[United States Government Manual]
[July 01, 1995]
[Pages 573-581]
[From the U.S. Government Publishing Office, www.gpo.gov]
FEDERAL TRADE COMMISSION
Pennsylvania Avenue at Sixth Street NW., Washington, DC 20580
Phone, 202-326-2222 (Public Reference Branch)
Chairman Robert Pitofsky
Executive Assistant James C. Hamill
Commissioners Mary L. Azcuenaga,
Roscoe B. Starek
III, Janet T.
Steiger, Christine
A. Varney
Executive Director Robert S. Walton III
Deputy Executive Director for Rosemarie Straight
Management
Deputy Executive Director for Alan Proctor
Planning and Information
Director, Bureau of Competition William J. Baer
Deputy Director Mary Lou Steptoe
Deputy Director Mark D. Whitener,
Acting
Director, Bureau of Consumer Protection Joan Z. Bernstein
Deputy Director Lydia B. Parnes
Director, Bureau of Economics Jonathan B. Baker
General Counsel Steven Calkins
Deputy General Counsel Jay C. Shaffer
Director, Office of Legislative Affairs Dorian Hall, Acting
Director, Office of Public Affairs Murfy Alexander
[[Page 574]]
Secretary of the Commission Donald S. Clark
Chief Administrative Law Judge Lewis F. Parker
Inspector General Frederick J. Zirkel
[For the Federal Trade Commission statement of organization, see the
Code of Federal Regulations, Title 16, Part 0]
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The objective of the Federal Trade Commission is to maintain competitive
enterprise as the keystone of the American economic system, and to
prevent the free enterprise system from being fettered by monopoly or
restraints on trade or corrupted by unfair or deceptive trade practices.
The Commission is charged with keeping competition both free and fair.
The purpose of the Federal Trade Commission is expressed in the Federal
Trade Commission Act (15 U.S.C. 41-58) and the Clayton Act (15 U.S.C.
12), both passed in 1914 and both successively amended in the years that
have followed. The Federal Trade Commission Act prohibits the use in or
affecting commerce of ``unfair methods of competition'' and ``unfair or
deceptive acts or practices.'' The Clayton Act outlaws specific
practices recognized as instruments of monopoly. As an administrative
agency, acting quasi-judicially and quasi-legislatively, the Commission
was established to deal with trade practices on a continuing and
corrective basis. It has no authority to punish; its function is to
prevent, through cease-and-desist orders and other means, those
practices condemned by the law of Federal trade regulation. However,
court-ordered civil penalties up to $10,000 may be obtained for each
violation of a Commission order or trade regulation rule.
The Federal Trade Commission was organized as an independent
administrative agency in 1914 pursuant to the Federal Trade Commission
Act. Related duties subsequently were delegated to the Commission by
various statutes, including: the Wheeler-Lea Act, the Trans-Alaska
Pipeline Authorization Act, the Clayton Act, the Export Trade Act, the
Wool Products Labeling Act, the Fur Products Labeling Act, the Textile
Fiber Products Identification Act, the Fair Packaging and Labeling Act,
the Lanham Trade-Mark Act of 1946, the Consumer Credit Protection Act,
the Robinson-Patman Act, the Hobby Protection Act, the Magnuson-Moss
Warranty-Federal Trade Commission Improvement Act, the Federal Trade
Commission Improvements Act of 1980, the Smokeless Tobacco Health
Education Act of 1986, the Telephone Disclosure and Dispute Resolution
Act, the Federal Trade Commission Improvements Act of 1994, the
International Antitrust Enforcement Assistance Act of 1994, the
Telemarketing and Consumer Fraud and Abuse Prevention Act, and the
Federal Trade Commission Act Amendments of 1994.
The Commission is composed of five members. Each member is appointed
by the President, with the advice and consent of the Senate, for a term
of 7 years. Not more than three of the Commissioners may be members of
the same political party. One Commissioner is designated by the
President as Chairman of the Commission and is responsible for its
administrative management.
Activities
The Commission's principal functions are to:
--promote competition in or affecting commerce through the
prevention of general trade restraints such as price-fixing agreements,
boycotts, illegal combinations of competitors, and other unfair methods
of competition;
--safeguard the public by preventing the dissemination of false or
deceptive advertisements of consumer products and services generally,
and food, drug, cosmetics, and therapeutic devices, particularly, as
well as other unfair or deceptive practices;
--prevent pricing discrimination; exclusive-dealing and tying
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arrangements; corporate mergers, acquisitions, or joint ventures, when
such practices or arrangements may substantially lessen competition or
tend to create a monopoly; interlocking directorates or officers'
positions that may restrain competition; the payment or receipt of
illegal brokerage; and discrimination among competing customers in the
furnishing of or the payment for services or facilities used to promote
the resale of a product;
--enjoin various fraudulent telemarketing schemes;
--bring about truthful labeling of textile, wool, and fur products;
--regulate packaging and labeling of certain consumer commodities
within the purview of the Fair Packaging and Labeling Act so as to
prevent consumer deception and to facilitate value comparisons;
--supervise the registration and operation of associations of
American exporters engaged in export trade;
--achieve accurate credit cost disclosure by consumer creditors
(retailers, finance companies, non-Federal credit unions, and other
creditors not specifically regulated by another Government agency) as
called for in the Truth in Lending Act to ensure a meaningful basis for
informed credit decisions, and to regulate the issuance of and liability
for the use of credit cards so as to prohibit their fraudulent use in or
affecting commerce;
--protect consumers against circulation of inaccurate or obsolete
credit reports and ensure that consumer reporting agencies exercise
their responsibilities in a manner that is fair and equitable and in
conformity with the Fair Credit Reporting Act, the Fair Credit Billing
Act, the Equal Credit Opportunity Act, and the Fair Debt Collection
Practices Act; and
--gather and make available to the Congress, the President, and the
public, factual data concerning economic and business conditions.
Enforcement The Commission's law enforcement work falls into two
general categories: actions to foster voluntary compliance with the law,
and formal administrative litigation leading to mandatory orders against
offenders.
For the most part, compliance with the law is obtained through
voluntary and cooperative action by way of staff level advice, which is
not binding on the Commission; advisory opinions by the Commission; and
through issuance of guides and policy statements delineating legal
requirements as to particular business practices.
The formal litigation is similar to that in Federal courts. Cases
are instituted either by issuance of an administrative complaint or by
filing a Federal district court complaint charging the person,
partnership, or corporation with violating one or more of the statutes
administered by the Commission. Cases may be settled by consent orders.
If the charges in an administrative matter are not contested, or if the
charges are found to be true after an administrative hearing in a
contested case, a cease-and-desist order may be issued requiring
discontinuance of the unlawful practices and may include other related
requirements. Federal district court charges are resolved through either
settlements or court-ordered injunctive or other equitable relief.
Legal Case Work Cases before the Commission may originate through
complaint by a consumer or a competitor; the Congress; or from Federal,
State, or municipal agencies. Also, the Commission itself may initiate
an investigation into possible violation of the laws it administers. No
formality is required in submitting a complaint. A letter giving the
facts in detail, accompanied by all supporting evidence in possession of
the complaining party, is sufficient. It is the general policy of the
Commission not to disclose the identity of any complainant, except as
permitted by law or Commission rules.
Upon receipt of a complaint, various criteria are applied in
determining whether the particular matter should be investigated. Within
the limits of available resources, investigations are initiated that are
considered to best support the Commission's goals of maintaining
competition and protecting consumers.
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The Commission's investigations commonly include requests for
voluntary production of relevant information and materials. The
Commission also has the authority to issue compulsory process in the
form of subpeonas, civil investigative demands, or orders to file
reports. The Commission may bring suit in a United States district court
to enforce its compulsory process. Also, the Commission often cooperates
with other law enforcement agencies, both domestic and, to the extent
permitted by U.S. law, foreign and international.
On completion of an investigation, staff will recommend Commission
action. The staff may recommend that the matter be closed. If that
recommendation is approved, a closing letter is usually sent to the
individual or company that was the subject of the investigation. The
staff may instead recommend that the Commission approve the settlement
of a case, usually by acceptance of an agreement containing a consent
order to cease and desist. Such consent orders frequently provide that
the respondent does not admit any violation of the law, but agrees to be
bound by an order requiring the discontinuance of the challenged
practices, and, in some cases, other corrective action.
If the Commission determines that some action other than closing the
investigation is appropriate, but no consent agreement can be
negotiated, the Commission may issue a formal complaint alleging that
the respondent has violated one or more of the laws administered by the
Commission. The respondent is then served with a copy of the complaint,
often accompanied by a proposed cease-and-desist order to be used if the
allegations of law violations are proved. The Commission's counsel
supporting the complaint and respondents may negotiate a consent
agreement after the issuance of the formal complaint. Otherwise, the
case is heard by an administrative law judge, who conducts a trial that
is open to the public, and issues an initial decision.
The initial decision becomes the decision of the Commission at the
end of 30 days unless the respondent or the counsel supporting the
complaint appeals the decision to the Commission, or the Commission by
order stays the effective date or places the case on its own docket for
review. In the Commission's decision on such an appeal or review, the
initial decision may be sustained, modified, or reversed. If the
complaint is sustained or modified, a cease-and-desist order is issued.
If an initial decision dismissing a complaint is sustained, no cease-
and-desist order is issued.
Under the Federal Trade Commission Act, an order to cease and desist
or to take other corrective action--such as affirmative disclosure,
divestiture, or restitution--becomes final 60 days after date of service
upon the respondent, unless within that period the respondent petitions
an appropriate United States court of appeals to review the order, and
also petitions the Commission to stay the order pending review. If the
Commission does not stay the order, the respondent may seek a stay from
the reviewing appeals court. The appeals court has the power to affirm,
modify, or set the order aside. If the appeals court upholds the
Commission's order, the respondent may seek certiorari to the Supreme
Court and ask that the appeals court or the Supreme Court continue to
stay the order. Provisions requiring divestiture are automatically
stayed until any judicial review is complete. Violations of a cease-and-
desist order, after it becomes effective, subject the offender to suit
by the Government in a United States district court for the recovery of
a civil penalty of not more than $10,000 for each violation and, where
the violation continues, each day of its continuance is a separate
violation.
In addition to, or in lieu of, the administrative proceeding
initiated by a formal complaint, the Commission may, in some cases,
request that a United States district court issue a preliminary or
permanent injunction to halt the use of allegedly unfair or deceptive
practices, to prevent an anticompetitive merger from taking place, or to
prevent violations of any other statutory obligations enforced by the
Commission.
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The Commission also has specific authority to ask the United States
district court to enjoin the dissemination of advertisements of food,
drugs, cosmetics, and devices intended for use in the diagnosis,
prevention, or treatment of disease, whenever it has reason to believe
that such a proceeding would be in the public interest. Preliminary
injunctions remain in effect until a cease-and-desist order is issued
and becomes final, or until the complaint is dismissed by the Commission
or the order is set aside by the court on review.
Further, the dissemination of a false advertisement of a food, drug,
device, or cosmetic, where the use of the commodity advertised may be
injurious to health or where there is intent to defraud or mislead,
constitutes a misdemeanor. Conviction subjects the offender to a fine of
not more than $5,000, or imprisonment of not more than 6 months, or
both. Succeeding convictions may result in a fine of not more than
$10,000, or imprisonment for not more than 1 year, or both. The statute
provides that the Commission shall certify this type of case to the
Attorney General for institution of appropriate court proceedings.
Compliance Activities Through systematic and continuous review, the
Commission obtains and maintains compliance with its cease-and-desist
orders. All respondents against whom such orders have been issued are
required to file reports with the Commission to substantiate their
compliance. In the event compliance is not obtained, or if the order is
subsequently violated, civil penalty proceedings may be instituted.
Trade Regulation Rules The Commission is authorized to issue trade
regulation rules specifically defining acts or practices that are unfair
or deceptive. A rule may also specify steps to prevent such practices
from occurring. Such rules may be limited to certain industries or be
applicable to all businesses within the Commission's jurisdiction. Rules
are promulgated under specific procedures providing for participation of
interested parties, including oral hearings and comments. The
Commission's decision to issue a rule may be appealed to a United States
court of appeals. In most cases, once a rule has become final, the
Commission can seek the institution of a civil proceeding in a United
States district court for knowing violations of the rule and seek civil
penalties of up to $10,000 per violation and consumer redress.
Cooperative Procedures In carrying out the statutory directive to
``prevent'' the use in or affecting commerce of unfair practices, the
Commission makes extensive use of voluntary and cooperative procedures.
Through these procedures business and industry may obtain authoritative
guidance and a substantial measure of certainty as to what they may do
under the laws administered by the Commission.
Whenever it is practicable, the Commission will furnish a formal
advisory opinion as to whether a proposed course of conduct, if pursued,
would be likely to result in further action by the Commission. An
advisory opinion is binding upon the Commission with respect to the
person or group to whom the opinion is issued with regard to the acts,
practices, or conduct described in the request, where all relevant facts
were completely and accurately presented to the Commission, until the
advice has been rescinded or revoked and notice has been given to the
requester. No enforcement action will be initiated by the Commission
concerning any conduct undertaken by the requester in good faith
reliance upon the advice of the Commission where such conduct is
discontinued promptly upon notification of rescission or revocation of
the Commission's approval.
Industry guides are administrative interpretations in laymen's
language of laws administered by the Commission for the guidance of the
public in conducting its affairs in conformity with legal requirements.
They provide the basis for voluntary and simultaneous abandonment of
unlawful practices by members of a particular industry or industry in
general. Failure to comply with the guides may result in corrective
action by the Commission under applicable statutory provisions.
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Consumer Protection Consumer protection is one of the two main missions
of the Commission. The Commission works to increase the usefulness of
advertising by ensuring it is truthful and not misleading; reduce
instances of fraudulent, deceptive, or uniform marketing practices; and
prevent creditors from using unlawful, practices when granting credit,
maintaining credit information, collecting debts, and operating credit
systems. Consumer Protection initiates investigations in many areas of
concern to consumers, including health claims in food advertising;
environmental advertising and labeling; general advertising issues;
health care fraud; telemarketing, business opportunity, and franchise
and investment fraud; mortgage lending and discrimination; enforcement
of Commission orders; and enforcement of credit statutes and trade
rules.
The Commission has issued and enforces many trade rules important to
consumers. The Used Car Rule requires that dealers display a buyers
guide containing warranty information on the window of each vehicle
offered for sale to consumers. The Mail Order Rule requires companies to
ship merchandise that consumers order by mail or telephone within a
certain time, and sets out requirements for notifying consumers about
delays and offering them the option of agreeing to the delays or
cancelling their orders. The Funeral Rule requires that price and other
specific information regarding funeral arrangements be made available to
consumers to help them make informed choices and pay only for services
they select. The Franchise Rule requires the seller to provide each
prospective franchisee with a basic disclosure document containing
detailed information about the nature of its business and terms of the
proposed franchise relationship. The R-Value Rule requires manufacturers
to disclose the R-value (a measure of resistance to heat flow) of their
home-insulation products. Under the Cooling-Off Rule, consumers can
cancel purchases of $25 or more made door-to-door, or at places other
than the seller's usual place of business, within 3 business days of
purchase.
Under the Consumer Protection mission, the Commission also enforces
a number of specific laws that help consumers. One such law is the
Consumer Credit Protection Act, which establishes, among other things,
rules for the use of credit cards, the disclosure of the terms on which
open- and closed-end credit is granted, and the disclosure of the
reasons a business uses in determining not to grant credit.
The Truth in Lending Act is one part of the Consumer Credit
Protection Act. Its purpose is to ensure that every customer who has
need for consumer credit is given meaningful information with respect to
the cost of that credit. In most cases the credit cost must be expressed
in the dollar amount of finance charges, and as an annual percentage
rate computed on the unpaid balance of the amount financed. The Truth in
Lending Act was amended in October 1970 to regulate the issuance,
holder's liability, and the fraudulent use of credit cards.
The Fair Credit Reporting Act, another part of the Consumer Credit
Protection Act, represents the first Federal regulation of the vast
consumer reporting industry, covering all credit bureaus, investigative
reporting companies, detective and collection agencies, lenders'
exchanges, and computerized information reporting companies. The purpose
of this act is to ensure that consumer reporting activities are
conducted in a manner that is fair and equitable, upholding the
consumer's right to privacy as against the informational demands of
others.
Maintaining Competition (Antitrust) The second major mission of the
Commission is to encourage competitive forces in the American economy.
Under the Federal Trade Commission Act, the Commission seeks to prevent
unfair practices that may keep one company from competing with others.
Under the Federal Trade Commission Act and the Clayton Act, the
Commission attempts to prevent mergers of companies if the result may be
to lessen competition. Under some circumstances, companies
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planning to merge must first give notice to the Commission and the
Department of Justice's Antitrust Division and provide certain
information concerning the operations of the companies involved.
The Commission also enforces the provisions of the Robinson-Patman
Act, a part of the Clayton Act prohibiting companies from discriminating
among other companies that are its customers in terms of price or other
services provided.
Economic Factfinding The Commission makes economic studies of
conditions and problems affecting competition in the economy. Reports of
this nature may be used to inform legislative proposals, part of a
rulemaking record, in response to requests of the Congress and statutory
directions, or for the information and guidance of the Commission and
the executive branch of the Government as well as the public. The
reports have provided the basis for significant legislation and, by
spotlighting poor economic or regulatory performance, they have also led
to voluntary changes in the conduct of business, with resulting benefits
to the public.
Competition and Consumer Advocacy To promote competition, consumer
protection, and the efficient allocation of resources, the Commission
has an active program designed to advocate the consumer interest in a
competitive marketplace by encouraging courts, legislatures, and
government administrative bodies to consider efficiency and consumer
welfare as important elements in their deliberations.
The Commission uses these opportunities to support procompetitive
means of regulating the Nation's economy, including the elimination of
anticompetitive regulations that reduce the welfare of consumers and the
implementation of regulatory programs that protect the public and
preserve as much as possible the discipline of competitive markets. The
competition and consumer advocacy program relies on persuasion rather
than coercion.
Regional Offices--Federal Trade Commission
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Region Address Director
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ATLANTA--Alabama, Florida, Georgia, Rm. 1000, 1718 Peachtree St. NW., Atlanta, GA Paul K. Davis, Acting
Mississippi, North Carolina, South 30367
Carolina, Tennessee, Virginia
BOSTON--Connecticut, Maine, Suite 1184, 10 Causeway St., Boston, MA 02222- Phoebe D. Morse
Massachusetts, New Hampshire, Rhode 1073
Island, Vermont
CHICAGO--Illinois, Indiana, Iowa, Suite 1437, 55 E. Monroe St., Chicago, IL C. Steven Baker
Kentucky, Minnesota, Missouri, 60603
Wisconsin
CLEVELAND--Delaware, District of Suite 520-A, 668 Euclid Ave., Cleveland, OH Phillip L. Broyles
Columbia, Maryland, Michigan, Ohio, 44114
Pennsylvania, West Virginia
DALLAS--Arkansas, Louisiana, New Suite 500, 100 N. Central Expressway, Dallas, Thomas B. Carter
Mexico, Oklahoma, Texas TX 75201
DENVER--Colorado, Kansas, Montana, Suite 1523, 1961 Stout St., Denver, CO 80294- Claude C. Wild III
Nebraska, North Dakota, South Dakota, 0101
Utah, Wyoming
LOS ANGELES--Arizona, southern Suite 13209, 11000 Wilshire Blvd., Los Sue L. Frauens, Acting
California Angeles, CA 90024
NEW YORK--New Jersey, New York Suite 1300, 150 William St., New York, NY Michael J. Bloom
10038
SAN FRANCISCO--Northern California, Suite 570, 901 Market St., San Francisco, CA Jeffrey A. Klurfeld
Hawaii, Nevada 94103
SEATTLE--Alaska, Idaho, Oregon, 2806 Federal Bldg., 915 2d Ave., Seattle, WA Charles A. Harwood
Washington 98174
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Sources of Information
Contracts and Procurement Persons seeking to do business with the
Federal Trade Commission should contact the Division of Procurement and
General Services, Federal Trade Commission, Washington, DC 20580. Phone,
202-326-2275.
Employment Civil service registers are used in filling positions for
economists, accountants, investigators, and other professional,
administrative, and clerical personnel. The Federal Trade Commission
employs a sizable number of attorneys under the excepted appointment
procedure. All employment
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inquiries should be directed to the Director of Personnel, Federal Trade
Commission, Washington, DC 20580. Phone, 202-326-2022.
General Inquiries Persons desiring information on consumer protection,
restraint of trade questions, or to register a complaint, should contact
the Federal Trade Commission or the nearest regional office.
Publications A copy of the Federal Trade Commission--``Best Sellers,''
which lists publications of interest to the general public, is available
free upon request from the Public Reference Section, Federal Trade
Commission, Washington, DC 20580. Phone, 202-326-2222. TTY, 202-326-
2502.
Over 140 of the Commission's consumer publications are also
available online. The FTC Consumerline gopher service is located on the
Internet at CONSUMER.FTC.GOV 2416. For World Wide Web access, the
Uniform Resource Locator is GOPHER://CONSUMER.FTC.GOV:2416.
For further information, contact the Director, Office of Public Affairs,
Federal Trade Commission, Pennsylvania Avenue at Sixth Street NW.,
Washington, DC 20580. Phone, 202-326-2180.
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