FTC power grab

Trade Nanny


In 1978 The Washington Post dubbed the Federal Trade Commission (FTC) the "National Nanny." The agency's regulatory zeal hasn't waned in the decades since. Chairman Jon Leibowitz has embarked on a campaign to beef up The FTC's reach and authority, lobbying Congress for a bigger budget, enhanced prosecutorial powers, and the ability to issue new rules more swiftly and with reduced public input, all as part of a broader package of Wall Street regulation.

Testifying to Congress in February, Leibowitz argued that the changes would merely amount to "enhancing the FTC's ability to protect consumers" from deceptive business practices such as negative-option marketing (which assumes that someone wants a service or product unless he or she opts out). The current rules, he said, are "complex, cumbersome, and time-consuming, resulting in rule making proceedings lasting many years." He promised the agency would strive to use its expanded powers judiciously. "We'd be really stupid if we try to solve every problem in American society with a rule," he told Communications Daily.

Not everyone is convinced. Berin Szoka of the Progress and Freedom Foundation points out that the restrictions Leibowitz wants lifted were put in place after episodes in the 1970s in which the commission "thoroughly abused its uniquely vast jurisdiction by issuing rules to, among other things, ban advertising to children." By 1980 Congress was so upset with what former FTC official J. Howard Beales III described as "the breadth, overreaching, and lack of focus in the FTC's ambitious rulemaking agenda" that it briefly shut the agency down entirely before imposing the rules to which Leibowitz objects. Now, says Szoka, "Leibowitz wants Congress to write his agency a blank check" once again.