What Is the Federal Trade Commission (FTC)?

What Is the Federal Trade Commission (FTC)?

Let me explain the Federal Trade Commission, or FTC, directly to you. It's an independent, bipartisan agency of the U.S. government that's responsible for protecting consumers and maintaining a competitive market. Right now, Lina Khan serves as its Chair.

The FTC's main job is to enforce non-criminal antitrust laws in the United States, which means it works to prevent and eliminate anticompetitive business practices, including coercive monopolies. It also protects consumers from predatory or misleading business practices.

Key Takeaways

You should know that the FTC is a bipartisan federal agency that enforces antitrust laws and protects consumers. It was signed into law by President Woodrow Wilson in 1914 as part of trust-busting efforts. Its activities include investigating fraud or false advertising, handling congressional inquiries, and managing pre-merger notifications.

The FTC also deals with scams and unfair or predatory business practices. Through its Bureau of Competition, it discourages anticompetitive behavior by reviewing proposed mergers alongside the Department of Justice.

Understanding the Federal Trade Commission (FTC)

The FTC was established in 1914 by the Federal Trade Commission Act, during the Wilson administration's push for trust-busting, which was a major issue back then. It was given the task of enforcing the Clayton Act to ban monopolistic practices.

Before the FTC existed, there was the Bureau of Corporations, set up by the Roosevelt administration in February 1903. This bureau, part of the Department of Commerce and Labor, ensured businesses acted in the public's best interest. Its success paved the way for the FTC's creation.

Today, the FTC continues to discourage anticompetitive behavior via its Bureau of Competition, which reviews proposed mergers with the Department of Justice. Over time, the FTC has taken on enforcing additional business regulations, as outlined in Title 16 of the Code of Federal Regulations.

Fast Fact

Under the premerger notification program, parties involved in larger mergers must submit a premerger notification to the FTC and the Department of Justice.

The Federal Trade Commission's Core Activities

The FTC's regular activities involve investigating fraud or false advertising reported by consumers, businesses, and the media, as well as handling congressional inquiries and pre-merger notification filings.

It can investigate a single company or an entire industry. If an investigation uncovers unlawful activities, the FTC can seek voluntary compliance through a consent order, start federal litigation, or file an administrative complaint. These complaints are typically heard by an administrative law judge and can be appealed to the U.S. Court of Appeals and then the Supreme Court.

The FTC addresses complaints about unfair business practices, like scams and deceptive advertising. Its Bureau of Consumer Protection investigates alleged abuses, takes enforcement actions, and provides educational materials to consumers. This bureau also manages the U.S. National Do Not Call Registry.

Additionally, the FTC administers and enforces rules such as the Telemarketing Sales Rule, the Pay-Per-Call Rule, and the Equal Credit Opportunity Act. In all, the Commission handles enforcement or administrative responsibilities under more than 70 laws.

The Bureau of Economics supports the other FTC departments with research, including analysis of the potential effects of FTC actions.

Important Note

The FTC typically doesn't have the power to directly enforce its rulings, but it can go to the courts to get them enforced.

Examples of Federal Trade Commission Actions

In 1984, the FTC addressed deceptive pricing in the funeral home industry by implementing the FTC Funeral Rule. This requires funeral homes to provide a written General Price List detailing all prices for goods and services to anyone who asks. By law, no one can be denied this list, and they can keep it if they want.

In 1996, the FTC started the Funeral Rule Offenders Program, allowing offending funeral homes to make a voluntary payment to the U.S. Treasury or a state fund instead of going to court.

During the 1990s, the FTC investigated telemarketing scams, starting with Project Telesweep in 1995, which targeted at least 100 fictitious business opportunity scams.

The FTC has been involved in the healthcare industry as well, blocking the proposed acquisition of Palmyra Medical Center by Putney Memorial Hospital due to potential consumer harm. The case reached the Supreme Court, which ruled in the FTC's favor in 2013.

More recently, in 2021, the FTC ordered Amazon to pay over $61 million in a settlement for failing to give Amazon Flex drivers all their tips from customers. The company had promised drivers 100% of tips, but withheld some for more than two years.

What Is the Federal Trade Commission Act of 1914?

The Federal Trade Commission Act of 1914 created the FTC and gave the U.S. government full authority to address unscrupulous business acts.

What Does the FTC Regulate?

The FTC regulates trade by defining deceptive and unfair practices in the marketplace. It enforces antitrust and consumer protection laws.

How Do You File a Complaint With the Federal Trade Commission?

You can file complaints with the FTC online or by calling 1-877-FTC-HELP. The FTC also runs the Identity Theft hotline at 1-877-ID-THEFT and the National Do Not Call Registry at 1-888-382-1222.

What Happens When You File a Complaint With the FTC?

When you submit a complaint, the FTC shares it with more than 3,000 law enforcers. It uses the information from complaints to create reports that help investigate fraud, unfair business practices, and scams.