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Testimony of Kathleen Keest In Regards To HR 2309

May 12, 2009
Auto Loans
Credit & Prepaid Cards
Financial Literacy
Overdraft Loans
Payday Loans

Too often in the recent past, discussions over consumer protection regulation have been portrayed as a zero-sum game, where consumer protections are assumed to be a drag on the market, and must come at the expense of business. But that is a false dichotomy. Businesses have a symbiotic relationship with their customers. In the end, the health of the business community – indeed, the health of the economy as a whole – depends upon the financial health of America's households. Practices which undermine the financial health of households in the long run undermine the health of the businesses that depend upon them. If, for a while, we forgot that the absence of common sense and balanced rules for the marketplace is just as bad for business as it is for consumers, the events of the last year and a half should be a forceful reminder.

This shared benefit has been at the basis of the FTC's dual mission from its earliest days. Though Congress did not add preventing consumer injury explicitly to the FTC Act until 1938, the Commission understood that unfair methods of competition injure both competitors and consumers, so that "there is a direct link between consumer protection and the prevention of unfair competition." Honest, efficient and ethical competitors benefit as much from sound ground rules that level their playing field as do consumers. In this testimony, we first discuss why we support eliminating what is functionally discrimination in the law against the FTC in its rule-making authority, compared to other agencies. We also support the Congressional guidance to the FTC to use the APA rule-making in the area of consumer credit and debt, which we recognize to be central to the health of the economy as a whole. We first put that priority into context, with a general picture of the financial health of the majority of America's households. Turning to the specific areas identified in the bill, Section III discusses the two areas that the bill would set as priorities for the FTC: III-A explains some of the critical and widespread problems which have infected the auto sales and finance market. details some of the problems in the debt settlement industry which led the sponsors of the CCDPA to prioritize that industry. In Section III-C, we suggest, too, that the Commission review its existing credit-related rules, including the Credit Practices Rule, now a quarter of a century old, to evaluate whether they need to be updated to address the evolution of the consumer credit market place. Finally, in Section IV, we support giving concurrent enforcement authority to state attorneys general.