called away so they substituted the deputy mayor, putin. and because i wasn't meeting with the mayor, i knew putin had been kgb. i was negative about it and he came in and was equally negative. he didn't want to meet some american woman wanting to run a business. i think he was very suspicious of women. he had no gallantry and he was the coldest, he had the coldest eyes i've ever seen, very big clue cold eyes. all i could think is i wonder what would happen if he was interrogating me. on wednesday the five members of the federal trade commission testified at a house energy and commerce committee.

topics include data security and privacy for social media users and mergers in the healthcare industry. this begins with the chair bob goodlatte of ohio. >> good morning. i'd like to call the committee to order. before we begin our opening statements i would like to say how pleased i am to have all of our commissioners before us today. what i would like to do before i begin my opening remarks is introduce the commissioners. today we have the chairman who was sworn into office on may 1 before joining the commission he was a partner at the antitrust group and previously served at the commission in various positions between 1987 and 1989 and from 2001 to 2003. next we have the commissioner who was sworn into office april 4, 2012 and served as the

acting ftc chairman between january, 2017 and may 1, 2018. prior to joining, she was a partner and previously served as the commission for 11 years and various leadership roles. we think the commission for her leadership th past 15 months whn she was the acting chair and for her work at the agency. the commissioner was sworn into office on may 2, 2018 before joining the commission served as a with john cornyn of texas. the commissioner was also sworn in on may 2 and previously served as the senior fellow at the federation of america. finally, we have the commissioner sworn in on may 2, 2018 and prior to joining the commission served us to chief to senator schumer of new york. york. when this is the responsibility of public service and they are once again being asked to serve

to maintain competitive markets and protect consumers against unfair and deceptive action practice. thank you very much for being with us today. at this time i don't recognize myself for a five-minute opening statement. our hearing today will focus on oversight of the federal trade commission. the ftc function as a top cop on the beat and keeps consumers safe to promote a vibrant market to the united states. we look forward to working with the ftc on specific issues relating to the committee's jurisdiction including self driving cars, data security companonthe internet of things,k technologies, privacy issues, deceptive advertising, robo calls and more. emerging consumer protection issues are at the forefront of the committee and recently i joined the commissioner chairman blackburn and sharon harper sending letters to apple and google asking them to explain how smartphone users data is protected and went although recording information is compiled and shared.

this morning we will be sending letters to the location data for location smart, secure and the interactive corp.. we continue to remain concerned by the cybercrime estimated to cost millions to the global economy each year and how the business is prioritized the most sensitive data. as we all know there is no such thing as 100% perfect security. we will continue to work with the regulators to understand what transpired in the recent high-profile breaches and what we should learn from these actions for the future. the world's most valuable resource is no longer oiled up data. i look forward to a thoughtful discussion on the appropriate steps the ftc is considering including the chairs recently announced hearings on 21st century challenges. in my remaining time i would like to hear how the chairman will work to utilize the funding to its greatest need and impact judiciously using the tax payers

dollars including on the ftc current priority authorities and performance including its human resources and effort to secure, maintained the best experts in the view of antitrust and consumer protection. while we are in a chilling and fiscal environment, the house appropriations committee approved 2 million more dollars to the ftc and the agency requested for fiscal year 2019. i was also encouraged by the refunds the ftc has been able to return directly to consumers. most recently for drivers and customers who subsequently marketed the product consumers and both were receiving average checks over $200. this tool and ftc toolbox at the ftc has over $543 million to consumers and 940 million in the u.s. treasury. ftc orders from the volkswagen from amazon and matters require to self administer consumer refund program with more than

$11.5 billion. the ftc enforcement authorities are broad and far-reaching and in the unique position as the civil law enforcement agency for the majority of the u.s. economy cannot be taken lightly. calls for expanded rulemaking authority shifting the agency from its expertise in enforcement of the regulatory rulemaking raises questions from the explicit grant the agency rulemaking that has been utilized in years. some may argue it isn't equipped to handle the challenge, but i believe that actions speak louder than words. the ftc vigorously defended its jurisdiction and consumers and we have no reason to believe that will stop anytime soon. finally, the ftc plays an important role in the eu privacy shield framework particularly relating to clients and enforcement and u.s. businesses. with a second review of the privacy shield by the european commission coming this fall, we want to hear about the ftc and

consumer role in the commissioners who and what the candidates can do to help make sure the 31 businesses including small businesses continue to have access to the privacy shield. again, i want to thank the witnesses for being here today and at this time i'm going to yield to the gentle lady from illinois, the ranking member of the subcommittee for five minutes for an opening statement. >> thank you so much, mr. chairman and for holding this hearing. the i want to welcome the chair i know you are new to the job and i look forward to serving with you. today's hearing really comes down to two questions. is the federal trade commission equipped to fulfill its mission of protecting consumers, and what can congress do to make it more effective consumer

advocate? the ftc, to echo the chairman is the top cop on the beat protecting both the public and businesses against unfair, deceptive, fraudulent or anti-competitive practices though the consumer protection and antitrust authorities. as the economy continues to change and expand, the ftc has had to adapt to this new economy and is the social networks shopping, banking and other forms of communication and businesses move to the internet, the ftc has changed bringing in more technical technology experts. at the same time, many suggest that the commission needs more technology experts even though its resources are as tight as ever. i am concerned that we are asking one of the countries most important agencies to choose

which protections that will be able to enforce. i hope we will work together to ensure the ftc has all the resources that it needs to maintain consumer protection and in the marketplace. from a regulatory standpoint, it's time to look at ways to reduce barriers to the consumer protection rulemaking. the ftc ability to move forward with important rulemaking is much more limited than those other agencies. in the rapidly changing climate of commerce today, the making must be efficient and timely to keep pace, specifically i would like to discuss how well the ftc is protecting the come to numerous privacy and what they are doing to promote data security. it's my belief on data security this committee and congress should be getting the ftc the tools it needs to do more. ranking member pallone and i have introduced hr 3895 with a

secure and protect america's data act, which gives the ftc rulemaking authority and civil penalty authority more data security breach notifications. these issues are becoming more important for americans, not less. less. in our hearing last october with the former ceo richard smith, i asked as a consumer can i opt out, after all, i never opted in, and they collect my data whether i want them to do it or not. and now my data is at risk from is being shared because equifax failed to adequately protect it, and the answer was yes i don't have an opportunity to opt out. it would be one thing if the breach were an isolated incident, but it wasn't. the syllabus with facebook and we saw this under a uber and

they actually paid the hackers $100,000 before reporting the incident to the ftc. this can't be standard industry practice. we need to change that power balance. by strengthening the consumer protections. the ftc as our partner, we must work to strengthen the agency to face the 21st century challenges. many of these new marketplaces, which are often highly concentrated on failing the american consumers. part of the mission is the issue of antitrust and as we saw this morning with the leveling of $5.1 million, strong consumer protection and robust competition go hand-in-hand and that's why congress and consumer watchdogs must step in. i welcomed the new commissioner, chairman simons and commissioner

philip -- did i miss somebody, commissioner simon, philip and slaughter and i want to thank the commissioner for her work on the commission and stewardship during the transition. i look forward to hearing your perspective on these issues and i yield back. >> the gentle lady yields back into the chair recognizes the gentleman from oregon of the full committee for five minutes. >> good morning mr. chairman and members welcomed for the energy and commerce committee we are delighted you are here. we want to welcome the five distinguished public servant and welcome to the committee. we have a lot of work to do, so do you so we appreciate your counsel. while the economy as a driver of so much growth and opportunity, so many are still bad actors and

the federal trade commission is one of the top cops on the beat charged with a dual mission of competition and consumer protection across large segments of the united states economy and the commission's jurisdiction. we need them to follow the authority from the anti-competitive practices both online and off. recent data security incidents involving facebook, equifax, uber and others continue to raise concerns about the aspects of protecting consumers and the data driven economy. they do not forget recent comment on open investigations and we won't ask you to do that but i would emphasize data security instances involving sensitive, personal and financial information are a significant threat to the united states consumers and businesses, and we are laser focused on these issues and commerce committee. revelations surrounding facebook and cambridge analytic that have brought the issue of consumers

data and privacy to the forefront. like said from the chair for five hours not long ago particularly with facebook under an order with the ftc, we are closely evaluating the tools used by the federal trade commission in cases as that matter moves forward. two weeks ago we asked the apple ceo and larry page to explain how their companies use audio recording data as well as vocational information collected on smartphones and consumers want to know who's tracking them and ho how and following reports that the data aggregators obtain information from u.s. wireless carriers in turn selling it to other firms this morning we will be sending letters to locations in three c. interactiv interactf patients to prove their data handling and use practices. we have pursued and will

continue to pursue important oversight work on these issues, and we will explore the question whether there are improvements in the current privacy regulations that would increase the consumer understanding of how the data flows to the global economy. we do not want to settle the companies on the regulations were imposed compliance burdens that will not result in a meaningful impact for consumers, but we will ensure they are being responsible and they do not misuse the consumer's data. this is the reason i support the commission's restoring internet freedom order which reaffirms the authority over both the isp internet service providers. they provide a free and open it in print for the anticompetitive behaviors across the digital ecosystem. succumb as we consider these issues we would reiterate the invitation to the technology company ceos to come to

congress, come to washington, d.c., engage with us and talk directly to the committee and the public about the practices. our goal is to work with all stakeholders on how to best incentivize the data security and help protect personal and financial data so i am encouraged to have all of you here today because i know you understand the importance of these issues into the complexities of these issues and the role that the federal trade commission hasn't protecting so we look forward to your testimony. and thanks for being here for the committee. unless anybody wants the remainder of my time, i would be happy to yield back. >> the chair now recognizes the gentleman from new jersey for five minutes for an opening statement. today's hearing focuses on the work of the federal trade commission and we want to congratulate and welcomed the new commission, simons, and welcome back the commission or

if i'm pronouncing this rate. right. the ftc plays a critical role protecting consumers nationwide and has a dual mission of protecting anti-competitive business practices and protect consumers from unfair or deceptive actions. it's an enormous endeavor covering many industries and issues and works to stop anti-competitive business practices that are likely to lead to higher prices and lower quality of goods and services intand at the same time works to protect consumers from false advertising and telemarketing data and other forms of fraud. the ftc has had success of justice case against volkswagen in which it obtained $11 billion in compensation for consumers to purchase clean diesel car as it turned out not to b be cleaned y the commission should be doing more in my opinion. in order to do more and support consumers, the ftc needs the support and legislative authorization from congress and instead of working with the ftc, the committee just two years ago

sought to further reduce the already limited authority of the ftc and i'm hopeful we will not see that again. the ftc is a relatively small agency especially given the breadth of its mission and the area of the data privacy and security one of the more critical consumer protection issues tissues today the ftc's e division is 45 full-time employees. and only 35 of those are attorneys able to bring enforcement actions. these are important since the commission's rule making authority the commissions rule-making authorities are hinderewerehindered by the overy burdensome requirements that effectively nullify its ability to establish regulations for the consumer privacy and data security. and even its enforcement authoritieif enforcementauthori. most often they can only get an injunction stopping the deceptive acts and the ftc cannot get the offender where it hurts with a monetary policy, a slap on the risk they promised not to do that again often entails to the sufficient deterrent to further the action only if the company commits the

same act again they have to promise in a content that it would stop such comments can be ftc seeks finds. they would take advantage of consumers without consequences. just a few months ago we were here listening to mark apologized yet again for facebook failure to properly inform users about the data would be shared. the ftc has 40 employees revealing the dissent decrees that are in effect and those cannot possibly know whether anyone companies keeping the commitment made in the dissent decrees. today's hearing is not on the beach but facebook or equifax

but those are good examples for exploring how the ftc can fulfill its mission of the. they maintain patient health records and secured business transactions and communications between the internet of things that works and the essential element in function to walk chain ithatwatching is the centd mentor to technology but at the height of its applications growth, how example did exactly it has been defined as less clear. there is no agreed-upon definition of the law change.

so i'm working on legislation that would direct the department of commerce for the industry stakeholders to develop a consensus-based agreed-upon definition. i believe a common definition could greatly assist in the development and deployment. to work with me on this as well as my colleagues here i hope that we can do this as quickly as possible. thank you and i yield back. >> the gentleman yield back the balance of his time and that will conclude with the member opening statements. the chair would like to remind members of all the opening statements will be made a part of the record and again i want to thank all of the witnesses for appearing before us today to testify before the subcommittee. witnesses will have an opportunity to give a five-minute opening statement followed by a round of questions for the members of the

subcommittee. you are recognized for five minutes if you pull the microphone up close and turned about and on, we are glad to have you here today. >> thank you so much. chairman, ranking member schakowsky and members of the soap debate the subcommittee. i'm a member of the federal trade commission and it is an honor to appear before you today especially alongside my fellow commissioners i'd also like to thank you for being so supportive of the resource needs over the years. as he felt he sai evil but he sa highly productive and effective dependent agency with a broad mission to protect consumers and to maintain competition. the ftc also has a long history of bipartisanship and all of us here today are committed to continuing the strong tradition. i'm going to focus my remarks today prematurely on data security and privacy. year after year these two issues top the list of consumer protection priority is that the

ftc. the commission has challenged numerous privacy and security practices under section five of the ftc act. our program in these areas which include enforcement as well as consumer and business education has been highly successful within the limits of our authority. section five is an imperfect tool and in my view we do need more authority. i support the data security legislation that would give us three things. one, the ability to seek civil penalties and effectively to tour the unlawful conduct. number two contra stitch over the nonprofits and common carriers and three, the authority to issue implementing rules under the administrative procedure act. make no mistake however under my leadership, privacy and data security for continued to be an enforcement priority and the ftc will use every tool in its arsenal to address the consumer harm to the extent we can. to date the commission has brought more than 60 cases alleging the companies fail to

implement reasonable data security safeguards and as well as dozens of genital privacy cases. we have aggressively pursued privacy and data security cases in myriad areas including financial privacy, children's privacy, health privacy and the internet of things. recently the european union put into effect its genital data protection regulation. the ftc will be watching carefully and assessing the impact of the new regime does the what lessons we can learn that might be applicable to the u.s.. in addition, gdp unlike its predecessor imposes restrictions on the ability of companies to transfer consumer data to other jurisdictions including the u.s.. the eu and u.s. privacy shield framework provides a mechanism that enables the data to be legally transferred from europe to the united states, and the ftc is committeof theftc is comy

enforcing the privacy issue. finally, let me mention one additional thing. the ftc has a tradition of self-critical examination and we recently announced in the hearings on competition and consumer protection in the 21st century and these will begin in the fall. these public hearings will explore whether we need to adjust our enforcement efforts, priorities and policies in light of changes in the marketplace and new thinking. issueissues discussed include wr we need to change the governing standard of antitrust enforcement, whether the merger enforcement has been to relax or the remedial authority with respect to privacy and data security and other issues. the discussion of these issues at the hearing along with public comments that will be collected throughout the hearings will help inform our thinking. the ftc is committed to maximizing the use of its resources to enhance its effectiveness in protecting

consumers and promoting competition. to anticipate and respond to changes in the marketplace and to meet current and future challenges. we look forward to continuing to work with the subcommittee and congress and i look forward to answering a question. thank you so much. >> thank you for your statement. commissioner, you are recognized for five minutes. >> chairman, ranking member schakowsky, members of the subcommittee, i am pleased to appear before you today alongside my ftc colleagues. i've been a commissioner for six years and was honored to be named acting chairman in january 2017 and to serve in that capacity until may the 2018. having a leadership role at the ftc provides a unique insight into the vital protections the agency provides for the american consumer and i'm proud of the work that we will discuss at today's hearing. although the ftc has many a compass and i will limit my remarks today to two areas, process reforms in the competition enforcement.

first, process reforms. in april, 2017, i directed the ftc bureau of consumer protection to identify ways they could streamline our civil investigative demands which are the agencies version of administrative subpoenas. this initiative was important in response to the concerns raised by members of congress the ftc investigations often impose undue burdens on legitimate companies. of course the ftc must remain an effective and aggressive protector of the american consumer. that is our primary mission. but we should also look for ways to be more efficient. the reforms have been in effect for a year and i believe the agency has successfully navigated making the process friendlier to legitimate businesses without sacrificing our effectiveness. for example, one difficulty for small businesses waiting to lighten the burden the ftc now

includes a plain language description of the cip process and in every one of the issue. we've posted for the small businesses on the website to help them. we are also being more selective about the timeframe for the requested documents and information. obviously the broader time frame, the greater the burden on companies. it's now our policy where appropriate to limit the time frames to more recent years and of course when there is good cause we will seek a broad range of documents and information, but that is now the exception, not the rule. these are a handful of the ways we have reformed overprocessed so that we can continue to protect consumers without placing undue burdens on legitimate companies. now turning briefly to competition enforcement, i would like to make a few points. in fiscal year 2017, the ftc challenged 23 mergers and obtained remedies for consumers and 15 others. ain't getting essentially the same merger enforcemen enforcemg

the beginning of this administration as it had in the previous one. and this continues in fiscal year 2018. the agency has already undertaken a number of challenges including trauma and speak to all of which are currently in litigation. the 2017 and 2018 period they stopped the mergers when the parties abandoned them. and in addition, walgreens restructured its proposed acquisition of rite aid du aid o the commission concerns. and i'd like to highlight two cases that focus on important points about the competition mission. trafficking scandal proposed merger of the internet platforms offering so-called elite fantasy sports contests and the ftc sued to block legal finding that these companies were the leading providers and other forms of fantasy sports were inadequate substitute. and importantly, the commission rejected arguments that the technology was nascent and fast-moving to be able to draw the reliable conclusion.

the face of the ftc challenged companies ultimately abandoned the transaction and the i. would like to mention is the two providers of specialist software used by auto dealers. our challenge noted that the current levels of competition between the parties likely understated the competitive significance with a smaller firm. in effect, the larger firm is buying out this promising upstarts before it could grow to become a much more serious competitive threat and in the face of the ftc challenged the parties abandoned their deal. both of these cases were big wins for u.s. consumers. but they also show how the commission can use its existing authorities to intervene in the factually grounded economically nuanced way even in fast-moving high-technology markets. in addition to the merger also bought a number of important contact cases including several challenging anticompetitive behavior by drug manufacturers.

and finally our economic liberty task force, which i launched last year has helped a spotlight on unnecessary or overbroad occupational licensing which often disproportionately harms those near the bottom of the economic ladder and burdens for military families. so thank you for your time, and i look forward to questions. >> thank you for your testimony today. commissioner phelps, you are recognized for five minutes. >> thank you. chairman, ranking member schakowsky, members of the subcommittee. thank you all for the opportunity to be before you today. i'm honored to be here with my fellow commissioners, and from our testimony, i hope you see the important work that the deep end its staff do every day on behalf of american consumers. as you all know our economy is increasingly globalized, digitized and connected. these changes generate incredible opportunity. they alsbut they also pose new s for consumers such as

traditional scams but now thrive online and new internet-enabled fraud. they also raise important enforcement challenges like the enhanced ability of scammers to ask anonymously or to move their ill-gotten gains abroad and outside our jurisdiction. they also create roadblocks to international law enforcement cooperation. congress has been an essential ally in this fight. in 2006 comments pas 2006, it pe web act. this allows the ftc to share with and provide investigative assistance to foreign authorities in cases involving spam, spyware, privacy violation of data breaches. it also confirms our authority to challenge fraud that harms u.s. consumers or involves material conduct in the united states. using safe web, the ftc has worked with authorities abroad to stop illegal conduct and

secure millions in judgments from fraud and sometimes even criminal convictions. the ftc uses this authority and important international privacy cases. he collaborated with canadian and australian privacy authorities on the massive data breach of the toronto-based website ashley madison. and we worked again with canadian authorities on ftc's first children's privacy security case involving connected plays a settlement with electronic toy manufacturer vtec electronics under the children's online privacy protection act. in total, the ftc has responded to more than 125 safe web information sharing requests from 34 in enforcement agencies. we've issued more than 110 civil investigative demand in more than 50 investigations on behalf of the foreign agencies civil and criminal. the ftc has collected millions of dollars in restitution for the consumers, both foreign and

domestic. safe web helps protect americans by policing and instilling confidence in the digital economy. but it is sunset in 2020. the commission requests that congress reauthorize this authority and eliminate the sunset provision. our international efforts support american business leadership in the global digital economy by enabling transatlantic data flow and protecting privacy, as the chairman rightly highlighted in his remarks the ftc works with the department of commerce on three key cross-border data transfer programs, including the eu and u.s. privacy shield. privacy shield provides a legal mechanism for companies to transfer personal data from the useu to the u.s. with strong privacy protections. and the ftc enforces these companies privacy shield promises under section five of our statute. we are committed to the success

of privacy shield and the other cross-border data transfer mechanisms. we brought nearly 50 actions to enforce them including four under the new privacy old. one announced just two weeks ago. privacy shield is an important mechanism for encouraging commerce and protecting privacy. enforcement is and will remain a priority for the agency. thank you for your time and attention, and i look forward to answering any questions you may have. >> thank you for your testimony. commissioner, you are recognized for five minutes. >> chairman, ranking member schakowsky and members of the subcommittee, thank you for the opportunity to testify and discuss data security and privacy. according to the survey data, 91% of adults believe they have lost control about how companies are collecting and using their personal information. news reports of data breaches and disclosure of sensitive data

have become routine. on the dark web, stolen credit card and social security numbers and social media profiles can be bought and sold. for many americans, the situation seems hopeless, and they feel powerless. washington cannot be sitting on the sidelines. we must confront the risks to our economy, our society and national security of inadequate data security and privacy. and at the cost o the cost of ts growing. according to an industry study, over 15 million americans were a victim of identity theft in some form in 2016, leading to $16 billion of losses. the majority of these americans had their records accessed in a data breach in the years prior to their identity theft. when we talk about the data

security, we typically focus on protecting power grids, payment networks and other critical infrastructure to avoid a crippling attack. but we also know that the infiltration of commercial holdings of consumer data can also cause chaos. large-scale breaches of unencrypted data are increasing these risks, and we must do more to secure personal data from falling into the wrong hands. chairman simons is right, the ftc cracks down on illegal practices whenever we can. but i think our existing toolkit won't do the trick. into many situations, our resolution is to tow a lawbreaking company to simply stop breaking the law. to truly make a difference when it comes to data protection, we need the ability to deter the misconduct through financial penalties and sensible safeguards that can evolve with the marketplace. when it comes to privacy, the

united states should lead to new privacnewprivacy protections fre and california are advancing. but we shouldn't feel we have to simply copy and paste. we should be leaving. i believe privacy and competition can go hand-in-hand, especially when consumers can access their data in portable and interoperable format. we can increase privacy protections without crowning corporate royalty. we don't need to start from scratch either. congress can build upon existing privacy laws such as the children's online privacy protection act. 20 years ago, incumbents warned this bipartisan effort to protect children online would end in utter disaster for our information economy, and they were wrong. they have common sense ideas. data collected for one purpose shouldn't be used for another

purpose without your permission. you should have the ability to review the information collected about you. companies should be upfront and honest about who they are sharing their data with. and strong protections should be backed by an enforcement regime that can hold companies and their operators accountable. over the past decade, the ftc has produced scores of studies and reports, but now it is time for congress to act. i am confident that if congresss entrusts the federal trade commission with the authority and resources to do more to protect families and businesses, we will deploy them efficiently and effectively, while continuing to promote a dynamic digital economy that truly benefits all of us. thank you. >> thank you very much for your testimony. commissioner, you are recognized for five minutes for your opening statement. >> thank you chairman, drinking

member schakowsky and members of the subcommittee thank you for inviting all of us here today. i would like to use my remarks to highlight the work the commission doeof thecommission t american consumers from fraud and from illegal calling. i also want to draw attention to the resource challenges of the commission. although it sometimes grabs the viewer headlines, fighting fraud is an essential part of the ftc's consumer protection mission. the commission tracks down and stop some of the worst scams often targeting consumers who can least afford to lose money including the elderly, members of the military, students burdened by debt and small businesses. the ftc takes the lead on important initiatives to shut down fraudsters and joins with our federal, state and international law enforcement partners. recent examples of these initiatives include operation crackdown on tech-support scams and others with operation game of loans where we land first federal and state coordinated

action targeting 36 student loan debt relief scams. and just last month we announced obligation mainstreet come in africa's top small-business scams. the agency has also been at the forefront in addressing the deceptive moneymaking fraud involving crypto currencies. bringing the enforcement action in hosting a workshop through to explore how the scam artists are exploiting public interest in the crypto currencies and how to empower and protect consumers against the growing threat of exploitation. this is an area we must continue to monitor closely including working with stakeholders who don't traditionally engage with the ftc on robo calls. a few things unite americans more than their outrage over a legal robo calls, and i include myself among the outraged. the ftc uses every tool at its disposal to stop illegal calls. we've got 137 cases targeting over 100 individuals and companies responsible for billions of illegal calls to u.sgive us consumers and we've

collected over $121 million in judgment. but as with anyone with a phone does, the problem persists. while our aggressive law-enforcement efforts continue, we know the explosion in illegal calls stems from technological develop; landscape. violators can now face endless streams of calls for a fraction of a cent, and too often, the criminals behind some of the worst calling scams are located abroad, beyond the reach of a civil law enforcement agency. technological problems need solutions. the ftc is a leader pushing the industry to the solutions helping spur providers and third parties into offering call blocking option. however, the best long-term solution is to empower and expect providers to deploy solutions at a network level that will reach every consumer. effective blocking tools to stop this should be available to all consumers using every kind of phone system and carriers should have both the right and

responsibility to keep their systems clear of unwanted calls. the ftc is currently limited in its ability to address failures on the part of providers as a result of the common carrier exemption to the jurisdiction. some carriers know or have every reason to know they are passing along a illegal or fraudulent calls but they are beyond our reach. speaking as a consumer as well as an enforcement official, i share the public outrage of robo calls and am eager to work with congress to empower the ftc to do even more to combat this profound nuisance. finally, i'd like to say a word about the resources. the ftc works tirelessly to protect consumers and advance competition and an increasingly technical, digitally and sophisticated marketplace. consumers likely look to the ftc to address evolving challenges and one of my priority is his to make sure we meet those expectations successfully. we have excellent expert experience staff who want nothing more than to hold the

law breakers accountable. we leverage them as effectively as possible. but we have more cases to bring everyday. they've becomevery day. they've become more complex both legally and technologically, and they involve defendants with deep pockets and armies of attorneys. our budget has not kept pace with these developments. we have more full-time employees in the ronald reagan administration than today. it's critical the ftc has the resources to support its work, particularly as the demand for so many complex areas continue to grow. in addition to sufficient resources and asked several cliques noted, the authority is critical for the ftc to continue to meet the demands of the marketplace. repeal of the common carrier exemption rulemaking authority and related civil penalty authority would go a long way to help better meet today's challenges as well as tomorrow tomorrow's. thank you and i look forward to taking questions. >> thank you for your testimony today and i think the commissioners for being with us today and i will start the questioning for five minutes.

while you bring strong antitrust credentials to the bureau of competition, one of the priority issues in the subcommittee and the jurisdiction enforcement activities of the ftc, and i noted in your opening remarks you talk to but especially enforcement which is the legislation with the gentleman from vermont and on the internet of things that we also in the last commerce of a working group comes to the internet of things is something we are very concerned about. with recent headlines that highlight the open investigations active the banks which i know you can't comment on in the 11th circuit recent decision highlighting the enforcement lab data security case how would you describe your general approach to the consumer protection enforcement cracks >> our mantra is vigorous enforcement, mr. sharon.

so, that's what we are all about protecting the consumer and vigorous enforcement. in addition, we are very active in terms of not only trying to create a disincentive for the bad guys to do the wrong thing but in addition, to educate consumers and small businesses generally to make sure they do the right thing. so, very enforcement oriented and vigorous and across the board. one of the things you probably noticed from the remarks of the commissioner is that it was spread out in terms of different subject matter and that was not by accident. so, we are aggressive across the board whether it is data security, privacy, all kinds of different fraud across the board. >> let me follow-up. you mentioned on the authority of the ftc has the authority

today to enforce initial violations of the safeguards rule that covers companies like equifax. would you support fees to theseo enforce the safeguards rule? >> yes. >> thank you. would you like to follow-up on n that? >> sure. one of the problems we have is that we are able to show indies cases that there is sufficient harm to show a violation under the statute but in terms of our monetary remedial authority showing damage from any particular breach and tracing it to the specific breach is very difficult. so, it hinders our ability to seek a significant monetary policy or relief and to create a sufficient deterrence so that conduct doesn't occur in the future. >> when you were talking about the announcement of the public hearings this year on the 21st century challenges to the economy, i commend you and the

commissioner for taking a thoughtful approach in examining whether the current legal, economic and technological predicates one to the competition and consumer protection policies. whawould you share your goal for the hearing with updates to the agency's research and policy function or to set the foundation for the enforcement actions and policy agenda settings? >> we are conducting these hearings with a broad range of participants from all over the spectrum of thoughts and ideas. we are going in with an open mind, and we are not expecting any particular outcome. potential outcomes with the things that involve, for example, amending our horizontal merger guidelines, potentially new vertical merger guidelines. we might also look at privacy

and data security and immediately will come out with strong suggestions there as to how to move forward medi maybe g the lines of the commissioners suggestions a minute ago. so it's really quite wide open. the last time the hearings of this nature were conducted, there were substantial action items coming out of those hearings. this was done by the chairman and one of the main things that came out of that was amendments to the merger guidelines relating to the efficiencies and also a lot of work done on the intellectual property area, so the goal is to try to be as effective in these hearings as the chairman was in his hearings. >> thank you very much. my time is about to expire, so i'm going to yield back and recognize the gentle lady from illinois, the ranking member of the subcommittee for five minutes.

>> thank you. let me just say as a probably long-term consumer advocates since i was a very young woman, so i have a special place in my heart for the federal trade commission, and i want to ask about your authorities. most agencies issued regulations under the administrative procedures act which sets out notice and public comment procedures for the regulations, but unless granted apa rulemaking authority for specific issues by congress, the ftc issues rules under a different law which provides more burdensome procedures and makes it more difficult for the commission to issue rules. so i want to ask you, mr. chairman, do you agree that the ftc correctly is limited and for example, and an example i think you gave in a meeting,

could not write rules like the open internet rules written by the ftc >> i generally agree with your characterization of the rulemaking authority. the general authority is under the magnuson act and is more burdensome than the administrative procedure act, so i agree with that completely. ..

>> so to the whole panel to give the ftc authority on data security and breach notification using rulemaking

and i would just like to go down the row and see if you would support that? the mac without commenting on the specifics of your bill i support the concept of what you are suggesting. >> i previously supported this legislation i would also support that. >> i have not yet formed an opinion with rulemaking one of the things i look forward to and we look forward to learning from those. so that development of rules is that process and it also gives clear notice to the marketplace and i think that

would be a good idea. >> i have not study that particular bill but that is something i would very much support. >> so to come up in various testimonies on the committee and i hope that we can use that approach. chairman, if the fta would you direct staff to make that rulemaking process? >> sure. yes. couldn't the ftc issue and advanced notice of proposed rulemaking? or a notice of inquiry to get

the process started now? >> we could certainly start that rulemaking. just would be time assuming so there is an issue if we want to start that. >> we have those high profile hearings from equifax and zuckerberg sitting in the chair and not moving forward to do something about with the mistakes that have been made we look forward to meeting with all of you. thank you. >> i want to thank you for your leadership in this area with four roundtables we know

that it's pretty complicated. and then to worry about her data being breached but the worried part is gone and that is the tragedy. we don't have control over the data companies have trust obligations and they don't have the security in most cases something that this committee is very concerned about and with that legislation to get that data breach notification and we are closing in on it.

and we are all consumers and we care deeply that is part of the mantra to do the price competition and choice and your comment about the robo calls i remember when pop-up ads that suggested a death penalty for those people because you couldn't do anything on your computer. we had a hearing on the robo calls and the private sector technology sector one of the witnesses has an after that they market and then to answer the call and pretend to be revealed and keeps the caller on the line for half an hour to run up there bill we have a

lot of young kids out there that can develop the apps to help us. and it is hard for anybody to get their hands around. >> what role do antitrust play. >> it is similar to what you just suggested that but the consumer will benefit. it was at consumer protection and terms of information non- deceptive information in the marketplace that makes them compete stronger and drives competition we want to have those two things with vigorous competition to make firms are

not behaving anti-competitively and make sure consumers have the information necessary to make the right decision and the right choices. >> every day we have legacy rules that are built upon those and then to have consolidation with people trying to compete. and with that nature of the u.s. economy during the public hearings? >> we are focused on a broad range of things. everything from that consumer welfare with the consensus standard and the way that we

have done analysis in the past 20 or 30 years that has been too lax with the consumer protection side and in terms of that were very focused on is a potential trade-off privacy on the one hand and data security on the other we are a little nervous if you do privacy in the wrong way you could end up reducing competition to create a situation with those platforms to make it very difficult because the advertising market becomes much less efficient you make it difficult for smaller firms to get the attention of the consumers they are trying to reach. saw very recently was the wall

street journal reported you could already see advertising was moving that is something we are very conscious of and this is something my recommendation would be to strike the right balance. >> that is exactly the conundrum to have just a couple of platforms so you want that competition something it actually enhances so i appreciate that and i healed back. >> the chair recognizes the gentleman from new jersey. >> much of the ftc enforcement actions under section five of the act was unfair practices

that they can only seek an injunction with those first violations and that you support gives the authority to seek civil penalties for violations. and then to halt from those data breaches. >> what that would do will enable us to impose a sufficient monetary penalty to incentivize companies to do better protection of data. so if what is going on with enforcement authority to get an injunction than that is

much less of a deterrent than to get monetary penalties but causes the business to think through how it is conducting its business and what it doing in terms of security and privacy. >> it does have the authority to seek civil penalties but how much those should be? >> correct. >> can you repeat that? >> when they do have authority to seek civil penalties and how much those penalties should be? and with those privacy cases as well? >> that is something we should ask more.

>> i appreciate you i think it's great that you are doing that but what about the other section five violations would you support violation with the ftc civil penalty authority? >> it is different like fraud for example even though we go under section five authority providing injunctive relief what is ancillary is the ability to get restitution those serve as a significant deterrent. and that is sufficient. and then to prove the extent of damage. >> i'm thinking of robo calls which we discussed so we have

a rule we cannot have civil penalties for marketing sales to ask a court for civil penalties there is a rule on the books in violation of an order generally speaking. when we do have a rule on the books it is easier even on the first offense to ask for a civil penalty that is why rulemaking could increase deterrence as well. >> i want to ask about the settlement ftc recently announced while they were in the process to negotiate a settlement to make those deceptive claims have failed to disclose another significant breach of customer data that was called

strikingly similar. so that includes additional requirements why couldn't they seek civil penalties. >> we have a violation of a pre-existing order but it still cannot impose fines? do you think this situation is to stop repeat offenders? >> my understanding of the uber resolution that the order was modified that was not a direct violation of the original order so there are limitations to obtain civil penalties whenever there is a rule violation itself.

to make sure that they are followed or not followed but the question you are raising the first offense there should be penalties but in order to deter misconduct we need to consider when that it is appropriate even on the first offense and the lack penalties. >> and the chair recognizes the vice chairman for five minutes. >> thank you chairman and for all of you to be here today and everything you do for the country. commissioner, the commission's website states the ftc protects consumers by stopping unfair deceptive or fraudulent practices in the marketplace.

with a rudimentary question do you think a private company should never be compelled to provide an accurate information to consumers that is deceptive or could impact the marketplace? been that i would be concerned of any company providing inaccurate information whether it was voluntary or not. >> with crypto currency scams as that skyrocket in value at the end of 2017 bringing that rising interest for startups but the last congress i work with the representative to pass a resolution 835 to five to highlight the importance of improving consumer access. so besides the recent workshop what was the ftc doing like investment opportunities? >> we actually have brought

two cases in crypto currency and we also have a long history to bring in at different times enforcement action against deceptive promises about precious metals. >> did that get enough public attention? >> we are always happy to get more we are interested in those ways. >> with the bandwidth of the media the goal of the u.s. and the eu privacy shells is to protect data and the flow of the transatlantic data so people both sides of the atlantic could face grave uncertainty with the ability to leave business owners so do? support for enforcing the framework? >> absolutely. >> yes. >> yes. >> yes. >> and chairman the 2015 and 21t

quarter 2018 all broke records for merger acquisition activity in the first quarter 2018 it increased 67% year% year over year research has found economic concentration increased of most economic sectors at the same time researchers have found entrepreneurs starting new businesses to overcome business closings that increasing concentrations cause for concern or evidence of declining competition in the economy? >> so that is one of the main focuses of the hearing precisely concerned is one of the things we want to get testimony about and make comments on. >> in other words it is an important focus of the hearing

because based on what we see there is enough out there to be concerned that it is problematic. >> is there any correlation between rising concentration? >> not specifically some of that material you are citing relates to industry categories that could be national if you have in the marketplace with chains that are more pervasive that local concentration for those types of markets you could worry about.

>> that intent is to figure that out. >> and to dominate the market accounting for 99% of the market in the google was going to have a 5 million-dollar the way they bundle the apps on the tablet in the smart phone what about a highly concentrated market? >> to compete pretty heavily against each other but i have to agree it is concentrated it isn't like commodities but is a concentrated industry like i said before what we do in the antitrust world so this is a

place we focus on spinning the gentleman from vermont. >> i went to go through this quickly that first congratulations to each of you i have read your resume. you people are smart but in addition with a record of public service but you also want to use your talents serving on the ftc is incredibly important because rages are not going out with that incredible pricing power with anti- competitive practices and that is so insensitive essential so to

assert that need with working americans so thank you. >> in april a bipartisan group on the subcommittee technological changes taking place and to be vigilant with that existing technology by potential competitors and i appreciate it very much with the response to the letter looking closely at that payment standards the commission will take appropriate action that

violates any of the strap statute that you enforce i do want to ask you any practice that would harm consumers what have you do to check competition and innovation? >> it is an important thing the economy with the numbers of deficiencies and what is interoperable there is different players and credit card companies and all the merchants. so it is important to have that function but it is also

possible they can be anti- competitive and they have cases of the standard-setting bodies. >> thank you i will go on to my next question just yesterday the ftc issued a statement to health and human services to respond to the hhs request to lower drug prices. which laid out the commission's concerns to use that program for competition the program to protect the public but they could be misused to disrupt competition and innovation but the ftc supports regulatory and legislative action with the misuse of the program that is exactly right thank you for that.

as we continue to see the generic fax how can congress deter from brand manufacturers that motivate them to provide generics with access to samples in a timely way? >> without giving a view on the precise specifications we are very supportive of this issue. >> let me interrupt you. i have a few seconds but thank you. another issue come to my attention is that web browsers are considering changes to the user interface on their screen specifically for those who are already rustling how to best protect themselves would be provided with less information about the security of the

website they're using at any given time we should be working together to provide consumers to get information is this a change to the web browsing experience that we should be aware of what that security labeling? if so i would ask the commission to keep them updated to the potential change and i am out of time. >> again i want to thank you your institution and your agency is so vital i hope you find a way better than we do to work together to get the outcome that is durable for the american people. thank you. >> the gentleman time is expired the chair recognizes the gentleman from texas. >> i appreciate that commissioners meeting here this is a good thing so you

began your testimony but it is the tool that we have but still after years of the case i realize most of you were not even born when that case started, and i also understand there was a recent politicalization of certain it's not settled yet but here in the aftermath of that arguably there was a good business plan and competently run but because of that breach of technology was poorly understood years ago now this business is no more and the people involved obviously have suffered significant harm.

so really my question is, is this a learning process as we look back? i know you cannot talk about the specifics of the case but i do understand it is still in litigation. but it has been hard as i have watched the last ten or 15 years in congress i practiced medicine before then so i certainly understand you could have somebody in your front office do something on the computer that puts data at risk but with the absence of harm to do this much violence to the business plan and model seems a little over-the-top. is this an ongoing process? >> one of the things the ftc does it has a good history to engage in self-critical examination. first of all let me say of

course we never intentionally tried to put legitimate businesses out of business we try to get them to comply with the law and not drive them from the market. that is bad for competition which is the other side of our mission we don't really want to do that. the other thing i will say is that we do engage in self critical examination even with public hearings we do this internally so one thing we have going on is a task force how we do our orders. that is relevant in the decisio decision. >> it is reassuring to know that and history is history and we cannot undo that but i'm grateful to hear that. so the question of robo calls at our house we have three cell phone and they can all being simultaneously with the same identifying number from a

small little town in texas that secretly did originate from there but also there was a hailstorm and then three simultaneous calls come in at the exact same time it doesn't seem reasonable that is one person doing that. is there a recourse for the consumer? is there a recourse for the consumer? what is the next step? >> i'm sorry was not directed to me? you make anybody can answer. >> if anybody would like to go

ahead. >> thank you for the question i think probably we are all on the same page you would hear a similar answer from any of us it is in or mislead frustrating from consumers i cannot tell you if those cars originated from texas or not but the challenge for us is that many of the people orchestrating these calls and schemes hide behind the spoofing technology. >> right now the technological solution that the fcc pushes to the marketplace could be the most helpful to identify as the robo calls the chairman talked about one example but looking at larger scale solutions they could be implemented. >> it is a longer discussion for the record but in the healthcare industry when i was

in practice in the late '80s i was worried there would be a single-payer health care system and now the corner drugstore. so there is a cause of concern and i will have specific questions for you. >> the gentleman's time has expired he recognizes the gentleman from massachusetts. >> i want to thank everybody for coming and testifying this morning. i want to touch a little bit on number of hearings we have had over the past year or so with the internet companies following those revelations with third parties for the third party apps developers

that led to facebook users with cambridge analytic avenue with the 2011 consent decree that was was to notify the customers of the policies so this appears very similar. >> i won't ask you details of the investigation but i believe you have confirmed the sec is investigating if facebook has violated? >> correct. >> with the dissent decreed they were required to get the independent audit certified that has in fact a privacy program in place to meet or exceed the requirements of the ftc order and to ensure that information is protected so given the requirement it is troubling to see the ftc did not discover the cambridge issue earlier i know you not

can long -- discussed the ongoing investigation but this is a circumstance in which the ftc isn't investigating the acts of a company subject to a consent decree is a limited if it was or will they also consider if there was unfair or deceptive practices? >> thank you congressman. like you said it is an ongoing investigation but what we can't do is discuss the particulars of the investigation. i'm sorry i cannot comment on that. >> i just want to add the ftc orders typically do not preclude the agency from investigating conduct outside so if you review the wide loss of orders we have entered into over the years we typically do not handcuff ourselves.

>> thank you i appreciate that commissioner. to those points made earlier if unfair or deceptive practices are found a reef pita fender could be subject to civil penalties. >> correct. >> i also want to understand if the ftc takes into account public statements made by the company? that it is investigating all third-party apps but with that statement is also been reported facebook cannot access data regarding what happened with facebook with cambridge analytic because it was located abroad. now we are getting into the details of the investigation and i respect that chairman. do you consider those public statements?

>> without talking to a specific case, we look at everything we look at the public documents and in advertising and websites and the whole range. we look at everything. >> congressman i apologize for interrupting you but one of the things i talk about earlier was the importance of congress re- authorizing and eliminating the sunset act you mentioned access to data abroad without speaking to a specific case that is a very important to also we really do urge you to consider that. >> we appreciate the insight. google told the public would stop sending personal e-mails but now we hear that google allowed third parties to scan e-mails so what about their

violations? >> we review everything. that is one of the ways we start investigations we see public announcements or statements and we get complaints so we consider everything. >> okay. thank you for being here we appreciate your testimony and i yield back. >> we will have a five minute recess at this time it will come back. thank you speefive spee5

event we will reconvene at this time with a gentleman from new jersey for five minutes. >> thank you very much and good morning to the distinguished panel. i champion the consumer review fairness act in 2016 to protect consumers ability including social media. there has been influence in social media and much has changed since the ftc with the google investigation and asked the panel what is your view to

maintain the competitive market with consumer reviews? >> i hope this is recorded. >> as i alluded to in terms of competition we need good information that allows consumers to make the best choices but that really helps to spur competition we are looking to that statute. >> i think that is very beneficial and it was a

violation but in addition to make sure they express their opinions of that is clear to consumers to so they engaged in enforcement with warning letters to make sure they are labeled as such the fact you have required a disclaimer to have additional guidance on twitter or on online that people understand how they apply in the new economy as wel well. >> so just briefly thank you for your work that based upon

the fact there was a review of the orchestra at a wedding when there was a discussion that they had to sign a form that there could be no disparaging review online which appalls the american public. >> and i also want to share that is full provision that is passed on a bipartisan basis to allow them to every orchestra violation. >> without commenting if it is operating under a consent

order does that affect the assessment of penalties? >> typically violations of orders allow the ftc to seat from the court injunction that can have consumer refunds or penalties so we have discretion with the enforcement of orders have to be a top priority. >> as the ftc considers its investigation but i indicated the facebook actions leading up to the cambridge analytic hack constructed with the ftc

in 2011 to strengthen my belief that it has routinely violating its promise with consent before sharing information as members of the commission after i have reviewed the matter recognizing the gentlelady from california. >> last week we discussed governing to privacy with the telecommunications providers before they could share with unlimited third parties. but more broadly it is often the case with the online platform and to visit that

platform but on that website is that information to allow that third party to access user data so i believe a necessary part of that discussion could be addressing access with whom a consumer has no direct relationship. but with that independent third party data use. >> under the current authority if that is disclosed we may be frustrated to combat that. but with respect to any privacy legislation giving rights to know what it is used for if we were able to

implement that as these principles come from 20 years ago that would be effective for the marketplace. >> a basically is a unique business on -- legislation. >> we cannot solve all of these problems. this is why we need more tools and resources. >> but we have to be very specific in the legislation. >> many people know how to craft legislation better than me but to the extent you could provide the framework will allow us to be flexible how the market changes. nobody knew how the website trackers would be used. and it can be accepted between

the user and the website. ht tp protocol can ensure the online connection between consumers and how it is encrypted and as the security indicators to provide consistent meaningful consumer information the matter which browser you are using common indicators consistently could be a step toward increasing consumer understanding not only secure but also safe and does anybody have any thoughts although security indicators could promote consumer protection? >> with those advancements how

they secure website traffic is a positive step in the marketplace we know from other sectors with financial services encryption and higher standards continue to be far ahead of the individual economy i don't necessarily know what we can do from a law enforcement perspective but obviously companies that maintain data need to take steps to secure that data. >> i think it's important how we look at how consumers get information about the enforcement actions against browsers computers to not have the man in the middle attack.

but if we paid attention to all the that she. >> what we like to and that is what is causing a lot of wear what is secure in what is not and i am out of time. thank you two the gentlelady yields back in the gentleman from kentucky. >> for thank you for holding this meeting commissioner the last congresswoman i interviewed we had a series of bills that we put forward on process reform almost one year ago the commission announced it would look at a set of reforms for consumer protection investigation but it was reported of those

competitive investigations as well has there been progress made? >> yes there has been progress made we had a civil investigative demand reforms that i talked about at the beginning of my testimony and try to give recipients better guidance and information we reduced the civil investigative demand and gave more time to respond. we have gone through leadership and close a number of investigations but we also went through to look at all the data security investigations with privacy that we closed and we distilled from that lesson about what steps companies had taken that gave reasonable security and we issued that with updating guidance to give us ten additional lessons to supplement to start with.

>> thank you and you have any comments on issues the committee should be considering with process reform as well? >> also on the competition side one of the things that has been reported publicly is a merger investigation seems to have gotten longer according to some men on -- measures we are tracking to see how long they are taking and why they are taking that long allowing us to determine what we can do to make it more efficient and less burdensome. >> we have advertised and talke talked. never to gather any information on the phone but that concern that i have is these fake websites when you are seeking the information

trying to engage with a hotel change to give a reservation or confirmation it is just how we know the identity of a website. i know the committee is looking at how identities are confirmed but what tools can they used to confirm they are on a real website that they intended to go? i know the lock next to the site is not secure? >> talking about secure websites? >> just very briefly you asked about other process reforms i would be remiss not to bring up the sunshine act that law

the way it operates today it inhibits our ability as a commission to talk to each othe other. so i just for that. >> how was that detrimental? been back i'm not challenging you. >> sure. one example three of us want to talk together about an important issue or four of us but unless we publicly noticed that in advance we cannot meet and while there are some important meetings that take place that are noticed the daily back-and-forth can be important. >> the ability to informally meet without having to advance schedule a full commission meeting would be enormously helpful. >> that allows us to work through issues much more quickly and without delay as opposed to scheduling a formal meeting. >> the idea is if you take action it is noticed but we

would have to vote. >> we are talking about informal conversations not legal action. >> one commission is a step out of the room and then there can only be two instead of three and i have seen that before and they literally do that if they don't have the quorum but it does seem like talking about issues it is not an action that has been taken. >> i yield back now that chair recognizes the gentlelady from new york for five minutes. >> thank you for convening this hearing. a pleasant good morning to all commissioners and a special welcome to the ftc commissioners.

your role is more important now than it has ever been the american people count on you to protect their data and privacy promote competition and much more there are so many issues and changes happening under the ftc authority, i can say i am very anxious to hear your answers with the significant changes. i like to start with the issue of privacy and directed that question to the commissioner when it comes to privacy there are many changes that need to be made to protect american consumers over the past year discrimination online has been rapid resulting in the marginalization of communities. can you talk about the impact the lack of meaningful privacy protection has on consumers particularly those in underserved and low income communities? >> 50 years ago congress had a debate about secret databases

making decisions about our lives and where we could live, work and what loans we could take. we passed the fair credit reporting act in 1972 advance new levels of transparency to give consumers redress but in today's decision on -- digital economy decisions are made through data sets we never could have imagined it is no longer a manila folder. it is very hard to look at what was the data being used with machine learning and algorithms it is hard to audit and see when those mechanisms are reinforcing a bias rather than leading to more inclusion of the ftc has done work on big data issues and i'm concerned our existing laws to prevent discrimination can't

be easily used when it comes to how technological choices or how technology is affecting the choices of firms in the economy especially with housing and employment. >> what can the ftc do to make sure they are protected? feel to have the resources necessary? >> we do have the fair credit reporting act we have not brought a case in a long time i would like us to energetically enforce those two laws but truthfully on the second part of your question answer would be no i don't think we have the authority to confront these issues you are raising with respect to privacy and data security.

>> and net tragedy is the issue. so do you believe the recent supreme court decision affected the ability with anti- competitive behavior with net neutrality by broadband providers? >> i don't think so. so basically the basic crux is limited to situations to design a platform with a transaction providing a service to both sides at the same time. that would apply to very few

in the situation. so with those consumers on the other against the anti- competitive conduct. >> it could be depend but i think not in general. >> former ftc commissioner has suggested created a bureau of technology. so do they have sufficient resources in the digital age with those resources that issue families to put forth the 2011 order? >> we cannot talk about the existing investigation but we can say we have numerous ways to have the help that we need

with the office of technology research and investigation. we frequently contract with outside parties and we hold workshops and seminars to bring people into educate us about new developments in the technological area. . . . .

as opposed to one that is just in one of the gurus. >> bureaus. >> the time is expired into the chair now recognizes the gentleman from indiana for five minutes. >> thank you mr. chairman. i am concerned to hear reports that the doj may not challenge the merger. in the healthcare industry that already lacks the price transparency in many areas of competition, this vertical merger could increase anti-competitive practices. i'm not passing any judgment on the merge merger at all up or d, i'm just voicing a few concerns. the merger could lead to customers receiving pressure to fill prescriptions at cbs and to

visit the walk-in clinics instead of other pharmacies or clinics limiting choice for the consumer. in addition, one of the largest asset managers in the country as you likely know they negotiate prices for drug manufacturers and the top three manage the drug benefits for approximately 95% of american people. the merger might incentivize better deals while potentially increasing cost for other companies. while i understand the doj is investigating the merger i want to get your perspective particularly on this and i'm getting to my point i want your perspective since they have jurisdiction on the antitrust law. to the panel, what are your thoughts on this kind of a vertical merger and the healthcarin thehealthcare indusc to this, but in general particularly in health care i'm very concerned about this

because as you know we are struggling to get health care costs down and provide coverage for all of our citizens. i will address that to the panel. what are your thoughts on the merger and healthcare space? >> healthcare industry has been and will continue to be an assist for all the reasons that you just described. in terms of, we are very focused on this part of the economy looking out for the consumer. in terms of the vertical mergers, they turn out to be very fact specific. even when the companies involved are large they can be harmful to the consumer. the authority is which is which and to act accordingly.

>> i agree healthcare is important to consumers and is an important part of the economy and focused at the ftc. regarding the vertical mergers, i agree they are intensely fact specific that i would mention outside of the healthcare space we recently had a vertical merger where we had a remedy we required a behavioral remedy on the matter so there can be problems and where there are it should be stopped or proposed to allow for the efficiencies to occur. >> thank you for the question. i agree with my colleagues hope their hats for a long time remained a focus for this agency. i'm very proud of the work our staff has done fighting all

sorts of anti-competitive conduct ensuring that the mergers work for consumers. does this teach us they can be very good for consumers but the specifics depend on the facts and is really important that we pay attention to trends in that sector of the economy and look aand lookat how companies are cg their behavior and combining and stay on top of them when we fear that there may be. >> it raises transparency and conflict of interest issues. >> my colleague basically said everything i was going to say and in the plaintiff told her in particular, consumers are frustrated and competition is frustrated by the lack of transparency and that is true with respect to pharmaceutical benefit. >> quickly, commissioner.

we are focused on ways in which we collect information about consumers. aas i've raised in several hearings i have specific concerns with cell phones and other devices listening and collecting information and then being used to deliver targeted ads and this happens all the time. is this something you are concerned with, and i know you are, and will it be an issue for the ftc makes a priority? >> i think it is one of those economic trends i mentioned a moment ago that is very much at the front of what we are looking at. >> the gentleman's time is expired and now recognizes the gentleman from texas for five minutes. >> thank you mr. chairman for calling this hearing and also for the public member. i would like to talk about the robo call problem and as you

know they are on the do not call registry and they are the top tp complaints that you see by the ftc and members of congress and constituents particularly older americans that lose more than all the other younger age groups according to the ftc consumer network data book. americans ages 50 and older are repeating a loss of over 2.5 times the median loss for americans in the 30s for $380. all of the complaints received can you provide a rough estimate on how many come from u.s. companies or individuals. >> thank you for the question. the data that we have access to doesn't allow us to determine that. if i had to guess i would say that is largely coming from overseas.

>> she said she got a call and somebody was speaking chinese to her. >> one of the problems is the do not call rule has been superseded by technological developments. you can have the telecommunications costs that he come down so dramatically that the last thing millions of calls are so cheap. >> do you know how many received this from the ftc? >> if you don't know and could get that to us because a lot of us see this in the town hall meetings and they want to know about social security and the care. to give jurisdiction over the common carriers because some of

them are we think facilitating robo calls and we could challenge that. >> i've understood that and i don't have any opposition to it, but i know that when we get the ftc, the committee has jurisdiction over both of them so you are talking to the right committee. what more can the ftc do under the current law to protect older americans from fraud >> we have community outreach, and on the website we have consumer materials for the elderly and we do sweeps and recently conducted a sweep that dealt with the elderly. there is a task force now that they are spearheaded that we are involved in as one of the

communities it is geared to help. >> ten-day partner on a joint effort particularly with seniors and older americans? >> we would certainly be happy to talk about that. >> i will bring that up at the telecom subcommittee. that is a big issue that i know we all hear about and i will yield back the balance of my time. >> the chair recognizes the gentleman from pennsylvania for five minutes. >> they sent 13 warning letters to the retailers, manufacturers and distributors of the gaping products to start marketing -- stop marketing to children. as we have seen that it is increasingly becoming pervasive in the schools. it is well-established tha nicoe

can be whthat theteam can rewirt brain leading to years of addiction. if anybody else would like to weigh in do they agree on the statement that there is no acceptable number of children using tobacco products, and i guess that is an easy answer ist followed by this question. would it be a powerful deterrent to give the ftc the authority to find a party marketing these products to children for the first violation? >> i would think any financial penalty. >> this comes on the heels of the commissioner has a comment about the difference between having the ability to find versus working on.

>> if there were a rule in place or we had the authority, we would be able not only to just tell someone stop, we would be able to seek penalties and other remedies. >> what would it look like and how can congress tailor that so that they don't have all the freedom that we fear you could have? >> some of the things made on this i think would inform how you might prescribe it because there is changing science and delivery mechanisms. i am not an expert in the tobacco market, but i think he would be able to put the guard rails around it to make it as narrow as the want. i think sure whatever you do give us we vigorously enforce.

that example is from a marketing perspective how do you fashion how you would go about determining if there isn't a violation and how broadly it would be vested upon you to go into the marketing space and say we are going to stop you here &-and-sign you hear versus enter into the distance the creek, and if it's so broad as to say any marketing or is it going to be certain types of marketing or product is? >> i gave you the easy example. >> we do enforce a children's online privacy protection act and its implementing regulation. as a part of that, we hope to communicate the market place but is considered dealing with online transactions with children. we specify that. so, one of the advantages of

putting some meat on the bone implementing the rules is because of the participants a clear sense as to what is inside and outside the bounds rather thaof the bounds ratherthan wait action. >> i have another question. a smart acsmart act was approvee full committee. we are focused on both the benefits and challenges. can you talk about the actions and initiatives that they will take to promote consumer protection with respect to the device is? >> we are active in that space as tension we had a coupl have f workers there already. to look at what we should be doing going forward, we are very active in this area.

>> do you have anything to add in terms of what you are doing in this space? >> it is a particularly interesting area and the enforcement action again the first connected case and other ones that were brought about in the connected cameras and the routers as well as the policy because the internet of things can have enormous benefits for consumers and competition so we want to draw the lines in the right places to make sure they are connected but that the innovation may still continue in the market. >> do you have the type of authority vested in you to do that, or have you found that lacking intelligence? >> the cases that we have been able to bring do show that we have sufficient authority and have the attention of the

industry making sure they don't have balls and they are looking at things but it is challenging because they are often disposable products and they don't get updated a lot so there may be other industry involvement. >> i appreciate the feedback. >> the chair recognizes the gentle and from florida for five minutes. >> thank you, mr. chairman. this is actually for chairman simons. the ftc points out the mission through vigorous enforcement education, advocacy and policy work by anticipating the changes in the marketplace. help side of laoutside of law ee there paths are examples of policy work reports and workshops related to online privacy that can you share with us today? >> i am drawing a blank right now but maybe one of my colleagues can help me.

>> in the past year and a half, we've done six workshops looking at privacy and data security. we had a student privacy network to explore the boundaries and the type of injuries consumers they suffer. so i think that we have done quite a bit in this space. just in the recent time building on the work that we've done in this area. >> commissioner phillips, does anybody else want to add something? >> the chair man also announced a very ambitious set of hearin hearings. i also would encourage you the 2012 privacy report as well as a later report on data brokers,

those two i think provide a consensus roadmap on a lot of the initiatives that could be pursued in a bipartisan basis. do you have anything to add? >> do you believe the consumers fully comprehend exactly how much personal health and financial data has been collected on them? what can they do to better educate consumers on the data collection? it's up to the individual, but they need to get all the facts. if you could answer, i would appreciate it. >> i can't sit here and tell you every individual fully comprehend the way which data are being collected and how they are being used or how they are

being shared. you are right to note consumers have access to that information and also have certain expectations. for instance, my ability to use a map that guides me through traffic, i know that it must have information about that traffic from drivers like me that are supplying it. that balance is very important fostering the innovation as we want to do and also helping to keep the consumer understanding in mind. i think that is going to be one of the biggest challenges that we face overall. i know what is going to be a topic that we will be talking about in the years to come if we look forward to working with you on that. >> if someone else wants to add something. something. would you recommend that a

consumer assume all of their data, that particular data would be collected when they make an informed decision as to whether they want to log in or out sometimes they don't have the opportunity. >> let me start with the second one. i hope in my own life and others they make informed decisions. that isn't always how we do things. and i will admit to you that i have repeatedly in the last few weeks clicked on any number and now i've forgotten the first part of the question i apologize. >> can you assume that this data is collected? >> as we engage with the additional economy we drive tremendous benefits from that in almost every minute of every day

of our lives and in many respects we are sharing information so that is a reasonable assumption. >> it's pretty sad that we have to assume helplessness. so i understand we may want to warn consumers anything else can be up for grabs, but that could lower the consumers confidence in engaging in online spaces where they think everything is going to be taken from them. so, we have to make sure that we are also not scaring people from engaging in productive transactions for their lives because they fear someone is always spying on them and this is how we have to put in place the right framework to protect privacy. >> from the enforcement perspective it is our obligation to make sure when companies represented to consumers that they are collecting data in a certain way or not collecting data in a certain way that they are living up to the representation and that is an

area under the current law that we can enforce. >> said, going back to the 2012 privacy report, it talks about the importance of being context specific. so if i'm sharing my location with a traffic app, i understand if those where i am to route me around, but the consumer may not expect that it will be used in other ways. supporting an example, we brought in a case called golden sure that it's about a flashlight app and it worked fine come up to consumers didn't know that it was also collecting real-time collection data sharing it with marketers. for thaso that is an important s the context of the information being used, or is it being shared in the sensitive data in a way that they don't anticipa anticipate. and i think that is where the enforcement and guidance into policy concerns need to focus. >> i have a couple more questions i've also put the

record. the time is expired and the gentleman from new mexico for five minutes. >> ranking member alone and schakowsky for holding this important oversight when it comes to protecting consumers i'm afraid both congress and the ftc have much more work to do. i want to direct my question to you which i believe you should be able to address without getting into the active investigations. september, 2017, equifax announced a data breach that they knew about but failed to adequately address. information including social security numbers, addresses and in some cases, drivers numbers or partial numbers of almost 150 million consumers are exposed to a list of actors. commissioner, is that correct?

>> that's my understanding. that is consistent with -- >> equifax announced the massive consumer reach. >> this is public information. >> isn't perfect but more than 200,000 consumers were compromised as well as other information and documents of more than 180 consumers? >> i'm not sure if that was public. >> is that correct facebook revealed 87 million users have their data exposed to cambridge analytic? >> is it correct november of last year we learned that they sold information of 57 million drivers? >> that is reported as well. >> i would like to submit the article states in january of 2017 at least 15 retailers were hacked and have information

stolen from them that include macy's, adidas, sears, delta, best buy, under armour, panera bread, sonic, whole foods, game stop and arby's. have you ever shopped at one of these establishments? >> yes. >> i think most americans have. commissioner simmons, is there any reason to expect that there would be fewer data breaches in the future? >> that is our goal that we are looking for. >> one of the things we discussed earlier is the need for a civil penalty authority to act as an increased deterrent. >> so building on that, can you detail what role they are developing to better protect consumers privacy and data? >> we don't have any rulemaking going on. we are engaged to the extent the current authority allows us to

do that and we are as aggressive as we can. >> do they have rulemaking authority? >> we do, but it's very cumbersome. >> but not in this space. >> it's general. >> could they use a support for the authority to have more clear rulemaking authority to protect the consumers privacy? >> through the enforcement we are able to make clear what the companies are supposed to do, so we are our relatively effective in that regard. the rule i don't think we needed to be clear what th with the cos the ticket. i think that the authority of the civil penalty authority without as a substantial additional deterrent. >> of some of the numbers i rattled off, 150 million exposed with equifax and 200,000 consumers were compromised and

with facebook and cambridge analytic and uber drivers, if people are getting their information stolen. are you aware of any recent legislation passed by congress and signed into law that would strengthen privacy protections for consumers? >> this would be a relatively recent one. it's not recent but there's the fair credit reporting act as well. >> the reason i ask that question is they held a hearing in october of 2017. we had mark before the committee in april of 2018 and it is now july. these took place before the holiday and there were assured in this they would act to provide more certainty to the comment that commissioner shared to instill confidence.

nothing happened. >> i believe this congress and this committee needs to act before the august recess and before the end of this year to be able to get more comprehensive privacy legislation adopted in our constituents and the american people deserve better than that. i see that my time has expired. >> thank you very much. the gentleman's time is expired anhas expiredand we recognize tn from georgia for five minutes. >> i appreciate you letting me sit in on this. i think all of you for being here. you have a very important job and certainly it's important to consumers. full disclosure i'm the only pharmacist in congress for over 30 years i practiced retail pharmacy and i'm very familiar with what is going on. i wanted to ask him to talk specifically about the pharmacy

benefit managers where three companies control 78% of the market. first, you and i met after he became the director. we met and talked about anti-competitive nature. what you consider three companies owning 78% of the market to be a problem? >> certainly it is a market that you might find and we might look for the competitive conduct. as i mentioned before in terms of antitrust enforcement, the places to look are the places there are small numbers or firm. >> one of the things that confuses me is when we talk about vertical and horizontal integration often times you tell me vertical integration is fine we just have to worry about horizontal integration. i appreciate you correcting me because that is probably a misnomer i want to dispose of. the integration as we see it

right now, all of you know what's going on. we've got the top three that i mentioned that control 78% of the market, they are now buying aetna so all of a sudden it includes the insurance company and now you've got buying out express scripts. do you know according to volume it is the third-largest pharmacy chain in america right now? ..

>> under the auspices of a lack of transparency that is known out there and they hide behind that and the process is outrageous. according to data from cms and in 2014 with prescription prescription drugs have jumped by 1100%. 1550% increase but in the last ten years to increase the profit margin by nearly 600%. i'm not opposed to anybody making money but what is that mission to control prescription drug prices.

how is that working out? what the president of hhs right now to lower prescription drug prices. they are hiding and this is what we look to do am i wrong? is that not the responsibility should i talked to another agency? >> it is partially our responsibility. we look at any competitive conduct that they are engaged then we should be challenging i it. >> a quick story a pharmacist filled a prescription for his wife who is covered. that night he got a call at his home from cvs saying if you get it filled at our pharmacy you can have a lower

co-pay. isn't there supposed to be a firewall? that is the kind of behavior that is going on and we look to you to help us with this. not because of the pharmacy but because of the consumer the consumer is suffering because as you do away with independent retail season choice of this competition that doesn't benefit the consumer at all. it is very frustrates -- frustrating that they create pharmacy network and who will be let into the network a direct patients to the pharmacy they own the pharmacy who today direct to? who is supposed to be watching this? i thought it was the ftc can i get a commitment you will look into this? >> we are looking into it.

>> we had a meeting and they took what you said to heart. >> we had a meeting and they took what you said to heart. >> i look forward to continuing that conversation with you. >> thank you for that opportunity to participate with this hearing and i agree 1000% with my colleagues' mergers are out of control but the consumer in a bad position but thank you for being here and your work this is incredibly important in terms of protecting consumers and the opportunities to lean in to do that that is expansive right now. commissioner simons? i was wondering why everybody said simmons.

i wanted to talk about biologic drugs and the ftc doesn't currently have the authority to monitor the agreements made with the manufacturers of biologics and the similar's is an important if the ftc has that authority? >> my understanding is look at that authority of the agreement between the brand name drug fractures to monitor this anti- competitive behavior that you can have a significant impact out there? if you take those actions.

>> that statute requires that there is any agreement that delays the marketing of the product to report that to the ftc and those disclosures are significant a way in which the commission finds out from these agreements and it gives them the sense to tell us where to look these are anti- competitive not it is a big brief description and we can look at them to figure out which looks like a problem and we go after it. >> there is a study out there that shows while brand-name drugs are 10% that are dispensed including biologics there is a huge amount of money on the line obviously for patients directly in

payers like medicaid and medicare to be saved by monitoring the agreements. it is critical to get the same authority with the biologics and bio similars because in the same way those delays are decreasing market competition that hurts patients at the counter and again i want to commend you you are doing with respect to the generics on the brand-name drugs but the medicare modernization act that gave ftc this authority to extend to biologics and bio similar drugs i will be introducing a bio similar competition act to grant you that authorities you can monitor these deals and punish the bad actors and deter many of these backroom deals from being made in the first place

we look forward to the comments you will have with respect to the proposed legislation would you want to give you that authority. >> thank you very much to switch gears quickly you had two or three members ask about your authority as it related to facebook with the earlier consent decree and i want to pick up on that a little bit. i was struck in a recent earnings call the various wall street analyst bring up mark sucker berg of the invocations of europe's privacy laws and how that might impact the company and its earnings not one single analyst asked about the ftc announced investigation into facebook privacy concerns and potential violations of the 2011 consent decree so the market doesn't to be taking that consent

decree or the ability to enforce that and punish facebook seriously from the market standpoint. actually the commissioner i would like her perspective to share quickly, just about this issue of the commissions credibility? at on the earnings call suggest takes it seriously so how can the ftc be taken more seriously with those tools? >> without speaking about the specific matter at hand, the ftc very energetically goes after companies that break the law when it comes to smalltime scammers we really do lay down the hammer we seek executives or close down a business. i would like us to apply the law evenly with the smalltime scammer or a big time publicly

traded corporation and it is a duty to apply that equally in the market need to see we are willing to do that or the credibility of our orders and enforcement are not as high as it needs to be. >> i appreciate that and i agree we do need to make sure the big guys perceive this as the small guys the public's confidence in the commission is dependent on that and i yield back. >> your time is expired know the gentleman from california for five minutes. >> i think commissioners for your services in recent years we have witnessed more incidents from many companies like facebook facebook linkedin and and some the ftc does have resources to help consumers who have been victims of data breach so commissioner what could more

the ftc be doing for consumers ? >> thank you for the question i think my colleagues and i have also been looking at the area of data breach and data security we have spoken i think all of us actually how we could benefit from data security legislation or data breach notification legislation to give us more specific authority to make authority with respect to data security and data privacy. >> that is your specific recommendation the ftc be given rulemaking authority? >> i think we outlined different issues and different kinds of authorities that would be useful civil penalty authority is another, i think we do and we will go after

violations of the law where we find them now that you deter these problems on a large-scale we would be better able to do that with more authority. >> commissioner do have anything to add? >> i think you mentioned target and other large retailers i want to underscore particularly with respect to stolen credit card information at the large retailers this impacts wide swath of the banking industry as well community banks and others who have to take those losses. we require financial institutions in healthcare institutions to protect data and then to level the playing field to make sure other big sectors are doing the same thing. >> facial recognition features are incorporated brad smith from microsoft said that what

is it doing with privacy concerns is this a good example it was not considered sensitive information now sensitive information so one of the things is if people are being misled and how they are using them the correct way. >> the potential for misuse with facial recognition that we are not always that

situated to combat identify want to live in a society where everyone knows my movements at all time where my face can be scanned and used other things about me. it is something i am worried about i saw a microsoft announcement about this we will do what we can but i want to be clear we cannot solve everything with respect to facial recognition. >> congress needs to get involved? >> i think it involves a lot of issues beyond our narrow lens and that is something to enforce the law for misuse of data with commercial transactions but i think is on you to look at the big picture.

>> following up on that came from --dash tee2 cambridge analytic at issue it was revealed it wasn't until this spring the commission announced it was investigating. you cannot comment specifically but what about how it monitors the decrees? >> without saying anything about the particular matter with the self-critical examination when this came to light we started a task force to deal with potential changes. >> how do you enforce those? >> how we write them and enforce them you have to get the company committed to doing

what it needs to do and also in terms to monitor properly. >> writing the orders is important and enforcing is important. >> and if i can quickly add we all taken force meant of order seriously. i note when chairman simon his previous didn't he is achieved and obtained a significant penalty we will continue with that to correct violations of our orders. >> we will ask one quick question mutually agreed-upon. i will touch on an issue with advertisements that are good mom -- target the senior population we have seen or

heard the lawsuit advertisements that claim certain medication may have complications during the advertisement also that they may at times be misleading or fraudulent with potential physical harm is there an issue that the ftc is focused on and if you are what are you doing to prevent misleading and false as. >> it is potentially deception because of the area's involvement something we would do in conjunction with the fda. >> you are actively working on them. >> you brought it to our attention so this is of a concern. yes. >> thank you i will recognize the gentlelady from illinois. >> from my opening statement the european commission announced a $5.1 billion

antitrust fine on google. so among the other things for smart phone makers to preinstall google search together with the place store in chrome browser and does not sell on vital android systems by imposing the bundle package on the smart phone makers. it gave itself an advantage over the competitor so i know you announced a series of hearings to examine competitive competition policy but as of right now are there any limitations under u.s. law to prevent the ftc to look into google's conduct with this bundling? do you have enough authority to consider their conduct as anti- competitive?

>> thank you for the question. we do have enough authority to determine if it is anti-competitive or not and let me just say that we will read what the eu put out very closely we are very interested what they are doing i had a conversation yesterday and we are very interested. >> who was that person? >> the commissioner my counterpart of the european competition director. but in terms of what they look at versus what we look at their regulatory regime is a little different than ours so once they find a company's dominant as i understand it imposes upon the company like a fairness obligation irrespective of the effect on the consumer our regime requires there is a harm to

consumer welfare so the consumer has to be injured so the two test is a little different but we will look closely at what the eu is doing. >> thank you i yield back. >> the gentlelady yields back there are no further members here so we thank you for being with us today and appearing before the subcommittee before we do conclude the following documents submitted for the record the aca international in the information center trade association and a letter from the internet dissociation and without objection so ordered. i remind members they have ten business days to submit additional questions for the record and i ask witnesses respond within ten business days upon receipt without objection we are adjourned

without objection we are adjourned spee5

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>> come to order the chair recognizes for purposes of an opening statement. >> today we convene to hold an oversight hearing on the mental