| Federal Trade Commission and the Act | Prepared for ASCM630.9040, Professor Charles Carey |
Candy Mott-Harris
3/26/2012
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Contents
ABSTRACT 2 HISTORY OF THE FEDERAL TRADE COMMISSION ACT 2 FALSE AND DECEPTIVE ADVERTISING 5 BAIT AND SWITCH ADVERTISING/TACTICS 8 CONSUMER FRAUD 10 IDENTIFYING, VERIFYING AND PREVENTING DECEPTION 12 CLOSING STATEMENTS ABOUT THE FEDERAL TRADE COMMISSION 13 BIBLIOGRAPHY 14
ABSTRACT
The paper will serve as a historical background overview of how the Federal Trade Commission Act (FTC) came into existence. The paper will also break down the key components for which the FTC covers, such as deceptive advertising, baiting and switching and consumer fraud. There will be examples
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One of the key components was that now, civil penalties could be assessed for failure to follow FTC’s orders, such as cease and desist orders, should the respondent ignore the order. Previously, they would just be sanctioned. In addition, the amendment to Section 5 was to include unfair and deceptive acts or practices. Prior to this passage of the Wheeler-Lea Act, it was the burden of the FTC to prove unfair methods of competition. The Wheeler-Lea Act expanded on the food and drug advertising, as well. (Brown, 1947) Over the next few decades, the FTC saw changes, many fleeting and few with staying power. There were also staffing issues from the 1930s to present. In addition, at one point in time, when the FTC was tasked with enforcing labeling and identification, especially within the textiles and furs industry, many felt that the FTC overzealously pursued labeling claims. FTC also saw other challenges such as scathing reviews by critics consistently accusing the FTC of falling short. From 1933 through 1935, there were significant turnovers of leadership areas including the Commissioner’s position. Critics would claim that the Commission had become complacent after the existing board remained in place from 1935 to 1945. (Federal Trade Commission, 2004) William Brown wrote that “The changes,” as a result of the passage of the Wheeler-Lea Act, “added certain teeth to the law and made
During the Progressive Era, Regulatory Agencies fail to provide and do their work, legislation ere made with the purpose for the common good of the citizen that suffer from the big corporation abuse, most of the corporation state strict rule but never got to accomplish them or the personal was too much expensive. The Supreme Court during the United State v Knight Company state diminished the effectiveness of the Sherman Anti-Trust act by ruling that manufacturing was not an interstate commerce (Document 5). The Federal Trade Commission, an independent agency of the United State government, established in by the Federal Trade Commission Act. Its principal mission was the promotion of consumer protection and the elimination/prevention of anti-competitive
Buy American Act (BAA) requirements specifically pertain to the use of American products in federal public works. BAA stipulations have been particularly controversial because of their demand that domestic steel and iron be used in public construction projects. Domestic steel and iron must be used in all permanent structures created via federal contracts. Waivers to the Act are available provided "the application of those provisions would be inconsistent with the public interest;" "steel and iron materials/products are not produced in the United States in sufficient and reasonably available quantities which are of a satisfactory quality" or when the cost of the final product would be prohibitive, based upon the requirements, versus the materials offered by foreign competitors (23 CFR 635.410 - Buy America requirements, 2011, Vlex). The BAA definition of a "domestic end product"¦requires that the cost of a product's components mined, produced, or manufactured in the U.S. exceeds 50 percent of the cost of all its components" (Zirkelbach 2009:55).
In the case of Hayden Wreyford v. Citizens for Transportation Mobility, plaintiff Hayden is upset that he received automatic telephone calls from CTM without having expressed any prior consent. The issue here is that the company has, in the opinion of Mr.Wreyford, violated the Telephone Consumer Protection Act. This act, in brief, restricts the use of
It also declares an “unfair method for the sake of competition that affects commerce, and also being involved in the deceptive acts which affect commerce, are declared unlawful.” The Don’s restaurant is rather famous and has great market value. This means that there must be competitors in the market for Don’s restaurant to participate in various acts. The truth will be known once the investigations have been made. Injustice and deception for the consumers symbolizes two separate areas of the FTC authority and enforcement. The FTC has the authority to overtake all the unfair techniques of the competition between the businesses (Macaulay, 1979).
Unknowingly, Antitrust began a cycle of Rule of Reason, which is the Lax Enforcement, and the Per Se Rule, which is the tight enforcement (Boyes 2013, p 249). Litigation of the Antirust law was not frequent, and that’s because between the years of passage 1890 and 1914, only seven cases were tried by the Supreme Court, in which they broke up monopolized companies like Northern Securities, and Standard Oil Co. of New Jersey; but also allowed the formation of major league baseball. This period of Lax Enforcement ended with the passage of the Clayton Antitrust Act and the Federal Trade Commission Act, and ushered in Per Se Rule. The changes to Antitrust laws gave a more clear definition to the law by guide lining the prohibitions of price discrimination, the creations of barriers to enter a market, outlaws mergers deemed unfair, and imbalanced methods of business; the Federal Trade Commission was also allowed to investigate into these practices. Since 1941, the FTC and it parent division, the Justice Department, had filed over 2,800 cases related to Antitrust, but it is the private sector that had an exponential amount lawsuits filed. Between the passage of these two laws and the Supreme Court Justice William Douglas, who prized the laws, any inkling of proof that a business could be monopolizing or engaging in unfair business practices, almost always lead to a guilty verdict that mostly results in a heavy fine, and in extreme
In the late 1960’s, the FTC was a paper tiger. Ralph Nader, who began the consumer protection movement in this country with the publication of Unsafe At Any Speed, was a sharp critic of the Federal Trade Commission for its lack of consumer protection. Specifically, the FTC was criticized because it relied too heavily on consumer complaints and brought enforcement actions only on a case-by-case basis. The consumer protection movement wanted the FTC to proceed against entire industries rather than individual businesses.
Starting in 1902, reporters, referred to as Muckrakers, began publishing stories, which informed the general public of corruption in the business world. President Roosevelt spearheaded the task of breaking up trusts that he considered a danger to the public wellbeing. However, federal regulation of businesses proved difficult because of vague language the Sherman anti-trust act of 1890, although in 1914 the Clayton Anti-trust Act changed regulations: making them much clearer and closing loopholes. During this time, despite the controversy, the federal government created a central banking system with the 1913 Federal Reserve Act and later that year the 16th amendment was established and set restrictions on taxable income of individuals and
The FTC is a bipartisan federal agency with a unique dual mission to protect consumers and promote competition. For one hundred years, our collegial and consensus-driven agency has championed the interests of American consumers. As we begin our second century, the FTC is dedicated to advancing consumer interests while encouraging innovation and competition in our dynamic economy.
President Bill Clinton created the Telecommunications Act of 1996 to promote fair competition in the United States telecommunications market. President Clinton’s goal was to establish an open market so that any business can compete in the telecommunications field. Since the creation of the Telecommunications Act, there has been a bevy of radio and television mergers. One can safely say that with all the recent mergers, some companies have become monopolies in their respective fields. The Telecommunications Act primary focus is to help businesses compete against other businesses so that the consumer can reap the benefits of lower prices for services, a wider selection of services from different companies, more jobs, and a better
(Econedlink, 2014, pp.1-5). Also the by Congress adding changes to the Nutrition Labeling and Education Act of 1990 that would have in to make it mandatory that restaurant display the content of the value what is the nutrition in their products can be seen by their customers. (Econedlink, 2014, pp.1-5). And if the FTC determined that the advertisement is proved to be deceptive they have the power to prohibit it and stop it they can make the advertiser reissue the advertisement with corrections. The deceptive part of the advertisement will be taking out of the second advertisement that was advertise the first time. For these illegal acts some companies are given a fine. It is very rare and happen on an occasion but someone can be incarcerated. Also the FTC has the authority to make advertiser to show that their claims are true. Test prove or physicians recommended stated by the advertiser must be prove by a doctor and must be able to be seen by consumers that request it. (Econedlink, 2014, pp.1-5). Sometimes FTC guidelines that are designed to shape behavior in a particular industry depend not only on voluntary compliance by affected businesses but also on the notion that an informed citizenry will expect such compliance. For instance, in a widely publicized 2011 effort to address the problem of childhood
The Federal Trade Commission is an agency of the United States government that works to prevent fraudulent, deceptive, and unfair business practices. They also provide information to help consumers’ stop, and avoid scams and fraud. The FTC has an impact in the economy, because its purpose is to help the US maintain a more stable market and economy by helping customers and keeping a more accurate information of product, in aspects such
This means that the act was designed to protect the victims of customer who was being fraudulent and deceptive. This law also created the Federal Trade Commission (FTC), an independent regulatory agency, to enforce these provisions. It grants the Commission civil, but not criminal, jurisdiction to pursue unfair and deceptive market practices (Norrgard, 1998, p.105).Thomas Aquinas said it best, “If the seller be aware of a fault in the thing he is selling, he is guilty of a fraudulent sale, so the sale is rendered unlawful. Another defect is in respect of quantity which is known by being measured: wherefore if anyone knowingly makes use of a faulty
First, product or services offered or promote to the customers should be based on the product or services’ truth or real information. Misleading word or over-praised of the product or services provided which violates the rules under Trade Practices Act are not allowed. The products or services should be presented morally, correctly, and fairly without confusing or ambiguous. Second, the price of the product or services provided should not be over-price or underpriced or unreasonable price. We should not take advantage of customers who have less knowledge or do not have a clear understanding about the market price during the promotion or advertising of the product or services. We should not lower the services or
The modern era is considered to be the era of consumers. No country can ever disregard the interest of the consumers. This is best argued through the process of rapid enactment of consumer protection laws throughout the world. In addition to consumer protection acts throughout the world, one can easily find the rapidly rising rate of lawmaking for consumers in the developing countries like Sri Lanka, Thailand, Philippines,Mongolia, Mauritius , China, Indonesia,Taiwan, Nepal, Malaysia and other such countries. India is not an exception to this rule. The Consumer Protection Act, 1986 is an example of a milestone in the history of socio-economic legislation to protect and preserve the
Throughout history, United States courts have remained hesitant to protect commercial advertising under the First Amendment, mainly due to the number of false claims and exaggeration (Tedford & Herbeck, 2013). Prior to the government controlling false advertising, consumers had to rely solely on common-law remedies such as civil suits and various state laws; a method that proved ineffective (Tedford & Herbeck, 2013). However, since the creation of the Federal Trade Commission in 1914, consumers have gained the deserved protection against deceptive and unfair business practices (FDA, 2015).