Dear Chairman Kovacic and Director Ohlhausen:
This written statement is submitted in connection with your invitation for me to participate in your conference on “The FTC at 100: Into Our Second Century.”
The “FTC at 100” project is designed to get a big picture of the past, present, and future of the Federal Trade Commission. The overarching theme of my testimony is that the FTC is, and should remain, the preeminent consumer protection agency in the world. In an era of limited resources, the focus of the agency should be where two criteria are met: (1) a topic has important effects on consumers; and (2) the FTC has a significant advantage in effectiveness compared with other possible ways to address the topic. Those other ways, for instance, might include state enforcement, enforcement by agencies in other countries, self-regulation, or reliance on market forces.
A key area for FTC leadership is online commerce. My testimony reports on recent research that shows reasons for expecting underenforcement against online harms unless the FTC continues, and quite possibly expands, its leadership role. To date, the FTC has acquired impressive expertise in technology issues relevant to online commerce. My recommendation is that such information technology expertise should be an important priority for the commission in the coming years.
In order to achieve leadership in IT issues for online commerce, I propose the following recommendations, explained more fully below:
1. Appoint a chief technology officer for the FTC. A chief technology officer at the commission would provide vision and leadership for IT issues affecting consumers’ online activities.
2. Assess policy initiatives by functional area, not geography. For online harms, local and state consumer protection agencies will face major challenges in playing their historical role in enforcement. The FTC should step forward with initiatives defined by function, such as fighting spam, protecting against identity theft, and combating spyware and other malware.
3. Use technology to implement an effective mix of federal and federated enforcement. The Consumer Sentinel program is a promising step toward using new technologies to share information and link enforcement agencies both nationally and internationally.
4. Use new technologies effectively in consumer education. The commission should increase its use of multimedia and other emerging technologies to conduct consumer education. In addition, participating in emerging technologies will provide insights to improve the commission’s policy and enforcement activities for new media as they evolve.
5. Create and implement a research agenda for consumer protection online. An important part of being the leading consumer protection agency for online activities is to create a research agenda on issues of major concern to consumers and consumer protection. Topics for research include how to provide notice about online activities, the growing role of behavioral and experimental economics, and a special role the commission can play in computer security research to protect consumers.
As the FTC prepares for its second century, this agenda for leadership on online commerce should be a priority part of the commission’s protection of consumers.