The Sleeping Giant - Regulation of Internet Commerce by the FTC
The Federal Trade Commission (“FTC”) is the sleeping giant of federal Internet commerce regulation. This federal agency has a huge grant of responsibility under § 5 of the FTC Act, which empowers it to prevent “deceptive and unfair acts or practices.” The FTC says a practice is “deceptive” if it is likely to mislead consumers and affect their behavior and decisions about the product or service being offered. A practice is “unfair” if it causes or is likely to cause substantial injury that is not outweighed by other benefits and cannot be reasonably avoided. Under the FTC Act, advertising is unlawful if it misleads consumers either with overt misstatements or by omissions that tend to mislead.
Anyone using the advertising medium of the Internet to sell goods in commerce in the United States is subject to the requirements of the Act, which requires additionally that whatever claims are made about a product or service be substantiated. The requirement that claims be “substantiable” is especially important when it concerns products involving health, safety, or performance. And not only are sellers responsible for claims about their products and services, the FTC takes the position that even advertising agencies and website designers are responsible for reviewing the information used to substantiate ad claims.
A WORD ABOUT ANTITRUST LAW AND THE MICROSOFT CASE
In this book, I deal only with the consumer-protection activities of the FTC. Although the FTC is the nation's antitrust enforcement agency, unless you are planning a merger, antitrust law will not likely affect your business. Not that antitrust laws are unimportant. Far from it, but the federal courts have done a great deal to take the guts out of antitrust law, which is supposed to protect us from nasty things like abuses of monopolistic power, conspiracies to fix prices, conspiracies to lock competitors out of the market, oppressive contracts that stifle competition, and deliberate underpricing to bankrupt competitors.
While theoretically, these types of “anti-competitive conduct” are unlawful — actually they're crimes, federal felonies — they are so hard to prove that some law professors argue they are mythical, “imaginary” wrongs that just don't happen in the real world. The “Chicago School” of law and economics, which has done a great job of burying good legal ideas under a pile of theoretical nonsense, has great sway in the minds of Federal judges who rule on all questions of antitrust law.
Just look at the Microsoft case. Even with a great lawyer like David Boies spending his talent and the DOJ's gunpowder in dramatic trial presentation; even after an appellate ruling that Microsoft had abused its monopoly, the case ended, to borrow from T.S. Eliot, “not with a bang but a whimper.” The Bush DOJ took all of David Boies' good work in exposing the Microsoft machinery of commercial oppression, gave it a fond kiss on the cheek, put it in a concrete overcoat, and let it all sink in a sea of words — Judge Kollar-Kotelly's 600-page opinion approving the sweetheart deal between the Department of Justice and Microsoft. Proving primarily that antitrust law will make a fool out of the biggest players. Let's move on to running our websites in a manner that will attract no attention from the FTC.
Next Page --->
Anyone using the advertising medium of the Internet to sell goods in commerce in the United States is subject to the requirements of the Act, which requires additionally that whatever claims are made about a product or service be substantiated. The requirement that claims be “substantiable” is especially important when it concerns products involving health, safety, or performance. And not only are sellers responsible for claims about their products and services, the FTC takes the position that even advertising agencies and website designers are responsible for reviewing the information used to substantiate ad claims.
A WORD ABOUT ANTITRUST LAW AND THE MICROSOFT CASE
In this book, I deal only with the consumer-protection activities of the FTC. Although the FTC is the nation's antitrust enforcement agency, unless you are planning a merger, antitrust law will not likely affect your business. Not that antitrust laws are unimportant. Far from it, but the federal courts have done a great deal to take the guts out of antitrust law, which is supposed to protect us from nasty things like abuses of monopolistic power, conspiracies to fix prices, conspiracies to lock competitors out of the market, oppressive contracts that stifle competition, and deliberate underpricing to bankrupt competitors.
While theoretically, these types of “anti-competitive conduct” are unlawful — actually they're crimes, federal felonies — they are so hard to prove that some law professors argue they are mythical, “imaginary” wrongs that just don't happen in the real world. The “Chicago School” of law and economics, which has done a great job of burying good legal ideas under a pile of theoretical nonsense, has great sway in the minds of Federal judges who rule on all questions of antitrust law.
Just look at the Microsoft case. Even with a great lawyer like David Boies spending his talent and the DOJ's gunpowder in dramatic trial presentation; even after an appellate ruling that Microsoft had abused its monopoly, the case ended, to borrow from T.S. Eliot, “not with a bang but a whimper.” The Bush DOJ took all of David Boies' good work in exposing the Microsoft machinery of commercial oppression, gave it a fond kiss on the cheek, put it in a concrete overcoat, and let it all sink in a sea of words — Judge Kollar-Kotelly's 600-page opinion approving the sweetheart deal between the Department of Justice and Microsoft. Proving primarily that antitrust law will make a fool out of the biggest players. Let's move on to running our websites in a manner that will attract no attention from the FTC.
Next Page --->