Academic journal article
By Thurman, Michael; Mallow, Michael L.
Texas Review of Law & Politics , Vol. 14, No. 2
Over the past four decades, the Federal Trade Commission (FTC) has engaged in an aggressive campaign to expand its administrative enforcement and rulemaking authority over businesses and individuals in the areas of consumer protection and antitrust regulation. Sparked by a 1969 American Bar Association (ABA) report that took the agency to task for failing to achieve the ambitious goals of its early twentieth-century designers/ the FTC] transformed its public perception from toothless in 1969* to tyrannical by 1980.' During that time the agency developed a strategic policy, which continues to be employed today, of pushing the envelope of its authority in the name of its enormously broad charge to prevent "unfair competition" ' and "unfair or deceptive acts or practices.""
The agency's latest foray into the uncharted and undefined waters of undelegated authority is its initiative to amend the Telemarketing Sales Rule (TSR) ' to add a wide-ranging set of new regulations" targeted at the debt-relief-services industry.9 Oddly, these proposed new rules were announced to the public shortly after Congress began considering proposed legislation regulating the debt-relief industry.'" Rather than wait for the Legislature's express guidance, the agency has elected to pursue its own rulemaking, purportedly based on its existing regulatory authority. However, the proposed regulations have little to do with telemarketing, ' begging the question: why would the FTC resort to the TSR as a rulemaking device given its broad rulemaking authority provided by the Magnuson-Moss Warranty Federal Trade Commission Improvement Act?
The answer to this question is both obvious and troubling. The FTC's attempt to sidestep its statutory rulemaking requirements under Magnuson-Moss, and instead use the more expeditious notice and comment provisions of the TSR, raises important constitutional questions. Some might argue that this solution reflects a nimble and pragmatic response to the challenge of effectively regulating businesses in the Internet age. However, another perspective is that the agency has gone too far in its zeal to fulfill its mission and that it routinely engages in the same conduct for which it prosecutes individuals and companies: namely, failing to comply with the law.
This Article examines the background and history of the FTC's late twentieth-century activism leading up to the current Administration. It reviews the basis and limitations of the agency's rulemaking authority, both under the Federal Trade Commission Act of 1914 (FTC Act) and the Telemarketing and Consumer Fraud and Abuse Prevention Act (TCFAPA). This Article also looks at the debt-relief-services industry and the nature of the proposed regulations that have been advanced by the FTC to govern debt-relief-services companies. Finally, this Article examines the application of the TSR rulemaking provisions to the debt-relief-services industry and discusses why the telemarketing statute is unsuitable for the FTC's proposed rulemaking.
II. THE HISTORY AND BACKGROUND OF THE DEVELOPMENT OF THE FTC'S LATE TWENTIETH-CENTURY ACTIVISM
"To many, [the PLC's] comparative inefficiency will seem, scandalous, but. one could regard it as the agency 's saving grace. "
The FTC was created by Congress in 1914 in response to growing concerns from the public and industry about unfair methods of competition in the channels of interstate trade.1' The FTC Act created the Commission"' and prohibited unfair business practices. ' The Act also granted the Commission authority to institute administrative proceedings against any person, partnership, or corporation that it had reason to believe was using unfair methods of competition in commerce and to issue cease-and-desist orders enjoining violators from continuing the alleged unlawful activities.18
The FTC Act declared that "unfair methods of competition in or affecting commerce" are unlawful. …