FTC - key points (short version)

make-up of the FTC?

- 5 person commission - members appointment by the President - staggered 7-year terms - large staff of attorneys, economists, & accountants who originate inquiries, issue reports, & conduct investigations

unfairness is more likely to arise in ____ than in ______

- a company's treatment of customers - advertising

puffery

exaggerated, figurative advertising claims that consumers would not assume to be grounded in factual documentation (i.e., the best in the world)

do false & deceptive advertising have protection?

no

trade regulation rules

rules adopted by the FTC that specify certain kinds of advertising or packaging practices as automatically deceptive & illegal

what is the distinction between express falsehoods & implied falsehoods?

express falsehoods are presented by the seller/advertiser (them making a claim about their product when advertising - i.e., "antique") & implied falsehoods are the reader or viewer's interpretations from an advertisement (false meaning added to a truthful ad - i.e., white jacket technicians)

an advertisement is not deceptive if...

it would mislead only a few particularly gullible consumers

what is the definition of deception as stated by the FTC?

a deceptive ad is one that is likely to mislead a reasonable consumer with a material statement or omission - contain express falsehoods or create false impressions that tend to mislead

what is a cease-and-desist?

a letter sent to a business or an individual with the intent of stopping the person from continuing an unlawful activity ("cease") and to not start participating in the activity again ("desist")

endorsement

a message of product or service approval that is represented to come from a party other than the sponsoring advisor

material representation

a statement upon which an average consumer or investor might reasonably rely when making a purchasing decision

according to the FTC website, the enforcement priorities of the Division of Advertising Practices include:

- combating deceptive advertising of fraudulent cure-all claims for dietary supplements & weight loss products - monitoring & stopping deceptive internet marketing practices that develop in response to public health issues - monitoring & developing effective enforcement strategies for new advertising techniques and media, such as word-of-mouth marketing - monitoring & reporting on the advertising of food to children, including the impact of practices by food companies & the media on childhood obesity - monitoring & reporting on industry practices regarding the marketing of violent movies, music, and electronic games to children - monitoring & reporting on alcohol and tobacco marketing practices

what is the process involved in a cease-and-desist?

- if consent (consent decree) cannot be reached, the FTC may issue a formal complaint leading to a cease-and-desist order - once the formal complaint is issued, the advertiser loses the opportunity to sign a consent order - the commission begins the cease-and-desist proceedings if it determines that the action would be "to the interest of the public" - if the deception is trivial, the commission may decide that seeking a cease-and-desist order is not in the public interest - when the FTC issues a complaint against an advisor, an investigation proceeds to adjunction - the FTC announced the complaint in a widely distributed press release sometimes accompanied by a press conference - when the complaint is issued, the case is assigned to an FTC administrative law judge, who conducts a hearing much like a trial - the agency has the burden to establish substantial evidence that an advertiser has violated the law - the judge either dismisses the case or issues a cease-and-desist order than can be appealed to the full commission and then to a federal appeals court - a cease-and-desist order becomes final after all appeals or after time runs out to make an appeal

what is the process involved in consent decrees?

- most consent decrees originate when a citizen - or more frequently - a competitor sends a letter to the FTC complaining about an advertising practice - if it appears that ads are deceptive, the staff conducts an investigation - if the investigation reveals that corrective action may be necessary, proposed complaint may be submitted to the commission - the commission notifies the party of the proposed complaint & asks whether the party would sign a consent order agreeing to discontinue the deceptive practice - if so, the complaint can be abandoned (and they are not required to admit to false or deceptive advertising) - a signed consent order is published for public comment & becomes final after 60 days - if they do not sign, the FTC may file a formal complaint against them - failure to abide by a consent order subjects a company to fines of up to $10,000 a day for as long as the ad campaign continues

when is an affirmative disclosure required?

- often times a consent decree contains an affirmative disclosure requirement

what are the advantages of agreeing to a consent decree?

- signing prevents the FTC from filing a formal complaint against them - avoiding bad publicity - not having to admit to false or deceptive advertising - saves the costs & time of litigation

how did this ^^ reflect an expanded mission of the FTC?

----

when did the FTC acquire the regulatory responsibility over advertising?

----

when the FTC receives a complain, it must decide whether or not to pursue a formal investigation based on:

1. the seriousness of the problem 2. geographic scope of the ad 3. current status of the agency's resources

when was the FTC created?

1914 under the federal trade commission act

what are injunctions?

A judicial order that restrains a person from beginning or continuing an action threatening or invading the legal right of another, or that compels a person to carry out a certain act

what is affirmative disclosure?

Encompasses providing the consumers information about the negative or harmful effects of the product/service in the advertisement

what are consent decrees?

an agreement or settlement that resolves a dispute between 2 parties without admission of guilt (in a criminal case) or liability (in a civil case), and most often refers to such a type of settlement in the US.

what is unfairness?

an unfair act or practice is one that "causes or is likely to cause substantial injury to consumers which is not reasonably avoidable by consumers themselves & not outweighed by countervailing benefits to consumers or to competition"

B, K, R

breyer kavanaugh roberts

industry guides

detailed descriptions of what the FTC considers to be illegal advertising practices, published by the FTC to put advertisers on notice

double G

gorsuch ginsburg

what is corrective advertising?

government ordered disclosures that a person or organization must make to compensate for prior deceptive advertising

do required statements threaten the advertisers' First Amendment rights?

the FTC's power to alter the content of advertisements is power not usually enjoyed by the government. critics charge that such a power violates the 1st amendment as well as the purpose of the federal trade commission act.

net neutrality

the concept that the internet service providers will treat all content providers by equal rules and will not discriminate among content providers based on favor the the ISP

the FTC is...

the government body with primary regulatory responsibility for advertising

what is prior substantiation?

the prior substantiation doctrine is the FTC requirement that advertisers possess reasonable substantiation for all verifiable product claims before the claims are made

T.A.S.K.

thomas alito sotomayer kagan

why was the FTC created?

to protect consumers from unfair or deceptive market practices and to promote vigorous competition

when is corrective advertising required?

when there have been deceptive advertising - ads contain statements that are misleading