Victims of Unfair Business Practices Get Limited Help from the Federal Trade Commission

HRD-78-140: Published: Oct 17, 1978. Publicly Released: Oct 17, 1978.

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The Federal Trade Commission (FTC) was organized in 1915 as an independent administrative agency whose objective was to maintain strongly competitive enterprises as the keystone of our economic system. Legislative authority provides for identification of unfair or deceptive acts or practices in commerce and for enforcement activities. FTC uses a public interest standard to determine which marketplace activities it will pursue; it does not settle individual cases, but it pursues programs and cases with larger economic impact.

Although the task of protecting consumer interests in the marketplace is one of its key responsibilities, FTC has not been successful in recovering many consumers' losses. Legislative authority does not provide FTC with practical redress authority against businesses. The FTC administrative process lengthens case timeframes, and its standards for dishonest or fraudulent practices increase FTC burden of proof. In addition, businesses' weak financial conditions limit their ability to provide consumer redress. If consumers are to receive adequate redress, case actions must be started as soon as possible and handled expeditiously. FTC has experienced delays because of lengthy negotiation periods, lack of adequate consumer injury analyses, and problems with policy communications. Case delays weaken the consumer's position by lessening the potential for obtaining redress and reducing the value of any redress obtained.

Matter for Congressional Consideration

  1. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Matter: Congress should amend section 19(a)(2) of the Federal Trade Commission Act to authorize FTC to order redress if it determines that a reasonable person would have known that violations were dishonest or fraudulent as well as section 13(b) to authorize FTC to seek an injunction to prevent businesses from dissipating their assets to avoid redressing consumers. The Chairman of FTC should ensure that redress cases are handled as expeditiously as possible by monitoring implementation of management changes designed to redress delay and improve communications.

 

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