[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

[[Page 575]]




[[Page 576]]

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.

[[Page 577]]

    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. 

[[Page 578]]

    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.

[[Page 579]]

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

[[Page 581]]

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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