FTC Advises US Senate on Ability to Protect Consumers

Investigative & Security Professionals for Legislative Action continues to stay abreast of issues in Washington with regard to regulation and legislation affecting this profession. ISPLA is singularly focused to protect the interests of the investigative and security professions at the federal level, and at the state level when specifically requested by state professional associations. As part of its government affairs program, ISPLA has been monitoring the activities of the Federal Trade Commission in their workshops on privacy issues, meeting with officials of that agency having jurisdiction over certain aspects of activities conducted by professional investigators, and reviewing testimony given by the agency concerning its enforcement activities.

The FTC advised the U.S. Senate Committee on Commerce, Science and Transportation that they have stepped up their efforts to protect consumers affected by the economic downtown, and that additional authority would make the agency even more effective.

The testimony presented by FTC Chairman Jon Leibowitz described the agency’s efforts to prosecute financial fraud and deception, including working with states to bring hundreds of cases against mortgage relief scams in 2009. The testimony also discussed the FTC’s rule-making and consumer education initiatives, how additional authority will enhance the agency’s effectiveness, and the FTC’s perspective on recent proposals to create a consumer financial protection agency as part of a broader reform of the financial services regulatory system.

As stated in the testimony, during the past five years the FTC has targeted financial services providers in more than 100 actions and, over the past decade, obtained nearly half a billion dollars in redress for consumers. As the economic downturn has taken hold, the FTC’s highest priority has become targeting frauds that prey on consumers made vulnerable by the financial crisis. The agency has shifted more of its consumer protection staff to the area of financial services, while continuing to carry out its broader consumer protection mission. In addition to prosecuting mortgage foreclosure and loan modification scams – working with state attorneys general more than 200 lawsuits were brought last year – the FTC has targeted a variety of other deceptive and fraudulent schemes, including those in mortgage servicing, debt relief services, credit repair, economic stimulus scams, debt collection, advance-fee loans, payday lending, and credit card marketing, as well as fake get-rich-quick schemes, work-at-home offers, and job-hunting ads.

Describing other FTC efforts in the financial area, the testimony noted that it is in the process of formulating new rules to address unfair or deceptive practices in: 1) mortgage relief services, 2) mortgage advertising and servicing, 3) debt relief services. Also, in conjunction with the federal banking agencies, the FTC is considering additional rules to protect the privacy of consumers’ sensitive financial information. The testimony also recounted the FTC’s many education campaigns to help consumers manage their resources and avoid scams, including a major effort on mortgage relief services scams.

According to the testimony, new enforcement and regulatory tools would strengthen the FTC’s ability to anticipate and respond to financial fraud. The agency encourages Congress to give it explicit authority to act against those who assist others they know, or consciously avoid knowing, are engaged in unfair or deceptive practices under the FTC Act. The FTC has asked Congress for authority to use more efficient rule-making procedures to address consumer protection issues and enhance the agency’s ability to stop financial fraud. In addition, the FTC would like the authority to seek civil penalties for violations of the FTC Act, and to prosecute civil penalty cases in federal court in its own name so that it can bring cases more quickly and more effectively.

Regarding President Obama’s proposed Consumer Financial Protection Agency, the testimony expressed FTC support for the goal of making consumer financial protection more effective while ensuring that the FTC’s authority and ability to protect consumers remains uneroded and clear. It states they should remain active and effective in policing financial and non-financial products and services.

The Commission vote authorizing the testimony was 4-0. Commissioner Kovacic dissents from that portion of the testimony that seeks across-the-board authority for the Commission to use, for promulgating all rules respecting unfair or deceptive acts or practices under the Federal Trade Commission Act, the notice and comment procedures of the Administrative Procedure Act, although he would be willing to consider whether all the procedures currently required to issue, repeal, or amend these rules are necessary. Commissioner Kovacic also dissents from the Commission’s endorsement of across-the-board civil penalty authority.

For information about ISPLA, the good work it has been doing on behalf of investigative and security professionals, and information on how you may assist us in our mission visit www.ISPLA.org.

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Bruce Hulme
Director of Government Affairs
Investigative & Security Professionals for Legislative Action
235 N. Pine Street, Lansing, MI 48933
Tel: (734) 428-9663
www.ISPLA.org