The Essential Guide to FTC Compliance, Investigations, and Enforcement

The Essential Guide to FTC Compliance, Investigations, and Enforcement

By Kronenberger Rosenfeld, LLP

The Law - Compliance

The FTC Act

The Federal Trade Commission Act (the “FTC Act”) is a federal statute that appears in the U.S. Code at 15 U.S.C. §§41 through 58. The FTC Act creates and empowers the Federal Trade Commission (the “FTC” or, in its own publications, the “Commission”) to regulate trade to prevent unfair and deceptive acts and practices affecting consumers. As relates to e-commerce and internet advertising, Section 5 of the FTC Act prohibits making false and misleading statements to consumers in any form, including display ads, text and email communications, publisher or merchant websites, and labels and other product packaging. The FTC Act enables the FTC to investigate and prosecute businesses and people who engage in deceptive advertising.

FTC Rules and Publications

The FTC has expounded on the FTC Act with a series of publications and rules that apply to merchants and advertisers. Some of these rules address specific advertising practices, such as the use of testimonials and other endorsements in advertising. Others apply to high-risk products or verticals, including business opportunities and weight loss products. These rules and publications are available on the FTC’s website, and we go into several in more depth below.

FTC Enforcement of Other Laws

In addition to the FTC Act, the FTC has been put in charge of enforcing several U.S. laws that apply to advertising and e-commerce. These include the CAN-SPAM Act of 2003, 15 U.S.C. §7704 et seq., the Children's Online Privacy Protection Act of 1998, 15 U.S.C. §6501, et seq., the Consumer Review Fairness Act (“CRFA”), 15 U.S.C. §45(b), the Restore Online Shoppers’ Confidence Act (“ROSCA”) regarding negative options, 15 U.S.C. §8401 et seq., and the Fair Credit Reporting Act (“FCRA”), 15 USC §1681 et seq. Thus, in addition to unfair or deceptive advertising, the FTC can investigate and enforce violations of these statutes.

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