You’ve possibly heard about the FTC but may not recognize what it actually is or work. FTC or officially recognized as the Federal Trade Commission is a federal agency that performs a critical and sometimes disregarded position in consumers’ lives. The FTC helps defend consumers from what it defines as “anti-competitive, deceptive and unfair business practices.” Basically, it helps as a watchdog firm for consumers and companies to prevent unethical business practices in the market. Additionally, the FTC presents access to sources, tools, and protections for consumers.
This agency operates to protect consumers and businesses alike by stopping unlawful, deceitful, and fraudulent systems in the market. This is of utmost importance to learn your rights that FTC can help you, especially when you intend to start your business. If you are into franchising, you can refer to an updated magazine for franchisees to further learn about your business coverage.
The work is divided across three bureaus, respectively, with its own focus:
- The Bureau of Competition
It evaluates anticompetitive organizations and other probably anticompetitive systems.
- The Bureau of Consumer Protection
Intends to protect buyers from unfair, fraudulent, and deceptive acts or practices.
- The Bureau of Economics
Assesses the possible influence of the FTC’s actions on the economy.
FTC is the nation’s consumer protection agency. Therefore, it is their job to watch out for and stop unfair, deceptive, or false business in the marketplace and provide people with learning to help them spot, restrain, and avoid scams. Below are common FTC violations:
Companies are under no universal responsibility to disclose everything. Advertisers may set a radiant face on their products as long as they do not advance a literal material misstatement or exaggeration. But under particular situations, a business may be expected to disclose more than it did to evade being connected in unfair or deceptive acts and practices. For instance, failure to discuss the price of service might create deception. Therefore, a federal court has directed that it is misleading to fail to disclose pricing.
Although some words are deemed mere puffery like greatest or best, other words, which have more specific implications, can cause trouble if they are not used correctly. The effectiveness of products is possibly their most frequently advertised features. An advertisement that is promoting that a product will do more further than it can is almost invariably deceptive if the claim is definite. Typical examples that the FTC proceeds to do battle over are parts that a cream or other products will “reinvigorate” the body, “cure” baldness, “forever remove” wrinkles, or “restore” the vitality of hair.
Buying one, getting another for a half-price, or lower than the suggested retail price is a violation covered by Section 5 of the FTC Act. As explained by an FTC defense lawyer, Dr. Oberheiden, to control deceptive price and savings claims, the FTC has circulated a series of Guides against Deceptive Pricing that established definite policies by which the commission will assess price claims’ merits. These examples are not themselves law, but they are vital signs to how the FTC will respond when confronted with a price claim case, and they may even provide direction to state courts hearing claims of deceptive pricing ads.
The guides distribute with five claims as follows:
The former price must have been granted for a substantial period in the near past for a seller to be verified in relating to it. A product that once had a cost tag of $70 but that never truly sold for more than $60 cannot be hawked at “the previous price of $70.” Under the FTC guides, a discount of at least 10 percent is required to make a claim true.
The similar rules practice as those just cited. But in the state of a “manufacturer’s suggested” price, an extra crease can occur: the manufacturer might support the retailer’s trick by listing a “suggested” price that is considerably higher than the going price in the retailer’s selling area.
In these cases, the usual statement is “Buy one, get one free” or at some percentage of the usual selling price. Again, the signals are literally accurate. If the package of batteries marketed typically in the advertiser’s store for ninety-nine cents, and two boxes are now selling for that price, then the advertisement is irreproachable.
A typical sales pitch in retail is the bait and switch. The retailer “bribes” the considered customer by hanging a tempting offer, but the offer either evaporates or is deprecated once the customer appears. Suppose someone notices an advertisement like a grand piano costing only a thousand dollars. But when the buyer arrives at the store, he discovers that the advertised product has “sold out.” The retailer then works to sell the distressed customer a higher-priced product. Or the salesperson may have the product, but she will deprecate it, pointing out that it does not exist to the advertised expectations and will urge the customer to get the “better,” more pricey model. These and associated tactics are all violations of Section 5 of the FTC Act.
Product disparagement, stating defamatory things about a rival’s product, is a common-law tort, actionable under state law. It is also under Section 5 of the FTC Act. The FTC brands as disparaging the formulation of particularly misleading statements about a competitor’s product. The bureau labels an indirect form of disparagement “comparative misrepresentation,” presenting false claims of the advantage of one’s own product.
Accuracy has always supported product disparagement claims, but even that common-law rule has been disintegrated in recent years by applying the significance principle. A statement may be technically correct but irrelevant and delivered in such a way as to be misleading. For instance, P. Lorillard Co. v. Federal Trade Commission of Section 49.5.2 “Product Comparisons” troubled a comparative study published in Reader’s Digest of tar and nicotine in cigarettes. The editorial implied that the differences were inconsequential to health, but the business offering the cigarette with the tiniest amount of tar and nicotine puffed the fact anyway.
How excellent to have a superstar or maybe yesterday’s superstar perform on television drooling your product. Likely, millions of individuals would buy a throat spray if Beyonce swore by it, or a face cream if Gigi Hadid blessed it. In more complex ways, many products are promoted every day with one form of testimonial or another. In this field, there are countless possibilities for deception. It is not a deception for a well-known celebrity to endorse a product without revealing that she is being paid to do so. But the person providing the testimonial must utilize the product; if she does not, the endorsement is false.
Pictorial illustrations produce particular problems because the picture can refute the inscription or the announcer’s words. A photo displaying an expensive car may be unreliable if the dealer does not stock those cars or if the only easily available cars are different models. The ways of lying by creating false conjectures through pictures are restricted only by imagination.
Television demonstrations may also imply nonexistent properties or features in a product. In one case, the commission ordered a liquid cleaner manufacturer to discontinue showing it in use near hot stoves and candles, indicating falsely that it was nonflammable. A commercial displaying a knife slicing through nails is illusory if the nails were pre-cut and several knives were used for the before and after shots.