FTC on the CFPA
Commissioners Rosch and Kovacic of the Federal Trade Commission come out against the proposed CFPA. Both emphasize the risk of shifting consumer protection authority away from an agency with substantial expertise in the area (including the Bureau of Economics which has an excellent record of reports and publications in this area) to an unproven agency. Commissioner Kovacic ends his statement noting the potential for conflict in interpreting and enforcing consumer protection law as well as questioning the whether the CFPA commitment to “plain vanilla” products will improve welfare:
In addition, as the CFPA carries out its primary enforcement authority for unfair, deceptive, or abusive acts or practices under Federal law regarding consumer financial products or services, and as the FTC continues to enforce consumer protection laws as to non-financial products and services, there is no assurance – beyond mandates for interagency coordination – that the CFPA will account properly for the FTC’s views about the appropriate content of unfairness and deception jurisprudence. Conflicts in interpretation and in litigation strategies, along with an increase in litigation over jurisdictional questions, will adversely affect every core area of consumer protection for which the FTC will continue to exercise primary responsibility. Furthermore, the present draft legislation could be read to divest the FTC of certain competition authority and resources where the product market at issue involves the issuance of credit. Third, the wisdom of granting new substantive powers to the CFPA has yet to be established. Indeed, I have concerns about the benefits of certain new responsibilities that have been proposed, such as the requirement that the CFPA prescribe “plain vanilla” products for consumers.