Legal Definitions - FTC

The FTC, which stands for the Federal Trade Commission, is an independent agency of the United States government. Its primary mission is to protect consumers and promote fair competition in the marketplace. Established in 1914, the FTC works to prevent unfair, deceptive, or fraudulent business practices and to ensure that companies compete fairly, which ultimately benefits consumers through lower prices, more choices, and better quality products and services.

The FTC achieves its goals through two main areas of focus:

• Consumer Protection: The FTC investigates businesses and individuals to stop practices that are misleading, fraudulent, or harmful to consumers. It also educates consumers and businesses about their rights and responsibilities under the law.
• Competition Promotion: The FTC enforces antitrust laws to prevent monopolies and other anti-competitive practices that could limit consumer choice, stifle innovation, or lead to artificially high prices. It reviews mergers and acquisitions to ensure they do not harm competition.

Here are some examples of how the FTC's work impacts everyday life:

• Example 1: Stopping Deceptive Advertising

  Imagine a company launches a new line of dietary supplements, claiming they can cure serious illnesses like diabetes and heart disease without any scientific evidence. The FTC would investigate these claims. If found to be false or misleading, the FTC could order the company to stop the deceptive advertising, issue fines, and even require them to refund money to customers. This illustrates the FTC's role in consumer protection by preventing businesses from making fraudulent claims that could harm people's health and finances.

• Example 2: Reviewing Major Business Mergers

  Consider a scenario where the two largest online streaming services, which together control 80% of the market, announce plans to merge. The FTC would meticulously review this proposed merger. They would assess whether combining these two giants would significantly reduce competition, potentially leading to higher subscription prices, fewer content options, or less innovation for consumers. If the FTC determines the merger would create a monopoly or substantially lessen competition, they could challenge it in court to block the deal. This demonstrates the FTC's commitment to competition promotion, ensuring that no single company or small group of companies can dominate an industry to the detriment of consumers.