By Lynn Stanton, TR Daily
The House Energy and Commerce Committee’s Consumer Protection and Commerce Subcommittee held a teleconference to discuss the FTC’s work in addressing COVID-19 related scams.
In a generally amicable virtual hearing, members of the House Energy and Commerce Committee’s consumer protection and commerce subcommittee asked FTC Chairman Joe Simons to explain the agency’s efforts to address scams and fraudulent claims related to the ongoing COVID-19 pandemic, privacy concerns arising from increased use of videoconferencing, and proposals to harness technology to track people’s location in order to trace contacts as potential virus transmission vectors.
They also asked what additional authority the agency might need to address consumer concerns at this time.
Subcommittee ranking member Cathy McMorris Rodgers (R., Wash.) emphasized that as track and trace proposals are rolled out, "Americans must be assured of their privacy" because, "without trust, the success of these technologies will be limited."
Rep. Lisa Blunt Rochester (D., Delaware) asked about the extent of FTC authority to address the track and trace issues.
Mr. Simons emphasized that the agency wants companies under existing consent decrees with respect to their privacy practices remain compliant. He added that the agency is talking to industry about privacy practices.
Rep. McMorris Rodgers also noted that as people stay home to reduce the spread of the virus, "we’re all using Zoom" and there has been "a lot of issues raised around the privacy of those sessions."
Mr. Simons said that users can take steps to protect themselves, such as using a password for their videoconference meeting and locking the meeting after all expected participants show up. "You may get an unexpected meeting link ... Don’t click on that link. It may be a phishing attack," he warned.
Rep. Jerry McEnerny (D., Calif.) noted that he had joined other members last month in sending a letter to the chief executive officer of Zoom to ask about its privacy and security practices, but he acknowledged that there might be limits on what the FTC chairman might be able to say regarding its investigatory or enforcement efforts in that area.
Mr. Simons said that in general, "we’re willing to take complaints from anywhere." He added, "If you’re reading about it in the media you can be assured that we’re either working on it already or we will be as result of that media attention."
Subcommittee Chair Jan Schakowsky (D., Ill.) said that "some price gouging laws that do exist don’t cover the current situation." She noted that she has proposed federal price gouging legislation and asked whether the FTC has enough authority to address price gouging.
Mr. Simons said, "No, we don’t really think we have the authority right now. It’s not a good fit for our current statute," that is, the FTC Act. He said the agency would appreciate and use any additional authority granted by Congress.
Rep. Fred Upton (R., Mich.) asked how enforcement with respect to price gouging is working in states that don’t have price-gouging laws, and whether there is anything Congress can do.
The FTC is sending referrals to states and "looking to make referrals" to the U.S. Department of Justice, Chairman Simons said. "They have 200 open investigations just for price gouging. We maybe have 200 open investigations into everything we do," he noted.
Full committee Chairman Frank Pallone Jr. (D., N.J.) asked what the FTC is doing about scams related to the pandemic.
"When we’ve seen questionable claims we’ve reacted quickly by sending warning letters," Mr. Simons said. Almost all of those warned have responded by removing the claims, but where they haven’t, the FTC has pursued enforcement, he added.
In response to a question from Rep. Tony Cardenas (D., Calif.), the FTC Chairman said that the agency does not have an estimate on total monetary damages to U.S. consumers from scams and fraud during the pandemic period. He said that the FTC needs congressional action to boost its authority in this area.
Rep. Kathy Castor (D., Fla.) asked what the FTC is doing to ensure compliance with its Children’s Online Privacy Protection Act (COPPA) rule, now that many students are engaged in online learning and have increased online activity overall, since they can’t leave home.
Mr. Simons said the agency is continuing to enforce the COPPA rule.
In response to a question about the FTC is using AI (artificial intelligence) as an enforcement tool, FTC Consumer Protection Bureau Chief Andrew Smith, who was also present for the virtual hearing, said that the agency has been using AI to crawl the web to find COVID-19 scams.
Asked by Rep. Michael Burgess (R., Texas) about whether he has seen any trends on consumer protection issues during the pandemic, Mr. Simons said, "I think it’s pretty standard." He outline three types of cases the agency is seeing: bogus cures and preventions for coronavirus; scams that are based on financial hardship and confusion over government programs; and imposter scams. He noted that "based on what we saw on the 2008 [financial] downturn, we expect these types of [government program] scams [to continue] for a long time." He said that the FTC is engaged in consumer education and enforcement for all three types of cases.
Rep. Doris Matsui (D., Calif.) asked whether the FTC has adequate resources to monitor labor markets for collusion.
Mr. Simons said the agency is "very much on the lookout and where appropriate would refer these kinds of cases" to the Justice Department. He added that a lull in pre-merger review filings has freed up human resources at the agency to be redirected to other issues such as the labor market.
In his opening statement, Mr. Simons emphasized that the FTC is "continuing to fulfill our mission to protect American consumers even under these conditions [with] staff working almost entirely from home."
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