Hearing of the Senate Commerce Committee - Opening Statement of Sen. Tom Udall, Hearing on Legislation to Protect NM Consumers from COVID-19 Scams

Hearing

Today, U.S. Senator Tom Udall (D-N.M.) secured important support from commissioners on the Federal Trade Commission for his Stopping COVID Scams Act of 2020. The legislation would empower the Federal Trade Commission (FTC) and state attorneys general to hold bad actors accountable for defrauding consumers during the current public health emergency.

"Throughout the COVID-19 pandemic, we have seen Americans come together to support frontline workers," Udall began in his opening statement. "We have seen New Mexicans rally as communities to help their families and neighbors. But just as times of crisis can bring out the best in people, they can also bring out the worst who target vulnerable people.

"And that is what we have been seeing in numerous reports of harmful scams that put consumers at risk," Udall continued. "As a former New Mexico Attorney General, I know you recognize the need to work with partners outside of the agency. State attorneys general have their ear to the ground. They hear directly from consumers. And many are strong protectors of state consumer laws. A working relationship with them is essential. That is why I introduced the Stopping COVID Scams Act in the Senate--to empower federal and state authorities to do more to deter scammers and hold them accountable."

"My legislation would allow State Attorneys General to bring a civil action in district or State court to respond to COVID related fraud under the FTC Act. So, a question for every commissioner. Do any of you oppose authorizing state attorneys general to take action and respond to fraud under the FTC Act?" Udall asked.

"I don't have any reservations about that at all, and I agree completely and want to echo what you said about the importance of our relationship with the state [Attorneys General]," said FTC Charmain Joe Simons. "They are boots on the ground, they are terrific partners and we couldn't do what we do without working with them."

"Senator, I agree with your proposal," said Commissioner Rohit Chopra.

"My bill also enhances the FTC's civil penalty authority," Udall continued. "Currently, FTC enforcement begins with an administrative complaint against a potential scammer. Then there's a cease-and-desist order or a settlement. Under current law, the Commission can only then seek civil penalties in court if there's further violation. That is months or potentially years of court action. But, as we've seen, the current health crisis moves quickly. New Mexicans have died due to contaminated hand sanitizer with false labeling. Families fear for their health and are willing to spend their money on questionable products making false claims.

"Commissioner Slaughter, is FTC's current "tool kit' of enforcement actions up to the present challenge?" Udall asked.

"I think as you point out, senator, civil penalty authority would be enormously helpful," Slaughter responded. "It is really hard for us to have to go in most cases through that iterative process to get to civil penalties, and civil penalties are valuable because they put a big stick on the table in terms of potential money that companies will have to pay, which has an important deterrent effect. So seeing that would be important."

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