In a hearing at the U.S. House Energy and Commerce Subcommittee on Digital Commerce and Consumer Protection, representatives sought to hear from the newly confirmed Federal Trade Commission about whether the agency has the tools and resources it needs to protect U.S. consumers from threats against privacy, data protection and anti-competition among marketplace actors.
The commission's response? No. It needs increased tools and resources to get the job done. Interestingly, both Republicans and Democrats on hand seemed to be in favor of doing their part to help the commission out.
In his opening statement, Rep. Greg Walden, R-Oregon, called the FTC "one of the top cops on the beat," and indicated his support for Federal Communications Commission's Restoring Internet Freedom Order, which "reaffirms the FTC's authority over both ISPs and tech companies alike." The Congressman said that authority is "critical for enforcing data privacy practices, promoting a free and open internet and protecting consumers from anti-competitive behaviors across the digital ecosystem."
In testimony to the committee, FTC Chairman Joseph Simons described the agency's near-term priorities, including work on consumer privacy and data security; seeing to the success of the EU-U.S. Privacy Shield agreement; fighting fraud and robocalls, as well as efforts to combat anti-competitive conduct.
But the FTC's various testifiers also took the opportunity to call for more tools to support its mission.
"In my view, we need more authority" Simons said in his written testimony. He called for the ability for the FTC to seek civil penalties in the name of deterring unlawful conduct, for jurisdiction over non-profits and common carriers, and for the authority to issue implementing rules under the Administrative Procedure Act.
Commissioner Rohit Chopra echoed Simons' calls for increased authority. He said the ability for rule-making authority would be helpful to the agency, and not only in terms of enforcement.
"When we do have a rule on the books we are able to ask for civil penalties," he said. "That’s one reason why rule-making also could create deterrence as well." He added that the "development of rules is much more participatory process than individual enforcement actions and also gives clear notice to the marketplace."
Simons noted that under the FTC's current authority, it's only able to get an injunction against companies who violate consent decrees, which is "less a deterrent than if we did monetary penalties that caused a business to think through how it's affecting business."
Massachusetts Congressman Joe Kennedy asked the commissioners whether its current investigation into the Facebook-Cambridge Analytica scandal will look at not only whether Facebook's earlier consent decree was violated, but also whether there could be new charges of unfair and deceptive practices.
Though the commissioners aren't permitted to comment on ongoing investigations, Chopra said, "FTC orders typically do not preclude the agency from investigating over those borders; we typically do not handcuff ourselves."
More generally, Republican Congressman Brett Guthrie of Kentucky wanted to know what kind of process reforms the committee should be looking at in aiming to help the commission do its job. For his part, Commissioner Noah Phillips, a Republican, discussed concerns about the Sunshine Act, which "generally requires that any meeting of a collegial agency at which deliberations of a quorum of agency members determine or result in the joint conduct or disposition of official agency business be open to the public."
Phillips said, "The way it operates today, it inhibits our ability today to talk to each other. So if three of us want to talk together about an important issue, or four of us want to talk together of commission business, unless we publicly notice it in advance, we can't meet. While there are some really important meetings that take place that are noticed, the daily back and forth can also be important."
Simons agreed with Phillips that the ability to meet informally would be helpful in expediting processes.
In addition, on process reform, Simons mentioned that the commission is looking at how it pursues civil investigatory demands both in how they're written and how they're enforced.
"You have to write them in the right way, you have to get the company to do what it needs to do," he said. "The way you write it is important and enforcing it is important."
Rep. Yvette Clarke, a Democrat representing New York, wanted to talk to Chopra about discrimination online and the impact the "lack of meaningful privacy protections has on consumers, particularly those in underserved and low-income communities."
Chopra noted the Fair Credit Reporting Act was passed in 1970 following Congressional concerns about secret databases determining things like where people could work, rent and whether they could take out loans. The FCRA was passed in the name of transparency and to give consumers redress when there are mistakes, but noted, today, things are different.
"It's no longer a manila folder world, it's a digital world," he said. And in that world, it's hard to audit the data being used in affecting choices consumers are given and whether algorithms are reinforcing discriminatory practices rather than leading to more inclusion. Existing laws can't be well used to determine how technology is affecting choices for consumers, "particularly over employment, housing and credit," said Chopra.
Clarke asked whether the FTC has the resources necessary to combat those kinds of concerns. "Truthfully ... my answer would be no," said Chopra. "I don't think we have the resources and authority to confront some of the issues you're raising, particularly with respect to privacy and data security."
The Privacy Shield framework, though mentioned by Simons in his opening statement as a commitment the FTC is dedicated to seeing through, did not incite conversation from the subcommittee despite the fact that the European Parliament recently voted to suspend the framework in September unless the U.S. amends what it perceives as its shortfalls.
The hearing was live streamed, and its archive can be viewed in full here.