FTC Consumer Protection at 100: 1970s Redux or Protecting Markets to Protect Consumers?

George Washington Law Review, Vol. 83, No. 6, pp. 2157-2229, 2015

George Mason Law & Economics Research Paper No. 16-12

74 Pages Posted: 31 Mar 2016

See all articles by Howard Beales

Howard Beales

George Washington University - School of Business

Timothy J. Muris

George Mason University, Antonin Scalia Law School

Date Written: March 30, 2016

Abstract

Throughout most of the Federal Trade Commission’s (“FTC” or “Commission”) history, the agency has been condemned as ineffective. Indeed, the prestigious 1969 American Bar Association Report said that the FTC should either change or be abolished. The disastrous decade of the 1970s followed, in which the FTC tried to become the second most powerful legislature in Washington. The Commission then finally developed a bipartisan regulatory program, recognizing that the FTC was not the star player in the economy but had an important role in enforcing the rules that facilitate market interactions. Following the ABA report’s recommendation, the program’s consumer protection foundation was a systematic and aggressive attack on consumer fraud.

This Article discusses this modern FTC, providing details on programs involving fraud, conventional advertising, and privacy. We explain how, embracing a more limited role and recognizing its past mistakes, the FTC became one of the world’s most widely respected government agencies. Unfortunately, the agency has recently lost its way in regulating traditional advertising, threatening to restrict truthful information to consumers that is vital to the optimal performance of competitive markets. We also discuss the newest part of the FTC’s mission, protecting consumer privacy. The heart of the program has been to prevent harmful misuse of sensitive information, most notably the National Do Not Call Registry, one of the most popular government initiatives ever. In attempting to broaden the basis for protection of privacy, the agency currently threatens to impede rapidly evolving information technology markets.

Keywords: advertising, competition, consumer protection, consumer welfare, Federal Trade Commission, FTC, fraud, harm, ordinary consumer, privacy, substantiation, transparency, truthful information

JEL Classification: D18, K23

Suggested Citation

Beales, Howard and Muris, Timothy J., FTC Consumer Protection at 100: 1970s Redux or Protecting Markets to Protect Consumers? (March 30, 2016). George Washington Law Review, Vol. 83, No. 6, pp. 2157-2229, 2015; George Mason Law & Economics Research Paper No. 16-12. Available at SSRN: https://ssrn.com/abstract=2756671

Howard Beales

George Washington University - School of Business ( email )

Washington, DC 20052
United States

Timothy J. Muris (Contact Author)

George Mason University, Antonin Scalia Law School ( email )

3301 Fairfax Drive
Arlington, VA 22201
United States
703-993-9421 (Phone)
703-993-8088 (Fax)

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