Regulation, Monitoring, and Enforcement of Non-Financial Consumer Products

Background

The Federal Trade Commission (FTC) has authority to prohibit unfair and deceptive trade practices. During the 1970s, it relied heavily on its authority to promulgate industry-wide rules to set industry behavior standards. In the 1980s, the FTC largely rejected this rulemaking approach and opted primarily to pursue case-by-case enforcement. The result has been a hit-and-miss approach to enforcing laws against unfair and deceptive trade practices, since only the most apparent violations are prosecuted. Since 1980, Congress has prohibited the FTC from regulating unfair advertising. The FTC needs this authority to deal effectively with pressing public health matters.

State laws on unfair and deceptive acts and practices (UDAP laws) are among the most effective tools in fighting consumer fraud and abuse. These statutes provide remedies for consumers, encourage merchants to resolve disputes fairly, and deter misconduct.

The Dodd-Frank Wall Street Reform and Consumer Protection Act authorized the Consumer Financial Protection Bureau to supervise various industries and to prohibit unfair, deceptive, or abusive acts and practices.

Regulation, Monitoring, and Enforcement of Non-Financial Consumer Products: Policy

Federal and state consumer laws and rulemaking

In this policy: FederalState

The Federal Trade Commission (FTC) and other applicable agencies should adopt the rulemaking approach that sets minimum industry-wide standards of behavior. Such standards would help to ensure that consumers are adequately protected against restraints of trade, as well as unfair and deceptive trade practices, because all industries under the commission’s jurisdiction would be subject to the standards.

Congress should allow the FTC to exercise its full authority to prohibit unfair and deceptive practices through enforcement actions and rulemaking in other areas, including advertising.

The Consumer Financial Protection Bureau (CFPB) should adopt and enforce rules to strengthen consumer protections from a variety of unfair, deceptive, or abusive acts and practices.

The FTC, the CFPB, and states should adopt rules or pass laws to prohibit the imposition of contract terms that waive legal rights or impose other unreasonable conditions (such as mandatory binding arbitration, nondisparagement clauses, waivers of class actions or jury trials, and requirements that people travel long distances to assert their legal rights) in order to do business.

States should ensure that all appropriate consumer protection laws related to specific industries include provisions specifying that state laws on unfair and deceptive acts and practices apply when violations occur.

States should adopt laws that prohibit unfair and deceptive acts and practices in trade or commerce.

Unit pricing

In this policy: FederalState

Unit pricing should be based on standardized units to enable accurate price comparisons.

State jurisdiction

In this policy: FederalState

Congress should ensure that states have enforcement authority over unfair, deceptive, or abusive acts and practices.

State consumer protection laws should not:

  • exempt certain types of merchants, such as insurance companies and utilities, or
  • limit violations to situations in which the merchant acts with intent.