AMEND FEDERAL TRADE COMMISSION ACT

FRIDAY, MARCH 8, 1946

HOUSE OF REPRESENTATIVES,

COMMITTEE ON INTERSTATE AND FOREIGN COMMERCE,

Washington, D. C.

The subcommittee reconvened at 10 a. m., Hon. George C. Sadowski, chairman of the subcommittee, presiding.

Mr. SADOWSKI. The committee will come to order.

We have some ladies here who wish to testify. Before we proceed, then, with Mr. Cassedy, we will call on these ladies.

I believe the first witness will be Mrs. Elizabeth Rohr.

Will you state your name and the organization you represent, please?

STATEMENT OF ELIZABETH ROHR, WASHINGTON REPRESENTATIVE OF CONSUMERS UNION OF UNITED STATES CONSUMERS UNION

Mrs. ROHR. I am Elizabeth Rohr, Washington representative of Consumers Union of United States Consumers Union, a nonprofit consumer technical organization with over 100,000 members throughout the United States, is strongly opposed to the Reece bill (H. R. 2390). This proposed legislation would seriously weaken the present protection consumers have against fraudulent and misleading advertising. The provisions of H. R. 2390 would hamstring the Federal Trade Commission in investigating and correcting the dissemination of false advertising, thus helping unscrupulous advertisers to promote the sale of worthless or dangerous products to consumers. In addition, by reducing penalties for violation of cease-and-desist orders, H. R. 2390 would make it advantageous to manufacturers to defy the provisions of the existing act.

Consumers Union is concerned with preventing passage of any proposals which would make Federal control of misleading advertising less effective. At this time, a flood of new products is being offered to the consuming public.

Unless there is effective regulation of the advertising claims made in connection with their sale, many consumers will be mislead into purchasing products detrimental to their health and their pocketbooks. The FTC has the administrative machinery and trained personnel to stand guard over the consumer's health and economic welfare through investigating and cracking down on false advertisements. Every provision of the Reece bill would undermine the protection the consumer now has. To begin with, major obstacles would be set

up against executing the FTC's cease and desist orders. Since a violator would be encouraged to evade the consequences of misleading advertising by engaging in long and complicated litigation under the Reece bill, it would not be the violator but the FTC which would have the burden of proving that its findings were "supported by the preponderance of evidence."

In effect, this would put the FTC on trial rather than the violator, and would enable a disseminator of false advertising to drag out hearings through lengthy legal procedure involving the use of large numbers of experts, technicalities, and so forth.

The courts would be clogged with appeals and the practical result would be a great increase in misleading advertising, since violators would know that the FTC could be tied up with protracted legal hearings. A premium would be placed on violations because only a small minority could ever be punished under the time-consuming procedure established by H. R. 2390.

A second premium is put on violations by the Reece bill in its provision to put a $10,000 ceiling on penalties imposed on violators and to reduce the maximum penalty for each violation from $5,000 to $1,000. The present penalties are far from adequate for big manufacturers of products whose use is injurious to the health of consumers.

But the amendment proposed in the Reece bill would make penalties a joke to large corporations. A $10,000 ceiling would be regarded simply as a sort of license charge, small in comparison with the budget for and the profits made from misleading advertising. It would certainly not act as a curb upon large corporations which combine in order to control markets and fix prices to the detriment of the con

sumer.

In addition to weakening the existing safeguards against fraudulent and misleading advertising, H. R. 2390 would stimulate the sale of drugs and other products which may have serious potential dangers to

consumers.

Under the present act, the consuming public must be informed in advertisements of potential hazards existing in the use of certain products, or at least advised to use the product only as directed.

The public is thus warned and can guard itself against dangerous consequences. Were H. R. 2390 to be adopted, it would not be possible to require a company advertising a drug or device that is potentially dangerous to state what might happen if the drug were used under conditions prescribed in the advertisement, or even under customary or usual conditions.

Under the Reece bill, advertisers would only be required "to prevent deception resulting from indirection and ambiguity, as well as from statements which are false."

This amendment would make it impossible for the FTC to require advertisers to disclose to the consuming public consequences which may result from use of products under conditions not disclosed in the advertisements.

Right now the public has become very interested in many new drugs developed during the war. Physicians have warned that indiscriminate use of some of these can lead to dangerous complications. But under H. R. 2390, advertisers could push the sales of such products, witho publishing disclosures of their consequences. There is abso

lutely no justification, in our opinion, for removing this protection to consumers, so that some manufacturers can increase their sales and profits at the expense of the health and welfare of hundreds of thousands of consumers.

Perhaps the worst feature of H. R. 2390 is its provision to exempt foods, drugs, devices, and cosmetics from the jurisdiction of the FTC. We are consumers and not legal experts, so we are not in a position to discuss the alleged conflict in jurisdiction between the Federal Trade Commission and the Food and Drug Administration with regard to improper labeling.

But as consumers, we do know that exempting foods, drugs, cosmetics, and devices from the regulation of the FTC in this respect would weaken the protection consumers require against unfair labeling practices and false or misleading information on labels.

We believe that it is important for the FTC to continue under the present act to have the authority to correct improper labeling as an unfair method of competition in all industries.

Consumers Union wants to emphasize the importance to the public of the FTC's procedure in requiring that dangerous or potentially dangerous products carry in advertising, at least, the precautionary statement: "Caution. Use only as directed," or such pertinent disclosure as is necessary to protect the consumer.

We fail to see how any honest manufacturer can object to this necessary warning. If his product may have dangerous consequences for its users, he will want to have the assurance that the public has been warned.

But the health of consumers should not be endangered by exempting foods, drugs, devices, and cosmetics from the jurisdiction of the FTC on the ground that a jurisdictional tangle may exist between the FTC and the FDA.

We suggest that the answer to this problem of jurisdiction lies in continuance of the close cooperation that we understand exists between the two agencies.

As far as consumers are concerned, we are more than happy to have the double protection against false labeling. There is no reason, if a food or drug product is fraudulently labeled, why both the FTC and FDA should not be available to proceed against the manufacturer in the interests of the consuming public.

What is at stake here is maximum consumer protection. There should be no loopholes for concerns which misbrand, adulterate, or do not reveal in advertising as well as labeling the potential dangers resulting from use of their products.

We believe that we have demonstrated that the provisions of H. R. 2390 would seriously undermine consumer protection against misleading and false advertising, because the sellers, could advertise dangerous products without warning, and in the case of cosmetics or drugs sold by mail order, at soda fountains, or similarly dispensed, the only possible warning to the prospective purchaser would be that found in the advertisement.

Adoption of the Reece bill would only serve the interests of a minority of manufacturers, willing to gamble with the health of the public. For some time they have been seeking to make it easier for them to

85257-46- -23

get away with dishonest claims and to eliminate existing curbs on the sale of dangerous products. We are not alone in this opinion of the forces seeking to weaken consumer protection.

For example, Business Week-a hard-headed business publication-in its March 24, 1945, issue, pointed out that H. R. 2390—

looks like an answer to the prayer of proprietary drug interests, as the bill would satisfy virtually all objections which drug companies have expressed about FTC procedure.

By the same token, we feel that H. R. 2390 would weaken or nullify much of the protection consumers now have under the provisions of the existing act.

The health and welfare of the American people are the primary concern of Congress. When legislation is proposed that would undermine essential safeguards for the people, it is the duty of Congress to reject it. We respectfully urge your committee to vote down H. R. 2390, thus serving notice that the FTC will continue to uncover fraudulent advertising and to protect the over-all interests of the consuming public.

Mr. SADOWSKI. Thank you.

Mr. REECE. May I ask just one question: You and your organization have confidence in the Federal Trade Commission and likewise in the Pure Food and Drug Administration?

Mrs. ROHR. We have, Mr. Reece.

Mr. REECE. In 1935, as I recall, your organization advocated that the interests of the consuming public would be best served by placing full authority to deal with all phases of foods, drugs, and cosmetics in one agency.

Mrs. ROHR. Congressman Reece, I believe you have our organization confused with another organization. We were not in existence in 1935.

Mr. REECE. That was another organization?

Mrs. ROHR. Yes.

Mr. REECE. Then what would be your attitude now if you were to find that power to deal with all phases of this question should be placed either in the Federal Trade Commission or the Food and Drug Administration?

Mrs. ROHR. That is something that we would not express an opinion on, because as I have said, we are not legal experts and have no legal experts in our organization.

We are interested in maximum consumer protection. Whatever way the Congress chooses to give it to us is all right as far as we are concerned. I think that we have it now with the two agencies.

We do not want either one to lose any of their existing powers. Mr. O'HARA. Mrs. Rohr, when was your organization organized? Mrs. ROHR. 1936.

Mr. O'HARA. And where is its headquarters?

Mrs. ROHR. New York.

Mr. O'HARA. What address, please?

Mrs. ROHR. 17 Union Square West.

We have a Washington address, 1706 G Street.

Mr. O'HARA. And what is your connection with that organization? Mrs. ROHR. I am the Washington representative.

Mr. O'HARA. And what is your title?