Oversight of the Federal Trade Commission

Summary

Senate hearing document 116–625, Oversight of the Federal Trade Commission, a hearing before the Committee on Commerce, Science, and Transportation, United States Senate, on August 5, 2020. The witnesses listed are Chairman Joseph J. Simons and Commissioners Noah Joshua Phillips, Rohit Chopra, Rebecca Kelly Slaughter and Christine S. Wilson of the Federal Trade Commission, each with a prepared statement. In the opening statement, Chairman Roger Wicker says the FTC was established in 1914 by the Federal Trade Commission Act. The appendix lists a letter dated August 11, 2020 from Tamra Kennedy, Chair, International Franchise Association Franchisee Forum.

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Issuer: Congressional materials
Document type: Congressional Hearing
Case: Chrg 116Shrg52824

Cite this document

“Oversight of the Federal Trade Commission.” Original at www.govinfo.gov. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/chrg-116shrg52824/, SHA-256 f5cbb39f1f97bf1a6416d75479c50a098e366aee2d8f69daf533e624f0f95486.

Full text

S. HRG. 116–625

OVERSIGHT OF
THE FEDERAL TRADE COMMISSION

HEARING
BEFORE THE

COMMITTEE ON COMMERCE,
SCIENCE, AND TRANSPORTATION
UNITED STATES SENATE
ONE HUNDRED SIXTEENTH CONGRESS
SECOND SESSION

AUGUST 5, 2020

Printed for the use of the Committee on Commerce, Science, and Transportation

(

Available online: http://www.govinfo.gov

U.S. GOVERNMENT PUBLISHING OFFICE
52–824 PDF WASHINGTON : 2023

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SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION

ONE HUNDRED SIXTEENTH CONGRESS

SECOND SESSION

ROGER WICKER, Mississippi, Chairman
JOHN THUNE, South Dakota MARIA CANTWELL, Washington, Ranking
ROY BLUNT, Missouri AMY KLOBUCHAR, Minnesota
TED CRUZ, Texas RICHARD BLUMENTHAL, Connecticut
DEB FISCHER, Nebraska BRIAN SCHATZ, Hawaii
JERRY MORAN, Kansas EDWARD MARKEY, Massachusetts
DAN SULLIVAN, Alaska TOM UDALL, New Mexico
CORY GARDNER, Colorado GARY PETERS, Michigan
MARSHA BLACKBURN, Tennessee TAMMY BALDWIN, Wisconsin
SHELLEY MOORE CAPITO, West Virginia TAMMY DUCKWORTH, Illinois
MIKE LEE, Utah JON TESTER, Montana
RON JOHNSON, Wisconsin KYRSTEN SINEMA, Arizona
TODD YOUNG, Indiana JACKY ROSEN, Nevada
RICK SCOTT, Florida
JOHN KEAST, Staff Director
CRYSTAL TULLY, Deputy Staff Director
STEVEN WALL, General Counsel
KIM LIPSKY, Democratic Staff Director
CHRIS DAY, Democratic Deputy Staff Director
RENAE BLACK, Senior Counsel

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CONTENTS

Page
Hearing held on August 5, 2020 ............................................................................. 1
Statement of Senator Wicker .................................................................................. 1
Statement of Senator Cantwell .............................................................................. 3
Statement of Senator Fischer ................................................................................. 25
Statement of Senator Klobuchar ............................................................................ 27
Statement of Senator Moran .................................................................................. 29
Statement of Senator Blumenthal .......................................................................... 31
Statement of Senator Blackburn ............................................................................ 33
Statement of Senator Schatz .................................................................................. 35
Statement of Senator Capito .................................................................................. 36
Statement of Senator Udall .................................................................................... 38
Statement of Senator Thune ................................................................................... 40
Statement of Senator Baldwin ................................................................................ 41
Statement of Senator Scott ..................................................................................... 43
Statement of Senator Peters ................................................................................... 45
Statement of Senator Lee ....................................................................................... 47
Statement of Senator Tester ................................................................................... 49
Statement of Senator Sinema ................................................................................. 51
Statement of Senator Rosen ................................................................................... 54

WITNESSES
Hon. Joseph J. Simons, Chairman, Federal Trade Commission .......................... 4
Prepared statement .......................................................................................... 5
Hon. Noah Joshua Phillips, Commissioner, Federal Trade Commission ............ 7
Prepared statement .......................................................................................... 9
Hon. Rohit Chopra, Commissioner, Federal Trade Commission ......................... 11
Prepared statement .......................................................................................... 12
Hon. Rebecca Kelly Slaughter, Commissioner, Federal Trade Commission ....... 13
Prepared statement .......................................................................................... 15
Hon. Christine S. Wilson, Commissioner, Federal Trade Commission ............... 17
Prepared statement .......................................................................................... 19

APPENDIX
Letter dated August 11, 2020 to Hon. Roger Wicker and Hon. Maria Cantwell
from Tamra Kennedy, President, Twin City’s T.J.’s, Inc. and Chair, Inter-
national Franchise Association Franchisee Forum ........................................... 59

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OVERSIGHT OF
THE FEDERAL TRADE COMMISSION

WEDNESDAY, AUGUST 5, 2020

U.S. SENATE,
COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION,
Washington, DC.
The Committee met, pursuant to notice, at 10 a.m., in room SR–
254, Russell Senate Office Building, Hon. Roger Wicker, Chairman
of the Committee, presiding.
Present: Senators Wicker [presiding], Thune, Blunt, Fischer,
Moran, Sullivan, Blackburn, Moore, Lee, Young, Scott, Cantwell,
Klobuchar, Blumenthal, Schatz, Udall, Peters, Baldwin, Tester,
Sinema, and Rosen [presiding].
OPENING STATEMENT OF HON. ROGER WICKER,
U.S. SENATOR FROM MISSISSIPPI
The CHAIRMAN. Good morning. The meeting will come to order.
And welcome to today’s hearing on the oversight of the Federal
Trade Commission, FTC. I extend a special welcome to our distin-
guished panel of witnesses and thank them for appearing. They
will all appear remotely this morning, including FTC Chairman Joe
Simons, Commissioner Noah Phillips, Commissioner Rohit Chopra,
Commissioner Christine Wilson, and Commissioner Rebecca
Slaughter.
The FTC is the Nation’s primary consumer protection agency. Es-
tablished in 1914 by the Federal Trade Commission Act, the FTC
is chiefly responsible for protecting consumers from unfair, decep-
tive, or fraudulent business practices in the marketplace. This in-
cludes protecting consumers’ privacy and the security of their data,
preventing harmful uses of technology, and combatting deceptive
advertising and illegal robocalls among other issues. The FTC is
also responsible for educating consumers about fraudulent activity
and predatory business practices. Consumer education is an essen-
tial part of the FTC’s mission and it is intended to inform customer
choices and help prevent Americans from falling victim to
scammers, fraudsters, cybercriminals, and other bad actors.
As was recently discussed at Chairman Moran’s subcommittee
hearing on COVID–19 scams last month, the coronavirus has cre-
ated a new avenue for scammers to take advantage of consumers.
The surge in Internet usage, in particular, because of stay-at-home
orders has been a prime target for exploitation. I appreciate the
Commission’s ongoing efforts to protect consumers from identity
theft, e-mail phishing schemes, and other online dangers during
this public health crisis. Today’s hearing is an opportunity to dis-
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cuss what more can be done to protect Americans from deceptive
and unfair commercial practices. This work begins by ensuring the
FTC has the proper authority and resources at its disposal to carry
out its broad statutory mandate.
The FTC’s authority under the U.S. SAFE WEB Act, for exam-
ple, empowers the agency to work with foreign law enforcement
agencies to combat international crimes. This law has provided
critical cross-border enforcement tools to the FTC to take swift ac-
tion against criminal activity, such as Internet pyramid schemes
and data theft. The reauthorization of this Act was favorably re-
ported out of this committee in March and soon we will have a fi-
nalized committee report.
Once this is completed, I urge Congress to reauthorize the U.S.
SAFE WEB Act quickly before it expires next month. There have
also been challenges to the scope of the FTC’s authority under Sec-
tion 13(b) of the FTC Act, which the Supreme Court plans to ad-
dress in its next term. The Commission has long relied upon this
section of the law to require scammers to give money back to those
who have been defrauded. I look forward to examining how Con-
gress can clarify the statute to empower the FTC not only to enjoin
improper behavior, but also to compensate victims for their losses.
The FTC’s ability to protect the privacy and security of data is also
essential. I hope we can all agree that the COVID–19 pandemic
further underscores the need for strong, uniform national data pri-
vacy legislation. Such a law would provide all citizens with more
transparency, choice, and control over their data. It would also pro-
vide certainty and clear, workable rules for businesses across all 50
states.
I hope the Commissioners will discuss the scope of their existing
authority to protect the privacy and security of personal data and
outline additional tools that are needed to safeguard information
from misuse and unauthorized access. I am sure Commissioners
will also want to discuss the potential impact of the recently invali-
dated EU, U.S. Privacy Shield Framework. The Privacy Shield pro-
vided a method for companies to transfer personal data back and
forth between the United States and the European Union in com-
pliance with EU data protection requirements and in support of
transatlantic commerce.
The FTC has played a critical role in enforcing compliance with
the Privacy Shield since it was established in 2016. Today’s hear-
ing is an opportunity to review how the FTC is working with the
Department of Commerce to develop interim guidance for thou-
sands of U.S. companies, including many small- and medium-sized
businesses impacted by this recent decision. Finally, some policy-
makers are proposing that the FTC take a more active role in over-
seeing unfair or deceptive commercial practices with respect to
issues ranging from Section 230 of the Communications Decency
Act to compensating collegiate athletes for the use of their name,
image, or likeness.
I look forward to hearing more about the FTC’s authority and ex-
pertise to address these matters, as well as whether it has suffi-
cient tools to protect consumers engaging in these commercial ac-
tivities. Clearly, with the FTC there is much to discuss. I thank the
Commissioners again for their testimonies. And I now turn to my

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friend and the Ranking Member for her opening remarks. Senator
Cantwell.
STATEMENT OF HON. MARIA CANTWELL,
U.S. SENATOR FROM WASHINGTON
Senator CANTWELL. Thank you, Mr. Chairman, and thank you
for holding this important hearing today as we invite the Commis-
sioners to come before Congress to talk about the impacts of this
pandemic on our constituents, the amazing impact that it is having
on our economy and on our health care system. My view of the FTC
is simple, you should be doing everything in your power to help
Americans during this time of crisis.
The mission is of extreme importance and our Nation continues
to reel from one of the worst health emergencies and one of the big-
gest economic crises we have ever faced. And so, we have seen that
the COVID–19 pandemic has attracted bad actors, and scam art-
ists, including those who take advantage of people’s fear and dire
circumstances. I am sure every member of this committee has
heard from their constituents on these issues about buying ineffec-
tive face masks or being subject to COVID–19 phishing attacks or
seeing advertisements for miracle coronavirus cures. Thousands of
people have reported sky high prices for goods and services from
their family.
And just like the spread of COVID–19, these scams are hap-
pening in every part of the state. There was a recent story in the
Seattle Times about sanitizer for $150 for $7 sanitizer. So, price
gouging and the issues related to price gouging continue to pile up.
So just like the spread of COVID–19, these virus scams are hap-
pening everywhere. They are impacting rural communities, urban
communities, and hurting Americans young and old. Certainly that
is the case in my state of Washington where according to the FTC,
people have been scammed out of over $2.5 million since the pan-
demic began, and more than 3,500 reports of fraud.
And while many of the Attorneys General have gone after these
profiteers, I believe the FTC is holding back. You could be doing
more. We must move beyond warnings and threats in response to
these unconscionable scams. We must see the FTC exercising real
enforcement with real consequences to protect consumers and fami-
lies when they are most vulnerable. That is why I believe the FTC
needs clear price gouging legislation to go after these scammers.
We must not allow unscrupulous merchants to exchange exorbi-
tant prices sometimes for life saving supplies like personal protec-
tive equipment or medical equipment simply because their families
are desperate. And trust me, on the frontlines of the epidemic in
Kirkland, Washington was Evergreen Hospital. And I can tell you
it is not a good thing to get calls from emergency room doctors who
were saying they are getting price gouged on essential equipment
when they were at the front lines of this pandemic.
So we need to make it clear that it is illegal to peddle defective
masks or fake COVID cures and we need to empower our states’
Attorneys General to go after these bad actors to buttress the argu-
ment and the FTC enforcement. So this is especially true, given our
crisis today. So with many sales happening online, Internet sale
platforms should also be working with the Federal and local law

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enforcement to identify price gouging. So, Mr. Chairman, I plan to
introduce in the coming days Federal legislation to do two things,
to move both on price gouging definition to make sure the law is
clear that consumers can be protected in this area, and to enforce
civil penalties for deceptive COVID scams.
It is time for us to act on these important pieces of legislation.
It is time for us to protect our consumers from these very impor-
tant issues during the time of crisis. People need help and support.
They don’t need deception and schemes, and we need an FTC that
will be more aggressive. Thank you, Mr. Chairman.
The CHAIRMAN. Thank you, Senator Cantwell. And we look for-
ward to seeing that legislation once you get it drafted and intro-
duced. We now turn to testimony—summaries of testimony from
our witnesses. Written testimony has been submitted and will be
admitted into the record in full at this point. And we ask each
member of the Commission to summarize testimony in 5 minutes
if possible. We begin with the Chair, the Honorable Joseph J. Si-
mons, again, who joins us remotely along with all of the other
members. Chairman Simons, you are recognized, sir.
STATEMENT OF HON. JOSEPH J. SIMONS, CHAIRMAN,
FEDERAL TRADE COMMISSION
Chairman SIMONS. Thank you so much, Chairman Wicker, Rank-
ing Member Cantwell, and members of the Committee. It is an
honor to be with you today even if it is virtual and especially along-
side my fellow Commissioners. Despite the challenges presented by
the pandemic, the FTC has remained active, open, and aggressive.
We are using every tool in our arsenal on COVID-related initiatives
while simultaneously handling our everyday efforts to protect con-
sumers’ privacy and data security, to stop fraud, and to ensure that
advertising claims are truthful and not misleading, and to combat
illegal robocalls. And what is truly extraordinary, the Commission
staff has accomplished this while quickly transitioning from nearly
100 percent office space work to nearly 100 percent telework.
I want to take a moment to focus on one of my priorities, privacy
and data security. Our enforcement in these areas, including cases
against Facebook, Google and YouTube, and Equifax has been
highly successful within the limits of our authority. But as I have
said before, Section 5 is a 100 year old statute that is an imperfect
tool for this purpose. We believe we need more authority, which is
why I urge you to continue your hard work to enact privacy and
data security legislation that would be enforced by the FTC. As pol-
icymakers, it is appropriate for you to make the difficult value
based decisions underlying new privacy protections. From an en-
forcement perspective, I ask that the legislation give us three
things, one, the ability to seek civil penalties, two, jurisdiction over
nonprofits and common carriers as well as everybody else, and
three, targeted APA rulemaking authority to ensure that the law
keeps pace with changes in technology and the market.
This is similar to the approach Congress took under COPPA. We
will continue to vigorously enforce existing privacy statutes and we
will use our extensive experience and expertise to enforce aggres-
sively any new privacy or data security laws that you pass. We also
need your help to clarify our authority under 13(b) of the FTC Act

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which is our principal means of getting money back for consumers.
Using this authority as it has been interpreted for decades, the
FTC has returned over $10 billion to consumers in just the last 4
years. Recent court decisions, however, threaten this essential au-
thority and this issue is now before the Supreme Court.
So, I strongly urge you to clarify the law on 13(b). I want to
thank the Committee for advancing legislation to reauthorize
SAFE WEB which is an indispensable tool in combating cross-bor-
der fraud. However, without further action, SAFE WEB will sunset
on September 30. So I would really like your continued support in
pushing this effort across the goal line and keeping SAFE WEB in
our enforcement arsenal. Though I am asking for more help, please
know how grateful I am for what you have already done on these
issues. And I am very thankful for the financial support that Con-
gress has given the FTC this year.
The $20 million increase averted FTE reductions and instead al-
lows us to hire more people for some of our most critical work. I
also want to mention the recent EU ruling on Privacy Shield and
that we are studying its effects. We stand ready to support the Ad-
ministration’s efforts in this area. But at the same time, we will
continue to hold companies accountable for their privacy commit-
ments including privacy promises made under the Privacy Shield.
I will end by briefly highlighting our antitrust enforcement. We are
on pace for the highest number of merger enforcement actions in
20 years since Fiscal Year 2000. We have brought four monopoliza-
tion cases in the last two years.
Last year we formed the Technology Enforcement Division, what
we call TED, which is currently pursuing a number of very signifi-
cant investigations involving big tech platforms. And we have used
our study authority to issue special orders to Alphabet, Amazon,
Apple, Facebook, and Microsoft, requiring them to provide informa-
tion about prior acquisitions not reported under the HSR Act.
We are committed to using every resource as effectively as we
can to protect consumers and to promote competition, and we cer-
tainly look forward to continuing to work with you. And I would
be happy to answer your questions. Thank you so much.
[The prepared statement of Chairman Simons follows:]

PREPARED STATEMENT OF HON. JOSEPH J. SIMONS 1, CHAIRMAN,
FEDERAL TRADE COMMISSION
Chairman Wicker, Ranking Member Cantwell, and Members of the Committee, I
am Joe Simons, and I am the Chairman of the Federal Trade Commission (‘‘FTC’’
or ‘‘Commission’’). It is an honor to be with you today, especially alongside my fellow
Commissioners.
Despite the challenges presented by the pandemic, the FTC has remained open,
active, and aggressive. We have used every tool in our arsenal on COVID-related
initiatives,2 while simultaneously handling our everyday efforts to protect con-
sumers’ privacy and data security, stop fraud, ensure that advertising claims are
truthful and not misleading, and combat illegal robocalls. And—what is truly ex-
traordinary—Commission staff has accomplished this while quickly transitioning
from nearly 100 percent office-based work to nearly 100 percent telework.

1 These remarks reflect my own views. They do not necessarily reflect the views of the Com-
mission or any other individual Commissioner.
2 See generally www.ftc.gov/coronavirus.

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I want to take a moment to focus on one of my top priorities: privacy and data
security. Our enforcement in these areas—including cases against Facebook,3 Google
and YouTube,4 and Equifax 5—has been highly successful within the limits of our
authority.6 But, as I have said before, Section 5 7 is a 100-year-old statute that is
an imperfect tool for this purpose. I believe we need more authority, which is why
I urge you to continue your hard work to enact privacy and data security legislation
that would be enforced by the FTC. As policymakers, it is appropriate for you to
make the difficult value-based decisions underlying new privacy protections. From
an enforcement perspective, I ask that the legislation give us: (1) the ability to seek
civil penalties, (2) jurisdiction over non-profits and common carriers, and (3) tar-
geted Administrative Procedure Act (‘‘APA’’) rulemaking authority to ensure the law
keeps pace with changes in technology and the market. This is similar to the ap-
proach Congress took under the Children’s Online Privacy Protection Act
(‘‘COPPA’’).8 We will continue to vigorously enforce existing privacy statutes,9 and
we will use our extensive expertise and experience to enforce aggressively any new
privacy or data security laws that you pass.
We also need your help to clarify our authority under Section 13(b) of the FTC
Act,10 which is our principal means of getting money back for consumers. Using this
authority as it has been interpreted for decades, the FTC has returned over $10 bil-
lion to consumers in just the last four years.11 Recent court decisions, however,
threaten this essential authority, and this issue is now before the Supreme Court.12
I strongly urge you to clarify the law.
I want to thank the Committee for advancing legislation to reauthorize the U.S.
SAFE WEB Act 13—an indispensable tool in combatting cross-border fraud. How-
ever, without further Congressional action, SAFE WEB will sunset on September
30. I would like your continued support in pushing this effort across the goal line,
and keeping SAFE WEB in our enforcement arsenal.
Though I am asking for more help, please know how grateful I am for what you
already have done on these issues. I am also very thankful for the financial support
Congress has given the FTC this year. The $20 million increase averted full-time
employee reductions, and instead allows us to hire more people for some of our most
critical work.
I also want to mention the recent European Union (‘‘EU’’) ruling on the EU–U.S.
Privacy Shield and note that we are studying its effects.14 We stand ready to sup-
port the administration’s efforts in this area, but at the same time we will continue
to hold companies accountable for their privacy commitments, including promises
made under the Privacy Shield.

3 FTC Press Release, FTC Imposes $5 Billion Penalty and Sweeping New Privacy Restrictions
on Facebook (July 24, 2019), https://www.ftc.gov/news-events/press-releases/2019/07/ftc-im-
poses-5-billion-penalty-sweeping-new-privacy-restrictions. In April 2020, a court approved the
record-breaking $5 billion penalty the FTC negotiated with Facebook. FTC Press Release, FTC
Gives Final Approval to Modify FTC’s 2012 Privacy Order with Facebook with Provisions from
2019 Settlement (Apr. 28, 2020), https://www.ftc.gov/news-events/press-releases/2020/04/ftc-
gives-final-approval-modify-ftcs-2012-privacy-order-facebook.
4 FTC Press Release, Google and YouTube Will Pay Record $170 Million for Alleged Violations
of Children’s Privacy Law (Sept. 4, 2019), https://www.ftc.gov/news-events/press-releases/
2019/09/google-youtube-will-pay-record-170-million-alleged-violations.
5 FTC Press Release, Equifax to Pay $575 Million as Part of Settlement with FTC, CFPB, and
States Related to 2017 Data Breach (July 22, 2019), https://www.ftc.gov/news-events/press-re-
leases/2019/07/equifax-pay-575-million-part-settlement-ftc-cfpb-states-related.
6 See, e.g., FTC Press Release, FTC Releases 2019 Privacy and Data Security Update (Feb. 25,
2020), https://www.ftc.gov/news-events/press-releases/2020/02/ftc-releases-2019-privacy-data-
security-update.
7 15 U.S.C. § 45.
8 15 U.S.C. §§ 6501–6506.
9 The Commission also enforces sector-specific statutes containing privacy and data security
provisions, such as the Gramm-Leach-Bliley Act (‘‘GLB Act’’), Pub. L. No. 106–102, 113 Stat.
1338 (1999) (codified as amended in scattered sections of 12 and 15 U.S.C.), and the Children’s
Online Privacy Protection Act (‘‘COPPA’’), 15 U.S.C. §§ 6501–6506.
10 15 U.S.C. § 53(b).
11 See https://public.tableau.com/profile/federal.trade.commission#!/vizhome/Refunds_15797
958402020/RefundsbyCase.
12 See FTC v. Credit Bureau Center, 937 F3d. 764 (7th Cir. 2020), petition for cert. granted,
2020 WL 3865251 (July 9, 2020) (No. 19–825); see also FTC Press Release, Statement of FTC
General Counsel Alden F. Abbott regarding Supreme Court Orders Granting Review of Two FTC
Matters (July 9, 2020), https://www.ftc.gov/news-events/press-releases/2020/07/statement-ftc-
general-counsel-abbott-regarding-supreme-court.
13 15 U.S.C. §§ 41 et seq.
14 See FTC Business Center, Update on the Privacy Shield Framework (July 21, 2020),
https://www.ftc.gov/tips-advice/business-center/privacy-and-security/privacy-shield.

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I will end by briefly highlighting our antitrust enforcement. We are on pace for
the highest number of merger enforcement actions in 20 years (since FY 2000). We
have brought four monopolization cases in the last two years.15 Last year we formed
the Technology Enforcement Division (‘‘TED’’),16 which is currently pursuing a num-
ber of very significant investigations involving big tech platforms, and we have used
our study authority to issue special orders to Alphabet, Amazon, Apple, Facebook,
and Microsoft requiring them to provide information about prior acquisitions not re-
ported under the HSR Act.17
We are committed to using every resource to effectively protect consumers and
promote competition. We look forward to continuing to work with you, and I would
be happy to answer your questions.

The CHAIRMAN. Thank you very much, Mr. Chairman. And now
we turn to Commissioner Noah Phillips. You are recognized.
STATEMENT OF HON. NOAH JOSHUA PHILLIPS,
COMMISSIONER, FEDERAL TRADE COMMISSION
Commissioner PHILLIPS. Thank you, Mr. Chairman. Chairman
Wicker, Ranking Member Cantwell, members of the Committee,
thank you for the opportunity to appear before you. I am honored
to be with you today and to testify alongside my fellow Commis-
sioners about the important work that we do at the FTC. I also
want to thank you for your flexibility on format. It is always good
to be back at the Senate, even if that means virtually. There is a
lot to cover and I look forward to our discussion. But I want to take
a moment to highlight an important issue, which I know is a focus
for many of you, data security. Hardly a week goes by without
Americans learning about another major cyber-attack, breach, or
vulnerability.
Accounts on a major social media platform were exploited 3
weeks ago. Last week, researchers reveal the vulnerability on de-
vices running Windows and Linux operating system, which could
impact billions of devices. Consumers get this. A 2018 Commerce
Department study showed identity theft as the number one privacy
and security issue concerning Americans. Considering the harms
Americans have in mind when they think about privacy, data secu-
rity legislation is one of the best things that we can all do for pri-
vacy. The endemic use of data in our economy is not going away
and it supports not only the new ways——
The CHAIRMAN. OK. Commissioner, your video froze there for a
moment so we want to make sure at that point we can iron out
these technical difficulties and you can resume at that very point
15 FTC Press Release, FTC and NY Attorney General Charge Vyera Pharmaceuticals, Martin
Shkreli, and Other Defendants with Anticompetitive Scheme to Protect a List-Price Increase of
More Than 4,000 Percent for Life-Saving Drug Daraprim (Jan. 27, 2020), https://www.ftc.gov/
news-events/press-releases/2020/01/ftc-ny-attorney-general-charge-vyera-pharmaceuticals-mar-
tin; FTC Press Release, FTC Challenges Illumina’s Proposed Acquisition of PacBio (Dec. 17,
2019), https://www.ftc.gov/news-events/press-releases/2019/12/ftc-challenges-illuminas-pro-
posed-acquisition-pacbio; FTC Press Release, Reckitt Benckiser Group plc to Pay $50 Million to
Consumers, Settling FTC Charges that the Company Illegally Maintained a Monopoly over the
Opioid Addiction Treatment Suboxone (July 11, 2019), https://www.ftc.gov/news-events/press-
releases/2019/07/reckitt-benckiser-group-plc-pay-50-million-consumers-settling-ftc; FTC Press
Release, FTC Charges Surescripts with Illegal Monopolization of E-Prescription Markets (Apr.
24, 2019), https://www.ftc.gov/news-events/press-releases/2019/04/ftc-charges-surescripts-ille-
gal-monopolization-e-prescription.
16 FTC Competition Matters Blog, What’s in a Name? Ask the Technology Enforcement Divi-
sion (Oct. 16, 2019), https://www.ftc.gov/news-events/blogs/competition-matters/2019/10/
whats-name-ask-technology-enforcement-division.
17 FTC Press Release, FTC to Examine Past Acquisitions by Large Technology Companies
(Feb. 11, 2020), https://www.ftc.gov/news-events/press-releases/2020/02/ftc-examine-past-ac-
quisitions-large-technology-companies.

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8

in the testimony. So we will just pause for a moment and rely on
the advice of our technical experts.
Commissioner PHILLIPS. Can you hear me?
The CHAIRMAN. We can now hear you.
Commissioner PHILLIPS. Thank you. My apologies. I am having
some connectivity issues.
The CHAIRMAN. OK, so if you could just back up a sentence or
two there and we will hear you. We don’t see you.
Commissioner PHILLIPS. My apologies.
The CHAIRMAN. OK. Good.
Commissioner PHILLIPS. While the vast majority of attacks are
thwarted, in 2019 there were still over 1,400 reported data
breaches in the U.S. exposing over 160 million records. The loss,
corruption, and ransoming of these data can pose serious harm to
businesses, including identity and IP theft, exposure of sensitive
data, years of expensive litigation, and so on. And of course, inad-
equate data security is a profound National Security issue.
At the FTC, we investigate and bring actions against companies
that fail to maintain reasonable data security or mislead con-
sumers about it. Recent examples include our enforcement against
DealerBuilt, an auto dealer management software provider Retina-
X, a stalkerware app which also raised other profound privacy
problems, and of course Equifax, the credit bureau we allege ne-
glected to fix an Apache Struts vulnerability, resulting in a theft
of records of over 145 million Americans.
We are also imposing new requirements for defendants and data
security orders like certifications of compliance by senior officials
and a better third-party assessor process. Statutes like COPPA and
Gramm-Leach-Bliley give us data security authority in areas of
heightened sensitivity, like kids and financial services, but the re-
gime today has gaps including in areas of particular vulnerability.
Consider the Internet of Things. The proliferation of connected de-
vices is good for consumers and the economy but it creates risks.
The manufacturer of a $15 device may not have adequate incen-
tives to secure it. We grappled with this issue in a 2017 suit
against the Wi-Fi router company D-Link, and again just a few
months ago in our settlement with Tapplock, a maker of smart
locks.
The Department of Homeland Security’s Cybersecurity and Infra-
structure Security Agency, CISA, which builds up cybersecurity de-
fenses in partnership with public and private entities is also active
on IoT. We regularly consult with CISA and refer to them as a re-
source in our consumer and business education. We also view use
of CISA’s tools, such as those that help businesses identify risks,
favorably in our data security investigations. I think we ought to
go further, and consider carrots and sticks to encourage participa-
tion with CISA through mechanisms like integrating their work
into our orders. Today, though, I want to stress the importance of
the Commission’s call for data security legislation.
We need to be flexible to deal with rapid technological develop-
ment, and mindful of the fact that defendants in data security
cases are often themselves victims of felonies. But a specific Con-
gressional mandate and additional incentives to protect data are
critical.

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9

As a report issued just days ago about many large public compa-
nies still failing to patch known vulnerabilities showed, those who
could most efficiently address data security problems often fail to
do so. Data privacy is something on which many of you have been
working hard and it is an important part of our mission and pri-
ority. Data security legislation is one of the best things I think we
can do——
The CHAIRMAN. OK, just so you will know, on that sentence
about data privacy, that is when your video froze up, Mr. Commis-
sioner. So perhaps we can iron that out. Well, let’s see. Can you
hear us now, sir?
Commissioner CHOPRA. Commissioner Phillips, I believe the
Chairman is addressing you.
Commissioner PHILLIPS. Forgive me, Mr. Chairman, I did not
hear the question. Can you repeat it, please?
The CHAIRMAN. Commissioner Phillips, you were in the middle of
a sentence about data privacy and your screen froze up again. So
if you could restart there at about the minute 2040 mark——
Commissioner PHILLIPS.—Mr. Chairman. I believe that data se-
curity legislation is one of the most important things we can do for
privacy.
The CHAIRMAN. Very good. If you will just complete your state-
ment then, we will appreciate it.
Commissioner PHILLIPS. Yes, thank you. And of course, I will
submit a copy for the record.
[The prepared statement of Commissioner Phillips follows:]

PREPARED STATEMENT OF HON. NOAH JOSHUA PHILLIPS 1, COMMISSIONER,
FEDERAL TRADE COMMISSION
Chairman Wicker, Ranking Member Cantwell, Members of the Committee, thank
you for the opportunity to appear before you. I’m honored to testify with my fellow
Commissioners about the important work we do at the FTC. I also want to thank
you for your flexibility on format. It is always good to be back at the Senate, even
if that means virtually.
There is a lot to cover, and I look forward to our discussion; but I want to take
a moment to highlight an important issue, which I know is a focus for many of you:
data security.
Hardly a week goes by without Americans learning about another major
cyberattack, breach, or vulnerability. Accounts on a major social media platform
were exploited three weeks ago.2 Last week, researchers revealed a vulnerability on
devices running Windows and Linux operating systems, which could impact billions
of devices.3 Consumers get this: a 2018 Commerce Department study showed iden-
tity theft as the number one privacy and security issue concerning Americans.4 Con-
sidering the harms Americans have in mind when they think about privacy, data
security legislation is one of best things we can do for privacy.

1 This written statement, my oral testimony, and my responses to questions reflect my views
and do not necessarily reflect the views of the Commission or any individual Commissioner.
2 Euirim Choi and Robert McMillan, Widespread Twitter Hack Reaches Bill Gates, Kanye West,
Elon Musk, Joe Biden, and Barack Obama, THE WALL STREET JOURNAL (July 15, 2020), https://
www.wsj.com/articles/twitter-accounts-of-bill-gates-jeff-bezos-elon-musk-appear-to-have-been-
hacked-11594849077.
3 Tim Starks, Billions of Windows, Linux devices at risk from vulnerability that could give
hackers ‘‘near total control,’’ researchers say, POLITICO (July 29, 2020), https://sub-
scriber.politicopro.com/article/2020/07/billions-of-windows-linux-devices-at-risk-from-vulner-
ability-that-could-give-hackers-near-total-control-researchers-say-3982874.
4 Rafi Goldberg, Most Americans Continue to Have Privacy and Security Concerns, NTIA Sur-
vey Finds, NATIONAL TELECOMMUNICATIONS AND INFORMATION ADMINISTRATION (Aug. 20, 2018),
https://www.ntia.doc.gov/blog/2018/most-americans-continue-have-privacy-and-security-con-
cerns-ntia-survey-finds.

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The endemic use of data in our economy is not going away, and it supports not
only the new ways that we all are working, worshiping, learning, and shopping, but
countless jobs. Americans are putting an increasing amount of data online, a lot of
which is sensitive. My view is that attempts broadly to roll back these trends are
unlikely to succeed, and also would hurt consumers and the economy; so we need
to focus on how to enjoy the fruits of progress while protecting Americans’ data.
The data we put online are targets for criminals and hostile states. While the vast
majority of attacks are thwarted, in 2019 there were still over 1,400 reported data
breaches in the U.S., exposing over 160 million records.5 The loss, corruption, and
ransoming of these data can pose serious harm to people and businesses, including
identity and intellectual property (IP) theft, exposure of sensitive data, years of ex-
pensive litigation, and so on. And, of course, inadequate data security is a profound
national security issue.
At the FTC, we investigate and bring actions against companies that fail to main-
tain reasonable data security, or mislead consumers about it. Recent examples in-
clude our enforcements against DealerBuilt, an auto dealer software provider6; Ret-
ina-X, a stalkerware app (which also raised other privacy problems)7; and Equifax,
the credit bureau we allege neglected to fix an Apache Strutts vulnerability, result-
ing in the theft of records of over 145 million Americans.8 We’re also imposing new
requirements for defendants in data security orders, like certifications of compliance
by senior officials and a better third-party assessor process.9
Statutes like COPPA 10 and Gramm-Leach-Bliley 11 give us data security author-
ity in areas of heightened sensitivity, like kids’ data and financial services; but the
regime today has gaps, including in areas of particular vulnerability. Consider the
Internet of Things. The proliferation of connected devices is good for consumers and
the economy, but it creates risks—the manufacturer of a $15 device may not have
an adequate incentive to secure it. We grappled with this issue in our 2017 suit
against the Wi-Fi router company D-Link 12, and again just a few months ago in
our settlement with Tapplock, a maker of smart locks.13
The Department of Homeland Security’s Cybersecurity and Infrastructure Secu-
rity Agency (CISA), which builds up cybersecurity defenses in partnership with pub-
lic and private entities, is also active on IOT. We regularly consult with CISA, and
refer to them as a resource in our consumer and business education.14 We also view
use of CISA’s tools, such as those that help businesses identify risks, favorably in
our data security investigations. I think we ought to go further, and consider carrots
and sticks to encourage participation with CISA through mechanisms like inte-
grating their work into our orders.
Today, though, I want to stress the importance of the Commission’s call for data
security legislation. We need to be flexible to deal with rapid technological develop-
ment, and mindful of the fact that defendants in data security cases are often them-
selves victims of felonies. But a specific congressional mandate and additional incen-
tives to protect data are critical. As a report issued just days ago about many large
public companies still failing to patch known vulnerabilities showed,15 those who
could most efficiently address data security problems often fail to do so.

5 2019 End-of-Year Data Breach Report, IDENTITY THEFT RESOURCE CENTER (Jan. 28, 2020),
https://www.idtheftcenter.org/identity-theft-resource-centers-annual-end-of-year-data-breach-re-
port-reveals-17-percent-increase-in-breaches-over-2018/.
6 Lightyear Dealer Technologies, LLC, d/b/a DealerBuilt, No. C–4687 (Sept. 6, 2019), https://
www.ftc.gov/enforcement/cases-proceedings/172–3051/lightyear-dealer-technologies-llc-matter-0
(‘‘DealerBuilt’’).
7 Retina X Studios, LLC, and James N. Johns Jr., No. C–4711 (Mar. 27, 2020), https://
www.ftc.gov/enforcement/cases-proceedings/172–3118/retina-x-studios-llc-matter.
8 FTC v. Equifax Inc., No. 1:19-cv-03297–TWT (N.D. Ga. July 23, 2019), https://www.ftc.gov/
enforcement/cases-proceedings/172–3203/equifax-inc.
9 See, e.g., Statement of the Federal Trade Commission, Regarding Unizix, Inc. d/b/a/i-
Dressup.com, and Zhijun Liu and Xichen Zhang individually & James V. Grago Jr., d/b/a
ClixSense.com (Apr. 24, 2019), https://www.ftc.gov/system/files/documents/cases/2019-03-
19_idressupclixsense_statement_final.pdf; DealerBuilt.
10 15 U.S.C. §§ 6501–6506.
11 Pub. L. No. 106–102, 113 Stat. 1338 (1999) (codified as amended in scattered sections of
12 and 15 U.S.C.).
12 FTC v. D-Link Systems, Inc., No. 3:17–CV–39–JD (N. D. Cal. July 2, 2019), https://
www.ftc.gov/enforcement/cases-proceedings/132-3157/d-link.
13 Tapplock, Inc., No. C–4718 (May 20, 2020), https://www.ftc.gov/enforcement/cases-pro-
ceedings/192-3011/tapplock-inc-matter.
14 Lisa Weintraub Schifferle, Free vulnerability scanning for your business, FEDERAL TRADE
COMMISSION (Dec. 4, 2019), https://www.ftc.gov/news-events/blogs/business-blog/2019/12/free-
vulnerability-scanning-your-business.
15 National/Industry/Cloud Exposure Report (NICER) 2020, RAPID7 (July 2020), https://
www.rapid7.com/research/report/nicer-2020/.

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11
Data privacy is something on which many of you have been working hard; and
it’s an important part of our mission and a priority. Data security legislation is one
of the best things we can do to advance the goal of privacy.
Thank you, and I look forward to addressing your questions.

The CHAIRMAN. Alright. Do you have do you have more of your
written statement that you would like to—of your verbal statement
that you would like to complete? I tell you, why don’t we just go
ahead then to the next witness because we have these difficulties.
We thank you, Commissioner Phillips. And now we turn to Com-
missioner Chopra.
STATEMENT OF HON. ROHIT CHOPRA, COMMISSIONER,
FEDERAL TRADE COMMISSION
Commissioner CHOPRA. Thank you, Chairman Wicker, Ranking
Member Cantwell, and members of the Committee for this oppor-
tunity to appear before you today with my colleagues. The Federal
Trade Commission’s responsibilities are wide and far reaching with
so many that directly relate to the crisis we face, healthcare and
pharmaceuticals, disinformation and fake reviews, abuse and mis-
use of data, and so much more. But there is one area in particular
that the FTC can and should prioritize that I want to emphasize
today, which is protecting America’s small businesses.
According to a survey by the Society of Human Resource Man-
agement, 52 percent of small businesses believe that they are likely
to fail due to the effects of COVID–19. And if this comes true, mil-
lions of businesses and many more millions who work for them
could lose their livelihoods, devastating local economies in the proc-
ess. The FTC has an important role to play to protect small busi-
nesses from abusive practices. First, we must crack down on small
business loan sharking. Many small businesses are struggling to
access credit, including through the Paycheck Protection Program,
and this is giving an opening to bad actors that target restaurants,
stores, and other local businesses with predatory loans.
Many of these Wall Street affiliated lenders provide funds to
businesses in exchange for future credit card receipts, but the
terms often set those small businesses up to fail. In these con-
tracts, small businesses must agree to confessions of judgment
where borrowers automatically plead guilty if the lender sues them
for payment. These clauses are illegal in consumer contracts, but
are being unfairly weaponized against America’s small business
owners.
The FTC is the only Federal agency with authority to crack down
on these non-bank small business lending practices. And we have
taken some important actions and we must look to systemically
eliminate these illegal practices before it is too late. Second, the
FTC must safeguard operators of franchised businesses from abu-
sive practices by franchisors. Franchised businesses encompass a
broad swath of businesses across the economy, from auto repair to
real estate to fitness centers to fast food and so much more. Opera-
tors of franchised businesses employ millions of Americans and
they are also more likely to be minority-owned compared to other
small businesses.
However, there are signs that franchisors may be using the pan-
demic to impose new policies that are exacting more economic pain

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on franchise operators. For example, Subway and 7-Eleven
franchisees are fighting back against attempts by franchisors to
gain more control and implement practices that ship more cost and
risk to local business owners. The FTC administers the franchise
rule and enforces laws that prohibit unfair business practices by
franchisors. This responsibility is critical given the threats faced by
so many operators of franchised businesses today.
And finally, the FTC will need to police markets for anti-competi-
tive mergers that scoop up scores of small businesses. One common
acquisition strategy is called a roll up. This is when a buyer, often
a private equity fund, acquires a substantial number of small play-
ers in the market and combines them into a single large one. For
example, many independent medical practitioners are seriously
struggling right now and many believe they will need to sell their
practices to an investment fund or a hospital system due to the
dire economic straits they face.
The slow extinction of independent physician practices in par-
ticular may have a serious impact on cost and quality of care due
to diminished competition. Many of these deals are not subject to
merger reporting because they are relatively small but when buy-
ers acquire dozens or even hundreds of these small businesses, this
can kill competition and make it more difficult for new players to
enter the market. The FTC will need to use its authority to halt
any anti-competitive acquisitions freeze or monopolization schemes
that stamp out competition.
In closing, we face unusual and extraordinary times for our econ-
omy and society, and the FTC needs to continue to sharpen its
focus on the impact of the pandemic and the crisis on small busi-
nesses. Thank you again for the opportunity and I look forward to
your questions.
[The prepared statement of Commissioner Chopra follows:]

PREPARED STATEMENT OF HON. ROHIT CHOPRA, COMMISSIONER,
FEDERAL TRADE COMMISSION
Chairman Wicker, Ranking Member Cantwell, and Members of the Committee,
thank you for the opportunity to appear before you.
The Federal Trade Commission’s responsibilities are wide and far-reaching, with
many directly relating to the crisis we face. Health care and pharmaceuticals,
disinformation and fake reviews, abuse and misuse of data, and so much more. But,
there is one area in particular that the FTC can and should prioritize: protecting
America’s small businesses.
According to a survey by the Society of Human Resource Management, 52 percent
of small businesses believe that they are likely to fail due to the effects of COVID–
19. If this comes true, millions of businesses—and many more millions who work
for them—could lose their livelihoods, devastating local economies in the process.
The FTC has an important role to play to protect small businesses from abuse.
First, we must crack down on small business loan sharking. Many small busi-
nesses are struggling to access credit, including through the Paycheck Protection
Program. This is giving an opening to bad actors that target restaurants, stores, and
other local businesses with predatory loans. These lenders provide funds to busi-
nesses in exchange for future credit card receipts, but the terms often set the small
businesses up to fail. In these contracts, small businesses must agree to ‘‘confessions
of judgment,’’ where borrowers automatically plead guilty if the lender sues them
for payment. These clauses are illegal in consumer contracts, but are being unfairly
weaponized against small businesses.
The FTC is the only Federal agency with authority to crack down on these
nonbank small business lending practices. We have taken some important actions,
and we must systemically eliminate these illegal practices before it’s too late.

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13
Second, the FTC must safeguard operators of franchised businesses from abusive
practices by franchisors. Franchised businesses encompass a broad swath of busi-
nesses across the economy, from auto repair to real estate to fitness centers to fast
food and more. Operators of franchised businesses employ Americans across the
country, and they’re also more likely to be minority-owned, compared to other small
businesses.
However, there are signs that franchisors may be using the pandemic to impose
new policies that are exacting more economic pain on franchise operators. For exam-
ple, Subway and 7-Eleven franchisees are fighting back against attempts by
franchisors to gain more control and implement practices that shift more cost and
risk to local business owners.
The FTC administers the Franchise Rule and enforces laws that prohibit unfair
business practices by franchisors. This responsibility is critical, given the threats
faced by operators of franchised businesses today.
Finally, the FTC will need to police markets for anticompetitive mergers that
scoop up scores of small businesses. One common acquisition strategy is called a
‘‘roll up.’’ This is when a buyer, often a private equity fund, acquires a substantial
number of small players in a market and combines them into a single large firm.
For example, many independent medical practitioners are seriously struggling,
and many believe they will need to sell their practices to an investment fund or a
hospital system, due to the dire economic straits they face. The slow extinction of
independent physician practices, in particular, may have a serious impact on cost
and quality of care.
Many of these deals are not subject to merger reporting, because they’re relatively
small. However, when buyers are acquiring sometimes dozens or even hundreds of
these small businesses, this kills competition and can make it more difficult for new
players to enter the market. The FTC will need to use its authority to halt anti-
competitive acquisition sprees and monopolization schemes that stamp out competi-
tion and small players.
In closing, we face unusual and extraordinary times for our economy, and the FTC
will need to sharpen its focus on the impact of the pandemic on small businesses.
Thank you for again for the opportunity and I look forward to your questions.

The CHAIRMAN. Thank you very much, Commissioner Chopra.
And now we turn to Commissioner Rebecca Kelly Slaughter.
STATEMENT OF HON. REBECCA KELLY SLAUGHTER,
COMMISSIONER, FEDERAL TRADE COMMISSION
Commissioner SLAUGHTER. Thank you, Mr. Chairman. And
thank you, Ranking Member Cantwell and members of the Com-
mittee for inviting me here today.
The CHAIRMAN. Who is your guest?
Commissioner SLAUGHTER. Oh, this is Hattie. She is my new
baby. She is 2 months old and like many Americans I am home
with my kids so she is with me today.
The CHAIRMAN. She seems very relaxed about your position on
the issues.
[Laughter.]
Commissioner SLAUGHTER. Well, hopefully. She is popping her
head up right now so I am hoping she——
The CHAIRMAN. And her name is now in the Committee record
forever and ever.
Commissioner SLAUGHTER. She will be very proud. Let me start
over so I can address the Committee. Thank you so much for hav-
ing us here today. Like most Americans and yourselves, fallout
from the coronavirus is front of mind for me these days so I am
going to confine my oral remarks to that topic. I worry most about
the burden borne by three groups in particular: kids, workers, and
patients.
As a working parent with four young children at home who has
been struggling to manage distance learning for her kids even with

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14

the best circumstances and resources, I am especially sensitive to
education issues. The pandemic has exacerbated the existing deep
disparity in educational equity in this country. From day one, we
saw well-resourced schools transition relatively seamlessly to on-
line models with continued learning. Families with access to
broadband and devices and the flexibility for a parent to be avail-
able at home muddled through. But for millions of America’s kids
from vulnerable communities, school simply stopped. As many as
one in six kids lack the equipment necessary to participate in dis-
tance learning and nearly one-quarter of kids lack reliable Internet
access, conditions that particularly affect rural, urban, and low-in-
come families.
The solutions parents and school districts are considering pose
increased risks of privacy harm to kids, particularly kids in com-
munities already battling the equity gap. We need to acknowledge
that privacy and data issues are also equity and civil rights issues.
Hybrid and in person learning models will require unprecedented
collection of personal data to facilitate contact tracing, quarantines,
and family choices. Online learning demands rapid adoption of a
suite of technologies that may be unvetted and used without super-
vision. Where wealthy children’s families can pay for privacy pro-
tective services, poor kids may pay by sacrificing their privacy. The
FTC should help mitigate these potential harm. I was glad the
agency worked quickly to put out guidance on how to protect stu-
dent privacy.
The FTC must aggressively use COPPA and general Section 5
authority to hold companies accountable if the solutions offered to
fill the education gap violate current law. But I want to be realistic
about the best-case scenario many families face for the current
Academic year, shared devices hastily filled with emerging apps
and platforms being used by kids for hours with little oversight by
adults. Current law provides very little protection in these cir-
cumstances, particularly for applications targeting teenagers and
general audience. A need for comprehensive data privacy legisla-
tion with meaningful limitations on the collection and use of data,
and prohibitions on discriminatory practices, dark patterns, and
data abuses has never been greater.
The FTC stands ready to enforce a Federal privacy law, and my
hope is that the pandemic’s catastrophic consequences for children
will serve as the final push for such legislation. Until then, I be-
lieve the mounting data harms emerging from the crisis demand
that the Commission consider instituting a rulemaking under Mag-
nuson-Moss to identify and address serious data abuses. In addi-
tion 0 to supporting kids, we must support workers. I recognize
how fortunate I am to navigate the challenges of child care and on-
line learning from the privileged position of employment. At least
eleven percent of my fellow Americans do not share that good for-
tune. I echo Commissioner Chopra’s calls for the FTC to focus on
supporting small businesses which are a significant source of em-
ployment and may be particularly squeezed right now.
I believe the FTC must also use its competition authority to bet-
ter protect our workforce by sharpening our attention on anti-com-
petitive conduct and mergers that harm workers. Employers ought
to compete to attract workers by providing the highest wages, most

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15

attractive benefits, and especially today, the most robust health
and safety measures. We should focus on these issues in our en-
forcement action and also consider whether and how our rule-
making authority might be applied to address them. The most fun-
damental challenge we all face of course is how to help overcome
the deadly Public health crisis, which we know has an outsized im-
pact on seniors and communities of color.
The FTC must continue to protect access to care by challenging
problematic hospital and healthcare provider mergers that increase
prices and limit patient choice. We must vigorously apply scrutiny
to pharmaceutical mergers as well as address anti-competitive con-
duct involving healthcare service. We also must seek creative ways
to challenge price gouging. Creativity is no substitute, however, for
clear authority and I would ask Congress to give the FTC a direct
mandate to stamp out abusive pricing practices. In conclusion, I
want to acknowledge the dedicated public servants at the agency
who have been working through this crisis in incredibly chal-
lenging circumstances.
Working from home, especially for parents of young kids, is hard-
er than I could have imagined. Chairman Simons deserves great
credit for providing unmatched flexibility for staff across the agen-
cy to ensure they and their families remain safe. And the staff de-
serve equal credit for their tenacity, resilience, and unwavering
commitment to the important work of the Commission. I look for-
ward to answering your questions.
[The prepared statement of Commissioner Slaughter follows:]

PREPARED STATEMENT OF HON. REBECCA KELLY SLAUGHTER, COMMISSIONER,
FEDERAL TRADE COMMISSION
Chairman Wicker, Ranking Member Cantwell, and Members of the Committee,
thank you for inviting us here today.
Like most Americans and yourselves, for me fallout from the coronavirus is front
of mind these days, so I am going to confine my oral remarks to that topic. I worry
most about the burden borne by three groups in particular: kids, workers, and pa-
tients.
Supporting Solutions for Educational Equity
As a parent who has been struggling to manage distance learning for her kids,
even with the best circumstances and resources, I am especially sensitive to edu-
cation issues. The pandemic has exacerbated the existing deep disparity in edu-
cational equity in this country. From day one, we saw well-resourced schools transi-
tion relatively seamlessly to online models with continued learning. Families with
access to broadband and devices, and the flexibility for a parent to be available at
home, muddled through. But for millions of America’s kids from vulnerable commu-
nities, school simply stopped.1 As many as one in six kids lack the equipment nec-
essary to participate in distance learning,2 and nearly one quarter of kids lack reli-

1 Emma Dorn, Bryan Hancock, Jimmy Sarakatsannis, and Ellen Viruleg, ‘‘COVID–19 and Stu-

dent learning in the United States: The Hurt Could Last a Lifetime,’’ McKinsey (June 1, 2020)
(collecting data showing that ‘‘only 60 percent of low-income students are regularly logging into
online instruction; 90 percent of high-income students do. Engagement rates are also lagging
behind in schools serving predominantly black and Hispanic students; just 60 to 70 percent are
logging in regularly.’’), https://www.mckinsey.com/industries/public-and-social-sector/our-in-
sights/covid-19-and-student-learning-in-the-unit ed-states-the-hurt-could-last-a-lifetime.
2 Catherine E. Shoichet, ‘‘These Kids are Getting Left Behind When Schools Go Online,’’ CNN

(July 31, 2020, 8:36 AM), https://www.cnn.com/2020/07/31/us/distance-learning-inequality/
index.html.

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16
able Internet access—conditions that particularly affect rural, urban, and low-in-
come families.3
The solutions parents and school districts are considering pose increased risks of
privacy harms to kids, particularly kids in communities already battling the equity
gap; we need to acknowledge that privacy and data issues are also equity and civil
rights issues.4 Hybrid and in-person learning models will require unprecedented col-
lection of personal data to facilitate contact tracing, quarantines, and family choices.
Online learning demands rapid adoption of a suite of technologies that may often
be unvetted and used without supervision. Where wealthy children’s families can
pay for privacy-protective services, poor kids may pay by sacrificing their privacy.
The FTC should help mitigate these potential harms.
I was glad that the agency worked quickly to put out guidance on how to protect
student privacy.5 The FTC must aggressively use COPPA and general Section 5 au-
thority to hold companies accountable if the solutions offered to fill the education
gap violate current law. But I want to be realistic about the best-case scenario many
families face for the current academic year: shared devices, hastily filled with
emerging apps and platforms, being used by kids for hours with little oversight by
adults. Current law provides very little protection in these circumstances, particu-
larly for applications targeting teenagers or general audiences.
The need for comprehensive data-privacy legislation with meaningful limitations
on the collection and use of data and prohibitions on discriminatory practices, dark
patterns, and data abuses has never been greater. The FTC stands ready to enforce
a Federal privacy law, and my hope is that the pandemic’s catastrophic con-
sequences for children will serve as the final push for such legislation. Until then,
I believe the mounting data harms emerging from the crisis demand that the Com-
mission consider initiating a rulemaking under Magnuson-Moss to identify and ad-
dress serious data abuses.
Supporting Workers
In addition to supporting kids, we must support workers. As a parent with four
young kids at home, I am fortunate to navigate the challenges of child-care and on-
line learning from the privileged position of employment. At least 11 percent of my
fellow Americans do not share that good fortune.6 I echo Commissioner Chopra’s
calls for the FTC to focus on supporting small businesses, which are a significant
source of employment and may be particularly squeezed right now.7
I believe the FTC must also use its competition authority to better protect our
workforce by sharpening our attention on anticompetitive conduct and mergers that
harm workers. Employers ought to compete to attract workers by providing the
highest wages, most attractive benefits, and, especially today, the most robust
health and safety measures. We should focus on these issues in our enforcement ac-
tions and also consider whether and how our rulemaking authority might be applied
to address them.
Supporting Access to Affordable Care
The most fundamental challenge we all face, of course, is how to help overcome
the deadly public-health crisis, which we know has an outsized impact on seniors
and communities of color. The FTC must continue to protect access to care by chal-

3 Emily A. Vogels, Andrew Perrin, Lee Rainie, and Monica Anderson, ‘‘53 percent of Americans
Say the Internet Has Been Essential During the COVID–19 Outbreak,’’ Pew Research Center
(Apr. 30, 2020); see also John Kahan, ‘‘It’s time for a new approach for mapping broadband data
to better serve Americans,’’ Microsoft (Apr. 8, 2019), (estimating that about half of Americans,
163 million people, do not have high-speed Internet at home), https://blogs.microsoft.com/on-
the-issues/2019/04/08/its-time-for-a-new-approach-for-mapping-broadband-data-to-better-serve-
americans/.
4 Hannah Quay-de la Vallee and Cody Venzke, ‘‘Privacy and Equity in the New School Year:
Steps for In-Person, Remote, or Hybrid Learning,’’ Center for Democracy & Technology
(July 2020), https://cdt.org/wp-content/uploads/2020/07/2020-07-16-Privacy-Equity-in-the-
New-School-Year-Guidance-FINAL-2.pdf.
5 See, e.g., Lisa Weintraub Schifferle, COPPA Guidance for Ed Tech Companies and Schools
during the Coronavirus, Fed. Trade Comm’n: Business Information Blog (Apr. 9, 2020), https://
www.ftc.gov/news-events/blogs/business-blog/2020/04/coppa-guidance-ed-tech-companies-
schools-during-co ronavirus; Lisa Weintraub Schifferle, Remote learning and children’s privacy,
Fed. Trade Comm’n: Business Information Blog (Apr. 9, 2020), https://www.consumer.ftc.gov/
blog/2020/04/remote-learning-and-childrens-privacy.
6 Employment Situation Summary, U.S. Bureau of Labor Statistics (July 2, 2020), https://
www.bls.gov/news.release/empsit.nr0.htm.
7 More than 40 percent of American workers are employed by small businesses and small busi-
nesses can be significant drivers of new jobs. See 2018 Small Business Profile, U.S. Small
Bus. Admin., https://www.sba.gov/sites/default/files/advocacy/2018-Small-Business-Profiles-
US.pdf.

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lenging problematic hospital and healthcare-provider mergers that increase prices
and limit patient choice.8 We must vigorously apply scrutiny to pharmaceutical
mergers as well as address anticompetitive conduct involving healthcare services.
We also must seek creative ways to challenge price-gouging.9 Creativity is no sub-
stitute, however, for clear authority, and I would ask Congress to give the FTC a
direct mandate to stamp out abusive pricing practices.
In closing, I want to acknowledge the dedicated public servants at the agency who
have been working through this crisis in incredibly challenging circumstances.
Working from home, especially for parents of young kids, is harder than I could
have imagined. Chairman Simons deserves great credit for providing unmatched
flexibility for staff across the agency to ensure they and their families remain safe,
and the staff deserve equal credit for their tenacity, resilience, and unwavering com-
mitment to the important work of the Commission.
I look forward to answering your questions.

The CHAIRMAN. Thank you, Commissioner. It is indeed ironic
that just as you were speaking about online distance learning, we
lost your video although we could hear you and on the screen was
a text saying that we had lost the picture because of low band-
width. So——
Commissioner SLAUGHTER. I apologize.
The CHAIRMAN. Well, no. I think that points out the problems
that we have. If a member of the Federal Trade Commission has
problems with distance testimony, you can imagine what those stu-
dents that are trying to do distance learning are experiencing. Also
I want to tell you that Hattie has a beautiful head of hair there
and she is well behaved. So thank you for that testimony. And now
we turn to Commissioner Wilson. You are recognized.
STATEMENT OF HON. CHRISTINE S. WILSON, COMMISSIONER,
FEDERAL TRADE COMMISSION
Commissioner WILSON. Thank you. Chairman Wicker, Ranking
Member Cantwell, and members of the Committee, I am pleased to
appear before you today. I would like to highlight two areas where
I respectfully believe Congress could help the FTC fulfill its mis-
sion. First, by enacting privacy legislation, and second, by main-
taining the focus on consumer welfare and economics driven en-
forcement in antitrust. As my colleagues have shared, Federal pri-
vacy legislation is necessary for several reasons. First, businesses
need predictability in the face of a growing patchwork of State and
international frameworks.
Second, consumers need transparency regarding how their data
is collected and shared but they currently face significant informa-
tion asymmetries. Third, gaps have emerged in sectoral privacy
laws. For example, HIPAA covers the privacy of health data col-
lected by a doctor, but not by apps. The need is more urgent now
giving COVID-19. For millions of Americans, work and school have
moved online. Consumer data is being deployed to monitor compli-
ance with quarantines and for contact tracing. While many view
technology as key to safely easing quarantines and resuming nor-
8 See Remarks of Commissioner Rebecca Kelly Slaughter As Prepared for Delivery, Antitrust
and Health Care Providers Policies to Promote Competition and Protect Patients, Center for
American Progress (May 14, 2019), https://www.ftc.gov/system/files/documents/pub-
lic_statements/1520570/slaughter_-_hospital_speech_5-14-19.pdf.
9 See Concurring Statement of Commissioner Rebecca Kelly Slaughter Regarding the Matter of
Federal Trade Commission and State of New York v. Vyera Pharmaceuticals, LLC; Phoenixus
AG; Martin Shkreli; and Kevin Mulleady, Fed. Trade Comm’n (Jan. 27, 2020), https://
www.ftc.gov/system/files/documents/public_statements/1564517/
2020_01_27_final_rks_daraprim_concurring_statement.pdf.

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mal life, these tools depend on sensitive health and location data.
Though we now face many new and complex privacy issues, inter-
estingly effective contact tracing requires widespread adoption, but
digital trust is lacking.
A Washington Post poll found that half of smartphone users who
could use contact tracing apps won’t because they don’t trust tech
companies. Privacy legislation would help build digital trust which
is necessary to foster continued innovation and investment. Privacy
legislation is also necessary to protect our Fourth Amendment
rights. Courts employ a reasonable expectation of privacy tests in
Fourth Amendment cases. Consumers surrender extensive data
through their use of phones and other connected devices. If citizens
know and accept that nothing is private, then they have no reason-
able expectation of privacy and Fourth Amendment protections
evaporate. While privacy is important, so is competition.
Privacy legislation must be crafted so as to maintain competition
and foster innovation. Research indicates the passage of GDPR in
the EU led to decreased venture capital investment and entrench-
ment of dominant players in digital advertising. And compliance is
costly for small businesses and new entrants. U.S. legislation
should seek to avoid these pitfalls. With our dual mission in com-
petition and consumer protection, the FTC is well situated to pro-
vide technical assistance to Congress on this issue. Four other con-
siderations for privacy legislation. First, the FTC should be the en-
forcing agency given its decades of relevant experience.
Second, like COPPA, legislation should include civil monetary
penalties. Third, the FTC should have jurisdiction over nonprofits
and common carriers which collect sensitive information. Finally,
targeted APA rulemaking would permit the FTC to address techno-
logical development. I will turn now to the FTC’s competition mis-
sion. The consumer welfare standard in antitrust which measures
the impact of competitive conduct on consumers is under attack.
Critics assert the standard suffers because it focuses only on price
but the consumer welfare standard also addresses other important
factors like quality and innovation. If people wanted only the
cheapest product, we would still use flip phones instead of
smartphones. But price does matter.
Antitrust scholar Herbert Hovenkamp has written, attacking low
prices as a central antitrust goal is going to hurt consumers, but
it is going to hurt vulnerable consumers the most. Some conduct
like price-fixing drives up prices without increasing quality or inno-
vation, but most of the business practices and mergers that we re-
view require closer scrutiny. Enforcers determine whether an ac-
tion or a deal is legal based not on its label but on its competitive
effects. Economic analysis helps us determine whether any harm to
competition is outweighed by benefits to consumers.
Without economic analysis, antitrust at best would be a series of
per se rules resulting in business decisions that prioritize form over
function, creating market distortions. At worst, antitrust
untethered from economic analysis would be subjective and vulner-
able to political manipulation. Companies would seek the favor of
legislators and regulators instead of courting consumers. In closing,
the FTC welcomes the opportunity to assist Congress on these
issues. I am happy to answer any questions you may have.

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[The prepared statement of Commissioner Wilson follows:]
PREPARED STATEMENT OF HON. CHRISTINE S. WILSON, COMMISSIONER,
FEDERAL TRADE COMMISSION
Introduction
Chairman Wicker, Ranking Member Cantwell, and Members of the Committee, I
am pleased to appear before you today (albeit remotely).
I would like to highlight two areas where I respectfully believe that Congress
could assist the Federal Trade Commission in fulfilling its mission to protect con-
sumers and competition: first, by enacting Federal privacy legislation; and second,
by maintaining the focus on consumer welfare and economics-driven enforcement in
antitrust.
Privacy Legislation
With respect to privacy legislation, I agree with Chairman Simons’ opening state-
ment on this topic. Federal privacy legislation is necessary for several reasons.
First, businesses need predictability in the face of a growing patchwork of state and
international privacy regimes. Federal privacy legislation would provide needed cer-
tainty to businesses in the form of guardrails governing information collection, use,
and dissemination. Second, consumers need clarity regarding how their data is col-
lected, used, and shared so they can make informed decisions about which goods
and services to use. Currently, there are significant information asymmetries with
regard to consumers’ knowledge of the privacy characteristics of various products,
leaving consumers ill-equipped to evaluate the quality and value of those products.
Third, there are growing gaps in the sectoral coverage of our existing privacy laws.
For example, the Health Insurance Portability and Accountability Act (HIPAA) 1
covers the privacy of sensitive health data collected by a doctor or pharmacist, but
not by apps or wearables.
The need for Federal privacy legislation is even more urgent now, given the
spread of Covid-19, which is driving data usage in ways not previously contemplated
by consumers. For tens of millions of Americans, work, school, entertainment, and
social interactions have moved online. Businesses, researchers, and government en-
tities have deployed consumer data to monitor compliance with quarantines and to
implement contact tracing. And many view technology, including both contact trac-
ing and widespread health monitoring, as key to safely easing quarantines and re-
suming normal life. But these tools are fueled by sensitive data regarding people’s
movements and their health. These initiatives have raised new and complex issues
regarding consumer privacy, and have laid bare both the lack of clear guidance for
businesses and the absence of comprehensive privacy protections for consumers.
Proposed contact tracing initiatives have also exposed the dearth of digital trust
in this country. For disease containment initiatives to be effective, consumers must
trust that government entities and businesses will be careful stewards of their data.
But among those who use smartphones and can download contract tracing apps, a
Washington Post poll found that more than half do not trust tech companies to en-
sure that people who report a coronavirus diagnosis using an app would remain
anonymous.2 Privacy legislation would help build digital trust around data collection
and use, which is necessary to foster continued innovation and investment in the
tech arena.
An additional imperative for Federal privacy legislation is protection of our rights
under the Fourth Amendment. In applying the Fourth Amendment, courts employ
a ‘‘reasonable expectation of privacy’’ analysis.3 Consumers have grown accustomed
to surrendering extensive data through their daily use of phones, computers, digital
assistants, and other connected devices. If citizens know and accept that nothing is
private, then they have no reasonable expectation of privacy, and protections under
the Fourth Amendment are eviscerated.
While privacy is important, so is competition. Federal privacy legislation must be
crafted carefully to maintain competition and foster innovation. The General Data
Protection Regulation in the EU (‘‘GDPR’’) may have lessons to teach us in this re-

1 The Health Insurance Portability and Accountability Act of 1996, Pub.L. 104–191, 110 Stat.
1936 (1996).
2 Craig Timberg, Drew Harwell and Alauna Safarpour, Most Americans are not willing or are
able to use an app tracking coronavirus infections. That’s a problem for Big Tech’s plan to slow
the pandemic, WASHINGTON POST (Apr. 29, 2020), https://www.washingtonpost.com/technology/
2020/04/29/most-americans-are-not-willing-or-able-use-an-app-tracking-coronavirus-infections-
thats-problem-big-techs-plan-slow-pandemic/
3 Katz v. U.S., 389 U.S. 347 (1967).

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gard. Preliminary research indicates that GDPR may have created unintended con-
sequences, including a decrease in venture capital investment and entrenchment of
dominant players in the digital advertising market.4 Reports also indicate that com-
pliance with GDPR is costly and difficult for small businesses and new entrants.
U.S. legislation should seek to avoid these negative consequences. The FTC, with
its dual mission in competition and consumer protection, is uniquely situated to pro-
vide technical assistance to Congress as it seeks to protect privacy while maintain-
ing competition.
There are four other elements that I believe should be included in Federal privacy
legislation:
• First, the FTC should be the enforcing agency. We have decades of experience
in bringing privacy cases, and we have the requisite expertise to tackle any new
law effectively.
• Second, any legislation should include civil monetary penalties, which Congress
has included in other statutes enforced by the FTC, including the Children’s
Online Privacy Protection Act.5
• Third, the FTC should be given jurisdiction over non-profits and common car-
riers, which collect significant volumes of sensitive information.
• Fourth, any law should include narrow and targeted APA rulemaking authority,
which will enable the FTC to promulgate guidance and address technological
developments.
Finally, on a related note, I encourage Congress to enact data security and data
breach notification legislation.
Consumer Welfare and Economics in Antitrust
Let me turn now to the FTC’s second mission, preserving competition. The con-
sumer welfare standard in antitrust—in which competition in the markets for goods
and services is measured by how well it serves consumers—has attracted criticism
in recent years. Critics often over-simplify the standard by asserting that it is solely
concerned with low prices. In fact, the consumer welfare standard encompasses
other factors that consumers value, including quality and innovation; if people want-
ed only the cheapest product, we would still be using flip-phones instead of
smartphones. But price does matter. As antitrust scholar Herbert Hovenkamp re-
cently wrote, attacking ‘‘low prices as a central antitrust goal is going to hurt con-
sumers, but it is going to hurt vulnerable consumers the most.’’ 6 Many of us are
fortunate enough today to be able to buy a higher quality, name-brand product—
but most of us also can remember those early days when we were thankful for the
availability of a no-frills, value-priced version.
Some conduct, like price fixing and market allocation, clearly drives up prices
without any redeeming increase in quality or innovation. But most of the business
practices and mergers that come before the antitrust agencies are more ambiguous
in their effects. Enforcers determine whether a business practice is legal based not
on its label, but rather by examining its empirical effects. For that reason, we need
economic analysis to help us determine whether any harm to competition is out-
weighed by benefits to consumers. Fortunately, the FTC has a Bureau of Economics
that provides the expertise and experience needed for such analysis, as well as for
studies including merger retrospectives that help to inform our enforcement. We
also can hire outside economists to testify at trial.
In the absence of economic analysis, antitrust at best would be a series of per se
rules. This system would result in business decisions that prioritize form over func-
tion, creating market distortions and inefficiencies. The U.S. experienced this phe-
nomenon during the decades when many vertical restraints that had similar welfare
effects could be either per se illegal or per se legal, and when merger decisions were,

4 See Jian Jia, Ginger Zhe Jin & Liad Wagman, The Short-Run Effects of GDPR on Technology
Venture Investment (Nat’l Bureau of Econ. Research, Working Paper 25248, 2018), https://
www.nber.org/papers/w25248.pdf.; GDPR—What happened?, WHOTRACKSME BLOG (2018),
https://whotracksme/blog/gdpr-what-happened.html.
5 Children’s Online Privacy Protection Act of 1998, 15 U.S.C. 6501–05; see also Children’s On-
line Privacy Protection Act Rule, 16 C.F.R. Part 312, available at: https://www.ftc.gov/enforce-
ment/rules/rulemaking-regulatory-reform-proceedings/childrens-online-privacy-protection-rule.
6 Herbert Hovenkamp, Is Antitrust’s Consumer Welfare Principle Imperiled? 45 J. CORP. L.
101, 130 (2019) (‘‘The neo-Brandeisian attack on low prices as a central antitrust goal is going
to hurt consumers, but it is going to hurt vulnerable consumers the most. . . . As a result, to
the extent that it is communicated in advance, it could spell political suicide. Setting aside eco-
nomic markets, a neo-Brandeis approach whose goals were honestly communicated could never
win in an electoral market, just as it has never won in traditional markets.’’).

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as Justice Potter Stewart put it, a ‘‘counting-of-heads game’’ that ignored the actual
competitive dynamics in the relevant market. At worst, antitrust untethered from
economic analysis would be subjective and vulnerable to political manipulation.
Companies would devote themselves to seeking the favor of legislators and regu-
lators, instead of courting consumers.
Conclusion
In closing, the FTC would welcome the opportunity to provide technical assistance
to Congress on these issues. Thank you for your assistance in strengthening the
FTC’s ability to fulfill its mission.
I am happy to answer any questions you may have.

The CHAIRMAN. Well, thank you very much. And before I begin
my questions, another thing I wanted to mention after the testi-
mony of Rebecca Kelly Slaughter was to thank her for pointing out
what a wonderful job the staff of the FTC does. And I am sure each
member of the Commission subscribes to that. We certainly, Sen-
ator Cantwell, can say the same for our hard-working and talented
and knowledgeable staff here in the Committee on both sides of the
dais and that gives me a chance to say that. Let’s start off, and I
guess we will begin with the Chair.
So Chairman Simons, let’s talk about the FTC’s role in over-
seeing the enforcement of Section 230 of the Communications De-
cency Act and in particular President Trump’s Executive Order in
May on preventing online censorship. Specifically, Section 4 of this
Order calls on the FTC to take action against online platforms that
restrict speech in a manner inconsistent with their terms of serv-
ice.
What is your view, Mr. Chairman, on the FTC’s responsibilities
under the Executive Order? And have you seen any examples of
the behavior described in the order and taken any action under
your authority so far?
Chairman SIMONS. Thank you, Mr. Chairman. We haven’t taken
any action according to the Executive Order. We get complaints
from a wide variety of sources, from the public, from Congress,
from competitors, from people in industry, from consumer watch-
dogs, and it is very important that we get those complaints and we
pay attention to them. Lots of complaints have come from members
of this committee and we are very thankful that you provide us
with such thoughtful complaints. We are an independent agency so
we review all of them independently.
We have jurisdiction over commercial speech, particularly non
deceptive and unfair and then some other statutes. So we look to
see whether the complaints are subject to unfairness or—I am
sorry, whether they are within our authority as I described, and
our authority focuses on commercial speech not political content
curation. If we see complaints that are not within our jurisdiction,
then we don’t do anything. If we see complaints that are, we take
a closer look and figure out whether there is a violation, and then
we determine whether it is appropriate for us to act.
The CHAIRMAN. So, Mr. Chairman, you don’t view political
speech as within your jurisdiction?
Chairman SIMONS. Correct.
The CHAIRMAN. OK, and so if the public and members of the Sen-
ate are concerned about online platforms like Twitter and Facebook
being inconsistent in the way they restrict political speech, you do
not view that as within the purview of your statutory responsibil-

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ities and therefore the Executive Order does not instruct you in
that specific area. Is that correct?
Commissioner SIMONS. Yes, for political content curation. Yes.
The CHAIRMAN. OK. Now who else would like to comment on
this? I am going to take my whole 5 minutes on this so——
Commissioner CHOPRA. Chairman Wicker, I am happy to weigh
in. I think putting aside the Executive Order, the issue of Section
230 is one where of great concern, I think, and there is a growing
bipartisan consensus that it has been abused. We see whether it
comes to counterfeit and defective goods, an unlevel playing field
between online platforms and brick-and-mortar stores, and in gen-
eral, I think the scrutiny is warranted when it comes to technology
platforms abusing any liabilities and public privileges, and using
that as regulatory arbitrage.
I think many of these platforms do have too much power to dic-
tate certain policies and regulations, and I don’t want to see them
continue, in my view, to overuse and abuse the legal immunities
that Congress has provided and I think we need to take a hard
look at that, particularly when it comes to the use of surveillance
based behavioral advertising. I think that business model is incon-
sistent with the origins of Section 230.
Section 230 is supposed to safeguard and promote speech, it is
not supposed to, you know, prioritize certain types of things over
the others based on what makes those companies more money.
The CHAIRMAN. You know, Commissioner, I think you make
some very good points there and I would observe that the hearing
in the House of Representatives last week on a bipartisan basis in-
dicated a real concern that these platforms are awfully big and too
powerful, and that it is a matter of concern for the consuming pub-
lic. So I appreciate your testimony there and——
Commissioner WILSON. I also have a comment, Senator Wicker.
The CHAIRMAN. Yes, please ma’am.
Commissioner WILSON. You noted that this was a bipartisan
issue in last week’s hearing and I actually have Chairman Nadler’s
quotes in front of me. He asked whether the ability to make money
in any way affect Google’s algorithm in terms of what news ap-
pears in a typical users search results. He also noted that Facebook
and Google have gravely threatened journalism in the United
States. He noted, now we hear Google and Facebook are making
money over what news they let the American people see. He said
it is a very dangerous situation.
And so I agree social media companies now provide a significant
portion of America with its news and so there is concern about con-
tent curation. My colleague, Commissioner Chopra and I have pre-
viously asked the FTC in a public statement to prioritize 6(b) stud-
ies that explore how content curation and targeted advertising
practices impact data collection use and sharing, and how the
monetization of data impacts the creation and the refinement of al-
gorithms that drive content curation and targeted advertising prac-
tices. And so I think this issue, as my colleague Commissioner
Chopra noted, is a really important one for us to consider and to
learn more about.
The CHAIRMAN. And have those studies been authorized and
commenced at this point?

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Commissioner WILSON. Nothing has been publicly announced,
Senator.
The CHAIRMAN. Thank you. Thank you very much. And undoubt-
edly, there will be more discussion.
COMMISSIONER. Senator?
The CHAIRMAN. Yes? I hear a voice. Perhaps you are being
censored at this point. Let me say, this will be a further topic of
questions and I will not further intrude on my time at this point,
but recognize the distinguished Ranking Member. We will get back
to you for an answer once we get these kinks ironed out. Senator
Cantwell.
Senator CANTWELL. Thank you, Mr. Chairman. And again,
thanks for holding this important hearing and for all the feedback
from the Commissioners. It has been quite interesting obviously on
a breadth and depth, but I would like to go back to price gouging.
In April, in the State of Washington, the Attorney General
launched a ‘‘see it, snap it, send it’’ campaign to fight price gouging.
The initiative followed 400 price gouging related complaints, a
round of cease and desist letters to Washington-based online sellers
accused of price gouging, and upwards of 150 site visits to busi-
nesses that were subjects of these complaints.
So this is a very important and timely issue as it relates to the
crisis and we want to make sure that Americans are getting all the
help that they deserve. Currently, the Federal agencies have very
limited authority to prevent price gouging. The FTC, as the Chair-
man was just mentioning, go after unfair and deceptive practices,
which really hasn’t been used in cases of price gouging. So that is
why I believe that we need a new definition, particularly during
the time of an emergency.
During the time of an emergency, we should not allow for these
unconscionably excessive prices. And I think that we should do
something about that. So I wanted to ask you, Chairman Simons,
do you support Congress doing something specifically on price-
gouging authority?
ChairmanSIMONS. Senator, we agree that price gouging is a very
serious problem, especially for PPE and the like. We currently
work with this with the DOJ and the states to refer cases to them
because as you said Section 5 really is not a good fit for price-
gouging authority, but we would vigorously support and enforce
legislation if Congress passed the law on price gouging. We think
that legislation should include a triggering event and a time limit,
should be National in scope, it should define the products that are
covered, describe what constitutes an excessive price increase, and
provide carve-outs for offsetting costs increase. Thank you.
Senator CANTWELL. Well, thank you for that list. I agree and I
think particularly when you define a crisis, we have certainly been
involved in what we think of being manipulations of oil markets
and certainly people who took advantage of oil prices during a hur-
ricane and certainly been involved in electricity rates and what we
thought were manipulated electricity markets.
So anyway, look forward to working with you on that. Commis-
sioner Slaughter and Chopra—well first let me just thank you
Commissioner Slaughter for mentioning, well, first of all enlight-

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ening our day with Hattie, thank you. That is very nice of you. But
also for mentioning 4 broadband.
And I know the Chairman agrees that we have an important op-
portunity in front of us with the next COVID package as we are
seeing schools make decisions about what they are going to do on
the education system for the fall. We really have to address this
gap and we need to make sure that the dollars are there and the
specific programs are there for broadband. So we look forward to
working with everybody to make sure that gets in a package. But
on this issue of price gouging, Commissioner Slaughter, you also
mentioned, and Commissioner Chopra, what is your perspective
about the core provisions of a price gouging law? We heard from
the Chairman, but what do you believe needs to be in the legisla-
tion?
Commissioner SLAUGHTER. Thank you, Senator, for the question
and you are right about broadband. As you can see with all of us
struggling with our feeds occasionally in the best circumstances, we
can see how important it is. In terms of price gouging, I agree with
a lot of what the Chairman said in terms of what the parameters
of price gouging legislation should look like.
I would want to make sure that it wasn’t too limited and didn’t—
excuse me, didn’t put too high a burden on the agencies to estab-
lish that the circumstances have been met because when that’s the
case, then we can’t really bring the cases effectively that we want
to protect the public. And the last point I would make is, I agree
also that Section 5 is very much an imperfect tool for addressing
these kinds of problems, but I want to see us in all cases, including
in the case of price gouging or maybe especially thinking about
whether particular circumstances might give rise to a creative use
of Section 5 authority on this topic, and this is something Commis-
sioner Chopra and I both talked about in terms of drug price spikes
recently.
So I think that we would really benefit from clear legislation
from Congress, but very much share your view that this is a high
priority and something that we can see the real life effects of for
American people every day.
Senator CANTWELL. Thank you. Commissioner Chopra, did you
want to say anything? I mean——
Commissioner CHOPRA. Yes, that thank you. I agree. Just two
quick points. I do not want to see any Federal law delete the State
laws, the preemption of State laws. I don’t think is appropriate
when it comes to this issue. And I also hope, given some of the
framework in the Defense Production Act as well, that you also
consider criminal penalties in certain circumstances.
Senator CANTWELL. Yes, I certainly believe so. We have done ef-
fective work on this as it relates as I said to energy markets, and
having criminal penalties has been giving the FTC really—I mean
the Federal Energy Regulatory Commission the tool that they
needed to police energy markets.
So we certainly don’t need any higher energy costs than what we
should be paying. And just Mr. Chairman, I know my time has ex-
pired, but I just wanted to mention on Commissioner Wilson’s point
about content curation, this is really a very severe problem that is
undermining the newspaper industry. The fact that these content

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creators are basically becoming the entry and point of delivery is
limiting the options for our broadcast and content delivers and the
newspaper business.
And I so I look forward to seeing what the Commission comes out
with on this but I think this is also a very important issue that
needs to be addressed. Thank you.
The CHAIRMAN. Thank you very, very much, Senator Cantwell.
Senator Fischer is next.
STATEMENT OF HON. DEB FISCHER,
U.S. SENATOR FROM NEBRASKA
Senator FISCHER. Thank you, Mr. Chairman. Chairman Simons,
as I am sure you know, this committee has been evaluating paths
forward on the name image likeness rules that have begun to take
shape at the State level along with the proposal recently developed
by the NCAA.
I am interested to hear your perspective on this matter, particu-
larly on the FTC’s role in enforcing any new Federal NIL rules. As
talks continue on a potential Federal framework, what new au-
thorities and resources do you believe the Commission may or may
not need to enforce added protections for student-athletes? I think
you have to unmute, sir. There you go.
Chairman SIMONS. Alright. Can you hear me?
Senator FISCHER. Yes.
Chairman SIMONS. Alright. Thanks for the question. I think I
was unmuted and by mistake muted. So I am sorry for that. So I
am a big believer that competition should function in almost every
situation including college athletics. I have been very concerned for
a long period of time that students are not getting what they
should get in terms of compensation for what they do. This is par-
ticularly serious because it has a large effect on minority, disadvan-
taged communities particularly with the football and the basketball
programs.
And so I am very, very excited about what you are doing and I
encourage you to go as far as you can. In terms of expertise, we
don’t really have very much expertise at all in this area as an insti-
tution. The DOJ has really been the one that has been interacting
with colleges including college athletics. And so we don’t really—
we don’t have that base that the DOJ has. But having said that,
if you want to give us authority, we will of course enforce it.
But depending on exactly what you pass, it might require a lot
of increased manpower on our part in order to do that. And also
depending on what you pass, if it looks something like a profes-
sional regulation like where you are regulating agents or things
like that and any kind of certification or other type of way, I think
that would be not particularly suited for our agency.
Senator FISCHER. Thank you. Over the past few months, we have
seen the pandemic add new volatility to our food supply chain and
that requires a massive shift in logistics. And amid the financial
strain, consumers are trying to stock up on food while producers
and retailers are doing their best to ensure that the grocery store
shelves are stocked.
The FTC has important responsibilities in helping safeguard
America’s food supply. Mr. Chairman, in terms of the FTC’s rule,

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what policies do you feel would be most effective to focus on for
maintaining a stable food supply chain during these unprecedented
times?
Chairman SIMONS. So our big focus on, with respect to food, is
the retail aspect of it. And so we are very focused on that. We are
making—we are doing our best to make sure that there are as com-
petitive as possible and that the competition flourishes at the retail
level. The DOJ is the one that focuses on the production of meat
and things like that, and we are dealing with the agricultural side
of it.
So we would defer to them on that part. But on terms of the re-
tail part, we are very focused on making sure that there is good
competition for consumer benefit.
Senator FISCHER. You know, as you know, the Packers and
Stockyards Act was drafted following an FTC report that high-
lighted abuses by major meatpacking companies at that time and
leveraged their concentrated market power. Mr. Commissioner
Chopra, I would be interested in your take on this as well, particu-
larly on more recent concerns about vertical integration trends that
we are seeing in the food industry.
Commissioner CHOPRA. Thank you, Senator Fischer. I totally
share those concerns. What we are seeing in the food industry from
farm to table, including what Chairman Simon said on the retail
side but also on the production side, there are serious issues with
how certain large, powerful players are able to dictate terms in the
lives of so many, whether they are poultry growers or livestock pro-
ducers and ranchers. I am concerned that the USDA’s rulemaking
on the Packers and Stockyards Act is going to make matters worse.
It is going to make it even harder to make sure that our food mar-
kets are competitive and fair.
The FTC does have some limited authority under the Packers
and Stockyards Act but as we have seen during this pandemic, just
recently the JBS, Mountain States Rosen transaction, there is
going to be a lot of issues when it comes to the stability of our food
supply and I think we all as Federal agencies need to think about
it, including our national security regulators as well.
Senator FISCHER. Right. You do have say over retail sales of
meat and livestock products. And when you look at, as I know you
have been focused on that vertical integration, obviously that has
an impact on those retail sales, the vertical integration that takes
place. So I thank you for your comments and hope that you—
Thank you, Mr. Chairman.
The CHAIRMAN. Thank you. Thank you, Senator Fischer. Let me
just exercise a little discretion here and intrude on the next round
of questioning. Mr. Chairman, you don’t want this issue of athletic
name image and likeness. You would rather the Justice Depart-
ment have that, right?
Chairman SIMONS. Yes, they have the expertise.
The CHAIRMAN. OK. Does any member of the Commission dis-
agree with the Chairman on that? Who wants this issue?
Commission CHOPRA. Well, I would personally favor a private
right of action for some of this. It is very hard to police some of
these markets and in some cases the 1 players themselves may be
well situated to vindicate their own rights.

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The CHAIRMAN. Would you like for the FTC to have jurisdiction
over it?
Commissioner CHOPRA. You know, that is really your choice. I
don’t think that we seem best situated, but we will do ultimately
what Congress passes laws instructing us to do.
The CHAIRMAN. OK. Well if anybody wants to comment——
Chairman SIMONS. Mr. Chairman, can I just make a comment
there? I agree with Commissioner Chopra that a private right of
action would be appropriate.
The CHAIRMAN. OK, and please submit, feel free to submit writ-
ten responses expanding your position there. And Senator
Klobuchar, I appreciate you letting me delay your questioning for
a moment or two there. You are recognized.
STATEMENT OF HON. AMY KLOBUCHAR,
U.S. SENATOR FROM MINNESOTA
Senator KLOBUCHAR. Well, thank you. Mr. Chairman. And again,
thank you for conducting, along with Senator Cantwell, this really
important hearing right now. You know, I have told many of you
this before but I think that this pandemic has shed a big magni-
fying glass on some issues that we know are already out there with
consolidation, with consumer scams, and the like, and I appreciate
all the Commissioners being here.
Start with following up with some of Senator Cantwell’s ques-
tions. I am on her bill along with Senators Markey and Schatz on
privacy and then Senator Kennedy and I have a separate bill. But
I wanted to ask, I think it was in your opening statement, Chair
Simons, that you mentioned you believe you need additional rule-
making authority. I think Commissioner Chopra is also taking this
position. Could you just really briefly, because I have a lot of ques-
tions, answer that question in order to really do things on privacy
outside of legislation, Chairman?
Chairman SIMONS. Yes, thank you, Senator. So in terms of the
rulemaking, what we are looking for is a targeted rulemaking au-
thority. So not kind of pass a general statute that says we want
Federal privacy legislation, let the FTC figure it out.
No, we think that that is your job and you have done great ef-
forts, as you have described, to the move that long and we really
encourage you to go further and get across the finish line on that.
In terms of us though, just like the Congress did with COPPA, they
allowed us to have APA targeted rulemaking to do things such as
change definitions to account for changes in technology or changes
in business methods.
One example from COPPA was there the original language did
not include photos. So this was like in 1998 or 2000 and photos
weren’t a big thing in terms of being uploaded to the internet. Now,
of course they are and they are really important and sensitive.
That is just an example of targeted rulemaking.
Senator KLOBUCHAR. OK. Before I go to Commissioner Chopra,
one other question of you because I don’t think we have delved into
this yet. On the front of the hearing in the House last week with
the CEOs of Amazon, Facebook, Google, and Apple, do you, based
on what you heard at the hearing, I assume you watched it or read
the transcript, do you believe that the FTC should look back at con-

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summated mergers not just to learn from them, but potentially to
take more enforcement action given what we have seen with
Instagram and WhatsApp with Facebook and some of these others
and what the market is looking like right now?
Chairman SIMONS. Yes, thank you, Senator. I don’t think it
would be appropriate for me to comment on any particular inves-
tigation or company. As I have said before that, yes, we have the
ability to look back at consummated mergers and to undo them.
And certainly we have done that many times in the past.
We have a litigation going on now where we are doing that so
that is something that is definitely on the table for us. In addition,
what we have done is we have issued 6(b) orders to all the major
tech platform companies to get information from them about acqui-
sitions that were not reportable under the HSR Act and so we are
looking at those too.
Senator KLOBUCHAR. And one thing you and I discussed in Judi-
ciary before the antitrust—I cut you off.
The CHAIRMAN. No, I think you are good.
Senator KLOBUCHAR. OK. OK, one thing you and I discussed at
the antitrust subcommittee, and I guess you and the other Com-
missioners could briefly pitch in here, I look back historically at the
staffing for the FTC. This is not about your decisions as Chairman.
And when you look, you are like a shadow of yourselves from the
80s, from the Reagan Administration on down, and yet you are
dealing with trillion dollar companies and are expected to be the
counterweight to those companies and expected by the public and
by all of us Democrats and Republicans to be looking at these
things.
So Grassley and I have a bill to, as you know, add more re-
sources with some filing fee changes for the mega-mergers and the
like. I think we should be doing more going into next year in a big
way, but could you just briefly say whether more resources would
be helpful.
The public needs to understand and my colleagues need to un-
derstand this shift over time and how it is just literally going to
be impossible for us to take on legions of lawyers and trillion dollar
companies to do all the stuff everyone is talking about from Sen-
ator Hawley on, if we don’t have the resources.
Chairman SIMONS. Yes, we dearly need the resources. You make
a very good point that in the 80s we were about twice the size we
are now, and some of that has to do with computerization and more
efficiency among the staff. But still we are, I think, we are behind
and we do need more resources. We are busting at the seams. We
are having trouble staffing the existing mergers as it is. Like I
mentioned earlier, we are on a pace to have more merger enforce-
ment actions than any time since Fiscal Year 2000.
Senator KLOBUCHAR. Exactly and here is the point that for my
colleagues that want to be fiscally responsible, which we all do, is
that you bring in money, the FTC and the antitrust division of the
Justice Department brings in money with these fines and we got
to look at all of this in that context. And what is happening to con-
sumer prices in this new gilded age that we are entering and if we
don’t do something with this pandemic profiteering and other
things that is going on.

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Chairman SIMONS. Yes, let me respond to one thing in particular
about that, Senator. That is the way that the law, the HSR Act is
currently determined, increasing the fees actually would not go into
our budget but you could change that legislatively and we would
ask that you do that.
Senator KLOBUCHAR. Got it. OK. I am just going to turn to, is
that Commissioner Chopra’s name, but I am running out of time
quickly. Commissioner Slaughter, are you there?
The CHAIRMAN. She was going to have to come and go, so maybe
perhaps we can get back to her.
Senator KLOBUCHAR. OK, I was going to complement the baby.
But I will ask this on the record, but it is just simply about the
exclusionary practices bill that we have and they need to update
our standards for these mergers in light of what is going on around
the country with monopolies and the like. And I can do that on the
record. Thank you, Mr. Chairman.
The CHAIRMAN. Thank you so much, Senator Klobuchar. Senator
Moran.
STATEMENT OF HON. JERRY MORAN,
U.S. SENATOR FROM KANSAS
Senator MORAN. Chairman, thank you. Thank you for having
this hearing. Your subcommittee had a hearing two weeks ago on
the issue of consumer protection in the times of COVID–19 as well.
So I will skip those questions today. Senator Blumenthal is in the
room. It seems like I should be asking you about data privacy, but
I am going to deal with at least for this round of questions with
the U.S.-EU Privacy Shield.
Chairman Simons, the court of justice at the—of the European
Union in Schrems II recently invalidated the Privacy Shield ar-
rangement as a basis for lawful transfers of data. With more than
70 percent of the nearly 5,300 Privacy Shield certified companies
being small to medium sized businesses including many in my
home state, I would understand this to be an extremely urgent
matter for digital commerce in the United States. Just simply to
begin with, do you agree with the significance of this?
Chairman SIMONS. I am sorry. Yes, particularly for small busi-
nesses. I was muted, sorry.
Senator MORAN. Yes, thank you, Chairman. Your website, the
FTC’s website includes an update on the recent developments re-
lated to the Privacy Shield. It states in there and I quote, ‘‘con-
tinues to expect companies to comply with the ongoing obligations
with respect to transfers made under the Privacy Shield frame-
work.’’
This statement aligns with the FTC’s previous discretions and re-
fraining from bringing any enforcement action in 2015 when the
Privacy Shield’s predecessor says Safe Harbor was invalidated in
Schrems I. Can businesses expect a similar reasonable approach by
the FTC in terms of enforcement in the aftermath of this invalida-
tion of the Privacy Shield?
Chairman SIMONS. Yes, basically we you know, they are making
promises that they are following the Privacy Shield principles and
if they don’t, that is a problem under our Act, under Section 5. In
addition, so companies could say, they could put on their website

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we are no longer certified under Privacy Shield. It has been over-
turned by the EU courts, but they would still be obligated to pro-
tect the data in a way that they promised going forward. So one
thing they might have to delete it or otherwise just, you know, pro-
tect it in the way that they promised pursuant to the Privacy
Shield principles.
Senator MORAN. And in that circumstance, how does the FTC re-
spond to that business?
Chairman SIMONS. You mean if they don’t?
Senator MORAN. Yes, if they do—let me let me first start with
if they do, then the FTC would take no action. Is that right?
Chairman SIMONS. That is right.
Senator MORAN. OK. Commissioner Wilson, let me direct this to
you. I would warn that the European’s Court surveillance concerns
in relation to Privacy Shield should not be conflated with the con-
cerns about consumer data privacy. However, is it fair to say that
the enactment of a pre-emptive Federal privacy framework might
make achieving a future adequacy determination by the EU easier?
Commissioner WILSON. Yes, thank you for the question. And I
would agree with that statement.
Senator MORAN. And then let me ask all, in the case of—if that
is the case, would you support enactment of the Consumer Data
Privacy Security Act which provides a uniform National standard?
And I have seen some of the Commissioners have answered that
question in other Senators’ dialogue, but that uniform National
standard, I would ask for a yes or no from each of you.
The CHAIRMAN. We will begin with Chairman Simons.
Chairman SIMONS. Yes, sorry.
Senator MORAN. Commissioner Wilson?
Commissioner WILSON. Yes, I think that one Federal privacy
standard is incredibly important. The Internet does not stop at
state or even international borders and businesses need the pre-
dictability and certainty of one Federal standard.
Senator MORAN. Are there any other Commissioners that have
not spoken to this issue this morning in response to my colleagues’
questions?
Commissioner SLAUGHTER. I don’t believe I have. I don’t know—
can you hear me?
Senator MORAN. Yes.
Commissioner SLAUGHTER. Can you hear me? OK, great. Sorry,
I would say I support the idea of a national floor. That makes a
lot of sense to me, but I would be concerned about a law where that
floor is too low or a law that invalidated stronger State privacy
statutes or prohibited states from having the ability to innovate to
fill gaps that aren’t filled by the Federal law.
Senator MORAN. Thank you. Mr. Chairman, my time is almost
expired.
The CHAIRMAN. Let’s go ahead those—since we have not specifi-
cally heard from Commissioner Phillips and Commissioner Chopra
on that question.
Senator MORAN. OK. Thank you. I thought we had from Commis-
sioner Chopra.
Commissioner CHOPRA. Mr. Chairman, I agree that a national
law would be helpful. I do have concerns about deleting all the

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State laws. The FTC has dealt with this in the past in terms of
working with State laws, determining if there is conflicts, and then
what is more protective, and I think we could go down that path
again to make sure we don’t delete states that decide they want
higher levels of protection.
Commissioner PHILLIPS. Senator, this is Commissioner Phillips.
Can you hear me?
The CHAIRMAN. Yes.
Commissioner PHILLIPS. Thank you. I just want to echo what my
colleagues, Chairman Simons and Commissioner Wilson said about
the need for a coherent and singular Federal standard. Not only
will this help businesses save costs and keep barriers down for
smaller firms relative to large incumbents, it will also help with
another critical privacy issue we face and that is consumer under-
standing. It is easier for consumers to understand one standard.
Senator MORAN. Let me thank the Commissioner for that an-
swer. It is a point that has not been made often previously. Thank
you.
The CHAIRMAN. And thank you, Senator Moran. Senator
Blumenthal.
STATEMENT OF HON. RICHARD BLUMENTHAL,
U.S. SENATOR FROM CONNECTICUT
Senator BLUMENTHAL. Thank you, Mr. Chairman. And thank you
to Senator Moran for raising the privacy issue. We are continuing
to strive for bipartisan solutions, which I think should be within
reach at some point because clearly these questions and the an-
swers we received, and most important, the feelings of the Amer-
ican people, are that we need stronger privacy protection and we
should continue to work to that end. But as important as new legis-
lation is the commitment to enforce the tools that the FTC has
right now.
On Monday, Twitter disclosed that it faces an FTC fine up to
$250 million for its misuse of account security information for ad
targeting. According to Twitter this breach of trust lasted between
2013 and 2019, 6 years. And this announcement follows Twitter’s
catastrophic and dangerous breach of dozens of high-profile ac-
counts last month. Twitter has been under a consent order since
2011 for exactly these kinds of problems, an order that requires bi-
annual audits and a comprehensive information security program.
So I think that the public is rightly skeptical about the FTC’s use
of its existing tools and its inconsistent and inadequate enforce-
ment of the laws already on the books, and I would like to hear
what the FTC has to say about this issue at length, but I want to
turn first to the issue of antitrust.
The House hearings, I think, should give the FTC a greater
sense of urgency about bringing an action based on antitrust
against both Facebook and Amazon which are within its purview.
I want to ask Chairman Simons, can we expect some kind of anti-
trust action against tech firms that have monopolistic power and
may have abused that monopolistic power by the end of the year,
and what is preventing action now?
Chairman SIMONS. Thank you, Senator. I don’t want to prejudge
the outcome of an investigation, but let me say this, we are focused

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on and this is the most important thing that we are doing on the
competition side at the FTC which is these investigations of the
tech platforms. We formed a new group in the Bureau of Con-
sumer—Bureau of Competition, the Technology Enforcement Divi-
sion specifically dedicated to investigating these types of compa-
nies.
And they are incredibly busy. They are very active and I have
told them that what they are working on is the most important
thing in the Bureau of Competition and that they should do it as
quickly and as efficiently as possible, and I am very confident that
they are doing that.
Senator BLUMENTHAL. Have you given them a mandate that is
action oriented because I think the American people want to see ac-
tion?
Chairman SIMONS. Oh, yes. I have absolutely and I talk to them
regularly.
Senator BLUMENTHAL. Let me ask you about some of the scams
that have appeared in the wake of the pandemic. As you know, the
FTC has issued 255 warning letters about these snake oil scams
that have appeared promising cures. It is really the wild west out
there. Warning letters simply lack the deterrent and enforcement
value of actions. Do you plan more action to stop these kinds of
consumer scams that exploit people’s fears about the pandemic and
their search for treatments and cures?
Chairman SIMONS. Yes, thank you Senator. We try to do what
is most effective and most efficiently—and efficient to get to the
problematic advertising or claims off the internet. And so we are
able to get out these warning letters very quickly and so far they
have been extremely effective, extremely effective. Overwhelmingly,
the companies take down the problematic language within 48
hours, and where they don’t, then we initiate enforcement actions
and we brought a number of those already. I think today in fact
we announced three or four new ones. And so we have had seven
of those already.
Senator BLUMENTHAL. Well, let me just interrupt because—I
apologize my time is running out but we know from experience, I
know as a former U.S. Attorney and a State Attorney General that
a warning letter means that the company can just come back and
you can do an enforcement action, but the better course is to have
a judgment on the books that can be enforced rather than have to
begin the case all over again.
Let me just ask you finally on the issue of privacy, in his Dissent
in the Facebook privacy settlement, Commissioner Chopra criti-
cized the FTC for not deposing Facebook executives. Don’t you be-
lieve that the FTC should depose Mark Zuckerberg in your ongoing
antitrust investigation?
Commissioner SIMONS. I can’t comment on the specifics of any in-
dividual matter, but we—it depends on the circumstances. What
we do is fact-specific. Sometimes it is important to depose the CEO
and sometimes it is not necessary. But where it is important and
helpful, we try to do it. And the other thing I would say is particu-
larly with respect to Facebook, we got as much—we had e-mails
from lots and lots of people, we did not need to get Mr. Zuckerberg
in a deposition for that case.

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Senator BLUMENTHAL. Don’t you think in this antitrust inves-
tigation it will be necessary to depose both Zuckerberg and Jeff
Bezos?
Chairman SIMONS. Well, Mr. Bezos works for Amazon, but I can’t
comment on——
Senator BLUMENTHAL. I understand that is a separate antitrust
investigation but shouldn’t this investigation——
Chairman SIMONS. I can’t comment on what—sorry, I can’t even
comment on whether there is an investigation of Amazon. The only
investigation that is publicly known that our TED group is doing
is Facebook and that is only because they have disclosed it them-
selves and so we are able to confirm that. But other than that, we
don’t—we don’t discuss individual cases.
Senator BLUMENTHAL. Fair enough. Let me just suggest because
my time has expired that the credibility of this investigation is
going to depend on its completeness and aggressiveness, and seems
to me that the public will be satisfied only if you do depose the very
top executives of whatever company you are investigating. Thank
you, Mr. Chairman.
The CHAIRMAN. Thank you very much, Senator Blumenthal. Sen-
ator Blackburn.
STATEMENT OF HON. MARSHA BLACKBURN,
U.S. SENATOR FROM TENNESSEE
Senator BLACKBURN. Thank you to each of you for the time to be
here today. Mr. Chairman, I think that—Chairman Simons, I think
you know that Facebook compliance is very important to us and
dealing with social media is very important to us. You are hearing
a lot about it from letters and notes that are coming to you. We
are hearing a good bit about it.
So I have been jumping back and forth from the Judiciary hear-
ing to this one and so let me ask you this. Just very briefly, when
do you think you are going to bring this to a conclusion? And are
you satisfied that we are going to be able to get to a conclusion
with the issues with Facebook and all of this going back to the
2012 Order?
Chairman SIMONS. OK, there we go, unmuted. So are you talking
about the Facebook privacy order or you talking about a Facebook
antitrust investigation?
Senator BLACKBURN. Yes. Let’s take privacy first and then we
can go to antitrust.
Chairman SIMONS. OK. Sure. So the order, the negotiated order
settling the our order violation of Section 5 case against Facebook
was finally entered I think on April 27 or 28 of this past year. It
was in litigation in front of a judge in the D.C. District Court——
Senator BLACKBURN. We know all of that. Where are you? Where
do you feel you are in compliance? Are they in compliance? And
then are you satisfied with the progress? And then I will add some-
thing on it because the clock is ticking, what kind of legislative bal-
ance do you think we need to strike to make certain that you all
can properly deal with this?
Chairman SIMONS. Yes, I think, I don’t—so, I can’t comment any
particular investigation of any particular company, but we are very
focused on that Order in particular and compliance with it. If there

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is any problem with it, we will be on it. We will be active, but I
can’t talk about anything in particular about an existing, non-pub-
lic——
Senator BLACKBURN. Correct, but you are pleased with where
you are in the process. Is that what you are saying?
Chairman SIMONS. What I am saying is we are very happy with
the Order. We think it really restructures aboard. It provides all
kinds of——
Senator BLACKBURN. OK. Speak to whatever kind of legislative
balance we need to strike to empower you to conduct enforcement
to hold big tech accountable, because when we hear from Ten-
nesseans, they will say well there is a lot of conversation around
this but what are you going to do about it? So what kind of legisla-
tive action needs to happen?
Chairman SIMMONS. So I think what your colleagues, what you
and your colleagues are doing in terms of a new Federal privacy
legislation is absolutely critical because our hundred-year-old stat-
ute is not really up to the task and doesn’t give us the authority
that we need. We don’t really have anything looking even remotely
close to what the Europeans have with GDPR so it is really impor-
tant that you, you know, through your work on the privacy, Fed-
eral privacy legislation to continue.
Senator BLACKBURN. OK, I have got another question and I am
not going to have time to get through this but looking at the invali-
dation of the Privacy Shield of the court of justice of the EU and
some of the European data protection authorities, they have sig-
naled that they do not foresee a grace period to allow data flows
to continue during the negotiation of a successor agreement like
that which occurred in 15–16.
So I would be interested to know if any of you have had con-
versations with any of your DPA colleagues in Europe about the
importance to both economies of allowing these data flows to con-
tinue? And, also if you have a sense of whether or when there
might be a final or collective decision on allowing data transfers to
continue while a successor framework is negotiated? And Chairman
Simons, I will come to you first and anyone else that wants to
weigh in on this just raise your hand.
Chairman SIMONS. Thank you, Senator. So we are working with
the Commerce Department and other parts of the Administration.
We stand by ready to help them in whatever way we can be useful
to them. They are carrying the water on this, and you know, we
will have to see what direction they head in and will support them
as much as we can.
Commissioner PHILLIPS. Senator, this is Commissioner Phillips.
If I can just add——
Senator BLACKBURN. Absolutely.
Commissioner PHILLIPS. Thank you so much. I really appreciate
it. A little bit of context, back in, after the Schrems I decision when
the Safe Harbor agreement was invalidated, the U.S. Government
and the European Commission were already negotiating what be-
came the Privacy Shield agreements.
It was because of that ongoing negotiation that the European pri-
vacy authorities agreed to do what you are describing which is to
standdown on enforcement and allows firms to continue to transact

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in data. I shared the disappointment of Secretary Pompeo and Sec-
retary Ross at this decision.
I do not think it is fair to hold the U.S. to a standard that other
countries cannot meet. I think the transaction in this data is very
important, in particular for small businesses and we are going to
do whatever we can to support the Commerce Department in its ef-
forts and to continue to hold companies accountable to the privacy
promises that they make.
Senator BLACKBURN. Thank you. Anyone else want to weigh in
on this? I am over time, Mr. Chairman. I thank you and I yield
back my time.
The CHAIRMAN. Thank you, Senator Blackburn. Senator Schatz.
STATEMENT OF HON. BRIAN SCHATZ,
U.S. SENATOR FROM HAWAII
Senator SCHATZ. Thank you, Mr. Chairman, Ranking Member,
members of the Commission. First thing I want to say is I just
want to thank the Commissioners for making it very difficult to de-
termine who was a Republican appointee and who was a Demo-
cratic appointee. This is the way that these Commissions should
operate. It is the way that the Commerce Committee likes to do it
and it is a real pleasure to sort of dig into the issues without nec-
essarily digging 1 into each other.
My first question is for Chairman Simons on credit reporting.
What actions is the FTC taking to verify that the credit reporting
agencies are following the CARES Act provisions and what is the
FTC doing to ensure that data furnishers are accurately reporting
the data?
Chairman SIMONS. So, thank you, Senator. So yes, so we have in-
vestigations open. We had a—and we brought some actions as well.
We had a workshop that was specifically focused on accuracy with
the CFPB and we are working with them as well. They have super-
visory authority under the big three credit bureaus and so we work
with them and talk to them about accuracy issues in that regard.
Senator SCHATZ. Can you talk a little more about that because
I had Ms. Kraninger in front of the Banking Committee and I was,
you know, I don’t mind a consultative educational process, but I am
a little concerned as to where the enforcement stick is and to the
degree and extent that the CARES Act specifically instructs the big
three, you know, not to report say a forbearance as a negative cred-
it event. I want to be satisfied that people have access to that infor-
mation to know that the CARES Act is being complied with and
that the big three are actually doing so.
Chairman SIMONS. Yes. So, we are monitoring for that, and yes,
I didn’t understand your question. We are monitoring for that and
if we see something that is problematic, that is a priority for us.
Senator SCHATZ. Thank you. Commissioner Chopra, do you want
to add anything just generally speaking about credit reporting and
about the sort of public policy question of whether or not con-
sumers should have access to their own credit reports?
Commissioner CHOPRA. Yes, I really think we are long overdue
for broader reforms of what I see as a broken oligopoly where con-
sumers are the product, they are not the customer. The CFPB real-
ly is the lead on this because of their broader authorities, but I

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really want to see the FTC continue its focus on some of the tenant
screening and employer background check abuses, because if we
see some of this being misreported, you are going to see people who
are trying to get to back to work, trying to get a new place if they
can’t afford their current one, and they might be blocked from
doing it.
So we have got a lot to do but we have got to really figure out
what we are going to do long-term about Equifax, TransUnion, and
Experian because it is just simply not working, the current system.
Senator SCHATZ. I think that is right. And I think that, you
know, some of the folks who are exasperated by the big three and
their conduct to their incompetence and their unwillingness to give
in any way are sometimes characterized as wanting to undermine
the ability to do, you know, proper underwriting for mortgages and
car loans and everything else. That is not what we are doing. We
are trying to make sure that the error rate goes down and that con-
sumers have access to their own information.
I remember being in a Commerce Committee hearing and one of
the representatives from the big three said well, our error rate is
only three to five percent, which means many, many millions of
people are being prevented from having a job or a mortgage or a
car as a result of the errors of these companies and they just plug
along profitably. Commissioner Chopra, what do you think you can
do under the FTC’s authority here?
Commissioner CHOPRA. Well just to be candid with you, I think
the Congress rightfully stripped the FTC of much of its authorities
here and gave it to the CFPB. I have obviously been disappointed
at the CFPB’s actions in this regard because I think there is much
more that they can be doing given the much broader panoply of au-
thorities that they have.
I do want us to enforce the FCRA, including with respect to
whether certain large data brokers and tech platforms may be sub-
ject to its requirements but have been flouting it. But I agree, we
need to reform the big three credit reporting agencies, and it is
going to take time, but we need to introduce some real competition
because it is just not working right now.
Senator SCHATZ. Thank you very much, Commissioners. Thank
you, Mr. Chairman.
The CHAIRMAN. Thank you, Senator Schatz. Senator Capito.
STATEMENT OF HON. SHELLEY MOORE CAPITO,
U.S. SENATOR FROM WEST VIRGINIA
Senator CAPITO. Thank you, Mr. Chairman, and I thank all of
you both for your testimony, but also for your service. I greatly ap-
preciate the complexity of a lot of the issues that you are dealing
with. In 2015, I launched my West Virginia Girls Rise Up program
to encourage young women to take on leadership roles and to build
and encourage the future leaders of America. There was a recent
Wall Street Journal article that referenced a study that found that
78 percent of fifth through eighth graders, girls in particular, were
lonely and isolated during this pandemic time and certainly under-
standably so.
And so it was also quoted that girls between 10 and 14 are
spending about three to four hours a day on TikTok, Snapchat, and

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Instagram to stay connected. So as children and teens turn to more
social media platforms to stay connected, what is the Commission
doing to ensure that companies who collect user data are not vio-
lating the Children’s Online Privacy Protection Act and I will ask
the Chairman that question?
Chairman SIMONS. Thank you, Senator. So we are monitoring
the market very carefully. We have given advice to ed tech pro-
viders. We have given advice to schools. We have given advice to
parents, consumers. And so, let’s see what—you know, I mean that
is what we are doing so far. And one of the things I think that this
points to is that we really need Federal privacy legislation. This is
an area where it is not just a matter of are you doing what you
say? It is a matter of what you are doing may not be proper even
if you don’t say anything about it.
Senator CAPITO. Well, I think obviously and particularly nobody
could have anticipated this and the availabilities obviously of on-
line platforms to younger children, probably maybe were some par-
ents might have prevented the use of it or limited the use of it, now
it has become more difficult to do that because that is the only way
that a lot of teens and pre-adolescents and everything are keeping
in touch.
So I am concerned about that. I am going to shift to another
issue and Commissioner Phillips on the Made in America provi-
sions. I know that there has been some lack of clarity in terms of
what does made in America mean? What does it mean to you?
What does it mean to consumers for perception? I know you do
studies on that.
Where are we on that made in America? Obviously here again
during this pandemic when we saw our PPE is was being made in
China, the lack of availability very frustrating. We are going to try
to do something about that here, hopefully in our next CARES
package. So do you have a comment on that Commissioner Phil-
lips?
Commissioner PHILLIPS. Sure, and Senator, let me just begin by
following up briefly on your last question to the Chairman. It is im-
portant also to note that the COPPA enforcement under this FTC,
the five Commissioners sitting here before you today, is as aggres-
sive as it ever has been. That began with what was then a record
settlement against a company that few Americans have heard up
at the time, TikTok.
We are very glad they are under order. It continued with our set-
tlement with the New York Attorney General for $170 million in
the YouTube case. On ‘‘made in the USA,’’ we are continuing to do
our enforcement. We had a big case recently against William
Sonoma. We are also in the process of doing a rulemaking. I have
to tell you I dissented from that.
But the reason that I dissented is something very much within
your power and that was I didn’t think that we had the authority
to make the rule that we were trying to make. That is a pretty
easy legislative fix even though legislation as we all know is hard.
That is certainly something that Congress can address and that I
could work with you on going forward. Thank you.

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Senator CAPITO. Thank you. I am going to go to Commissioner
Slaughter. She just gave me a little chat and said she had some
comments. So that is the beauty of technology. Yes, Commissioner.
Commissioner SLAUGHTER. Thank you so much, Senator. I just
wanted to echo your comments about the importance of thinking
about how our children are being affected by all of the online activ-
ity that they are engaging in and particularly thank you for your
leadership in addressing the mental health issues for young
women. I have three daughters and this is something I think about
all the time.
And I just point out to you that COPPA does give us some spe-
cific authority for children’s privacy, but only for kids 13 and
under, and only basically to give parents’ permission and to require
reasonable data security. It doesn’t give us the same sort of general
authority to engage in protection against abuse of privacy and data
practices that you are referring to, especially for teenagers, so I
really hope that this is something that Congress will think about
as you continue to discuss data privacy legislation.
Senator CAPITO. Well it certainly looks like the data coming for-
ward over in the last several months would support something like
that. Thank you very much. I think I probably used my 5 minutes.
I appreciate it. Thank you all, and a cute little baby.
The CHAIRMAN. Thank you, Senator Capito. Senator Udall.
STATEMENT OF HON. TOM UDALL,
U.S. SENATOR FROM NEW MEXICO
Senator UDALL. Thank you, Mr. Chairman and Ranking Member.
Mr. Chairman, you can hear me, I assume?
The CHAIRMAN. You bet.
Senator UDALL. OK. Throughout the COVID–19 pandemic, we
have seen Americans come together to support frontline workers.
We have seen New Mexicans rally as communities to help their
families and neighbors, but just as times of crisis can bring out the
best in people, they can also bring out the worst who target vulner-
able people. And that is why we have been seeing this I think a
lot in numerous reports of harmful scams that put consumers at
risk.
As a former Attorney General in New Mexico, I know you recog-
nize the need to work with partners outside of the agency. State
Attorneys General have their ear to the ground. They hear directly
from consumers. And many are strong protectors of State consumer
laws. A working relationship with them is essential and that is
why I introduced the ‘‘Stopping COVID Scams Act’’ in the Senate
to empower Federal and State authorities to do more to deter
scammers and hold them accountable.
So my question is, my legislation would allow State Attorneys
General to bring a civil action in District Court or State court to
respond to COVID related fraud under the FTC Act. So a question
for every Commissioner, do any of you oppose authorizing State At-
torneys General to take action and respond to fraud under the FTC
Act?
Chairman SIMONS. Hi, this is Chairman Simons. No, I don’t have
any reservations about that at all. And I agree completely and
want to echo what you said about the importance of our relation-

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ship with the State AGs. They are boots on the ground. They are
terrific partners and we couldn’t do what we do without cooper-
ating with them.
Senator UDALL. Great. Thank you.
Commissioner SLAUGHTER. No concerns. I think it is a good idea.
Senator UDALL. Terrific. Thank you.
Commissioner CHOPRA. Same.
The CHAIRMAN. I think we want answers from Phillips, Chopra
and Wilson also.
Commissioner PHILLIPS. Senator Udall, I would like to take a
closer look at the legislation. A lot of our statutes do pair our State
AG enforcement with ours and that tends to be a really good thing.
A lot of states also have what we call baby FTC Acts so I am not
sure how the statute, I mean the proposed bill will match up to
that.
Commissioner WILSON. Senator, I agree with your proposal.
Senator UDALL. Great. Thank you very much. We would like to—
Commissioner Phillips, we would like to continue the discussion
with you and hopefully get to a place where you feel comfortable
with Attorneys General doing that. Now my——
Commissioner PHILLIPS. I appreciate it.
Senator UDALL. You bet. Now, my second question goes to civil
penalty authority. My bill also enhances the FTC’s civil penalty au-
thority. This is the same bill we talked about with regard to the
Attorneys General. Currently FTC enforcement begins with an ad-
ministrative complaint against a potential scammer. Then there is
a cease and desist order or a settlement. Under current law, the
Commission can only then seek civil penalties in court if there is
a further violation.
This is months or potentially years of court action, but as we
have seen the current health crisis moves quickly. New Mexicans
have died due to contaminated hand sanitizers with false labeling,
families fear for their health and are willing to spend their money
on questionable products making false claims. Chairman Simons,
would enhancing the FTC’s authority to use civil penalty authority
protect consumers in the current health crisis?
Chairman SIMONS. Yes. We support that. The other thing I
would say is we really need 13(b) because with 13(b), we can go
into Federal court and get a TRO, preliminary injunction, and we
can get an asset freeze for these fraudsters. Whereas civil penalties
might take a while to get through the court system and we have
to get the Justice Department involved too. So that would be im-
portant in the absence of 13(b) but 13(b) is really important.
Senator UDALL. Yes. Thank you for that answer. Commissioner
Slaughter, is the FTC’s current toolkit of enforcement actions up to
the present challenge?
Commissioner SLAUGHTER. Well, I think as you point out, Sen-
ator, civil penalty authority would be enormously helpful. It is real-
ly hard for us to have to go in most cases through that iterative
process to get to civil penalties and civil penalties are valuable be-
cause they put a big stick on the table in terms of potential money
that companies will have to pay which has an important deterrent
effect. So seeing that would be important.

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The Chairman pointed to an issue that I think is little-noticed
but is also very important, which is that when we have civil pen-
alties, we usually have to go through DOJ. I would rather see those
be coupled with independent litigating authority for us on the civil
penalty front. And I also agree with the Chairman’s point about
13(b) which is not only gives us those important tools to go into
court, but it also allows us to return money directly to consumers
and what we want to do at the end of the day is make harmed con-
sumers whole.
So I think civil penalties coupled with 13(b) authority that is
clarified are really, really important to both give a big stick, help
deter bad actions, punish companies that have wronged consumers,
and also return money to consumers that have been wronged.
Senator UDALL. Thank you so much, Commissioner, and I have
a couple of questions for the record that I hope you will answer
with regards to refunds for flights and other travel arrangements
and then some of these bots that are taking real advantage of con-
sumers and the marketplace. So with that, I yield back, Mr. Chair-
man.
The CHAIRMAN. Thank you, Senator Udall. Senator Thune.
STATEMENT OF HON. JOHN THUNE,
U.S. SENATOR FROM SOUTH DAKOTA
Senator THUNE. Thank you, Mr. Chairman. Chairman Simons, as
you know, reforming Section 230 of the Communications Decency
Act has been hotly debated here in Congress. Section 230 is the law
that prevents social media platforms like Facebook and Twitter
from being sued for content that users post on their platforms. I
have introduced a bipartisan bill with Senator Schatz on this issue
known as the Platform Accountability and Consumer Transparency
Act or the PACT Act which among other things would stipulate
that the immunity provided by Section 230 does not apply to civil
enforcement actions brought by the Federal Government.
The DOJ recommended this particular provision and it has re-
cently published a list of recommendations for reforming Section
230. My question is how would consumers benefit from reforming
Section 230 to ensure that the immunity provided by Section 230
does not apply to civil enforcement actions brought by the Federal
Government such as the FTC?
Chairman SIMONS. Thank you, Senator. So we have a number of
instances, it is actually fairly common, for us to go into court and
have a defense put on us relating to Section 230. So it would be
very helpful to us to avoid having to deal with that and allow us
the ability to go not only after the platform participants but in the
right circumstances the platform itself.
Senator THUNE. OK. This I would direct all Commissioners and
it has to do with the bill that Congress passed last year that the
President signed into law. It is called the TRACE Act, and among
other things, the TRACE Act required that the FTC register a sin-
gle entity that conducts private lead efforts to trace back the origin
of illegal robocalls, and I was pleased to see that the FTC did fulfill
that requirement this last month. Can you speak to the FTC’s ef-
forts on engaging with industry initiatives like the U.S. Telecom
Industry Traceback Group and whether this public-private partner-

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ship has been successful in identifying illegal robocallers? Let’s
start with the Chairman.
Chairman SIMONS. Yes, Senator. Yes, so absolutely. This has
been extremely helpful for us. The traceback organization is very
effective and we use—you know, we are just overjoyed with what
the with their progress. The other thing I will say is what we are
doing is we are going after VoIP service providers who often serve
as the entry point for scammers into the U.S. telephone network.
And we sued a company in December of last year, Globex, and
then we sent a whole bunch of warning letters to other VoIP serv-
ice providers and said hey, look at this. You may be liable. These
people are already being sued. You may be next. And we think that
that may have had some impact on a decrease, on a substantial de-
crease in robocalls since that time.
Senator THUNE. Great. Thanks. Is there anybody else quickly
or—yes, go ahead.
Commissioner PHILLIPS. Senator, just to add briefly, in the
TRACE Act, as you know, it also calls for the FTC to convene the
Hospital Robocall Protection Group to come up with best practices
for State and local governments, for telecom, and for hospitals to
help deal with the particular storage, in particular the public
health, that robocalls present. We had our first meeting last week
and meetings are continuing, and we hope to have a report out ac-
cording to the timeline indicated by Congress.
Senator THUNE. Good. Excellent. Thank you. Last question very
quickly. I think I have got a little bit of time left. And Mr. Chair-
man, do you expect to exercise discretion and refrain from bringing
any enforcement actions with regard to Privacy Shield until after
a new structure is negotiated and put in place to transfer data
from Europe?
Chairman SIMONS. I think what we are expecting to do, what we
intend to do is make companies fulfill the promises they made
under Privacy Shield. If they had made promises private—excuse
me, if they made promises, which if you sign up for Privacy Shield
you have and you are going to protect the data in a certain way
and when you are done with it, you are going to delete it. Those
types of things. We are going to enforce with respect to that.
Senator THUNE. OK. And my understanding is that the issue of
preemption and the California law has been covered extensively al-
ready. But so I will—my time has running out. I will defer that one
and perhaps may have a question for the record about that.
The CHAIRMAN. Thank you, Senator Thune. Senator Baldwin.
STATEMENT OF HON. TAMMY BALDWIN,
U.S. SENATOR FROM WISCONSIN
Senator BALDWIN. Thank you, Mr. Chairman. A recent FTC
press release noted that online shopping complaints that the FTC
has received during the pandemic have surged. The FTC has point-
ed out—or has put out a shopping online guide that recommends
online shoppers get the sellers’ physical address and inspect prod-
uct descriptions closely. These common-sense suggestions seem
aimed at ensuring that the buyer has the same information shop-
ping online during the pandemic as they would if they were shop-
ping in person. Before I go further, I would like to just ask each

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Commissioner if they agree that generally American consumers
should seek the same information shopping online as they do in
person? And if you could just briefly answer yes or no starting with
Mr. Chairman.
Chairman SIMONS. Yes.
Senator BALDWIN. Mr. Phillips?
Commissioner PHILLIPS. Yes, they generally seek the same infor-
mation.
Senator BALDWIN. Mr. Chopra?
Commissioner CHOPRA. Yes.
Senator BALDWIN. Ms. Slaughter?
[No response.]
Senator BALDWIN. Ms. Wilson?
Commissioner WILSON. Yes, I agree.
Senator BALDWIN. OK. I think I missed Ms. Slaughter, but let
me carry on. I know that many consumers want to buy American-
made products, but they can’t verify the country of origin of items
when they are shopping online. In order to ensure that online con-
sumers get the same access to country of origin and seller location
information that in-person shoppers have, I introduced the COOL
Online Act with Senator Rick Scott back in May.
The bill requires online sellers to provide buyers the country of
origin label for products that they are selling. With more and more
consumers buying their goods online during the pandemic, this
transparency is more important than ever. Commissioner Chopra,
can you please share that if you are supportive of the goals of my
COOL Online Act and explain the role you see the FTC playing in
this important issue for American consumers?
Commissioner CHOPRA. Yes, there is no question that there are
so many products where consumers want to know where they were
made, particularly during the pandemic. I have had discussions
with many major e-commerce platforms that been very concerned
that they are not listing the country of origin except for textile wool
and other things where they are required to and I think this needs
to change. They should disclose country of origin for those goods,
and in as much that they are lying about it, that can create some
enforcement liability and I think this is a good way to create more
information for consumers.
Senator BALDWIN. Thank you. In April, I joined my colleague
Senator Hawley, in sending a letter to the Commission urging an
investigation into the consolidation of the meat packing and proc-
essing industry, and its impact on consumers, farmers, workers,
and our Nation’s food supply. During the COVID–19 pandemic, we
have seen severe outbreaks of the virus among workers at meat
packing facilities in Wisconsin and elsewhere in the country.
Though the pandemic has brought many of the issues into
starker relief, the concerns around consolidation have been sim-
mering for years. Commissioner Chopra, I know there has been a
previous question in this hearing about consolidation in the meat
packing industry, but I want to hear if you agree that concentra-
tion has contributed specifically to workplace safety issues and
pricing issues? And what do you believe the FTC as well as other
Federal agencies can do to address these problems?

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Commissioner CHOPRA. Yes. I agree. It was 100 years ago that
the FTC’s reports exposed a lot of the abuses by the food and the
meat packing industry in particular. In 1921, Congress stripped
some of those authorities to enforce those laws for the FTC but we
still retain our industry-wide investigation authority under Section
6(b).
I really think the USDA needs to increase its enforcement and
its rulemaking to change the undue preferences standards. I think
they are going in the wrong direction and I think the DOJ, all of
us need to really be cracking down on this. It has some real impact
for those of us eating at the table as well as those working and ev-
eryone in our food industry.
Senator BALDWIN. I did note that Ms. Wilson said she had a com-
ment on this issue. With the Chairman’s indulgence can we——
The CHAIRMAN. Ms. Wilson?
Commissioner WILSON. Thank you, Senator Baldwin. I appre-
ciate the opportunity to address this issue. I think actually while
consolidation may be a concern, one of the significant issues that
we may not perhaps be paying sufficient attention to is the fact
that laws and regulations that are designed to apply to some of the
larger food producers and meat producers impose significant costs
and compliance issues when they are applied in the same way to
smaller farmers.
And so smaller farmers do need to grapple with these massive
compliance costs not even designed for them and end up having to
exit the business. There is a fantastic book on this topic called ‘‘Ev-
erything I Want To Do is Illegal.’’ So I think revisiting the way in
which we regulate small farmers could perhaps help to reintroduce
more competition into the food sector in the United States.
The CHAIRMAN. Thank you. And thank you very much. Our next
questioner will be Senator Scott. But we heard there was a ques-
tion about the connection. Senator Scott, can you hear us?

STATEMENT OF HON. RICK SCOTT,
U.S. SENATOR FROM FLORIDA
Senator SCOTT. I can hear you perfectly.
The CHAIRMAN. You are recognized.
Senator SCOTT. Alright, thank you, Chairman Wicker. Just to fol-
low up on what Senator Baldwin was talking about. I introduced
the PRIME Act which is going to require online retailers to list the
country of origin for each product they sell. Then I joined with Sen-
ator Baldwin to introduce the Country Of Origin Labeling Online
Act which would give the FTC authority over such laws. The
PRIME Act would also require app stores just to display the coun-
try of origin for apps sold in their marketplace.
So consumers know where the apps they download to their
phones are developed and you know, they can make good decisions.
I think we have seen this just recently with TikTok. So I am con-
cerned, as I think all of us are, about companies influenced and
controlled by the Chinese government like TikTok because under
Chinese law they have to adhere to the communist government’s
demands of spy, steal user data, or any content the government
wishes and we have seen that with TikTok.

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I think we all would agree that no American should be subject
to things like this and this sort of risk. And we will see if TikTok
becomes owned by a U.S.-based company, but even if we do we
have to be careful about back doors. So my question is, what en-
forcement measures and oversight does the FTC have to ensure a
company operating in the United States with access to personal
identifying information discloses to users where the company is
housing the data and how they are using that data?
Commissioner SIMONS. So this is one of the—thank you, Senator.
This is one of the reasons we need Federal privacy legislation be-
cause there isn’t a lot—there is a hundred year old statute is based
on deception standard where somebody says here is what we are
doing with your data and then they don’t do it. But if they don’t
say anything and it is not untruthful and we are deceptive, then
it is very challenging for us to deal with that.
Senator SCOTT. Have you proposed legislation?
Chairman SIMONS. I am m sorry. Say again.
Senator SCOTT. Have you proposed legislation or do you—have
you seen legislation that you like?
Chairman SIMONS. No, we have been relying on the Congress to
do that, your new colleagues on the Committee and elsewhere.
Senator SCOTT. OK. Have you seen any legislation that has been
proposed that you like with regard to giving you the authority you
need?
Chairman SIMONS. I could get you something on that. We have
given technical assistance on a bunch of statutes and we would be
happy to provide that to you.
Senator SCOTT. So, I mean first off what Senator Baldwin and
I are doing with regard to looking at apps and products sold online,
do you think it is the right approach or do you have suggestions
that we should change to make sure that our goal is accomplished,
assuming we can get that passed?
Chairman SIMONS. I have to consult with the staff. I haven’t had
the opportunity to look at your legislation in detail, I am sorry, sir.
Commissioner CHOPRA. Senator Scott, if I could add one chal-
lenge that—I support the goals. One challenge that is an emerging
issue among the technology community is verifying the country of
origin for software code.
This is obviously something that the DOD and the Commerce De-
partment have been thinking about. It is extremely difficult in cer-
tain circumstances to verify. It is not physical and it is going to be
a more emerging problem as our whole industrial base as well as
consumers are thinking more about supply chains and whether
there might be back doors or theft from adversarial State and non-
State actors.
Senator SCOTT. That makes sense.
Commissioner PHILLIPS. Senator Scott, this is Commissioner
Phillips and if I could just add briefly, whenever we are talking
about enforcement, again, privacy and other enforcement, against
companies that are abroad that have effects here in the United
States, we would be remiss not to mention the SAFE WEB Act and
the passage of that authority which is set to expire is very, very
important for us, not only on our own but in particular working

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with our partners abroad on cases that—as cyber cases often do
cross National boundaries.
Senator SCOTT. OK, and when is that expiring?
Commissioner PHILLIPS. I believe later this month.
Senator SCOTT. OK. Alright. Do anybody else want to respond?
OK. Do you have—does the FTC have the ability to require online
retailers to disclose the country of origin for either products or
apps, understanding what you just said about the difficulty on the
app side because of where codes are produced, do you have the abil-
ity to do this without legislation?
Commissioner CHOPRA. Yes, Senator. My understanding is that
we have certain rulemaking authorities that could be used for that.
It may be potentially cumbersome. There are certain statutes that
directly require country of origin labeling for textiles, wool, and
other products, but there is not a general requirement. So legisla-
tion would obviously make it much more expedited.
Senator SCOTT. OK.
Commissioner WILSON. Senator, this is Commissioner Wilson. I
do believe that more information available to consumers is always
better. It will allow them to more accurately evaluate the quality
and value that various product and services may offer to them. And
so I think this is definitely a good idea.
The CHAIRMAN. Thank you.
Senator SCOTT. Go ahead.
The CHAIRMAN. Thank you, Senator Scott.
Senator SCOTT. Thank you. Thank you, Chairman Wicker.
The CHAIRMAN. Thank you, sir. Senator Peters.
STATEMENT OF HON. GARY PETERS,
U.S. SENATOR FROM MICHIGAN
Senator PETERS. Thank you, Mr. Chairman, and thank you for
putting this hearing together and each of the Commissioners. Ap-
preciate your testimony here today as well. My first question is for
Commissioner Phillips. On June 5, one of Michigan’s largest
healthcare providers finished investigating a data breach that oc-
curred in January.
They found that around 6,000 patients had information possibly
exposed as a result of this breach. The system that assessed ac-
counts contain personal and protected health information according
to the system. This included patient names, dates of birth, diag-
nosis, the codes, procedures, treatment locations, treatment types,
prescription information, patient account numbers, pretty extensive
information.
So my question to you because I know in your opening statement
you discussed the need for data security in particular, knowing
that this technology is constantly evolving in a rapid fashion, what
can the FTC and Congress particular do to ensure that companies
are doing all that they can to protect this data, especially when it
comes to patient data?
Commissioner PHILLIPS. There are things we can do here. I think
a regime that includes a very specific legal authority that captures
some of the work we do already ensuring that companies undertake
adequate processes to make sure that they are protecting the kind
of data that they have. I do think rulemaking authority is appro-

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priate here and I think civil penalty authority is appropriate here.
My view is that unfortunately, we don’t always have the people
who could most efficiently protect data, adequately protecting it,
that the cost is borne by others. There are externalities, and a civil
penalty regime that helps sort of right that incentive structure.
Senator PETERS. Well——
Commissioner CHOPRA. Senator, may I add something to that?
Senator PETERS. Absolutely.
Commissioner CHOPRA. Yes, one of the things that I think we are
going to need to confront is there has been a change in my view
over the last 10 years that much of the impetus for stealing per-
sonal data was really identity theft to open up a credit card at a
department store in someone else’s name. But really what we are
seeing is something very different. Equifax, Anthem, Marriott, the
Justice Department and others have all said that these were not
necessarily identity thieves.
They were affiliated with State and non-State actors related to
China. And I think we are now going to need to be thinking about
really safeguarding our entire data security even in the commercial
context to make sure that adversarial parties cannot collect de-
tailed dossiers on each of us for the purposes of weaponizing it,
interfering in our country, and manipulating us. So I think the
stakes are much higher and the harms are on a different dimen-
sion than they were even just a few years ago.
Commissioner WILSON. Senator, this is Commissioner Wilson. If
I may, just one thought.
Senator PETERS. Yes, please.
Commissioner WILSON. I think your question highlights one of
the issues we need to confront. Privacy legislation and data secu-
rity legislation essentially are two sides of the same coin and it is
important to remember that many healthcare providers in the
United States are classified as nonprofits and so in data security
and privacy legislation, the FTC should gain jurisdiction to have
authority over these nonprofits, because as you point out, they do
have significant sensitive health data and so it is just another rea-
son that we need to get privacy legislation coupled with data secu-
rity legislation in place to protect consumers.
Senator PETERS. Yes, clearly. And really go online and follow
those lines about more of this information. It is becoming available.
Directed to Commissioner Slaughter initially, but others, please
weigh in, you know, according to media reports, data brokers are
buying and selling data collected from Americans phones and have
even been tracking Americans at protest or at places of worship.
And while smartphones allow customers to choose whether or not
to allow an app to have access to their location data, Americans
have no ability to control whether either the app developer or its
partners sell that information to third parties. So my question is,
do you believe that Americans have sufficient control over sec-
ondary uses and the sharing of very sensitive data? And if not,
what is the FTC doing to address this problem?
Commissioner SLAUGHTER. Thank you so much for the question,
Senator. I think this is a really, really good point. No, I don’t be-
lieve Americans have enough control for a number of reasons. Our
current framework is as you suggested basically a notice and con-

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sent framework that says companies are supposed to tell you what
they are doing and you are supposed to be able to say yes or no.
But as you know, often that notice is buried in really lengthy and
unreadable privacy policies that consumers often have no choice
but to click through to get access to the service.
They can’t go back and say yes, I agree to some provisions or not
other provisions and almost none of that controls secondary uses or
tertiary uses down the line. So one of my big concerns is that the
current FTC authority, which as we have discussed is basically pre-
mised on deception in the privacy context with some unfairness au-
thority, really doesn’t reach that kind of behavior that is deeply
concerning and deeply problematic.
So I think you are highlighting a really important issue that
should continue to be a focus for the Committee. And I do think
in the meantime the Commission should think about where we can
apply existing authorities that we have, whether it is standard
UDAP enforcement or whether we dust off our Magma’s rule-
making authority which we basically rarely use because it is as
Commissioner Chopra pointed out, it is somewhat cumbersome. I
think undertaking that process is really an important thing for us
to start and not just wait for Congress to act because these things
are happening now in real time and they are creating real peril for
Americans.
The CHAIRMAN. Senator Peters, could we let other members an-
swer on the record since——
Senator PETERS. That would be great. Thank you.
The CHAIRMAN. Thank you, Senator Peters. Senator Lee.

STATEMENT OF HON. MIKE LEE,
U.S. SENATOR FROM UTAH
Senator LEE. Thank you, Mr. Chairman. Thank you, Commis-
sioners for being here today. The FTC first implemented the Con-
tact Lens rule in 2004 after Congress passed the Fairness to Con-
tact Lens Consumers Act. The Contact Lens rule at its heart is
very simple. It simply requires prescribers to give consumers a
copy of their contact lens prescriptions. The reason for this is also
simple.
That contact lens consumers, as Congress determined and as the
FTC has reiterated, need to have the opportunity to shop around
to find the best deal. Now, Senator Klobuchar and I wrote to the
Commission raising concerns that Federal law was not being prop-
erly implemented and enforced and the consumers don’t always
have access to their prescription and I was grateful for your re-
sponse. I want to thank each of you for your unanimous agreement
to finalize the new Contact Lens rule to help protect consumers
against this kind of protectionism. Unfortunately, I am hearing
that there are some efforts underway to delay this important rule
and so I want to ask a couple of questions about that.
Chairman Simons, we will start with you. If this rule is delayed,
particularly now when consumers are facing significant economic
hardships in connection with the global pandemic and trying to so-
cially distance, couldn’t consumers end up being harmed and spe-
cifically couldn’t it end up making it more difficult for consumers

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to shop around and to purchase contact lenses from their retailer
of choice and at a lower cost?
Chairman SIMONS. Thank you, Senator, for that question. Yes,
absolutely. The whole purpose of this of this rule——
Senator LEE. Chairman Simons, you still there? Sounds like we
may have lost you.
The CHAIRMAN. Chairman Simons, you were saying the whole
purpose of the rule and then we lost the connection. Can you hear
us, sir?
Senator LEE. OK. Mr. Chairman——
The CHAIRMAN. I think, Senator Lee, you were making such a
poor point there that the technology went out——
[Laughter.]
Senator LEE. I know. I think it has much more to do with the
fact that Chairman Phillips was emotionally overcome at the im-
portance of this to Contact Lens consumers.
The CHAIRMAN. OK, can the witness hear us because we do need
to get an answer there.
Senator LEE. OK. Maybe we can move along to some follow-up
questions of other members of the panel and then we will move
back to Chairman Simons if and when we hear back from him.
Let’s move to you then, Commissioner Phillips, optometrists argue
in some cases not all cases, but some optometrists are arguing that
the compliance costs associated with the rule are great.
Some have even argued that they can’t do patient signatures be-
cause that would require pens to be disinfected between uses. Put-
ting aside for a moment the fact that during COVID–19 optom-
etrist should be practicing basic sterilization, did the Commission
examine the compliance costs and if so, what were the findings?
Commissioner PHILLIPS. Absolutely, Senator. As you know, the
Contact Lens rule that we recently promulgated was a very long
process involving two proposed rules and taking into account some
of the concerns about compliance costs about health. All of those
things are reflected in the final version of the rule that we pub-
lished. But as you noted earlier, the concerns that animated Con-
gress and that animated us also include having a sufficient degree
of competition in the market, allowing and making sure that con-
sumers have available to them their prescriptions for contact
lenses, and that sales for those lenses not only be done by the pre-
scriber but also by other sellers.
Senator LEE. Thank you. Commissioner Slaughter, in your state-
ment regarding the Contact Lens rule, you actually noted that Con-
gress could go further to empower consumers. What additional re-
forms do you think Congress should perhaps consider in order to
stop this kind of market protectionism? Perhaps we have lost Com-
missioner Slaughter as well.
I can move on to a subsequent question. We will pick up there
if we pick them back up. I would next like to talk briefly about an-
other issue. Our country is in a nationwide debate regarding online
political bias and censorship among certain big tech firms. It is sad
to think that Internet platforms, platforms that boast the ability to
connect hundreds of millions of people and allow for the rapid dis-
semination of ideas and opinions believe that they know what is
best for the American people, to read, to watch, and to listen, and

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to know what opinions are dangerous, even when they have no
technical expertise in a particular field.
In an effort to protect all viewpoints, a number of members in-
cluding myself are asking whether Congress must amend current
law as part of the solution and whether the FTC might play a new
role in that. Chairman Simons, if you are back, I would like to ask
you evaluating whether a tech company is following the terms of
service is something that the FTC currently does, but having the
FTC evaluate political viewpoints is much broader. Would FTC
evaluation of online content for political bias or neutrality implicate
the First Amendment and how would the FTC go about evaluating
for such bias?
The CHAIRMAN. We are informed, Senator Lee, that Chairman
Simons had to log off and try to log back on. Are you back on, Mr.
Chairman? That may not have been accomplished. Let’s——
Senator LEE. Can I ask the same question of Commissioner Phil-
lips?
Commissioner PHILLIPS. Yes, Senator. Look, I think the process
of content moderation is something that big firms face. It is some-
thing that a lot of small firms face. I am not sure if my answer
was clear earlier in the hearing but we all recall with horror when
press reports about the awful shooting at the Tree of Life syna-
gogue in Pittsburgh included reports about communication on a
platform called ‘‘Gab’’ so this isn’t all just about large tech compa-
nies. It is a difficult question.
At the end of the day though, when it comes to moderating
speech, the First Amendment is implicated and that is something
that we have always taken into account when we have done any
of our work related to the content of speech with respect to a kid
video games, going back decades. And of course, the First Amend-
ment is something we have to keep in mind as we move forward.
Senator LEE. Thank you. Thank you, Mr. Chairman.
The CHAIRMAN. Thank you. Senator Tester.

STATEMENT OF HON. JON TESTER,
U.S. SENATOR FROM MONTANA
Senator TESTER. Thank you, Mr. Chairman. I got to tell you I
love this committee. This has been a great hearing and I appreciate
the Commissioners. I just want to make a few statements, never
going to get to my question. Number one, I cannot believe how con-
cerned people are about textiles and electronics when it comes to
country of origin labeling yet we don’t give a damn about where the
food that we put in our body comes from.
So maybe I need to use you guys to be able to enforce a country
of origin labeling for food at least online food. And the second thing
is I want to go back to Commissioner Wilson’s point on smaller
companies. You are absolutely correct. And I will tell you that
when the 2012 Food Modernization Act came by and I put an
amendment in to exempt smaller companies and we got it passed,
guess who came to Capitol Hill and acted like the world was going
to end, the big food companies. And that is where I come to my
question is for you, Mr. Chopra, and it deals with consolidation in
the packer industry, but it is going to deal with it from a Packers

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and Stockyards Act perspective. Look, I am going to tell you a fact,
this is an overstatement.
We got kalkhoff operators and we got medium and small-sized
feeders that are going broke and it is going to change the food
chain for food for this country from a consumer standpoint and a
for food production standpoint. We authorized the USDA to put
forth some new rules on the Packers and Stockyards Act and they
came back with a document that wasn’t worth the paper it was
written on.
So my question to you, Mr. Chopra, what is your recommenda-
tions for improving the Packers and Stockyards Act so it actually
works for folks in production agriculture and folks and consumers?
Commissioner CHOPRA. Well, I just have to say that in the sub-
mission I made to the USDA, I think the rulemaking they are
doing is going to legalize lots of the worst practices that allow them
to do everything from rigging the weights and measures to giving
poor product and then penalizing farmers for doing it. So there is—
we need to do a real rework of how that whole thing is working.
And we need to also more answers from the USDA about what
is going to go on. There has almost been no enforcement on some
of these things. So I also just add on country of origin labeling,
even under the USDA guidelines, meat can come from overseas.
And if it comes into a factory by a U.S. meat packer, it can be la-
beled as product of USA. It is totally inconsistent with every other
country of origin standard and it just feels like a giveaway to me.
Senator TESTER. You are absolutely 100 percent correct. It is a
giveaway and guess who suffers? The people in production ag suf-
fer because you are bringing in crappy meat from Brazil or Argen-
tina to put it with good U.S. product and the consumer doesn’t
know the difference. So we agree. The question I have for you, Mr.
Chopra before I go to Commissioner Wilson is, is there anything
the FTC can do about it or is it just the Congress has to get off
their butt and do it?
Commissioner CHOPRA. Well, I would push Congress but legally
and I am happy to share more with you and your staff later. Our
authorities are much different when it comes to poultry products
and margarine versus other types of meat. The Justice Department
does a lot of the antitrust work. Our efforts are really on retail, but
we got to start looking at the whole food system, whether it is food
delivery apps, whether it is supermarkets, or whether it is the ex-
ploitation of farmers.
And I just want to share, you know, one of the reasons that we
are seeing more poverty, more opioid issues in many of these com-
munities is being unable to sell and make a livelihood. You know,
last week we are seeing that a lot of those who raise lamb are not
going to be able to get it to market and that is going to be dev-
astating.
Senator TESTER. Well, let me tell you, I couldn’t agree with you
more. And the fact is that we are screwing things up by not enforc-
ing the rules that have been put out 100 years ago. They still
apply. They need some modification. We need to make them work
or all we are going to turn into serfs working for the big man. OK,
so thank you, Mr. Chopra, for your work.

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Ms. Wilson, I want to talk about something else is near and dear
to my heart and that is right to repair, OK. When I went back to
Montana this weekend, we harvested a little bit of peas, we har-
vested a little bit of winter wheats, and I had a rear beater bearing
go out of my combine. I was able to replace it because my combine
is about 15 years old, OK. Today, it is a different story when you
buy this equipment because of the technology and by the way, this
isn’t about cell phones. You can throw this damn cellphone away.
I don’t care. I can go buy a new one for $300 bucks. It cost me
$300,000 bucks to buy a combine if I can’t repair the damn thing.
So could you give me a little input on what we need to be doing
on the ‘‘right to repair’’ stuff because it is going to put, once again
for people in production agriculture, out of business. It will be con-
solidated at the ground. It will be consolidated at the packer level.
It will be consolidated from top to bottom and it is going to ruin
it for this country. You are muted.
Commissioner WILSON. Sir, thank you for the question, and I
completely agree with you. Obviously ‘‘right to repair’’ is an issue
that the FTC has explored in a recent workshop. There are com-
petition issues and a bedrock principle of competition is that you
are not tied to a manufacturer to do repairs on your equipment. We
have a Massey Ferguson tractor on our farm out here in West Vir-
ginia and my husband broke a couple of bands using the chipper
and replaced the band himself, because frankly, the dealer here
isn’t great.
And so the ‘‘right to repair’’ is important. I see you laughing. Yes,
we have an issue with the Massey Ferguson dealer here. But at the
same time, there are legitimate consumer protection concerns with
respect to certain products. For example, if you put the wrong bat-
tery in a certain product, it might explode, so the FTC, as it has
done with the contact lens rule, is looking to balance the benefit
of competition with the protection of consumers from exploding
products or products that are harmful to health.
But I do believe, sir, that you are correct. There are manufactur-
ers who invoke safety concerns, in fact, not to protect consumers
but to prevent competition for repairs in the aftermarket and that
is just another cost that our small farmers are facing and that we
need to eradicate.
Senator TESTER. And unnecessary. And I want to echoed Senator
Schatz saying I appreciate the bipartisan work that this Commis-
sion does. Thank you.

STATEMENT OF HON. KYRSTEN SINEMA,
U.S. SENATOR FROM ARIZONA
Senator SINEMA. Hi, it is Senator Sinema. I want to thank the
Chairman for holding this hearing today and I want to thank our
witnesses for being here. As the pandemic create significant chal-
lenges for American families and small businesses, scammers are
using the pandemic as an opportunity to defraud Americans includ-
ing our seniors. This week one of Arizona’s major private lab com-
panies Sonora Quest alerted patients that scammers are posing as
Sonora Quest representatives to steal personal information from
patients.

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This is just one troubling example of the thousands of COVID-
related scams Arizonans reported to the Federal Trade Commis-
sion. These scams have cost millions of dollars in losses for Arizona
families, but they are not just a financial concern. COVID scams
also endanger the health of the public who can be defrauded into
believing that certain products can prevent or cure COVID, which
of course as we know is not true. I am looking forward to working
with the FTC to make sure you have the tools you need to protect
Arizona families and small businesses from deceit and abuse.
I think Chairman Simons is not back on yet so I will direct my
first question only to Commissioner Slaughter. I introduced the bi-
partisan Seas Act with Senators Gardner and Capito that expands
FTC authority to stop false advertising and other deceptive ads
during the Coronavirus pandemic by increasing civil and criminal
penalties on scammers. This bill ensures that scammers face seri-
ous 1 Federal penalties for lying to the public about COVID. Do
you support the goals of this legislation?
Chairman SIMONS. Senator Sinema, this is Joe Simons. I actually
showed up. I had a power outage at my house and I am on battery
power.
Senator SINEMA. Oh, wonderful. I am so glad.
Chairman SIMONS. I can—I am a little bit in the dark here as
you can see because I have no light, but I do support the goals of
that legislation absolutely, but I would have to say this, in terms
of legislative priorities at least from our parochial standpoint, from
my parochial standpoint at the FTC, your time is very valuable
and——
Commissioner CHOPRA. Senator Sinema, I never like to speak for
the Chairman, but I will just—I believe what he is probably going
to say is that he would welcome Congressional action on Section
13(b) to make sure that we can get the ill-gotten gains and return
money to consumers. And he can correct me later if I am wrong,
but that is what I believe he was going to argue.
Senator SINEMA. Well, I appreciate it and thank you for stepping
on that. We will follow up with him after the hearing to get those
details. And is Commissioner Slaughter on?
Commissioner SLAUGHTER. I just tried to change my audio. Can
you hear me now?
Senator SINEMA. Yes, I can.
Commissioner SLAUGHTER. OK, great. I don’t know what the
problem was. So I wanted to say, yes. I think the goals that you
are talking about are extremely important. Stopping scams is part
of the bread and butter of the FTC and it is never more important
than in a moment like this where bad actors are really praying on
vulnerable consumers and imperiling not only their wallets but
their health and safety. So I really applaud you for working on that
and look forward to continuing to work with your office and your
colleagues on these issues.
Senator SINEMA. Thank you so much. Commissioner Chopra, due
to the coronavirus pandemic, many Arizona small businesses are
struggling to get by and entrepreneurs are doing everything they
can to stay afloat. Some bad actors are using these difficult times
to take advantage of small business owners with unfair and decep-
tive practices related to financial assistance. Can you tell me what

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the FTC has done to protect small businesses from abuse and what
should small business owners know when looking for financial as-
sistance right now?
Commissioner CHOPRA. Thanks for that question. We have actu-
ally sued two actors in this space including one very recently that
I think we believe were violating the law in order to profit off of
small business owners’ pain. One of the things that’s really con-
cerning to me is that the contract terms, some of them are com-
pletely unfair in how they are executed and essentially require that
a small business owner automatically plead guilty when they are
sued. This is called a ‘‘confession of judgment.’’
So I really hope that small business owners—I know they are
struggling to work with many of the largest banks. A lot of the
community banks have been much better in delivering PPP assist-
ance, but really going after these high rates, sometimes 4,000 per-
cent loans, it is just setting small businesses up to fail, and we just
can’t have that.
Senator SINEMA. Thank you. I know my time is close to expiring.
I am not sure if the Chairman is back so I am going to go forward
and ask one more question to Commissioner Slaughter. As I ref-
erenced earlier, Arizonans are being targeted by COVID scams
such as the Sonora Quest imposter scam and we need to make sure
that our enforcement agencies have adequate resources to protect
Arizona families and return stolen money to Arizonans. Given the
increase in scams during the pandemic, how could the FTC best
use additional resources to protect Arizonans? And what authori-
ties do you need to insure that victims of fraud do get their money
back?
Commissioner SLAUGHTER. Thank you, Senator. This is a really
important question and I appreciate your attention to this issue. In
terms of resources, as determined, and some of my colleagues have
noted, the FTC has been doing its work in a very substantially
underresourced way for several decades and that has never been
felt more acutely than it is right now as we are trying to cope with
all the pandemic related issues as well as the general underlying
ongoing work of the Commission. So I think whatever appropria-
tions the Congress felt fit to give us would be able to put to very
good use on behalf of the American people. In terms of authority
and returning money to harmed consumers in particular, there are
two things that we are talking the most about, clarifying our au-
thority under Section 5 of the FTC Act, the provision that allows
us to discord ill-gotten gains and return money to consumers.
I think that is one of the most important things that you do and
right now that authority is under attack in the courts—verification
from Congress on that point is enormously important. And then
civil penalty authorities also helpful for us to create leverage with
companies—bad actions and help us in our negotiations, keep the
fraud from happening in the first place. So we can’t return civil
penalties to consumers. That money goes into the Treasury, but I
think it is still useful for us to have a bigger—in order to prevent
the fraud from happening to begin with.
Senator SINEMA. Thank you so much. Thank you, Mr. Chairman,
for holding this hearing today and I do yield back.

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STATEMENT OF HON. JACKY ROSEN,
U.S. SENATOR FROM NEVADA
Senator ROSEN. Thank you, Senator Sinema. This is Senator
Jackie Rosen from Nevada. I am not sure that Chairman Wicker
is on so I believe that I am the last Senator and I will ask a few
questions and we will close this hearing out. I want to thank you
for being here today. And Commissioner Slaughter, I want to tell
you that you really exemplify during this pandemic what so many
families are going through trying to balance work and childcare
and all of that and I appreciate you sharing your beautiful sleeping
baby with us today. It reminds us of all the important work that
we have to do to protect things for the next generations. But I want
to talk just a little bit about notario scams.
You know, Nevada, is home to thousands of immigrant families
who make up a really diverse fabric of our state and of our Nation.
Almost 30 percent of Nevadans identify themselves as Hispanic or
Latino and scammers have targeted members of these communities
as they go through the immigration process. Of course, we know
one common form of deception are the so-called ‘‘notario.’’ While
public notaries may perform the duties of attorneys in some Latin
American countries, they cannot practice law, give legal advice, or
accept legal consultation fees here in the United States.
Nonetheless, bad actors will suggest that they can guide an indi-
vidual through the U.S. immigration process, even though they are
not qualified or authorized by Federal law to do so. We know that
only a lawyer or federally accredited representative can provide
someone with legal advice and so therefore so many in my state are
falling prey to these scams. In response in 2015, the Federal Trade
Commission, you released a fotonovela educational graphic novel to
raise awareness about notario schemes in Latino community and
since then Nevada’s Chief Deputy Attorney General Mark Ruger
indicated that notario scams are expanding even broader into our
AAPI communities, our Ethiopian communities, and our Nigerian
communities.
So to Ms. Slaughter and Mr. Chopra, although the 2015 cam-
paign increased awareness about notario scams in our Latino com-
munity, like I said, we know fraud is rising in many of our minor-
ity communities. What other types of outreach or resources are you
doing with the FTC to protect individuals from the notarios or
other kinds of fraud? How are you working with their State agen-
cies and communities to prevent this? Ms. Slaughter, you can go
first.
Commissioner SLAUGHTER. Thank you, Senator, and I want to
thank you for your kind words about the baby and I just want you
to know on behalf of all of the working parents out there, appre-
ciate everybody saying nice things about how easy this looks. It is
really hard. So just a moment for all of the families who are trying
to juggle childcare and their professional responsibilities and ac-
knowledge that these are really, really challenging times—so I ap-
preciate the support from everybody on the Committee and the un-
derstanding. In terms of your question, I think this is a hugely im-
portant issue.
Paying attention to scams that target our most vulnerable com-
munities should be among the highest priorities we have, and in

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addition to the outreach that we do, we can work with our State
partners and we often host local events with community organizers
and groups and work with State AGs to raise awareness in order
to help prevent people from falling for these scams before they even
come up. We need to do enforcement to stop them when they hap-
pen where it is possible but we would rather they not happen to
begin with.
Senator ROSEN. Mr. Chopra, anything to add?
Commissioner CHOPRA. Yes. Thank you, Senator Rosen. You
know, when it comes to notario fraud, this has been actually an on-
going problem now. It is actually pretty difficult to enforce on a
one-by-one basis, and one of the things I think we have to start
thinking about is more criminal sanctions and also what are we
going to do to go after the plumbing of some of these rings of mob-
like fraudsters? We need to look at how they are moving money.
I think we have to look at this more with cracking down on a mob
mentality, an organized crime rather than one by one. So, you
know, it is definitely a huge problem and it has been really worri-
some to see how it is just invading so many states across the coun-
try. So we have to look at this systemically and not just one by one.
Senator ROSEN. Yes by the time sometimes we find out about it,
the people that have been affected have just gone really through
such a terrible experience. And I look forward to working with you
and figuring out what we can do about that. But for the last ques-
tion, I want to talk just what is on everybody else’s mind too prob-
ably a little bit is unemployment and PII. You know, the
Coronavirus, of course, hit Nevada’s economy harder than any
state in the Nation. I don’t know if you know that.
We had unemployment over 30 percent in April. It was a highest
in the country. It is still I think the highest in the country. Our
average is about 15 percent now. That was in June but we will
wait to see what the numbers are coming back up. Over half a mil-
lion Nevadans filed for unemployment insurance since March 14,
of course. Again, we are seeing scammers. We are seeing criminals.
They are trying to defraud people. They are trying to hack into the
system. They are taking that personal identifiable information.
They are doing phishing and impersonation scams and the impact
of this cannot be underestimated in Nevada.
Really thousands of families are waiting on their unemployment
benefits because we are having to weed through some of these
hackers and scammers, whatever you want to call them. And so as
the agency charged with protecting consumers personal informa-
tion, you at the FTC really have a significant role to play and we
want to just quote a little bit from the FTC that using law enforce-
ment policy initiatives, consumer, and business education to protect
consumers personal information.
That is what you are charged to do. So let me ask, I don’t think
Chairman Simons is on so I see you there, Mr. Chopra. I will ask
you. First, how much time and resources is being devoted? Do you
know or anybody that is still on? I can’t see everything on my
screen either.
Commissioner CHOPRA. Sure. And I believe the Chairman has
joined.

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Senator ROSEN. OK, so whoever if that thinks they can answer.
I see some blank screens, some initials. It is the joy of working this
way. How much time are you devoting to this? Because it is not
just a problem in Nevada. It is a problem everywhere and hard-
working people are not able to pay their bills because we have to
take so much time to stop the scammers from stealing the hard-
earned tax dollars that we are using on unemployment benefits
right now. Chairman Simons, are you on? I don’t hear him——
Chairman SIMONS. Can you hear me?
Senator ROSEN. Yes. Yes, we can now. Thank you.
Chairman SIMONS. I can hear you. Like I said, the power went
out and then my jetpack went out so but I got another battery sup-
ply so hopefully that will be OK. So we are doing at least two dif-
ferent types of things. One is we are actually suing people over this
kind of stuff. And the other thing is that we have an incredible
amount of outreach.
On all levels, we are dealing with our—well, first of all we have
an FTC website that deals with all these types of scams relating
to coronavirus, including the financial ones. We have got—our folks
are out all over the place doing media and they are doing meetings
and town halls and that type of thing. They did one effort with the
AARP that was participated—where 800,000 people participated.
So you know, it is all our regional offices. We have boots on the
ground there. They are out there all the time doing this kind of
thing. And then we are doing it online and then we are bringing
enforcement actions.
Senator ROSEN. And do you think there is a role for you to part-
ner—this is my final question for you Chairman. Is there a role for
us to partner, for you to partner with our State unemployment
agencies? Of course during this pandemic everything is turned on
its head where you might not partner with them, but in this ex-
treme case with every state, everybody applying, what is a role
that you can do to help states like mine who are really suffering
with a lot of—could be a lot of potential fraud?
Chairman SIMONS. So one thing I would say is that we have all
kinds of partners and they are very important in terms of making
our work productive and effective and in using our scarce re-
sources. And I don’t see me, you know, why we wouldn’t at least
talk to the employment offices and see if there is something that
we can do together to stop this type of horrible thing from hap-
pening.
Senator ROSEN. Well good. Well, I am going to have my team
reach out to, maybe there are some ways we can get some help out
there because it I know it is not just in my state but others. Well,
I appreciate—you know, I am telling you the baby was good. The
baby slept. You had your power up and down.
We are all in and out, all the technical difficulties today, but I
want to thank everyone for taking the time to be here today and
for the hard work that you do. And I know you’re probably all
happy to hear this as considering with all the challenges we have
had that that concludes our hearing. And the hearing record will
remain open for two weeks. During this time, Senators are asked
to submit any questions for the record, and upon receipt, the wit-

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57

nesses are requested to submit their written answers to the Com-
mittee as soon as possible.
I thank you again. Please stay safe and healthy. And this hear-
ing is adjourned.
[Whereupon, at 12:43 p.m., the hearing was adjourned.]

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A P P E N D I X

INTERNATIONAL FRANCHISE ASSOCIATION
Washington, DC, August 11, 2020
Hon. ROGER WICKER, Hon. MARIA CANTWELL,
Chair, Ranking Member,
Committee on Commerce, Science, and Committee on Commerce, Science, and
Transportation, Transportation,
U.S. Senate, U.S. Senate,
Washington, DC. Washington, DC.
Dear Chairman Wicker and Ranking Member Cantwell:
On behalf of the Franchisee Forum of the International Franchise Association
(IFA), we appreciate the opportunity to comment for the record on how the franchise
business model is a vehicle for achieving the American Dream, especially in the
wake of COVID–19. Leveraging our experience as successful franchise business own-
ers and mentors to prospective franchisees, we would like to offer a more com-
prehensive picture of franchising than the one painted at the Committee hearing
by Commissioner Chopra and express our firm belief that participation in the fran-
chise business industry helps unlock economic prosperity for all Americans.
As the representative body for franchisees within the IFA, we are proud to be a
clarifying voice for franchisees as legislative and regulatory issues impacting the
franchise business model arise at the federal, state, and local levels. The view on
franchisee dissatisfaction offered in Commissioner Chopra’s testimony suffers from
flawed reasoning. Without providing any factual analysis of concern, it is irrespon-
sible to conclude that franchisors must be prevented from alleged abusive practices.
While there may be instances when a franchisor behaves or takes action that is per-
ceived to be unjust to a franchisee or prospective franchisee, they are rare.
We know first-hand that small business franchise ownership is a viable pathway
to achieving and maintaining economic success. With careful planning and execu-
tion, sound management of a franchise business can help grow the business and the
franchisor’s brand—contributing to a successful relationship between the franchisee
and the franchisor. Allowing someone who profits off the unfortunate circumstances
of others to paint a one-sided picture of franchising does a disservice to the thou-
sands of small franchise business owners in this country who work hard every day
to grow their business and our economy.
The story about franchising we wish had been aired at the hearing is one based
in data rather than cherry-picked generalizations. A broader perspective is provided
by Franchise Business Review, which surveyed over 6,500 franchisees over the last
four months during the pandemic. Key findings from the comprehensive research in-
clude:
• 55 percent of franchise owners surveyed said they are (still) optimistic that they
will meet their 90-day business goals;
• 80 percent said they feel very positive/mostly positive about their association
with their franchise brand; and
• 83 percent said they have received valuable support from HQ during COVID–
19.
Franchisee satisfaction with their franchisor has remained steady during the pan-
demic, and in some cases, has even risen. This data reflects the spirit of franchising:
franchisors are vehicles for community, growth, and support for their franchisees,
especially during a crisis. To ease franchisees’ burdens and take steps to help the
systems survive, there are numerous reports of franchisors taking proactive steps
to provide flexibility to their franchisees during COVID–19. These actions include,
but are not limited to:
(59)

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60
(1) Royalty/ad fund deferrals, fee waivers, abatements, and other cash-flow as-
sistance to franchisees;1
(2) Extensions of development schedules under development agreements;
(3) Transitions to more ‘‘e-learning’’ and virtual learning as part of initial train-
ing programs to minimize travel for franchisee employees and related costs;
(4) Extensions of unit opening deadlines under existing franchise agreements;2
(5) Reductions of initial fees to incentivize new franchise sales;
(6) Changing the unit’s footprint to lower development costs;
(7) Providing franchisees with frequent, if not daily, updates on legislative as-
sistance from the Federal government under CARES Act;3
(8) Providing grants to employees suffering from pandemic-related layoffs or fur-
loughs;4
(9) Providing PPE to franchisees, local communities, front-line workers;5
(10) Providing franchisees with signage related to social distancing, mask wearing
and other Covid-19 prevention operations procedures; and
(11) Providing guidance on safe re-opening, social-distancing, and related prac-
tices to protect employees, consumers, and the brand.6
The value of the franchise business model can be harnessed by Congress and pro-
vide a vehicle for sustained economic growth out of the pandemic. As a result of the
significant economic impact of COVID–19, the number of unemployed individuals
reached nearly 30 million workers. Given the dislocation in the economy, many of
those jobs may not return forcing many individuals to find new employment or try
entrepreneurial ventures, including starting a new franchise business. This has
been the case following previous economic downturns, such as after the 2008 finan-
cial crisis where interest in franchise ownership significantly increased, as out of
work Americans explored new career opportunities. For example, the growth in em-
ployment in the franchise sector was 7.4 percent from 2009 to 2012, while the total
U.S. employment growth rate was only 1.8 percent.
IFA also maintains its commitment and strong support of the FTC Franchise
Rule, which will continue to ensure that prospective franchisees receive relevant
and material information about their proposed franchise purchases sufficiently in
advance of such purchases to enable them to make informed and unpressured pur-
chase decisions. This rule has been essential to the continued growth and success
of the franchise business model.’’ 7

1 See ‘‘Subway to Slash Royalty Payments by 50 Percent’’ at https://www.qsrmagazine.com/

franchising/subway-slash-franchise-royalty-payments-50-percent; see also ‘‘7-Eleven Ups Fran
chisee Support Amidst Coronavirus Pandemic’’ at https://csnews.com/7-eleven-ups-franchisee-
support-amidst-coronavirus-pandemic; see also ‘‘Wyndham Continues Waivers on Franchise
Fees’’ at https://www.asianhospitality.com/wyndham-continues-waivers-on-franchise-fees/; and
see also ‘‘Church’s Chicken Franchisees Get Relief Plan’’ at https://www.franchising.com/arti-
cles/churchs_chicken_franchisees_get_relief_plan.html.
2 Scott Deviney, President & CEO, Chicken Salad Chick.
3 See ‘‘Stories from the Covid-19 Front Lines: CEO Q&A with Meg Roberts of The Lash

Lounge’’ at https://www.franchising.com/articles/stories_from_the_covid19_front_lines_ceo_qa
_with_meg_roberts_of_the_lash_lo.html.
4 See ‘‘Self Esteem Brands Founders, Employees & Roark Capital Unveil $1 Million SEB Relief

Fund to Financially Aid Employees of Clubs, Studios Impacted by COVID–19’’ at https://
cutt.ly/Od1o04A.
5 See ‘‘With PPE Shortages, BrightStar Care Creates Fulfillment Center for Franchisees’’ at

https://www.franchisetimes.com/news/May-2020/With-PPE-Shortages-BrightStar-Care-Creates-
Fulfillment-Center-for-Franchisees/; see also ‘‘KFC Implements Additional Health and Safety
Measures in U.S. Restaurants’’ at https://www.yum.com/wps/portal/yumbrands/Yumbrands/
kfc-newsroom/detail/Vertical+Content_3-SF/additional-safety-measures-4-16–20; and see also
‘‘Two Men and a Truck volunteers to deliver face shields to Detroit hospital’’ at https://
www.mlive.com/coronavirus/2020/04/two-men-and-a-truck-volunteers-to-deliver-face-shields-to-
detroit-hospital.html.
6 See ‘‘McDonald’s Engages Mayo Clinic to Advise on Continued Approach to Cleanliness and

Safety’’ at https://news.mcdonalds.com/news-releases/news-release-details/mcdonalds-engages-
mayo-clinic-advise-continued-approach.
7 See IFA’s April 24, 2019, Comments to the Federal Trade Commission regarding Disclosure

Requirements and Prohibitions Concerning Franchising, available at https://bit.ly/2XpUIm7.

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We thank the Subcommittee for its attention to our views and the opportunity to
comment.
Sincerely,
TAMRA KENNEDY
President, Twin City’s T.J.’s, Inc.,
Chair, International Franchise Association Franchisee Forum.
cc: Members, Senate Committee on Commerce

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