Legal Definitions - Baby FTC Act

A Baby FTC Act is a state-level law that prohibits unfair and deceptive business practices within that state. These statutes are modeled after the federal *Federal Trade Commission Act*, which gives the federal government power to regulate commerce and protect consumers nationwide. Just like its federal counterpart, a Baby FTC Act empowers state attorneys general or other state agencies to investigate and take legal action against companies that engage in misleading advertising, fraudulent sales tactics, or other dishonest conduct that harms consumers or competition.

Here are a few examples of how a Baby FTC Act might apply:

• Imagine a local furniture store advertises a "Going Out of Business Sale" with deeply discounted prices for several months, but never actually closes. Customers are lured in by the promise of liquidation prices, only to find that the store continues to operate indefinitely with similar pricing. This prolonged and potentially false advertising could be considered a deceptive trade practice under a state's Baby FTC Act, as it misleads consumers about the urgency and value of the sale.

• Consider a home repair company that offers to fix a leaky roof for a low initial price. However, once they start work, they claim to discover extensive, unrelated damage and pressure the homeowner into agreeing to costly additional repairs that are unnecessary or overpriced. This tactic of exploiting a homeowner's vulnerability and making false claims about additional work could be deemed an unfair or deceptive practice, allowing the state to intervene under its Baby FTC Act to protect consumers from such predatory behavior.

• Suppose an online subscription service automatically renews its members' accounts and charges their credit cards without providing clear, prominent notice of the upcoming renewal or an easy way to cancel. Many customers only realize they've been charged after the fact. This practice of obscuring renewal terms and making cancellation difficult could be challenged as an unfair trade practice under a state's Baby FTC Act, as it takes advantage of consumers through a lack of transparency and burdensome cancellation procedures.