Essay Example on FTC: Protecting Consumers Since 1914

Introduction

The Federal Trade Commission (FTC), an independent government agency promoting consumer protection and prohibiting deceptive business practices in commerce, affords various legal protections to consumers. Since its establishment in 1914, meant to challenge unfair competition and other deceptive business actions such as coercive monopoly by enforcing federal consumer protection. First, the Federal Trade Commission hinders unjust, deceptive, and fraudulent business practices that could affect the consumers. Such fraudulent business practices could include unfair competition, price-fixing schemes, marketing frauds, among others (Federal Trade Commission, 2019). Within this legal protection, FTC ensures that it collects complaints and conducts investigations of any fraudulent business practices. By this, the government agency sues companies along with individuals breaking the law. In other cases, FTC affords legal protections to consumers by developing policies, rules, and regulations that maintain fair marketplace alongside the education of consumers about their responsibilities and rights as well. Primarily, FTC enforces federal antitrust laws that prohibit anticompetitive mergers and acquisitions and harm consumers and hinder competition. Also, it deliberates policies to Congress meant to ensure that consumers are not exploited by any government or independent agencies willing to conduct fraudulent and unfair business practices (Federal Trade Commission, 2019).

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Correspondingly, the Consumer Financial Protection Bureau (CFPB), a government agency founded in 2011, to protect consumer finances affords legal protection to consumers as well. Primarily, the CFPB oversees the federal financial laws by monitoring the banks, credit unions, and other financial activities. Also, CFPB enforces financial protection laws (such as Fair Credit Reporting) by stopping practices that are deceptive or abusive to consumers in the market. In different developments, the Federal Trade Commission and the Consumer Financial Protection Bureau coordinate efforts to enforce legal practices to protect businesses and consumers and hinder duplication of regulatory and other federal law enforcement efforts (Federal Trade Commission, 2019).

Regulations FTC and CFPB Enforce to Protect Consumers

The Federal Trade Commission enforces various laws, regulations, and statues meant to protect consumers. Since its founding, the FTC has administered and enforced various statutes under more than seventy laws. However, the primary laws enforced by the commission include the Federal Trade Commission Act and the Clayton Act alongside other regulations. Primarily, the FTC Act is meant to ensure fair competition and overall consumer protection. The aspect of the Claytons Act, it has undergone various amendments; however, this regulation offers multiple authorizations to prevent practices involving discriminatory pricing and product promotion (Hoofnagle, 2016).

Additionally, the FTC enforces the Bankruptcy Abuse Prevention and Consumer Protection Act of 2015 which is an amendment of the Truth in Lending Act meant to ensure consumer protections, the Better Online Ticket Sales Act prohibiting the circumvention of security measure and other technological control measures, Children's Online Privacy Protection Act to protect children's privacy by equipping parents with tools to control information collected online from children, as the College Scholarship Fraud Prevention Act of 2000. Moreover, FTC enforces other regulations such as the Consumer Leasing Act, Consumer Review Fairness Act, Credit Card Accountability Responsibility, and Disclosure Act of 2009, among other regulations meant to ensure consumer protection (Federal Trade Commission, 2019).

In as much as the FTC is involved in the regulations as mentioned earlier, the CFPB plays a similar role as well. In 2010, after Congress enacted the establishment of the CFPB, the authority supervises and regulates the provision of financial services (Ohlhausen & Okuliar, 2015). The CFPB's authority covers various profit entities such as creditors, debt collectors, and mortgage companies. Through such developments, the commission enforces a selection of financial protection laws. These laws and regulations include the Truth-in-Lending Act, Fair Debt Collection Practices Act, Fair Credit Reporting Act, The Equal Credit Opportunity Act, the Credit Repair Organizations Act, as the Electronic Funds Transfer Act. Additionally, the CFPB delivers an overall regulation on the privacy provisions of the Gramm-Leach-Bliley Act to aid consumers to manage their financial resources alongside protecting them from deception. In most cases, the FTC and CFPB work together to enforce the protection of consumer laws for the requirements of the set laws, statutes, and regulations (US Legal, 2019).

Steps to Investigate and Enforce Violations of Consumer Rights

In the investigation and enforcement of violations of consumer right by the FTC and the CFPB, there are various steps taken. For example, there is both informal and full investigation that TFC may undertake.

Informal Investigation

Since most of the investigations begin informally, the FTC review public information and reach out to the involved company. Mainly, the FTC may begin an investigation by its own, because of consumer complaints, or at the request of another government agency. The informal investigation could end with more actions or conduct a full investigation (Block-Lieb, 2012).

Full Investigation

Upon the launch of a full investigation, the agency sends a formal request for information to the involved company. Since this is the first step, the agency may seek for audits, risk assessments, privacy policies, company's information plan policies, among other critical information. Also, FTC could communicate with vendors, consumers, and other competitors. In the second step, the TFC reviews delivered information and decide on the firm's data security. Within this stage, the agency considers the sensitivity and volume of consumer information the company holds, costs of tool to improve security and handle vulnerabilities, and the complexity of the business. The firm's data security practices ought to be "reasonable." In the third step, FTC assesses the company's compliance with the requires industry requirements. For example, financial companies are bound to the Gramm-Leach-Bliley Act. In the next step, if the agency is investigating the company for an information security breach, FTC will focus on the breach or any harm delivered to the consumers since it is responsible for consumer protection. At the end of the investigations, FTC may decide whether the company has violated any applicable law. Mostly, FTC investigations resolve with finding reasonable solutions rather than actions of enforcement. In extreme cases, KFC may file a lawsuit based on the specific regulation or statutes violated (Federal Trade Commission, 2019).

Penalties Imposed in Cases of regulations Violations

According to the regulations of the FTC, the commission orders the involved party to adhere to specific regulations as stated. However, in case a respondent violates the final order and the different regulations, it is liable for various penalties for each violation. In most cases, the penalty imposed is assessed by the federal court in a suit brought to enforce the order of the commission. Also, the court may deliver mandatory injunctions as deemed appropriate to ensure that the commission redresses from the respondent in federal court. In different considerations, the FTC imposes penalties based on the violations that the involved company might have violated (US Legal, 2019).

The "Real" Impact and Significance of FTC and CFPB on U.S Commerce

While the Federal Trade Commission mounts significant efforts in data security and privacy, it also focuses on the digital flow of information to businesses as it regulates the various involvements in the protection of consumer rights. For instance, the Federal Trade Commission Advertising Regulation has delivered a major significant on US commerce. Within this regulation, the FTC has protected consumers by ensuring proper advertisement and marketing practices (Kennedy, McCoy, & Bernstein, 2011). For example, FTC approved final consent orders with five U.S firms that allegedly violet the Consumer Review Fairness Act. According to FTC, it charged; National Floors Direct, Inc. (NFD), Staffordshire Property Management, LLC, A Waldron HVAC, LVTR LLC, and Shore to Please Vacations LLC in 2019 for violating the CRFA by utilizing form contracts that barred consumers from posting negative reviews online and imposed penalties for doing so. Therefore, FTC played a significant role in protecting consumers (Federal Trade Commission, 2019). Also, in another case between FTC, the plaintiff, v. Sunrise Nutraceuticals, LLC, Defendant, FTC protected consumers from exploitation by sending refund checks worth more than $210,000 to consumers that had purchased Elimidrol "an opiate withdrawal" product. According to FTC, it claimed that the defendant included a powdered drink mix that could alleviate opiate withdraws symptoms and increase the individual's likelihood of overcoming opiate addiction. The court barred Sunrise Nutraceuticals from making unsubstantiated claims and agreed to refund consumers (Federal Trade Commission, 2019).

In another development, FTC developed a case with Facebook Inc. in a matter where FTC alleged that Facebook violated the privacy and consumers promised and violated a 2012 Commission's order on the FTC Act. Within the case, FTC imposed a $5 Billion penalty along with new privacy restrictions to maintain Consumer protection (Federal Trade Commission, 2019). The consumer protection regulations are growing at a tremendous rate, particularly with the drive by the Consumer Financial Protection Bureau. In conclusion, there are advancements in the Federal Trade Commission in the modern protection policy through which the FTC and CFPB have delivered significant developments on the United States commerce. In as much as there are privacy laws aimed at specific industries, they are no general privacy regulations in the U.S since there are different FTC Acts protecting consumers from frauds and other deceptive acts in commerce.

References

Block-Lieb, S. (2012). Accountability and the Bureau of Consumer Financial Protection. Brook. J. Corp. Fin. & Com. L., 7, 25.

Federal Trade Commission. (2019). Statutes Enforced or Administered by the Commission. Retrieved from https://www.ftc.gov/enforcement/statutes

Hoofnagle, C. J. (2016). Federal Trade Commission privacy law and policy. Cambridge University Press.

Kennedy, L. J., McCoy, P. A., & Bernstein, E. (2011). The consumer financial protection bureau: Financial regulation for the twenty-first century. Cornell L. Rev., 97, 1141.

Ohlhausen, M., & Okuliar, A. (2015). COMPETITION, CONSUMER PROTECTION, AND THE RIGHT [APPROACH] TO PRIVACY. Antitrust Law Journal, 80(1), 121-156. Retrieved from https://www.jstor.org/stable/26411522

US Legal, I. (2019). Federal Trade Commission Law and Legal Definition. US Legal, Inc. Retrieved from https://definitions.uslegal.com/f/federal-trade-commission/