Chapter 19 Lesson
Chapter 19 Lesson
19 - Unfair and Deceptive Trade Practices and Advertising
After completing this lesson, the required reading, and the assignments, learners will be able to:
1. Describe how the FTC operates.
2. Identify several types of deceptive and/or unfair trade practices
Federal Trade Commission (FTC) / Common Law
The Federal Trade Commission (FTC) is the federal regulatory agency with the power to issue and enforce rules which define
and prohibit various forms of unfair and/or deceptive methods of competition.
The FTC does so by issuing trade practice or
trade regulation rules, investigating marketing actions or behavior which may violate those rules, and requiring violators to run
corrective advertising to remedy the damage done by previous misleading advertisements or other forms of marketing.
Individuals may not bring private causes of action pursuant to the Federal Trade Commission Act.
However, some of the
business tort causes of action covered in Chapters 11 and 16, such as trade disparagement, theft of trade secrets, and
trademark infringement, do provide individuals with a private cause of action for certain unfair trade practices.
National Advertising Division
You may skip this section.
All products are required to provide consumers with nutritional information labeling, pursuant to the 1990 Nutrition Labeling and
Deceptive Acts and Practices
Pyramid Sales Schemes
Several years ago, my former husband had an employee ("Terry") who kept nagging him for a meeting to discuss an investment
opportunity in which he thought my husband would be interested.
Finally, one evening after work my husband invited Terry to
our house to hear his pitch.
When Terry came to our house, he brought with him a binder full of paper, not containing
information about the actual investment, but instead it was full of page after page of photos of couples wearing lots of diamonds
and other jewelry (both men and women), standing in the driveways of their palatial homes, leaning against their large luxury
cars, boats and RVs.
Terry kept telling my husband that if he began to sell the "product" he too could amass this type of
Clearly, Terry believed that if he persuaded Eric to invest,
would also be one step closer to retirement, which he
fully expected to do within two to three years!
Not once during the entire evening did he tell my husband
have to sell to obtain these riches.
If you were going to quit your job to begin marketing a new product, wouldn't you be at least