FTC Chairman Defends Record on Energy, Lending, Internet Issues

This posting was written by John Scorza, CCH Washington Correspondent.

The chairman of the Federal Trade Commission defended her agency’s record on energy, banking, and “net neutrality” at a September 12 congressional hearing by the Senate Commerce, Science, and Transportation Subcommittee on Interstate Commerce, Trade, and Tourism.

Mergers of Oil Refiners

Subcommittee Chairman Byron Dorgan (D-N.D.) expressed concern that mergers by oil refiners have led to increased market power, higher profits, and higher consumer prices. FTC Chairman Deborah Platt Majoras responded that the FTC has not concluded that mergers of refiners have resulted in increased prices. Rather, increased demand is the driving factor, with refineries being unable to keep up with that demand.

Deceptive Practices in Lending

On the issue of subprime loans, Dorgan questioned Majoras about deceptive advertising and lending in that industry. Majoras acknowledged that the agency has concerns about deceptive practices, but suggested that borrowers also share some blame. “Consumers are just not understanding what they get in their mortgages,” she said.

Majoras noted that the agency on September 11 sent more than 200 letters to mortgage companies and media outlets, warning that some mortgage ads are potentially deceptive or in violation of the Truth in Lending Act.

“Net Neutrality”

Dorgan and Majoras respectfully agreed to disagree about “net neutrality,” the principle of keeping broadband networks free from restrictions on (1) the kinds of equipment that may be attached, (2) the modes of communication allowed, and (3) the communication streams that may degrade network communications.

Some lawmakers, including Dorgan, advocate legislation that would require broadband providers to treat all content providers equally. Essentially, broadband carriers would be barred from favoring certain Internet content providers by granting higher-speed access to their content. Dorgan said he feared we are moving toward a system where big providers “set up new roads – new highways – some tolls, some not.”

Majoras advised against legislation, warning that premature regulation could squelch technological innovation. “If we put rules in place here, there will be unintended consequences,” Majoras stated.

Consumer Protection, Competition Enforcement

In a prepared statement, Chairman Majoras discussed the Commission’s consumer protection efforts in the areas of data security and identity theft, technology, health care, financial practices, telemarketing, violence in the media, and “green marketing.”

The second section of the statement covered the Commission’s efforts at maintaining competition “in sectors of the economy that have a significant impact on consumers, such as health care, energy, technology, and real estate.”

In conclusion, the chairman expressed the agency’s commitment to maintaining the quality of its work, “despite the breadth of our mission and the challenges that have been described involving technological change and an evolving global economy.”

She pointed out that Congress has recently passed a variety of new legislation that the FTC is charged with implementing and enforcing, including the CAN-SPAM Act, the Children’s Online Privacy Protection Act, the Gramm-Leach-Bliley Act, and the U.S. SAFEWEB Act.

Text of the 49-page prepared statement appears on the FTC web site.