Funding the FTC

Globalization and New Information Technologies Necessitate an Appropriations Boost

Globalization and changing information technology necessitate greater funding for the Federal Trade Commission. As the House Appropriations Committee begins discussion of the FTC budget this week, I offer five key reasons why we must provide the Commission with significantly greater resources.

1. FTC staffing is currently below historical levels. During the 1980’s there were large, sustained budget cuts at the FTC. Despite some increases in recent years, the number of full-time employees at the FTC today is only up to 1987 levels, and well below the 1980 level. The FTC is thus smaller today than it has been historically, despite its success at consumer protection and the unprecedented new tasks that face it.

2. Consumer problems are becoming national and global. Many consumer problems are shifting from local (used car dealers or a retailer falsely advertising a “going out of business sale”) to national or global (spam, phishing, spyware, computer security, and fraud over the Internet). The traditional local and state infrastructure of consumer protection does not work as effectively with national and global consumer problems. To match the national and global problems, more action will be needed by the FTC, which takes the lead on national and global harms to consumers.

3. Globalization is necessitating action across borders. The FTC was properly given new enforcement powers internationally in the 2006 SAFEWEB Act. Global enforcement, however, is necessarily more complicated and expensive than domestic litigation. To make the new powers effective, greater funding will be needed to pursue cross-border fraud and computer attacks.

4. Information technology raises new issues for technology and law enforcement. Information technology issues are much more important than before because online commerce and Internet safety lie at the intersection of technology and law enforcement. The FTC must therefore consider a new office of information technology to assist the Commission in making effective decisions about how to protect consumers in Internet activities. This office would parallel the FTC’s in-house capability in economics, and would permit the FTC to act strategically to protect consumers from emerging online threats.

5. The Internet is creating new tasks for the FTC. The rise of the Internet has caused Congress to assign a welter of new jobs to the FTC, further exacerbating the budget constraints. A partial list of new duties from Congress includes: the Gramm-Leach-Bliley Act privacy and security, the FACT Act of 2003 (and the multiple regulations under it), the Children’s Online Privacy Protection Act, data privacy, data security, spyware, CAN-SPAM, data breach, and international obligations related to Safe Harbor and SAFEWEB.

These five reasons provide a compelling intellectual and policy rationale for substantially increasing funding for the FTC as it grows into its role as chief consumer protection agency for the online world.

Peter Swire is the C. William O’Neill Professor of Law at the Moritz College of Law of the Ohio State University and a Senior Fellow at the Center for American Progress. He served as Chief Counselor for Privacy in the U.S. Office of Management and Budget from 1999 to 2001. He has published extensively on topics including privacy, data security, and the law of cyberspace; his current research focuses on the future of consumer protection law.

In July, 2006, he hosted a major conference on The Internet and the Future of Consumer Protection at the Center for American Progress. Speakers included several current or former FTC Commissioners and four current or past Directors of the Bureau of Consumer Protection. He has written a report on The Internet and the Future of Consumer Protection and is currently completing additional writing on the topic.

To contact Peter Swire for further comment:

For TV, Sean Gibbons, Director of Media Strategy 202.682.1611 or sgibbons@americanprogress.org
For radio, Theo LeCompte, Media Strategy Manager 202.741.6268 or tlecompte@americanprogress.org
For print, Trevor Kincaid, Deputy Press Secretary 202.741.6273 or tkincaid@americanprogress.org
For web, Erin Lindsay, Online Marketing Manager 202.741.6397 or elindsay@americanprogress.org