FTC Issued Policy Statement on Unfairness (December 17, 1980)

The FTC released a FTC Policy Statement on Unfairness

December 17, 1980

The Federal Trade Commission (“FTC”) issued a policy statement on unfairness, clarifying its jurisdiction over "unfair or deceptive acts or practices" as outlined in Section 5 of the FTC Act. This statement arose in response to inquiries about how the concept of unfairness has been applied in consumer transactions and whether the FTC's authority should be limited to false or deceptive advertising.

The statement acknowledges the evolving nature of the unfairness standard, which was intentionally framed in broad terms by Congress to adapt over time. It identifies three key criteria for assessing consumer unfairness: whether a practice causes consumer injury, violates public policy, and is unethical or unscrupulous. Among these, consumer injury is the primary focus. For an act to be deemed unfair, the injury must be substantial, must not be outweighed by any countervailing benefits, and must be unavoidable by consumers.

The statement emphasizes that the injury should not be trivial or speculative and typically involves significant economic harm. It recognizes that consumer decisions are influenced by the information available and asserts that practices hindering informed consumer choice are likely to be considered unfair. Additionally, the assessment of unfairness may be informed by established public policy, which can either corroborate or challenge findings of consumer injury.

The final criterion, concerning unethical conduct, is noted to be largely redundant, as unethical practices typically also result in consumer injury or public policy violations. Thus, the FTC intends to focus primarily on the first two criteria in future enforcement actions. Overall, this statement aims to provide clearer guidance on the application of the unfairness standard, addressing concerns from businesses and legal professionals while ensuring consumer protection remains a priority.

 

For more information, see here: https://www.ftc.gov/public-statements/1980/12/ftc-policy-statement-unfairness

 

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