AAF Government Report

September 17, 2009

Clark Rector Jr., Executive Vice President – Government Affairs

New Consumer Agency Proposal Expands Regulation

The House Banking Committee is considering The Consumer Financial Protection Act (H.R. 3126) which we believe would have an adverse impact on businesses that extend credit to consumers and permit flexibility in repayment. The legislation would create a new Consumer Financial Protection Agency that would have broad powers over the transactions described above. Thus, most businesses that offer flexible payment schedules would be subject to a new federal regulatory regimen. Additionally, the new agency would have power over businesses that “indirectly” provide a financial product or service. This could be interpreted to include providers of technology and communications such as advertisers, newspapers and other publications.

With this jurisdiction, the agency could assess fees to fund itself, mandate disclosures, determine “unfair” practices and set a myriad of other standards as to how businesses must operate.

This legislation is currently in its early stages. The AAF is concerned with this legislation and recognizes the need to carefully consider regulation in light of the events of the last year. We will work to ensure that any legislation regulates only where necessary and creates the least possible disruption of proper business practices.
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Cable and Content Providers Agree on Transmission Charges

Legislation in the House Judiciary Committee is intended to end a dispute over copyrights between cable television and content providers. Under the legislation as proposed, content providers would pay the studios $85 million to cover transmissions that are not viewable by consumers but do require payment under the rules of the Copyright Office. (Professional consumer groups continue to lobby the Congress to change the law so that transmissions not delivered to consumers would not be subject to these royalty payments.)

Legislation from the Judiciary Committee will have to be reconciled with any legislation ultimately reported by the House Energy and Commerce Committee which also has jurisdiction over these issues. There is no timetable for a House vote
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DTC Taxing Proposal off the Table, For Now.

Thanks to the quick work of AAF grassroots members and others a developing crisis has been averted. Earlier this week Senator Bill Nelson (D.-Fla.), a member of the Senate Finance Committee, told a Florida newspaper that he intended to introduce an amendment to the Finance Committee health bill which would deny tax deductibility to direct to consumer advertising. Sen. Nelson has now indicated that he does not expect to attempt to amend the health bill in this fashion. However, Sen. Nelson may introduce this amendment at some point in the future. We will continue our opposition to any efforts to deny tax deductibility to direct to consumer advertising.
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FTC Voices Concerns Over Privacy Issues

The Federal Trade Commission (FTC) has urged the Federal Communications Commission (FCC) to consider privacy issues involved in targeted marketing during the FCC’s work on creating a national broadband plan.

The FTC wrote, “A significant number of consumers appear to be particularly concerned about the tracking of their online activities for the purposes of, for example, delivering targeted advertisements. It appears consumers generally maintain these concerns even where the data is not personally identifiable.”

The FTC also expressed its concern regarding “deep packet inspection.” It said that technology now allows providers to “track a consumer’s online activities to deliver targeted advertisements…” The FTC commented that these practices can be a benefit to consumers but also, pose some risks.

The FTC wrote that the FCC’s broadband plan should “maximize incentives for business to enter, deploy risk capital, and compete for customers, keeping barriers to entry as low as possible.”
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Congressmen Fear Consequences of ICANN Plan

Senior Republican Congressmen Lamar Smith (R.-Texas) and Howard Coble (R.-N.C.) have written new ICANN CEO Rod Beckstom about concerns regarding the proposed introduction of multiple top level domain names as well as the expiration of an agreement memo between the Commerce Department and ICANN this month.

In the letter, the Congressmen express concerns about “serious negative consequences” from the action. Many businesses have expressed fears of cyber squatting, confusion and fraud if ICANN goes forward with its proposal to add significant numbers of top level domain names. Reps. Smith and Coble also suggest the need for price caps in the prices paid for domains registered or renewed.

Reps. Smith and Coble appear to not be alone in their concerns as to the expiration of the agreement between Department of Commerce and ICANN. House Energy and Commerce Committee Chairman Henry Waxman (D.-Calif.) and Communications Subcommittee Chairman Rick Boucher (D.-Va.) have previously called for a permanent relationship. AAF has expressed its views in a letter to Secretarry of Commerce Gary Locke. The letter can be found here.
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