Federal Trade Commission

THE FEDERAL Trade Commission (FTC) was enacted under the Federal Trade Commission Act of 1914, and was created in 1915. The FTC provides regulatory enforcement of rules and regulations designed to maintain fair and open competition in the marketplace. While the banking and transportation industries are regulated by other agencies, the FTC is responsible for enforcing rules and regulations for many other industry groups, including those that may be related to banking and transportation.

In addition to enforcement of the FTC Act, the FTC is responsible for enforcing laws created by other acts, such as the Wheeler-Lea Act of 1938 and the Robinson-Patman Act of 1936. The FTC does not possess criminal law enforcement powers, but does have civil and regulatory authorities that are enforceable through the federal court system. Among the actions available to the FTC are consent decrees between the commission and businesses. Consent decrees are agreements between the parties in which the offending business does not admit fault, but agrees to never engage in the behavior.

The FTC can also issue cease-and-desist orders, ordering businesses to change trade practices under the possibility of penalties for failure to comply. The FTC can also make a criminal referral to the U.S. Department of Justice in those instances in which a business fails to comply with a cease and desist order or refuses to enter into a consent agreement, or in which the FTC finds that the case is so severe that criminal action is warranted.

The FTC is divided into several bureaus, each of which is responsible for various activities within the commission. The Bureau of Consumer Protection comprises six divisions. The Advertising Practices Division deals with truth-in-advertising practices such as deceptive or unfair advertising. Such violations may include advertising a product at a certain price, while refusing to honor that price at the store. The Enforcement Division civilly prosecutes such cases and enforces other consumer protection laws.

The Financial Practices Division develops policies and enforces laws concerning the Truth-inLending Act, which requires lenders to follow certain rules and guidelines in issuing credit. For example, the FTC might get involved in cases where lending institutions automatically force minority borrowers to borrow money at subprime rates regardless of their credit history. Subprime rates are[Page 313] given to borrowers at higher interest rates than are available to other borrowers.

The Marketing Practices Division enforces consumer protection laws dealing with such issues as deceptive telemarketers, pyramid schemes, and internet scams. The Planning and Information Division assists consumers in getting information they need, as well as assisting FTC attorneys and other law enforcement agencies in protecting consumers' rights. The Consumer and Business Education Program develops advertising and education program to educate consumers and businesses about their respective rights.