FEDERAL TRADE COMMISSION (FTC)
Statement of Regulatory and Deregulatory Priorities
I. Regulatory and Deregulatory Priorities
Background
The Federal Trade Commission ("FTC" or "Commission") is an independent agency charged by its enabling statute, the Federal Trade Commission Act, with protecting American consumers from "unfair methods of competition" and "unfair or deceptive acts or practices" in the marketplace. The Commission strives to ensure that consumers benefit from a vigorously competitive marketplace. The Commission's work is rooted in a belief that competition, based on truthful and non-misleading information about products and services, provides consumers the best choice of products and services at the lowest prices.
The Commission pursues its goal of promoting competition in the marketplace through two different but complementary approaches. Unfair or deceptive acts or practices injure both consumers and honest competitors alike and undermine competitive markets. Through its consumer protection activities, the Commission seeks to ensure that consumers receive accurate, truthful, and non-misleading information in the marketplace. At the same time, for consumers to have a choice of products and services at competitive prices and quality, the marketplace must be free from anticompetitive business practices. Thus, the second part of the Commission's basic mission - antitrust enforcement - is to prohibit anticompetitive mergers or other anticompetitive business practices without unduly interfering with the legitimate activities of businesses. These two complementary missions make the Commission unique insofar as it is the Nation's only Federal agency to be given this combination of statutory authority to protect consumers.
The Commission is, first and foremost, a law enforcement agency. It pursues its mandate primarily through case-by-case enforcement of the Federal Trade Commission Act and other statutes. In addition, the Commission is also charged with the responsibility of issuing and enforcing regulations under a number of statutes. Pursuant to the FTC Act, the Commission currently has in place 16 trade regulation rules. Other examples include the regulations enforced pursuant to credit, financial and marketing practice statutes[1] and to energy laws.[2] The Commission also has adopted a number of voluntary industry guides. Most of the regulations and guides pertain to consumer protection matters and are intended to ensure that consumers receive the information necessary to evaluate competing products and make informed purchasing decisions.
Commission Initiatives
The Commission protects consumers through a variety of tools, including both regulatory and non-regulatory approaches. It has encouraged industry self-regulation, developed a corporate leniency policy for certain rule violations, and established compliance partnerships where appropriate.
As detailed below, protecting consumer privacy, containing the rising costs of health care and prescription drugs, fostering competition and innovation in cutting-edge, high-tech industries, challenging deceptive advertising and marketing, and safeguarding the interests of potentially vulnerable consumers, such as children and the financially distressed, continue to be at the forefront of the Commission's consumer protection and competition programs. By subject area, the FTC discusses some of the major workshops, reports,[3] and initiatives it has pursued since the 2013 Regulatory Plan was published.
(a) Protecting Consumer Privacy. As the nation's top enforcer on the consumer privacy beat, the FTC works to ensure that consumers can take advantage of the benefits of a dynamic and ever-changing digital marketplace without compromising their privacy. The FTC achieves that goal through civil law enforcement, policy initiatives, and consumer and business education. For example, the FTC's unparalleled experience in consumer privacy enforcement has addressed practices offline, online, and in the mobile environment by large, well-known companies and lesser-known players alike. Data security is an important focus of the Commission's privacy work. Since 2002, the FTC has brought over 50 cases against companies that have engaged in unfair or deceptive practices that the Commission alleged put consumers' personal data at unreasonable risk.
The Commission's recent policy initiatives to promote privacy included a three-part "Spring Privacy Series"[4] that examined the privacy implications of three new areas of technology or business practices that have garnered considerable attention for the possible privacy concerns they raise for consumers.
• The first event on February 19, 2014, focused on the privacy and security implications of mobile device tracking, which involves physically tracking consumers in retail and other businesses using signals from their smartphones.
• The second seminar on March 19, 2014, examined alternative scoring products, which are scores increasingly used by businesses for a wide variety of purposes, ranging from identity verification and fraud prevention to marketing and advertising. The event discussed the privacy ramifications of such predictive scores, which may fall outside the Fair Credit Reporting Act.
• The final seminar on May 7, 2014, examined consumers' use of connected health and fitness devices that regularly collect information about them and may transmit this information to other entities.
In November 2013, the Commission held a workshop entitled Internet of Things-Privacy and Security in a Connected World to explore consumer privacy and security issues posed by the growing connectivity of consumer devices, such as cars, home appliances, and health and fitness devices.[5]
(b) Protecting Children. Children increasingly use the Internet for entertainment, information and schoolwork. The Children's Online Privacy Protection Act (COPPA) and the FTC's COPPA Rule protect children's privacy when they are online by putting their parents in charge of who gets to collect personal information about their preteen kids. The FTC enforces COPPA by ensuring that parents have the tools they need to protect their children's privacy.
The Commission is actively litigating to protect children and their parents when children use mobile apps that appeal to children and offer virtual goods for sale. On August 1, 2014, the FTC filed a court complaint alleging that Amazon.com, Inc. billed parents and other account holders for millions of dollars in unauthorized in-app charges incurred by children.[6] Amazon offers many children's apps in its app store for download to mobile devices such as the Kindle Fire. The lawsuit seeks a court order requiring refunds to consumers for the unauthorized charges and permanently banning the company from billing parents and other account holders for in-app charges without their consent. This is the FTC's third case relating to children's in-app purchases; Apple and Google both settled FTC complaints concerning the issue in 2014.[7]
The Commission has issued an updated version of the popular free consumer guide, "Net Cetera: Chatting with Kids About Being Online."[8] The revised publication contains updated information for parents and other adults to use when talking with kids about how to be safe, secure and responsible online. The revision adds new topics that reflect changes in the online world since the guide was first issued in 2009. In the revised booklet, adults can find advice on how to talk with kids about mobile apps, using public Wi-Fi securely and how to recognize text message spam. The booklet also includes information about the recent changes to the COPPA Rule.
(c) Protecting Seniors. The Commission works vigilantly to fight telephone scams that harm millions of Americans. The agency has aggressively used law enforcement tools[9] as well as efforts to educate consumers about these scams and to find technological solutions that will make it more difficult for scammers to operate and hide from law enforcement. FTC education and outreach programs reach tens of millions of people every year. Among them is the recently created "Pass It On" program that provides seniors with information, in English and Spanish, on a variety of scams targeting the elderly. The agency also works with the Elder Justice Coordinating Council to help protect seniors and with the AARP Foundation, whose peer counselors provided fraud-avoidance advice last year to more than a thousand seniors who had filed complaints with the FTC about certain frauds, including lottery, prize promotion, and grandparent scams. The Commission is also promoting initiatives to make it harder for scammers to fake or "spoof" their caller Identification information and the more widespread availability of technology that will block calls from fraudsters, essentially operating as a spam filter for the telephone.
(d) Protecting Financially Distressed Consumers. Even as the economy recovers, some consumers continue to face financial challenges. The FTC acts to ensure that consumers are protected from deceptive and unfair credit practices and get the information they need to make informed financial choices. The Commission has continued its enforcement efforts by bringing law enforcement actions to curb deceptive and unfair practices in mortgage rescue, debt relief, auto financing and debt collection.
In October 2014, the FTC also co-hosted a roundtable on debt collection issues with the Consumer Financial Protection Bureau (CFPB). The roundtable specifically examined how debt collection issues affect Latino consumers, especially those who have limited English proficiency (LEP). The event brought together consumer advocates, industry representatives, State and Federal regulators, and academics to exchange information on a range of issues. Topics included an overview of the Latino community, its finances, and the collectors who contact members of this community; pre-litigation collection from Latino consumers; the experience of LEP Latinos in debt collection litigation; credit reporting issues among LEP Latinos; and developing improved strategies for educating and reaching out to LEP Latinos about debt collection.
(e) Ensuring Consumers Benefit from New Technologies While Also Protecting Them.
(f) Promoting Competition in Health Care. The FTC continues to work to eliminate anticompetitive settlements featuring payments by branded drug firms to a generic competitor to keep generic drugs off the market (so-called, "pay-for-delay" agreements). It's a practice where the pharmaceutical industry wins, but consumers lose. The brand company protects its drug franchise, and the generic competitor shares in the monopoly profits preserved by avoiding competition. The Commission supports legislation to ban these harmful agreements while actively litigating Federal court challenges to invalidate individual agreements. In a significant victory on June 17, 2013, the U.S. Supreme Court reversed a lower court ruling and held that pay-for-delay agreements between brand and generic drug companies are subject to antitrust scrutiny under an antitrust "rule of reason" analysis. FTC v. Actavis, Inc., 570 U.S. 756 (2013). The FTC now has three active pay-for-delay litigations underway in federal courts. Two of them involve the blockbuster male testosterone replacement drug Androgel, including the Actavis case on remand to the U.S. District Court for the Northern District of Georgia and FTC v. AbbVie, Inc., in the U.S. District Court for the Eastern District of Pennsylvania.[13] The third, underway in the U.S. District Court for the Eastern District of Pennsylvania, FTC v. Cephalon, Inc., involves the billion-dollar narcolepsy drug Provigil.[14] However, solving this problem through the courts will take considerable time, during which American consumers and governments will continue to pay high prices for prescription drugs.
The FTC also continues to vigorously challenge anticompetitive acquisitions in health care provider markets. For example, in January 2014, a federal court in Idaho issued a permanent injunction enjoining St. Luke's Health System's acquisition of Saltzer Medical Group, Idaho's largest independent, multi-specialty physician practice group, and requiring full divestiture of Saltzer's physicians and assets in an action brought by the FTC, together with the Idaho Attorney General. The complaint charged that the combination of St. Luke's employed primary care physicians and Saltzer's physicians would give the merged firm the market power to demand higher rates for primary care physician services in Nampa, Idaho, and surrounding areas. This case is on appeal. Moreover, in April 2014, in the first appellate decision in a health care provider merger in 15 years, the U.S. Court of Appeals for the Sixth Circuit upheld the Commission's 2012 decision finding that ProMedica Health System, Inc. acquisition of a rival, St. Luke's Hospital in the Toledo, Ohio area, violated the antitrust laws. The Commission's order requires ProMedica to divest St. Luke's Hospital to an FTC-approved buyer.
(g) Fostering Innovation & Competition. For more than two decades, the Commission has examined difficult issues at the intersection of antitrust and intellectual property law-issues related to innovation, standard-setting, and patents. The Commission's work in this area is grounded in the recognition that intellectual property and competition laws share the fundamental goals of promoting innovation and consumer welfare. The Commission has authored several seminal reports on competition and patent law and conducted workshops to learn more about emerging practices and trends.
For instance, the FTC and DOJ held a joint workshop in December 2012 to explore the impact of patent assertion entity (PAE) activities[15] and encouraged efforts of the Patent Trade Office to provide the public with more complete information regarding patent ownership.[16] The FTC and DOJ also received public comments in conjunction with the workshop. While workshop panelists and commenters identified potential harms and efficiencies of PAE activity, they noted a lack of empirical data in this area and recommended that FTC use its authority under Section 6(b) of the Federal Trade Commission Act. After public notice and comment, on August 8, 2014, the Commission received authority from the Office of Management and Budget to issue compulsory process orders to PAEs and other industry participants for the purpose of gathering information to examine how PAEs do business and develop a better understanding of how they impact innovation and competition.
(h) Alcohol Advertising. On February 1, 2012, the Office of Management and Budget (OMB) gave the Commission approval, under the Paperwork Reduction Act, to issue compulsory process orders to up to 14 alcohol companies. On April 16, 2012, the Commission issued the orders, seeking information on company brands, sales, and marketing expenses; compliance with advertising placement codes; and use of social media and other digital marketing.[17] On March 20, 2014, the Commission released a report, setting forth the results of its study.[18] The Commission also continues to promote the "We Don't Serve Teens" consumer education program, supporting the legal drinking age.[19]
(i) Gasoline Prices. Given the impact of energy prices on consumer budgets, the energy sector continues to be a major focus of FTC law enforcement and study. In November 2009, the FTC's Petroleum Market Manipulation Rule became final.[20] Our staff continues to examine all communications from the public about potential violations of this Rule, which prohibits manipulation in wholesale markets for crude oil, gasoline, and petroleum distillates. Other activities complement these efforts, including merger enforcement and an agreement with the Commodity Futures Trading Commission to share investigative information. In view of the fundamental importance of oil, natural gas, and other energy resources to the overall vitality of the United States and world economy, we expect that FTC review and oversight of the oil and natural gas industries will remain a centerpiece of our work for years to come.
(j) Fraud Surveys. The FTC's Bureau of Economics (BE) continues to conduct fraud surveys and related research on consumer susceptibility to fraud. For example, BE conducted an exploratory experimental study in a university economics laboratory to see whether we could identify characteristics of consumers who might be more likely to fall victim to fraud. A second exploratory study of susceptibility to fraud was conducted using an Internet panel. The results of that study are currently being analyzed. The most recent survey of the incidence of consumer fraud was conducted between late November 2011 and early February 2012, and a report describing the findings was released in April 2013. The results of these efforts may aid the FTC to better target its enforcement actions and consumer education initiatives and improve future fraud surveys.
(k) Protecting Consumers from Cross-Border Harm. The FTC continues to focus on combatting cross-border violations of law that affect consumers. For example, this year the Commission approved fourteen settlements with U.S. businesses that had falsely claimed they were abiding by an international privacy framework known as the U.S.-European Union Safe Harbor that enables U.S. companies to transfer consumer data from the European Union (EU) to the United States in compliance with EU law.[21] Additionally, the FTC, with the help of counterparts in Canada, Slovakia, and Austria, brought an action against a notorious multi-million dollar international business directory scam in FTC v. Construct Data.[22] Building on the FTC's work with African consumer agencies, the FTC signed a memorandum of understanding (MOU) with Nigeria's Consumer Protection Council and its Economic and Financial Crimes Commission.[23] It is the first FTC MOU of this kind to include a foreign criminal enforcement authority.
The FTC strives to promote sound approaches to common problems by building relationships with sister agencies around the world. With over 130 jurisdictions enforcing competition laws, the FTC continues to lead efforts to develop strong mutual enforcement cooperation and sound policy with its international partners. We continue to strengthen cooperation and coordination with agencies to reach compatible results on cases of mutual interest, such as Thermo Fisher/Life Technologies, in which the FTC recently cooperated with antitrust agencies in nine jurisdictions to reach consistent results.[24] We also work to develop improved tools to facilitate cooperation. This year, FTC and Department of Justice Antitrust Division staff jointly released a model waiver of confidentiality that is designed to streamline the waiver negotiation process, facilitating deeper communication between cooperating agencies.[25] During the past year the FTC held bilateral meetings with key partners, including competition agencies in the EU, Canada, Mexico, Japan, China and India, and continued to play a lead role in the International Competition Network, including co-leading the Agency Effectiveness Working Group and its Investigative Process Project.
(l) Self-Regulatory and Compliance Initiatives With Industry. The Commission continues to engage industry in compliance partnerships in the funeral and franchise industries. Specifically, the Commission's Funeral Rule Offender Program, conducted in partnership with the National Funeral Directors Association, is designed to educate funeral home operators found in violation of the requirements of the Funeral Rule, 16 CFR 453, so that they can meet the rule's disclosure requirements. Almost 460 funeral homes have participated in the program since its inception in 1996. In addition, the Commission established the Franchise Rule Alternative Law Enforcement Program in partnership with the International Franchise Association (IFA), a nonprofit organization that represents both franchisors and franchisees. This program is designed to assist franchisors found to have a minor or technical violation of the Franchise Rule, 16 CFR 436, in complying with the rule. Violations involving fraud or other section 5 violations are not candidates for referral to the program. The IFA teaches the franchisor how to comply with the rule and monitors its business for a period of years. Where appropriate, the program offers franchisees the opportunity to mediate claims arising from the law violations. Since December 1998, 21 companies have agreed to participate in the program.
Rulemakings and Studies Required by Statute
Congress has enacted laws requiring the Commission to undertake rulemakings and studies. This section discusses required rules and studies. The final actions section below describes actions taken on the required rulemakings and studies since the 2013 Regulatory Plan was published.
FACTA Rules. The Commission has issued all of the rules required by FACTA (Fair and Accurate Credit Transactions Act). These rules are codified in several parts of 16 CFR 602 et seq., amending or supplementing regulations relating to the Fair Credit Reporting Act.
FACTA Studies. On March 27, 2009, the Commission issued compulsory information requests to the nine largest private providers of homeowner insurance in the nation. The purpose was to help the FTC collect data for its study on the effects of credit-based scores in the homeowner insurance market, a study mandated by section 215 of the FACTA. During the summer of 2009, these nine insurers submitted responses to the Commission's requests. FTC staff has reviewed the large policy-level data files included in these submissions and has identified a sample set of data to be used for the study. The insurance companies then worked with their vendor to ensure the security of delivering the data set to the FTC's own and separate vendor. That data was sent to the FTC's vendor, which then sent the data, stripped of any personally identifiable information, to the FTC. The FTC's vendor also sent other data to the Social Security Administration (SSA), which will provide the FTC with additional data for the Report. The FTC hopes to receive the SSA data soon. Staff expects the Report will be submitted to Congress during the spring of 2015. This study is not affected by the Consumer Financial Protection Act.
Section 319 of FACTA requires the FTC to study the accuracy and completeness of information in consumers' credit reports and to consider methods for improving the accuracy and completeness of such information. Section 319 of the Act also requires the Commission to issue a series of biennial reports to Congress over a period of 11 years. The Commission's December 2012 report to Congress on credit reporting accuracy focused on identifying potential errors that could have a material effect on a person's credit standing. Any participants who identified a potentially material error on their report were encouraged to dispute the erroneous information. The study found that 26 percent of consumers reported a potential material error on one or more of their three reports and filed a dispute with at least one credit reporting agency (CRA), and half of these consumers experienced a change in their credit scores. For five percent of consumers, the errors on their credit reports could lead to them paying more for products such as auto loans and insurance. Congress instructed the FTC to complete this study by December 2014, when a final report is due.
Retrospective Review of Existing Regulations
In 1992, the Commission implemented a program to review its rules and guides regularly. The Commission's review program is patterned after provisions in the Regulatory Flexibility Act, 5 USC 601-612. Under the Commission's program, rules are reviewed on a 10-year schedule. For many rules, this has resulted in more frequent reviews than are generally required by section 610 of the Regulatory Flexibility Act. This program is also broader than the review contemplated under the Regulatory Flexibility Act, in that it provides the Commission with an ongoing systematic approach for seeking information about the costs and benefits of its rules and guides and whether there are changes that could minimize any adverse economic effects, not just a "significant economic impact upon a substantial number of small entities." 5 USC 610.
As part of its continuing 10-year review plan, the Commission examines the effect of rules and guides on small businesses and on the marketplace in general. These reviews may lead to the revision or rescission of rules and guides to ensure that the Commission's consumer protection and competition goals are achieved efficiently and at the least cost to business. In a number of instances, the Commission has determined that existing rules and guides were no longer necessary or in the public interest. Most of the matters currently under review pertain to consumer protection and are intended to ensure that consumers receive the information necessary to evaluate competing products and make informed purchasing decisions. Pursuant to this program, the Commission has rescinded 37 rules and guides promulgated under the FTC's general authority and updated dozens of others since the early 1990s.
In light of Executive Orders 13563 and 13579, the FTC continues to take a fresh look at its long-standing regulatory review process. The Commission is taking a number of steps to ease burdens on business and promote transparency in its regulatory review program:
• The Commission recently issued a revised 10-year review schedule (see next paragraph below) and is accelerating the review of a number of rules and guides in response to recent changes in technology and the marketplace. The Commission is currently reviewing 20 of the 65 rules and guides within its jurisdiction.
• The Commission continues to request and review public comments on the effectiveness of its regulatory review program and suggestions for its improvement.
• The FTC maintains a Web page at http://www.ftc.gov/regreview that serves as a one-stop shop for the public to obtain information and provide comments on individual rules and guides under review as well as the Commission's regulatory review program generally.
In addition, the Commission's 10-year periodic review schedule includes initiating reviews for the following rules and guides (79 FR 14199, March 13, 2014) during 2014 and 2015:
(1) Standards for Safeguarding Customer Information, 16 CFR 314,
(2) Contact Lens Rule, 16 CFR 315,
(3) CAN-SPAM Rule, 16 CFR 316, and
(4) Ophthalmic Practice Rules (Eyeglass Rule), 16 CFR 456.
As set out below under Ongoing Rule and Guide Reviews, the Commission recently initiated reviews of the Telemarketing Sales Rule (TSR), 16 CFR 308, and the Hobby Rules, 16 CFR 304.
Ongoing Rule and Guide Reviews
The Commission is continuing review of a number of rules and guides, which are discussed below.
(a) Rules
Premerger Notification Rules and Report Form (or HSR Rules), 16 CFR 801-803. The Premerger Office is considering recommending amendments to the HSR Rules regarding standards for the valuation of potentially reportable transactions, regarding the instructions to the HSR Form to update information related to NAICS (North American Industry Classification System) codes, recent rule changes, and a change of address for delivery of filings to the FTC Premerger Office. The proposed amendments may be issued during the first quarter of 2015. The Premerger Office is also considering amendments to the Instructions to the HSR Form to update information related to NAICS codes and recent rule changes and allow the submission of filings on electronic media.[26]
Fuel Rating Rule, 16 CFR 306. First issued in 1979, the Fuel Rating Rule (or Automotive Fuel Ratings, Certification and Posting Rule) enables consumers to buy gasoline with an appropriate octane rating for their vehicle and establishes standard procedures for determining, certifying, and posting octane ratings. On March 27, 2014, the Commission proposed amendments to the Rule that would adopt and revise rating, certification, and labeling requirements for blends of gasoline with more than 10 percent ethanol and would allow an alternative octane rating method that would lower compliance costs. 79 FR 18850. The comment period closed on July 2, 2014. Staff is reviewing comments and anticipates sending a recommendation to the Commission by the end of the first quarter of 2015.
Telemarketing Sales Rule (TSR), 16 CFR 308. Anti-Fraud Provisions-Commission staff are considering proposed "Anti-Fraud" amendments to the TSR concerning, among other things, the misuse of novel payment methods by telemarketers and sellers. On May 21, 2013, the Commission issued a Notice of Proposed Rulemaking ("NPRM"), which was published in the Federal Register on July 9, 2013. 78 FR 41200. After a short extension, the comment period closed on August 8, 2013. Commission staff is reviewing the comments submitted in response to the NPRM, and anticipates making a recommendation to the Commission by the end of 2014.
Periodic Rule Review-On August 11, 2014, Commission initiated periodic review of the TSR as set out on the 10-year review schedule. 79 FR 46732. The comment period as extended will close on November 13, 2014. 79 FR 61267 (Oct. 10, 2014).
Hobby Rules, 16 CFR 304. As part of the systematic rule review process, on July 14, 2014, the Commission requested public comments on, among other things, the economic impact and benefits of the Hobby Rules (Rules and Regulations under the Hobby Protection Act); possible conflict between the Rules and State, local, or other Federal laws or regulations; and the effect on the Rules of any technological, economic, or other industry changes. 79 FR 40691. The comment period closed on September 22, 2014. The Hobby Protection Act, 16 U.S.C. sections 2101-2106, prohibits manufacturing or importing imitation numismatic and collectible political items unless they are marked in accordance with regulations prescribed by the Federal Trade Commission. The implementing Rules prescribe that imitation political items-such as buttons, posters or coffee mugs-must be marked with the calendar year in which they were manufactured, and imitation numismatic items-including coins, tokens and paper money-must be marked with the word "copy." Staff anticipates sending a recommendation to the Commission by May 2015.
The Fair Packaging and Labeling Act ("FPLA") Rules, 16 CFR 500-502. The FPLA requires consumer commodities to be marked with statements of: (1) identity; (2) net quantity of contents; and (3) name and place of the business of manufacturer, packer, or distributor. These requirements serve FPLA's stated purpose of "enabling consumers to obtain accurate information as to the quantity of the contents and ... to facilitate value comparisons." As part of its ongoing systematic review process, the Commission requested comments on March 19, 2014, regarding, among other things, the economic impact and benefits of the FPLA Rules; possible conflict between the Rules and State, local, or other Federal laws or regulations; and the effect on the Rules of any technological, economic, or other industry changes. The comment period closed on May 21, 2014. Staff is reviewing the comments and anticipates forwarding a recommendation to the Commission by the end of 2014.
Care Labeling Rule, 16 CFR 423. Promulgated in 1971, the Rule on Care Labeling of Textile Apparel and Certain Piece Goods as Amended (the Care Labeling Rule) makes it an unfair or deceptive act or practice for manufacturers and importers of textile wearing apparel and certain piece goods to sell these items without attaching care labels stating "what regular care is needed for the ordinary use of the product." The Rule also requires that the manufacturer or importer possess, prior to sale, a reasonable basis for the care instructions and allows the use of approved care symbols in lieu of words to disclose care instructions. After reviewing the comments from a periodic rule review (76 FR. 41148; July 13, 2011), the Commission concluded on September 20, 2012, that the Rule continued to benefit consumers and would be retained, and sought comments on potential updates to the Rule, including changes that would: allow garment manufacturers and marketers to include instructions for professional wetcleaning on labels; permit the use of ASTM Standard D5489-07, "Standard Guide for Care Symbols for Care Instructions on Textile Products," or ISO 3758:2005(E), "Textiles-Care labeling code using symbols," in lieu of terms; clarify what can constitute a reasonable basis for care instructions; and update the definition of "dryclean." 77 FR 58338. On March 28, 2014, the Commission hosted a public roundtable in Washington, DC, that analyzed proposed changes to the Rule. Staff anticipates forwarding a recommendation to the Commission action during early 2015.
Used Car Rule, 16 CFR 455. The Used Motor Vehicle Trade Regulation Rule ("Used Car Rule"), 16 CFR 455, sets out the general duties of a used vehicle dealer; requires that a completed Buyers Guide be posted at all times on the side window of each used car a dealer offers for sale; and mandates disclosure of whether the vehicle is covered by a dealer warranty and, if so, the type and duration of the warranty coverage, or whether the vehicle is being sold "as is-no warranty." The Commission published a notice seeking public comments on the effectiveness and impact of the rule. See 73 FR 42285 (July 21, 2008). The comment period, as extended and then reopened, ended on June 15, 2009. In response to comments, the Commission published a Notice of Proposed Rulemaking on December 17, 2012 (See 77 FR 74746) and a final rule revising the Spanish translation of the window form on December 12, 2012. See 77 FR 73912. The extended comment period on the NPRM ended on March 13, 2012. The Commission is currently considering staff's recommendation relating to the next step in this rulemaking.
Consumer Warranty Rules, 16 CFR 701-703. The Rule Governing the Disclosure of Written Consumer Product Warranty Terms and Conditions (Rule 701) establishes requirements for warrantors for disclosing the terms and conditions of written warranties on consumer products actually costing the consumer more than $15.00. The Rule Governing the Pre-Sale Availability of Written Warranty Terms, 16 CFR part 702 (Rule 702) requires sellers and warrantors to make the terms of a written warranty available to the consumer prior to sale. The Rule Governing Informal Dispute Settlement Procedures (IDSM) (Rule 703) establishes minimum requirements for those informal dispute settlement mechanisms that are incorporated by the warrantor into its consumer product warranty. By incorporating the IDSM into the warranty, the warrantor requires the consumer to use the IDSM before pursuing any legal remedies in court. On August 23, 2011, as part of its ongoing systematic review of all FTC rules and guides, the Commission requested comments on, among other things, the economic impact and benefits of these Rules, Guides, and Interpretations;[27] possible conflict between the Rules, Guides, and Interpretations and state, local, or other federal laws or regulations; and the effect on the Rules, Guides, and Interpretations of any technological, economic, or other industry changes. See 76 FR 52596. The comment period closed on October 24, 2011. Staff anticipates sending a recommendation to the Commission by the fall of 2014.
Cooling-Off Rule, 16 CFR 429. The Cooling-Off Rule requires that a consumer be given a 3-day right to cancel certain sales greater than $25.00 that occur at a place other than a seller's place of business. The rule also requires a seller to notify buyers orally of the right to cancel, to provide buyers with a dated receipt or copy of the contract containing the name and address of the seller and notice of cancellation rights, and to provide buyers with forms which buyers may use to cancel the contract. As part of its systematic regulatory review process and following public comment, the Commission announced that it was retaining the Cooling-Off Rule and proposed increasing its $25 exclusionary limit to $130 to account for inflation. 78 FR 3855 (Jan. 17, 2013). The comment period closed on March 4, 2013. Staff reviewed the comments, and the Commission is currently reviewing its recommendation.
Unavailability Rule, 16 CFR 424. The Unavailability Rule states that it is a violation of section 5 of the FTC Act for retail stores of food, groceries, or other merchandise to advertise products for sale at a stated price if those stores do not have the advertised products in stock and readily available to customers during the effective period of the advertisement, unless the advertisement clearly discloses that supplies of the advertised products are limited or are available only at some outlets. This Rule is intended to benefit consumers by ensuring that advertised items are available, that advertising-induced purchasing trips are not fruitless, and that store prices accurately reflect the prices appearing in the ads. On August 12, 2011, the Commission announced an ANPRM and a request for comment on the Rule as part of its systematic periodic review of current rules. The comment period closed on October 19, 2011. Staff has reviewed the comments and expects to submit a recommendation to the Commission by the winter of 2015.
(b) Guides
Jewelry Guides, 16 CFR 23. The Commission sought public comments on its Guides for the Jewelry, Precious Metals, and Pewter Industries, which are commonly known as the Jewelry Guides. 77 FR 39202 (July 2, 2012). Since completing its last review of the Jewelry Guides in 1996, the Commission revised sections of the Guides and addressed other issues raised in petitions from jewelry trade associations. The Guides explain to businesses how to avoid making deceptive claims about precious metal, pewter, diamond, gemstone, and pearl products and when they should make disclosures to avoid unfair or deceptive trade practices. The comment period initially set to close on August 27, 2012, was subsequently extended until September 28, 2012. Staff also conducted a public roundtable to examine possible modifications to the Guides in June 2013. Staff is currently reviewing the record, including comments and the roundtable transcript.
Used Auto Parts Guides, 16 CFR 20. On July 14, 2014, the Commission completed its review of the Guides for the Rebuilt, Reconditioned and Other Used Automobile Parts Industry (Used Auto Parts Guides or Guides), which are designed to prevent the unfair or deceptive marketing of used motor vehicle parts and assemblies, such as engines and transmissions, containing used parts. 79 FR 40623. The Guides prohibit misrepresentations that a part is new or about the condition, extent of previous use, reconstruction, or repair of a part. Previously used parts must be clearly and conspicuously identified as such in advertising and packaging and, if the part appears new, on the part itself. In May 2012, the Commission sought public comments on the Used Auto Parts Guides. 77 FR 29922. After considering the comments, the Commission decided to retain and amend the Guides. Significant amendments include providing that the term "remanufactured," like the term "factory rebuilt," should be used only if the product was rebuilt "at a factory generally engaged in the rebuilding of such products;" applying the Guides to used tires; and shortening and updating the sample list of parts that may be industry products.
Final Actions
Since the publication of the 2013 Regulatory Plan, the Commission has issued the following final rules or taken other actions to close other rulemaking proceedings.
Mail or Telephone Order Merchandise Rule, 16 CFR 435. The Mail or Telephone Order Rule requires that, when sellers advertise merchandise, they must have a reasonable basis for stating or implying that they can ship within a certain time. On September 11, 2014, the Commission announced it was adopting final amendments to its Trade Regulation Rule previously entitled "Mail or Telephone Order Merchandise," including revising its name to "Mail, Internet, or Telephone Order Merchandise" (the "Rule"). 79 FR 55615 (Sept. 17, 2014). The final rule is based upon the comments received in response to an Advance Notice of Proposed Rulemaking, a Notice of Proposed Rulemaking, a Staff Report, and other information. Other final amendments clarify that the Rule covers all orders placed over the Internet; revise the Rule to allow sellers to provide refunds and refund notices by any means at least as fast and reliable as first class mail; clarify sellers' obligations when buyers use payment systems not enumerated in the Rule; and require that refunds be made within seven working days for purchases made using third-party credit cards. The final rule is effective on December 8, 2014.
Wool Rules, 16 CFR 300. On June 4, 2014, the Commission amended the Wool Rules (Rules and Regulations Under The Wool Products Labeling Act of 1939) to conform to the 2006 amendments to the Wool Suit Fabric Labeling Fairness and International Standards Conforming Act (the Wool Act) and the amended Textile Rules. The changes included incorporating the Wool Act's new definitions for cashmere and very fine wools, clarifying descriptions of products containing virgin or new wool, and allowing certain hang-tags disclosing fiber trademarks and performance even if they do not disclose the product's full fiber content. The amended Rules were effective on July 7, 2014.
Fur Rules, 16 CFR 301. The Commission published amendments to the Fur Rules (or Rules and Regulations under the Fur Products Labeling Act) on May 28, 2014, to update the Fur Products Name Guide, provide more labeling flexibility, incorporate Truth in Fur Labeling Act provisions, and conform the guaranty provisions to those governing the Rules under the Textile Fiber Products Identification Act. 79 FR 30445. The amendments are effective November 19, 2014. More specifically, the changes eliminate unnecessary requirements on companies that sell fur products to give them more flexibility on labeling, update the Fur Products Name Guide that lists common animal names allowed on fur labels, incorporate provisions of a fur labeling law passed by Congress in 2010, the Truth in Fur Labeling Act of 2010 ("TFLA"), including the elimination of the Commission's discretion to exempt fur products of "relatively small quantity or value" from disclosure requirements; and providing that the Fur Act would not apply to products covered by the hunter/trapper exemption.
Textile Labeling Rules, 16 CFR 303. These Rules implement Textile Fiber Identification Act requirements that apparel and other covered household textile articles be marked with (1) the generic names and percentages by weight of the constituent fibers present in the textile fiber product; (2) the name under which the manufacturer or another responsible USA company does business, or in lieu thereof, the registered identification number (RIN) of such a company; and (3) the name of the country where the textile product was processed or manufactured. After notice and comment, the Commission amended the Rules on April 4, 2014, to clarify and update its provisions and provide more flexibility, giving businesses more compliance options without imposing significant new obligations. 79 FR 18766.
Premerger Notification Rules and Report Form (or HSR Rules), 16 CFR 801-803. On April 25, 2014, the Commission, in conjunction with the Department of Justice's Antitrust Division, issued amendments to the HSR Rules, updating the Instructions to the HSR Form with the address for the Premerger Office's new location in the Constitution Center. The effective date of the new address was May 6, 2014. 79 F R 25662.
Prenotification Negative Option Rule, 16 CFR 425. On July 25, 2014, the Commission announced it was closing the periodic Regulatory Review and retaining the Negative Option Rule (the Trade Regulation Rule on Prenotification Negative Option Plans) as currently written. 79 FR 44271 (July 31, 2014). The Negative Option Rule governs the operation of prenotification subscription plans. Under these plans, sellers ship merchandise automatically to their subscribers and bill them for the merchandise within a prescribed time. The Negative Option Rule protects consumers by requiring the disclosure of the terms of membership clearly and conspicuously and establishes procedures for administering the subscription plans.
Energy Labeling Rule, 16 CFR 305. On April 9, 2014, the Commission issued conforming amendments to the Rule requiring a new Department of Energy ("DOE") test procedure for televisions and establishing data reporting requirements for those products. 79 FR 19464.[28]
Telemarketing Sales Rule, 16 CFR 310. Caller ID-After reviewing the public comments elicited by an Advance Notice of Proposed Rulemaking, 75 FR 78179 (Dec. 15, 2010) seeking suggestions on ways to enhance the effectiveness and enforceability of the caller identification ("Caller ID") requirements of the TSR as well as technical presentations at the FTC's 2012 Robocall Summit, the Commission determined that amending the TSR would not reduce the incidence of the falsification, or "spoofing," of Caller ID information in telemarketing calls. The Commission issued a Federal Register Notice closing this proceeding, effective December 5, 2013. 78 FR 77024 (Dec. 20, 2014).
Fred Meyer Guides, 16 CFR 240. On September 18, 2014, the Commission completed its review of the Fred Meyer Guides (officially the Guides for Advertising Allowances and Other Merchandising Payments and Services) and is retaining the Guides with updates that, among other revisions, clarify that the Guides apply to Internet commerce and bring the Guides into conformity with current case law regarding the applicability of Sections 2(d) and (e) of the Robinson-Patman Act to knowing inducement of disproportional promotional allowances. 79 FR 58245 (Sept. 29, 2014). The Guides assist businesses in complying with sections 2(d) and 2(e) of the Robinson-Patman Act, which proscribe certain discriminations in the provision of promotional allowances and services to customers. Broadly put, the Guides provide that unlawful discrimination may be avoided by providing promotional allowances and services to customers on "proportionally equal terms."
Vocational Schools Guides, 16 CFR 254. On November 18, 2013, the Commission amended the Vocational Schools Guides (or the Private Vocational and Distance Education Schools Guides) to address more specifically misrepresentations commonly used in recruitment, including those regarding completion/dropout rates and post-graduation job prospects; about whether completion of a program will qualify students to take a licensing exam; concerning a student's score on an admissions test, how long it takes to complete a course or program, or a student's likelihood of success; and regarding the likelihood of financial aid or help with language barriers or learning disabilities, or how much credit students will receive for courses completed elsewhere. 78 FR 68987. The Vocational School Guides address marketing practices by businesses that offer vocational training.
Summary
In both content and process, the FTC's ongoing and proposed regulatory actions are consistent with the President's priorities. The actions under consideration inform and protect consumers, while minimizing the regulatory burdens on businesses. The Commission will continue working toward these goals. The Commission's 10-year review program is patterned after provisions in the Regulatory Flexibility Act and complies with the Small Business Regulatory Enforcement Fairness Act of 1996. The Commission's 10-year program also is consistent with section 5(a) of Executive Order 12866, which directs executive branch agencies to develop a plan to reevaluate periodically all of their significant existing regulations. 58 FR 51735 (Sept. 30, 1993). In addition, the final rules issued by the Commission continue to be consistent with the President's Statement of Regulatory Philosophy and Principles, Executive Order 12866, section 1(a), which directs agencies to promulgate only such regulations as are, inter alia, required by law or are made necessary by compelling public need, such as material failures of private markets to protect or improve the health and safety of the public.
The Commission continues to identify and weigh the costs and benefits of proposed actions and possible alternative actions and to receive the broadest practicable array of comment from affected consumers, businesses, and the public at large. In sum, the Commission's regulatory actions are aimed at efficiently and fairly promoting the ability of "private markets to protect or improve the health and safety of the public, the environment, or the well-being of the American people." Executive Order 12866, section 1.
II. Regulatory and Deregulatory Actions
The Commission has no proposed rules that would be a "significant regulatory action" under the definition in Executive Order 12866.[29] The Commission has no proposed rules that would have significant international impacts under the definition in Executive Order 13609. Also, there are no international regulatory cooperation activities that are reasonably anticipated to lead to significant regulations under Executive Order 13609.
[1] For example, the Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003 (CAN-SPAM Act) (15 U.S.C. sections 7701-7713) and the Telemarketing and Consumer Fraud and Abuse Prevention Act (15 U.S.C. sections 6101-6108).
[2] For example, the Energy Policy Act of 1992 (106 Stat. 2776, codified in scattered sections of the U.S. Code, particularly 42 U.S.C. section 6201 et seq. and the Energy Independence and Security Act of 2007 (EISA)).
[3] The FTC also prepares a number of annual and periodic reports on the statutes it administers. These are not discussed in this plan.
[4] See press release " FTC to Host Spring Seminars on Emerging Consumer Privacy Issues" dated December 2, 2013, at http://www.ftc.gov/news-events/press-releases/2013/12/ftc-host-spring-seminars-emerging-consumer-privacy-issues.
[5] See workshop agenda and conference description at http://www.ftc.gov/news-events/events-calendar/2013/11/internet-things-privacy-security-connected-world.
[6] FTC v. Amazon.com, Inc., No. 2:14-cv-01038 (W.D. Wash.) (Complaint For Permanent Injunction And Other Equitable Relief filed on July 10, 2014).
[7] In the Matter of Apple Inc., Docket No. C-4444, Decision and Order, March 25, 2014; In the Matter ofGoogle Inc., Docket No. 122 3237, Proposed Agreement Containing Consent Order, September 4, 2014.
[8] See "Net Cetera: Chatting with Kids About Being Online" at http://www.consumer.ftc.gov/articles/pdf-0001-netcetera.pdf.
[9] The FTC has brought more than 130 cases involving telemarketing fraud against more than 800 defendants during the past decade,
[10] FTC v. T-Mobile USA, Inc., No. 2:14-cv-00967 (W.D. Wash.) (Complaint For Permanent Injunction And Other Equitable Relief filed on July 1, 2014).
[11] See "Mobile Cramming: A Federal Trade Commission Staff Report (July 2014)" at http://www.ftc.gov/system/files/documents/reports/mobile-cramming-federal-trade-commission-staff-report-july-2014/140728mobilecramming.pdf.
[12] See "What's the Deal? An FTC Study on Mobile Shopping Apps (August 2014)" at http://www.ftc.gov/system/files/documents/reports/whats-deal-federal-trade-commission-study-mobile-shopping-apps-august-2014/140801mobileshoppingapps.pdf.
[13] FTC v. AbbVie, Inc., No. 2:14-cv-05151-RK (E.D. Pa.) (Complaint For Injunctive And Other Equitable Relief filed on September 8, 2014).
[14] FTC v. Cephalon, Inc., No. 2:08-CV-02141 (E.D. Pa.).
[15] See press release "Federal Trade Commission, Department of Justice to Hold Workshop on Patent Assertion Entity Activities" dated November 19, 2012, at http://www.ftc.gov/opa/2012/11/paeworkshop.shtm.
[16] See Comments of the Antitrust Division of the United States Department of Justice And the United States Federal Trade Commission, February 1, 2013, Before the United States Department of Commerce Patent and Trademark Office, In the Matter of Notice of Roundtable on Proposed Requirements for Recordation of Real-Party-in-Interest Information Throughout Application Pendency and Patent Term, Docket No. PTO-P-2012-0047, at http://www.ftc.gov/os/2013/02/130201pto-rpi-comment.pdf.
[17] A copy of the order, a list of the target companies, and the press release are available online at http://www.ftc.gov/opa/2012/04/alcoholstudy.shtm.
[18] See Self-Regulation in the Alcohol Industry (March 2014), available at http://www.ftc.gov/system/files/documents/reports/self-regulation-alcohol-industry-report-federal-trade-commission/140320alcoholreport.pdf.
[19] More information can be found at http://www.dontserveteens.gov/.
[20] 16 C.F.R. Part 317; See press release: "New FTC Rule Prohibits Petroleum Market Manipulation" (Aug. 6, 2009), available at http://www.ftc.gov/opa/2009/08/mmr.shtm; "FTC Issues Compliance Guide for Its Petroleum Market Manipulation Regulations," News Release (Nov. 13, 2009), available at http://www.ftc.gov/opa/2009/11/mmr.shtm.
[21] See press release "FTC Approves Final Orders Settling Charges of U.S.-EU Safe Harbor Violations Against 14 Companies" dated June 25, 2014, at http://www.ftc.gov/news-events/press-releases/2014/06/ftc-approves-final-orders-settling-charges-us-eu-safe-harbor.
[22] FTC v. Construct Data Publishers, a.s. d/b/a Fair Guide, Civil Action Number: 13 cv 1999 (N.D. Ill.) Default Judgment and Order for Permanent Injunction and Other Equitable Relief Against Construct Data Publishers A.S., Wolfgang Valvoda, and Susanne Anhorn (March 7, 2014).
[23] See press release "FTC Signs Memorandum of Understanding with Nigerian Consumer Protection and Criminal Enforcement Authorities" dated August 28, 2013, at http://www.ftc.gov/news-events/press-releases/2013/08/ftc-signs-memorandum-understanding-nigerian-consumer-protection.
[24] See press release "FTC Puts Conditions on Thermo Fisher Scientific Inc.'s Proposed Acquisition of Life Technologies Corporation" dated January 31, 2014, at http://www.ftc.gov/news-events/press-releases/2014/01/ftc-puts-conditions-thermo-fisher-scientific-incs-proposed.
[25] See press release "Federal Trade Commission and Justice Department Issue Updated Model Waiver of Confidentiality for International Civil Matters and Accompanying FAQ" dated September 25, 2013, at http://www.ftc.gov/news-events/press-releases/2013/09/federal-trade-commission-and-justice-department-issue-updated.
[26] See Final Actions for information about a separate final rule proceeding for HSR Rules.
[27] The Federal Register Notice also announced the review of the related Guides for the Advertising of Warranties and Guarantees, 16 CFR 239, and the Interpretations of Magnuson-Moss Warranty Act, 16 CFR 700.
[28] See Ongoing Rule and Guide Reviews for information about a separate ongoing rulemaking proceeding for the Energy Labeling Rule.
[29] Section 3(f) of Executive Order 12866 defines a regulatory action to be "significant" if it is likely to result in a rule that may:
(1) Have an annual effect on the economy of $100 million or more or adversely affect in a material way the economy; a sector of the economy; productivity; competition; jobs; the environment; public health or safety; or State, local, or tribal governments or communities;
(2) Create a serious inconsistency or otherwise interfere with an action taken or planned by another agency;
(3) Materially alter the budgetary impact of entitlements, grants, user fees, or loan programs, or the rights and obligations of recipients thereof; or
(4) Raise novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles set forth in this Executive order.