DMA Takes Another Jab at Expanded FTC Power

As legislators fight to establish a new consumer financial protection entity, marketing groups are dead set against a component of the bill that would create a more powerful Federal Trade Commission. During a congressional hearing yesterday, the Direct Marketing Association cited concern that increased FTC authority could negatively affect the online ad industry.

“The DMA is particularly concerned that the [FTC] would use its expanded rulemaking authority to regulate in the areas where it has been most actively involved in policy discussion and enforcement activity, and that its involvement in those areas would hinder new and emerging business practices, such as mobile and interactive marketing,” suggested the DMA in testimony presented by Linda Woolley, EVP of government affairs for the DMA.

Woolley spoke during a Senate Consumer Protection, Product Safety, and Insurance Subcommittee hearing on the role of the FTC in protecting consumers. Like the DMA indicated in yesterday’s testimony, the Association of National Advertisers contended in July that removing cumbersome restrictions on the FTC’s rulemaking ability would give the agency unwarranted authority.

For some time the FTC has lobbied for removal of procedures requiring it to prove that an unfair or deceptive practice is prevalent throughout an industry. FTC Commissioner J. Thomas Rosch reiterated the agency’s wishes during the hearing. “Unless our authorities are really beefed up…I’m concerned that consumers and businesses are not going to be protected the way they ought to be,” he said. Privacy advocates are also in support of granting the FTC stronger enforcement and penalty-making capabilities.

It isn’t entirely clear that the consumer financial protection bill would make that happen; however, a reauthorization of the FTC might. That reauthorization will most likely be granted by the Senate Committee on Commerce, Science and Transportation, which encompasses the subcommittee that held yesterday’s hearing.

Trade groups are keeping their eyes on the reauthorization, too. In January, 29 business associations, including the Interactive Advertising Bureau, ANA, DMA, Online Publishers Association, and American Association of Advertising Agencies, sent a letter to the Senate Commerce Committee stating “that the current limits on the FTC’s discretion are appropriate given the significant consequences of any enforcement action for a targeted company and its shareholders and employees.”

Part of what the trade groups want to remain status quo is the requirement that Congress grant the FTC authority on a case-by-case basis to take action against alleged deceptive advertisers or impose civil penalties.

“Such unchecked regulation might occur in areas such as information-sharing, privacy, Internet advertising and marketing, mobile marketing, affiliate marketing, targeted marketing, online behavioral marketing, marketing to children and teenagers, and numerous other topics where the best intentioned rulemaking almost certainly cannot anticipate innovation and change, and may not be able to achieve its intended purpose without significant unintended consequences,” stated the DMA testimony.

You can follow Kate Kaye on Twitter at @LowbrowKate.