Fraud and Scam Reduction Act

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, I rise in opposition to this legislation.

Mr. Speaker, I had hoped to stand before you today urging my colleagues to support this legislation. Sadly, I must oppose because the expansive authority included here goes way beyond the new agency power I and my colleagues were willing to put into statute to ensure the FTC has the ability to get financial restitution to constituents who were victimized by scams as quickly as possible. So, we do agree on the concept but not the details.

Instead, this bill before us will provide the FTC with new authorities that far outpace the need supported by a consensus of the FTC Commissioners.

Even more concerning, Mr. Speaker, as we heard from the former head of the FTC's Consumer Protection Bureau, who testified before our subcommittee, it signals a return to the broad overreach we saw with the FTC in previous decades, a situation so bad that a Democratic Congress crippled the FTC's funding and stripped it of its authority at that particular time. But, alas, here we go again. History is repeating itself if this piece of legislation is passed.

Separately, H.R. 2668 has been riddled with process fouls and has ignored well-founded concerns from Republicans, including the lack of needed transparency reform and the lack of a national privacy standard, which will protect consumers. We are overdue for this, and we must have a national privacy standard as soon as possible, Mr. Speaker.

I have heard from my colleagues. They claim this bill only establishes a statute of limitations, but that simply is not the case. In fact, if you listened to the rhetoric from my Democratic colleagues, you would believe this bill was narrowly targeted at fraudsters and scammers, but that is not the case.

Under this bill, the FTC could obtain billions in penalties without ever proving that the alleged company ever knew or intended to mislead at all.

The Supreme Court ruled 9-0, a unanimous decision, that the FTC never had the authority to grant monetary relief under 13(b). Even the liberal Justices of the Court, Mr. Speaker, said that 13(b) was only designed for injunctive relief. We all agree on that.

So, let's fix it for the benefit of our consumers and any future victims. Let's make sure that they get the restitution they deserve.

An important principle of the American justice system is that the harsher the penalty is, the more due process is needed. So while I do agree with my Democratic colleagues that 13(b) provides sufficient due process for injunctive relief, the new authorities this legislation bestows on section 13(b) does not, however, provide enough due process if the penalty is monetary relief.

Perhaps therein lies my colleagues' true intent. This legislation is not really to fix a problem or restore a power but instead aims to grant the FTC with brand-new and unchecked authorities, rivaling those of the 1970s, to seek financial penalties for what it alleges is fraud and anticompetitive acts through section 13(b) of the FTC Act.

To those listening today, do not be fooled by the title of this bill. I believe it is irresponsible that the Consumer Protection and Recovery Act grants these new authorities without any guardrails to ensure due process remains a foundational American principle or to protect American companies from egregious enforcements that are not intended to protect consumers or help them recover from the harm of bad actors.

We all want to go after the bad actors, Mr. Speaker, but there must be due process.

Now, if it is a clear-cut case of fraud, like Volkswagen, then I agree that we should be able to use 13(b) to seek monetary relief, and my amendment captures such acts. That is the exception to the legal standard.

But if the FTC has to look back 10 years--and that is what we do with this particular piece of legislation, if it passes--and not have to prove there was deceptive intent, as there was in Volkswagen, then we need to ensure due process before the FTC can take money from small businesses and entrepreneurs.

I feel that that is only fair. That is why I was proud to offer a compromise during our Energy and Commerce Committee markup, which was the only portion of the markup that received bipartisan support. My amendment was the only one that received bipartisan support, and I believe it is fair and reasonable.

My amendment struck the right balance between providing the FTC with the new authorities to go after bad actors but also placed much-needed guardrails to keep the FTC from short-circuiting due process and seeking disgorgement from small businesses unaware of any potential violation.

Our small businesses are struggling, and those that conduct bad acts should be punished, absolutely should be punished. There should be restitution for the victims. But our innocent small businesses are having a hard time as it is.

One of my Democratic colleagues even commented that to go from 5 years to 10 years will increase the cost of businesses' errors-and- omissions insurance policies. We must consider that as well.

Now, combine that with no standards attached to the behavior in question,

and we will see even more inflation, ultimately hurting our small businesses and allowing the big guys to pass on the cost to constituents, which they most likely will do. They have the lawyers on their side, so they will pass the costs on to the constituents. We can't have that.

Without these guardrails, the FTC will create a ripple effect that will kill small businesses, unfortunately, innovation and ingenuity, while raising prices in our economy.

My amendment found the right balance, I believe, on the statute of limitations to ensure businesses are not blindsided by the assertion of claims long after the potential conduct, when evidence may no longer be available or is stale, and it is only right. Five years--I would even compromise and go a little higher, but the information must not be stale. I would say in most States, and also DOJ in some criminal cases, the statute is roughly 5 years. In most States, approximately 5 to maybe 7 years, at the most.

While shortening the statute, it also provides the FTC with a unique, equitable tolling period to allow the FTC the ability to seek monetary relief beyond the 5-year statute of limitations in the case of intentionally deceptive or fraudulent conduct. This addresses examples of the fraudulent behavior you will hear from my Democratic colleagues, when the FTC failed to act in a timely fashion. The tolling language is in my amendment.

Despite receiving bipartisan support, the majority rejected this amendment. One can only wonder if this is because it stands in the way of remaking our entire country into a managed economy and one that, again, strips due process rights from its citizens. I hope that is not the case.

Mr. Speaker, as I have said before, Republicans and Democrats both want to protect consumers. We were in Rules yesterday, and we both agreed on that; we want to protect our consumers, and we want to make sure that they get the restitution that they deserve.

I have stayed at the table to negotiate this and even offered an amendment that went a step further than the one I offered in committee. Unfortunately, it fell on deaf ears. The Rules Committee did not make my or any other Republican amendment in order today, ignoring our serious concerns.

We were concerned about pending cases, to make sure that the FTC had the time to look at all the pending cases, and that would make an exception to the statute of limitations, the 5 years. I think we thought of everything.

To my colleagues, let's work together and properly empower the FTC to protect constituents and pass a national privacy standard. This is our opportunity. As a matter of fact, the Senate is working on a bill that includes a privacy standard; a 13(b) fix, but also a privacy standard.

I urge a ``no'' vote on this particular piece of legislation. I want to get back to the table and get this right.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I yield 5 minutes to the gentleman from Michigan (Mr. Walberg), my good friend and a great Member. Michigan is the home of Tom Brady; at least he went to college there, a great American. Mr. Walberg is also a great American.

Mr. Speaker, I yield 2 minutes to the gentleman from Indiana (Mr. Pence), a great member of the Energy and Commerce Committee.

Mr. Speaker, I yield such time as she may consume to the gentlewoman from Washington (Mrs. Rodgers), our great ranking member of the Energy and Commerce Committee.

Mr. Speaker, I continue to reserve the balance of my time.

Mr. Speaker, I will continue to reserve the balance of my time.

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, we need due process in this particular bill. I believe that this bill is incomplete. We do have to protect the honest small businesses in this country. As a matter of fact, I heard just yesterday, from over 100 small businesses, and they have real serious concerns, legitimate concerns about this particular bill. This bill is not ready for prime time at this particular time. As I said, it is incomplete.

Mr. Speaker, we must go after the bad actors. There must be restitution for our victims--there is no question--but it has to be fair, with a fair and reasonable legal standard.

Mr. Speaker, on that particular note, with regard to the legal standard, former head of the FTC Consumer Protection Bureau and committee witness, Dr. Howard Beales stated that a reasonable person standard was an appropriate standard to include in any restitution or disgorgement legislation.

He testified that this will ensure that the FTC focuses its efforts on bad actors, not honest small business people, but bad actors when using its limited resources to bring these claims.

Mr. Speaker, I yield the balance of my time to the gentleman from Illinois (Mr. Rodney Davis).

Mr. Speaker, I urge a ``no'' vote on the underlying bill, and I yield back the balance of my time.

Mr. Speaker, pursuant to House Resolution 535, I call up the bill (H.R. 2668) to amend the Federal Trade Commission Act to affirmatively confirm the authority of the Federal Trade Commission to seek permanent injunctions and other equitable relief for violations of any provision of law enforced by the Commission, and ask for its immediate consideration in the House.

Mr. Speaker, I ask unanimous consent that all Members may have 5 legislative days in which to revise and extend their remarks and include extraneous material on H.R. 2668.

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, I rise in strong support of H.R. 2668, the Consumer Protection and Recovery Act.

This legislation is essential to protect consumers and honest businesses across the country. It restores a critical tool of the Federal Trade Commission to go to court to get victimized consumers their money back and make lawbreakers return their illegal profits. The tool is section 13(b) of the Federal Trade Commission Act.

For over 40 years, section 13(b) has been the FTC's primary and most effective means to obtain relief for consumers and businesses. Over just the last 5 years alone, the FTC returned over $11.2 billion to nearly 10 million Americans who had been scammed.

As one example, the FTC used this authority to help relieve veterans and servicemembers from crushing student debt after they were scammed by the University of Phoenix and DeVry. The agency has also returned money to seniors and other vulnerable groups often targeted by fraud. None of this would have been possible without 13(b).

Congress must act now because, in April, the Supreme Court ruled that 13(b) did not allow the FTC to seek restitution for consumers. Instead, the Court ruled that the FTC could only seek injunctions to stop bad actors from violating the law. In the case before the Court, a criminal payday lender was found to have defrauded consumers of $1.3 billion, but that money could not legally be returned to the victims.

Without this legislation, that unjust result remains the law of the land. That is why this legislation has such broad support, including military and veterans groups, business organizations, consumer advocates, unions, and the attorneys general of 28 States, including both Republican- and Democratic-led States. That is why the FTC, during both the Trump and Biden administrations, has repeatedly and unanimously begged Congress to act to save the consumer protections afforded by 13(b).

The opponents of the bill have misrepresented and mischaracterized what this bill does, in my opinion, Mr. Speaker. The Consumer Protection and Recovery Act simply restores the FTC's ability to seek equitable monetary relief for violations of all the laws it enforces, exactly as it has done for over 40 years.

Some say these authorities are ripe for abuse. But under this bill, the FTC would not be able to bring more cases or enact more rules. The bill does not allow for civil penalties, fines, or punitive damages. Consumers can only get back what they lost, and lawbreakers only have to give up their illegal profits.

Nothing in current law can replace the authorities that the FTC has lost. The suggested alternative, section 19 of the FTC Act, does not protect consumers in all cases and requires procedural hurdles that take far too long for any meaningful relief, or any relief at all, to reach our constituents.

This bill ensures consumers are not left holding the bag when bad guys break the law. The money they get back allows hardworking families to pay rent, feed their children, buy clothes, and make ends meet.

I thank Representative Cardenas for his leadership on this bill as well as Consumer Protection and Commerce Subcommittee Chair Jan Schakowsky for all her hard work in helping us get this bill to the floor today.

Mr. Speaker, I urge all of my colleagues to put their constituents first and support the Consumer Protection and Recovery Act, and I reserve the balance of my time.

Mr. Speaker, I yield 3 minutes to the gentlewoman from Illinois (Ms. Schakowsky), the chairman of our Consumer Protection and Commerce Subcommittee. She has worked long and hard on this legislation.

Mr. Speaker, I yield 3\1/2\ minutes to the gentleman from California (Mr. Cardenas), the sponsor of this legislation.

Mr. Speaker, I yield 2 minutes to the gentlewoman from Florida (Ms. Castor).

Mr. Speaker, I yield 2 minutes to the gentleman from California (Mr. McNerney).

Mr. Speaker, I yield 4 minutes to the gentleman from Oregon (Mr. Schrader).

Will the gentleman yield?

Mr. Speaker, I thank the gentleman from Oregon for the question.

The intent of this bill is to restore the FTC's authority to secure restitution not to pile penalties onto small businesses that make an honest mistake.

We want to allow the FTC to ensure consumers who are harmed by a violation of the law are made whole. So let me be clear. This bill does not allow the FTC to impose civil penalties or punitive damages. It only allows for equitable remedies, putting everything back the way it was before the violation occurred.

When the FTC is going after truly bad actors who intentionally preyed on consumers, it would need to use the authority under a different part of its statute to seek penalties and also meet the burden of proof required under that additional authority.

And another important point is that this bill actually protects honest small businesses from having to compete against unscrupulous companies that break the law to give themselves an unfair advantage. So this bill gives the FTC back the tools it needs to ensure a level playing field in the marketplace.

I thank the gentleman from Oregon for engaging on this bill and working with us on our shared goal of protecting American consumers.

Mr. Speaker, I yield 2 minutes to the gentlewoman from New York (Miss Rice).

Mr. Speaker, I yield 1 minute to the gentleman from New York (Mr. Nadler), who is the chairman of the Committee on the Judiciary, and I thank him, also, for working with us on this legislation.

Mr. Speaker, I yield 2 minutes to the gentleman from Rhode Island (Mr. Cicilline), who is the chairman of the Judiciary Subcommittee on Antitrust, Commercial and Administrative Law.

Mr. Speaker, I yield 2 minutes to the gentlewoman from California (Ms. Porter), who is a strong advocate for consumers.

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, to go back to this bill, I know my colleague from Illinois--who I like a lot--was talking about H.R. 1, but let's go back to this bill.

I know that there have been a lot of statements on the other side of the aisle about, why this bill? They didn't like the process; they didn't like what we were doing. But, look, the bottom line is very simple here. For many years, the FTC was going after bad actors and those who were committing fraud and scamming consumers, and they were basically getting the money back that was stolen from the consumers and giving it back to those consumers in a form of restitution.

The Supreme Court ruled they couldn't continue to do that, not because the Court thought it was a bad idea, but they just didn't think the statutory language allowed it. And since that time, the FTC--both under Democrat and Republican administrations--is asking us to restore that ability of the FTC to seek restitution and give money back to the consumers who were defrauded.

There is nothing else here. That is exactly what we are doing. Nothing more.

I don't really understand the opposition that is coming from the Republican side of the aisle because we are just making it possible for the FTC to do its job effectively, which they were doing for so many years when they recovered billions and billions of dollars for consumers.

I would say look at the language, look at what we are actually doing here, and please support this bill because this is good for everybody in this country, regardless of whether they are Democrat or Republican, or their ideology. This is not ideological. This is a practical way to help the average person.

Mr. Speaker, I urge support, and I yield back the balance of my time.

Mr. Speaker, I thank the gentleman for yielding and for his leadership on the subcommittee.

I rise today, unfortunately, in strong opposition to H.R. 2668, the Consumer Protection and Recovery Act, which represents a missed opportunity for both our committee and this Chamber.

Energy and Commerce has historically been the committee of bipartisanship and compromise. Unfortunately, this bill fails to meet that standard in the committee's rich history.

The legislation before us today is another go-it-alone approach that we have come to expect from House Democrat leadership.

In all my time on the committee, I am not sure I have seen so many process fouls or so much disregard for the minority as I have with H.R. 2668.

It fails to include an amendment put forward by Representative Gus Bilirakis, our fearless leader and ranking member on the subcommittee that received bipartisan support in our committee markup.

H.R. 2668 has been shadowed by a series of procedural fouls beginning with the intentional exclusion of Republican FTC commissioners from Energy and Commerce's hearing on this legislation as opposed to the Senate Commerce Committee hearing where they were invited to discuss 13(b) authority at length 1 week before.

Perhaps the Republican commissioners were excluded from our hearing because the majority did not want to hear the truth about their bill.

If the majority had led a better, more fair process, this legislation would have been significantly improved or at least built on the trust that we could come together on solutions crafted around sound legal arguments and analysis by all the proper experts.

To be clear, I share the goal of H.R. 2668, to protect people from scammers. But this bill is missing much-needed guardrails that the committee Republicans offered as amendments.

My biggest concern with this legislation, it fails to prioritize due process and ensuring proper analysis. This bill was pushed through a subcommittee markup without a good-faith effort to address the real concerns that we were raising.

We were given less than a week's notice late on Friday before the markup, and shortly before that DOJ sent us incomplete answers to a letter addressing the legitimate concerns raised by our members. This was followed by what seemed like a coordinated response to our questions for the record from FTC Acting Chair Slaughter shortly thereafter.

Mr. Speaker, committee members on both sides of the aisle received just 38 hours of notice regarding the inclusion of this legislation during a full committee markup resulting in criticism from both sides of the aisle.

I doubt many Members of this House believe Congress should operate in this manner. I do think we can all agree that both Republicans and Democrats want to protect people from malicious actors and that the FTC must have the necessary tools to do so.

H.R. 2668 grants FTC brand-new authorities under section 13(b) of the FTC Act, to seek financial penalties for what it alleges is fraud and anticompetitive behavior. It does so without the inclusion of guardrails to protect due process. This is a huge, missed opportunity to enact a national privacy standard.

Last Congress, Senator Wicker rightfully identified privacy and 13(b) reform as policies that could be easily legislated together and should. Even this bill's prime sponsor, Mr. Cardenas, acknowledged his effort to include a national privacy standard with a legislative fix for 13(b).

We must do our job. We cannot have California dictating policy for the other 49 States.

If my colleagues are so concerned about urgently granting the FTC with new authorities to protect people, why aren't we urgently passing a national standard, which we all agree will protect their data privacy?

This legislation fails to address much-needed FTC reforms, to increase transparency, establish a national privacy framework, and ensure due process. There should be no lack of will to take on fraudsters, scammers, and abusers of our personal information.

We need to sit down, work it out, and move comprehensive FTC reform legislation forward together.

I urge my colleagues to vote ``no.'' We can do better.

Mr. Speaker, I thank the gentleman, and we are glad that Brady is there. Go blue.

Mr. Speaker, I have long championed bipartisan legislation to increase consumer protections from fraud and scams, particularly for our Nation's seniors and vulnerable populations.

In April, the House passed by an overwhelming majority H.R. 1215, the Fraud and Scam Reduction Act, which I led with my friend and colleague, Representative Lisa Blunt Rochester.

Our bill creates the Senior Scams Prevention Advisory Group and the Senior Fraud Advisory Office within the FTC to better assist the agency and employers with monitoring, identifying, and preventing mail, telephone, and internet fraud.

I have also championed legislation that cracks down on robocall scams and Medicaid patient abuse and fraud. These efforts are particularly important, as we saw scams increase at an alarming rate during the COVID-19 pandemic.

But I cannot support H.R. 2668, the deceptively mis-advertised bill before us today. This bill was rushed through an entirely partisan process without addressing significant concerns from Republicans to protect fundamental due process rights and prevent the FTC from operating unchecked, as it did in the 1970s.

I hoped the Energy and Commerce Committee would have had the opportunity to hear from the full slate of FTC commissioners on this bill, the same commissioners who testified in the Senate one week prior to our legislative hearing and commented on what should be included in any legislative fix to 13(b).

Make no mistake, I fully support giving the FTC necessary tools to bring just enforcement actions against fraudsters and scammers, including restitution for harmed consumers. However, H.R. 2668 gives the FTC these new expansive tools without much-needed guardrails, all under the guise of protecting our constituents.

Just this past April, in a rare 9-0 unanimous decision, the Supreme Court ruled that section 13(b) of the FTC Act does not authorize the Commission to seek, or the Court to award, monetary relief including disgorgement or restitution.

The Court stated that the Commission grossly misused its authority and encouraged Congress to address the issue with a bipartisan--and that was their term--bipartisan legislative solution.

But the bill before us today is anything but bipartisan. This bill would grant the FTC a 10-year statute of limitations for this newfound authority, allowing the FTC the ability to go after conduct that is no longer occurring in the marketplace.

There is a reason that a 5-year statute of limitations or less is standard in many Federal and State statutes. As the committee learned from the former head of the FTC's Bureau of Consumer Protection, shorter statutes protect against surprises through the assertion of claims long after the conduct, when evidence may be stale or no longer available, and encourage the timely filing of claims by regulatory agencies.

Republicans on the Energy and Commerce Committee tried countless times to work with Democrats on a compromise solution to these issues, all to no avail.

My good friend, the Republican leader of the Consumer Protection and Commerce Subcommittee, Representative Bilirakis, proposed a compromise amendment that would allow the FTC to go after bad actors while also respecting due process rights. His amendment even addressed the concern raised from my friends in the majority on the statute of limitations.

This was a sincere offer from Republicans to address Democrats' concerns and meet them halfway, and it even received bipartisan support in committee.

But instead of coming to the floor with a bipartisan bill, Democrats rejected our efforts and jammed through this partisan bill without consideration for its consequences.

I urge my colleagues to vote ``no'' on H.R. 2668. Come back to the table and work with Republicans to find a compromise solution that provides the FTC the tools to actually protect our constituents. That is what we must ask and that is what I ask.

Mr. Speaker, I thank Chairman Frank Pallone for this opportunity to bring the culmination of over 2 years of working on both sides of the aisle to bring this bill to fruition.

It is unfortunate that we weren't able to negotiate more into this bill and make it bipartisan, but there will be other opportunities, as we are a two-Chamber legislature, and I am sure that the Senate has some ideas about how to make this bill better, and we are all open to that opportunity.

Mr. Speaker, I would also like to thank Subcommittee Chairwoman Schakowsky for doing an extraordinary job, making sure that we shepherd this bill through the process and making sure that we keep open lines of communication on both sides of the aisle so that we can get to this point.

It is important for us to understand that this bill is about the Federal Trade Commission's ability to protect consumers from fraudsters and scammers. This means that right now scammers remain free to steal money from hardworking Americans, seniors who are falling prey every minute of the day to scams on the Internet, to veterans who people knock on their door and appeal to them and rip them off and give them nothing for their hard-earned money after defending our honor in the military, to single moms who sign up to get a higher education so they can provide for their children, and then end up empty-handed, with nothing to show for their hard-earned money. Those are the people that 13(b), through the FTC, is going to go after and restore those funds.

For example, since 2016, they have restored over $11 billion to American families from fraudsters and scammers. Yes, it is happening every single day. And it is only getting worse. And today the United States people stand naked with the ability to be able to defend themselves.

The average American family cannot afford to hire a lawyer. What the FTC does is they appeal to a Federal court and they say we have found a bad actor. We are ready to take them to task. We are ready to restore the American families that they are trying to destroy and get them their money back. That is what 13(b) is.

We have a balance of power in this country. The FTC is part of the administration. That is one balance of power. The United States Supreme Court said through a technicality, well, 13(b) should not be made available right now for the FTC to protect the American people.

And they pointed to Congress and said, well, as long as Congress will pass the law then they can do their job and protect the American people. That is what this bill is.

This bill is simply an opportunity to restore the faith of the American people in our system that when they get ripped off, whether it is in person, or on the internet or in whatever manner that some scammer is taking advantage of our American people, the FTC is going to be there to speak up for them, to defend them, and take that money back and put it in the pockets of those individuals who have been ripped off. That is what 13(b) is.

Today, I am very proud, as an American-born citizen, the son of immigrants, to be a Member of Congress, to be able to do the work that we are doing today to get this bill out of the House of Representatives. I urge every Member of this House to please help restore the faith of the American people in us and our system and make sure that they understand that we speak for them, we hear them, and we know how they feel when they get ripped off. And the FTC is going to be there through 13(b) to restore the American people and give them the money that was stolen from them.