What is the Federal Trade Commission Act (FTCA)?
UPDATED: June 19, 2018
It’s all about you. We want to help you make the right legal decisions.
We strive to help you make confident law decisions. Finding trusted and reliable legal advice should be easy. This doesn't influence our content. Our opinions are our own.
The Federal Trade Commission Act (FTCA) prevents unfair competition methods and unfair or deceptive acts that may affect business commerce. Even though many of the original issues resulting from the passage of the FTCA were related to oppressive monopolies and anti-trust issues, the breadth of the FTCA is much broader. It covers a wide variety of business practices and consumer issues. Violations of the FTCA are usually proven by showing bad faith, fraud, oppression, or a violation of public policy.
Understanding the Federal Trade Commission Act & Recent Protections
Congress passed the Federal Trade Commission Act to protect consumers from unfair methods of competition. These unfair or deceptive methods by a business need only to have the possible likelihood of deceiving the consumer. The law does not require that an actual deception take place. A business may also be liable for the unfair and deceptive acts of its employees, agents, or representative. The FTCA covers a broad range of consumer issues. Every year a new concern arises that falls under the umbrella of the FTCA. For example, in recent years, electronic privacy and identify theft practices have become targets of protection under the authority of the FTCA.
Federal Trade Commission Role in the FTCA
To enforce the FTCA, the act created the Federal Trade Commission (FTC). Only the Federal Trade Commission can enforce the FTCA. The FTC is vested with administrative rule-making authority, investigatory authority, and enforcement authority; rules established by the FTC are considered administrative codes. They are designed to enforce the various provisions of the FTCA. When trying to decide whether your organization has violated the FTCA, you should also review the rules adopted by the FTC. Investigatory authority grants the FTC the ability to follow-up and verify consumer complaints. If the FTC decides that a business has violated the FTCA, they have the authority to enforce and regulate the repercussions. Enforcement actions include filing injunctions, administrative complaints, and lawsuits.
In addition to the FTCA, many States have also enacted antitrust laws to prevent restraints on abusive competition and protect consumers. Many states have laws in place designed to protect consumers, often in the form of what's known as a Deceptive Trade Practices Act (DTPA). Several sub-chapters usually exist under the main law. For example, many states have lemon laws regarding the sale of automobiles under their general DTPA laws. The federal laws apply to interstate and foreign commerce while the state laws apply to activities taking place within the state borders.
Depending on the nature of the deceptive practice, a business could be subject to state or federal enforcement actions, or both. If your business is accused of violating the FTCA or the state version thereof, consult with an attorney immediately to review your state and federal options for resolution.