Remove ads
The Federal Trade Commission (FTC) is an independent agency of the United States government whose principal mission is the enforcement of civil (non-criminal) antitrust law and the promotion of consumer protection. The FTC shares jurisdiction over federal civil antitrust law enforcement with the Department of Justice Antitrust Division. The agency is headquartered in the Federal Trade Commission Building in Washington, DC.
 Seal of the Federal Trade Commission | |
 Flag of the Federal Trade Commission | |
| Agency overview | |
|---|---|
| Formed | September 26, 1914 |
| Preceding agency | |
| Jurisdiction | Federal government of the United States |
| Headquarters | Federal Trade Commission Building Washington, DC |
| Employees | 1,123 (FY 2021)[1] |
| Annual budget | $425.7 million (FY 2024)[2] |
| Agency executive |
|
| Website | ftc.gov |
| Footnotes | |
| [3][4] | |
The FTC was established in 1914 by the Federal Trade Commission Act, which was passed in response to the 19th-century monopolistic trust crisis. Since its inception, the FTC has enforced the provisions of the Clayton Act, a key U.S. antitrust statute, as well as the provisions of the FTC Act, 15 U.S.C. § 41 et seq. Over time, the FTC has been delegated with the enforcement of additional business regulation statutes and has promulgated a number of regulations (codified in Title 16 of the Code of Federal Regulations). The broad statutory authority granted to the FTC provides it with more surveillance and monitoring abilities than it actually uses.[5]
The FTC is composed of five commissioners who are nominated by the President and subject to Senate confirmation. Commissioners serve seven-year terms, and no more than three FTC members can be from the same party. One member of the body serves as FTC Chair at the President's pleasure, with Commissioner Lina Khan having served as chair since June 2021.
Remove ads
Early history
In the aftermath of the U.S. Supreme Court's landmark decision in Standard Oil Co. of New Jersey v. United States in 1911,[6] the first version of a bill to establish a commission to regulate interstate trade was introduced on January 25, 1912, by Oklahoma congressman Dick Thompson Morgan. He would make the first speech on the House floor advocating its creation on February 21, 1912.
Though the initial bill did not pass, the questions of trusts and antitrust dominated the 1912 election.[7] Most political party platforms in 1912 endorsed the establishment of a federal trade commission with its regulatory powers placed in the hands of an administrative board, as an alternative to functions previously and necessarily exercised so slowly through the courts.[8][9]
With the 1912 presidential election decided in favor of the Democrats and Woodrow Wilson, Morgan reintroduced a slightly amended version of his bill during the April 1913 special session. The national debate culminated in Wilson's signing of the FTC Act on September 26, 1914, with additional tightening of regulations in the Clayton Antitrust Act three weeks later.
The new FTC would absorb the staff and duties of Bureau of Corporations, previously established under the Department of Commerce and Labor in 1903. The FTC could additionally challenge "unfair methods of competition" and enforce the Clayton Act's more specific prohibitions against certain price discrimination, vertical arrangements, interlocking directorates, and stock acquisitions.[7][non-primary source needed]
Recent history
In 1984,[10][non-primary source needed] the FTC began to regulate the funeral home industry in order to protect consumers from deceptive practices. The FTC Funeral Rule requires funeral homes to provide all customers (and potential customers) with a General Price List (GPL), specifically outlining goods and services in the funeral industry, as defined by the FTC, and a listing of their prices.[11][non-primary source needed] By law, the GPL must be presented on request to all individuals, and no one is to be denied a written, retainable copy of the GPL. In 1996, the FTC instituted the Funeral Rule Offenders Program (FROP), under which "funeral homes make a voluntary payment to the U.S. Treasury or appropriate state fund for an amount less than what would likely be sought if the Commission authorized filing a lawsuit for civil penalties. In addition, the funeral homes participate in the NFDA compliance program, which includes a review of the price lists, on-site training of the staff, and follow-up testing and certification on compliance with the Funeral Rule."[10][non-primary source needed]
In the mid-1990s, the FTC launched the fraud sweeps concept where the agency and its federal, state, and local partners filed simultaneous legal actions against multiple telemarketing fraud targets. The first sweeps operation was Project Telesweep in July 1995 which cracked down on 100 business opportunity scams.[12][non-primary source needed]
In the 2021 United States Supreme Court case, AMG Capital Management, LLC v. FTC, the Court found unanimously that the FTC did not have power under of the FTC Act, amended in 1973, to seek equitable relief in courts; it had the power to seek only injunctive relief.[13]
In 2023, Project 2025 suggested that an administration could abolish the FTC.[14]
Remove ads
Biden administration
In November 2024, U.S. District Judge Amit Mehta agreed with Assistant Attorney General Jonathan Kanter and FTC Chair Khan, ruling the company a monopoly, and ordering Google to sell its Chrome web browser.[15]
Banning non-compete clauses
The FTC ruled to ban virtually all non-competes nationwide in April 2024.[16] The agency estimates 30 million workers are bound by these clauses and only excludes senior executives from the ban on enforcing non-competes.[16] The agency believes that this will allow workers to find better working conditions and pay, since switching companies, on average, provides the biggest pay raises.[17] It also allows workers to leave abusive work environments and can prevent some doctors from having to leave medicine once they leave a practice.[17] The ban was put on hold by U.S. District Judge Ada Brown on July 3, 2024, but then upheld on appeal by U.S. District Judge Kelley B. Hodge on July 23, 2024.[18][19] On August 20, 2024, a federal court in Texas overturned the FTC's ban on non-compete agreements, which was originally scheduled to take effect on September 4, 2024.[20] U.S. District Judge Ada Brown said the FTC did not have the authority to issue the ban, which she said was "unreasonably overbroad without a reasonable explanation."[21] Victoria Graham, an FTC spokeswoman responded to the ruling by stating "We are seriously considering a potential appeal..."[22]
Chip manufacturers
The FTC successfully blocked Nvidia from purchasing ARM holdings in 2022.[23]
Pharmaceutical drug prices
The FTC has pursued lawsuits against companies to lower drug prices,[24] including for insulin[25] and for inhalers.[26]
The FTC launched its investigation into pharmacy benefit managers (PBMs) in 2022. In July 2024, it released an interim report on its 2-year investigation into pharmacy benefit managers, the agency requested documents from the six largest PBMs as part of its investigation. The three largest – UnitedHealth Group's OptumRx, Cigna's Express Scripts and CVS Health's Caremark – manage about 80% of U.S. prescriptions. The top three PBMs share a parent company with a large medical insurance company. The FTC accused these companies of raising drug prices through conflicts of interest, vertical integration, concentration, and exclusivity provisions; the agency also alleged that the companies created a rebate system that prioritized high rebates from drug manufacturers, among other factors. The agency stated that several PBMs failed to provide documents in a timely manner and warned that it could take the companies to court to force them to comply, during the announcment in the preliminary findings.[27][28][29][30] In September 2024, the FTC sued the three largest pharmacy benefit managers (PBMs) for allegedly engaging in anti-competitive practices that increased their profits while artificially inflating the list price of insulin. The agency is seeking to prohibit the PBMs from favoring medicines because certain pharaceuticals make them more money.[31][32]
Fake Online Reviews
In August 2024, the FTC announced it would finalize rules to ban fake reviews online.[33][34]
Food prices
In February 2024, the FTC challenged the Kroger-Albertsons merger, arguing it would drive up grocery and pharmacy prices, worsen service, and lower wages and working conditions.[35][36] On December 10, 2024, U.S. District Judge Adrienne Nelson agreed with the FTC, that the merger would risk reducing competition at the expense of both consumers and workers. Judge Nelson halted Kroger’s $24.6 billion acquisition of Albertsons with a preliminary injunction.[37]
In March 2024, the FTC released a report that found higher profit margins as a driver of inflation for grocery prices.[38]
In August 2024, it announced it would be probing grocery prices to look for anti-competitive behavior and price gouging at chain supermarkets.[39][40]
Junk fees and high prices
In 2023, the FTC proposed a new rule that would ensure that the cancellation process of subscription services is as easy as the process of signing up.[41][42] On October 16, 2024, the FTC announced the new rule, dubbed "click to cancel", requiring companies to make subscription services "as easy for consumers to cancel their enrollment as it was to sign up."[43][44] Khan said in a interview that the new rule is designed so that if consumers signed up online, they must also be able to cancel on the same website in the same number of steps.[45] The rule’s final provisions will go into effect 180 days after it is published in the Federal Register.[43]
It also targeted airlines and credit card companies over junk fees and high prices.[40]
Microsoft merger
In 2023, the FTC authorized an administrative complaint against the merger between Microsoft and Activision Blizzard, Inc. The FTC alleged the deal would suppress competitors from accessing future content/games developed by Activision once the deal goes through. The FTC dropped its lawsuit on July 20, 2023. Microsoft had to restructure its deal to appease UK regulators.[46] Microsoft reneged on promises it made in court filings by laying off 1900 employees in January 2024, signaling that it did not plan to let Activision Blizzard remain as independent as it had promised and leading the FTC to continue to appeal the decision.[47]
Right to repair
In July 2021, the FTC voted unanimously to enforce the right to repair as policy and to look to take action against companies that limit the type of repair work that can be done at independent repair shops.[48] In October 2024, following a comment by the FTC to the US Copyright Office, an exemption was granted allowing for repair of retail-level food preparation equipment, such as McDonald's ice cream machines.[49][50]
Trump administration
Meta antitrust acquisitions case
In December 2020 the FTC sued Meta (formally known as Facebook) for anticompetitive conduct under Section 2 of the Sherman Act, which prohibits improper monopolization of a market. The FTC accused Meta of buying up its competitors to stifle competition which reduced the range of services available to consumers and by creating fewer social media platforms for advertisers to target.[51][52]
Obama administration
Money Now Funding / Cash4Businesses case
In September 2013, a federal court closed an elusive business opportunity scheme on the request of the FTC, namely "Money Now Funding"/"Cash4Businesses".[53] The FTC alleged that the defendants misrepresented potential earnings, violated the National Do Not Call Register, and violated the FTC's Business Opportunity Rule in preventing a fair consumer evaluation of the business.[54] This was one of the first definitive actions taken by any regulator against a company engaging in transaction laundering, where almost US$6 million were processed illicitly.[55][56]
In December 2018, two defendants, Nikolas Mihilli and Dynasty Merchants, LLC, settled with the FTC.[57] They were banned from processing credit card transactions, though the initial monetary judgment of $5.8 million was suspended due to the defendant's inability to pay.
OMICS Publishing Group case
In 2016, the FTC launched action against the academic journal publisher OMICS Publishing Group for producing predatory journals and organizing predatory conferences.[58] This action, partly in response to ongoing pressure from the academic community,[59] is the first action taken by the FTC against an academic journal publisher.[60][61]
The complaint alleges that the defendants have been "deceiving academics and researchers about the nature of its publications and hiding publication fees ranging from hundreds to thousands of dollars".[62] It additionally notes that "OMICS regularly advertises conferences featuring academic experts who were never scheduled to appear in order to attract registrants"[59] and that attendees "spend hundreds or thousands of dollars on registration fees and travel costs to attend these scientific conferences."[62] Manuscripts are also sometimes held hostage, with OMICS refusing to allow submissions to be withdrawn and thereby preventing resubmission to another journal for consideration.[60] Library scientist Jeffrey Beall has described OMICS as among the most egregious of predatory publishers.[59][63] In November 2017, a federal court in the Court for the District of Nevada granted a preliminary injunction that:
"prohibits the defendants from making misrepresentations regarding their academic journals and conferences, including that specific persons are editors of their journals or have agreed to participate in their conferences. It also prohibits the defendants from falsely representing that their journals engage in peer review, that their journals are included in any academic journal indexing service or any measurement of the extent to which their journals are cited. It also requires that the defendants clearly and conspicuously disclose all costs associated with submitting or publishing articles in their journals."[64]
In April 2019, the court imposed a fine of US$50.1 million on OMICS companies for unfair and deceptive business practices.[65][66][67]
Sears Holdings case
In In the Matter of Sears Holdings Management Corp., the FTC alleged that a research software program provided by Sears was deceptive because it collected information about nearly all online behavior, a fact that was only disclosed in legalese, buried within the end user license agreement.[68] The FTC secured a consent decree in the case.
Bush administration
Gateway Learning case
In In re Gateway Learning Corp. the FTC alleged that Gateway committed unfair and deceptive trade practices by making retroactive changes to its privacy policy without informing customers and by violating its own privacy policy by selling customer information when it had said it would not.[69] Gateway settled the complaint by entering into a consent decree with the FTC that required it to surrender some profits and placed restrictions upon Gateway for the following 20 years.[70]
Activities in the healthcare industry
In addition to prospective analysis of the effects of mergers and acquisitions, the FTC has recently resorted to retrospective analysis and monitoring of consolidated hospitals.[71] Thus, it also uses retroactive data to demonstrate that some hospital mergers and acquisitions are hurting consumers, particularly in terms of higher prices.[71] Here are some recent examples of the FTC's success in blocking or unwinding of hospital consolidations or affiliations:
Phoebe Putney Memorial Hospital and Palmyra Medical Center in Georgia
In 2011, the FTC successfully challenged in court the $195 million acquisition of Palmyra Medical Center by Phoebe Putney Memorial Hospital.[71][72] The FTC alleged that the transaction would create a monopoly as it would "reduce competition significantly and allow the combined Phoebe/Palmyra to raise prices for general acute-care hospital services charged to commercial health plans, substantially harming patients and local employers and employees".[72] The Supreme Court on February 19, 2013, ruled in favor of the FTC.[72]
ProMedica health system and St. Luke's hospital in Ohio
Similarly, court attempts by ProMedica health system in Ohio to overturn an order by the FTC to the company to unwind its 2010 acquisition of St. Luke's hospital were unsuccessful.[71][73] The FTC claimed that the acquisition would hurt consumers through higher premiums because insurance companies would be required to pay more.[73] In December 2011, an administrative judge upheld the FTC's decision, noting that the behavior of ProMedica health system and St. Luke's was indeed anticompetitive. The court ordered ProMedica to divest St. Luke's to a buyer that would be approved by the FTC within 180 days of the date of the order.[71][73]
OSF healthcare system and Rockford Health System in Illinois
In November 2011, the FTC filed a lawsuit alleging that the proposed acquisition of Rockford by OSF would drive up prices for general acute-care inpatient services as OSF would face only one competitor (SwedishAmerican health system) in the Rockford area and would have a market share of 64%.[74] Later in 2012, OSF announced that it had abandoned its plans to acquire Rockford Health System.[74]
Remove ads
Current members of the FTC
The commission is headed by five commissioners, who each serve seven-year terms. Commissioners are nominated by the president and confirmed by the Senate. No more than three commissioners can be of the same political party. In practice, this means that two commissioners are of the opposition party. However, three members of the FTC throughout its history have been without party affiliation, with the most recent independent, Pamela Jones Harbour, serving from 2003 to 2009.[75]
| Portrait | Name | Party | Prior experience | Education | Term began | Term expires | |
|---|---|---|---|---|---|---|---|
.jpg) |
Lina Khan
(chair) |
Democratic | Legal scholar | Williams College (BA) | June 15, 2021 | September 26, 2024 | |
.jpg) |
Rebecca Slaughter | Democratic | Legal advisor to Senator Chuck Schumer | Yale University (BA)
Yale Law School (JD) |
May 2, 2018 | September 26, 2029 | |
.jpg) |
Alvaro Bedoya | Democratic | Director of the Center on Privacy and Technology at the Georgetown University Law Center | Harvard College (BA)
Yale Law School (JD) |
May 16, 2022 | September 26, 2026 | |
 |
Melissa Holyoak | Republican | Solicitor general of Utah | University of Utah (BA) | March 25, 2024 | September 26, 2025 | |
 |
Andrew N. Ferguson | Republican | Solicitor general of Virginia | University of Virginia (BA) | April 2, 2024 | September 26, 2030 | |
Notes
Backgrounds of commissioners
As of 2021, there have been:
- Three African-Americans to serve on the FTC: A. Leon Higginbotham Jr. (served from 1962 to 1964), Mozelle W. Thompson (served from 1997 to 2004), Pamela Jones Harbour (served from 2003 to 2009)[78]
- Three Asian-Americans to serve on the FTC: Dennis Yao (served from 1991 to 1994), Rohit Chopra (served from 2018 to 2021), and Lina Khan (served since 2021); Khan is the first Asian-American to serve as FTC Chair[79]
- Three independents to serve on the FTC: Philip Elman (served from 1961 to 1970), Mary Azcuenaga (served from 1984 to 1998), and Pamela Jones Harbour (served from 2003 to 2009)[75]
Bureaus
 |
§The FTC has three main bureaus: the Bureau of Competition, the Bureau of Consumer Protection, and the Bureau of Economics.
Bureau of Competition
The Bureau of Competition is the division of the FTC charged with elimination and prevention of "anticompetitive" business practices. It accomplishes this through the enforcement of antitrust laws, review of proposed mergers, and investigation into other non-merger business practices that may impair competition. Such non-merger practices include horizontal restraints, involving agreements between direct competitors, and vertical restraints, involving agreements among businesses at different levels in the same industry (such as suppliers and commercial buyers).
The FTC shares enforcement of antitrust laws with the Department of Justice. However, while the FTC is responsible for civil enforcement of antitrust laws, the Antitrust Division of the Department of Justice has the power to bring both civil and criminal action in antitrust matters.
Bureau of Consumer Protection
The Bureau of Consumer Protection's mandate is to protect consumers against unfair or deceptive acts or practices in commerce. With the written consent of the commission, Bureau attorneys enforce federal laws related to consumer affairs and rules promulgated by the FTC. Its functions include investigations, enforcement actions, and consumer and business education. Areas of principal concern for this bureau are: advertising and marketing, financial products and practices, telemarketing fraud, privacy and identity protection, etc. The bureau also is responsible for the United States National Do Not Call Registry.
Under the FTC Act, the commission has the authority, in most cases, to bring its actions in federal court through its own attorneys. In some consumer protection matters, the FTC appears with, or supports, the U.S. Department of Justice.
Bureau of Economics
The Bureau of Economics was established to support the Bureau of Competition and Consumer Protection by providing expert knowledge related to the economic impacts of the FTC's legislation and operation.
Other offices
- The FTC maintains an Office of Technology Research and Investigation to assist it in technology-related enforcement actions.[80]
- The FTC generally selects its Chief Technologist from among computer science academics and noted practitioners.[81] The role has previously been filled by Steven K. Bellovin, Lorrie Cranor, Edward Felten, Ashkan Soltani, and Latanya Sweeney.
- The FTC also maintains an academic in residence program, inviting leading legal scholars to join the FTC for a year as a Senior Policy Advisor. The role has been held by Tim Wu in 2011,[82] Paul Ohm in 2012,[83] and Andrea M. Matwyshyn in 2014.[84]
Remove ads
| This section relies largely or entirely on a single source. (August 2024) |
The FTC investigates issues raised by reports from consumers and businesses, pre-merger notification filings, congressional inquiries, or reports in the media. These issues include, for instance, false advertising and other forms of fraud. FTC investigations may pertain to a single company or an entire industry. If the results of the investigation reveal unlawful conduct, the FTC may seek voluntary compliance by the offending business through a consent order, file an administrative complaint, or initiate federal litigation. During the course of regulatory activities, the FTC is authorized to collect records, but not on-site inspections.[85]
Traditionally an administrative complaint is heard in front of an independent administrative law judge (ALJ) with FTC staff acting as prosecutors. The case is reviewed de novo by the full FTC commission which then may be appealed to the U.S. Court of Appeals and finally to the Supreme Court.[citation needed]
Under the FTC Act, the federal courts retain their traditional authority to issue equitable relief, including the appointment of receivers, monitors, the imposition of asset freezes to guard against the spoliation of funds, immediate access to business premises to preserve evidence, and other relief including financial disclosures and expedited discovery. In numerous cases, the FTC employs this authority to combat serious consumer deception or fraud. Additionally, the FTC has rulemaking power to address concerns regarding industry-wide practices. Rules promulgated under this authority are known as Trade Rules.[citation needed]
One of the Federal Trade Commission's other major focuses is identity theft. The FTC serves as a federal repository for individual consumer complaints regarding identity theft. Even though the FTC does not resolve individual complaints, it does use the aggregated information to determine where federal action might be taken. The complaint form is available online or by phone (1-877-ID-THEFT).[citation needed]
The FTC has been involved in the oversight of the online advertising industry and its practice of behavioral targeting for some time. In 2011 the FTC proposed a "Do Not Track" mechanism to allow Internet users to opt-out of behavioral targeting.[citation needed]
The FTC, along with the Environmental Protection Agency and Department of Justice also empowers third-party enforcer-firms to engage in some regulatory oversight, e.g. the FTC requires other energy companies to audit offshore oil platform operators.[86]
In 2013, the FTC issued a comprehensive revision of its Green guides, which set forth standards for environmental marketing.[87][non-primary source needed]
Unfair or deceptive practices affecting consumers
|
Section 5 of the Federal Trade Commission Act, 15 U.S.C. § 45 grants the FTC power to investigate and prevent deceptive trade practices. The statute declares that "unfair methods of competition in or affecting commerce, and unfair or deceptive acts or practices in or affecting commerce, are hereby declared unlawful."[88]
Unfairness and deception towards consumers represent two distinct areas of FTC enforcement and authority. The FTC also has authority over unfair methods of competition between businesses.[89]
Definitions of unfairness
Courts have identified three main factors that must be considered in consumer unfairness cases: (1) whether the practice injures consumers; (2) whether the practice violates established public policy; and (3) whether it is unethical or unscrupulous.[89]
Definitions of deception
In a letter to the Chairman of the House Committee on Energy and Commerce, the FTC defined the elements of deception cases. First, "there must be a representation, omission or practice that is likely to mislead the consumer."[90] In the case of omissions, the Commission considers the implied representations understood by the consumer.
A misleading omission occurs when information is not disclosed to correct reasonable consumer expectations.[90] Second, the Commission examines the practice from the perspective of a reasonable consumer being targeted by the practice. Finally the representation or omission must be a material one – that is one that would have changed consumer behavior.[90]
Dot Com Disclosures guide
In its Dot Com Disclosures guide,[91] the FTC said that "disclosures that are required to prevent deception or to provide consumers material information about a transaction must be presented clearly and conspicuously."[91] The FTC suggested a number of different factors that would help determine whether the information was "clear and conspicuous" including but not limited to:
- the placement of the disclosure in an advertisement and its proximity to the claim it is qualifying,
- the prominence of the disclosure,
- whether items in other parts of the advertisement distract attention from the disclosure,
- whether the advertisement is so lengthy that the disclosure needs to be repeated,
- whether disclosures in audio messages are presented in an adequate volume and cadence and visual disclosures appear for a sufficient duration, and
- whether the language of the disclosure is understandable to the intended audience.[91]
However, the "key is the overall net impression."[91]
Remove ads
- Children's Online Privacy Protection Act
- Competition policy
- Competition regulator
- Consumer Financial Protection Bureau
- Consumer Product Safety Commission
- Fair Debt Collection Practices Act
- Franchising
- FTC Fair Information Practices
- FTC regulation of behavioral advertising
- Gramm–Leach–Bliley Act
- Humphrey's Executor v. United States
- Information broker
- Sweepstakes
- United States v. Google Inc.
Remove ads
Wikiwand in your browser!
Seamless Wikipedia browsing. On steroids.
Every time you click a link to Wikipedia, Wiktionary or Wikiquote in your browser's search results, it will show the modern Wikiwand interface.
Wikiwand extension is a five stars, simple, with minimum permission required to keep your browsing private, safe and transparent.
Remove ads