What Is the FTC?
Online marketers frequently complain about the FTC, its rules, regulations, and law enforcement activities. However, many of those same marketers can’t answer the simple question: “What is the FTC?”
If you are doing business in the United States, it is in your best interests to become well acquainted with the Federal Trade Commission, what it is, what it does, and what its rules and regulations are.
The Federal Trade Commission is a federal agency established on September 26, 1914 when President Woodrow Wilson signed the Federal Trade Commission Act into law. The FTC officially started doing its business in March of 1915, so it celebrated its 100th birthday a few years ago.
The permanent headquarters of the FTC are in a building at 600 Pennsylvania Avenue, N.W., for which President Franklin D. Roosevelt personally laid the cornerstone.
The Federal Trade Commission bills itself as “The Nation’s Consumer Protection Agency.”
What Does the Federal Trade Commission Do?
The FTC states its mission as follows:
To prevent business practices that are anticompetitive or deceptive or unfair to consumers; to enhance informed consumer choice and public understanding of the competitive process; and to accomplish this without unduly burdening legitimate business activity.
In addition to its authority to investigate law violations by individuals and businesses, the Commission also has federal rule-making authority to issue industry-wide regulations.
In other words, it doesn’t just enforce laws passed by Congress. It makes rules itself which you as a business person must learn and follow.
Are you beginning to understand why it is so important for business owners to be familiar with the FTC?
Let’s investigate a little further. I always like to get information directly from the “horse’s mouth,” so to speak. Here’s a snippet directly from the Commission’s 2015 One Page Performance Snapshot published on its website under the heading “What We Do”:
- Identify illegal practices
- Stop and take action against illegal practices through law enforcement
- Prevent consumer injury through education of consumers and businesses
- Enhance consumer benefit through research, reports, and advocacy
- Protect American consumers from domestic and international deceptive and anticompetitive practices
To summarize the foregoing, the FTC is watching for businesses engaged in what it regards as illegal or deceptive practices.
So, if you are doing business online, you should assume that the Federal Trade Commission is keeping an eye on your activities.
From all the obvious violations I personally observe in emails and on the internet, it is clear that many online marketers are not taking the FTC too seriously at this point.
That is unwise. Many of you know who Frank Kern is. He’s been a “guru” in the internet marketing space for years and has been involved in some of the most successful online promotions ever. Here’s what he had to say:
I believe that once the FTC even thinks you’re a bad guy, you’re screwed. You can technically even be “right” and still get into trouble.
The FTC is the FTC. Your best course of action is to try to be obnoxiously compliant with their regulations. If you get on their bad side, YOU WILL NOT WIN.
There are at least two ways you can pop up on the FTC’s radar. The first is for a consumer (or competitor) to file an FTC complaint against you. Worse yet, if a bunch of people file FTC complaints.
Think that’s unlikely? Think again. The FTC encourages consumers to report grievances, and makes it fairly easy to do so.
But even with no complaints having been filed, the FTC is monitoring business activity in the marketplace and your conduct may put you in its cross-hairs even without consumer complaints having been filed.
Once you get the FTC’s attention, as stated above, it’s going to “stop and take action against illegal practices.”
In a nutshell, that can mean filing suit against you, freezing your assets, asking the courts to appoint an “independent” person to take over and run your business, fining you, or even sending you to prison through appropriate legal actions.
Take a look at these “2015 Highlights” taken directly from the FTC’s Performance Snapshot mentioned above:
The FTC returned more than $49 million in redress funds to consumers and over $155 million to the U.S. Treasury derived from fees, redress disgorgements, and fines.
The FTC saved consumers . . . over $717 million through its consumer protection law enforcement actions.
I don’t know the exact breakdown, but most of those funds the FTC is bragging about came from businesses and individuals who crossed the line and were hit with fines, asset seizures, etc.
I’m a Small Operator – This Doesn’t Apply To Me
It’s a common misconception that “I am too small to be noticed by the FTC.” Do not allow yourself to suffer under this delusion. It’s a misconception.
If you are violating the law, either intentionally or through ignorance, you can expect to hear from the FTC. Size doesn’t matter, except to the extent that it might take a little longer for the FTC to notice your activities.
As stated on its website, “The FTC pursues vigorous and effective law enforcement . . . .” There is no “small business” exception.
The Federal Trade Commission frequently gets maligned in business circles, but in actuality we are fortunate that it exists.
Let’s face it. There are dishonest businesses operating and without the FTC’s oversight and enforcement far more consumers would be taken advantage of.
Does the FTC sometimes impose unreasonable burdens on business? Sure. Does it sometimes throw its weight around and become overzealous in its enforcement efforts? Yes. Is learning and complying with its many rules and regulations a burden business owners wish they didn’t have. Of course.
But all things considered, the FTC’s rules are generally reasonable and designed to protect us all from unscrupulous business practices.