6. What type of commercial practices does the FTC prohibit in an effort to protect customers?
The FTC prohibits commercial practices that are deceptive to customers. This generally concerns the practices of merchants who market or otherwise represent the quality or characteristics of goods or services to customers. In determining what is “deceptive”, the FTC will look at various characteristics about the information disclosed to the public.
• How would a “reasonable consumer” understand the information in the context of the message?
• Are there any express and implied claims about the product or service?
• Would leaving out information from the advertisement give consumers a misimpression?
• Is the claim of deception “material”?
If the representations to customers are deemed to be deceptive, the customer or FTC may bring a civil action against the violator.
• Discussion: How do you feel about the reasonable consumer standard in determining whether a practice is deceptive? At what point should an opinion or general information about a product be considered an express or implied representation of the product’s qualities? How do you feel about the uncertain standard as to what type of practice constitutes a material deception?
• Practice Question: Mark produces an advertisement for his business ABC, LLC. The advertisement makes claims about the quality and durability of ABC products. ABC receives many complaints that the products they sell routinely break, malfunction, and generally do not meet the standards advertised. If a group of customers ban together and file a complaint with the FTC against ABC for deceptive practices, what standard will the FTC apply in determining whether ABC should be held liable?