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FTC Regulatory Enforcement Procedures

4. What are the enforcement procedures of the FTC?

Within the FTC, attorneys working in the bureau of consumer protection enforce the federal laws related to consumer affairs and rules promulgated by the FTC. The FTC enforces these rules and laws through the following methods:

•    Advisory Opinions & Industry Guides – If a business is uncertain as to the legality of a particular course of conduct, it can request an advisory opinion from the FTC. Upon request, the FTC will advise businesses as to whether a proposed practice is unfair or deceptive. These advisory opinions are not legally binding, but they provide guidance as to how the FTC would view the legality of a certain practice.

⁃    Note: The FTC also publishes industry guides, which specify the agency’s view as to legality of a particular industry trade practices.

•    Investigation – The BCP is the internal group charged with handling the investigation and potential prosecution of FTC violations. The FTC generally initiates investigations pursuant to reports from consumers and businesses, pre-merger notification filings, congressional inquiries, or reports in the media.

•    Consent Orders – The FTC may enter into agreements with alleged violators to refrain from the continued violation of consumer protection law, known as “consent orders”. This is where the alleged violating party consents to an administrative order to modify or correct the challenged practices.

⁃    Note: While voluntary compliance through a consent order is often effective, the FTC has the option to skip the consent order process and file an administrative complaint or initiate federal litigation.

•    Administrative Complaint – The FTC will bring an action before an administration court. The court may order that the business cease the practice in question. If the findings of the administrative judge are challenged, the case is reviewed de novo by the full FTC Commission. If the defendant wishes to appeal the decision of the FTC commission, she can initiate a challenge with the US Court of Appeals.

⁃    Note: The primary remedy for violation of the FTC Act is an administrative cease and desist order.

•    Civil Actions – The FTC may initial civil actions for violation of administrative statutes or regulations.

•    Criminal Charges – The FTC is charged with authority to prosecute businesses for committing unfair or deceptive trade practices. Often, however, the FTC supports the prosecution efforts of the US Department of Justice. Criminal charges against a business generally allege violation of Section 5 of the FTC Acts by:

⁃    committing “unfair or deceptive acts or practices”, or

⁃    violating “trade regulation rule”.

None of the above-mentioned methods are exclusive.

•    Discussion: How do you feel about the FTC enforcement procedure? Does it concern you that adjudication of alleged violations of consumer protection provisions are administrative? Why or why not?

•    Practice Question: Can you describe the process that the FTC follows in enforcing administrative protection laws against an alleged violator?

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