What does the Federal Trade Commission do?
The purpose of the FTC is to enforce the provisions of the
Federal Trade Commission Act, which prohibits "unfair or deceptive
acts or practices in commerce." The Clayton Antitrust Act (1914)
also granted the FTC the authority to act against specific and
unfair monopolistic practices. The FTC is considered to be a law
enforcement agency, and like other such agencies it lacks punitive
authority. Although the FTC cannot punish violators—that is the
responsibility of the judicial system—it can issue cease and desist
orders and argue cases in federal and administrative courts. Today,
the Federal Trade Commission serves an important function as a
protector of both consumer and business rights. While the
restrictions that it imposes on business practices often receive
the most attention, other laws enforced by the FTC—such as the 1979
Franchise Rule, which directed franchisors to provide full
disclosure of franchise information to prospective franchisees—have
been of great benefit to entrepreneurs and small business owners.
Basically, all business owners should educate themselves about the
guidelines set forth by the FTC on various business practices. Some
of its rules can be helpful to small businesses and entrepreneurs.
Conversely, businesses that flout or remain ignorant of the FTC's
operating guidelines are apt to regret it. Creation of the Ftc The
FTC was created in response to a public outcry against the abuses
of monopolistic trusts during the late 19th and early 20th
centuries. The Sherman Antitrust Act of 1890 had proven inadequate
in limiting trusts, and the widespread misuse of economic power by
companies became so problematic that it became a significant factor
in the election of Woodrow Wilson to the White House in 1912. Once
Wilson assumed the office of the Presidency, he followed through on
his campaign promises to address the excesses of America's trusts.
Wilson's State of the Union Message of 1913 included a call for
extensive antitrust legislation. Wilson's push, combined with
public displeasure with the situation, resulted in the passage of
two acts. The first was the Federal Trade Commission Act, which
created and empowered the FTC to define and halt "unfair practice"
in trade and commerce. It was followed by the Clayton Antitrust
Act, which covered specific activities of corporations that were
deemed to be not in the public interest. Activities covered by this
act included those mergers which inhibited trade by creating
monopolies. The FTC began operating in 1915; the Bureau of
Operations, which had previously monitored corporate activity for
the federal government, was folded into the FTC.