chapter and 
demand a seat at the negotiating table for future rounds?
    Ms. Khan. We have been engaged with USTR about that 
agreement. We've all seen how these trade----
    Mr. Duncan. Did you all send a letter?
    Ms. Khan. Yes. We've all seen how----
    Mr. Duncan. Can I get a copy of that, please?
    Ms. Khan. I'm happy to engage with your staff to see what 
we can share with you.
    Mr. Duncan. Thank you. Your actions from the EU DMA to the 
IPEF negotiations really run contrary to U.S. interests. Were 
these actions cleared by the State Department, Department of 
Commerce, the NSC, or the NEC?
    Ms. Khan. As you know, there are extensive interagency 
processes in place, and we work through them as appropriate.
    Mr. Duncan. Wow. Why should we increase your budget while 
you're sending staff to Europe to harm U.S. companies and 
directly benefit China? You don't have to answer that, but why 
would you help the EU undermine U.S. law and U.S. companies?
    Ms. Khan. Congressman, details back and forth from our 
agency to other agencies, from other agencies to our agencies 
have long been a key FTC practice extending back decades, and 
we've been pleased to continue that tradition.
    Mr. Duncan. Is it appropriate for you, the head of the FTC, 
to lobby foreign agencies to block transactions when U.S. 
companies or--and other companies overseas, especially when 
these reviews are happening without the oversight of the U.S. 
Federal court?
    Ms. Khan. Congressman, we make our own independent 
judgments with regards to our own enforcement authorities. We 
have some information-sharing agreements in place with other 
jurisdictions, but as it concerns our enforcement actions, we 
use our independent judgment and look at the facts as applied--
look at the law as applied to the facts before us.
    Mr. Duncan. These policies are problematic, and I think 
what it's going to do is hurt U.S. companies from operating in 
Europe, from consolidating operations, and it will be to the 
benefit of Chinese companies, such as Alibaba, to enter 
European markets when Amazon or companies like that are kicked 
out.
    So, Chair Khan, will you assure me the FTC will not urge 
Europe, the UK, China, or other foreign jurisdictions to block 
transactions or encourage those jurisdictions to extract any 
remedies for competition from U.S. companies?
    Ms. Khan. Congressman, again, we make our independent 
assessments with regards to how the U.S. law applies to the 
facts before us. We have some information-sharing agreements in 
place, but every jurisdiction makes its own determinations 
using its independent judgment.
    Mr. Duncan. So you're not cooperating with the Europeans on 
blocking U.S. companies operating in Europe, or the DMA, or the 
CMA with regard to the UK?
    Ms. Khan. Again, we have information-sharing agreements in 
place, but each jurisdiction has to follow the laws of its--of 
that country, and that's what each----
    Mr. Duncan. With the encouragement of the U.S. or the 
disapproval of the U.S.?
    Ms. Khan. Again, you know, there are many examples in which 
these jurisdictions are coming to different examples. I think 
it's good government for us to be sharing information and 
cooperating to get to consistent outcomes where possible. And 
again, these types of international processes have been in 
place at the FTC for a long time. We have a stellar Office of 
International Affairs that is widely respected around the 
world, in part because of the leadership that we have been able 
to show, both on the antitrust front as well as consumer 
protection.
    Mr. Duncan. Thank you. And I look forward to you delivering 
that letter. Thank you.
    Mr. Bilirakis. The gentleman yields back. Now we'll 
recognize Representative Blunt Rochester for her 5 minutes of 
questioning.
    Ms. Blunt Rochester. Thank you, Mr. Chairman, and thank you 
to the witnesses for joining us today, and especially for your 
service to our country.
    The work the FTC undertakes is some of the most impactful 
on the everyday lives of Americans and affects the economic 
health of our entire country. Chair Khan, your bipartisan 
confirmation demonstrated that Americans on both sides of the 
aisle are concerned about our personal data harmed by 
widespread fraud and scams and ultimately concerned about the 
power large corporations have over our everyday lives. So 
again, thank you for your willingness to testify before the 
committee.
    Chair Khan, for years, companies like GoodRx and BetterHelp 
deceptively shared private health information with social media 
companies so that they could make more money from users' health 
ailments, even information about users' mental health. These 
companies broke their public promises to keep the data private. 
The FTC rightly took enforcement actions on these two companies 
for breaking the law.
    My question is, the allegations against BetterHelp note 
that these practices continued from 2013 until 2020. Chair 
Khan, can you explain how companies are able to hide their 
deception for so long and how the FTC was able to pursue 
enforcement in this case?
    Ms. Khan. Thanks, Congresswoman. Yes, we were really 
thrilled to be able to move forward with enforcement on both of 
those areas, especially since we saw how during the pandemic a 
lot more health services switched online and people became much 
more reliant on these apps to be able to access key health 
services, be it, you know, counseling services, therapy 
services.
    You're absolutely right that oftentimes the inner workings 
of these companies can be somewhat of a black box to us, 
especially in digital markets, and we were really thrilled and 
proud of the FTC's work to uncover these practices that had 
been going on for so long. Again, we have our lawyers looking 
at this, we have our technologists increasingly on board that 
are also trying to unpack what's happening there.
    Ms. Blunt Rochester. Thank you. I'll note that the FTC 
under your leadership has taken a balanced approach to 
regulating this new emerging healthcare mobile app industry. In 
addition to taking punitive actions, the FTC has also updated 
the business guidance for health data. Does updating this 
guidance suggest that GoodRx and BetterHelp are not outliers, 
and should Congress be taking more concerted action to protect 
Americans' health information?
    Ms. Khan. Absolutely. As you know, Americans health 
information is some of the most sensitive data that there is. 
People feel extremely exposed when this information is out 
there and misused, and so I think this is an especially 
critical area where we need action.
    Ms. Blunt Rochester. Chair Khan, I think Americans will be 
pleased and encouraged to learn about your proposed Click to 
Cancel rule. My colleagues, like Ms. Clarke of New York, have 
been pushing to make it easier for Americans to cancel 
subscriptions, but as you noted, businesses often trick 
consumers into these subscriptions and then make it extremely 
difficult to get out of them.
    While you are taking important action to remedy these 
predatory practices, I want to ask you about preventative 
measures. As you know, I intend to reintroduce the DETOUR Act, 
which aims to crack down on deceptive practices that undermine 
the ability for Americans to make informed choices, practices 
also known as dark patterns. How pervasive of a problem are 
dark patterns, and what kind of impact do they have on American 
families?
    Ms. Khan. Based on our work, including a deep study that 
the FTC staff did that was published last year, dark patterns 
can be quite extensive across the economy and across digital 
markets. Unfortunately, what we've seen is that in practice, 
dark--these dark patterns can end up tricking consumers into 
signing up for services that they didn't want, into leading 
them to situations where they're incurring fees for charges or 
services that they don't want. And so I think we see a lot of 
deception that can stem from these types of dark patterns.
    Ms. Blunt Rochester. And do you support legislation that 
bans the use of intentionally manipulative design techniques 
that trick users into giving up their personal information? And 
I will ask all of the Commissioners.
    Ms. Khan. Yes.
    Mr. Bedoya. Yes.
    Ms. Slaughter. Yes.
    Ms. Blunt Rochester. At this point, I cannot believe I am 
actually ahead of schedule. I've got more questions, but I will 
put them for the record. But again, thank you so much for your 
service, especially now. We know that so many Americans have 
been tricked just looking at a app or a website, and they can't 
even find the little X to cancel out because it is deceptively 
the same color as the ad or the page. And so, again, your work 
to protect us from abuse, scams, fraud, we really appreciate 
it.
    And I thank you, Mr. Chairman, and I yield back.
    Mr. Bilirakis. I thank the gentlelady. Appreciate it. She 
yields back. And now I'll recognize Dr. Dunn from Florida. 
We're really well represented on this committee from the great 
State of Florida. We appreciate that.
    Mr. Dunn. Thank you.
    Mr. Bilirakis. So I'll recognize you for 5 minutes.
    Mr. Dunn. Thank you very much, Mr. Chairman.
    Chair Khan, thank you for appearing before this panel 
today. Congressional oversight of the FTC is an important part 
of the American political process. Small and medium-size 
businesses are the backbone that rural communities throughout 
America, including Florida's Second Congressional District, 
these include regional and local grocery stores and convenience 
stores, which are typically the only source of essential 
groceries and other consumer goods in many small towns in my 
district.
    Last year, as our Nation faced broken supply chains and 
rising prices, I sent a letter to the FTC asking the Commission 
to use its existing authority to study conduct that could 
violate laws under its purview. My primary concern is when 
rural stores are taken advantage of in such unstable times. 
Many towns and small rural communities have become food deserts 
after their local grocery stores went out of business.
    In addition, many of these businesses are family owned and 
provide the only viable option for individuals who don't have 
access to adequate transportation to travel to larger chain 
stores, which may be hours away.
    The independent, small, and medium-size grocers are telling 
me that big-box star--stores are forcing them out of business. 
So, Chair Khan, Section 6(b) of the FTC Act empowers the FTC to 
require companies to respond to questions about business 
practices. Where are you currently in the 6(b) process on 
independent grocers and food supply chains, and have you 
formally inquired about monopolistic practices harming 
independent and regional grocers?
    Ms. Khan. Thanks for that question, Congressman. I couldn't 
agree more that these are especially troubling concerns that 
we're hearing from independent retailers, especially 
independent grocers. One 6(b) that we launched early in my 
tenure was to understand whether the supply chain disruptions 
that we had seen were being exacerbated by asymmetries of power 
that we may see between the small independent stores and the 
big chain stores. We had----
    Mr. Dunn. So my question, though, have you actually 
formally started that 6(b) process----
    Ms. Khan. Yes.
    Mr. Dunn [continuing]. For inquiry?
    Ms. Khan. Yes, we have.
    Mr. Dunn. Excellent, excellent. So last Congress, the then-
Ranking Members Rodgers and Bilirakis sent a letter to 
Secretary of Commerce Raimondo--we mentioned that earlier 
today--requesting that the Secretary work with stakeholders 
across the Federal Government to prevent supply chain 
disruptions in--throughout Americans, but especially in rural 
areas. Have you been working with the Department of Commerce on 
that particular effort?
    Ms. Khan. I'm not sure if we're working with them on this 
specific issue, but generally we try to take a whole-of-
government approach to these issues in general.
    Mr. Dunn. All right, then. So I'd like to recognize and 
actually commend the Commission's bipartisan May 2021 report 
called ``Nix the Fix.'' It was an FTC report to Congress 
regarding restrictions on repairs on various products. The vote 
was 4 to 0 on that ruling in 2021. This congressionally 
directed report highlighted the unsustainable rise in cost of 
vehicle maintenance and repair, and it prompted the need for 
bill--my Bill H.R. 906, the REPAIR Act, which seeks to restore 
consumer choice and competition in the vehicle repair sector.
    The Nixing the Fix report highlights the important ways in 
which bipartisanship at the FTC can result in positive 
legislative actions afterwards. So after all, you know, 
Congress did create the FTC, and we're glad that on passage of 
that bill, vehicle owners will be able to repair their own 
property and repair shops can continue operating without fear 
of being put out of business.
    Unfortunately, bipartisanship does not seem to be the order 
of the day currently at the FTC. Ms. Khan, I find it striking 
that the FTC Commission--or that Commissioner Christine Wilson 
resigned in protest of your partisan conduct as Chair.
    Chairman Bilirakis, I'd like to submit this February 14, 
2023, Wall Street Journal article, ``Why I am Resigning as an 
FTC Commissioner,'' for the record.
    Mr. Bilirakis. Without objection, so ordered.
    [The information appears at the conclusion of the hearing.]
    Mr. Dunn. Thank you very much.
    Chair Khan, Commissioner Wilson's scathing review of your 
agency cited, first, your violation of due process, given your 
failure to recuse yourself from a Meta acquisition case despite 
clear legal precedent requiring you to do so; second, your 
colleagues' and staff's excessive redactions to her written 
objections and dissent you--in order to protect you; and third, 
a staggering 49 percent--less than half--of the FTC employees 
recently polled believe that senior FTC agency officials 
maintain high standards of honesty and integrity. For 
comparison, in 2020, just prior to your appointment, 87 percent 
thought FTC officials had high honesty and integrity standards.
    Do you have an answer to that question, Chair Khan?
    Ms. Khan. Thanks, Congressmen. I'll just say I'm incredible 
proud of the FTC staff who day after day are on the front lines 
of protecting Americans from unlawful business practices. 
There's no doubt that early in my tenure there were things we 
could have done better or differently, but since then we've 
been taking these survey results seriously and taking steps to 
make sure we're fully understanding what was the source of 
these declines and identifying what changes we can put in 
place, and I think----
    Mr. Dunn. My time has expired, and I yield back to the 
Chair. I'll submit the--or my questions for----
    Mr. Bilirakis. The gentleman yields back. Thank you, 
Doctor. Now we'll recognize my friend, again from the State of 
Florida, Mr. Soto, for his 5 minutes of questioning.
    Mr. Soto. Thank you, Chairman. This committee is charged 
with broad jurisdiction, and overseeing the FTC is one of our 
great responsibilities. Thank you, Chairwoman and 
Commissioners, for being here.
    We've been through a lot together: COVID-19 scams, like in 
Florida, where fake cures, paycheck protection program scams, 
stimulus check scams ran abound. I appreciate the FTC's work to 
rein those in. We faced challenges with social media, and we 
did have some victories, like a bipartisan robocall reform, 
which I know everybody around here appreciates. You all 
testified your work to combat opioid fraud, fraud against our 
military, and others.
    You know, I find it pretty sad that both Republicans, 
Wilson and Phillips, both resigned. They took their toys and 
went home. I guess they couldn't hold on for one more day, 
right? And now we face major challenges, like restoring the 
restitution power recently struck down by the courts, combating 
potential fraud related to the Inflation Reduction Act, a 
privacy standard that we're hoping this committee could get out 
and passed. In the meantime, you all have stepped up in the 
vacuum. We appreciate you doing that.
    Chair Khan, we saw Grant Bae, a fraudster company from Lake 
City, Florida, preying on minority small business owners 
seeking pandemic relief, specifically African-American business 
owners, with false promises of easy access to guaranteed grant 
funding. And I commend the Commission for stepping up to shut 
them down.
    With new laws now rolling out, like the Inflation Reduction 
Act, can you speak to FTC's role in preventing future predatory 
business practices with a lot of the tax credits and other 
opportunities coming out of both that, the infrastructure law, 
and other laws coming out?
    Ms. Khan. Yes, absolutely. There are a few ways in which 
our work intersects with some of this new legislation. One is 
making sure that in areas where the Government is trying to 
prioritize Made in USA, that we are protecting the integrity of 
Made in USA labels. I think all too often we've seen that 
companies can play fast and loose with that label. They put it 
on, but actually their products were manufactured elsewhere.
    In 2021, we finalized a rule that allows us to go after 
Made in USA fraudsters and get civil penalties, and so that's 
an area we'll be--where we will be continuing to do this work.
    More generally, any time you have benefits from the 
Government or credit from the Government that's going out, 
there's always a heightened risk of fraud that can attach to 
that. We saw that during COVID, and I think we have to be 
vigilant at this moment as well.
    Mr. Soto. And how important is restoring your restitution 
power to protecting consumers with these future scams?
    Ms. Khan. It's critical. You know, absent that, we saw 
billions of dollars basically evaporate that could have gone 
back into consumers' pockets that were not able to get back to 
them.
    Mr. Soto. Commissioner Slaughter, the FTC recently launched 
a new Office of Technology, which would hire technical staff to 
inform the Commission's investigations. How would this in-house 
technical expertise help further the Commission's work in areas 
like you just worked on with Epic Games in helping our--protect 
our children from predators online?
    Ms. Slaughter. Having a fully staffed Office of Technology 
is critical to make sure we can keep up with 21st century 
problems in the markets. It's the kind of expertise we need to 
really understand the business practices that are most hurting 
Americans in digital markets. And to be fair, today almost 
every market has some sort of a digital element to it. Almost 
every case we have has some sort of a technological element on 
it.
    We have, for a very long time, put economists on every case 
that we bring, and that is enormously valuable, but the 
technological expertise is also really valuable. So I want to 
commend the Chair for standing up that office, and I'm really 
excited for the work it's already producing.
    Mr. Soto. Commission Bedoya, we saw the Commission work to 
help put a consent order for Google Pixel 4's deceptive product 
claims in Spanish radio ads. If the Commission were provided 
additional resources, what actions--additional actions could 
the Commission take to prevent predatory business practices in 
Espanol?
    Mr. Bedoya. Thank for that question, Congressman. I'll 
point to one recent example that I think gives you a sense of 
what more could be done.
    The Commission actually has a great track record for 
decades providing information in Spanish and English, but 
recently, as of February, we've been able to start providing 
advice to spot frauds, identify them, how to report them in 12 
languages in addition to English. When you add English in, we 
can reach 99 percent of the American population in the 
comfortable they're most--in the language they're most 
comfortable in. And that's a great initiative from the Every 
Community Initiative, and there's more where that came from, 
and with resources, we could do even more of that work.
    Mr. Soto. Thank you. And my time's expired.
    Mr. Bilirakis. Thank you, appreciate that. Now we'll 
recognize Representative Allen for his 5 minutes of 
questioning.
    Mr. Allen. Thank you, Chair Bilirakis, and for convening 
this hearing, and thank you to our Commissioners for being here 
today. I want to start immediately with questions, and if you 
could give quick answers because I've got a lot to get to.
    Chair Khan, during your nomination confirmation process, 
you noted that you would take a 2-year unpaid leave of absence 
from your faculty position at Columbia University School of 
Law. Two years will have passed in June of this year since you 
were sworn in on June 15, 2021. Have you asked Columbia 
University for an extension to your leave of absence?
    Ms. Khan. Not officially, but those discussions are ongoing 
since I intend to continue to serve in this position.
    Mr. Allen. So you have spoken to administration officials 
about serving--continuing to serve in the administration?
    Ms. Khan. My term goes until--through 2024, and I fully 
intend to continue serving, yes.
    Mr. Allen. Thank you. Members from rural districts have 
been tracking the status of the American Farm Bureau, John Deer 
MOU, and other related actions on farmers' repair facilities 
having access to farm equipment repair data. To date, there has 
not been any similar industry action or agreement between the 
automakers and industry partners: repair shops, car rental 
companies, aftermarket parts manufacturers, distributors.
    With the FTC's Nixing the Fix report in 2021, and the 
administration's interest in repair data access, does FTC have 
a strategy or plan to address the light-duty-vehicle-data 
access issue that owners of vehicles and their repair 
facilities face? And I will ask who would be most able to reply 
to my question?
    Mr. Bedoya. I'd be glad to say, Congressman, that the 
Commission's work under Chair Khan's leadership has been 
terrific on this. I took a meeting with Commissioner Phillips 
in Iowa with a group of corn growers and cattlemen, and one of 
the things they kept on coming back to was, ``I used to be able 
to fix my tractor. Now I can't, now I have to go 3 hours to the 
special shop. They're not open, they don't answer their 
phones.'' And this is really big issue, and this is something 
the Commission is taking very seriously and started under 
bipartisan action of the Chair.
    Mr. Allen. OK, good. Well, thank you, I'm glad you're on 
that.
    Chair Khan sent a letter to then-Chair Cicillini and 
Ranking Member Buck on September 28, 2021, about antitrust and 
the American worker. I seek unanimous consent to have this 
letter included in the record, Mr. Chairman.
    Mr. Bilirakis. Without objection, so ordered.
    [The information appears at the conclusion of the hearing.]
    Mr. Allen. Towards the end of the letter, Chair Khan 
explained that legislation clarifying that labor organizing by 
workers regarding the terms and conditions of their work is 
outside the scope of the Federal antitrust statutes, regardless 
of whether the worker is classified as an employee, would 
remove the threat of the antitrust liability resulting from 
such coordination. Chair Khan went on to say that this 
clarification would allow for expansion of this concept to the 
gig economy.
    Commissioner Bedoya, you recently gave a speech in Utah 
saying that Congress has made it clear that work organizations 
and collective bargaining are violations of antitrust laws. An 
article detailing your speech also stated that you said 
independent contractors such as those who work at gig economy 
companies like Uber, Lyft, and DoorDash aren't barred from 
collectively bargaining under antitrust law.
    Commissioner Bedoya, how can you definitely assert that 
under antitrust law independent contractors have the authority 
to collectively bargain when your colleague has written to the 
Judiciary Committee seeking legislative action to clarify this 
as current law?
    Mr. Bedoya. Thank you for that question. Let me just state 
that some of the headlines around that speech don't reflect 
what was in that speech. I can tell you, however, that I do 
think if you look at what Senator John Sherman said on the 
floor of the Senate in 1890--1889, if you look at what Members 
of Congress said in 1914, if you look at what, you know, 
Fiorella LaGuardia said on the floor of this House in 1932, 
every single instance they wanted to make clear that if you're 
a working person, they do not want antitrust law to be used to 
stop you organizing for better wages, better working 
conditions, things like that.
    I read Chair Khan's letter from--the letter you just 
mentioned to be squarely in line with my own beliefs and 
remarks. My clarification in Federal law be useful either 
through an amendment to the antitrust laws or through something 
like the PRO Act. I personally think it very much would, and I 
read that to be in line with what Chair Khan said.
    Mr. Allen. So I--if I understand what you're saying----
    Mr. Bedoya. Yes, sir.
    Mr. Allen [continuing]. What she said, you did not say?
    Mr. Bedoya. Respectfully, some of the headlines were not 
from what my remarks said, although I do think there is a 
strong argument that a lot of people who have been classified 
or misclassified as independent contractors should benefit from 
the ability to organize, yes.
    Mr. Allen. OK, thank you.
    Mr. Chairman, I yield back.
    Mr. Bilirakis. The time of the gentleman has expired. Thank 
you, appreciate it. And now we'll recognize Representative 
Clarke, who was my classmate, I believe, and I'll recognize her 
for 5 minutes.
    Ms. Clarke. Thank you, Mr. Chairman. And I thank our 
Commissioners and Chairperson for your presence today and their 
forthcoming responses to the Members' questioning.
    Chairwoman Khan, as you know, automated critical decision-
making processes like algorithms can produce discriminatory 
outcomes on the basis of race, sex, or other characteristics. 
I'm encouraged by the steps the Commission is taking toward 
addressing discriminatory algorithms through both its 6(b) 
investigation into social media companies, which I hope will be 
completed soon, and its ANPRM on commercial surveillance.
    The American Data Privacy Protection Act passed by this 
committee last Congress would prohibit companies from 
collecting, processing, or transferring covered data in a 
discriminatory manner and requires algorithmic impact 
assessments. While this committee continues to work towards 
passage of a comprehensive privacy bill, can you commit to 
addressing algorithmic discrimination in your commercial 
surveillance rulemaking?
    Ms. Khan. Thanks, Congresswoman. As you know, this 
rulemaking proceeding is underway. We have received thousands 
of comments that our staff is reviewing now to determine next 
steps, but it's a big area of interest for all of us, and so 
we're looking closely to see if we may be able to move forward 
to address these practices.
    I think you're absolutely right. Given the digitization 
across our economy, the ability for firms to be able to 
algorithmically discriminate is a huge concern.
    Ms. Clarke. Thank you. I'm concerned about with the ability 
of new generation AI tools to be used not only to spread 
misinformation and disinformation online but to generate new 
and more sophisticated scams. We've seen recent reports from 
scammers using ChatGPT to generate phishing attacks and deep-
fake audio scams.
    Chair Khan, could you discuss how the FTC is working to 
combat unfair or deceptive practices that result from advances 
in new technology? I know the Commission recently formed the 
Office of Technology, and how will that office work across the 
agency to ensure the FTC is able to fulfill its mission to 
adequately protect consumers from unfair deceptive practices?
    Ms. Khan. Thanks, Congresswoman. Making sure that we're 
able to enforce the laws, even as underlying technologies 
shift, is core to the FTC, and we have a host of tools 
available to make sure we can do that. I think you're 
absolutely right that AI provides--presents a whole set of 
opportunities but also presents a whole set of risks, and I 
think we've already seen ways in which it could be used to 
turbocharge fraud and scams.
    We have been putting market participants on notice that 
instances in which AI tools are effectively being designed to 
deceive people can place them on the hook for FTC action. Our 
technologists are embedding across our agency's work, both on 
the consumer protection side and on the competition side, to 
make sure that we're issue spotting for this, because I think 
the turbocharging of fraud and scams that could be enabled by 
these tools is a serious concern.
    Ms. Clarke. Commissioners Slaughter and Bedoya, anything to 
add there?
    Ms. Slaughter. Well, I think this is an area, you know, 
throughout the FTC's history, we have had to adapt our 
enforcement to changing technology. There's a lot of noise 
around AI right now, and it's important because it is a 
revolutionary technology in some ways, but our obligation is to 
do what we've always done, which is apply the tools we have to 
these changing technologies, make sure that we have the 
expertise to do that effectively, but to not be scared off by 
the idea that this is new, revolutionary technology and dig 
right in on protecting people.
    Ms. Clarke. Very well.
    Mr. Bedoya. Congresswoman, thank you for your leadership on 
this. Let me add, I'm really proud of how staff in the Division 
of Privacy Identity Protection and the Division of Advertising 
Practices have been consistently sending signals to industry 
that there is law. A lot of folks in the industry are saying, 
this is unregulated, we need to regulate this. Our staff has 
been consistently saying our unfair and deceptive practices 
authority applies, our civil rights laws, fair credit, Equal 
Credit Opportunity Act, those apply.
    The other point I'm really glad that they have stressed is 
it is not OK to say your algorithm is a black box and you don't 
understand it, so you're not responsible for it. Some of these 
laws demand expandability. And so I'm proud that the Commission 
has been staying up to date through the Office of Technology, 
through the career staff at DPIP and DIP to make clear that 
there is law and companies will need to abide by it.
    Ms. Clarke. Very well. Thank you so much.
    And, Mr. Chairman, I yield back.
    Mr. Bilirakis. Thank you. The gentlelady yields back, and 
I'll recognize Representative Fulcher for his 5 minutes of 
questioning.
    Mr. Fulcher. Thank you, Mr. Chairman, and thank you to 
those on the panel for being here and contributing today.
    This is addressed to Chair Khan, please. The proposed Motor 
Vehicle Dealers Trade Regulation Rule is something that FTC 
claims will save consumers $31 billion while only imposing 1.4 
billion in regulatory costs. The entirety of these savings is 
based on FTC's claim that consumers will spend 3 fewer hours 
shopping for a vehicle, and the Commission arrives at that 
apparently by taking the number of vehicles transacted in 2019, 
which is about 62.1 million, multiplying that by 3, then 
multiplying that sum by 22.20, which is the value nonwork-time 
hours for the average U.S. worker. That's my understanding 
where that came from.
    The 3 hours of savings is based on the Commission's 
assumption that the proposed rule will save 3 consumer hours. 
Can I just ask, Ms. Khan, what sources or documentation does 
the Commission have for making that kind of an assumption?
    Ms. Khan. Congressman, our proposed rule lays out extensive 
documentation for how we have come up with some of these 
estimates, and we'd be happy to engage with your team to 
share----
    Mr. Fulcher. And why won't those sources, though--I 
understand why you may not be able to recite them here, but why 
weren't those sources listed in the documentation in the rule--
or in the notice of proposed rulemaking, or NPRM, because it 
was not----
    Ms. Khan. I know as a general matter our staff tries to 
make sure that they're citing whatever empirical evidence 
underlies their assessments and analysis. Again, happy to 
engage with your team to see if there's more----
    Mr. Fulcher. It's my understanding that that was simply not 
there. That rule also mandates up to four new disclosures for 
car buyers to sign related to add-on products. We all know that 
takes time, burdening consumers with more Government paperwork 
and so on.
    Did your assumption factor in your own rule and what that 
will cost consumers in terms of time in the showroom?
    Ms. Khan. Congressman, our work here is based in part 
through our enforcement actions, which have shown that 
unfortunately the car-buying experience remains unfriendly to 
consumers.
    Mr. Fulcher. So we take that as a no, it did not factor 
that in. That's how--that's what I'm understanding.
    Ms. Khan. Factor what in?
    Mr. Fulcher. The time that it takes to put your own rule in 
placez, burdening consumers with that paperwork for add-on 
product disclosures.
    Ms. Khan. When we do this rulemaking, we have to engage in 
a cost-benefit type of analysis, so those considerations were 
definitely done here.
    Mr. Fulcher. Using the Commission's calculation of the 
value of consumers' nonwork time, can you provide an estimate 
of how much the added paperwork mandated under the proposed 
rule will cost consumers?
    Ms. Khan. We're happy to be in touch with your team if we 
can provide any----
    Mr. Fulcher. These are things that are important when you 
go about the process of this rulemaking, and that's the point 
of this discussion here.
    In a response to a question for the record--and I think it 
was to Senator Cruz last year--you made a quote, you said, 
``For a recent and exceptionally well-done example of an 
economic analysis that FTC economists played a leading role in 
formulating, I recommend to you the notice of proposed 
rulemaking concerning a Motor Vehicle Dealers Trade Regulation 
Rule. The billion dollar plus regulatory cost of this rule is 
real.''
    So those are your words, that's my understanding. So is 
this what passes in the FTC now for exceptionally well-done 
example of an economic analysis, an analysis based on inflated 
data and assumption but not supported by, what we can tell, any 
economic data?
    Ms. Khan. Congressman, our economists do superb work. The 
analysis that they do is undergirded by close assessment of the 
available empirical evidence, and I have no doubt that that's 
true here as well.
    Mr. Fulcher. Ms. Khan, I--well, it's--the data doesn't seem 
to back that up.
    Section 110 of the FTC's Procedural Rules states, prior to 
the commencement of any trade regulization rule proceeding, the 
Commission must publish in the Federal Register an advanced 
notice of such proposed proceeding. Since the proposed Motor 
Vehicle Dealers Trade Regulation Rule is a trade regulation and 
rule, why didn't the FTC first issue an announced notice of 
proposed rulemaking, or ANPRM?
    Ms. Khan. Congressman, this rule was issued pursuant to 
Dodd-Frank, which is separate from Section 18 of the FTC Act, 
which does require publication of an ANPR. Pursuant to Dodd-
Frank, we're able to do this under the Administrative Procedure 
Act.
    Mr. Fulcher. And my understanding is, is that you still 
have that requirement, regardless of how this is submitted.
    Ms. Khan. My understanding is that this is not under the 
APA. The APA permits us to begin by publishing a notice of 
proposed rulemaking.
    Mr. Fulcher. Ms. Khan, I thank you for your responses, but 
at the same time, I hope you understand the concern here. I've 
got a group of car dealers that are very difficult to upset in 
many ways, but you figured out a way to do that. And so our 
urging is to make sure that you follow that process moving 
forward. It's there for a reason.
    Mr. Chairman, I yield back.
    Mr. Bilirakis. Thank you. The gentleman yields back, and 
I'll recognize Representative Dingell for her 5 minutes of 
questioning.
    Mrs. Dingell. Thank you, Mr. Chairman. I'm biting my tongue 
because I--I'm not old, but I'm seasoned, and the auto industry 
has for many a year not always loved the FTC. But anyway, I'm 
going to behave.
    Thank you, Chairman and Ranking Member Schakowsky, for 
holding this important hearing and to all of you for sitting 
through all of this.
    The FTC provides a critical service promoting fair 
competition and protecting consumers from fraud and deceptive 
business practices to robocalls and exploitative, predatory 
marketing. The FTC's mandate is expansive, and it's continuing 
to grow with an increasingly diverse and innovative 
marketplace.
    This committee is also considering granting the FTC 
additional specific authorities to regulate Big Tech and data 
privacy through comprehensive data privacy legislation. And I 
want to make this point to all of my colleagues: If we can 
seriously expect the FTC to enforce these critical protections 
among its many responsibilities, we are going to have to make 
sure that you've got adequate funding and staffing to do so.
    I would like to focus now my questions in some of the 
crucial efforts that you are currently engaged in to protect 
consumers. In March we heard from TikTok's CEO about the 
company's collection of location data, and it gave me great 
concern. In the face of that information, I'm very pleased to 
talk about the FTC's latest geolocation data case against the 
data broker Kochava.
    My understanding is that in Kochava, the FTC has alleged 
that the defendant collected consumers' precise geolocation 
data, including locations that revealed consumers' visits to 
reproductive health clinics, houses of worship, temporary 
shelters for domestic violence survivors, and addiction 
treatment centers, and then sold that data to third parties--
all without the knowledge of the consumers whose data was being 
collected and sold.
    I know that this case is in litigation in Federal court 
now, so you're going to be somewhat limited in what you can 
say, but I--these are issues that really matter personally to 
me and to the victims I try to help, to those that are trying 
to get treatment, who are--those who are scared that they'll be 
persecuted for where they're worshiping.
    So I'd like to ask each of the Commissioners: Setting aside 
technical legal standards for unfairness under the FTC Act, do 
you believe the average consumer would agree it is unfair for a 
data broker they've never had contact with to sell data about 
their visits to sensitive locations? Just yes or no. Chairman 
Khan--Chairwoman Khan?
    Ms. Khan. As a general matter, yes, I think most Americans 
would be quite surprised.
    Mrs. Dingell. Commissioner Bedoya.
    Mr. Bedoya. Yes. I'll just add this was a bipartisan case 
of the Commission.
    Mrs. Dingell. Commissioner Slaughter.
    Ms. Slaughter. Yes.
    Mrs. Dingell. Chairwoman Khan, in this case, is the FTC 
seeking any financial recovery from the defendants? And if not, 
explain why not.
    Ms. Khan. Thanks, Congresswoman. So in this case we are 
alleging that the practice was unfair under Section 5 of the 
FTC Act. In light of the Supreme Court's decision in AMG, we 
are not able in Federal court to get back monetary equitable 
relief, including money back for consumers, under Section 5 in 
Federal court. So, unfortunately, we are hampered in that way.
    Mrs. Dingell. So, Commissioner Slaughter, would allowing 
the FTC to seek civil penalties to help deter this type of 
conduct in the continued sale of precise geolocation data 
revealing sensitive information?
    Ms. Slaughter. Yes, civil penalties play a very important 
deterrent effect, and we can only activate them either where we 
have an existing order or where we have an existing rule or 
where Congress has given us specific authority, and that would 
make a big difference here.
    Mrs. Dingell. And for any of the three of you, is there 
another--other authority Congress could provide to the FTC that 
would help enforcement in these type of privacy cases? Chairman 
Khan.
    Ms. Khan. I think as a general matter, any more specific 
bright-line rules of prohibitions that Congress is able to 
legislate would certainly make our jobs easier.
    Mrs. Dingell. Thank you. I'm going to quickly try to do--
I'd like to talk about one type of technology that some data 
brokers use to collect data: software development kits, or 
SDKs. Data brokers that consumers have likely never heard of 
entice app developers to install these SDKs in their apps, 
which collect geolocation data and feed it directly to the data 
brokers who then resell it to advertisers, other brokers, and 
anyone else they choose. And even the app developers often 
don't know where the consumers' data will end up.
    To all consumer--Commissioners: Yes or no, putting aside 
the statutory requirements for an unfairness claim, do you 
think consumers would think this type of data collection is 
unfair? Yes or no. Just go down the----
    Ms. Khan. Yes.
    Mr. Bedoya. Yes.
    Ms. Slaughter. Yes.
    Mrs. Dingell. And, Chairman Khan, in 4 seconds, do you know 
any good reason why Apple and Google continue to let app 
developers use SDKs and applications offered on their mobile 
application platforms? Do SDKs warrant significant concern?
    Ms. Khan. I think they warrant scrutiny, yes.
    Mrs. Dingell. Thank you.
    Thank you, Mr. Chairman. I'm just--people don't understand 
what's happening. I went in to do my financial disclosure this 
week and went in to look up the value of something, and within 
2 minutes of my having done that, I was getting investment 
advice, which--people don't know how we're being traced. I had 
to make that point. Thank you, Mr. Chairman, yield back.
    Mr. Bilirakis. I appreciate it very much, thank you. The 
gentlelady yields back, and now I'll recognize Representative 
Harshbarger for 5 minutes of questioning. Thank you.
    Mrs. Harshbarger. Thank you, Mr. Chair.
    I want to thank you all for looking at the unfair and 
deceptive business practices of pharmacy benefit managers, and 
I know it's--that study was initiated a year ago, but I hope 
you look at vertical integration and how that is really making 
it impossible for small, independent businesses to survive.
    And with that being said, Chair Khan, I'd like to discuss 
the gig economy. Specifically, I'd like to discuss the FTC's 
policy statement related to gig work, which was rammed through 
on a 3-2 vote. The policy statement complains about a power 
imbalance between gig companies and workers which may leave gig 
workers exposed to harms from unfair, deceptive, and 
anticompetitive practices and is likely to amplify such harms 
when they occur.
    Chair Khan, just a mere power imbalance in a commercial 
distribution change does not violate American antitrust or 
consumer protection law, unless it's accompanied by a specific 
bad conduct which harms consumers. Chair Khan, you have a 
specific amount of legal authority that Congress has 
authorized, and it does not include addressing power 
imbalances. Why are you deviating--in a short answer, why are 
you deviating from your authorized role?
    Ms. Khan. Thanks, Congressman. We're actually following 
existing precedent, including work that was started under my 
Republican predecessor, Joe Simons, to address instances in 
which gig companies are engaging in illegal practices, 
including with regards to their workers. One of the enforcement 
actions that preceded my time at the Commission involved 
instances in which Amazon was deceptively withholding tips from 
gig workers, from its drivers.
    Mrs. Harshbarger. That's----
    Ms. Khan. So again, there's nothing really unusual about 
this work.
    Mrs. Harshbarger. OK, that's good enough for me. But 
there's another interesting component of the policy statement, 
and it's around gig workers. It seems natural to me to call 
these people workers, not consumers, because generally, in a 
lot of--if you look at Lyft or Uber drivers, for example, 
they're contract workers or 1099s. They can leave anytime they 
want.
    But the FTC seems to have invented a new term called 
working consumers. Am I getting the phrase right? Yes or no. 
Working consumers?
    Ms. Khan. I'm not specifically familiar with that phrase. I 
will say our statute prohibits unfair or deceptive acts or 
practices as they could affect any market participant, be it a 
consumer, be it a worker, be it a small business.
    Mrs. Harshbarger. Well, if it's called working consumers, 
it's an oxymoron because the next thing we're going to have are 
manufacturing consumers or we're going to have selling 
consumers. And it's alarming because the FTC seems to think 
that it can regulate just about anyone if you label them as a 
consumer. And the wording is especially concerning given the 
FTC's agreement with the National Labor Relations Board. The 
Federal Trade Commission does not have the authority to promote 
the unionization of workers.
    And answer--you can answer this very shortly. How does the 
FTC NLRB Memorandum of Understanding affect the FTC's review of 
the gig economy?
    Ms. Khan. So this is an MOU that we're really pleased to be 
entering because there are ways in which our staff can be 
exchanging information and sharing information that can allow 
each agency to better do its job. It's absolutely true that our 
authorities differ from those of the NLRB, but through having 
these partnerships, through having training of staff, we can 
make sure each of us is best positioned to do our job.
    Mrs. Harshbarger. OK. I have two more, and I've got a 
limited amount of time. I will tell you this: I'm troubled by 
the actions taken by the FTC to unwind the Illumina/GRAIL 
merger. And Illumina reacted--or reacquired GRAIL in 2021. It's 
a company which has developed a transformational test to detect 
cancer, and with a single blood test, that gallery test can 
screen asymptomatic patients for more than 50 types of cancer, 
many of which have no other form of screening and are often 
caught too late to treat effectively.
    And I can go on and on about that, but why does the FTC 
insist on blocking the merger in the name of competition when 
there are no other companies that are even close to having a 
test on the market for several years? Why is that?
    Ms. Khan. Congresswoman, I'm limited in what I can say here 
given that this case remains pending in our administrative 
proceeding. I will note that the Commission recently published 
an opinion stating out our views and our legal analysis as 
applied to the facts here.
    Mrs. Harshbarger. OK, OK. And I do have another comment. We 
can all agree that competition law isn't supposed to protect an 
industry's dominant player, do you agree?
    Ms. Khan. Sorry, could you say that again?
    Mrs. Harshbarger. I say we can all agree that competition 
law isn't supposed to protect an industry's dominant player.
    Ms. Khan. Correct.
    Mrs. Harshbarger. In light of that, I find it curious that 
the FTC is taking action to protect Sony, which has 68 percent 
of the global market for high-end video gaming consoles, from 
competitive--or competition attempted to block Microsoft's 
proposal--or their proposed acquisition of Activision Blizzard 
King. As you know, Sony's been the most vocal opponent of that 
deal, and remarkably, the FTC has sided with Tony--Sony. Can 
you explain why that seems to be a good idea?
    Ms. Khan. This case also has been voted out and is in 
administrative proceeding, so I'll let the complaint speak for 
itself. I will say as a general matter, we always really 
benefit from hearing market participants across the board, 
including big players, but at the end of the day, we always 
make our own independent judgments based on the law and the 
facts.
    Mrs. Harshbarger. OK. I know my time is about up, and so 
with that, I yield back.
    Mr. Bilirakis. Thank you. The gentlelady yields back, and 
now we'll recognize Representative Trahan for her 5 minutes of 
questioning.
    Mrs. Trahan. Well, thank you, Mr. Chairman. Thank you 
Ranking Member Schakowsky.
    It's worth reminding that a strong FTC is good for 
consumers, it's good for small businesses, certainly good for 
our economy. You simply cannot be pro privacy and support a 
weak FTC. And you can't be pro competition and support an 
understaffed Commission.
    The issues before us, whether we're talking about 
anticompetitive monopolies or online harms, are just too big. 
And we need Federal enforcers like the FTC to have the 
resources and the personnel necessary to tackle them.
    Commissioner Bedoya, as you know, an overwhelming majority 
of my colleagues on both sides on the dais here today support 
comprehensive privacy protections, particularly for our 
children. I share Representative Castor's concern about privacy 
violations in education technology, and I'm encouraged by your 
answers on improving COPPA enforcement and the COPPA rule. I'm 
particularly worried that parents and students don't have any 
choice or control over the technologies that students are 
required to us.
    Could you expand on what the FTC is doing to investigate 
privacy abuses and expand consumer choice and education 
technology, and what options do parents have if they have 
concerns about the technology that children are mandated to use 
in their classrooms?
    Mr. Bedoya. Thank you for that question. I think one of the 
great first steps the Commission has taken recently in pushing 
against precisely this issue is making clear that parents 
legally have to have a choice. The policy statement made clear 
that in the rule it says you can't force kids to surrender 
their privacy in order to do their homework, so you can't 
require them to surrender all this information to do their 
homework. It also reminded people that they needed to give 
industry--they need to give parents a choice about deleting 
that data.
    And so the first thing is sending very clear signals that 
there is law here. And for years COPPA, by folks outside of the 
Commission, was caricatured as a notice-and-choice rule when 
it's not. It's much more than that.
    Secondly, alongside the rule review, there have been some 
very aggressive cases brought. The one that comes most to mind 
is the Chegg case. This involved data that was stored in plain 
text, weak encryption, that resulted in the breach of 40 
million students' data, including information about disability 
and sexual orientation, and the Commission was able to bring a 
strong case there.
    And so between the Office of Technology, the policy 
statement, and enforcement from the Division of Privacy 
Identity Protection, we're moving on a number of fronts on 
this.
    Mrs. Trahan. Thank you, Commissioner Bedoya. And the--
that's the level of attention that our parents and our 
students, frankly, deserve.
    When we talk about harms to privacy and potential digital 
discrimination, those are what I would call systemic risks. And 
while it's heartening to see you tackling them in ed tech, we 
know harms exist across the online economy. Systemic risks are 
things we can all agree on: illegal activity and content 
online, digital discrimination, and risks to our democracy and 
to the health and well-being of consumers.
    That list includes public security. And the recent leak of 
classified information by an attention seeker on Discord showed 
that our country is prone to public security risks inherent in 
the use of online platforms. Last Congress I introduced the 
Digital Services Oversight and Safety Act, which would require 
the largest tech companies to comprehensively assess and report 
systemic risks.
    So, Chair Khan, do you believe that large online platforms 
adequately assess systemic risks around digital discrimination, 
illegal content or activity, public security, and/or health and 
well-being of their users, and do you believe a failure to 
assess these risks could potentially be unfair under Section 5 
of the FTC Act?
    Ms. Khan. Thanks for that question. I worry that there is a 
lot more work here to be done. I think we've all seen time and 
time again how the business models of these platforms can 
really incentivize practices that are not aligned with what's 
best for their users or consumers, and so I definitely think 
that there is much more need for us to be looking closely to 
understand what types of practices are happening, is there 
discrimination, and how can we be better targeting those.
    Mrs. Trahan. And if you were to enforce against companies 
for failing to properly consider systemic risks, could you 
accomplish that if there wasn't a standardized way to measure 
and qualify those risks?
    Ms. Khan. It would certainly be challenging. I'll say in 
our data security work, we've been able to identify what 
constitutes best practices and then enforce the law based on 
what should be required for best practices for data security. I 
imagine we could try to do something here but, of course, clear 
word from Congress about how to do that would be most helpful.
    Mrs. Trahan. Thank you. I understand those challenges, and 
that's why I've been proposing and much for a national 
framework like the one outlined in the Digital Services 
Oversight and Safety Act to assess those risks and those 
mitigations.
    Thank you so much for your time. I yield back.
    Mr. Bilirakis. I thank the gentlelady. I'll recognize 
Representative Armstrong for his 5 minutes of questioning.
    Mr. Armstrong. Thank you, Mr. Chairman. The fiscal year 
2024 FTC budget request is a substantial increase compared to 
previous years. The request is for $590 million, which is a 160 
million increase from last year's enacted level and a 2,000--or 
213 million increase from the fiscal year 2022 enacted level.
    The budget explains that the increase is accounted for by 
adding 310 full-time staff along with an anticipated 5.2 
percent pay increase for said staff. And there is a single line 
that briefly mentions inflationary adjustments to account for 
what I--the four-decade-high inflation data that exceeds 9 
percent comparing 2022 to 2021. And much of the proposed budget 
is to help the FTC in pursuing your mission in regards to 
competition enforcement.
    The Commission's testimony states that the FTC has been 
reassessing how we can enforce antitrust laws to maximize our 
efficacy. Considering the Commission's record in competition 
cases in recent years, we conclude that the--we could conclude 
that the record is neither effective nor efficient. And that 
may be largely due to the Commission's advancing of novel legal 
theories as opposed to enforcing conduct that is violative of 
current law. Former Commissioner Wilson referenced this as 
defiance of legal precedent.
    The Commission recently abandoned an effort to prevent Meta 
from purchasing a fitness startup after losing in district 
court on an actual potential competition claim, a theory that 
was entertained by the district court but rejected on the 
facts. The Commission lost the suit before the ALJ to reverse 
the acquisition of GRAIL by Illumina, the first decision since 
the Commission dropped its support of the 2020 Vertical Merger 
Guidelines, which acknowledged that vertical mergers generally 
create efficiencies.
    Undeterred, the Commission ordered Illumina to divest GRAIL 
this month. I fear this may also be the case with Microsoft/
Activision, but we'll get to that in a second. The motive is 
clear: The Commission's goal is to advance its novel legal 
theories. Winning cases seems to be secondary. But you still 
have to win cases. Referring to the Commission's recent record, 
former Commissioner Kovacic simply said, ``Ultimately you need 
litigated victories.''
    And this perceived budgetary inefficiency and advancement 
of policy goals isn't limited to litigation. After the last 
U.S./EU joint tech compliance dialogue, the Commission 
announced it would send personnel to assist with the 
implementation of the Digital Markets Act, an EU-passed law 
that is in conflict with U.S. competition.
    So I'm left to wonder, as someone who cosponsored a bill to 
increase merger filing fees to support the Commission's 
enforcement efforts, why should Congress grant such a 
substantial budget increase to the Commission?
    With regards to Sony and--Sony controls about two-thirds of 
the global gaming market and has vocally opposed Microsoft's 
acquisition of Activision. The FTC's position aligns with Sony, 
the dominant market leader, despite Xbox's position as the 
third-place gaming console manufacturer with a near nonexistent 
mobile gaming market share and multiple public comments to 
ensure that Call of Duty is open to competitor consoles. While 
the FTC complaint mentions that Microsoft competes with 
independent studios to offer games like Call of Duty, this is 
really another challenge of a vertical merger.
    I previously mentioned the FTC's administration court loss 
in the GRAIL/Illumina, but the DOJ's failure to block the 
vertical merger between UnitedHealth/Change Healthcare is also 
[indiscernible]. I understand that the Commission may be 
limited in what they can say regarding ongoing limita--ongoing 
litigation. Without speaking to the facts of that matter, 
Chairwoman Khan, do you agree with the statement that antitrial 
law--trust laws exist to protect consumers, not individual 
competitors?
    Ms. Khan. Thanks, Congressman. The--we follow the 
competition laws as written by Congress. The Sherman Act says, 
you know, restraints of trade or practices that undermine 
competition are illegal. We also look closely at Section 5 of 
the FTC Act, which prohibits unfair methods of competition. So 
we are fully committed to following the text of the statutes.
    Mr. Armstrong. And you have previously stated that 
reforming FTC merger policies should be more deeply rooted in 
the text of our statutes and bringing antilaw--antitrust more 
squarely within the rule of law. Yet the FTC now demands 
decadelong prior approval provisions in consent orders and 
merging--merger matters. Former Commissioners Phillips and 
Wilson have called this policy an end run around the Hart-
Scott-Rodino premerger notification framework that Congress 
established in 1976.
    What is the specific statutory text that grant FTC 
authority?
    Ms. Khan. So these prior approvals are obtained in 
settlements with parties when we're taking action. I should 
note that pursuing prior approval was actually a longstanding 
FTC practice through the mid-'90s, and so the changes that 
we've made are actually putting us back into alignment with 
longstanding FTC practice.
    Mr. Armstrong. And then I would ask unanimous consent to 
enter into the record a letter Senator Cramer sent----
    Mr. Bilirakis. Yes, without objection, so ordered.
    [The information appears at the conclusion of the hearing.]
    Mr. Armstrong. Thank you. I yield back.
    Mr. Bilirakis. Thank you. And I don't see anyone on the 
Democrat side, so I'll recognize my good friend from 
Gainesville, Florida, home of the Fighting Gators, Ms. Cammack. 
Please, you're recognized for 5 minutes.
    Mrs. Cammack. Thank you, Mr. Chairman. Go Gators.
    [Laughter.]
    Mrs. Cammack. All right. Mr. Chairman, I would like to 
start out by submitting two letters for the record written by 
FTC alumni expressing concerns about the integrity and fairness 
of the FTC and its departure from the agency's traditional 
norms and bounds.
    Mr. Bilirakis. Without objection, so ordered.
    [The information appears at the conclusion of the hearing.]
    Mrs. Cammack. Thank you. As I mentioned, these letters are 
both signed by prominent former officials of the FTC, and I 
would say that when FTC alumni are questioning the direction 
and integrity of the FTC, I certainly think that we here in 
Congress should as well. I would also like the record to 
reflect that neither of these letters have been responded to by 
you or your office.
    Additionally, Mr. Chairman, I'd like to submit the August 
1, 2022, FTC Inspector General's Report titled, ``Audit of the 
Federal Trade Commission's Unpaid Consultant and Expert 
Programs,'' for the record.
    Mr. Bilirakis. Without objection, so ordered.\1\
---------------------------------------------------------------------------
    \1\ The report has been retained in committee files and is 
available at https://docs.house.gov/meetings/IF/IF17/20230418/115716/
HHRG-118-IF17-20230418-SD030.pdf.
---------------------------------------------------------------------------
    Mrs. Cammack. Thank you, Mr. Chairman.
    Chair Khan, according to the Inspector General's report, 
you expanded the agency's use of unpaid consultants and 
experts, correct?
    Ms. Khan. We made use of Government authorities that allow 
us to bring on experts, yes.
    Mrs. Cammack. How many consultants were added to the FTC 
after your confirmation?
    Ms. Khan. I don't have those numbers top of mind, but we're 
happy to get those to you.
    Mrs. Cammack. Thank you. Did they receive training?
    Ms. Khan. They received ethics training and ensuring that 
they were in compliance with all FTC's rules and ethics rules.
    Mrs. Cammack. OK, perfect. According to your agency's press 
statement on the IG's audit, you defended the agency's use of 
unpaid consultants and experts by claiming that they fill 
``subject matter gaps.'' What gaps have existed during your 
tenure?
    Ms. Khan. Yes, this is a great question. And I should note 
that there are existing authorities that allow us to bring on 
these experts for precisely this function. A lot of our work 
can get quite technical. It can require deep industry 
expertise. Especially as we're doing our work in digital 
markets, it can require expertise to understand how these 
technologies are working. And so we were able to bring on, for 
example, experts in AI technologies to help us make sure that 
our work in this area was fully informed by the latest best 
practices and the latest industry knowledge.
    Mrs. Cammack. Perfect, thank you. Who did these consultants 
and experts report to and how frequently?
    Ms. Khan. So it would depend on where they were brought on 
within the agency. We had some experts that were brought on 
within the Office of Policy Planning, and so they would report 
to the director of that office. We had some experts brought 
onto the Bureau of Consumer Protection, and so they would be 
reporting to the respective managers there.
    Mrs. Cammack. And did your staff keep you informed about 
the work of these consultants and experts that were doing work 
on behalf of the agency?
    Ms. Khan. Yes, as a general matter, these consultants were 
being plugged into existing work streams, and so as that work 
was coming up to the Commission, we would see their 
contributions there.
    Mrs. Cammack. So I would like to get copies of the 
communications from these consultants to you and your office 
and your staff. Could you provide that to us?
    Ms. Khan. We're happy to work with your team to see what we 
can make available.
    Mrs. Cammack. I would hope all of it would be made 
available. Now, under your helm, how did the agency define 
``consultant'' and ``expert''? Specifically, what criteria did 
the agency use in recruiting these consultants and experts?
    Ms. Khan. As a general matter, when we're looking to bring 
on experts, we're doing so because there is a specific function 
for which we need their expertise, and so the criteria would 
depend on whether we were looking to bring on people who had 
particular expertise in AI, in particular its forms of digital 
markets, in particular areas of antitrust where we felt we 
didn't have the requisite expertise internally and so it needed 
to go outside.
    Mrs. Cammack. So that doesn't really answer my question of 
how you define a consultant or an expert, but I guess----
    Ms. Khan. I believe those terms are probably defined under 
the regulations, so we would follow those definitions.
    Mrs. Cammack. So you advertised this to members of the 
public?
    Ms. Khan. As a general matter, we have the authority to 
identify specific experts that we want to bring on board. There 
are no requirements----
    Mrs. Cammack. So that's no.
    Ms. Khan. There are no requirements under the regulation--
--
    Mrs. Cammack. So you did not publicly advertise these 
unpaid consultant positions to the public.
    Ms. Khan. Correct.
    Mrs. Cammack. You did not, OK. Why?
    Ms. Khan. We followed the underlying regulations that 
permit Government agencies to bring on outside experts and 
consultants. Given that the function for which we're doing this 
is to fill specific niche needs, we thought it would be most 
efficient to actually identify directly the people we needed. 
And again, we followed the regulations and what they require.
    Mrs. Cammack. So you don't publicly advertise these 
positions for these experts. Who initiates contact?
    Ms. Khan. As a general matter, I would think the agency 
would have initiated contact since these were specific needs 
that we were looking to fill, and so we would know what our 
needs were.
    Mrs. Cammack. It seems like it's a--it's ripe for an 
opportunity for fraud or corruption or finding people who are 
willing to execute on a political agenda. But did you receive 
approval from the FTC's Office of General Counsel ethics team 
to do this?
    Ms. Khan. Yes, the ethics teams is always involved anytime 
we bring new people on board at the Commission.
    Mrs. Cammack. And you will be willing to provide the 
written approval to this committee?
    Ms. Khan. We're happy to provide you whatever materials we 
have available in this area.
    Mrs. Cammack. My time has expired, Mr. Chairman.
    Thank you, Chair Khan, for being here.
    Mr. Bilirakis. The gentlelady yields back, and now I'll 
recognize my good friend from the State of Indiana, Mr. Pence, 
for 5 minutes of questioning.
    Mr. Pence. Thank you, Chairman Bilirakis and Ranking Member 
Schakowsky, for holding this hearing, and thank you to the 
Commissioners for being here with us today.
    As we discussed today, the FTC plays a critical role 
protecting consumers from fraudulent schemes and deceptive 
trade practices. You know, years ago, many years ago, I had to 
get involved in mergers that occurred across the country, and 
that doesn't seem to be something anybody gets involved in 
anymore. And the consolidation, especially in Big Tech, which 
is something I focus on, has just gone unchecked.
    But that's not part of what I want to say today. In the 
past year alone, the FTC has returned over 25 million to 
Hoosiers that have fallen victim to the deceptive scams and 
frauds. However, I echo the concerns of my colleagues regarding 
the direction of the FTC under Chairwoman Khan's leadership.
    During the Chairwoman's tenure, the FTC has routinely 
overstepped congressional-directed jurisdiction to target 
American companies. Meanwhile, the Chair has disregarded the 
other Commissioners and consolidated authorities of the FTC 
within her own office. Chairwoman Khan has even gone as far as 
to allow a former Commissioner to vote on a substantial merger 
policy.
    In a recent and notable overreach, the FTC issued initial 
violation notices through their unprecedented penalty offense 
authority rule to over 700 companies before the final order was 
issued. Since the Commission does not have authority to issue 
civil penalties for initial violations for most unfair or 
deceptive practices, the FTC is setting a new and dangerous 
precedent that could threaten Hoosier businesses operating in 
the U.S. economy. This has left businesses in my State in the 
dark about how they're allowed to do business and continues 
this administration's find-and-fine approach instead of 
collaboration in partnership to meet common goals and protect 
consumers.
    In 2004, we had the same problem in the State of Indiana 
where it was fine and fine--find and fine, and we got that 
changed and, of course, the State of Indiana has a fabulously 
balanced budget and our economy is growing.
    The FTC has continued their overreach with a proposed rule 
seeking to ban noncompete clauses in its partnership with the 
National Labor Relations Board. This rule rejects American free 
market ideals and disregards State laws that already serve to 
protect employees in their communities. I had a conversation 
just a little while ago with a friend of mine sitting in the 
back, a surgeon, about what if I went to work for a hospital 
that paid off my debt, would I--could I not have a noncompete. 
That's not my question, OK.
    As a result of the FTC's concerning overreaches, the 
remaining Republican Commissioners have all resigned. Before 
this committee considers any sort of additional authority, it's 
imperative that we gain a better understanding as to how the 
FTC can more appropriately utilize the resources they have at 
hand.
    Chair Khan, former Commissioner Wilson, who resigned just a 
few weeks ago, brought important private-sector experience to 
the FTC. Can you describe your experience working in the 
private sector?
    Ms. Khan. Thanks, Congressman. I have not worked in the 
private sector. I did work for Columbia University, but that's, 
I believe, you know, organized as a nonprofit.
    Mr. Pence. I'm not downplaying your private--your academic 
experience, but my view of the FTC, which is very positive back 
in my business experience all my life, understanding how 
business actually operates is pretty important. Do you believe 
the lack of business experience among FTC Commissioners 
inhibits your ability to regulate private-sector entities 
effectively?
    Ms. Khan. Congressman, there's no doubt that diversity of 
experience among Commissioners greatly benefits our work, and I 
really look forward to new Commissioners that the President 
would nominate and the Senate would confirm, and we'll look 
forward to that.
    Mr. Pence. So I hope you lead that. I'd like to yield the 
balance of my time to Mr. Armstrong.
    Mr. Armstrong. Thank you.
    Mr. Bilirakis. You're recognized.
    Mr. Armstrong. Chair Khan, earlier you expressed concerns 
about data brokers selling sensitive location data, and I share 
that concern. Anybody who's noticed me testifying in just about 
any entire hearing my entire time here, I think this is one of 
the largest conversations we have moving forward. This might be 
an unfair question, but I'm going to ask it anyway because we 
forget about the true elephant in the room.
    Do you have any thoughts on the Federal Government 
purchasing that same data from third-party data brokers?
    Ms. Khan. It's an interesting question. For us, our work 
looks at private entities for the most part, and so that's 
where our area is--of attention is. As a general matter, I 
think it's no coincidence that those who have traditionally 
been skeptical of concentrations of power, including in 
government, are now also extending those concerns to the 
private sector. I think any time we see, you know, deep 
concentrations of economic power, that can create concern. And 
so be it data collected by, you know, big business or big 
government, I think a lot of people have concerns about that.
    Mr. Armstrong. Thank you. And I yield back.
    Mr. Pence. Thank you, Mr. Chair. I yield back.
    Mr. Bilirakis. Mr. Pence yields back. Now we'll recognize 
Ms. Lesko from the great State of Arizona. You're recognized 
for 5 minutes of questioning.
    Mrs. Lesko. Thank you, Mr. Chair.
    Thank you, Chair Khan. My question for you, Chair Khan, is 
in 2020, 87 percent of responding FTC employees affirmed that 
senior leaders maintain high standards of honesty and 
integrity. That number plummeted to 49 percent in 2022. This is 
quite alarming. How do you respond to those that say your 
leadership style is responsible for such a large drop in 
employee confidence?
    Ms. Khan. Thanks, Congresswoman. I'm incredibly proud of 
the staff of the FTC who day in and day out are protecting the 
interests of the American public, and I take those results very 
seriously. After seeing those declines, my team and I sprung 
into action to make sure we were understanding what was the 
source of the decline and what changes we could put in place to 
turn that around.
    Mrs. Lesko. Thank you. Who at the FTC has authority to 
initiate an investigation on a business?
    Ms. Khan. So as a general matter, any time there is 
issuance of compulsory process, or a CID, that has to go 
through a particular Commissioner.
    Mrs. Lesko. Do Commissioners have to vote to initiate an 
investigation on a business?
    Ms. Khan. It depends what type of investigation is being 
done. Traditionally, on the consumer protection side, we had 
what was known as the omnibus authority which streamlined the 
ability to send out CIDs to make sure we could do our work more 
efficiently. More recently, we've also adopted that on the 
competition side, so in a whole host of areas, be it----
    Mrs. Lesko. All right, let me ask you more specific. Do 
Commissioners have to vote to seek a court order against a 
business?
    Ms. Khan. As a general matter, yes.
    Mrs. Lesko. OK. Third question. In response to Elon Musk's 
Twitter acquisition and public commitment to protecting free 
speech on a social media platform, it appears the FTC began an 
intense investigation into the company citing user data privacy 
as the reason behind it. FTC made over 350 demands of Twitter, 
including information on journalists that interacted with 
Twitter, specifically those that produced the Twitter Files. On 
what authority did the FTC make this demand?
    Ms. Khan. Thanks, Congresswoman. As you know, Twitter has 
long been under FTC scrutiny, extending back a decade when it 
was found that lax data privacy and security practices had 
allowed hackers to take over all sorts of accounts, including 
the account of Fox News. At that point, there was a consent 
order that was entered into.
    Last year, we found that base--that Twitter had been 
violating that consent order, entered into a new one. And 
inasmuch as we read public reporting suggesting that third 
parties may have been granted unauthorized access to Twitter's 
internal systems and be violating the new consent decree, 
that's absolutely something that we have an obligation to look 
at closely.
    Mrs. Lesko. But I fail to understand how you say it's due 
to data privacy when you're asking about specific names and 
communications, and you're specifically asking for the emails 
and all communications with Elon Musk within the employee 
network. How does that have to deal with data privacy?
    Ms. Khan. We want to know who is making some of these 
decisions, what type of responsibility are senior-level 
executives potentially carrying, and so we try to be 
comprehensive in how we're looking at these issues.
    Mrs. Lesko. Thank you. And I yield back.
    Mr. Bilirakis. OK, now I'll save Representative Carter some 
time and say he is from the home State of Georgia, home of the 
national champion Georgia Bulldogs. You're recognized, sir, 
for----
    Mr. Carter. Twice in row.
    Mr. Bilirakis. Now you can stick to the second matter.
    Mr. Carter. Two years in a row, Mr. Chairman.
    Mr. Bilirakis. Thank you.
    Mr. Carter. Go Dawgs. Thank you, Mr. Chairman, and thank 
you for allowing me to waive onto this committee.
    Thank you, Chair Khan. Thank you, Commissioners, for being 
here, I appreciate it.
    Let me preface my remarks by saying this. I became a Member 
of Congress 8 years ago. The first thing I did when I got here 
was to go straight to the FTC and ask them to look at the 
vertical integration that exists in the drug pricing chain.
    I'm a pharmacist. I've been in retail pharmacy. I've 
practiced over four decades. I started when I was 10, so 
anyway.
    But seriously, this is something that I've witnessed over 
the years. And again, 8 years ago, this was the first thing I 
did when I got to Congress, go to the FTC. Asked you to look at 
how the insurance company owns the pharmacy benefit managers, 
the PBMs, that owns the pharmacy and in some cases that employs 
the providers.
    Finally, last summer you agreed to do that, and I know 
you're doing it, and I want to thank you for that because this 
is what the problem is right here. You've seen it throughout 
the country. You've seen what's happened in States like Ohio 
where the Attorney General just recently referred to PBMs as 
gangsters. And they are. And they are the reason why the price 
of prescription drugs are so high.
    There was a study done a little over a year ago by the 
Berkeley Group out in California that showed that only 63 
percent of the price of a drug goes to the PBM. Only 37 percent 
goes to the drug manufacturer. Now I'm not trying to take up 
for drug manufacturers--they need to do a better job too--but 
tell me what they are doing with that 63 percent. Do you think 
that they are passing those savings onto the--the discounts 
that they get onto the patient? I can tell you they're not.
    You're familiar with it, Chairman Khan, I know you are, 
with spread pricing, with DIR fees that are putting retail 
pharmacies--independent retail pharmacies--out of business to 
the tune of about 4 percent every year. The most accessible 
healthcare professionals in America are pharmacists. Ninety-
five percent of all Americans live within 5 miles of a 
pharmacy.
    We want--everyone, Republicans and Democrats--want the same 
thing in healthcare. We want accessibility, affordability, and 
quality. That's what we all want. You do away with that 
accessibility by doing away with independent retail pharmacies, 
and you're going to decrease accessibility, and we don't need 
that.
    Chair Khan, can you bring me up to date of where the FTC is 
now? I know you can only say so much publicly, but can you 
bring me up to date where you're at in this process of looking 
at this study? I believe that you call it a 6(b) study?
    Ms. Khan. That's right. And, Congressman, early on in my 
tenure we started hearing an enormous amount from independent 
pharmacies about potentially abusive practices by PBMs. We took 
those reports enormously seriously, and that's why we've 
launched this study.
    We've been collecting information, collecting the data that 
was requested and are in the process of reviewing it. We're 
hoping that we'll be able to, you know, share something on that 
with your office in short order, but this is work that is 
underway.
    I couldn't agree more that independent pharmacies play a 
critical role. One thing that we saw during the pandemic in 
particular was that States that have legislation protecting 
their independent pharmacies were actually able to have better 
outcomes in terms of distribution of key medicines. And so I 
think we've seen how on key metrics independent pharmacies are 
outperforming, and so we need to make sure that unfair methods 
of competition are not squeezing them out.
    Mr. Carter. I know that you're looking at, I believe, it's 
six PBMs total. You know, there are three PBMs that control 80 
percent of the market. Eighty percent of the market. That's--
there is no reason--there ought to be a law that a PBM cannot 
own a pharmacy. You know that there's patient steering going 
on.
    You know, when the insurance company owns the PBM that owns 
the pharmacy, they're steering their patients toward their own 
pharmacy. We see it every day. That's happening.
    Ms. Khan. I think you're absolutely right that when you 
have vertical integration coupled with significant industry 
concentration, the ability for that structure to create 
conflicts of interest become very, very real, and those 
conflicts of interest can be a serious concern when they're 
leading to those types of practices.
    Mr. Carter. I mentioned the lawsuit that was--that's 
recently been filed by the Ohio Attorney General that alleges 
that PBMs, through their subsidiaries, collude to fix 
reimbursement prices and share competitively sensitive 
information to enable coordinated negotiations. Is the FTC 
investigating this same conduct?
    Ms. Khan. Congressman, some of that information is 
nonpublic, but as a general matter, those issues are on our 
radar. We also early on in my tenure issued a policy statement 
noting that potentially illegal kickbacks or commercial bribery 
that might be occurring through the rebate system is on our 
radar as well.
    Mr. Carter. Well, I'm out of time. Again, this is the first 
thing I did 8 years ago. Thank you for doing this. This is 
extremely important. Republican, Democrat. I never went to the 
counter and asked a patient ``Are you a Republican or 
Democrat?'' All I tried to do was to help the patients, as all 
pharmacies are trying to do.
    Thank you, and I yield back.
    Mr. Bilirakis. Thank you, sir. The gentleman yields back. 
And now we'll recognize--no one on the Democrat side, so we'll 
go ahead and recognize Dr. Joyce from the State of 
Pennsylvania. Thank you--thanks for your patience, sir.
    Mr. Joyce. Thank you for yielding, Mr. Chairman. And I 
would further like to thank both you and Ranking Member for 
allowing me to waive onto this panel for this important 
hearing.
    Chair Khan, last fall I, along with 67 of my colleagues, 
sent you a bipartisan letter in support of the FTC Franchise 
Rule, which highlighted the importance that this rule has to 
the business community at large. And I would like to ask 
unanimous consent to enter this letter into the record.
    Mr. Bilirakis. Without objection, so ordered. Thank you.
    [The information appears at the conclusion of the hearing.]
    Mr. Joyce. Chair Khan, is the FRI--is the RFI announced in 
March of this year part of the FTC Franchise Rule review?
    Ms. Khan. No, it's a separate effort.
    Mr. Joyce. If this is not part of the FTC Franchise Rule 
review, do you agree that there would be benefits of including 
the RFI as part of the Franchise review--Rule review?
    Ms. Khan. It certainly could be. The Franchise Rule itself, 
as it stands, covers a narrower set of issues, so we wanted to 
have the separate process to make sure we were getting a 360 
view of what the issues here might be. If we learn things that 
are relevant for how we should be enforcing the Franchise Rule 
or do any amendments, of course we would take that into 
account.
    Mr. Joyce. And I agree with you. I think that it--including 
that as part of the franchise review, including the RFI would 
be important. Thank you for acknowledging that.
    How does the FTC NLRB Memorandum of Understanding affect 
the FTC's review of franchise issues, particularly at a time 
when the NLRB is finalizing a rule that will upend the 
franchise relationship?
    Ms. Khan. As a general matter, we entered into this MOU to 
make sure that we were able to share information that might be 
relevant to each other. We each have different authorities, and 
so if one of us is spotting conduct that we're not able to act 
on but might be unlawful under their authorities, we can refer 
that and vice versa. So that's the main way we're----
    Mr. Joyce. And I think it's important that you acknowledge, 
just as you did, that there are different authorities involved 
here. Do you believe that the Commission has the authority to 
grant a private right of action to franchisees under the FTC 
Act?
    Ms. Khan. No, the FTC Act, section 5 does not have the 
private right of action.
    Mr. Joyce. I think that this is an important message that 
we take with us, that that private right of action is not 
included. And I would also like to add that the franchise 
system here in the United States is incredibly uniquely 
American, and it has allowed hundreds of thousands of small 
businesses to thrive and employ what we estimate are millions 
of people.
    Today, in America, we must ensure that this system 
continues and the economic growth is not interrupted in a 
partisan manner or by an antibusiness implementation of rules 
that are outside the intent of the law. Small businesses rely 
and thrive on that ability to have that integral action of 
working right here in America.
    I thank you, Mr. Chairman, for allowing me to waive on, and 
I yield back the balance of my time.
    Mr. Bilirakis. Thank you. And I--the gentleman yields back. 
I ask unanimous consent to insert in the record the documents 
included on the staff hearing documents list.
    Without objection, that will be the order.
    [The information appears at the conclusion of the hearing.]
    Mr. Bilirakis. I'd like to ask the ranking member if she 
had any comments. I really appreciate the testimony today, and 
your ability to answer the questions, and I appreciate your 
patience. And I'll yield to the gentlelady, the ranking member 
of the subcommittee, Ms. Schakowsky, for any comments she might 
have.
    Ms. Schakowsky. I just want to give a big thank you to the 
Chairman and the Commissioners for not only being here today 
but for all the work that you do to--every single day to 
protect consumers. Your efforts to go as far as you can to make 
sure that all the fraudsters and the people who are trying to 
hurt our consumers are addressed, and I think you're doing a 
great job. I wanted to thank you for answering all of the many 
questions that you had and for being there every day along with 
your staff. Thank you.
    Mr. Bilirakis. I appreciate you giving us your time.
    I remind Members that they have 10 business days to submit 
questions for the record. And I ask the witnesses to respond to 
the questions promptly. Members should submit their questions 
by the close of business day on May 2nd.
    Without objection, the subcommittee is adjourned.
    [Whereupon, at 12:52 p.m., the subcommittee was adjourned.]
    [Material submitted for inclusion in the record follows:]

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