Providing Federal Trade Commission testimony today before the U.S. House of Representatives’ Subcommittee on Commerce, Trade, and Consumer Protection of the Energy and Commerce Committee, Bureau of Consumer Protection Director Lydia Parnes addressed issues related to the National Do Not Call (DNC) Registry, Internet safety, and financial services. Specifically, Parnes said that after carefully considering changes that have taken place since the Registry was implemented in June 2003, “the Commission now commits that it will not drop any telephone numbers from the Registry based on the five-year expiration period pending final Congressional or agency action on whether to make registration permanent.”
According to the testimony, when the Registry was developed, the Commission adopted a five-year re-registration mechanism and said that the list – which now contains more than 145 million phone numbers – would be periodically purged of disconnected or reassigned numbers. This was done to ensure that the Registry was as accurate as possible. The goal was “to adequately balance the need to maintain a high level of accuracy in the Registry, with the imposition on consumers to periodically re-register their telephone numbers.”
Since the Registry has been in place, however, several changes have occurred, the testimony continued, including the increased use of cell phones and the popularity of telephone number portability. In addition, the legal landscape surrounding the Registry has become clearer, and the Commission has more information about how the courts view consumer privacy in this context.
Also, the Registry has been implemented successfully for five years and has included a scrubbing program that has removed disconnected and reassigned numbers each month.
Finally, “[T]he Registry has enjoyed unprecedented popularity and helped enhance the privacy of the American public in a tangible way.”
“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 testimony continued. Citing a Harris Interactive survey released in January 2006 showing that 94 percent of American adults have heard of the Registry and 76 percent have placed their phone numbers on it, the testimony also described how the FTC operates the Registry, its fee structure, and the agency’s enforcement actions against companies and individuals who have not complied with its requirements. Since the Registry has been in place, the Commission has initiated 27 cases alleging DNC violations, resulting in a total of $8.8 million in civil penalties and $8.6 million in consumer redress or disgorgement of ill-gotten gains.
In one recent case highlighted in the testimony, the Commission targeted The Broadcast Team, a telemarketer that allegedly used “voice broadcasting” to make tens of millions of illegal automated telemarketing calls, often to numbers on the Registry. According to the FTC’s complaint, The Broadcast Team violated the “abandoned calls” provision of the DNC component of the Telemarketing Sales Rule, either by immediately hanging up on a consumer, or in some instances playing a recording instead of connecting a consumer to a live sales representative within two seconds after the consumer answered the phone. In settling the Commission’s charges, The Broadcast Team agreed to pay a $1 million civil penalty, the second-largest penalty obtained in a Do Not Call case. Satellite television subscription seller DirecTV paid a $5.3 million penalty in 2005 for allegedly violating the Do Not Call provisions of the Telemarketing Sales Rule.
Internet Safety and Financial Services
The Commission’s testimony also touched on Internet safety and financial services. Stating that “the FTC has been very active in educating consumers about Internet safety,” it described the agency’s computer security education campaign, which is built around the OnGuardOnline.gov Web site. Created in 2005 with assistance from other federal agencies, consumer advocates, and the technology industry, the site helps “computer users guard against Internet fraud, secure their computers, and protect their personal information.”
The testimony explained how OnGuardOnline works, and stated that if H.R. 3461 – legislation that would direct the FTC to implement a national education campaign on Internet safety and authorize funds for such a campaign – was passed, the FTC would “expand efforts it already has underway to educate novice and intermediate home computer users about basic computer security.” In addition, the agency would expand the scope of topics beyond those covered on the site, and would partner with government agencies active in protecting children from cyber-crime.
Finally, the testimony addressed proposed legislation that would expand the number of bank regulatory agencies that could issue rules under the FTC Act. The Commission has a particular interest in this area its expertise on interpretation of the FTC Act and because of its broad interest in consumer protection in financial services. Accordingly, the testimony states that the FTC supports amending Section 18 of the FTC Act to give the Federal Deposit Insurance Corporation (FDIC) and the Office of the Comptroller of the Currency (OCC) authority to issues rules prohibiting lenders from engaging in unfair or deceptive practices, but recommends two modifications.
First, the banking agencies and the National Credit Union Administration (NCUA) should be required to consult with the Commission in any rulemaking they undertake under Section 18; and the bill should be modified so that when the banking agencies and the NCUA begin a rulemaking under the FTC Act, the Commission should have the option to develop consistent and comparable rules using the same streamlined and expedited rulemaking procedures that the banking agencies would use.
The Commission vote to approve the testimony and place a copy on the public record was 5-0. The written statement presented at the hearing represents the views of the FTC.
Copies of the Commission’s testimony are available from the FTC’s Web site at http://www.ftc.gov and also from the FTC’s Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, DC 20580. The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices in the marketplace and to provide information to help consumers spot, stop and avoid them. To file a complaint, or to get free information on any of 150 consumer topics, call toll-free, 1-877-FTC-HELP (1-877-382-4357), or use the complaint form at http://www.ftc.gov. The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure, online database available to more than 1,600 civil and criminal law enforcement agencies in the U.S. and abroad.
(FTC File No. P034412)
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