Federal Trade Commission

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Federal Trade Commission
US-FederalTradeCommission-Seal.svg
Seal of the Federal Trade Commission
Flag of the United States Federal Trade Commission.svg
Flag of the Federal Trade Commission
Agency overview
Formed September 26, 1914
Preceding Agency Bureau of Corporations
Jurisdiction Federal government of the United States
Headquarters Washington, D.C.
Employees 1,131 (December 2011) [1]
Agency executive Edith Ramirez, Chairman
Website www.ftc.gov
Footnotes
[2][3]

The Federal Trade Commission (FTC) is an independent agency of the United States government, established in 1914 by the Federal Trade Commission Act. Its principal mission is the promotion of consumer protection and the elimination and prevention of anticompetitive business practices, such as coercive monopoly. The Federal Trade Commission Act was one of President Woodrow Wilson's major acts against trusts. Trusts and trust-busting were significant political concerns during the Progressive Era. Since its inception, the FTC has enforced the provisions of the Clayton Act, a key antitrust statute, as well as the provisions of the FTC Act, 15 U.S.C. § 41 et seq. Over time, the FTC has been delegated the enforcement of additional business regulation statutes and has promulgated a number of regulations (codified in Title 16 of the Code of Federal Regulations).

Legislative development[edit]

Apex Building, built in 1938 (FTC headquarters) in Washington, D.C.

Following the Supreme Court decisions against Standard Oil and American Tobacco in May 1911, the first version of a bill to establish a commission to regulate interstate trade was introduced on January 25, 1912, by Oklahoma congressman Dick Thompson Morgan, once known as the "father of the Federal Trade Commission".[citation needed] He would make the first speech on the House floor advocating its creation on February 21, 1912. Though the initial bill did not pass, the questions of trusts and antitrust dominated the 1912 election.[4] Most political party platforms in 1912 endorsed the establishment of a federal trade commission with its regulatory powers placed in the hands of an administrative board, as an alternative to functions previously and necessarily exercised so slowly through the courts.[5]

With the election decided in favor of the Democrats and Wilson, Morgan reintroduced a slightly amended version of his bill during the April 1913 special session. The national debate culminated in Wilson's signing of the FTC Act on September 26, with additional tightening of regulations in the Clayton Antitrust Act three weeks later. The new Federal Trade Commission would absorb the staff and duties of Bureau of Corporations, previously established under the Department of Commerce and Labor in 1903. The FTC could additionally challenge “unfair methods of competition” and enforce the Clayton Act’s more specific prohibitions against certain price discrimination, vertical arrangements, interlocking directorships, and stock acquisitions.[4]

Current membership[edit]

The following table lists commissioners as of June 2013.

Member Political party Sworn in Term expiration
Edith Ramirez
(Chair)
Democratic April 5, 2010 September 25, 2015
Julie Brill Democratic April 6, 2010 September 25, 2016
Maureen K. Ohlhausen Republican April 4, 2012 September 25, 2018
Joshua D. Wright Republican January 11, 2013 September 25, 2019
Terrell McSweeny Democratic April 28, 2014 September 25, 2016

List of former Commissioners[edit]

Recent former commissioners were:[6]

Commissioner Years
Caspar Weinberger December 31, 1969 – August 6, 1970
Philip Elman April 21, 1961 – October 18, 1970
Miles W. Kirkpatrick September 14, 1970 – February 20, 1973
Everette MacIntyre September 26, 1961 – August 30, 1973
Mary Gardner Jones October 29, 1964 – November 2, 1973
David J. Dennison, Jr. October 18, 1970 – December 31, 1973
Mayo J. Thompson July 8, 1973 – September 26, 1975
Lewis A. Engman February 20, 1973 – December 31, 1975
Calvin J. Collier March 24, 1976 – December 31, 1977
Stephen A. Nye May 5, 1974 – May 5, 1978
Elizabeth Hanford Dole December 4, 1973 – March 9, 1979
Paul Rand Dixon March 21, 1961 – September 25, 1981
David Clanton August 26, 1975 - October 14, 1983
Michael Pertschuk April 21, 1977 – October 15, 1984
George W. Douglas December 27, 1982 – September 18, 1985
James C. Miller III September 25, 1982 – October 5, 1985
Patricia P. Bailey October 29, 1979 – May 15, 1988
Margo E. Machol November 29, 1988 – October 24, 1989 [recess appointment]
Daniel Oliver April 21, 1986 – August 10, 1989
Terry Calvani November 18, 1983 – September 25, 1990
Andrew Strenio March 17, 1986 – July 15, 1991
Deborah K. Owen October 25, 1989 – August 26, 1994
Dennis A. Yao July 16, 1991 – August 31, 1994
Christine A. Varney October 17, 1994 – August 5, 1997
Janet D. Steiger August 11, 1989 – September 28, 1997
Roscoe B. Starek, III November 19, 1990 – December 18, 1997
Mary L. Azcuenaga November 27, 1984 – June 3, 1998
Robert Pitofsky June 29, 1978 – April 30, 1981 & April 11, 1995 – May 31, 2001
Sheila F. Anthony September 30, 1997 – August 1, 2003
Timothy Muris June 4, 2001 – August 15, 2004
Mozelle W. Thompson December 17, 1997 – August 31, 2004
Orson Swindle December 18, 1997 – June 30, 2005
Thomas B. Leary November 17, 1999 – December 31, 2005
Deborah Platt Majoras August 16, 2004 – March 29, 2008
Pamela Jones Harbour August 4, 2003 – April 6, 2010
William Kovacic January 4, 2006 – October 3, 2011
J. Thomas Rosch January 5, 2006 - Sept 2012
Jon Leibowitz March 2, 2009 – March 7, 2013

Bureaus[edit]

How to File a Complaint with the Federal Trade Commission, from the FTC

Bureau of Consumer Protection[edit]

The Bureau of Consumer Protection’s mandate is to protect consumers against unfair or deceptive acts or practices in commerce. With the written consent of the Commission, Bureau attorneys enforce federal laws related to consumer affairs and rules promulgated by the FTC. Its functions include investigations, enforcement actions, and consumer and business education. Areas of principal concern for this bureau are: advertising and marketing, financial products and practices, telemarketing fraud, privacy and identity protection, etc. The bureau also is responsible for the United States National Do Not Call Registry.

Under the FTC Act, the Commission has the authority, in most cases, to bring its actions in federal court through its own attorneys. In some consumer protection matters, the FTC appears with, or supports, the U.S. Department of Justice.

Bureau of Competition[edit]

The Bureau of Competition is the division of the FTC charged with elimination and prevention of "anticompetitive" business practices. It accomplishes this through the enforcement of antitrust laws, review of proposed mergers, and investigation into other non-merger business practices that may impair competition. Such non-merger practices include horizontal restraints, involving agreements between direct competitors, and vertical restraints, involving agreements among businesses at different levels in the same industry (such as suppliers and commercial buyers).

The FTC shares enforcement of antitrust laws with the Department of Justice. However, while the FTC is responsible for civil enforcement of antitrust laws, the Antitrust Division of the Department of Justice has the power to bring both civil and criminal action in antitrust matters.

Bureau of Economics[edit]

The Bureau of Economics was established to support the Bureau of Competition and Consumer Protection by providing expert knowledge related to the economic impacts of the FTC's legislation and operation.

Activities of the FTC[edit]

The FTC puts out its mission by investigating issues raised by reports from consumers and businesses, pre-merger notification filings, congressional inquiries, or reports in the media. These issues include, for instance, false advertising and other forms of fraud. FTC investigations may pertain to a single company or an entire industry. If the results of the investigation reveal unlawful conduct, the FTC may seek voluntary compliance by the offending business through a consent order, file an administrative complaint, or initiate federal litigation.

Traditionally an administrative complaint is heard in front of an independent administrative law judge (ALJ) with FTC staff acting as prosecutors. The case is reviewed de novo by the full FTC commission which then may be appealed to the U.S. Court of Appeals and finally to the Supreme Court. A summary of cases heard since 1996[7] indicates that the commission has never upheld an administrative law judge's decision to dismiss a complaint. After adverse results in which the independent administrative law judges have ruled against the FTC (Schering Plough[8] and Rambus),[9] there has been a move towards FTC commissioners being appointed as ALJ (Commissioner Rosch in Inova Health).[10]

Under the FTC Act, the federal courts retain their traditional authority to issue equitable relief, including the appointment of receivers, monitors, the imposition of asset freezes to guard against the spoliation of funds, immediate access to business premises to preserve evidence, and other relief including financial disclosures and expedited discovery. In numerous cases, the FTC employs this authority to combat serious consumer deception or fraud. Additionally, the FTC has rulemaking power to address concerns regarding industry-wide practices. Rules promulgated under this authority are known as Trade Rules.

In the mid-1990s, the FTC launched the fraud sweeps concept where the agency and its federal, state, and local partners filed simultaneous legal actions against multiple telemarketing fraud targets. The first sweeps operation was Project Telesweep[11] in July 1995 which cracked down on 100 business opportunity scams.

In 1984,[12] the FTC began to regulate the funeral home industry in order to protect consumers from deceptive practices. The FTC Funeral Rule requires funeral homes to provide all customers (and potential customers) with a General Price List (GPL), specifically outlining goods and services in the funeral industry, as defined by the FTC, and a listing of their prices.[13] By law, the GPL must be presented to all individuals that ask, no one is to be denied a written, retainable copy of the GPL. In 1996, the FTC instituted the Funeral Rule Offenders Program (FROP), under which "funeral homes make a voluntary payment to the U.S. Treasury or appropriate state fund for an amount less than what would likely be sought if the Commission authorized filing a lawsuit for civil penalties. In addition, the funeral homes participate in the NFDA compliance program, which includes a review of the price lists, on-site training of the staff, and follow-up testing and certification on compliance with the Funeral Rule."[12]

One of the Federal Trade Commission's other major focuses is identity theft. The FTC serves as a federal repository for individual consumer complaints regarding identity theft. Even though the FTC does not resolve individual complaints, it does use the aggregated information to determine where federal action might be taken. The complaint form is available online or by phone (1-877-ID-THEFT).

The FTC has been involved in the oversight of the online advertising industry and its practice of behavioral targeting for some time. In 2011 the FTC proposed a "Do Not Track" mechanism to allow Internet users to opt-out of behavioral targeting.

In 2013, the FTC issued a comprehensive revision of its Green guides, which set forth standards for environmental marketing.[14]

The FTC imposes civil penalties against companies that breach filing requirements, whether intentionally or not. Warren Buffett's Berkshire Hathaway agreed to a $856,000 civil penalty in August 2014 after failing to report in advance a December 2013 conversion of convertible notes. The FTC, in a statement referred to the matter as an "inadvertent error."

Unfair or deceptive practices affecting consumers[edit]

Endorsement Guides from the FTC

Section 5 of the Federal Trade Commission Act, 15 U.S.C. § 45 grants the FTC power to investigate and prevent deceptive trade practices. The statute declares that “unfair methods of competition in or affecting commerce, and unfair or deceptive acts or practices in or affecting commerce, are hereby declared unlawful.”[15] Unfairness and deception towards consumers represent two distinct areas of FTC enforcement and authority. The FTC also has authority over unfair methods of competition between businesses.[16]

Deception practices[edit]

In a letter to the Chairman of the House Committee on Energy and Commerce, the FTC defined the elements of deception cases. First, “there must be a representation, omission or practice that is likely to mislead the consumer.”[17] In the case of omissions, the Commission considers the implied representations understood by the consumer. A misleading omission occurs when information is not disclosed to correct reasonable consumer expectations.[17] Second, the Commission examines the practice from the perspective of a reasonable consumer being targeted by the practice. Finally the representation or omission must be a material one—that is one that would have changed consumer behavior.[17]

In its 2000 Dot Com Disclosures guide,[18] the FTC said that “[d]isclosures that are required to prevent deception or to provide consumers material information about a transaction must be presented clearly and conspicuously.”[18] The FTC suggested a number of different factors that would help determine whether the information was “clear and conspicuous” including:

  • the placement of the disclosure in an advertisement and its proximity to the claim it is qualifying,
  • the prominence of the disclosure,
  • whether items in other parts of the advertisement distract attention from the disclosure,
  • whether the advertisement is so lengthy that the disclosure needs to be repeated,
  • whether disclosures in audio messages are presented in an adequate volume and cadence and visual disclosures appear for a sufficient duration, and
  • whether the language of the disclosure is understandable to the intended audience.[18]

However, the “key is the overall net impression.[18]

In F.T.C. v. Cyberspace.com[19] the FTC found that sending consumers mail that appeared to be a check for $3.50 to the consumer attached to an invoice was deceptive when cashing the check constituted an agreement to pay a monthly fee for internet access. The back of the check, in fine print, disclosed the existence of this agreement to the consumer. The FTC concluded that the practice was misleading to reasonable consumers, especially since there was evidence that less than one percent of the 225,000 individuals and businesses billed for the internet service actually logged on.[19]

In In re Gateway Learning Corp. the FTC alleged that Gateway committed unfair and deceptive trade practices by making retroactive changes to its privacy policy without informing customers and by violating its own privacy policy by selling customer information when it had said it would not.[20] Gateway settled the complaint by entering into a consent decree with the FTC that required it to surrender some profits and placed restrictions upon Gateway for the following 20 years.[21]

In In the Matter of Sears Holdings Management Corp., the FTC alleged that a research software program provided by Sears was deceptive because it collected information about nearly all online behavior, a fact that was only disclosed in legalese, buried within the end user license agreement.[22]

Unfair practices[edit]

Courts have identified three main factors that must be considered in consumer unfairness cases: (1) whether the practice injures consumers; (2) whether the practice violates established public policy; and (3) whether it is unethical or unscrupulous.[16]

See also[edit]

References[edit]

  1. ^ "Office of Personnel Management". opm.gov. Retrieved March 5, 2013. 
  2. ^ [1][dead link]
  3. ^ "Federal Trade Commission: A History". Ftc.gov. January 18, 2012. Retrieved August 14, 2012. 
  4. ^ a b A Brief History of the Federal Trade Commission, Federal Trade Commission, 90th Anniversary Symposium.
  5. ^ Republican Party Platform of 1912, June 18, 1912, Democratic Party Platform of 1912, June 25, 1912, Platform of the Progressive Party, August 7, 1912.
  6. ^ "Commissioners and Chairmen of the Federal Trade Commission". Federal Trade Commission. 
  7. ^ [2][dead link]
  8. ^ "Docket No. 9297: In the Matter of Schering-Plough Corporation". Ftc.gov. August 26, 2011. Retrieved August 14, 2012. 
  9. ^ "Docket No. 9302: In the Matter of Rambus Incorporated". Ftc.gov. May 14, 2009. Retrieved August 14, 2012. 
  10. ^ "Docket No. 9326: In the Matter of Inova Health System Foundation". Ftc.gov. June 9, 2009. Retrieved August 14, 2012. 
  11. ^ "Business Opportunity Scam "Epidemic"". Ftc.gov. July 18, 1995. Retrieved August 14, 2012. 
  12. ^ a b FTC Announces Results of Compliance Testing of Over 300 Funeral Homes in the Second Year of the Funeral Rule Offenders Program, Federal Trade Commission, February 25, 1998
  13. ^ "Federal Trade Commission Funeral Rule - 16 CFR Part 453". Ftc.gov. October 24, 2008. Retrieved August 14, 2012. 
  14. ^ "FTC Issues Revised "Green Guides"". October 1, 2012. Retrieved October 24, 2013. 
  15. ^ 15 U.S.C. § 45(a)(1)
  16. ^ a b "FTC Policy Statement on Unfairness, Dec. 17, 1980". Ftc.gov. Retrieved August 14, 2012. 
  17. ^ a b c "FTC Policy Statement on Deception, Oct. 14, 1983". Ftc.gov. Retrieved August 14, 2012. 
  18. ^ a b c d "FTC, Dot Com Disclosures: Information about Online Advertising, May 2000" (PDF). Retrieved August 14, 2012. 
  19. ^ a b "453 F.3d 1196 (9th Cir. 2006)". Openjurist.org. Retrieved August 14, 2012. 
  20. ^ "Complaint" (PDF). Retrieved August 14, 2012. 
  21. ^ "Gateway Decision and Order, Sept. 2004" (PDF). Retrieved August 14, 2012. 
  22. ^ "Sears Complaint" (PDF). Retrieved August 14, 2012. 

Further reading[edit]

  • Davis, G. Cullom. "The Transformation of the Federal Trade Commission, 1914–1929," The Mississippi Valley Historical Review, (1962), 49#3 pp. 437–455 in JSTOR
  • MacLean, Elizabeth Kimball. "Joseph E. Davies: The Wisconsin Idea and the Origins of the Federal Trade Commission," Journal of the Gilded Age and Progressive Era (2007) 6#3 pp 248–284.

External links[edit]