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Mr. CASSEDY. The circumstances would determine that.
Mr. REECE. I think without reference to this bill that is a situation that should be very carefully considered, and I am sure it is, so as not to arouse suspicion.
Mr. CASSEDY. Let me answer that: The recent decision in the Buchsbaum case in the seventh circuit reversed a decision of the Commission because of a change in trial examiners when a trial de novo was not granted, when the new trial examiner took over.
Mr. SADOWSKI. And ordinarily it would not be advantageous to the FTC to make changes in examiners?
Mr. Davis. I want to say that the Commission avoids it whenever possible, and in almost every instance where for some reason there has been a change, it has been with the agreement of counsel for the respondent.
Mr. SADOWSKI. The committee stands recessed until Monday morning at 10 o'clock.
(Thereupon, at 12:45, March 8, 1946, the committee recessed until 10 a. m., Monday, March 11, 1946.)
AMEND FEDERAL TRADE COMMISSION ACT
MONDAY, MARCH 11, 1946
HOUSE OF REPRESENTATIVES,
Washington, D. C.
STATEMENT OF MRS. MARY DUBLIN KEYSERLING, REPRESENTING
AMERICAN ASSOCIATION OF UNIVERSITY WOMEN
Mrs. KEYSERLING. The American Association of University Women is strongly opposed to the provisions of H. R. 2390, to amend the act creating the Federal Trade Commission.
It contends that the amendments offered by the bill are not only wholly unnecessary but would, if enacted, deprive the consumer of present protection against misleading and highly dangerous advertising, by making it impossible for the Federal Trade Commission effectively to control the advertising of potentially dangerous cosmetics and patent medicines.
Further, the bill is detrimental to public interest, in our view, in that by lowering present penalties for violations of an order of the Commission, now too low to afford adequate consumer safeguards, it would make of penalties mere license fees.
The proposed bill would, we believe, deprive the public of much of the invaluable protection that has been given by the Federal Trade Commission, in that the amendments proposed would break down the Commission's essential administrative function and by vastly increasing the number of cases which would be taken unnecessarily into court, tie up its limited resources in long-drawn-out expensive and fruitless proceedings.
Consumer protection from fraud, potentially dangerous drugs and cosmetics, misleading advertising and unfair competitive practice is far from fully effective today.
We regard with serious misgivings any attempt which would break down any protection for which those with the public interest at heart,
the American Association of University Women among them, have fought for over 30 years.
This is no time to tinker with established procedures which years of experience have proved fair and reasonable and beyond question of benefit to the community. This is not time to concede to the demands of small special interest groups who shortsightedly put their concern for private gain above the public benefit.
These are the facts as we see them:
This bill would make a very important change in the Federal Trade Commission Act, (sec. 15) which now defines false advertising as that which is misleading in a material respect.
In determining whether advertising is misleading, the present law requires that there be taken into account "Not only representations made or suggested by statement, word, design, device, sound, or any combination thereof, but also the extent to which the advertisement fails to reveal facts material in the light of such representations or," and this I underline, "material with respect to consequences which may result from the use of a commodity to which the advertisement relates under the conditions prescribed in said advertisement or under conditions as are customary or usual."
The last part of this' requirement has proved especially essential to public protection. The use of drugs is a complicated business. The consumer, drawn to a preparation by an advertisement, may not know that its use may be habit-forming, that it may cause permanent functional injury, that it may produce insomnia or far more injurious consequences, unless he is so warned.
Because of the protection afforded by the present law, the Federal Trade Commission has been able to require the advertisers of certain products to reveal the possible consequences of which the consumer should be fully apprised.
We consumers are more than entitled to know that the use of a given preparation may result in grave injury. Far from being too strong, we hold that the present law is weak, in that the consumer is now informed of potential danger but can still buy a product which could result in permanent injury to the heart, to tissues, or to organic functions, or cause other irreparable damage.
Why, then, we ask, should the phrase which requires an indication in advertising of these potential dangers, where they clearly exist, be stricken from the law as this bill proposes ! The warning in advertising now required is little enough protection of the consumer. If the law is changed in this respect as proposed, we cannot but foresee an increased sale of products which have proven seriously harmful to some users in the past and of menacing new ones. It is not enough to prevent deception resulting from ambiguity and indirection or from false statement, all that H. R. 2390 would require. To do away with the indication now required of potential consequences of the use of a drug or other product when used under customary or usual conditions, or under conditions prescribed in the advertisement is not only unjustified; in our view it is dangerous in the extreme.
A second serious danger contained in the proposed bill is the provision which would put a ceiling of $10,000 on penalties imposed on violators of an order of the Commission and reduce from $5,000 to $1,000 the penalty for each violation.
We hold that present penalties are not adequate deterrents of violation on the part of firms with the immense resources of presentday corporations. Further, to reduce this deterrent would be to make of it merely a license fee rather than a fine. We would point out that $5,000 would far from pay for one good advertisement in a national magazine or over the air.
Perhaps the most serious dangers of the bill, in our minds, are those which strike at the heart of the powers of the Commission. At the present time, any order of the Commission to cease and desist certain practices is subject to review by an appropriate United States Circuit Court of Appeals at the choice of the affected party.
The full record of the Commission's proceedings is in all such cases certified to the court and, as is well-known, the Commisison's findings as to the facts, if supported by evidence, are held conclusive.
This has been the standard administrative procedure under the law, not only of the Federal Trade Commission but also of other quasijudicial governmental agencies, such as the Interstate Commerce Commission, the Federal Communications Commission, the Securities and Exchange Commission, and others.
Those against whom cease and desist orders have been issued have the fullest protection of the courts against arbitrary or unreasonable action, and, as is evidenced by the record, the courts have not hesitated in a few cases where the courts have found the Commission's orders were not supported by substantial evidence, to set the Commission's orders aside. We can see no
reason for any change in the present procedures of the Federal Trade Commission. H. R. 2390 would, if enacted, require that the Commisison's findings as to the facts be held conclusive by the court only “if supported by the preponderance of the evidence.”
The implications of this change would make one wonder whether some supporters of this proposal do not seek to cripple the powers of the Commission rather than to assure that justice is done.
For what this would do would be to require that the courts in all cases brought before them become experts in the issues themselves, review and weigh all the evidence on both sides, and reach an independent conclusion as to the facts.
Obviously, this would impose a tremendous burden on already overburdened courts. Proceedings would be greatly extended, the course of litigation would be greatly increased. The unscrupulous, who are always eager to make money, even out of dangerous products, might bring case after case into court, tieing up the Commission and the courts in endless litigation. What a device this would be in the hands of those whom we know would be ready to exploit it to the full.
The highly specialized functions of the Commission, which has served the public well and long, would be transferred, under H. R. 2390, to the courts, and the Commission would become merely a rollector of evidence.
If the procedure proposed by the bill is warranted in the case of the Federal Trade Commission, which we contend it is not, then it is equally appropriate to all other quasijudicial bodies. Can anyone imagine how our justices, able as they are, could become experts as to the facts in fields as diverse as trade practices, national labor relations, communications, and interstate commerce, to mention but a few? Can one conceive of the difficulties and delays that would result? Could one expect that the essential public protection the Federal Trade Commission now affords would be strengthened? We feel that justice would not be served; it is well served now. The proposed change is not only unnecessary; in our view, it is a threat to practice long tried and long proven in the public interest.
The American Association of University Women must conclude that the provisions of H. R. 2390 would deprive the consumer of necessary safeguards the law now affords. We urge that the bill be voted down with the least possible delay.
Mr. SADOWSKI. Thank you.
Mr. REECE. A good portion of your statement dealt with the court review provisions of the bill, and I was wondering if you had advised with some member of the bar in connection with that.
Mrs. KEYSERLING. No, sir; I have not. I am an economist but not a lawyer.
Mr. O'HARA. Just one or two other questions: In your comments upon the drug and cosmetic angle, particularly with regard to the matter of drugs, would you suggest that the law should be that every person who wants to buy headache tablets or something of that type should only do so by prescription of a physician?
Mrs. KEYSERLING. I feel that in the case of drugs not potentially harmful, or injurious, the consumer should be free, as he is at present, to purchase as he chooses.
Mr. O'HARA. Do you think the average purchaser of the average drug which he can buy without prescription reads the directions and labels upon the drug?
Mrs. KEYSERLING. I am afraid not-I am afraid very few do.
Mrs. KEYSERLING. So that the advertising which leads him to learn of the product is, in our minds, a very important place for him to get the information he should have.
Mr. O'HARA. How much do you think he would read the advertising ?
Mrs. KEYSERLING. I think people read a good deal more than one sometimes thinks.
Mr. O'HARA. Well, in your comments upon the legal end of it, do you know how long it takes an appeal to go from the Federal Trade Commission to the Circuit Court of Appeals to be argued, generally, as to what the limitation is?
Mrs. KEYSERLING. I do not know what that limitation is.
Mr. O'HARA. Do you have any idea how long it takes some of the cases to be tried in the Federal Trade Commission?
Mrs. KEYSERLING. No, I have not analyzed that record.
Mr. REECE. Just in that regard, of course primarily responsibility for protecting the public from injurious drugs rests with the Food and Drug Administration, which I think you will agree has done a very good job in administering that provision of the law.
That responsibility was given the Food and Drug Administration because it had the technical and laboratory facilities and the staff to enable it to determine the therapeutic value of drugs.