Providing safeguards to consumers concerning fraudulent business practices, defective products, and dangerous goods and services is the sole concept of the consumer protection laws.
Not only do such laws serve to be of utmost importance in a market economy but also enable a sense of honesty to prevail in sellers complemented with no requirement of sudden and unpleasant surprises.
Speaking particularly in the United States, falling under the umbrella of Consumer protection laws are the numerous kinds of federal and state rules and legalities that are each employed with the ability to regulate a particular region of the market economy.
On the federal level, the government takes liberty in the usage of a body known as the Federal Trade Commission for implementing and governing consumer protection laws, but stepping down, onto state levels, the authority responsible for enforcing such aforementioned rules and regulations are with various other agencies as well as found under several statutes, which are sometimes subjected to expansion depending on the case at hand.
Diving further into the concept of consumer protections, it deems it essential to focus on the federally controlled agency, The Federal Trade Commission.
An independent agency within the US government that is authorized with the power to govern and aid in the functioning of consumer protection and civil antitrust laws, is the Federal Trade Commission, which is also known as FTC.
Brought into force in the year 1914, the Federal Trade Commission is an administrative body that is given the authority to prevent several harmful acts affecting the marketplace such as any kind of anticompetitive, deceptive, or unfair business or trade practices.
Bestowed with two major goals which are to provide numerous defences against malpractices prevailing in the market economy to the consumers as well as to promote healthy and fair means of competition in the economy.
On the same lines, various additional supports such as agency expertise and resources are made to be accessible to federal and state governments, as well as other United States administrative agencies and officials.
Not only does The Federal Trade Commission work to ensure that consumer protection and antitrust laws are administered and properly regulated but it also empowers the consumers to help in advancing their interests as well as bestow upon them such educational and awareness-oriented programs serving as a benefit to such consumers.
1. The Development of The Federal Trade Commission
To understand The Federal Trade Commission better, it deems it necessary to shine a light on its history and development.
Starting from the initiation, The Federal Trade Commission was brought into existence on September 26, 1914, after then-president Woodrow Wilson placed his assent on the bill about the Federal Trade Commission Act, marking it the day when the said bill was converted into a law.
Dealing with harmful acts such as unfair competition and deceptive practices prevailing in the marketplace was the reason for bringing such legislation into force.
Moving ahead, speaking of The Federal Trade Commission’s early days, the Act was bestowed with the only purpose of investigating and prosecuting cases involving unfair competition and deceptive advertising and practices that were executed in the market economy.
Not only did bring to existence several amended rules but also certain highly sensitive cases that encompassed claims put forth against highly influential companies, created various landmark judgments that radically shaped the commission’s modus operandi.
Not only the aforementioned, but The Federal Trade Commission could work in sync with the Department of Justice for the act of enforcing antitrust laws that dealt specifically with the Sherman Antitrust Act.
Such a collaboration, led the commission to be in an even more authoritative position to govern, investigate, scrutinize, and regulate the presentation of companies acting like a monopolist as well as take down anticompetitive business practices.
Sprinting ahead to the phase of the Great Depression, The Federal Trade Commission not only strengthened its core goal which was to grant protections to its consumers in all trade-related aspects as well as push for fair and healthy competition in the economy, but it was also made to pro-actively pursue and investigate cases revolving around false advertising, product misrepresentation, and unfair trade practices.
Jumping to the 1960s and 1970s, dealing with deceptive marketing practices, false advertising, and fraud in a nutshell, served as the utmost focus of The Federal Trade Commission apart from offering guards to consumers in the market economy.
This led to the curation of even more stringent regulations and guidelines against such aforementioned actions the core of which was to solely shield the interests of the consumers.
While the above stated were taking place, running on the side was the concept revolving around the expansion of the Federal Trade Commission jurisdictions.
To include authorization for regulating and governing various industries and sectors such as telemarketing, online advertising, data privacy, identity theft, and financial services, was the sole reason for the expansion.
Growth stands to be multi-dimensional, hence when numerous changes were taking place, having to add on and develop consumer protection laws was one among them.
The Federal Trade Commission not only actively supported but added various elements that were used for the betterment of legislation such as the Fair Credit Reporting Act (1970), the Telemarketing Sales Rule (1995), and the Children’s Online Privacy Protection Act (1998).
It deems it highly crucial to add that the Federal Trade Commission has performed innumerable enforcement actions such as imposing fines and seeking injunctions against companies that were deeply engaged in deceptive or unfair practices.
Not only the aforesaid but the commission has equally been engaged in carrying out settlements via the process of negotiation to provide redress to the aggrieved parties.
Apart from the aforementioned, what makes the Federal Trade Commission more interesting is that it has been actively involved in collaborations with international counterparts to combat cross-border fraud and biased and unwarranted practices.
Complemented with the prior idea, is the fact the commission exchanges information, coordinates investigations and promotes cooperation with international agencies for the sole mission to grant protections to consumers globally.
Rolling to the present, the Federal Trade Commission has taken a lot of other arenas under its umbrella of protections which are deemed to be about issues arising from the initiation of the digital economy, such as online privacy, data security, and emerging technologies.
Not only has the commission established guidelines for the regulation of the aforementioned but has also taken rigorous actions against companies that have been engaged in data breaches, deceptive online advertising, as well as violations of consumer privacy.
The Purpose of The Federal Trade Commission
To delve further into the concept of The Federal Trade Commission, it deems it essential to shine a light on the purpose of the commission which stands strong on two grounds stated as follows:
- A Fair Deal: The first branch that The Federal Trade Commission sustains on the fact that it is curated for the only reason to ensure that businesses, organizations and individuals involved in any kind of trade are been bestowed upon opportunities to obtain a fair deal in the marketplace for executing their operations as well from refraining themselves to be involved in illegal and unjustified behaviours themselves, such as engaging in anti-competitive practices and unfair trade actions.
- Protect Consumers: The second branch of The Federal Trade Commission revolves around the bestowment of protections to the consumers working in the market economy from any kind of business or organization that may be engaged in deceptive, unfair, and unjustified market and competition practices.
On the same lines, the rules of The Federal Trade Commission are also applicable to businesses that are on the same level of production or working in the same sector to refrain from engaging in the acts of mutually spiking the prices of products and services, become a monopolist in the market or be involved in duopoly through mergers and acquisitions.
Apart from businesses, for consumers, the guidelines provided by The Federal Trade Commission would refer to being aware of targeting scammers, deceptive advertising, and improper financial selling.
2. The Modus Operandi of The Federal Trade Commission
As the purpose of The Federal Trade Commission is brought to light, to move ahead on the functioning of the commission serves to be of utmost essentiality.
The commission has three working Bureaus under its wings for governance which are the Bureau of Competition, the Bureau of Consumer Protection, and the Bureau of Economics.
Each of the aforesaid bureaus is bestowed with the authority to oversee the working of different parts of the commission’s remit.
2.1 The Bureau of Competition Under the Federal Trade Commission
To look over and regulate the operations falling under the ambit of competition prevailing in the market economy is the sole concept of the Bureau of Competition positioned under the Federal Trade Commission.
The concept of regulating competition refers to making sure that businesses and organizations refrain from coordinating with each other to fix or lower the prices of goods and services, as well as from engaging in any form of bid-rigging.
Not only the aforementioned but anti-competitive practices also stand inclusive of those single-headed companies that present themselves as too good to be true, meaning that they haven’t particularly been engaged in any unfair competitive practices only to have a monopolistic approach in the market.
The commission enforces the above by following the United States antitrust laws which were first brought into existence by the Sherman Act, passed in 1890, followed by two other acts namely the Federal Trade Commission Act and the Clayton Act, in 1914.
As stated categorically by The Federal Trade Commission, these above-mentioned legislations “form the foundation of the United States’ free market economy“.
Adding further, “the antitrust laws promote the interests of consumers as well as provide support to the unfettered markets and result in lower prices and more choices“.
2.2 The Bureau of Consumer Protection under The Federal Trade Commission
In comparison with the Bureau of Competition whose sole creation was to provide protections to consumers by ensuring a free market economy, the Bureau of Consumer Protection revolves around having more of a direct relationship in the marketplace that refers to essentially ensuring the public at large is treated fairly and unbiasedly when engaging in any interactions with the businesses, especially when it involves the aspects of by countering fraudulent and deceptive practices.
Categorized into eight divisions emphasizes the elite structure of The Bureau of Consumer Protection which are stated as follows:
- Division of Privacy and Identity Protection
- Division of Advertising Practices
- Division of Consumer & Business Education
- Division of Marketing Practices
- Division of Consumer Response & Operations
- Division of Financial Practices
- Division of Litigation Technology & Analysis
- Division of Enforcement
The Bureau of Consumer Protection is bestowed with numerous responsibilities that it is required to fulfil at all costs. The aforesaid duties are stated as follows:
- To deal with all the aspects about consumer privacy, credit reporting, identity theft, and information security
- To regulate and curb unfair or deceptive advertising as well as marketing practices that serve as the cause for bringing into light health and safety concerns, as well as those that are the source of any kind of economic injury
- To provide the consumers functioning in the marketplace with the tools and data so they can make informed decisions, as well as must ensure the businesses understand their duties and role falling under the ambit of the law
- To analyze, investigate and take rigorous actions against internet and telephone scams, business opportunity scams, deceptive telemarketing or direct mail marketing schemes, and mail or messaging spams
- To be able to gather and scrutinize information about activities falling under the arena of The Federal Trade Commission’s consumer protection mission to complement the working of the Division of Consumer & Business Education and Division of Enforcement
- To promote honesty, unbiasedness, and fairness in the sector of finances prevailing in the market economy
- To aid in the enforcement of federal court injunctions in any case falling under the umbrella of The Federal Trade Commission as well as coordinate The Federal Trade Commission’s actions with law enforcement agencies, support in the growth of reviewing and enforcing consumer protection rules, take charge of curating initiatives to address current consumer protection issues, as well as govern the Bureau’s bankruptcy programmes
2.3 The Bureau of Economics under The Federal Trade Commission
By way of bestowing analytical reports for consumer protection and competition investigations, the Bureau of Economics under the Federal Trade Commission not only investigates but also analyses the economic impact of The Federal Trade Commission enforcement actions.
Not only this it also focuses on the economic impact of guidelines and rules that have been subjected to businesses and consumers.
In a nutshell, if speaking, the Bureau of Economics not only serves to be an airbag for the other two bureaus but also invests its time in reporting The Federal Trade Commission’s enforcement actions complemented by the impact of such actions that are left on all the relevant parties.
From planning the policies, and maintaining congressional relations to governing international affairs, apart from the three listed bureaus above, the aforementioned responsibilities are also bestowed upon the Federal Trade Commission’s eight regional offices that are positioned in various areas of the United States such as Seattle, San Francisco, Los Angeles, Dallas, Atlanta, Cleveland, New York, and Chicago.
3. The Enforcement of The Federal Trade Commission’s laws
The Federal Trade Commission is not only responsible for enforcing the laws but also for carrying out investigations and taking actions about the outcome of such enquiry.
The Commission must ensure the three antitrust laws it encompasses are followed through and in case, post an examination, it is found that the business is violating either of them, the Commission has the power to sue.
Post an investigation, if The Federal Trade Commission finds the offence committed by the organization civil in nature, only then it can prosecute them, however, if the crime falls under the criminal ambit, the case must be referred to the Department of Justice, as the commission ceases to have jurisdiction over criminal cases.
4. The Structure of The Federal Trade Commission
In comparison with its equivalent, the Federal Communications Commission, The Federal Trade Commission has a structure that can be termed as a dual-party organization.
This refers to the fact that the commission functions independently that is the decisions carried out by the body are free from any intervention of the political parties or the government.
The composition of The Federal Trade Commission stands inclusive of five commissioners, one of whom resembles to be the chairman. The said head commissioners are appointed only after being nominated by receiving the assent of the President following with having the decision confirmed by the Senate.
Only three of the aforementioned commissioners can be a part of the same political party. Each commissioner is required to serve a term of seven years as prescribed by law.
The current commissioners of The Federal Trade Commission since 2018 are as follows:
- Joseph J. Simons- The Chairman
- Noah Joshua Phillips
- Rohit Chopra
- Rebecca Kelly Slaughter
- Christine S. Wilson
5. The Federal Trade Commission and its Benefits to the Consumers
The Federal Trade Commission is equipped to deal with several issues that arise from the aspects of finance and economy and has sworn to resolve the aforementioned glitches to better the functioning of the citizens of the United States who are engaged in the workings of the marketplace.
Having under its umbrella the jurisdictions of both, the aspect of consumer protection and the branch of competition, The Federal Trade Commission is bestowed with valuable duties and responsibilities to serve the citizens of the United States in the broad arenas of the economy.
The Federal Trade Commission deploys the following actions to broaden its responsibilities to the consumers:
- It pursues vigorous and effective law enforcement techniques
- It puts in efforts to advance consumers’ interests by sharing its knowledge with the federal and state legislatures as well as international government agencies
- It aids in the development of policies and research tools through various hearings, workshops, seminars, and conferences
- It helps in the curation of practical and non-verbose educational programs for consumers and businesses to make them aware of the issues arising in the global marketplace due to the constant change in technologies.
6. The Federal Trade Commission and The Federal Trade Commission Act
The Federal Trade Commission works on the guidelines and regulations that are provided under The Federal Trade Commission Act. The said act allows The Federal Trade Commission to:
- Prevent any kind of biasedness causing unfair means of competition as well as restrict unwarranted or deceptive trade practices that can affect any aspect of the economy.
- Aid in seeking monetary compensation for consumers who are adversely impacted due to the unfair trade practices carried out by businesses.
- Put forth the rules that have been curated to define various kinds of business acts and practices that are deemed to fall under the category of unfair or deceptive practices as well as establish requirements that can aid in the prevention of such practices.
- Prescribe ways for compiling data complemented with conducting investigations against the organizations, businesses, practices, and management of authorities.
- Help in the development of reports and legislative recommendations for the betterment of Congress and the public.
The Federal Trade Commission is known for bestowing protections to consumers to prevent them from suffering due to fraudulent business practices, defective products, and dangerous goods and services.
From understanding its development throughout the years to focusing on its structure, The Federal Trade Commission regulates and governs the functioning of the marketplace to ensure that the businesses, as well as the consumers, follow fair and honest techniques to maintain competition and prevent from engaging anti-competitive practices that can adversely affect the economy of the United States as a whole.