Industry groups demand no FTC power expansion in financial reform bill

Forty-one US trade organizations and business groups, including the Direct Marketing Association, the Interactive Advertising Bureau and the National Retail Federation, sent a letter to Senate leaders on April 22, urging them not to expand the Federal Trade Commission‘s powers as part of financial reform.

The groups wrote the letter to Senate Majority Leader Harry Reid (D-NV) and Minority Leader Mitch McConnell (R-KY) opposing any significant expansion of the FTC’s rulemaking and enforcement authority in the Restoring American Financial Stability Act.

The two issues, financial reform and FTC oversight of marketing, should be debated separately, according to the groups.

“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,” the groups said in the letter. “The financial troubles of the past year have not been laid at the FTC’s doorstep, and provisions to expand the commission’s authority are out of place in legislation to reform the financial system.”

Current versions of the House and Senate bills would give the FTC more authority over ads’ content, as well as the ability to quickly punish marketers, said Jerry Cerasale, SVP of government affairs at the DMA.

“The FTC could quickly go in and change a lot of requirements over what we do in the content of ads, and also the use of information in ads,” he said. “And then if you violate that, they could impose fines immediately.”

Last year, the FTC revised its guidelines to encourage marketers to disclose the expected or typical results of a product’s use under normal circumstances. A previous version of the FTC’s rules allowed marketers to describe better-than-expected results as long as they were tagged “results not typical.”

Craig Shearman, VP of government affairs at the NRF, said his group is most interested in ensuring that retail gift cards are not treated like bank gift cards.

“Retail gift cards are basically like an IOU,” he said. “A bank-issued card is very different. They exist for making money on fees associated with them, so from the banks’ point of view, their interest is that they not be redeemed.”

FTC spokeswoman Claudia Bourne-Farrell declined comment on behalf of the agency.

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