Under financial overhaul, FTC could gain enforcement power over Internet

By Cecilia Kang
Washington Post Staff Writer
Tuesday, April 27, 2010

The Federal Trade Commission could become a more powerful watchdog for Internet users under a little-known provision in financial overhaul legislation that would expand the agency's ability to create rules.

An emboldened FTC would stand in stark contrast to a besieged Federal Communications Commission, whose ability to oversee broadband providers has been cast into doubt after a federal court ruled last month that the agency lacked the ability to punish Comcast for violating open-Internet guidelines.

The version of regulatory overhaul legislation passed by the House would allow the FTC to issue rules on a fast track and permit the agency to impose civil penalties on companies that hurt consumers. FTC Chairman Jon Leibowitz has argued in favor of bolstering his agency's enforcement ability.

"If we had a deterrent, a bigger stick to fine malefactors, that would be helpful," Leibowitz told Fox News last week.

That provision to strengthen the FTC is absent from the financial overhaul legislation before the Senate. Some observers, however, expect the measure to be included when the House and Senate versions are combined.

The proposal comes as uncertainty surrounds the federal government's ability to regulate the Internet and oversee service providers. Spokeswomen at the FTC and FCC declined to comment.

"Everyone is trying to figure out who is on first and what the game is here. Everything is a moving target right now," said Art Brodsky, a spokesman for Public Knowledge, an advocacy group.

Major media, telecom and cable companies stand to win or lose greatly from changes at the FTC and FCC. For example, a proposed rule at the FCC would force carriers to treat all Web traffic equally on their networks. That has drawn sharp opposition from broadband service providers, who would prefer that Congress mandate such a change. Comcast has complained that some traffic is so heavy that it slows the entire system.

The proposal to expand the FTC's authority has sparked a flurry of lobbying by advertisers, industry groups and the U.S. Chamber of Commerce, which are seeking to block it citing concerns about possible overreach by the agency.

Advertisers and retailers, for example, are wary of new rules from the FTC, which acts as their primary enforcement agency. The House financial overhaul bill would make it easier for the FTC to issue rules on privacy that would curtail an advertiser's ability to collect personal data on consumers' Web habits.

The Chamber of Commerce sent a letter last week signed by 41 trade groups to Senate Majority Leader Harry M. Reid (D-Nev.) and Minority Leader Mitch McConnell (R-Ky.) protesting any move to include a provision on the FTC in the Senate bill. Advertisers took out a full-page ad in Roll Call, asking lawmakers to reject an effort to embolden the FTC.

"These FTC rules are a big deal and deserve their own debate," said Chris Merida, the director of congressional and public affairs at the Chamber.

Consumer interest groups, however, want to give the FTC greater clout in overseeing Web-related issues. They say online advertisers are gathering personal data about consumers and potentially abusing that information with little federal oversight.

"The bottom line is that these powerful special business interests want to keep the Internet as their private financial playground -- where they get to reap the big bucks without any regulatory oversight," said Jeff Chester, executive director of the Center for Digital Democracy.

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