Experts agree that insufficient consumer protections prevent the full realization of the Internet’s economic, creative and communicative potential. The Center for American Progress hosted a conference today to discuss the next step in enhancing Internet consumer protection.
The conference previews issues that the Federal Trade Commission (FTC) will discuss this November in its first major hearings since 1996 on consumer protection, the Internet and globalization. Peter Swire, a Senior Fellow at the Center for American Progress, designed today’s conference to develop and shape the agenda of those hearings. The conference brought together a diverse range of stakeholders, including current and former FTC commissioners, business representatives from AOL and Microsoft, academics and consumer advocacy groups.
Eileen Harrington, Deputy Director for the FTC Bureau of Consumer Protection, highlighted the importance of bringing together such diverse and relevant groups. “Consumers are best protected,” she said, “when there is a true cooperative effort.” Several panelists, including Frank Torres from Microsoft and Jules Polonetsky from AOL, observed that better consumer protection is in the interests of legitimate Internet businesses. Torres believes that because people depend more and more on the Internet for mainstream commerce, “consumers are starting to get a little more worried about privacy.”
According to Swire, appropriate policy should draw a distinction between large companies like Microsoft and smaller entities that are responsible for many internet-specific consumer harms. Whether online or offline, large companies can be easily identified and easily punished, so existing regulatory procedures are usually sufficient. Yet common problems like spam, fraudulent emails and spyware often originate with users that are comparatively small and difficult to track.
The openness of the Internet, so valued by businesses and consumers, is the very characteristic that leaves both groups vulnerable. Susan Grant from the National Consumers League pointed out that with the Internet, “costs are so low that there are no barriers to fraud.” Robert Pitofsky, former Chairman of the FTC, echoed this assessment, saying, “the Internet is a remarkable device for putting across deceptive claims.”
These issues were also acknowledged by Federal Trade Commissioner Jon Leibowitz. “This issue is going to remain challenging for us,” he said, “no matter how creative or how aggressive we are.” Because of the difficulties in managing a rapidly changing Internet environment, “the bad guys always manage to stay one step ahead in some areas,” according to Torres.
Participants in today’s conference broadly agreed that despite difficulties, meaningful steps can be taken to improve the current situation. Pitofsky pointed out that “consumer education is a primary way to get at this.” FTC Commissioners J. Thomas Rosch and Jon Leibowitz drew attention to statutory policy and enforcement authority that can be improved, and Polonetsky from AOL described a role for “distributed models of consumer protection” that rely on trusted reviewers to provide verifiable authenticity.
Panelists agreed that international progress on Internet consumer protection is crucial. Harmful use of the Internet often involves the routing of information through several countries with widely varying rules and regulations. “We absolutely have to have globalization of consumer protection,” said Rosch, “or we’re not going to be effective.”
Another crucial component is the fundamental issue of identity on the web and how much information should be used to verify it. Howard Beales, former Director of the FTC Bureau of Consumer Protection, said that “the core problem is anonymity. You have to be able to find a way to know who you’re dealing with.” Complicating the issue even more is the fact that the Internet blurs the distinction between producers and consumers, making the threshold for verifiable authenticity different than in traditional commerce.
Hopefully, the upcoming FTC hearings will find a way to productively increase the trustworthiness of the Internet by assuring consumers that they will be protected. Such assurance is vital for the Internet to reach its full social potential.
For materials from the conference including reports, presentations and video footage, see:
J. Howard Beales is an Associate Professor of Strategic Management and Public Policy at The George Washington University. Dr. Beales teaches in the School of Business, where he has been since 1988. His research interests include a wide variety of consumer protection regulatory issues, including privacy, law and economics, and the regulation of advertising. He has published numerous articles addressing these issues in academic journals.
From 2001 through 2004, Dr. Beales served as the Director of the Bureau of Consumer Protection at the Federal Trade Commission (FTC). In that capacity, he was instrumental in redirecting the FTC’s privacy agenda to focus on the consequences of the use and misuse of consumer information. During his tenure, the Commission proposed, promulgated, and implemented the National Do Not Call Registry. He also worked with Congress and the administration to develop and implement the Fair and Accurate Credit Transactions Act of 2003 (FACTA), and testified before Congress on numerous occasions. His aggressive law enforcement program produced the largest redress orders in FTC history and attacked high-volume frauds promoted through heavy television advertising.
Dr. Beales also worked at the FTC from 1977 to 1987, as a Staff Economist, Assistant to the Director of the Bureau of Consumer Protection, Associate Director for Policy and Evaluation, and Acting Deputy Director. In 1987-88, he was the Chief of the Human Resources and Housing Branch of the Office of Information and Regulatory Affairs in the Office of Management and Budget.
Howard Beales received his Ph.D. in Economics from the University of Chicago in 1978. He graduated magna cum laude from Georgetown University with a Bachelor of Arts degree in Economics in 1972.
Jodie Bernstein most recently completed six years as Director of the Bureau of Consumer Protection at the Federal Trade Commission (FTC). During her tenure, the agency targeted fraudulent operators on developing commercial Web sites; initiated a leading coordinating program in the government’s effort to attack identity theft; reported to Congress on issues of Internet privacy and, at the request of Congress, on self-regulation in the alcohol industry. She served as a spokesperson on many other consumer issues, particularly on those practices that affected children, in traditional deceptive advertising matters and in their online exposures. The government’s first examination of the marketing of “violent content” movies, music, and video games to children was conducted under her direction. By working closely with the state attorneys general, enforcement of federal legislation such as the Telemarketing Sales Act was expanded significantly.
Ms. Bernstein served for several years in the Environment Protection Agency (EPA) first as General Counsel and as Assistant Administrator for enforcement of EPA’s regulatory and permit program. She was also the General Counsel of the Department of Health and Human Services (HHS). Her responsibilities included developing and issuing a set of regulations giving affect to Title IX of the Civil Rights Act, which prohibits gender discrimination in colleges and universities. She also supervised the legal divisions of the Food and Drug Administration (FDA) as well, and the Health Care Finance Administration (HCFA).
In the private sector, she represented major companies in environmental matters and, for five years, was the General Counsel of Chemical Waste Management, the country’s largest hazardous waste company. She subsequently served as a Senior Vice President of Waste Management, Inc=, the parent company, where she developed environmental compliance and ethics programs at the company.
Ms. Bernstein has been recognized as a spokesperson on consumer and environmental, and health and safety issues. As such, she is a recipient of the Miles W. Kirkpatrick Award for Lifetime Federal Trade Commission Achievement. This award is presented annually to an individual whose contributions to the agency span the length of a professional career and are reflected in all facets of the honoree’s work, inside and outside the agency. She also has received the Good Housekeeping Award, the National Consumer League Trumpeter Award, and an Excellence in Government Service Award from the National Association of Women Executives in State Government. Ms. Bernstein is a board member of the Council for Better Business Bureaus.
Susan Grant is a Vice President for Public Policy at the National Consumers League (NCL), a nonprofit consumer advocacy organization headquartered in Washington, D.C. A veteran fraud-fighter, Ms. Grant began her career in consumer protection in the Northwestern Massachusetts District Attorney's Office, where she worked for 17 years as an investigator and Director of the Consumer Protection Division. Before joining the NCL staff in 1996, she served for three years as Executive Director of the National Association of Consumer Agency Administrators, a professional organization for the heads of local, state and federal government consumer protection agencies. At NCL, Ms. Grant works specifically in the areas of privacy, telecommunications, telemarketing, electronic commerce, and financial services. She is also the Director of NCL's National Fraud Information Center and Internet Fraud Watch programs, which provide advice to consumers about telemarketing and online offers and transmit information about suspected telemarketing and Internet fraud to law enforcement agencies in the United State and Canada. In addition, Ms. Grant coordinates the Alliance Against Fraud in Telemarketing and Electronic Commerce, a coalition of government agencies, consumer organizations, trade groups, labor organizations, and multinational companies that works to educate the public about preventing fraud and how to shop safely by telephone and online.
Eileen Harrington, an Attorney, is Deputy Director of the Federal Trade Commission’s (FTC) Bureau of Consumer Protection. The Bureau of Consumer Protection’s mandate is to protect consumers from deceptive, unfair, or fraudulent practices. The Bureau enforces a variety of consumer protection laws enacted by Congress, as well as trade regulation rules issued by the Commission. Its actions include individual company and industry-wide investigations, administrative and federal court litigation, rulemaking proceedings, and consumer and business education. Current Bureau priorities include data security, the Do Not Call rule, spam, spyware, childhood obesity, the deceptive marketing of health products and services, and consumer fraud.
Prior to becoming Deputy Director of the Bureau of Consumer Protection, Ms. Harrington was Associate Director for Marketing Practices at the Federal Trade Commission. In that role, she led the Commission’s consumer fraud law enforcement effort, and oversaw some of its most visible regulatory work, including the National Do Not Call initiative, and implementation of the CAN-SPAM Act. She also led development of the Commission’s Internet Fraud enforcement program, and coordinated domestic and international law enforcement programs to detect and halt fraud against consumers on the Internet.
Ms. Harrington joined the FTC as Assistant Director for Marketing Practices in 1987, and served as Associate Director for Marketing Practices from 1991 to 2005. In 1997, President Clinton conferred on Ms. Harrington the rank of Distinguished Executive in the Senior Executive Service for "sustained extraordinary accomplishments" in organizing and leading interagency enforcement, education and regulatory efforts to halt consumer fraud. In 2004, she was awarded a Service to America Medal for her work on the National Do Not Call Registry.
Jon Leibowitz is a Commissioner of the Federal Trade Commission (FTC). In joining the FTC, Jon Leibowitz resumed a long career of public service. He was the Democratic Chief Counsel and Staff Director for the U.S. Senate Antitrust Subcommittee from 1997 to 2000, where he focused on competition policy and telecommunications matters. He served as Chief Counsel and Staff Director for the Senate Subcommittee on Terrorism and Technology from 1995 to 1996 and the Senate Subcommittee on Juvenile Justice from 1991 to 1994. In addition, he served as Chief Counsel to Sen. Herb Kohl (D-WI) from 1989 to 2000.
Leibowitz worked for the late Sen. Paul Simon (D-IL) from 1986 to 1987. In the private sector, Leibowitz served most recently as Vice President for Congressional Affairs for the Motion Picture Association of America — from 2000 to 2004 — and worked as an Attorney in private practice in Washington from 1984 to 1986.
A Phi Beta Kappa graduate of the University of Wisconsin with a Bachelor of Arts degree in American History in 1980, Leibowitz graduated from the New York University School of Law in 1984. He is a member of the Bar of the District of Columbia, and has co-authored amicus briefs before the U.S. Supreme Court on issues ranging from gun control to the census.
He lives in Bethesda with his wife, Ruth Marcus, and his two daughters, Emma and Julia.
Jules Polonetsky serves as Vice President, Integrity Assurance, at America Online Inc. The Integrity Assurance team is responsible for a wide range of consumer protection and risk management issues for AOL's brands (America Online, AIM, Netscape, CompuServe, Mapquest, MoviePhone, Spinner, WinAmp, ICQ, Advertising.com) including privacy, advertising policy, content and community standards, product standards, parental controls, safety and accessibility for users with disabilities.
Jules has worked as Chief Privacy Officer and Special Counsel at DoubleClick, the advertising and marketing technology company that at the time was the largest Internet company in New York City. He has served as the New York City Consumer Affairs Commissioner for former Mayor Rudolph Giuliani, as an elected member of the New York State Assembly from 1994 to 1997.
Jules practiced law in the New York office of Stroock & Stroock & Lavan from 1989 to 1990. He is a graduate of New York University School of Law and Yeshiva University, and is admitted to the Bars of New York, New Jersey, Washington, D.C., and Virginia. Jules is also a Certified Information Privacy Professional.
Robert Pitofsky is the Sheehy Professor of Trade Regulation Law at Georgetown University Law Center and Of Counsel at Arnold & Porter in Washington, D.C. He has formerly held positions as Director of the Bureau of Consumer Protection at the Federal Trade Commission (FTC); Commissioner of theFTC; Dean of Georgetown University Law Center; Professor of Law at New York University School of Law, and Visiting Professor of Law at Harvard University Law School; and the Chairman of the FTC.
Pitofsky is the co-author of Cases and Materials on Trade Regulation, with Harvey Goldschmid and Diane Wood, and author of numerous books and articles on antitrust including Revitalizing Antitrust in its Second Century (1991, co-editor); “Antitrust and Intellectual Property, Unresolved Issues at the Heart of the New Economy,” 16 Berkeley Tech L.J. 535 (2001); “Proposals for Revised U.S. Merger Enforcement in a Global Economy,” 81 Geo. L. Rev. 195 (1992); “New Definitions of Relevant Market and the Assault on Antitrust,” 90 Colum. L.Rev. 1805 (1990); “The Political Content of Antitrust,” 127 U. Pa. L. Rev. 1051 (1979); “The Sylvania Case: Antitrust Analysis of Non-Price Vertical Restrictions,” 78 Colum. L. Rev. 1 (1978); and “Beyond Nader: Consumer Protection and the Regulation of Advertising,” 90 Harv. L. Rev. 1 (1978).
J. Thomas Rosch was sworn in as a Commissioner of the Federal Trade Commission January 5, 2006, to a term that expires in September 2012.
Rosch joined the FTC from the San Francisco office of Latham & Watkins, where he was the former Managing Partner and most recently a partner, working in the firm’s antitrust and health care and life sciences divisions. Rosch served as chair of the American Bar Association’s Antitrust Section in 1990, and he has chaired the California Bar Association’s Antitrust Section. He served as Director of the FTC’s Bureau of Consumer Protection from 1973 to 1975, and in 1989, was a member of the Special Committee to Study the Role of the FTC.
Nationally regarded for his antitrust and trade regulation law expertise, he has been lead Counsel in more than 100 federal and state court antitrust cases and has more than 40 years experience before the Bar. In 2003, Rosch was honored as Antitrust Lawyer of the Year by the California State Bar Antitrust Section. He obtained his Bachelor of Laws degree from Harvard University in 1965, and was a Knox Fellow at Cambridge in 1962.
Rosch is married with two children and four grandchildren.
Ari Schwartz is the Deputy Director of the Center for Democracy and Technology (CDT). Schwartz's work focuses on increasing individual control over personal and public information. He promotes privacy protections in the digital age and expanding access to government information via the Internet. He regularly testifies before Congress and executive branch agencies on these issues.
Schwartz also leads the Anti-Spyware Coalition (ASC), anti-spyware software companies, academics, and public interest groups dedicated to defeating spyware. In 2006, Schwartz won the RSA award for Excellence in Public Policy for his work building the ASC.
Teresa Schwartz is the J.B. and Maurice C. Shapiro Professor Emeritus of Public Interest Law at The George Washington University, where she teaches courses on consumer protection and products liability. During her 25 years on the faculty, she served as Associate Dean for Academic Affairs (1989-94), and published in the areas of administrative law, torts, and products liability. From 1995-2001, she was the Deputy Director of the FTC’s Bureau of Consumer Protection.
Ms. Schwartz currently serves on the Board of Directors of Consumers Union and the YWCA of the National Capital Area. She earned her Bachelor of Arts degree from Stanford University in 1965, and her Juris Doctorate degree from The George Washington University in 1971. She is a member of the Bar of the District of Columbia.
Peter Swire is a Professor of Law at the Moritz College of Law of the Ohio State University and Director of Moritz’s Washington, D.C., summer program. He joins the Center as a Visiting Senior Fellow while on sabbatical during the 2005-2006 academic year. From 1999 to early 2001, he served as the Clinton Administration's Chief Counselor for Privacy, in the U.S. Office of Management and Budget. In that position, he coordinated administration policy on the use of personal information in the public and private sectors, and served as point of contact with privacy and data protection officials in other countries.
He was White House coordinator for the proposed and final Health Insurance Portability and Accountability Act of 1996 (HIPAA) medical privacy rules, and played a leading role on topics including financial privacy, Internet privacy, encryption, public records and privacy, e-commerce policy, and computer security and privacy. With Lawrence Lessig, he is Editor of the Cyberspace Law Abstracts of the Social Science Research Network. Many of his writings appear at www.peterswire.net.
Frank Torres is the Director of Consumer Affairs for the Microsoft Corporation. He also has responsibility in helping direct federal policy for the company on privacy and Internet safety issues, such as spyware, phishing, identity theft, spam and child safety. Prior to joining Microsoft, he served as Senior Legislative Counsel in the Washington, D.C., consumer advocacy office of Consumers Union, the publisher of Consumer Reports magazine.
Mr. Torres has extensive experience in consumer privacy and online safety issues. He has testified on numerous occasions before the Congress on privacy legislation, as well as issues affecting banking and finance, consumer credit and lending, the independence of financial auditors, financial and Internet privacy and safety, and proposed changes to bankruptcy law.
Mr. Torres was a member of the Federal Trade Commission Advisory Committee on Online Access and Security. Mr. Torres assisted the Department of Commerce and Federal Trade Commission in a public workshop on Alternative Dispute Resolution for Consumer Transactions in the Borderless Online Marketplace. He was a leading Consumer Advocate during the consideration of legislation on digital signatures, and online privacy.
Sarah Wartell is the Executive Vice President for Management of the Center for American Progress. Ms. Wartell served at the White House during the Clinton administration. As Deputy Assistant to the President for Economic Policy and Deputy Director of the National Economic Council, she advised the President and senior White House officials on domestic economic issues. She led interagency efforts to develop major presidential initiatives, including the New Markets Program and the Financial Privacy and Consumer Protection Plan. She also helped shape administration policy, and worked with Congress, on dozens of pieces of legislation in the areas of financial markets and banking, consumer finance and consumer protection, product liability and legal reform, bankruptcy, pensions, e-commerce, housing and community development, community reinvestment, government-sponsored enterprises, government insurance programs, and international labor rights. Prior to serving at the White House, Ms. Wartell was a Deputy Assistant Secretary at the Federal Housing Administration in the Department of Housing and Urban Development (HUD). She has served as a consultant to the Millennial Housing Commission and the William J. Clinton Presidential Foundation. She is a graduate of the Yale Law School and Princeton University. She also practiced law with the Washington, D.C., firm of Arnold & Porter and taught Law and Technology Policy as an Adjunct Professor and Visiting Scholar at Georgetown University Law Center.