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The Federal Trade Commission

One of the most important enforcement agencies for direct marketers is the Federal Trade Commission (FTC), which enforces federal consumer protection laws passed by Congress and which has the authority to adopt regulations and rules interpreting and implementing those laws. There are rules on marketing to children online, on regulations for distance selling delivery requirements, for telemarketing, and many other subjects. Each of the states has similar powers and authority, usually under the office of the state’s attorney general, the chief law enforcement officer of the state. The Federal Trade Commission (FTC) Telemarketing Sales Rule requires certain disclosures and prohibits misrepresentations. The Rule covers most types of telemarketing calls to consumers, including calls to pitch goods, services, sweepstakes, prize promotions, and investment opportunities. It also applies to calls consumers make in response to postcards or other materials received in the mail. Calling times are restricted to the hours between 8 a.m. and 9 p.m. Telemarketers must disclose that it is a sales call and for which company. It is illegal for telemarketers to misrepresent any information, including facts about goods or services, earnings potential, profitability, risk or liquidity of an investment, or the nature of a prize in a prize-promotion scheme. Telemarketers must disclose the total cost of the products or services offered and all restrictions on getting or using them, and that a sale is final or non-refundable.

The FTC works to ensure that the nation’s markets are efficient and free of practices which might harm consumers. To ensure the smooth operation of a free market system, the FTC enforces federal consumer protection laws that make illegal fraud, deception, and unfair business practices. The Federal Trade Commission Act allows the FTC to act in the interest of all consumers to prevent deceptive and unfair acts or practices. In interpreting the Act, the Commission has determined that, with respect to advertising, a representation, omission, or practice is deceptive if it is likely to mislead consumers and affect consumers’ behavior or decisions about the product or service. In addition, an act or practice is unfair if the injury it causes, or is likely to cause, is substantial, not outweighed by other benefits, and not reasonably avoidable.

The FTC Act’s prohibition on unfair or deceptive acts or practices broadly covers advertising claims, marketing and promotional activities, and sales practices in general. The Act is not limited to any particular medium. Accordingly, the Commission’s role in protecting consumers from unfair or deceptive acts or practices encompasses advertising, marketing, and sales online, as well as the same activities in print, television, telephone, and radio. For certain industries or subject areas, the Commission issues rules and guides. Rules prohibit specific acts or practices that the Commission has found to be unfair or deceptive. Guides help businesses in their efforts to comply with the law by providing examples or direction on how to avoid unfair or deceptive acts or practices. Many rules and guides address claims about products or services or advertising in general and are not limited to any particular medium used to disseminate those claims or advertising. Therefore, the plain language of many rules and guides applies to claims made on the Internet. Solicitations made in print, on the telephone, radio, TV or online fall within the rule’s scope.

Inside The Federal Trade Commission