Ad Industry Fights to Stop Stronger FTC and Wins – For Now

Language strengthening the Federal Trade Commission has been removed from a newly-merged financial regulatory reform bill. The FTC provisions in the federal legislation were opposed by numerous advertising and business groups, among them the Interactive Advertising Bureau, Direct Marketing Association, Association of National Advertisers, and U.S. Chamber of Commerce.

The DMA and ANA released statements praising removal of the FTC enforcement provision and suggesting their lobbying efforts helped bring about the change. The legislation was sponsored by Senate Banking Chairman Christopher Dodd of Connecticut and House Financial Services Chairman Barney Frank of Massachusetts, both Democrats.

“DMA led the charge in the fight to keep these FTC expansion provisions out of the Restoring American Financial Stability Act…as the final text of the bill was negotiated by a formal Conference Committee,” the organization said in a June 25 statement. The DMA went on to stress that it “will remain vigilant until the bill has been signed by the President.”

During the conference period, Democratic Congressmen Henry Waxman and Bobby Rush were “very forthcoming that their number one priority was going to be to reinsert the [FTC] provision,” according to Chris Merida, director of congressional and public affairs for the U.S. Chamber of Commerce. House and Senate conferees who negotiated the merged bill worked from the Senate’s version, which did not include the FTC language. The House version did. Merida said the push to include the provision prompted PR campaigns on both sides of fight.

Mike Zaneis, the IAB’s VP of public policy, said this was the “number one legislative priority” for the trade group. Despite the fact that online privacy legislation has made more headlines, Zaneis described the inclusion of the FTC provision in the financial regulatory reform bill as the “one legislative vehicle that was moving and had at least a likelihood of passing.” If the FTC is given the broader authority, it could “just move unilaterally,” making the threat of overreaching privacy legislation moot.

Earlier last week, the ANA released a statement touting “substantial progress on defeating the broad expansion of FTC powers that is included in the House version of the Wall Street reform bill.” The group went on to state, “ANA took part in a very important meeting yesterday with Senate Commerce Committee Chairman Jay Rockefeller on these issues. We argued that these issues are very important to the entire marketing community and deserve careful consideration outside of the context of the Wall Street reform bill.”

About a year ago, Rockefeller, a Democrat from West Virginia and Senate Commerce Committee chairman, put out a press release stating his support for increased FTC power. The IAB’s Political Action Committee contributed $1,000 to the Friends of Jay Rockefeller PAC last June. The PAC this May donated $1,000 to Republican Congressman Mike Castle of Delaware, who sits on the House Committee on Financial Services, which is chaired by Frank.

Along with the IAB, ANA, and DMA, a total of 48 trade associations including the American Advertising Federation, American Association of Advertising Agencies, and Online Publishers Association, sent a letter to Senate and House Conferees opposing the FTC provision.

“These FTC-related issues deserve their own due consideration and debate in the more appropriate context of an FTC reauthorization, as has been done in the past. Thus, we strongly urge you to oppose the inclusion of any provisions that would expand FTC authority, rather than making changes to the Commission that would have a fundamental impact on the business community and broader American economy,” they wrote in the June 10 missive.

“The online marketing and advertising lobby…are afraid that the newly invigorated FTC will force the industry to protect privacy online, and also become more accountable to consumers engaged in e-commerce,” Jeff Chester, executive director of the Center for Digital Democracy, told ClickZ News.

Even if President Obama signs the bill into law, the potential for a stronger FTC looms. “This issue will come back in some form and it would be appropriate to consider something like this in a proposal to reauthorize the Federal Trade Commission,” said Linda Woolley, executive VP of government affairs for the DMA.

“I don’t think, personally, that these provisions are going to get done within the financial reform bill,” said Merida, adding that he expects a standalone FTC reauthorization bill to be introduced by the autumn and include agency-strengthening provisions.

The IAB opposes easing the FTC’s rulemaking process even if it is included in a reauthorization bill. In its Legislative and Regulatory Affairs Update to members in March, the group said it “continues to oppose certain provisions in the financial reform and FTC Reauthorization legislation that would allow the Federal Trade Commission (FTC) wide latitude in promulgating new rules and regulations.” The IAB argued that easing the FTC’s rulemaking process – which the agency argues is so arduous it hampers its ability to be effective in some cases – would create “sweeping rulemaking changes to industries, often in the absence of any pattern of harm by the affected industry.”

Some believe passage of the reform bill could be halted now that Senator Byrd, a Democrat, has died, potentially lessening support for the bill. However, Woolley suggested, “In general there’s enough support for the financial reform.”

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