[House Hearing, 110 Congress]
[From the U.S. Government Publishing Office]
ENHANCING FTC CONSUMER PROTECTION IN
FINANCIAL DEALINGS WITH
TELEMARKETERS AND THE INTERNET
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON COMMERCE, TRADE,
AND CONSUMER PROTECTION
OF THE
COMMITTEE ON ENERGY AND COMMERCE
HOUSE OF REPRESENTATIVES
ONE HUNDRED TENTH CONGRESS
FIRST SESSION
__________
OCTOBER 23, 2007
__________
Serial No. 110-72
Printed for the use of the Committee on Energy and Commerce
energycommerce.house.gov
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COMMITTEE ON ENERGY AND COMMERCE
JOHN D. DINGELL, Michigan, Chairman
HENRY A. WAXMAN, California JOE BARTON, Texas
EDWARD J. MARKEY, Massachusetts Ranking Member
RICK BOUCHER, Virginia RALPH M. HALL, Texas
EDOLPHUS TOWNS, New York J. DENNIS HASTERT, Illinois
FRANK PALLONE, Jr., New Jersey FRED UPTON, Michigan
BART GORDON, Tennessee CLIFF STEARNS, Florida
BOBBY L. RUSH, Illinois NATHAN DEAL, Georgia
ANNA G. ESHOO, California ED WHITFIELD, Kentucky
BART STUPAK, Michigan BARBARA CUBIN, Wyoming
ELIOT L. ENGEL, New York JOHN SHIMKUS, Illinois
ALBERT R. WYNN, Maryland HEATHER WILSON, New Mexico
GENE GREEN, Texas JOHN B. SHADEGG, Arizona
DIANA DeGETTE, Colorado CHARLES W. ``CHIP'' PICKERING,
Vice Chairman Mississippi
LOIS CAPPS, California VITO FOSSELLA, New York
MIKE DOYLE, Pennsylvania STEVE BUYER, Indiana
JANE HARMAN, California GEORGE RADANOVICH, California
TOM ALLEN, Maine JOSEPH R. PITTS, Pennsylvania
JAN SCHAKOWSKY, Illinois MARY BONO, California
HILDA L. SOLIS, California GREG WALDEN, Oregon
CHARLES A. GONZALEZ, Texas LEE TERRY, Nebraska
JAY INSLEE, Washington MIKE FERGUSON, New Jersey
TAMMY BALDWIN, Wisconsin MIKE ROGERS, Michigan
MIKE ROSS, Arkansas SUE WILKINS MYRICK, North Carolina
DARLENE HOOLEY, Oregon JOHN SULLIVAN, Oklahoma
ANTHONY D. WEINER, New York TIM MURPHY, Pennsylvania
JIM MATHESON, Utah MICHAEL C. BURGESS, Texas
G.K. BUTTERFIELD, North Carolina MARSHA BLACKBURN, Tennessee
CHARLIE MELANCON, Louisiana
JOHN BARROW, Georgia
BARON P. HILL, Indiana
______
Professional Staff
Dennis B. Fitzgibbons, Chief of Staff
Gregg A. Rothschild, Chief Counsel
Sharon E. Davis, Chief Clerk
David L. Cavicke, Minority Staff Director
(ii)
Subcommittee on Commerce, Trade, and Consumer Protection
BOBBY L. RUSH, Illinois, Chairman
JAN SCHAKOWSKY, Illinois CLIFF STEARNS, Florida,
Vice Chairman Ranking Member
G.K. BUTTERFIELD, North Carolina J. DENNIS HASTERT, Illinois
JOHN BARROW, Georgia ED WHITFIELD, Kentucky
BARON P. HILL, Indiana CHARLES W. ``CHIP'' PICKERING,
EDWARD J. MARKEY, Massachusetts Mississippi
RICK BOUCHER, Virginia VITO FOSSELLA, New York
EDOLPHUS TOWNS, New York GEORGE RADANOVICH, California
DIANA DeGETTE, Colorado JOSEPH R. PITTS, Pennsylvania
CHARLES A. GONZALEZ, Texas MARY BONO, California
MIKE ROSS, Arkansas LEE TERRY, Nebraska
DARLENE HOOLEY, Oregon SUE WILKINS MYRICK, North Carolina
ANTHONY D. WEINER, New York MICHAEL C. BURGESS, Texas
JIM MATHESON, Utah MARSHA BLACKBURN, Tennessee
CHARLIE MELANCON, Louisiana JOE BARTON, Texas (ex officio)
JOHN D. DINGELL, Michigan (ex
officio)
C O N T E N T S
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Page
Hon. Bobby L. Rush, a Representative in Congress from the State
of Illinois, opening statement................................. 1
Hon. Cliff Stearns, a Representative in Congress from the State
of Florida, opening statement.................................. 3
Hon. Jan Schakowsky, a Representative in Congress from the State
of Illinois, opening statement................................. 5
Hon. Joe Barton, a Representative in Congress from the State of
Texas, opening statement....................................... 6
Hon. John Barrow, a Representative in Congress from the State of
Georgia, opening statement..................................... 6
Hon. Darlene Hooley, a Representative in Congress from the State
of Oregon, opening statement................................... 7
Hon. Lee Terry, a Representative in Congress from the State of
Nebraska, opening statement.................................... 7
Hon. Michael C. Burgess, a Representative in Congress from the
State of Texas, opening statement.............................. 8
Hon. Marsha Blackburn, a Representative in Congress from the
State of Tennessee, opening statement.......................... 10
Hon. Mike Doyle, a Representative in Congress from the State of
Pennsylvania, opening statement................................ 11
Hon. G.K. Butterfield, a Representative in Congress from the
State of North Carolina, prepared statement.................... 12
Witness
Lydia B. Parnes, Director, Bureau of Consumer Protection, Federal
Trade Commission............................................... 13
Prepared statement........................................... 15
ENHANCING FTC CONSUMER PROTECTION
IN FINANCIAL DEALINGS WITH
TELEMARKETERS AND THE INTERNET
----------
TUESDAY, OCTOBER 23, 2007
House of Representatives,
Subcommittee on Commerce, Trade,
and Consumer Protection,
Committee on Energy and Commerce,
Washington, DC.
The subcommittee met, pursuant to call, at 10:10 a.m., in
room 2123, Rayburn House Office Building, Hon. Bobby L. Rush
(chairman) presiding.
Present: Representatives Barrow, Ross, Hooley, Stearns,
Pickering, Radanovich, Pitts, Terry, Burgess, Blackburn, and
Barton.
Also present: Representative Doyle.
Staff present: Consuela Washington, Judith Bailey,
Christian Fjeld, Peter Goodloe, Andrew Woelfling, Valerie
Baron, Sharon Davis, Erin Bzymek, Megan Mann, Brian McCullough,
William Carty, and Chad Grant.
OPENING STATEMENT OF HON. BOBBY L. RUSH, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF ILLINOIS
Mr. Rush. The subcommittee will come to order.
Today we are holding a legislative hearing on three
consumer protection bills involving the Federal Trade
Commission. As is the case with most of the business conducted
in this subcommittee, each bill represents bipartisan
cooperation in consultation with the germane expert regulatory
agency, in this case the FTC.
Subsequent to today's hearing, we will immediately move to
markup all three bills and, I hope, report them favorably to
the subcommittee.
The first bill before us today is H.R. 2601, introduced by
my friend, the distinguished ranking member of the
subcommittee, Mr. Stearns, a bill to extend the authority of
the Federal Trade Commission to collect fees, to administer and
enforce the provisions relating to the National Do-Not-Call
Registry.
In 2003, Congress passed the Do-Not-Call Implementation
Act, which authorized the FTC to establish fees sufficient to
implement the National Do-Not-Call Registry as originally
authorized by the Telecommunications and Consumer Fraud and
Abuse Prevention Act of 1994. I do not think it is hyperbole to
say that this may quite possibly be one of the most popular
laws and Government initiatives in recent history. Consumers
have registered more than 146 million telephone numbers since
the registry began in operation in 2003.
The FTC's authority to annually establish the appropriate
level of fees to charge telemarketers for access to the
registry expires in 2007, and Mr. Stearns' bill extends that
authority through fiscal year 2012.
No doubt, if Members of Congress wish to avoid the wrath of
millions of angry constituents who are being called by
telemarketers, it is in our best interest to facilitate the
continuing operation of the Do-Not-Call Registry. We are not
dumb. We do know what we are doing, and we do not want to have
the anger and angst of all our constituents breathing down our
neck.
Second, the subcommittee will deliberate on H.R. 3461, the
Safeguarding America's Families by Enhancing and Reorganizing
New and Efficient Technologies Act of 2007, or the SAFER Net
Act, introduced by my friend and colleague from Illinois,
Congresswoman Melissa Bean.
The bill directs the FTC to carry out a nationwide public
awareness campaign about Internet safety and directs the
Commission to annually report to Congress on its activity to
promote Internet safety. In addition, the bill authorizes $10
million for 1 year to carry out this public awareness campaign.
Finally, the last bill the subcommittee will take up is
H.R. 3526, a bill to include all banking agencies within the
existing regulatory authority under the Federal Trade
Commission Act with respect to depository institutions.
Chairman Barney Frank of the Financial Services Committee
introduced the bill, and he has asked the Energy and Commerce
Committee to expedite the exercise of its jurisdiction in order
to facilitate its consideration on the House floor's suspension
calendar. Today's hearing, followed by an immediate markup, is
the first step in this expedited process.
Under section 5 of the FTC Act, banks are exempted from the
Commission's broad enforcement authority to prevent unfair
methods of competition and deceptive financial practices, and
under section 18 of the Act it is the Federal Reserve that has
the sole authority to write consumer protection bills affecting
depository institutions.
Unfortunately, the Fed has been, quite frankly, asleep at
the switch and negligent in its duties. Despite a joint letter
from Chairman Dingell and Chairman Frank on May 11th,
complaining about the lack of consumer protection rules,
Federal regulators continue to lack even a strategy for better
Federal protection of financial consumers. In response, H.R.
3526 will allow both the Comptroller of the Currency and the
FDIC to write consumer protection rules governing depository
institutions in addition to the Federal Reserve's existing
authority.
The Financial Services Committee already held 2 days of
hearings in July on consumer protection in the financial
services industry, and it is my intent to hold further hearings
on this matter next year in addition to the hearings we are
conducting today.
I fully support Chairman Frank's bill, but as I have said,
the lack of consumer protection at depository and other
financial institutions is a problem, and I hope to effect
closer scrutiny by Congress and this committee during the next
session.
Lastly, I want to thank our witness today, Ms. Lydia
Parnes, Director of the FTC's Bureau of Consumer Protection,
who is no stranger to this subcommittee, appearing before us
today, and I look forward to hearing her opinions and insights
on these three consumer protection bills.
With that, I yield back the balance of my time, and I
recognize the ranking member, Mr. Stearns of Florida.
OPENING STATEMENT OF HON. CLIFF STEARNS, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF FLORIDA
Mr. Stearns. Good morning and thank you, Mr. Chairman.
I also want to thank Ms. Parnes for being here this
morning.
These three bills, my colleagues, fall under our
jurisdiction. The Federal Trade Commission is under our
jurisdiction as well as the Consumer Protection Agency.
Now, the first bill reauthorizes, as the chairman
mentioned, one of the most popular bills that we have ever
enacted, the Do-Not-Call Act. I would stipulate that, if we
could pass one of these bills every other month, the approval
of Congress, Mr. Chairman, would rise significantly. So that is
how popular this bill has been.
It has been clear that since the last inception that many
Americans like having a means to make their home phone numbers
free from telemarketing phone calls. The legislation I
introduced with yourself, Chairman Dingell and Ranking Member
Barton reauthorizes the Do-Not-Call Act. I have an amendment,
Mr. Chairman, that I plan to offer, and will provide more
detail on it when we go to markup.
The Do-Not-Call Registry implemented a list maintained by
the FTC containing home phone numbers of consumers voluntarily
placed on the list. Telemarketers then paid to access the list
to know which numbers they cannot call under the Do-Not-Call
Act. This is a straightforward program, and has benefited both
the consumers and the telemarketers. The telemarketers, in this
case, do not waste time calling households that are not
interested in receiving unsolicited business offers over the
phone, and consumers have a means to stop calls they do not
want. I have heard some arguments for improvement to the list
to make it more effective and to keep it current. I welcome our
Director of the Bureau of Consumer Affairs at the FTC, and look
forward to discussing the suggestions that we have with her.
My colleagues and Mr. Chairman, the other two pieces of
legislation that we will discuss today are H.R. 3461, the SAFER
Net bill, sponsored by our colleague from the Financial
Services Committee, Ms. Bean, and H.R. 3526, sponsored by
another of our Financial Services' colleagues, in fact, the
chairman of the Financial Services, Mr. Frank, from
Massachusetts, which addresses consumer protection regulation
for financial institutions.
The first one, H.R. 3461, I support the intent of creating
a well-informed consumer-base by raising awareness of the
problems and dangers that await uninformed users on the
Internet. A global communication network that permits
anonymity, fake identities and criminal enterprises to exist
and to gain access to anyone at any time is obviously a threat
to everyone and anyone who interacts on the Internet. We should
take this very seriously. We have seen through our work on
spyware by Mrs. Bono and Mr. Towns, that many criminals have
Web sites disguised to hide their intent so they can take over
a user's computer or can load malicious software on it to steal
their identities.
Of course, the dangers that are inherent on the Internet do
not stop with dangers to consumers' identities. The Internet is
a serious danger for our young people if precautions are not
taken. We learned through this consumer investigation and
through this committee's investigation into online child
pornography that the safety of one's home can be invaded
through the Internet by predators using the tools to access our
kids even when we think they are safe under the roofs of our
very own homes. Because of this danger, parental supervision is
necessary, and parents must be vigilant in educating and in
communicating with their children about maintaining their
guard. We do not require a license to surf the Internet nor
should we. Whether a parent permits their child to access the
Internet is their choice, but parents should be aware of the
dangers of the Internet to their children and the tools that
are available to combat these threats.
I look forward to hearing more from the FTC about their
efforts to help educate the consumers on this front.
Finally, we are here to discuss H.R. 3526, a bill to
include the Federal financial regulators within the authority
of the FTC. While banks and most financial institutions are not
within this committee's jurisdiction, direct jurisdiction,
consumer protection is. I agree with the premise that banks and
other financial institutions should be penalized for violating
consumer trust if they engage in unfair, deceptive acts. We are
watching the housing boom quickly deflate for many reasons, and
there is much blame, obviously, to go around.
Among the stories coming out of the subsequent spike in
foreclosures are examples of people trying unsuccessfully to
speculate on homes in the hopes of a quick profit as well as
many who bought homes they just could not afford. Well, I
believe everyone has to take responsibility for their personal
finances. I welcome the opportunity to discuss what regulations
currently exist to protect these consumers at the Federal level
and what regulations exist at the State level where many of the
nondepository mortgage brokers are regulated outside the reach
of the Federal banking regulators.
Just on a closing note, Mr. Chairman, and perhaps as a note
of caution, we are moving on these last two bills very quickly,
perhaps in a couple of days to the full committee, and it
appears to me it might be a forced march to some people who
want to have amendments. We have not had a chance to discuss
them. I would suggest that we tell Mr. Dingell that perhaps we
might need a little more time between a markup and going to
full committee if there are others who want to contribute.
With that caution of mine, I am very pleased that we are
having this hearing, and I thank you for the time.
Mr. Rush. The Chair thanks the gentleman from Florida and
now recognizes the gentlelady from Illinois, Ms. Schakowsky,
for 5 minutes of opening statements.
OPENING STATEMENT OF HON. JAN SCHAKOWSKY, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF ILLINOIS
Ms. Schakowsky. Thank you, Chairman Rush and Ranking Member
Stearns.
It would be hard to overstate just how important today's
hearing is given that the issues that we are looking at today
affect the lives of millions of Americans across the country.
Politicians sometimes talk about kitchen table politics, and we
should all remember that the National Do-Not-Call Registry has
145 million telephone numbers representing millions of
Americans who do not want to be disturbed by telemarketers when
they are at their kitchen tables, eating dinner.
Likewise, we have all heard the disturbing stories of
predators using the Internet to lure children away from their
homes, and as a grandmother of four, I am proud to be a
cosponsor of H.R. 3461, the Safeguarding America's Families by
Enhancing and Reorganizing New and Efficient Technologies Act
of 2007, and the clever acronym, the SAFER Net Act. This
legislation will, among other things, promote safe online
activity among children, something that is so crucial as more
and more of our children at earlier and earlier ages go online.
Finally, we are all distressed by the prevalent stories
about predatory lending, subprime mortgages, hidden outlandish
fees, and other deceptive and unfair practices that financial
institutions can use to take advantage of consumers, especially
with low and marginal incomes, who simply do not have access to
the information they need to make informed decisions. The
negative consequences to our entire economy are growing more
obvious, and I am, therefore, glad that the subcommittee is
acting today on Chairman Frank's legislation to include banking
agencies under the Federal Trade Commission Act to ensure that
depository institutions are regulated to prevent these unfair
and deceptive financial practices from continuing.
I would like to welcome and look forward to hearing from
our witness today, Lydia Parnes, the Director of the Bureau of
Consumer Protection at the Federal Trade Commission.
I would like to underscore that I stand ready to work with
my colleagues and with the Commission to ensure that you have
the resources to fulfill your mission. I was particularly
pleased to read in your testimony that the FTC has committed
itself not to purge any telephone numbers from the Do-Not-Call
Registry, pending any Congressional action, and I look forward
to working with my colleagues, especially Representative Doyle,
to ensure that, once someone registers his phone number with
the registry, it stays on that list.
I thank you, Mr. Chairman, and I yield back my time.
Mr. Rush. The Chair thanks the gentlelady.
The Chair now recognizes the ranking member of the full
committee, the gentleman from Texas, Mr. Barton, for 5 minutes
of opening statements.
OPENING STATEMENT OF HON. JOE BARTON, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF TEXAS
Mr. Barton. Thank you, Mr. Chairman.
I am glad we are having a legislative hearing on these
three bills. They all seem to be bills that address a need. It
is a little unusual to do three at one time, but I guess people
in Chicago are just more efficient, so I look forward to
hearing from the witnesses and in working together on follow-up
in terms of moving the legislation.
Mr. Rush. The Chair thanks the ranking member.
The Chair now recognizes the gentleman from Georgia, Mr.
Barrow, for 5 minutes.
OPENING STATEMENT OF HON. JOHN BARROW, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF GEORGIA
Mr. Barrow. Thank you, Mr. Chairman. I want to thank you
and the ranking member for your expeditious action on these
three bills, and I have a special word on the subject of H.R.
3526, the financial services consumer protection legislation,
the spectacle of a Federal regulator that has the monopoly on
regulatory authority basically objecting to the States as they
move into the void created by the Feds doing nothing.
Basically, you cannot regulate in this area. Only we can
regulate in this area, and then not regulate in that area or
protecting anybody brings to mind Aesop's fable of the dog in
the manger. You know, he is the fellow who made his bed in the
straw, and in the manger. He would snap and snarl at the
animals that could eat the hay, but he could not eat it
himself. But he was going to make sure nobody else could enjoy
it though.
Coming right from where I come from down in bird hunting
country, it brings to mind a more homely metaphor. It is, you
know, working with a Federal agency that does not know its
authority, does not care about its authority, is not going to
exercise its authority. It is a little bit like going bird
hunting and having to tote the dog.
Well, the object of this legislation about a couple of
other Federal regulators with current responsibility to move,
to get into the act and to see what they can do, I think, is a
message to the Federal Reserve. The message is very simple:
Lead, follow or get out of the way. We need some protection in
this area, and if you are going to stop those who are trying to
do the right thing by the consumers, we are going to try and
open up the playing field to some folks who will.
With that, I yield back the balance of my time, but I thank
you for allowing us to move quickly on this legislation. I
yield back.
Mr. Rush. The Chair thanks the gentleman.
The Chair now recognizes the gentleman from Pennsylvania,
Mr. Pitts, for 5 minutes.
Mr. Pitts. Thank you, Mr. Chairman.
I would just like to say thank you for holding this hearing
on this important legislation to discuss these important
issues.
As a cosponsor of H.R. 2601, I strongly believe we must
protect the privacy of our constituents, and I appreciate your
urgency in addressing these issues.
I yield back.
Mr. Rush. The Chair thanks the gentleman.
Now the Chair recognizes the gentlelady from Oregon, Ms.
Hooley, for 5 minutes.
OPENING STATEMENT OF HON. DARLENE HOOLEY, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF OREGON
Ms. Hooley. Thank you, Mr. Chairman, for holding this
important hearing, and thank you, Ms. Parnes, for being here
today and for providing your testimony.
The Do-Not-Call program, Internet safety and giving select
financial regulatory agencies rulemaking authority are three
timely and important issues that I am glad we are taking up
today.
The National Do-Not-Call Registry has been very successful.
The registry now includes over 145 million telephone numbers
and has prevented unwanted telemarketing calls to the grateful
millions who have signed up for it. Reauthorizing the Do-Not-
Call Implementation Act is the right thing to do and will
ensure that millions of consumers who have signed up for the
registry will remain protected from unwanted calls.
Directing and funding the FTC to implement a national
education campaign on Internet safety is also important. H.R.
3461 will expand the scope in educating computer users of basic
but important computer security. The FTC is currently working
to educate consumers with their OnGuardOnline program, and this
bill will help immensely in those efforts by giving them the
additional funds they need.
Lastly, expanding the number of bank regulatory agencies
that may issue rules will strengthen Federal level consumer
protections and enforcement. The two primary changes proposed
in H.R. 3526 will strengthen Federal level consumer protections
by allowing agencies to work together in developing meaningful
strategies to improve consumer protections.
I support these three bipartisan bills and look forward to
their passage on the House floor.
Thank you, Mr. Chairman.
Mr. Rush. The Chair thanks the gentlelady.
The Chair now recognizes the gentleman from Nebraska, Mr.
Terry, for 5 minutes for an opening statement.
OPENING STATEMENT OF HON. LEE TERRY, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF NEBRASKA
Mr. Terry. Thank you, Mr. Chairman.
I think this could, actually, be a more interesting
discussion than some anticipate, especially on 3461 and 3526.
In regard to the Do-Not-Call list, let me admit that I am
one of the Do-Not-Call eight--those are the eight people who
voted against this program in the first place--and I did so on
philosophical grounds of creating a new Federal program where
the market, through devices, was already blocking phone calls
or, through caller ID, you have an option of not answering when
it comes up ``out of area'' or ``private.'' I have an unlisted
number, and I just dial star 82 before I call several of my
friends so it will be unblocked and so they will know who is
calling them. I still feel that way, but as my colleagues have
all professed, rightfully so, it is now ingrained into the
consumer's mind, and so the issue then is whether there are
ways to improve the efficiencies of this program, and those are
some of the issues I have dealt with, which is in the timing of
the information and the costs of having to implement that.
In Omaha, we are the telemarketing capital of the world.
The shift has already occurred. The small mom and pop
organizations just could not keep up, so the Wests, the Cytels,
the biggies, that can keep up with the monthly requirements now
have whatever outbound telemarketing is left, of which there is
very little.
So, in H.R. 3526, let me just say before I yield back that
I respect and appreciate the arguments by my friends in
criticizing the Feds for not implementing some consumer
protections. Let me just say that, as I understand the Fed, the
philosophy of the Fed under both Greenspan and Bernanke has
been to not regulate financial institutions. They have had a
hands-off philosophy, so there is a difference of opinion on
the impact of regulations as opposed to just being remiss.
Please keep in mind that the focus of the Fed is monetary
policy, so maybe there should be a discussion of whether or not
they should have the consumer protection rights. So I will
stand up or at least defend those who I do not even know, but I
do appreciate their less regulation stance in the past.
With that, I yield back.
Mr. Rush. The Chair thanks the gentleman.
The Chair now recognizes the gentleman from Texas, Mr.
Burgess, for 5 minutes of opening statements.
OPENING STATEMENT OF HON. MICHAEL C. BURGESS, A REPRESENTATIVE
IN CONGRESS FROM THE STATE OF TEXAS
Mr. Burgess. Thank you, Mr. Chairman. I appreciate the
consideration, and I want to thank you for bringing these bills
to us today.
We are here to discuss three important pieces of
legislation that concern the Federal Trade Commission. I must
admit that is not my favorite Federal agency, but I am glad to
be here doing this today.
Along with Chairman Dingell and Chairman Rush and Ranking
Member Barton, I am an original cosponsor of the bill
originally introduced by Ranking Member Stearns, H.R. 2601.
This bill will extend the Federal Trade Commission's authority
to collect fees and to administer and to enforce the Do-Not-
Call Registry. While I firmly believe in a free market society
and that businesses should be able to formulate their own
business practices and plans, I also firmly believe that
Americans have a right to privacy.
As Director Lydia Parnes so eloquently stated in her
written testimony, the Do-Not-Call Registry helps to restore
the sanctity of the American dinner hour. People should be able
to have the option of whether or not they want to receive phone
calls from telemarketers in the privacy of their own homes. I
should know, parenthetically, that politicians are excluded,
and thanks to the Do-Not-Call Registry, consumers can sign up
and are afforded that decision. In fact, since the creation of
the registry, 146 million telephone numbers have been
registered. However, the authority for the Do-Not-Call Registry
was only authorized for 5 years time; therefore, it is
imperative that we act swiftly to pass this important
legislation and to further extend the protection and privacy
for Americans.
Two other bills are before us today, H.R. 3526, a bill to
include all banking agencies within the existing regulatory
authority under the Federal Trade Commission Act with respect
to depository institutions. In a time of widespread allegation
regarding unfair and deceptive financial practices in the field
of mortgage lending, I agree with some of my colleagues that
banking agencies should have this authority, and I must admit
that I was a little surprised to learn that they did not have
this authority. I, actually, look forward to discussing that
with Director Parnes today.
While I do realize that the House Financial Services
Committee has held hearings on this issue, I do support
Chairman Rush's intent of holding a more extensive hearing on
this matter in the near future.
Finally, today we will be discussing H.R. 3461, the SAFER
Net Act. Last year, on our Oversight Investigations
Subcommittee. We had extensive investigation into one of the
most disturbing topics, I think, I have ever encountered in my
life--child exploitation over the Internet--and I will never
forget the story of Masha Allen, who sat right here at our
witness table. She was a brave, little girl who told about the
evils and the exploitations encountered at both the hands of
here adoptive father and the Internet. Her story was
heartbreaking, and we must never let another child go through
the same type of horror. It is crucial for the safety of our
children for all of us to know about these evils so we can help
end this abuse of a dangerous practice. Pedophiles are our
enemy--they are our biggest enemy--but so also is lack of
information, and I support the intent of this legislation.
Mr. Chairman, I want to thank you for holding this hearing
and for responding in such a bipartisan manner. This committee
does do its best work when we function in a bipartisan manner.
Last week and, really, in the last 2 weeks, we have seen
Congress at its worst, and unfortunately, because of the
political impasse we have been unable to pass sensible
reauthorization of the State Children's Health Insurance
Program.
Mr. Chairman, this committee has some of the greatest
intellectual firepower of any committee in the free world, and
when we do not respect the committee process, when we take a
bill through like we took the SCHIP bill through, that violates
the whole sanctity of this committee. Mr. Chairman, I hope you
will speak with your leadership and will let us get back to the
table to renegotiate on the area of children's health insurance
because it is too important a program to be left only to the
political consideration.
With that, Mr. Chairman, I will yield back the balance of
my time.
Mr. Rush. The Chair thanks the gentleman for his remarks.
Now the Chair recognizes the gentlelady from Tennessee,
Mrs. Blackburn, for 5 minutes of opening statements.
OPENING STATEMENT OF HON. MARSHA BLACKBURN, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF TENNESSEE
Mrs. Blackburn. Thank you, Mr. Chairman.
I want to thank you for holding the hearing today and want
to thank you for the bipartisan work that we have had on these
bills.
Ms. Parnes, I want to welcome you. I want to thank you for
your very well-done and very well-presented testimony. We are
looking forward to hearing from you after we return from votes,
so we do welcome you.
I am pleased that we are taking up the bills. I am
particularly interested, Mr. Chairman, in the SAFER Act. I find
this to be imperative, and for the sake of brevity, I am going
to submit my full statement for the record. I do want to make a
couple of comments primarily about the SAFER Act.
We all know that there is a plethora of new technologies
and new platforms that are available for our constituents and
for their families, and we are familiar that many individuals
who do not seek to do good are availing themselves of these
platforms, and that is of concern to us for the sake of our
children and for our families, and we have all seen the work on
the fake check scam that is out there and the Web site that is
now attached to that. We have heard about it.
Mr. Chairman, I think I would like to submit this article
for the record if I may. It is in today's Washington Post. It
is about some of the Internet security ads that are being run.
Ms. Parnes, I will talk with you as we get into Q&A about
that.
It is about some of the work that is there to help protect
our families and our children, and I was particularly touched,
and I think this is something that we have to pay very close
attention to. People are very concerned about how to get this
out of their homes and how to keep it from inside the four
walls of their homes. Mr. Chairman, I do thank you for the work
on this bill that will help address that. Ms. Parnes, I am
looking forward to working with you more about that.
I yield back the balance of my time.
Mr. Rush. Does the gentlelady seek unanimous consent to
enter her documents into the record?
Mrs. Blackburn. Mr. Chairman, I do. I ask unanimous consent
to enter into the record the Washington Post article today.
Mr. Rush. Without objection, so ordered.
Mr. Doyle. Mr. Chairman.
Mr. Rush. The Chair understands that there is a vote going
on on the floor. We have got 4 minutes before the vote is
concluded. The Chair will recess the subcommittee, and we will
return for the participation of Mr. Doyle, the full
participation of Mr. Doyle, in these hearings.
[Recess.]
Mr. Rush. The hearing will come to order again. The Chair
seeks unanimous consent at this moment to allow the gentleman
from Pennsylvania, Mr. Doyle, to participate fully in this
subcommittee's hearing.
Without objection, the Chair now recognizes Mr. Doyle for 5
minutes of opening statements.
OPENING STATEMENT OF HON. MIKE DOYLE, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF PENNSYLVANIA
Mr. Doyle. Yes. Mr. Chairman, thank you very much and thank
you to Ranking Member Stearns for your unanimous consent. I
really appreciate your letting me speak today. My friend and
colleague, Mr. Chip Pickering, with whom I have introduced H.R.
3541, I thought initially would be unable to join us. He is a
member of the committee, and I do understand that he is finally
on the ground and making his way over here. And hopefully he
will be here in time to participate in the hearing and markup.
But I appreciate your allowing me to ask a few questions and
make a brief opening unanimous consent.
Mr. Chairman, as you have said, the Do-Not-Call list is one
of the most popular consumer protections ever created. It is so
popular frankly because it works. It is easy to sign up your
number and stop telemarketers from calling your home day and
night. That is why after all the success of the program many of
us in Congress were surprised to learn that the 132 million
numbers on the list expire after 5 years and that the first 52
million numbers will expire before September 30, 2008.
Now, the people who own those numbers, Mr. Chairman, will
first need to be aware that their numbers expire, and that is
no easy task to notify these 52 million people, and then they
have to resubmit their numbers.
So picture millions of numbers expiring right around Labor
Day next year, and that is not only the time the 2008 election
will heat up, but it is also in the middle of the digital
television transition. That will minimize the television time
available to broadcast the message that consumers need to sign
up again.
Mr. Chairman, no matter how many articles are written and
stories broadcast, I suspect that millions won't know that they
need to act to stay on the Do-Not-Call list. That is why I am
glad to be joined by my friend and colleague, Chip Pickering,
and dozens of cosponsors on H.R. 3541, which will make the
numbers on the Do-Not-Call list permanent.
I have been working closely with committee staff on both
sides of the aisle, as well as the FTC, and I am grateful for
their hard work on seeing that this language is enacted at the
end of the day.
I am also proud to tell you that the bill has the complete
support of the AARP, Consumers Union and Consumers Federation
of America. I am hopeful that negotiations with other
interested parties prove fruitful and the bill will move
quickly.
Mr. Chairman, once you go through that process of calling
up or going on-line and putting your number on the Do-Not-Call
list, saying I do not wish to hear from telemarketers, you
shouldn't have to re-up every 5 years. I think once is plenty.
I think this is a good improvement to the law. I thank you
for letting me participate in this hearing and I yield back my
time.
Mr. Rush. The Chair thanks the gentleman from Pennsylvania.
Other statements for the record will be accepted at this
time.
[The prepared statement of Mr. Butterfield follows:]
Prepared Statement of Hon. G.K. Butterfield, a Representative in
Congress from the State of North Carolina
Thank you Chairman Rush and Ranking Member Stearns for
holding this important hearing on ``Enhancing FTC Consumer
Protection in Financial Dealings with Telemarketers, and on the
Internet.'' I commend this committee's leadership in assembling
this timely hearing.
I would like to welcome Lydia Parnes who serves as
Director of the Bureau of Consumer Protection at the Federal
Trade Commission. I look forward to her testimony and
appreciate the work she and the Commission are doing in order
to safeguard Americans from predatory consumer practices.
The National Do Not Call registry has been widely
successful and I was encouraged to learn that over 90 percent
of American adults had heard of the registry and that over 75
percent had signed up for the free service. I am also pleased
to learn that the enforcement mechanism has not gone
overlooked. I commend the Commission in initiating nearly 30
cases where there have been near $9 million in damages awarded.
The FTC has also stepped up efforts to educate Americans
about online computer safety. They have established a Web site
called onguardonline.gov which includes tips, articles,
quizzes, and videos which aim to educate consumers about spam
and scam practices. Over 4 million people have visited the Web
site in the past 2 years. I thank Ms. Parnes and her staff as
well as the FTC as a whole for the work they do for the
betterment of all Americans.
We will also have the opportunity to mark up three
important legislative items which will expand the authority of
the Federal Trade Commission. They seek to (1) protect
consumers against unfair and deceptive financial practices, (2)
continue to implement the National Do Not Call Registry, and
(3) continue to educate Americans about the potential dangers
online. I support the three bills we are considering today and
look forward to this subcommittee discharging them favorably.
Chairman Rush, I thank you for your work on this issue and
look forward to working with you and the other members of the
committee as these issues progress. I yield back the balance of
my time.
----------
Mr. Rush. And now the Chair welcomes the witness for this
hearing, Ms. Lydia Parnes, who is the Director of the Bureau of
Consumer Protection for the U.S. Federal Trade Commission. Ms.
Parnes will discuss ongoing efforts by the Federal Trade
Commission under section 5 of the Federal Trade Commission Act
and other applicable laws to protect consumers with reference
to the three bills that we will consider today.
Again, Ms. Parnes, we welcome you to this committee hearing
and we recognize you now for 5 minutes of opening statements.
STATEMENT OF LYDIA B. PARNES, DIRECTOR, BUREAU OF CONSUMER
PROTECTION, FEDERAL TRADE COMMISSION
Ms. Parnes. Thank you, Chairman Rush and Ranking Member
Stearns. I appreciate the opportunity to appear before you
today to present the Commission's view on these three bills.
As Congress considers legislation to reauthorize the Do-
Not-Call Registry and also to make consumers' Do-Not-Call
registrations permanent, let me assure the subcommittee that
the Commission's support for Do-Not-Call has not wavered one
bit since 2002, when the Do-Not-Call list was first proposed.
We will implement any legislative measures to strengthen
consumers' Do-Not-Call rights with the same skill and
dedication that have made Do-Not-Call such an unqualified
success for the American public.
The first bill I understand you are considering on the
issue is H.R. 2601, which would reauthorize the Do-Not-Call
Implementation Act of 2003. The FTC appreciates Ranking Member
Stearns' and Chairman Rush's introduction of this bill.
Reauthorizing the DNCIA demonstrates Congress' continued
commitment to protecting consumers from unwanted intrusions
into their homes.
The Commissions does believe that the bill can be
strengthened by statutorily setting the fees charged to
telemarketers accessing the registry at an amount sufficient to
enable the Commission to maintain the registry and enforce the
telemarketing sales rules. A congressional amendment setting
the fee would provide the Commission with a stable funding
source for its telemarketing rule enforcement activities. A
stable fee structure also would benefit telemarketers, sellers
and service providers who access the registry.
Congress also is considering H.R. 3541, which would make
Do-Not-Call registration permanent. In the 2003 rulemaking that
establishes the registry, the Commission believed that a 5-year
re-registration mechanism, coupled with periodic purging was
necessary to maintain the accuracy of the list. Since 2003,
several changes have taken place, including the increased
popularity of telephone number portability, more clarity in the
legal landscape and an explosion of public support for the
registry.
As a result of these changes, the Commission now commits
that it will not drop any telephone numbers from the registry
based on the 5-year expiration period, pending final
congressional or agency action on whether to make registration
permanent. In any event, the Commission will continue its
robust efforts to maintain the registry's accuracy and ensure
the continued success of the Do-Not-Call program.
The second bill on which the Commission is submitting its
views is H.R. 3461, which would direct the Commission to
implement a new national education campaign on Internet safety.
As you know, the Commission has extensive expertise in
educating consumers and businesses on a variety of issues,
including Internet safety. We appreciate the sponsors of H.R.
3461 who have the confidence in the FTC to entrust it with
launching a new educational campaign and we support the
legislation.
Finally, H.R. 3526 would allow two additional banking
agencies, the FDIC and the OCC, the power to issue rules under
section 18 of the Federal Trade Commission Act with respect to
the depository institutions they regulate. They would have this
authority along with the existing authority that the Federal
Reserve Board, the Office of Thrift Supervision, and the
National Credit Union Administration have under section 18.
The FTC supports amending section 18 in this manner, but
recommends two modifications. First, these agencies should be
required to consult with the Commission in any rulemaking they
undertake under section 18 of the FTC Act, as the FTC is the
expert agency responsible for ensuring appropriate and
consistent interpretation of the Federal Trade Commission Act.
Second, the FTC suggests that the bill be modified so that
whenever the Federal banking agencies and the NCUA commence
rulemaking under the FTC Act for the entities they regulate the
Commission has the option to promulgate consistent and
comparable rules for the entities it regulates.
The bill also should state that in such rulemaking the FTC
should be able to use the relatively streamlined and expedited
notice and comment procedures of the APA that are used by the
other agencies, rather than the more lengthy rulemaking
procedures set forth in section 18 of the FTC Act.
The Commission has proposed language that I have with me
here that would make these changes, and we look forward to
working with the subcommittee on this issue, as well as the
other legislative initiatives being considered at this hearing.
Thank you very much, and I would be pleased to answer any
questions that you have.
[The prepared statement of Ms. Parnes follows:]
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Mr. Rush. The Chair thanks the witness and the Chair
recognizes himself for 5 minutes of questioning.
Ms. Parnes, the FTC has been very active in protecting
consumers from unfair and deceptive acts and practices. In your
opinion, what is the track record of the Federal Reserve Board
and the other bank regulators in likewise protecting consumers?
Ms. Parnes. Mr. Chairman, it is really very difficult for
me to assess the track record of the bank regulatory agencies
in this area. They are addressing issues that are very, very
different from the kinds of institutions that the FTC deals
with.
As you know, the institutions that they regulate, they are
dealing with both consumer issues and also safety and soundness
issues, and I think it is just very hard for me to express a
view on that.
Mr. Rush. I can appreciate your remarks. Please provide
details how the FTC's usual rulemaking procedures under section
18 are more cumbersome than APA rulemaking procedures.
Do I understand correctly that when the FTC coordinated
with the banking agencies on the Gramm-Leach-Bliley rulemaking
that it could do a more streamlined, APA-like rulemaking?
Ms. Parnes. Yes, sir, in fact Congress has given the
Commission authority under Gramm-Leach-Bliley, under the FACT
Act, where we are working closely with the bank regulatory
agencies. The telemarketing sales rule, we were given APA
rulemaking authority. The CAN-SPAM Act. There are any number of
areas where we have been given specific authority to use APA
rulemaking. It is a much more expedited process.
Magnuson Moss rulemaking, as it is called, under section 18
has many, many more procedural hoops that the Commission needs
to comply with.
Mr. Rush. Ms. Parnes, your testimony as it relates to the
Do-Not-Call Registry states that the DNC Registry contains 145
million telephone numbers. Now what percentage of existing
residential phone numbers in the U.S. is that, approximately
what percentage?
Ms. Parnes. I don't believe that we have that information.
We simply take telephone numbers. We don't screen those
numbers, so we just know how many telephone numbers are on the
registry.
Mr. Rush. Are you familiar with the Harris poll survey that
shows widespread consumer satisfaction with the DNC Registry
that dates back to January 2006; are you familiar with that?
Ms. Parnes. We are extremely familiar with that survey and
very proud.
Mr. Rush. Very proud.
Ms. Parnes. Of how successful the program has been.
Mr. Rush. Does the FTC have any plans to update that survey
in the future?
Ms. Parnes. The Harris survey was not an FTC-initiated
survey, it was a survey that Harris Interactive did on its own
and at this moment we don't have plans to update the survey. We
think right now there is widespread understanding of Do-Not-
Call and widespread consumer satisfaction. And really when you
consider the number of consumers on the registry, there are
comparatively very few complaints about the way in which it is
working.
Mr. Rush. We are up against a deadline in terms of the
reauthorization of the DNC. Is it correct that the FTC's new
position is that it will not drop any phone numbers at the end
of the 5 years on the registry while you wait for Congress to
act to make the registry permanent? At this point would you
caution that consumers not be concerned or worried about re-
registering?
Ms. Parnes. Absolutely, Mr. Chairman. The Commission will
not drop any numbers off of the registry pending final action
by Congress or by the agency itself on whether to make the
registration permanent.
Mr. Rush. Lastly, I have about 25 seconds remaining in my
time, can you be more specific about the Internet safety
programs that the Federal Trade Commission could launch with
the added funds proposed by H.R. 3461?
Ms. Parnes. Right now the Commission has several really
excellent consumer education campaigns and business education
campaigns as well on Internet issues. OnGuardOnline is the
number of one of our key Internet safety programs.
There are a couple of things that we would do if this bill
is enacted. First of all, there are issues that you mentioned,
child safety, exploiting children, child pornography that don't
come within the FTC's jurisdiction and they are not issues that
we necessarily have the best expertise on. And what we would do
at the outset is reach out to the partners that we have already
worked with to get the best information on our Web sites. That
is No. 1.
The second thing that we would do that we have had a lot of
success with is creating what we call a tool kit. We have done
this in the identity theft area where we are basically putting
together a consumer or a business education campaign in a
package. You can ask for this package if you are a member of a
civic group, if you have a business, and you can put on your
own consumer education program essentially. It has PowerPoint
presentations, speech, consumer education material that can be
distributed. So it is really a way of putting together a
program and then pushing it out very effectively to what we
hope are millions of consumers.
Mr. Rush. My time is up.
The Chair recognizes the gentleman from Florida, Mr.
Stearns for 5 minutes.
Mr. Stearns. Thank you, Mr. Chairman.
Ms. Parnes, I never got a solicitation over my cell phone.
Is it illegal to solicit over the cell phone?
Ms. Parnes. It is----
Mr. Stearns. Just yes or no.
Ms. Parnes. Oh, that is so hard.
Mr. Stearns. Is it yes or no?
Ms. Parnes. It is not illegal specifically to solicit over
the cell phone, but it is illegal to use a predictive dialer.
Mr. Stearns. Computerized?
Ms. Parnes. Yes.
Mr. Stearns. I think the FTC advertises that you can put
your cell phone in the list.
Ms. Parnes. No, we don't. We say that you don't have to
because you are not likely to get telemarketing calls, but that
you can put your cell phone number on the registry.
Mr. Stearns. So you tell them they can if they want, but
cell phones generally, if you do it through a computerized
telemarketing, it is illegal.
Ms. Parnes. Under a FCC rule.
Mr. Stearns. Does the FCC check the Do-Not-Call Registry
for invalid numbers on a regular basis?
Ms. Parnes. We purge the registry on a monthly basis, a
contractor that we work with----
Mr. Stearns. A subcontractor goes out and you say run this
against a database and see if there are invalid numbers. How
about you check numbers reassigned, you have Joe Smith and
suddenly you find out it is not Joe Smith anymore, it is John
Doe?
Ms. Parnes. We purge numbers that have been disconnected
and reassigned. Our contractor gets this information from what
they tell us are all of the Local Exchange Carriers throughout
the country, and when numbers are disconnected and then
reassigned they are purged from the registry.
Mr. Stearns. Mr. Doyle has talked about his bill. The
question I have is if you have to keep these numbers
indefinitely, over a period of years, is it possible that
almost every phone number 20 years, 30 years, every phone
number will be in there? Well, let me ask you how you feel
about that, that when John Doe puts his number in it remains
permanently, in perpetuity, how do you feel about that?
Ms. Parnes. Well, the accuracy of the registry is something
that has been key for the Commission since it enacted the
registry. The 5-year re-registration requirement, as I
mentioned, along with purging were the two mechanisms that the
Commission relied on to ensure accuracy. And we will be
vigilant working with our contractor to make sure that
disconnected and----
Mr. Stearns. Do you think you need legislation? Do you
think you need a stipulation that John Doe, once he registers
with you, remains there in definitely, forever?
Ms. Parnes. Well, I think that we would need either
legislation or some agency act----
Mr. Stearns. Do you think it is a good idea?
Ms. Parnes. Registry permanent?
Mr. Stearns. As it stands now it is every 5 years?
Ms. Parnes. Every 5 years.
Mr. Stearns. So every 5 years you would notify John Doe or
John Doe's number would be gone and he or she would have to
reenter it, right.
Ms. Parnes. We don't notify John Doe specifically. What we
would do more generally is tell the public that the 5-year re-
registration----
Mr. Stearns. But John Doe and his family don't keep track,
they don't know. The first time they would know is if after 5
years they would start to get solicited calls and they would
call you again. But I am just trying to see, wouldn't this be a
pretty big database after 20 years if all the numbers are just
kept there? Is there another way to do this other than making a
permanent John Doe forever?
Ms. Parnes. Well, I think that--kind of three things.
First, John Doe can always unregister his telephone number.
Mr. Stearns. But he's not going to do that probably, OK.
Ms. Parnes. The second thing is that the list is pretty big
now.
Mr. Stearns. It is 145 million.
Ms. Parnes. That is right. I don't know that we expected
that when we first rolled this out.
Mr. Stearns. No, no.
Ms. Parnes. We will work to make this manageable and
continue to purge the list.
The third thing is we will be happy to work with the
subcommittee to address any concerns about accuracy.
Mr. Stearns. So do you think it is necessary or wise to
pass legislation that John Doe's name be put in there in
perpetuity, forever? Just yes or no, I need your opinion.
Ms. Parnes. Well, I think that I absolutely understand----
Mr. Stearns. I know you understand, but can you make a
position on this, because we are going to probably mark this
bill up in 2 days. The amendment sounds good. And my question
is, is there another way do it through this cross-check that
you mentioned earlier through the subcontractors? You run the
databases to check Do-Not-Call for invalid numbers, one, and,
two, people who have been reassigned--is that enough so that if
John Doe puts his name in there forever you just leave it
there? Here is your chance to tell us what you think.
Ms. Parnes. I think that it will be enough and I think that
we will continue. None of this is static. The technology is
constantly changing concerning the phones and I think we will
keep on top of this.
Mr. Stearns. I am taking your opinion to say you support
keeping it in there forever.
Ms. Parnes. Yes. What I think I see the legislation doing
is making registration permanent, but still giving consumers
choice.
Mr. Stearns. Thank you, Mr. Chairman.
Mr. Rush. The Chair now recognizes the gentlelady from
Illinois, Ms. Schakowsky, for 5 minutes.
Ms. Schakowsky. Thank you, Ms. Parnes. Your testimony said
that the FTC has been very active in protecting consumers in
the financial services marketplace and that 21 actions against
bad actors were taken in the past decade; is that right?
Ms. Parnes. Yes.
Ms. Schakowsky. So that is about two a year. And so if that
is active, do you feel that is sufficiently active?
Ms. Parnes. The context that I would put this in, while
this is a very high priority for the FTC, these are actions
that--it is a part of what we do in the consumer protection
area.
Ms. Schakowsky. In the financial services marketplace,
because that is what you are referring to that you have been
active there.
Ms. Parnes. Well, right. I do think that we have been
active in that area. I think that we have done, in financial
services generally--I believe we have brought more, that
doesn't include, for example, debt collection cases that we
have brought, it doesn't include cases involving credit cards
that are marketed to consumers, advance fee loan credit cards.
I think it is focusing on a very specific segment in the
financial sector.
Ms. Schakowsky. What resources do you need that you don't
currently have to do it and then even more?
Ms. Parnes. Well, I am really not prepared to talk about
what resources, additional resources that we need in this area.
I would say that we are pretty flexible in terms of the Bureau
of Consumer Protection and we are adding resources to our
financial practices division on a regular basis, because it is
an important area for us.
Ms. Schakowsky. Thank you. I yield back.
Mr. Rush. The Chair thanks the gentlelady.
The Chair now recognizes the gentleman from Pennsylvania,
Mr. Pitts, for 5 minutes.
Mr. Pitts. Thank you, Mr. Chairman.
Ms. Parnes, are cell phone numbers included in the
registry?
Ms. Parnes. Cell phone numbers can be registered, yes, they
can, although under FCC rules you can't use the typical
computer technology. Telemarketers are prohibited from using
that technology to call cell phones.
Mr. Pitts. So there are other laws that govern
telemarketing practices with regard to cell phone numbers?
Ms. Parnes. That is correct.
Mr. Pitts. Of the 145 million numbers in the registry, how
many are cell phone numbers?
Ms. Parnes. We do not know. We don't ask consumers who are
registering to indicate whether it is a cell phone or a land
line.
Mr. Pitts. Does the FTC advertise on their Web site that
consumers can register their cell phone number?
Ms. Parnes. We don't, we simply say you can register a
telephone number on the registry.
Mr. Pitts. With cell phones replacing land lines more and
more, are you seeing a decline in the percentage of the land
lines registered? Will the registry be necessary in 20 years?
Ms. Parnes. We actually don't have information on whether
the numbers that are registered are cell phone lines or land
lines so we really can't make that judgment about whether the
percentage of land lines are going down and the percentage of
cell phones is going up.
Mr. Pitts. Do you keep any type of database specifically
for cell phones?
Ms. Parnes. We do not. We have the Do-Not-Call Registry and
we only keep telephone numbers that are registered. We don't
separate it out by cell phone or landline.
Mr. Pitts. So you don't take any steps to remove cell phone
numbers from the registry?
Ms. Parnes. No, we do not.
Mr. Pitts. Should the Commission do that?
Ms. Parnes. I am actually not certain about that. Initially
when consumers were told kind of periodically there will be
maybe something that goes around on-line or people hear that
some cell phone registry will be published and telemarketers
will get cell phones and they will be able to call their cell
phones. We typically respond by issuing some kind of consumer
education release assuring them that that will not happen, but
that if they are concerned they can register their cell phones.
So that while I believe that now consumers have nothing to
be concerned about with respect to cell phones, I would hate to
drop cell phones from our registry and then find that
telemarketers have developed some way of reaching these numbers
through some other system that is permitted. I just think that
we need to know more about how cell phones may be reached.
Mr. Pitts. The FTC is currently not obligated by law to
purge disconnected or invalid numbers from the database; is
that correct?
Do you believe that the law should mandate this? If so, why
or why not?
Ms. Parnes. We are not currently required to do so. We do
it. I don't think that we would object to a requirement that we
purge numbers, but we are certainly committed to purging
numbers. Our contract that we just entered into, a 5-year
contract, calls for monthly purging of the registry.
Mr. Pitts. So you believe the law should mandate that?
Ms. Parnes. I think it could. I don't necessarily think
that it has to, but I don't see that we would object to that.
Mr. Pitts. Thank you, Mr. Chairman.
Mr. Rush. The Chair thanks the gentleman.
The Chair now recognizes the gentlelady from Oregon, Ms.
Hooley, for 5 minutes of questioning.
Ms. Hooley. Thank you, Mr. Chairman.
Ms. Parnes, how frequently does the FTC currently scrub or
check for accuracy in the numbers on the Do-Not-Call Registry?
Ms. Parnes. We do it on a monthly basis.
Ms. Hooley. How accurate would you say the registry is?
Ms. Parnes. We understand that we use the best contractor
in the country to do purging. So we think it is probably as
accurate as it can be.
Ms. Hooley. And you have to renew every 5 years?
Ms. Parnes. As the law stands right now, you do have to
renew every 5 years, but the Commission today is stating that
it will not drop any individual off the registry pending a
final congressional or agency decision on whether to make the
registry permanent.
Ms. Hooley. Because I think a lot of people when they sign
up don't realize that they have to renew and my next question
was going to be, how do you let people know that they have to
renew if in fact you don't do something different with the
rules where they can stay on the registry?
Ms. Parnes. I think if no change were made we would do a
very aggressive consumer education campaign. As it stands right
now, we will put something on our Web site just telling
consumers not to worry about this, that no number will be taken
off the registry.
Ms. Hooley. On the Internet safety question, what
department in the FTC will be spending authorized funds?
Ms. Parnes. It will be a division within the Bureau of
Consumer Protection.
Ms. Hooley. What is their current annual budget and how
many employees do they have currently?
Ms. Parnes. Our Division of Consumer and Business Education
has about somewhere between 16 and 18 employees. And I do not
know the budget numbers specifically. We would have to get you
that.
Ms. Hooley. And in this process where they are trying to
educate people, how are they intending to spend the money?
Ms. Parnes. Well, I would say that the people in our
Division of Consumer and Business Education are among the most
creative people around. We spend the money in a variety of
ways. We spend a lot of it simply on printing material that
gets out to civic organizations, and senior organizations. We
do a tremendous amount of outreach and partnering with consumer
advocates, with businesses.
Ms. Hooley. So you try to go through organizations mostly
of some sort?
Ms. Parnes. Absolutely, we do a lot of partnering.
Ms. Hooley. Do you have any idea how effective your efforts
are in educating consumers? Are we really reaching the numbers
that we need to reach and are we being effective?
Ms. Parnes. I think that the consumer and business
education material that we put out is praised very highly. It
is award winning material.
Does it reach every consumer? Absolutely not. We really do
our best to try and push it out whenever we can. But I think
that consumer and business education certainly is not, even on
consumer issues, it is not the sole property of the Federal
Trade Commission. We encourage others to take this information
and use it as their own. We work very closely with States, for
example, on doing consumer education on a more retail level.
Ms. Hooley. OK. If I wanted to send something out to the
people in my district, do you have a perfect piece of
information to send out?
Ms. Parnes. Well, we actually work very closely with
Members of Congress as well linking to our Web sites. So I
think we would have good information for you to send out to
your constituents, absolutely.
Ms. Hooley. Thank you. I have no more questions.
Mr. Rush. The Chair recognizes the gentleman from Nebraska,
Mr. Terry, for 5 minutes.
Mr. Terry. Thank you, Mr. Chairman.
Ms. Parnes, are you aware whether the FCC has programs that
educates the constituents and folks and businesses on threats
to juveniles, cyber predators and materials that are
inappropriate for minors?
Ms. Parnes. We do not. These are issues that fall outside
of the FTC's jurisdiction.
Mr. Terry. The question was FCC. Are you aware whether they
have programs, FCC?
Ms. Parnes. The FCC?
Mr. Terry. I know it is outside of your jurisdiction.
Ms. Parnes. Right. I don't know. We can certainly get that
information.
Mr. Terry. I do know they do. And so my follow-up question
of whether you know how duplicative the suggested programs
would be is meaningless. So I will go on.
The gentlelady from Oregon asked a good question about the
FTC's current program of being effective. I am not sure you
answered that directly, but obviously the authors of this bill
is assuming that you have not been effective and need further
guidance as well as more money. Do you agree with that
assumption?
Ms. Parnes. I think we have been effective in this area and
I would like to think that the authors are looking to us
because they think that we would use this money wisely and
effectively.
Mr. Terry. I missed the answer to the gentlelady from
Oregon's question about how much does the FTC spends on
communicating to people right now.
Ms. Parnes. I don't know the exact number. We would have to
get that for the subcommittee.
Mr. Terry. Do you have any clue, is it $10 million like
this bill authorizes? Do you already spend that much money?
Ms. Parnes. I just hesitate to guess at the number.
Mr. Terry. Would you identify within the FTC the group who
would be in charge of identifying, promoting and encouraging
best practices for Internet safety?
Ms. Parnes. It would be a division within the Bureau of
Consumer Protection.
Mr. Terry. Best practices is something that you already do?
Ms. Parnes. Yes, we do, in terms of Internet security.
Mr. Terry. What is the already established best practice
for encouraging, for identifying best practices for Internet
safety? Would you run those down for me?
Ms. Parnes. Well, I cannot run down all of the best
practices. We have a Web site that deals--it is called
onguardonline.gov and it has just dozens and dozens of tips for
consumers and business on Internet security.
Mr. Terry. OK, very good.
Mr. Rush. Would you please submit that list for the record,
please?
Ms. Parnes. Absolutely.
Mr. Terry. You are already able to carry out a national
outreach and education campaign using various media and
Internet, you already do that?
Ms. Parnes. We do it on the Internet and we work very
closely with partners in other Federal agencies, industry
members, State and local governments.
Mr. Terry. All right. I want to go back to jurisdiction
then. Does the FTC have current jurisdiction to establish best
practices for Internet safety for cyber predators? In regard to
cyber predators, that is something that already exists in your
jurisdiction?
Ms. Parnes. No. As we were discussing, it is outside of the
FTC's jurisdiction. And if we were charged with doing a
consumer education campaign in this area, we would certainly
look to our partners who have the expertise in this area, the
FBI being one of them.
Mr. Terry. All right. So since it is not in your
jurisdiction today, you don't have best practices established
regarding safety from cyber predators?
Ms. Parnes. That is correct.
Mr. Terry. I was confused on the extent of the established
programs.
How about determining material that is inappropriate for
minors; is that already established within your jurisdiction?
Ms. Parnes. No, our----
Mr. Terry. I am over my time, appreciate your answer, and I
am not sure I am comfortable with expanding the FTC's
jurisdiction here, especially when the FCC already has
jurisdiction over these matters.
Mr. Rush. The gentleman's time is up.
The Chair recognizes the gentleman from Georgia, Mr.
Barrow, for 5 minutes.
Mr. Barrow. No questions.
Mr. Rush. The Chair now recognizes the gentleman from
Texas, Mr. Burgess, for 5 minutes.
Mr. Burgess. I thank the chairman and thank you for being
here today. We are reauthorizing this bill that was previously
authorized for 5 years. What would be the effect of just
indefinitely reauthorizing this program and not revisiting it
from time to time? Is there value in revisiting from time to
time?
Ms. Parnes. Well, it is my understanding that most
reauthorization is time limited and certainly if Congress
wanted to do a permanent reauthorization, I don't think the FTC
would have an objection.
Mr. Burgess. We were talking an awful lot about cell phones
a moment ago. I guess I didn't really understand. What
prohibits a computer from calling cell phones? Is it technology
or is there actually a FCC violation involved there?
Ms. Parnes. The FCC has a rule that says that you can't use
the computerized technology, predictive dialers, automated
dialers to call cell phones. And since predictive dialers,
automated dialers are the standards in the telemarketing
industry for placing calls, in effect it is prohibiting those
calls to cell phones.
Mr. Burgess. I will tell you it doesn't happen with every
carrier I have used, but I have received telemarketing calls on
my cell phone as well as telemarketing text messages just like
you receive spam on your computer. I guess the system is not
perfect, but I did not ever register that number on the Do-Not-
Call list.
What about the newer stuff? I even forget what the
technology is called, but Vonage where you use your computer as
your telephone.
Ms. Parnes. The Voice over Internet Protocol?
Mr. Burgess. That is it.
Ms. Parnes. I believe that that would not be covered by the
registry.
Mr. Burgess. It would not be covered by the registry; it
would be bound by the same rules that the FCC has for cell
phones?
Ms. Parnes. I am not certain. I think that this truly is a
different technology. Certainly from the FTC's perspective it
wasn't something envisioned when the registry was adopted.
Mr. Burgess. So in actuality the Voice over Internet
Protocol could be under the radar screen as far as the Do-Not-
Call list is concerned and those families would not be
protected under the Do-Not-Call?
Ms. Parnes. It could be, it could be. I think we certainly
haven't gotten complaints yet from users of VoIP about
telemarketing calls.
Mr. Burgess. What would happen if someone tried to put
their number on a Do-Not-Call list who used Voice over Internet
Protocol?
Ms. Parnes. We don't screen any telephone numbers, if you
want to register a number with us, you can.
Mr. Burgess. I think the question was asked a minute ago
about enforcement. What is the enforcement if someone violates
the Do-Not-Call list?
Ms. Parnes. We have a very aggressive enforcement program.
The details of it are in the Commission's full testimony, but,
for example, since the Do-Not-Call Registry was passed I
believe we brought over 27 or 28 cases that would be since
2003, cases that include Do-Not-Call violations. Our highest
civil penalty has been over $5.3 million against DirecTV for
violating the Do-Not-Call rule.
Mr. Burgess. Oh, they were the ones that called me on my
cell phone.
Ms. Parnes. Oops.
Mr. Burgess. What do you do if a company has outsourced its
telemarketing to Bombay or Shanghai?
Ms. Parnes. Our position is that the company in the U.S.,
the seller, is responsible regardless of where the
telemarketing calls are coming from.
Mr. Burgess. But if it was a true overseas or multinational
corporation, they may be outside the reaching grasp of the
Commission?
Ms. Parnes. I don't know that we have ever had that
question posed to us.
Mr. Burgess. Well, what would happen?
Ms. Parnes. I would imagine----
Mr. Burgess. Well, you know, down in Texas we used to have
radios that violated--the FCC would broadcast these mega
stations across the border at night. What would you do if you
had a corporation that set up shop specifically to market to
Do-Not-Call numbers and was exclusively overseas?
Ms. Parnes. If we weren't applying the Do-Not-Call
Registry, and we might because these are calls made to U.S.
Consumers. So I think we would need to certainly research this
and I would be happy to get back to you. But if we couldn't
reach that seller, we would certainly rely on new authority
that Congress gave us under the U.S. SAFE Web Act to work with
colleagues in other countries to try and address that issue.
Mr. Burgess. Mr. Terry asked the question about funding on
the SAFE Internet Act. Could you provide the committee at some
later date, perhaps, Mr. Chairman, before we go to full
committee markup on this bill exactly how the allocations there
run, what amount of money you are spending now on these types
of programs, how is a $5 million or $10 million authorization
going to change things for you, will we simply be moving
dollars around in your baseline budget, are we identifying real
dollars going into real work, which is the intent, the
congressional intent, of the bill?
I yield back, Mr. Chairman.
Ms. Parnes. Absolutely, absolutely.
Mr. Rush. The Chair recognizes the gentlelady from
Tennessee for 5 minutes.
Mrs. Blackburn. Thank you.
Ms. Parnes, on the Do-Not-Call Registry Mr. Burgess
mentioned to you the VoIP, Voice over Internet Protocol. One of
the things we talked about many times in the Telecom
Subcommittee is looking at end use. And as we look at expanded
platforms and look at new uses, new technologies and as more of
our constituents move to VoIP, I would highlight with you that
there may be a need for you all to consider that and to focus
more on the end use and less on a specific technology.
To the Internet SAFER bill and Internet safety, how many
individuals and how much of your budget is spent on chasing
down these scams; do you know? How many people do you have that
are investigators?
Ms. Parnes. How many resources do we devote towards
Internet scams?
Mrs. Blackburn. Right.
Ms. Parnes. A considerable amount.
Mrs. Blackburn. Can you give me a number of people or the
amount of your budget dollar-wise what you are spending?
Ms. Parnes. I would need to get back to you on that.
Mrs. Blackburn. That is fine, I think that that would be
helpful as we look at legislation that would change the funding
mechanism. Many of us, we hear about this especially from our
moms and teachers, and those that are working with young
people, and those that are working with families, many times
about the intrusion of Internet scams into the homes, into
family lives, et cetera. So I would really like an answer if
you could help provide us with that.
Just a couple of quick points. In your testimony on page 13
you talk about the organizations that you all work with
onguardonline.gov. And the FCC is not listed as one of these.
As we look at the Internet and as we look at some of the scams
that are coming in there and they already have some items that
are in place and as you all look at working on the best
practices, which you do not have available for us, I would
recommend some shared resources or shared information.
Ms. Parnes. To the extent, yes, we can absolutely do that
and certainly to the extent that we have overlapped with the
FCC we do work closely with them.
Mrs. Blackburn. OK. That is great.
And then just for clarification for me, you said that your
national education campaign as is designated in the legislation
would be done by the Consumer Protection Division; is that
correct?
Ms. Parnes. It would be a division within the Bureau of
Consumer Protection.
Mrs. Blackburn. I think that is all that I have at this
point.
Mr. Burgess. Will the gentlelady yield?
Mrs. Blackburn. I will be happy to yield to the gentleman.
Mr. Burgess. I just had a general knowledge question, I
think is probably something I should know but I don't. How come
we are exempt from this? How come political calls, robo-calls,
do not fall under the Do-Not-Call jurisdiction?
Ms. Parnes. Well, the Do-Not-Call list applies to
telemarketing. It was a provision in the Telemarketing Sales
Act and it applies only to telemarketing, which is a call that
is made to induce the purchase of a product or service.
Mr. Burgess. Do you ever get complaints from consumers who
receive robo-calls and political calls and have to explain that
to them because I get it when I go to Town Halls, and they say
how come you call me and I was on a Do-Not-Call list?
Ms. Parnes. I don't know that calls come to us complaining
about political calls.
Mr. Burgess. Do you make it apparent in the literature that
you provide instructional material? As you said, you have some
good materials available. Do you provide that material that
this will not stop MoveOn.org from calling you nightly?
Ms. Parnes. We don't say what it won't do, we say what it
will do. We explain that it will stop telemarketing calls, it
will stop calls that are selling you something.
Mr. Burgess. Thank you, Mr. Chairman.
Mr. Rush. The Chair now recognizes the gentleman from
Mississippi, Mr. Pickering, for 5 minutes.
Mr. Pickering. Thank you, Mr. Chairman. I thank you for
having this hearing. This is one of the most successful pieces
of legislation that we have done since I have been here. It is
very popular, as indicated by 146 million people, I believe,
that have signed up for the Do-Not-Call Registry.
I want to thank Congressman Stearns for his work and
leadership on the legislation that we are having a hearing on,
and I especially want to thank my friend and colleague from
Pennsylvania, Mr. Doyle, for his good work and allowing me to
join him on a simple straightforward shot to extend and end a
5-year expiration date that is before us.
That was not in the original legislation, but I believe it
was adopted by regulation and we do not want to have all the
disruption of having that expire without prior warning and
prior information to individuals that they would have to re-up
and extend their Do-Not-Call status.
My question to you is, if that were to occur, if we were
not to move quickly on legislation, what does the FTC have in
place to notify individuals that the Do-Not-Call regulation is
expiring and their status as far as being on a list that would
no longer protect them from calls?
Ms. Parnes. Well, as of today the Commission has said that
it will not take any number off the list pending final
congressional or agency action on whether to make the registry
permanent.
Mr. Pickering. Currently as I understand it, you all clean
or scrub lists and update approximately every 30 days; is that
correct?
Ms. Parnes. Yes, we do.
Mr. Pickering. Is there a way you can do that more quickly?
Ms. Parnes. We could. We could do it on a basis that is
more regular than 30 days. Scrubbing the list more frequently
would cost more money. So that is really the only factor that
we would need to weigh.
Mr. Pickering. What would increase the cost, additional
staff or resources?
Ms. Parnes. We use a contractor to scrub the lists. So we
would need to go back to the contractor and find out how much
more it would cost. I am certain it would depend on how
frequently the scrubbing was done.
Mr. Pickering. If you were to do it every 15 days, would
that create a significant cost increase?
Ms. Parnes. We would need to talk to the contractor about
what the cost increase would be.
Mr. Pickering. OK. If we were to address this issue of more
regular cleaning or scrubbing or other proper term, would you
advocate us simply working with you to find the appropriate
timetable of being able to do that?
Ms. Parnes. Absolutely, absolutely. We can get information
from the contractor and work with the subcommittee staff so
that everybody has all of the information in terms of cost and
frequency and can make the best decision.
Mr. Rush. Would the gentleman yield for a moment?
Would you get us a copy of the estimate from the contractor
to the committee, please?
Ms. Parnes. Absolutely, Mr. Chairman, yes.
Mr. Rush. OK.
Mr. Pickering. Mr. Chairman, I have no further questions
other than to say I look forward to working with you and Mr.
Doyle and Mr. Stearns so that as we move through the
subcommittee to the full committee that we find the right
vehicle to move it as quickly as possible.
Mr. Rush. The Chair thanks the gentleman. The Chair now
recognizes the gentleman from Pennsylvania for 5 minutes.
Mr. Doyle. Thank you, Mr. Chairman.
Ms. Parnes, first of all, I want to praise you for
committing not to purge numbers from the Do-Not-Call list
pending congressional action. That is a really smart consumer
friendly move, and I am glad you are doing it.
When I first introduced the Do-Not-Call List Improvement
Act with my good friend Chip Pickering, we heard some concern
from people and I think the ranking member expressed the same
concern that this list would become something like the Do-Not-
Call roach motel. Numbers go in, but they don't come out.
And I think it is important that we clear the record on
this. The only numbers that would stay there permanently are
those numbers of individuals who, A, it is their telephone
number and, B, they want to be there permanently. Numbers that
are no longer John Doe's number will be scrubbed from the list.
And any number that isn't currently somebody's telephone
number, and if somebody wants to go back on the list because
they want to start getting telemarketing calls at dinner time,
they just have to call the Do-Not-Call Registry and say, we
want to take our number from the list. So it will not be an
accumulation of a bunch of numbers that are not valid numbers
anymore, because you have a contractor scrubbing those lists.
Is that correct?
Ms. Parnes. Yes, it is. The only caveat that I would add is
that the agreement that we have with our contractor calls for
scrubbing telephone numbers that have been disconnected and
reassigned, and we have taken a very cautious approach there.
Not simply saying scrub numbers that have been disconnected,
because sometimes numbers are disconnected when consumers, for
example, go on vacation for a month. They may disconnect their
number, or if they have been delinquent in a bill, their number
may be recorded by the LEC as disconnected. And we didn't want
consumers to drop off the registry in those circumstances.
Mr. Doyle. Right. That is the only one contention here,
that the list isn't scrubbed until the number is reassigned so
you have a bunch of numbers that sit on that list that have
maybe been abandoned or maybe some of the instances that you
just suggested, and those numbers aren't purged until they are
reassigned to somebody else; is that correct?
Ms. Parnes. That is correct.
Mr. Doyle. I think that is something maybe we can look at
or maybe the Commission can look at. We are not trying to
create a situation where telemarketers don't have access to
numbers that don't want to be on the list. But I think it is
very important that once you go through the process of going
on-line or picking up a phone and saying, you know, I don't
want to get these calls in my home, that that should be
respected.
Let me ask you about the cell phones. It is against the law
for telemarketers to use auto dialers to call cell phones. What
you were saying is in a practical sense most people won't get
telemarketing calls on their cell phones because the
telemarketers all use auto dialing technology. So it is not
absolutely necessary, but technically a telemarketer could call
a cell phone if they are not using that technology; is that
correct?
Ms. Parnes. That is exactly right.
Mr. Doyle. And so people can register their cell phones on
the Do-Not-Call list?
Ms. Parnes. Yes, they can.
Mr. Doyle. I think Mr. Pitts brought up an interesting
point that more and more people are using cell phones
exclusively, especially younger people. I have four children
and none of them have land lines in their homes. They just have
cell phones. So we encourage people to register their cell
phones as well as their land lines on the Do-Not-Call list
because, like you said, there may be something else come down
the line that we don't foresee right now and telemarketers
might be able to access those calls.
Just for the record, Mr. Chairman, this is not a list that
will grow simply because someone puts their number on the list.
The monthly purging of numbers will take care of any John Does
that no longer have that number. They will come off the list.
If not, they will not be on there permanently if our amendment
is adopted, because that is what the scrubbing is about each
month and there seems to be a willingness on the part of the
Commission to work with the contractor to maybe even scrub that
list more frequently, if the costs allow it, more than 30 days.
So we are keeping a list that is current and numbers that are
no longer people's numbers are being taken off that list, and
so it won't grow into millions. But the people who don't want
to get these calls, I think once they do that, that should be
respected and that is why we introduced the legislation and I
just want to get those points on the record.
Ms. Parnes, I thank you for your consumer friendly move on
behalf of the people to keep that intact until we act one way
or the other.
Thank you, Mr. Chairman. Thank you for your courtesy and,
Ranking Member Stearns, thank you for your courtesy also.
I yield back.
Mr. Rush. The Chair thanks the gentleman. This concludes
the hearing for this morning and the Chair will recess now for
10 minutes and we will reconvene at 12:15 for the markup. The
subcommittee's hearing is adjourned.
[Whereupon, at 12:05 p.m., the subcommittee was adjourned.]