GOP lawmakers question Khan, other commissioners about FTC record

01 May 2023 00:00 by Claude Marx


Republican House members asked Federal Trade Commission Chair Lina Khan tough questions about the agency’s performance and seemed opposed to granting a request for more funding.

At two separate hearings, the lawmakers expressed skepticism about the scope of the agency’s enforcement actions. The tone was mostly polite, lacking the rancor that has characterized other GOP hearings this Congress and Democratic oversight during the Trump administration.

Khan and Commissioners Alvaro Bedoya and Rebecca Kelly Slaughter testified before the House Energy and Commerce’s Innovation, Data, and Commerce panel on April 18. Khan testified on April 27 before the House Appropriations Subcommittee on Financial Services and General Government.

Both panels discussed the agency’s $590 million budget request for the fiscal year that starts Oct. 1, which would be an increase from this year’s funding level of $430 million. But the FTC could in fact see a 22 percent budget reduction, if GOP lawmakers get their way, as outlined in the House-passed measure to raise the debt ceiling.

Representative Steve Womack, who chairs the Appropriations subcommittee, said he opposed the budget increase because of the agency’s “cavalier attitude” and “dangerous” approach that big is bad.

“To be clear, to no surprise, I can’t support a massive increase for the FTC’s budget, especially given the commission’s recent track record and given the nation’s current fiscal outlook,” the Arkansas Republican said.

Energy and Commerce Subcommittee Chairman Gus Bilirakis said no observer of the agency can “conclude that the FTC is on the right track.” He criticized the agency for devoting too much of its resources on 6(b) studies and rulemakings. The Florida Republican suggested the agency needs to do more to combat fraud, noting its own report indicated that fraud cost American consumers $8.8 billion last year.

Khan told the appropriators, in response to a question from Representative Mark Pocan, a Wisconsin Democrat, that a budget cut would be “devastating” and lead to a hiring freeze and possible staff reductions.

Limits and ambitions

She also defended the agency’s enforcement record.

Khan told the Energy and Commerce panel the FTC is “undertaking comprehensive enforcement action to root out fraud and deceptive business practices, including those that target historically underserved or vulnerable communities.” She noted by creating a new Office of Technology, the agency will be better equipped to be more aggressive in going after bad actors.

Khan, Slaughter and Bedoya said the agency would stop the surveillance rulemaking process if Congress passed a sweeping data privacy law. Bilirakis said after the hearing that passing such legislation was a priority of the subcommittee, full committee, and House leadership.

Lawmakers on both panels asked Khan about employee surveys that showed low morale and frustration with agency leadership.

She told the Appropriations panel that “there are things early in my tenure we could have done better.” But Khan added the FTC has streamlined decision-making processes and done a better job of informing employees of management priorities and decisions.

Slaughter told the Energy and Commerce panel that the agency would be more effective if lawmakers restored its power to recover ill-gotten gains under Section 13(b) of the FTC Act. In 2021, the Supreme Court’s unanimous ruling in AMG Capital Management hampered the FTC on this front.

In response to a question from Representative Debbie Dingell, a Michigan Democrat, she explained the limits on the agency because of the high court’s decision.

“Civil penalties play a very important deterrent effect, and we can only activate them where we have an existing order, or where we have an existing rule or where Congress has given us specific authority,” Slaughter said.

After the hearing, Bilirakis told FTCWatch in the current Congress lawmakers are likely to consider legislation to give the agency the power to use 13(b) to obtain permanent injunctions against lawbreakers as a means for securing restitution for consumers or forcing disgorgement of ill-gotten gains.

“We will discuss it. We will bring it back up,” he said. Bilirakis declined to specify the details of the legislation, but during the hearing he said any legislation should contain “crystal clear guardrails,” and the FTC’s Bureau of Economics should create a formula for determining what the appropriate remedy should be.

A spokesperson for the Senate Commerce Committee didn’t respond to emails requesting details on whether that panel plans to take up similar legislation. Such a bill passed the House in 2021 but died in the Senate.

Energy and Commerce Committee Chairman Cathy McMorris Rodgers of Washington state and Representative Tim Walberg of Michigan criticized the agency for removing from its mission statement that its goal is to do its work “without unduly burdening legitimate business activity.”

Walberg said without that statement and in the wake of letters sent to 700 marketers warning them to back up their claims or face civil penalties, legitimate businesses could believe the FTC wants to become the “national overlord,” considers them guilty until proven innocent, and puts companies “into the interrogation spotlight.”

Khan said the mission statement change resulted from an internal discussion, and they decided to emphasize the FTC’s work protecting a broad range of consumers.

She said it was a “good government practice” to put market participants on notice if they’re violating the law.

Friendly encounters

Khan’s experiences on Capitol Hill weren’t all negative.

Shortly before she testified at the Energy and Commerce subcommittee, she had a brief conversation with her former boss, Representative David Cicilline, a Rhode Island Democrat. It ended with him giving her a hug.

Khan was a key staff member to the House Judiciary Antitrust Subcommittee when Cicilline was chair and a main author of the panel’s report on digital marketplace competition, which led to pieces of legislation that were approved by the full committee.

At the end of her testimony before the Appropriations panel, Womack thanked her for being “very accessible and responsive.” He also congratulated her on the birth of her son.

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