What is an unfair practice FTC?

What is an Unfair Practice by the FTC?

The Federal Trade Commission (FTC) is a government agency tasked with protecting consumers and promoting competition. The FTC enforces laws and regulations that prohibit unfair or deceptive business practices. But what exactly constitutes an “unfair practice” under FTC guidelines?

Definition of Unfair Practice

The FTC defines an unfair practice as one that:

• Causes or is likely to cause substantial consumer injury
• Cannot be reasonably avoided by consumers
• Is not outweighed by countervailing benefits to consumers or competition

All three of these conditions must be met for a business practice to be deemed unfair by the FTC.
Some key things to understand about unfair practices:

• They cause actual harm or have the potential to cause harm to consumers financially, physically, or emotionally
• Consumers cannot reasonably avoid the harm – they do not have free choice to avoid engaging with the business practice
• Any benefits of the practice to consumers or competition do not outweigh the harm caused

Examples of Unfair Practices

Some common examples of unfair business practices that the FTC might investigate and take action against include:

• Unauthorized billing – Charging consumers for products or services without their consent or making it unreasonably difficult to cancel services
• Pyramid schemes – Illegal multi-level marketing programs more focused on recruiting than selling products to real customers
• Predatory lending – Providing loans with unfair, deceptive, or abusive terms like extremely high interest rates
• Negative option marketing – Getting consent from consumers to receive trial products which turn into regular monthly shipments if they do not take action to cancel in a short period of time
• Data security failures – Collecting or storing consumer data without reasonable security measures in place to prevent breaches
• Unfair debt collection tactics – Harassing consumers repeatedly with threatening language or revealing debts to employers or family members
• Price gouging – Selling essential goods like food, water, or gas at significantly higher prices during natural disasters or crises

Enforcement of Unfair Practices

When the FTC determines a business is engaging in unfair acts or practices, they have several options to stop the behavior:

• Seek voluntary compliance – The FTC contacts the business, explains the unlawful practices, and tries to get the business to stop voluntarily
• Administrative proceedings – The FTC files a formal complaint against the business and seeks an order to cease and desist the unfair practices
• Litigation – The FTC sues the business in federal court for engaging in unfair or deceptive practices prohibited by the FTC Act
• Consumer redress – The FTC seeks refunds from the business to provide money back to harmed consumers
• Civil penalties – Fines imposed for knowingly engaging in unfair or deceptive behavior, especially if it continues after FTC warnings

The remedies and penalties imposed depend on the nature, extent, and intention behind the unfair business practices. But the overarching goal is to get companies to stop harming consumers through unfair tactics.

When to File an FTC Complaint

If you believe a business has engaged in unfair billing, lending, marketing, or other practices that meet the FTC’s definition, you can file a complaint with the FTC. The more complaints against a company, the more likely the FTC will launch an investigation and take action to protect consumers.
Some key things to report in your complaint:

• The name and location of the business
• Details on their specific unfair practice(s)
• How you were misled, injured financially, or suffered other harm
• If and when you sought refunds or cancellations
• Copies of contracts, terms and conditions, bills, correspondence if possible

With detailed, documented complaints, the FTC can recognize patterns and put an end to systematic unfair practices harming large numbers of consumers across the country.

Working with an Attorney

If you have suffered significant financial losses or other substantial injury due to unfair business tactics, you may want to consult an attorney regarding private legal action. They can advise if you have grounds for a lawsuit against the company under state consumer protection laws or other statutes related to fraud, negligence or breach of contract. An experienced lawyer can also represent you through the litigation process to recover monetary damages.

Key Takeaways

• Unfair practices cause consumer harm that cannot reasonably be avoided and are not outweighed by benefits
• Common examples include unauthorized billing, predatory lending, data breaches more
• The FTC works to stop unfair practices through warnings, administrative cases, lawsuits, fines and consumer refunds
• Consumers should file detailed complaints with the FTC about unfair business practices
• Consult a private attorney if you suffered significant losses due to a company’s unfair tactics