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