Definition

FTC (Federal Trade Commission)

Contributor(s): Ben Cole

The FTC (Federal Trade Commission) is a United States federal regulatory agency designed to monitor and prevent anticompetitive, deceptive or unfair business practices. 

The agency pursues enforcement against unlawful business practices; shares expertise with both U.S. and international government agencies; develops policy and research tools through hearings, workshops and conferences; and creates educational programs to share best practices with consumers and businesses.

FTC mission and goals

The FTC was created in 1914 to prevent unfair methods of competition in commerce. Since the FTC's inception, Congress has passed additional laws that give the agency greater authority to police anticompetitive business practices. In 1938, Congress passed a prohibition against "unfair and deceptive acts or practices," and since then, the FTC has been directed to administer consumer protection laws. In 1975, Congress gave the FTC the authority to adopt industry-wide trade regulation rules.

The FTC website outlines three primary goals for the commission.

  • To protect consumers by preventing fraud, deception and unfair business practices.
  • To maintain business competition by preventing anticompetitive mergers and other anticompetitive business practices.
  • To advance FTC performance by striving for organizational, individual and management excellence.

Beyond the FTC's efforts to protect consumers and maintain business competition, the agency's mission also includes enhancing informed consumer choices and public understanding of business competition processes, and to do so without creating an undue compliance burden on legitimate business activities.

FTC bureaus

The FTC consists of the Bureau of Consumer Protection, the Bureau of Competition and the Bureau of Economic Analysis. In addition, the agency has seven regional offices and an Office of General Counsel that serves as the commission's chief legal officer and advisor.

The Bureau of Competition enforces antitrust laws to prevent anticompetitive business practices in the marketplace. This bureau is designed to promote marketplace competition so as to protect consumers' freedom to choose goods and services at a price and quality that fits their needs.

The Bureau of Consumer Protection protects consumers against unfair, deceptive or fraudulent practices. This bureau enforces consumer protection laws enacted by Congress as well as FTC-issued trade regulation rules. To meet these goals, the Bureau of Consumer Protection conducts investigations of companies and industries and spearheads administrative and federal court litigation, rulemaking proceedings and consumer and business education. This bureau also helps inform Congress and other government entities about the impact that proposed legislative actions could have on consumers.

The Bureau of Economic Analysis helps evaluate the economic impact of FTC actions by analyzing antitrust and consumer protection investigations and rulemaking. This bureau also analyzes the impact of government regulation on competition and consumers, and it provides lawmakers and consumers with economic analysis of market processes relating to antitrust violations, consumer protection efforts and regulations.

Federal Trade Commission Act

The Federal Trade Commission Act is the primary statute of the commission. This act empowers the FTC to:

  • Prevent unfair methods of competition and unfair or deceptive acts or practices in or affecting commerce.
  • Seek monetary compensation for consumers impacted by unfair business practices.
  • Prescribe rules that define specific business acts or practices that are unfair or deceptive and to establish requirements to help prevent these acts or practices.
  • Compile information and conduct investigations into organizations, businesses, practices and management of entities.
  • Develop reports and legislative recommendations for Congress and the public.

Section 5 of the Federal Trade Commission Act prohibits "unfair or deceptive acts or practices in or affecting commerce." To meet this goal, the FTC gathers consumer complaints and manages several consumer protection efforts. These include running the Do Not Call Registry, distributing "scam alerts" via its website and collecting identity theft reports.

Management of these efforts includes bringing enforcement action against companies that violate consumer protection guidelines and regulations. For example, the FTC has brought more than 100 enforcement actions against companies and telemarketers for Do Not Call violations, according to the FTC website. One example of this is the Mortgage Investors Corporation (MIC) litigation, which produced the largest settlement to date for violating Do Not Call regulations, resulting in civil penalty payments of $7.5 million. The settlement resolved a lawsuit involving allegations that MIC violated the Telephone Consumer Protection Act by making automated calls to cellular telephones and calling telephone numbers registered on the National Do Not Call Registry.

The FTC manages IdentityTheft.gov, a resource to help consumers submit identity theft reports and to recover from identity theft. The site offers consumers advice on how to protect against and identify instances of identity theft, as well as the steps to take if their personal information is stolen to perpetuate fraud.

The FTC also posts scam alerts online to notify consumers about the latest schemes criminals are using to defraud people out of their money and personal information. Consumers can search the alerts by topic or by when they occurred.

Office of Inspector General

The Office of Inspector General (OIG) was established in 1989 as an independent and objective organization within the FTC. The OIG is responsible for conducting audits and investigations related to FTC programs and operations. The OIG conducts audits to find and prevent fraud, waste and abuse in relation to FTC operations, while also promoting economy, efficiency and effectiveness within the agency.

The OIG investigates allegations of wrongdoing by FTC employees, as well as individuals or entities that have contracts with or obtain benefits from the commission.

This was last updated in November 2016

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