The Federal Trade Commission

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CHAPTER IV

THE FEDERAL TRADE COMMISSION

A. Introduction

The Federal Trade Commission (FTC or Commission), through its

Bureau of Consumer Protection (Bureau), has a leading role in protecting

consumers from unfair, deceptive, or fraudulent practices in the

marketplace. This chapter provides insight into how the Bureau fulfills

that role.

The Bureau carries out its mission through eight offices in seven

regions of the United States1 and and 8 divisions in Washington, D.C.

The Division of Advertising Practices protects consumers from unfair or

deceptive advertising practices that raise health and safety concerns as

well as those that cause economic injury. The Division of Privacy and

Identity Protection oversees issues related to consumer privacy, credit

reporting, identity theft, and information security. The Division of

Financial Practices promotes truthfulness and fairness in the provision of

financial services by entities within the FTC’s jurisdiction. The Division

of Marketing Practices examines marketing practices other than

advertising with a focus on the ever-evolving problems of consumer

fraud in the marketplace. The Division of Enforcement litigates civil

contempt and civil penalty actions to enforce federal court injunctions

and administrative orders in FTC consumer protection cases and

develops, reviews, and enforces a variety of consumer protection rules.

The Division of Consumer and Business Education provides consumers

with the tools they need to make informed decisions and gives businesses

the tools they need to comply with the law. The Division of Litigation

Technology and Analysis oversees the Office of Technology Research

and Investigation as well as the financial and litigation support activities

of the Bureau, and the Division of Consumer Response and Operations

handles the Consumer Response Center, Consumer sentinel, and the

bureau’s administrative and operational support activities.

1 The FTC regional offices are as follows: Cleveland (East Central

Region), Chicago (Midwest Region), New York (Northeast Region),

Seattle (Northwest Region), Atlanta (Southeast Region), Dallas

(Southwest Region), and San Francisco and Los Angeles (both of which

compose the Western Region).

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418 CONSUMER PROTECTION LAW DEVELOPMENTS

Sections B and C of the chapter highlight the FTC’s enforcement

procedures, starting with the origin of an FTC investigation and

concluding with judicial review of FTC actions; this section also covers

monetary and non-monetary remedies available under FTC law. Section

D of the chapter reviews FTC’s rulemaking authority and enforcement

while sections E and F describe the other mechanisms through which the

FTC gives guidance and advocates for consumers. Sections G, H, I, and

J review FTC work in the financial services, warranty, telemarketing,

and pay-per-call areas. And, finally, section K presents the panoply of

FTC labeling regulation.

B. FTC Enforcement Procedures

1. Jurisdiction

The Federal Trade Commission (FTC) has broad jurisdiction over

consumer protection matters. Under Section 5 of the FTC Act,2 the FTC

has the power to prevent “persons, partnerships, and corporations” from

using unfair or deceptive acts or practices in or affecting commerce. The

FTC also has jurisdiction over acts and practices involving foreign

commerce, if the alleged conduct occurs within the United States or

harms U.S. consumers.3

Certain entities, however, are expressly exempted from FTC

jurisdiction. These exempt entities include banks, savings and loan

institutions,4 federal credit unions,5 and persons, partnerships, or

corporations subject to the Packers and Stockyards Act.”6

As a general practice, bona fide non-profit organizations are exempt

from FTC jurisdiction. Where a profit motive exists in relation to the

organization’s underlying members, however, the Commission retains

2. 15 U.S.C. § 45.

3. Id. § 45(a)(4); FTC v. SkyBiz.com, 2001 WL 1673645, at *9, *12 (N.D.

Okla. 2001), aff’d, FTC v. Skybiz.Com, 57 Fed. Appx. 374, 2003 WL

202438, at *2 (10th Cir. Jan. 30, 2003); FTC v. Commonwealth Mktg.

Group, 72 F. Supp. 2d530, 545 (W.D. Pa. 1999); FTC v. Vacation Travel

Club, 1996 WL 557831, at *5 (M.D. Fla. 1996); FTC v. Magui

Publishers, 1993 WL 430102, at *5 (9th Cir. 1993); Branch v. FTC, 141

F.2d 31, 34-35 (7th Cir. 1944).

4. 15 U.S.C. § 57a(f)(3).

5. Id. § 57a(f)(4).

6. 7 U.S.C. § 181.

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jurisdiction. In FTC v. California Dental Association,7 the United States

Supreme Court found that the FTC Act extends the Commission’s

jurisdiction to any corporation, company or association “organized to

carry on business for its own profit or that of its members.” 8

“whether

the entity is organized as a non-profit; the manner in which it uses and

distributes realized profit; its provision of charitable purposes as a

primary or secondary goal; and its use of non-profit status as an

instrumentality of individuals or others seeking monetary gain.”9

Also exempt from FTC jurisdiction are “common carriers.” This

term is undefined in the FTC Act, but is generally understood to include

airlines, railways, and telecommunications providers. However, the

“common carrier” exemption does not immunize all activities rather, “the

common carrier exception applies only where the entity has the status of

common carrier and is actually engaging in common carrier activity.”10

The FTC has sued common carriers for unfair and deceptive practices.11

Entities under FTC jurisdiction do not become exempt when they act

on behalf of or in conjunction with an exempt entity.12 If a party asserts

7. 526 U.S. 756 (1999).

8. 526 U.S. at 765.

9. FTC v. AmeriDebt, 343 F. Supp. 2d 451, 460 (D. Md. 2004).

10. Order Denying Defendant’s Motion to Dismiss, FTC v. AT&T Mobility

LLC, No. C-14-4785-EMC, Slip Op. at 23 (N.D. Cal.) (denying AT&T’s

Motion to Dismiss allegations by FTC that carrier had unfairly throttled

service costs for unlimited consumer data plans, which, at the time, were

not regulated as common carrier service).

11. See FTC v. Verity Int’l, 194 F. Supp. 2d 270, 274-75 (S.D.N.Y. 2002),

aff’d, 44 F.3d 48, 59 (2d Cir. 2006) (“[I]t would make little sense to

exempt a carrier’s extraneous activities from laws of general application

affecting the broad sweep of American business.”); see also Complaint,

FTC v. AT&T Mobility LLC, No. 1:14-cv-3227-HLM (N.D. Ga. Oct. 8,

2014) (alleging deceptive practices in billing consumers for unauthorized

charges); Complaint, FTC v. T-Mobile USA, Inc., No. 2:14-cv-00967

(W.D. Wa. July 1, 2014) (alleging deceptive and unfair “cramming” by

common carrier in connection with billing practices for wireless

customers).

12. FTC v. CompuCredit, 2008 WL 8762850, at *4 (N.D. Ga. 2008)

(concluding the FTC has jurisdiction over credit card marketing

corporation performing activities for an exempt bank); Nat’l Fed’n of the

Blind v. FTC, 303 F. Supp. 2d 707, 714 (D. Md. 2004) (a professional

fundraiser is not exempt from FTC jurisdiction even when acting on

behalf of a bona fide non-profit organization); FTC v. Am. Standard

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