Federal Trade Commission (FTC)

Federal Trade Commission: An Overview

Federal Trade Commission: An Overview

  • The FTC is an independent and bipartisan government agency; 5 commissioners; nominated by the President and approved by the Senate.
  • Mission is to ensure compliance with antitrust law and to protect consumers, investors, and businesses, namely by preventing deceptive and predatory trade practices
  • The Federal Trade Commission Act (“FTCA”) endows the FTC with its authority; passed in 1914 by President Woodrow Wilson to “bust the trusts” and dismantle monopolies.
  • Since the Federal Trade Act was passed and the FTC was created, Congress has passed additional laws giving the FTC greater authority to police anticompetitive practices and to administer other such consumer protection regulations.
  • In addition, Congress has also endowed the FTC with the authority to adopt and implement industry-wide trade regulations to better regulate business.
  • The FTC conducts research and collects in-depth reports on various issues, including data security, mobile technology, do not call registries, deceptive advertising schemes, and mergers and competition.

The FTC and its Mission

  • The FTCA endows the FTC with broad authority to pursue several goals. In particular, the FTCA permits the FTC to:
  • (1) prevent deceptive trade practices and anticompetitive practices amongst various industries and companies;
  • (2) pursue compensation to reimburse consumers who have been harmed by deceptive and anticompetitive trade practices;
  • (3) explain and outline what constitutes deceptive and anticompetitive practices and establish, and implement rules and regulations to eradicate these practices;
  • (4) investigate organizations, businesses, and companies who might be engages in prohibited practices; and
  • (5) develop reports, data, and statistical analysis which provide the FTC with a basis to make certain legislative recommendations.
  • The FTC’s three main goals are:
  • (1) to protect consumers;
  • (2) to maintain competition amongst businesses; and
  • (3) to maintain and advance its own productivity.

The FTC Bureaus

  • The FTC has three “bureaus,” much akin to departments, regulating three broad areas in the trade practices realm: (1) consumer protection, (2) competition, (3) and economic analysis.

The Competition Bureau

  • Antitrust laws are designed to ensure consumers’ right to choose.
  • Historically, anticompetitive business practices dominated the American marketplace prior to the FTCA’s inception severely limited marketplace competition and provided American consumers no room to make choices about the goods and services at the price and quality that met their individual needs.
  • The Competition Bureau was designed to promote marketplace competition by ensuring compliance with antitrust laws and consumer’s right to choose.

Economic Analysis Bureau

  • The Economic Analysis Bureau is charged with evaluating the economic impact that FTC actions have by examining and reviewing the investigation and rulemaking processes mostly carried out by the Consumer Protection Bureau.
  • This Bureau also examines the impact government regulation, and antitrust regulations have on consumers.

The Consumer Protection Bureau

  • The Consumer Protection Bureau’s authority is a bit broader than the Competition Bureau and the Economic Analysis Bureau; role overlaps with the Consumer Protection and Economic Analysis Bureaus.
  • Involved in every step in the process: regulation development, administration and policing, and advice and education.
  • The Consumer Protection Bureau is charged with policing, investigation, and prosecuting businesses and companies. The Consumer Protection Bureau then uses these investigations to better develop its own administrative rulemaking policies and educate consumers accordingly. Consumer Protection also uses its regulation development, administration, and education powers to advise Congress and other government entities about the potential impact proposed legislation could have on consumers.

The Inspector General

  • Established in 1989 as an independent agency within the FTC and essentially provides oversight to the Commission as a whole and over any individual employees.
  • Charged with conducting FTC audits and investigations into the FTC’s own operations and programs to ensure productivity and that government and commission resources are not being wasted or abused.
  • Also investigates and responds to allegations and complaints against individual employees, as well as other entities who contract with the FTC.

FTC Consumer Protection Actions: Real Examples

Project Telesweep (1995)

  • The FTC has sought to crack down on various industries to eliminate deceptive practices, thereby protecting unsuspecting consumers.
  • In the mid 1990s, the FTC conducted investigations into telemarketing schemes with Project Telesweep in 1995, which revealed at least 100 “business opportunity” scams.
  • One such scam discovered by the FTC was perpetrated by Public Telco Corporation and its owner, Ronald Oman, who were in the pay telephone business.
  • The FTC discovered that Public Telco and Oman made misleading statements to both investors and consumers regarding how much money investors could expect to pocket per week per phone.
  • Based on these allegations, a Federal District Court in Florida entered a Judgment against Public Telco amounting to $2.4 million and implemented a permanent ban against Public Telco and Oman, prohibiting any continued telemarketing by the company.

Credit Karma (2022)

  • Credit Karma was using its “approval odds” hallmark and would show consumers that they had 90% odds to be approved, when the odds that they would be approved were substantially less.
  • The 90% odds enticed consumers to apply, and consumers subsequently wasted their time in applying when they couldn’t be approved.
  • Although these consumers were not necessarily out money like the consumers in Project Telesweep, discussed above, the FTC ordered Credit Karma to pay $3 million to the consumers impacted by Credit Karma’s deceptive practices.


  • The Federal Trade Commission protects consumers and ensures a competitive market. The main way the FTC does so is by enforcing laws against deceptive advertising, fraudulent business practices, and monopolistic behavior. Additionally, the FTC promotes consumer education and investigates complaints to safeguard the American public.
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