Federal Trade Commission

Published Apr 29, 2024

Definition of Federal Trade Commission (FTC)

The Federal Trade Commission (FTC) is an independent agency of the United States government, established in 1914 by the Federal Trade Commission Act. Its principal mission is to protect consumers and promote competition. It does this by enforcing federal antitrust and consumer protection laws that prevent anticompetitive, deceptive, and unfair business practices. The FTC also provides information to businesses to guide them in complying with the law and to consumers to help them recognize and avoid fraud and deception.

Roles and Responsibilities

The FTC’s work is divided primarily among three bureaus: the Bureau of Consumer Protection, the Bureau of Competition, and the Bureau of Economics. These bureaus work together to carry out the FTC’s mission.

– Bureau of Consumer Protection: This bureau’s mandate is to protect consumers against unfair, deceptive, or fraudulent practices in the marketplace. It conducts investigations, sues companies and individuals that violate the law, develops rules to maintain a fair marketplace, and educates consumers and businesses about their rights and responsibilities.

– Bureau of Competition: The Bureau of Competition seeks to prevent anticompetitive mergers and business practices in the commercial marketplace. By enforcing antitrust laws, it ensures that consumers benefit from competitive pricing, quality products and services, and innovation.

– Bureau of Economics: This bureau helps the FTC evaluate the potential economic impact of its actions by providing expert economic analysis and support. It helps to assess the economic implications of antitrust and consumer protection policies and contributes to the broader understanding of market behavior.

Key Functions

The FTC’s key functions include investigating issues related to business practices and consumer complaints, enforcing compliance with the laws it administers, and educating consumers and businesses about their rights and obligations. Some specific activities include:

– Conducting investigations into potentially unlawful business activities.
– Bringing enforcement actions against companies or individuals who violate laws.
– Developing policies and research related to consumer protection and competition.
– Engaging in consumer and business education to prevent fraud and promote a competitive environment.

Why the FTC Matters

The Federal Trade Commission plays a critical role in maintaining the integrity of the U.S. economy by promoting fair competition and protecting consumers from fraudulent, deceptive, and unfair business practices. By doing this, the FTC enhances consumer confidence and ensures that the market functions efficiently.

An economy that fosters competition is considered healthier as it typically leads to more innovation, lower prices, and greater availability and variety of products and services. In protecting consumers, the FTC directly contributes to the overall well-being of the economy and supports the principle that businesses should compete on the merits of their products and services, rather than employing deceptive or unfair practices.

Frequently Asked Questions (FAQ)

How does the FTC decide which companies to investigate?

The FTC selects investigation targets based on various sources, including consumer complaints, congressional inquiries, or investigations initiated by other agencies or organizations. It prioritizes actions that have the potential for widespread impact on consumers or market competition.

Can the FTC make laws?

While the FTC cannot make laws, it does have the authority to promulgate trade regulation rules that interpret and make specific the laws it enforces. It also works with Congress and other governmental bodies, providing expertise that helps shape effective consumer protection and competition policies.

What happens if a company violates an FTC order?

If a company or individual violates an FTC order, they are subject to civil penalties, which can be substantial. The FTC may also seek injunctions, consumer redress, and other remedies to stop the wrongful practices and prevent future violations.

By enforcing these laws and regulations, the FTC helps ensure that America’s markets remain vibrant, competitive, and free of undue restrictions that can harm consumers and businesses alike.