The Folklore of Unfairness

98 Pages Posted: 4 Jun 2020 Last revised: 17 May 2021

See all articles by Luke Herrine

Luke Herrine

University of Alabama - School of Law

Date Written: May 14, 2021

Abstract

The Federal Trade Commission Act’s ban on “unfair . . . acts and practices” would,
on its face, seem to give the FTC an awesome power to define proper treatment of
consumers in changing conditions. But even in a world of widespread corporate
surveillance, ongoing racial discrimination, impenetrably complex financial products,
pyramid schemes, and more, the unfairness authority is used rarely, mostly in
egregious cases of wrongdoing. Why?

The standard explanation is that the more expansive notion of unfairness was tried
in the 1970s, and it failed spectacularly. The FTC of this era was staffed by bureaucrats
convinced of their own moral superiority and blind to the self-correcting
dynamics of the market. When the FTC finally reached too far and tried to ban
television advertising of sugary cereals to children, it undermined its own legitimacy,
causing Congress to put pressure on the agency to narrow its definition of
unfairness.

This Article argues that this standard explanation gets the law and the history
wrong, and, thus, that the FTC’s unfairness authority is more potent than commonly
assumed. The regulatory initiatives of the 1970s were actually quite popular.
The backlash against them was led by the businesses whose profit margins they
threatened. Leaders of these businesses had become increasingly radicalized and
well-organized and brought their new political clout to bear on an unsuspecting
FTC. It was not the re-articulation of the unfairness standard in 1980 that narrowed
unfairness to its current form, but rather the subsequent takeover of the FTC by
neoliberal economists and lawyers who had been supported by these radicalized
business leaders. The main limitation on the use of the unfairness authority since
then has been the ideology of regulators charged with its enforcement. In fact, the
conventional morality tale about the FTC’s efforts in the 1970s are part of what
keeps this ideology dominant.

A reconsideration of the meaning of unfairness requires situating the drama of the
1970s and 80s in a longer struggle over governance of consumer markets. Since the
creation of the FTC, and even before, an evolving set of coalitions have battled over
what makes markets fair. These coalitions can be divided roughly into those who
favor norm setting by government agencies informed by experts held accountable to
democratic publics and those who favor norm setting by business leaders made
accountable via the profit motive. The meaning of “unfair . . . acts and practices”
has been defined and redefined through these struggles, and it can and should be
redefined again to reconstruct the state capacity to define standards of fair dealing.

Keywords: Consumer Law, Consumer Protection, Federal Trade Commission, Unfair and Deceptive Acts and Practices, Administrative Law

Suggested Citation

Herrine, Luke, The Folklore of Unfairness (May 14, 2021). 96 N.Y.U. L. Rev. 431, Available at SSRN: https://ssrn.com/abstract=3593493 or http://dx.doi.org/10.2139/ssrn.3593493

Luke Herrine (Contact Author)

University of Alabama - School of Law ( email )

P.O. Box 870382
Tuscaloosa, AL 35487
United States

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