FTC Five Year Plan Addresses E-Commerce

(October 10, 2000) The FTC released a report outlining its five year plan. It addresses both protecting consumers from Internet based fraud, and applying antitrust law to electronic commerce and intellectual property.

The Federal Trade Commission (FTC) released its report titled Federal Trade Commission Strategic Plan: Fiscal Years 2000 – 2005, as required by the Government Performance and Results Act. The FTC is the federal government's primary agency for protecting consumers from unfair, deceptive and fraudulent practices in the marketplace. It also shares jurisdiction with the Antitrust Division of the Department of Justice over antitrust enforcement.

"The explosive growth of electronic commerce has greatly affected the FTC’ s mission," states the report. "With the explosive growth of e-commerce (consumer sales are expected to increase from $20 billion in 1999 to $184 billion by 2004), newly deregulated telecommunications and electricity markets, and globalization, the FTC's scope of responsibilities grows even broader." [parentheses in original]

"In just a few years, the Internet has changed traditional sales and distribution patterns for all sorts of products and services, increasing global markets have altered business relationships and marketing opportunities, and high technology innovation has introduced whole new markets and competitive arenas. We must evaluate each new development and ensure that anticompetitive practices do not stunt the growth of these innovations."

Antitrust

The FTC report addresses some issues which new technologies and electronic commerce present for antitrust enforcement. In particular, the report addresses intellectual property:

"To support competition in markets in transition ... the FTC must be alert to practices designed to entrench market power and deny consumers the benefit of new forms of competition, such as ... use of the intellectual property rights in one market to gain unfair competitive advantage in another market. To support competition in innovative, high-tech arenas, the FTC must evaluate the significance of business conduct in the context of novel, high-tech settings. The analysis must distinguish between practices that restrict competition and those that otherwise promote competition by simply protecting against misappropriation of intellectual property or other efforts of firms to "free ride" on the investments of others."

Consumer Protection

The report also elaborates on efforts already taken, and to be taken in the future, to protect consumers from unfair trade practices, such as Internet fraud scams.

This includes the FTC's Internet Lab, which monitors and the web to identify illegal practices, and then traces, investigates, and records illegal activity.

The report also addresses the FTC's information system. This includes several integrated databases for consumer fraud complaints and identity theft complaints. The consumer fraud database, which is named Consumer Sentinel, is accessible online to over 250 law enforcement agencies in the United States and Canada.

The report says little about online privacy. In other publications, the FTC has advocated new legislation that would allow the FTC to regulate online privacy practices of businesses. However, this report merely states that the FTC will implement "new congressionally mandated regulations governing financial privacy and online children's privacy", and that it will "Develop policies to address newly emerging consumer protection issues resulting from changes in the marketplace" and "Encourage self-regulation and private initiatives, where appropriate, in lieu of regulation or law enforcement."