DMA Asks Financial Reform Conferees to Keep FTC Expansion Out of 'Restoring American Financial Security Act'

Washington, DC, June 11, 2010 — The Direct Marketing Association (DMA) was joined by 47 other trade associations and business coalitions in sending a letter to each of the conferees on H.R. 4173, the “Restoring American Financial Stability Act” (RAFSA), urging them to keep language that would dramatically expand the powers of the Federal Trade Commission (FTC) out of the final bill.

As the House and Senate conferees work to reconcile their versions of the financial regulatory legislation, the associations — which represent hundreds of thousands of US companies from a wide array of industry segments — expressed strong opposition to provisions in the House version of the bill that would expand the FTC’s rulemaking and enforcement authority over virtually every sector of the American economy. 

“The balance struck in the Senate bill is the right one,” said Linda Woolley, DMA’s executive vice president, government affairs.  “That bill makes the most sense in the context of financial reform legislation, maintaining the FTC’s existing jurisdiction without expanding its rulemaking and enforcement authority over industries and sectors that had nothing to do with the financial crisis.  Issues of FTC expansion deserve their own due consideration and debate in the more appropriate context of an FTC reauthorization, as has been done in the past.”

DMA and the other associations strongly believe that granting the FTC broad new authority is not a necessary or relevant response to the causes of the recent recession and, therefore, asked the conferees to oppose the inclusion of any provisions that would expand FTC authority, rather than making changes to the Commission that would have a fundamental impact on the entire business community and the broader American economy. 

For more information please visit www.dmaaction.org. 

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The text of the letter follows:

Dear Conferee:

As you begin working to reconcile the House and Senate versions of financial regulatory reform legislation, the undersigned trade associations and business groups – representing hundreds of thousands of U.S. companies from a wide array of industry segments – write to express our strong opposition to the inclusion of provisions that would significantly expand the Federal Trade Commission’s (FTC) rulemaking and enforcement authority over virtually every sector of the American economy.

The proposed expansion of FTC authority envisioned in H.R. 4173[1] would eliminate procedural safeguards that were imposed upon FTC rulemaking decades ago, after Congress determined the Commission had repeatedly overstepped its regulatory authority.  These provisions couple unrestrained rulemaking authority with enforcement powers to seek civil penalties for unfair or deceptive acts or practices; to seek such penalties without coordinating with the Justice Department; and to pursue companies that allegedly provide “substantial assistance” in an FTC Act violation, even without actual knowledge of the violation.  Granting such sweeping powers to the Commission would enable it to act essentially as an unelected legislature, governing industries and sectors that had nothing to do with the financial crisis. 

Particularly given their potentially far-reaching effects, these provisions received remarkably little attention during the legislative process, largely overshadowed by debate about the creation of a new agency focused on consumer financial protection.  The House Energy & Commerce Committee reported H.R. 4173 after very brief consideration in committee markup and without affording affected industries any opportunity to present their concerns regarding the included proposal for FTC expansion.

The Senate Commerce, Science & Transportation Committee considered these provisions only in the context of the FTC’s role in the financial services sector, rather than the sweeping impact that such expanded authority would have on the broader economy.  The proposal for FTC expansion did not receive a vote in committee or on the Senate floor.  Rather, the Rockefeller-Hutchison amendment to S. 3217 adopted on the floor only granted the FTC concurrent jurisdiction relative to the new Consumer Financial Protection Bureau, without expanding the Commission’s rulemaking and enforcement authority over industries and sectors that had nothing to do with the financial crisis. 

The balance struck in the Rockefeller-Hutchison amendment to the Senate bill makes the most sense in the context of financial reform legislation, whereas granting the FTC broad new authority across all but a few sectors of the American economy is not a necessary or relevant response to the causes of the recent recession.

These FTC-related issues deserve their own due consideration and debate in the more appropriate context of an FTC reauthorization, as has been done in the past. Thus, we strongly urge you to oppose the inclusion of any provisions that would expand FTC authority, rather than making changes to the Commission that would have a fundamental impact on the business community and broader American economy. 

Sincerely,

Alliance of Automobile Manufacturers

American Advertising Federation

American Association of Advertising Agencies

American Bakers Association

American Business Media

American Financial Services Association

American Frozen Food Institute

American Herbal Products Association

Association of International Automobile Manufacturers, Inc.

Association of National Advertisers

Beer Institute

Consumer Data Industry Association

Consumer Electronics Association

Consumer Healthcare Products Association

Council for Responsible Nutrition

CTIA - The Wireless Association ®

Direct Marketing Association

Direct Selling Association

Electronic Retailing Association

Financial Services Institute, Inc.

Financial Services Roundtable

Food Marketing Institute

Interactive Advertising Bureau

International Franchise Association

Internet Commerce Coalition

Magazine Publishers of America

Marketing Research Association

National Association of Manufacturers

National Association of Mutual Insurance Companies

National Association of Professional Background Screeners

National Association of Realtors

National Association of Wholesaler-Distributors

National Business Coalition on E-Commerce and Privacy

National Council of Chain Restaurants

National Restaurant Association

National Retail Federation

Natural Products Association

NetChoice

Online Publishers Association

Retail Industry Leaders Association

Shop.org

Snack Food Association

Software & Information Industry Association

TechAmerica

Toy Industry Association

United Natural Products Alliance

United States Organization for Bankruptcy Alternatives

U.S. Chamber of Commerce

About Direct Marketing Association (DMA)

The Direct Marketing Association (www.the-dma.org) is the leading global trade association of businesses and nonprofit organizations using and supporting multichannel direct marketing tools and techniques.  DMA advocates standards for responsible marketing, promotes relevance as the key to reaching consumers with desirable offers, and provides cutting-edge research, education, and networking opportunities to improve results throughout the end-to-end direct marketing process.  Founded in 1917, DMA today represents companies from dozens of vertical industries in the US and 48 other nations, including nearly half of the Fortune 100 companies, as well as nonprofit organizations.

In 2009, marketers – commercial and nonprofit – spent $149.3 billion on direct marketing, which accounted for 54.3% of all ad expenditures in the United States.  Measured against total US sales, these advertising expenditures generated approximately $1.783 trillion in incremental sales.  In 2009, direct marketing accounted for 8.3% of total US gross domestic product.  Also in 2009, there were 1.4 million direct marketing employees in the US.  Their collective sales efforts directly supported 8.4 million other jobs, accounting for a total of 9.9 million US jobs. 

The Power of Direct:  Relevance.  Responsibility.  Results.

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