Deception In Advertising Essay Research Paper Deception

Deception In Advertising Essay, Research Paper

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Deception and Unfairness

The Federal Trade Commission (FTC) was founded in 1914 after the enactment of the Federal Trade Commission Act. The Commission is headed by five Commissioners, nominated by the President and confirmed by the Senate, each serving a seven-year term. The President chooses one Commissioner to act as Chairman. No more than three Commissioners can be of the same political party.

The Federal Trade Commission enforces a variety of federal antitrust and consumer protection laws. The Commission seeks to ensure that the nation’s markets function competitively, and are vigorous, efficient, and free of undue restrictions. The Commission also works to enhance the smooth operation of the marketplace by eliminating acts or practices that are unfair or deceptive (Federal Trade Commission, 1999). In general, the Commission’s efforts are directed toward stopping actions that threaten consumers’ opportunities to exercise informed choice (Federal Trade Commission, 1999). Finally, the Commission undertakes economic analysis to support its law enforcement efforts and to contribute to the policy deliberations of the Congress, the Executive Branch, other independent agencies, and state and local governments when requested (Federal Trade Commission, 1999).

The primary responsibility of the FTC is to keep the United States economy free and fair. Section 5 of the Federal Trade Commission Act empowers the FTC to prevent unfair methods of competition and unfair or deceptive acts or practices (Barnes, Bowers, Langvardt, Mallor, Phillips, 1988).

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The Federal Trade Commission Act also prohibits unfair or deceptive acts or practices in commercial settings. This enables the FTC to govern and regulate a broad range of activities that disadvantage customers. In regulating activities the FTC would need to prove an activity is deceptive or unfair. If the FTC decides to proceed against the alleged offender, they must enter a formal complaint. The case would then be heard in a public administrative hearing called an adjudicative proceeding. A FTC judge would preside over this proceeding. If an appeal were desired the FTC.s five commissioners would hear the case. After this step would be the federal court of appeals and then the U.S. Supreme Court.

The Federal Trade Commission reviews deceptive practices on a case-by-case basis (Barnes et al, 1988). The court system often defers their judgments to the Commission’s determinations. Actual or proven deception is not required; a practice likely to mislead a consumer is also deceptive under the FTC Act. The Commission may require sellers to substantiate their claims by showing a reasonable basis for making such claims (Barnes et al, 1988).

The FTC may begin an investigation in different ways. Letters from consumers or businesses, Congressional inquiries, or articles on consumer or economic subjects may trigger FTC action (Federal Trade Commission, 1999). Investigations are either public or nonpublic. Generally, FTC investigations are nonpublic in order to protect both the investigation and the company.

If the FTC believes a violation of the law occurred, it might attempt to obtain voluntary compliance by entering into a consent order with the company (Federal Trade

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Commission, 1999). A company that signs a consent order need not admit that it violated the law, but it must agree to stop the disputed practices outlined in an accompanying complaint (Federal Trade Commission, 1999).

If a consent agreement cannot be reached, the FTC may issue an administrative complaint. If an administrative complaint is issued, a formal proceeding that is much like

a court trial begins before an administrative law judge: evidence is submitted, testimony is heard, and witnesses are examined and cross-examined (Federal Trade Commission, 1999).

Section 5 of the FTC Act also prohibits unfair acts or practices. The FTC focuses on consumer injury violations. The injury must be substantial, must not be outweighed by any offsetting consumer or competitive benefits produced by the challenged practice, or must be one that consumers could not reasonably have avoided (Barnes et al, 1988).

The person, partnership, or corporation so complained of shall have the right to appear at the place and time so fixed and show cause why an order should not be entered

by the Commission requiring such person, partnership, or corporation to cease and desist from the violation of the law so charged in said complaint. (U.S. 15:45).

The FTC can order a respondent to cease engaging in a deceptive or unfair act (Barnes et al, 1988). The FTC can also order a respondent to disclose information related to the deception or unfairness (Barnes et al, 1988). The final remedy the FTC can order is for a seller to do corrective advertising (Barnes et al, 1988). The seller would be asked to retract and republish the advertisement. The FTC can also take a seller to court seeking civil penalties or consumer redress (Barnes et al, 1988).

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The court shall have jurisdiction to grant such relief as the court finds necessary to redress injury to consumers or other persons, partnerships, and corporations resulting from the rule violation or the unfai

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