United States: House Subcommittee Pushes FTC Overhaul, Restricting Investigations And Consent Orders

Last Updated: June 15 2016
Article by Joseph W. Jerome and D. Reed Freeman, Jr.

In an effort to "reduce some of the ambiguous legal liability" that exists under Section 5 of the FTC Act, the House Energy and Commerce trade subcommittee advanced eleven legislative initiatives consolidated into four bills to "modernize" the Federal Trade Commission last Thursday. Three bills give the FTC additional authority to police "gag clauses" and online ticket sales and to standardize "Made in the USA" labeling. The final bill—the FTC Process and Transparency Reform Act—contains eight Republican-sponsored reform bills examined at a subcommittee hearing in late May.

These reform bills could significantly alter the FTC's responsibilities under the FTC Act, and they include the following proposals:

  • H.R. 5093, the Technological Innovation through Modernizing Enforcement (TIME) Act;
  • H.R. 5097, the Start Taking Action on Lingering Liabilities (STALL) Act;
  • H.R. 5098, the FTC Robust Elderly Protections and Organizational Requirements to Track Scams Act;
  • H.R. 5109, the Clarifying Legality and Enforcement Action Reasoning (CLEAR) Act;
  • H.R. 5115, the Statement on Unfairness Reinforcement and Emphasis Act (SURE) Act;
  • H.R. 5116, the Freeing Responsible and Effective Exchanges (FREE) Act;
  • H.R. 5118, the Solidifying Habitual and Institutional Explanations of Liability and Defenses (SHIELD) Act; and
  • H.R. 5136, the Revealing Economic Conclusions for Suggestions (RECS) Act.

In brief, these measures impose restrictions on FTC investigations and consent orders, establish a "safe harbor" for compliance with FTC guidance, and require additional reports and documentation from the FTC. A more detailed breakdown of the eight substantive sections of the FTC Process and Transparency Reform Act follows.

Codify the FTC's 1980 Policy Statement on Unfairness: Section 2 captures the SURE Act, which would amend the FTC Act to codify the FTC's test for substantial injury from its Unfairness Policy Statement. The FTC would be statutorily required to consider whether an act or practice results in monetary harm, unwarranted health or safety risks, or "only in emotional or other more subjective harm," which would not qualify. Further, acts or practices may not be deemed unfair unless the FTC can conclude they are injurious in their "net effects." In written testimony last month, Chairwoman Ramirez cautioned that this codification effort could undermine the FTC's efforts "to prevent likely substantial harm before it occurs."

Limit FTC Consent Orders to Eight-Year Durations: Section 3 incorporates the TIME Act and imposes an eight-year limit on most FTC consent orders. In determining the time limit for any consent order, the FTC shall consider: (1) the impact of technological progress on the continuing relevance of the order; and (2) whether there is reason to believe the entity will continue to engage in the alleged activities after eight years. No order may last longer than eight years unless it relates to alleged fraud and requires a longer time frame based on these two factors. Moreover, companies subject to consent orders lasting longer than five years (including existing consent orders) may petition the FTC to evaluate whether provisions in the consent order continue to serve their initial purposes. Consent orders may be terminated early based upon this evaluation.

Report on FTC Unfair and Deceptive Investigations Annually: Section 4 captures the CLEAR Act, which would require the FTC to publish an annual report to Congress on its consumer protection investigations. This report would include information about both open and closed matters. Specifically, the report must detail: (1) the number of investigations begun by the FTC; (2) the number of investigations closed with no official action, (3) the disposition of any investigation resulting in agency action, and (4) for any closed action, a description sufficient "to indicate the legal analysis supporting the Commission's decision not to continue such investigation, and the industry sectors of the entities subject to each such investigation." Privacy protections would be put in place to ensure no description identifies a person subject to an investigation.

Require FTC Recommendations Be Supported by Economic Analysis: Section 5 describes the RECS Act, which would amend the FTC Act to require that any legislative or regulatory recommendation sought by the Commission to be accompanied by an economic analysis from the Bureau of Economics. This analysis must: (1) be sufficient to demonstrate that the FTC has identified a problem it determines should be addressed; (2) include the rationale for the FTC's determination that private markets or public institutions could not adequately address the issue; and (3) be supported by on a determination that the benefits of the recommended action outweigh its costs.

Clarify that FTC Policy Guidance Does Not Provide an Independent Basis of Liability: Section 6 incorporates the SHIELD Act, which would limit the ability of the FTC to bring an enforcement action based solely on a Respondent's practices being inconsistent with FTC-issued industry guidance. Further, companies could use compliance with FTC guidance as evidence of legal compliance, creating a "safe harbor" of sorts. While the bill states that it is not to construed to "negate any authority of the Commission to issue guidelines, general statements of policy, or similar guidance," Commissioner Ramirez has expressed concern that this provision would preclude the ability of the FTC to consider "the law's applicability to the specific facts and circumstances of the case" and would chill the FTC's efforts to provide informal guidance to industry through workshops and reports.

Terminate Investigations After Six Months: Section 7 captures the STALL Act, requiring the termination of an FTC investigation if the FTC fails to contact the target of an investigation with a "verifiable" written communication every six months or unless the FTC formally votes to continue the investigation.

Permit Closed-Door Meetings with a Bipartisan Majority of FTC Commissioners: Section 8 incorporates the FREE Act, which would permit a bipartisan majority of commissioners to hold a closed-door meeting to discuss official business. These meetings would be subject to transparency requirements provided by the Sunshine Act, and the FTC also would be required to publish online a list of any attendees to these meetings.

Require an Annual Report on Elder Fraud: Finally, Section 9 would require the FTC to submit an annual report to Congress that details the Commission's policy and rulemaking work with respect to elder fraud. Commissioner Ramirez has suggested that while the FTC is "happy to continue to keep the Subcommittee apprised of Commission activities" and would support "broadening the report to capture all of what the FTC is doing on behalf of seniors," she is concerned that the specification required by Section 9 could "impair the FTC's ability to respond to emergent issues, or would not produce helpful additional information."

The markup had limited bipartisan support, and it is unclear whether or when the full committee will take up these measures.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
Global Advertising Lawyers Alliance (GALA)
Frankfurt Kurnit Klein & Selz
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Global Advertising Lawyers Alliance (GALA)
Frankfurt Kurnit Klein & Selz
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions