The Federal Trade Commission Act of 1914 established the Federal Trade Commission (FTC). Consumers are protected by it, and certain business practices are prevented that take advantage of consumers.
The FTC regulates companies to prevent them from forming monopolies or dominating the market. This is also referred to as antitrust regulation. Consumers and businesses are both protected by the FTC.
Below is a partial list of the FTC’s activities:
- Protecting consumers from false advertising and other forms of fraud;
- Enforcing a variety of laws related to consumer credit;
- Regulating business marketing and warranty practices; and
- Enforcing laws and trade regulation rules and developing new rules to protect the marketplace.
The FTC’s main goal is to ensure that the markets are vigorous, efficient, and free of restrictions. Thus, the FTC tries to enforce consumer protection laws that prevent fraud, deception, and unfair business practices.
What Is the FTC’s Process For Bringing an Action?
When the FTC receives letters from consumers or businesses, pre-merger notification filings, congressional inquiries, or articles on consumer or economic issues, it may decide to take action. Investigations conducted by the FTC are usually not made public. As a result, the investigation and the companies involved are protected.
By entering into a consent order with the company, the FTC may be able to get voluntary compliance from the company if it believes the company has violated the law.
In essence, this means that the company agrees to stop its practices. If the FTC cannot get such an agreement, it may issue an administrative complaint or seek injunctive relief from the courts.
The company may be ordered to cease and desist if a violation is found. It is also possible for the FTC to issue Trade Regulation Rules. During rulemaking proceedings, the public can attend hearings and submit written comments.
How Does the Bureau of Consumer Protection Work?
As part of the FTC’s consumer protection mission, this Bureau enforces FTC rules, as well as laws enacted by Congress. Among its actions are:
- Conducting investigations and collecting complaints;
- Bringing lawsuits against companies and individuals who break the law;
- Maintaining fairness in the marketplace through rules; and
- Making consumers and businesses aware of their rights and responsibilities.
There are eight regional offices of the Bureau located in Los Angeles, New York, San Francisco, Seattle, Chicago, Cleveland, Atlanta, and Dallas. In addition, it has eight divisions.
What Are the Responsibilities of the Bureau’s Divisions?
There are many responsibilities of the FTC, but within the Bureau, there are separate divisions that handle the following:
- Division of Privacy and Identity Protection: handles issues related to identity theft, consumer privacy, and credit reporting.
- Division of Advertising Practices: enforces federal truth-in-advertising laws.
- Division of Consumer and Business Education: produces educational materials in various formats to help consumers and businesses stay educated on their rights and responsibilities.
- Division of Enforcement: litigates and coordinates with law enforcement personnel.
- Division of Marketing Practices: enforces consumer protection laws by filing actions on behalf of the FTC to stop scams, prevent scam artists from repeating their fraudulent schemes, freeze assets, and obtain compensation for victims.
- Division of Consumer Response and Operations: takes data and interprets it in order to determine whether the FTC’s efforts at consumer protection are successful.
- Division of Financial Practices: develops policy and enforces laws related to financial and lending practices affecting consumers.
- Division of Litigation Technology and Analysis: working with lawyers and determining the efficacy of technology used in litigation.
What Is the Federal Trade Commission Act?
The Federal Trade Commission Act is the statute that established the Federal Trade Commission (FTC). The FTC is an independent, five-member commission that administers laws aimed at regulating businesses and preventing deceptive trade practices, unfair restraints on trade, and the establishment of business monopolies.
How Does the Federal Trade Commission Protect Consumers?
Part of the FTC’s mandate is to eliminate and prevent unfair competition among businesses and promote consumer protection. Unfairness and deception towards consumers represent two areas that the Federal Trade Commission Act expressly grants the FTC power to investigate.
- False advertising and false business claims
- Consumer fraud and scams
- Breaches of consumer contracts
- Breaches of warranty
- Dangerous or defective products
- Health and safety code violations
Can the Federal Trade Commission Take Action Against Violators?
According to the Federal Trade Commission Act, the FTC may issue an order requiring a violator to cease the illegal practice on behalf of the general public. The FTC can impose significant fines if the violator does not comply with the order. In Federal court, a violator can appeal the FTC’s order.
In addition to creating the Federal Trade Commission, the Federal Trade Commission Act also provides the following:
This Act empowers the Commission, among other things, to:
- Prevent unfair competition and unfair or deceptive acts and practices in commerce;
- Obtain monetary redress and other relief for consumer-injurious conduct;
- Establish trade regulations that define unfair or deceptive acts or practices with specificity, as well as requirements for preventing them;
- Investigate the organization, business practices, and management of entities engaged in commerce; and
- Legislative recommendations are made to Congress in the form of reports.
The act was part of an early 20th-century movement to supervise and regulate certain kinds of businesses through special groups.
Any violation of the Sherman Act also violates the Federal Trade Commission Act, so the Federal Trade Commission can act on cases that violate either act. In today’s society, the Federal Trade Commission Act and both antitrust laws serve the same purpose to “protect the process of competition for the benefit of consumers, making sure there are strong incentives for businesses to operate efficiently, keep prices down, and keep quality high.
To curb unfair trade practices, this commission was authorized to issue “cease and desist” orders to large corporations. Further, the Federal Trade Commission Act is also regarded as a measure that protects privacy since it allows the FTC to penalize companies that violate their own policies through false advertising. Deceptive advertisements and pricing were some of the unfair methods of competition targeted.
On September 8, 1914, the Senate passed the act with a 43-5 vote, and the House passed it without a tally of yeas or nays. On September 26, President Wilson signed it into law.
Do I Need a Lawyer for a Federal Trade Commission Act Problem?
It is the FTC’s responsibility to take legal action when consumers or others complain. After filing a complaint with the FTC and your complaint was ignored or unresolved, you can decide whether to pursue a civil action privately.
In any case, you should hold onto all of your documents and records in case the FTC cannot resolve your complaint immediately.
The laws governing unfair competition, antitrust, and consumer protection can be complex and technical. Suppose you feel that your rights as a consumer or business owner have been violated. In that case, a business lawyer can help guide you through the legal process, make sure all of your rights are protected, and, if applicable, help you file a report with the FTC.
Use LegalMatch to find the right business lawyer for your needs, and start resolving your legal issue today.