Public Statement of
Chairman Robert Pitofsky and Commissioners Anthony and Thompson

Internet Omnibus Investigational Resolution

The Internet has demonstrated a remarkable ability to benefit consumers. At the same time, however, it has proven its ability to breathe new life into old frauds (e.g., pyramid scams and chain letters), giving rise to entirely new types of consumer injury (e.g., hijacking computer modems) and, more generally, enabling wrongdoers to create and modify deceptive ads with unprecedented speed and dissemination, and at minimum cost and with maximum anonymity. As a result, some of the most serious consumer harms that we have seen in a generation occur in electronic commerce. It is precisely these harms that warrant the Commission's issuance of an omnibus investigational resolution covering possible Section 5 violations in connection with the advertising and sale of goods or services over the Internet.

The Commission has brought nearly one hundred Internet-related cases and has taken the lead in combating online fraud. Speed and anonymity are key in Internet fraud. Hence, speed is also critical to identifying perpetrators and ending consumer injury. The proposed omnibus resolution affords needed speed and efficiency to respond to the Internet's unique capabilities. It therefore seems illogical to respond to high speed electric frauds by employing "snail-mail" when we can act more quickly.

Commissioner Swindle claims that the Omnibus Investigational Resolution is an impermissible delegation to staff. While our colleague correctly notes that any such delegation should be carefully considered, we believe that we have done so in this case and that the resolution is not unduly broad. First, it does not cover all advertising by any company that also may advertise online, but covers only the online activities. Second, as with all existing omnibus resolutions, one Commissioner must review and sign every single Civil Investigative Demand. Should the signing Commissioner identify an important policy issue, he or she may direct it to the attention of the full Commission. Third, assuming the use of compulsory process results in a proposed law enforcement action, the full Commission will have the opportunity to determine how to proceed in that matter. Alternatively, should compulsory process issue but not lead to law enforcement resulting in closure of the matter, the Commission will be apprised of the use of process. Accordingly, appropriate checks are still in place for all omnibus resolutions.

We also note that the existence of an omnibus resolution is in no way a stigma; any more than our omnibus resolution adopted over three years ago to investigate telemarketing fraud -- a clear precedent for this action. Indeed, the existence of this resolution should similarly instill consumer and business confidence in online commerce. It sends a message that Section 5's prohibition against unfair or deceptive acts or practices will be enforced promptly and vigilantly online.

The dynamic nature of the Internet has and will continue to create new challenges. To fulfill its law enforcement duties, the Commission routinely has put in place such resolutions to ensure it can act as efficiently as possible. This is no different and is therefore appropriate.