False Advertising

Federal and State Regulation

The Federal Trade Commission (FTC) is responsible in part for protecting consumers from unfair and deceptive practices, which are generally the result of improper advertising. The Bureau of Consumer Protection within the FTC is authorized to investigate and litigate cases that are alleged as deceptive or unfair to consumers. Important to note is that it is the Division of Marketing Practices within the Bureau of Competition of the FTC handles some aspects commonly thought of as directly related to consumers, such as fraudulent telemarketing schemes, 900-number programs, and franchise disclosures or business opportunities.

Despite inception of authority in 1914, it was not until the 1970s and pressure by consumer protection groups that the FTC took a more proactive role in regulating advertising and the [Page 359]misrepresentations so often causing harm. Further enactment of the Magnuson-Moss Act of 1975 and the establishment of restitution for damages exceeding a paltry $5 prompted the FTC to set the enforcement of laws regarding false or misleading advertising as a top priority. Additionally, the agency may levy civil penalties of up to $10,000 for each violation subsequent to an FTC order to cease and desist deceptive activities. The powers of the FTC as a federal agency are founded in interstate commerce, and as such, regulation and enforcement is limited when product vendors fall outside the classification of their jurisdiction.

False advertising and misleading representations for commercial enterprise is also regulated by several other federal agencies having more direct jurisdiction over the subject matter of the goods or service promoted. The Federal Communications Commission (FCC) was founded in 1934 to regulate broadcast communications, now encompassing radio, television, telephone, and telegraph industries, as well as more recent Internet and cable/satellite communications. While the FCC's primary means of control over false advertising is through the issuance or denial of licensure to broadcast, the power to purge improper ads also exists; close working relations with the FTC are maintained for litigious, prosecutorial measures.

...