Q: I sometimes see TV ads that I think are misleading, I've heard about telemarketing scams, and I'm reluctant to do business on the Internet. Is there any government agency which tries to protect consumers from unfair or deceptive business tactics?
A: The federal government has enacted a number of "consumer protection" laws and regulations which are enforced by the Federal Trade Commission (FTC). Its mission is to protect consumers by preventing and eliminating fraud, deception and unfair business practices.
Q: What is the FTC?
A: It is an independent federal agency created by Congress in 1914 to combat "unfair methods of competition." In 1938, its mission was expanded to include prevention of "unfair or deceptive acts or practices." Under this authority, the FTC has become the premier protector of our nation's citizens against consumer fraud.
In addition, Congress has over the years given the FTC authority to enforce a wide variety of other consumer protection statutes relating to such matters as product warranties, product packaging and labeling, including the "EnergyGuide" label for energy-efficient appliances, "truth in lending" disclosures, "fair credit" billing and reporting procedures, telemarketing fraud prevention, children's online privacy protection, and identity theft prevention and detection.
Q: How does the FTC decide what to investigate?
A: An investigation can begin in various ways--for example, by a Congressional inquiry, an FTC staff member spotting something questionable in the marketplace, or consumer complaints. It is important to know that the FTC does not resolve individual consumer complaints. Rather, it tracks individuals complaints to look for patterns of potential wrongdoing that can lead to an investigation.
Q: How does the FTC try to stop unfair or deceptive practices?
A: First, it will investigate the alleged conduct. If it concludes that a company is violating the consumer protection law(s), it may ask the company to enter into a so-called "consent order" in which the company agrees to stop the harmful conduct and seek consumer redress in the form of fines or civil penalties. If the company refuses, the FTC may start a formal proceeding before an administrative law judge; this is similar to a court case, where there is submission of evidence and legal arguments. If the judge finds that the law has been violated, a "cease-and-desist order" is then issued. The company can appeal an adverse decision by the judge to the full Commission. If either party is not satisfied with the outcome at that level, it can appeal the Commission's decision in the federal courts.
If a company ever violates an FTC consent order or cease-and-desist order, the FTC may seek monetary penalties and/or an injunction in federal court. Further, in cases where the FTC finds an unfair act or practice that a reasonable person would have known to be "dishonest or fraudulent," the FTC may follow up the administrative proceeding by asking a federal court to order consumer redress, such as an order to pay monetary restitution to victims of the violation.
In some cases, the FTC will go directly to court. For example, if there is an ongoing consumer fraud, instead of starting an administrative proceeding, the FTC will seek an immediate court order to stop the fraud before too many consumers get hurt.
The FTC may also issue "trade regulation rules" if its formal rule-making process discloses evidence of unfair or deceptive practices affecting an entire industry which can be prevented by an appropriate rule. Such rules have the force of law. The FTC may also publish guidelines or other materials to help the industry understand and comply with the rules.
Q: Is the FTC involved in "e-commerce" issues like Internet fraud prevention or online privacy?
A: The FTC has increased and tailored its law enforcement efforts to detecting online fraud and deceptive practices such as identification theft. It has been very involved in developing recommendations relating to privacy concerns. Consumer information about a variety of topics, including Internet fraud prevention and privacy, can be found at www.consumer.ftc.gov. Additionally, the FTC has helped open www.econsumer.gov to assist consumers with multinational Internet fraud complaints.
Q: Is the FTC doing anything about telemarketers?
A: Yes. The FTC enforces the National Do Not Call Registry. If you do not wish to be contacted by telemarketers, you may add your phone number to the Registry; this should stop most (but not all) calls from telemarketers. You may add your phone number to the Registry online at www.donotcall.gov or by phone at (888)382-1222. You can register land lines or mobile/cellular numbers with the National Do Not Call Registry; despite Internet rumors to the contrary, there is no separate registry for mobile/cellular phones, and you only need to register your phone number once--the registration does not expire. You may file a complaint about a firm violating the law on the same website (www.donotcall.gov).
Q: Is the FTC doing anything about identity theft?
A: Yes. The FTC has a special section of its website dedicated to identity theft education, including tools to protect your identity and guidance on what to do if you believe your identity has been stolen, at www.ftc.gov/idtheft.
Additionally, the FTC, along with governmental agencies that regulate the banking and credit industries, enforces the "Red Flag Rules." These rules require certain companies that extend credit to individuals or use consumer credit reports to develop a written policy aimed at detecting, preventing and mitigating identity theft.
Q: To whom at the FTC should I complain about a fraud or unfair business practice?
A: In Ohio, you can write to the East Central Regional Office of the Federal Trade Commission, Suite 200, 1111 Superior Avenue, Cleveland, Ohio 44114-2507. If you prefer to call, the phone number is (877) FTC-HELP (382-4357), 9:00 a.m. to 8:00 p.m. EST, Monday through Friday. Or, you can submit an online complaint to the FTC through its website at www.ftccomplaintassistant.gov. These complaints are entered into a database that can be accessed by civil and criminal law enforcement authorities worldwide. If you want to find out whether the FTC has already announced that it is active in a particular area, you might check the same website.
Q: If an FTC complaint is made against me or my business, what should I do?
A: You should handle an FTC complaint as if it were a lawsuit. You should refer it to your attorney.
Law You Can Use is a weekly consumer legal information column provided by the Ohio State Bar Association. This article was originally prepared by Mark L. Silbersack, a partner in the Cincinnati office of Dinsmore & Shohl, LLP, and Tammy L. Imhoff, an associate in the same office. It was updated by Tammy L. Imhoff.