What is the Federal Trade Commission (FTC)?
The Federal Trade Commission (FTC) is an agency independent from the United States government that aims to protect consumers and ensure a strong competitive market by enforcing consumer protection and anti-trust laws. Its primary objective is to enforce non-criminal antitrust laws in the United States, preventing and eliminating anti-competitive business practices, including coercive monopoly. The FTC also seeks to protect consumers from predatory or deceptive business practices.
Key points to remember
- The FTC enforces antitrust laws and protects consumers from predatory practices.
- The FTC’s activities include fraud or misleading advertising investigations, congressional investigations and pre-merger notifications.
- The FTC also manages scams and unfair trading practices.
How the Federal Trade Commission Works
The Federal Trade Commission (FTC) was created in 1914 by the Federal Trade Commission Act, as part of the Wilson Administration’s confidence-destroying efforts, the destruction of confidence being a major concern at the time. He was responsible for enforcing the Clayton Act, which prohibited monopoly practices. The FTC continues to discourage anti-competitive behavior through the Competition Bureau, which reviews plans to merge with the Department of Justice. Over the years, the FTC has been responsible for enforcing additional trade regulations, as codified in Title 16 of the Code of Federal Regulations.
The regular activities of the FTC include investigating cases of fraud or misleading advertising by consumers, businesses, the media, congressional investigations or pre-merger notification notifications. The FTC can investigate a single company or an entire industry. If an FTC investigation reveals illegal activity by one or more companies in the industry, they can request voluntary compliance through a consent order, initiate federal litigation, or file an administrative complaint. Traditionally, such a complaint would be heard before an administrative law judge (ALJ) and can be appealed to the United States Court of Appeal and then the Supreme Court.
The FTC also handles complaints of unfair business practices such as scams and misleading advertising. The Consumer Protection Bureau investigates allegations of abuse, conducts coercive actions and provides educational materials to consumers. The Bureau of Consumer Protection is responsible for the United States national registry of Do Not Call Numbers.
The Bureau of Economics provides research support to the other two departments of the FTC, including analysis of the potential effects of FTC actions.
Generally, the FTC does not have the capacity to directly enforce its decisions, but it can go to the courts to have them enforced.
Examples of FTC actions
In 1984, the FTC cracked down on deceptive pricing in the funeral home industry, implementing the FTC Funeral Rule, which requires funeral homes to offer a written General Price List (GPL) of all property prices and services in the funeral industry to anyone who requests one. No one can be denied a written copy of the GPL by law, and they should be allowed to keep it if they wish. In 1996, the FTC implemented the Funeral Rule Offenders Program, which allows funeral homes at fault to make a voluntary payment to the U.S. Treasury or an appropriate state fund in exchange for not having to go to court.
In the 1990s, the agency conducted a number of investigations into telemarketing scams offering fictitious business opportunities, starting with the Telesweep project in 1995, which cracked down on at least 100 business opportunity scams. The FTC has been active in the healthcare industry, blocking the proposed acquisition of the Palmyra Medical Center by Putney Memorial Hospital due to potential harm to consumers. The case went to the Supreme Court, which ruled in favor of the FTC in 2020.