FTC to Hold Public Forum on “Cramming”

This posting was written by Darius Sturmer, Editor of CCH Trade Regulation Reporter.

The FTC announced that it will host a public forum in Washington, D.C. on May 11, 2011, to examine how the government, businesses, and consumer protection organizations can work together to prevent consumers from being hit with unauthorized third-party charges on their phone bills—a practice known as "cramming."

Despite its ongoing enforcement efforts, the agency noted, cramming continues to harm individuals and small businesses. Therefore, it is holding this forum to determine what more can be done to prevent it.

Government agencies, consumer advocates, and industry representatives are invited to participate in the forum to discuss ways to reduce cramming through business practices, law enforcement, and possible legislation.

Participants will be asked to take up specific ideas such as allowing consumers to request a block on all third-party billing, and requiring third parties to get written approval from consumers before placing charges on their phone bills.

Other issues forum participants will discuss include:

(1) How telephone bill cramming harms individual consumers and small businesses;

(2) How consumers and competition can benefit from third-party billing on telephone bills for products and services such as voicemail, developing or hosting websites, or other enhanced services;

(3) The steps that billing companies and telephone carriers currently take to detect, monitor, and prevent cramming;

(4) Best practices being used by the industry to reduce cramming, such as improving disclosure of third-party charges to consumers; and

(5) The types of goods and services charged on telephone bills, and the difference between landline and wireless billing practices.

Persons interested in being panelists may submit requests by sending an e-mail by March 4 to: crammingforum@ftc.gov. Requests should include a statement detailing any relevant expertise in working on or studying cramming, especially the topics specified above, and complete contact information. Panelists selected to participate will be notified by April 8, 2011.

The FTC also invites the public to submit comments online on any of the topics mentioned above, using the form available here.

FTC Testimony Highlights Privacy Protection, Competition Efforts

This posting was written by Preston Carter and Darius Sturmer.

In testimony before the U.S. Senate Subcommittee on Financial Services and General Government of the Committee on Appropriations on May 20, the FTC described the agency’s continuing work to promote competition and protect American consumers, including initiatives to stop fraud targeting financially distressed consumers and protect privacy.

FTC Chairman Jon Leibowitz summarized the FTC’s Fiscal Year 2011 budget request, noting that strong support from Congress has made the agency more effective in its consumer protection efforts.

The testimony stated that, in the past year, the FTC has brought almost 40 law enforcement actions to stop scams that prey on consumers suffering from the financial downturn, and the agency is also engaged in rulemaking and consumer education efforts related to financial services.

In the financial services area alone, the FTC has filed more than 100 actions over the past five years, and obtained nearly $500 million in redress for consumers in the past 10 years.

Privacy Protection

The testimony noted that the FTC has taken 29 actions against companies that failed to protect consumers’ personal information. These actions resulted, for example, in the agency’s securing of $11 million for consumer redress from LifeLock, Inc. for allegedly making false identity theft prevention claims (CCH Trade Regulation Reporter ¶16,421); its shutting down of a rogue Internet service provider that helped distribute illegal spam, child pornography, and other harmful content (CCH Trade Regulation Reporter ¶16,451); and its settlement of a lawsuit against Sears for not fully disclosing the scope of consumers’ personal information the company collected (CCH Trade Regulation Reporter ¶16,308).

To help consumers check for inaccurate information on their credit reports, the FTC amended the Free Credit Report Rule to help consumers avoid “free” offers that cost money. The FTC also stated that it is examining consumer privacy more broadly, especially in light of merging technologies and business models, including social networking, cloud computing, online behavior advertising, and mobile marketing.

Noting the FTC’s continuing enforcement of the Do Not Call Registry, which protects almost 200 million telephone numbers, the testimony stated that in the past year the FTC filed nine law enforcement actions against “robocallers” making deceptive telemarketing pitches.

Among these were suits against DirecTV and Comcast, which paid $2.3 million and $900,000, respectively, to settle charges that they called consumers who had asked not to be called (CCH Trade Regulation Reporter ¶16,291). More recently, the FTC announced a $500,000 settlement with Diamond Phone Card, Inc. for overstating the number of calling minutes on its prepaid calling cards (CCH Trade Regulation Reporter ¶16,452).

Also, as stated in the testimony, the FTC has worked to protect children by filing more than 14 lawsuits to enforce the Children’s Online Privacy Protection Act, obtaining more than $3.2 million in civil penalties for law violations.

Anticompetitive Practices

According to the testimony, “[o]ne of the Commission’s highest antitrust priorities is stopping pay-for-delay patent settlements in the pharmaceutical industry, a practice that costs consumers $3.5 billion each year.”

The agency “has devoted substantial resources to this issue, and is continuing to conduct new investigations into pay-for-delay agreements.”

The text of the testimony can be found here on the FTC website.

Senate Banking Committee at Impasse over New Financial Consumer Protection Agency

This posting was written by Sarah Borchersen-Keto, CCH Washington Correspondent.

Democrats and Republicans on the Senate Banking Committee have failed to agree on the creation of a new financial consumer protection agency.

After reaching an impasse on the financial regulation overhaul with Ranking Member Richard Shelby (R-Alabama) on February 11, Committee Chairman Chris Dodd (D-Connecticut) tapped Senator Bob Corker (R-Tennessee) to lead negotiations on the Republican side.

The next day, Corker described the prospect of a stand-alone financial consumer protection agency as a “nonstarter.”

Corker said that consumer protection should be part of any financial regulatory reform package, but does not support the creation of a stand-alone agency for consumer protection. He suggested that the issue of consumer protection be set aside for the time being in order to focus on areas of consensus.

“I will work to see if we can find a way to enhance consumer protection without negatively impacting the safety and soundness of our financial system, and if we cannot, this will not be a bill I can support,” Corker stated. While agreeing to work with Dodd, he had not promised to support anything less than a reform bill that can attract bipartisan support.

Meanwhile, White House press spokesman Robert Gibbs reiterated President Obama’s support for strong consumer protection.

“The president still believes it is a great priority to have the independent authority to ensure that consumers in this reform are protected,” said Gibbs.

The spokesman failed to indicate whether President Obama would insist on the creation of a separate agency.

“Without knowing what exact vehicle might come in a bipartisan proposal from the Senate, obviously we would look at this assuming that strong consumer protections and authority was in that legislation.