The Federal Trade Commission Turns 100

The Federal Trade Commission is well known for cutting-edge litigation, aggressive competition advocacy, and far-reaching hearings that tackle such topics as global competition and consumer protection, competition and health care, and competition and patent law and policy. It has taken the lead on emerging issues such as Internet fraud and privacy. It has promoted international competition and consumer protection enforcement.  Learn here how it served consumers and businesses for almost 100 years. 

• September 26, 1914 – President Woodrow Wilson signs the Federal Trade Commission Act
  • In response to years of national debate about competition policy, President Woodrow Wilson signed the Federal Trade Commission Act on September 26, 1914, followed by the Clayton Act on October 15, 1914.  Together, these acts were the New Freedom’s antitrust legislation.  The FTC Act transformed the Bureau of Corporations (under the Commerce Department) into a five-member, independent agency, the Federal Trade Commission, with new powers.  Like the Bureau of Corporations, the FTC could conduct studies and issue reports.  Unlike the Bureau of Corporations, the FTC also had enforcement authority.  The original language of Section 5 of the FTC Act provided:   “The commission is hereby empowered and directed to prevent persons, partnerships, or corporations, except banks, and common carriers subject to the Acts to regulate commerce, from using unfair methods of competition in commerce.”
• March 16, 1915 – The Federal Trade Commission (FTC) begins operations in Washington, D.C.

  

  • Five Commissioners were appointed by Woodrow Wilson:  Joseph Davies (chairman), Edward Hurley, William Harris, Will Parry, and George Rublee.  The early Commission reported on export trade, resale price maintenance, and other issues, as well as meatpacking and other specific industries. Unlike the Bureau, though, the Commission could also bring administrative cases. 
• November 23, 1915 – The FTC Holds 1st Commission Hearing with The Associated Advertising Clubs of the World
  • The Associated Advertising Clubs of the World, acting as a predecessor to today’s Better Business Bureaus, asked that the FTC use section 5 to challenge deception at the Federal level.   The Commission soon brought numerous deception cases, and the AACW frequently alerted the Commission to specific problems.

• 1919 – The FTC starts its “trade practice submittal” procedure (later renamed “trade practice conferences”)
  • In the heyday of these programs, conferences were called at the behest of industry and presided over by the full Commission or, more commonly, a single Commissioner. As those conferences later developed, industry participants voted on rules, which the Commission then considered. The Commission either approved, disapproved, or (controversially) modified proposed rules, and it announced whether violations of particular rules would be deemed per se violations of Section 5.  In the 1960s, these conferences would segue into substantive rulemaking under the FTC Act.
• 1925 – President Calvin Coolidge appoints William Humphrey as FTC Commissioner
  
  • The 1920s were contentious years within the Commission’s leadership.  In the immediate aftermath of Humphrey’s appointment, appointees of Democratic President Woodrow Wilson clashed with those of Republican Presidents Warren G. Harding and Calvin Coolidge.  Wilson appointees comprised the majority of the Commission until Coolidge appointed William E. Humphrey in 1925, which shifted the agency’s balance of power decisively.  For example, Humphrey argued that the Commission should not respond to resolutions from a single house of Congress while trying to stop the Senate from directing certain investigations.  
• 1926 – The Supreme Court rules against the Commission’s ability to challenge mergers effectively
  
  • In FTC v. Western Meat Co. (1926), the Supreme Court held that divestiture of stock acquisitions was unavailable, under the original language of the Clayton Act if the parties followed a stock acquisition with an asset acquisition before the Commission issued a complaint.   Based on this and a series of subsequent decisions, the Clayton Act would become ineffective as a merger law until it was amended in 1950.
• 1927 – President Calvin Coolidge appoints Democrat Garland Ferguson to the Commission
  • Garland Ferguson would serve more than 21 years, the longest tenure of any Commissioner.   Like another Coolidge appointee, Republican Charles March, Ferguson would later be reappointed twice by Franklin D. Roosevelt. 
• August 30, 1930 – Fire on D Street.
  • The FTC was housed in a main headquarters in a temporary building on D Street when a serious fire occurred on a sunny Saturday afternoon.  No employees were harmed, but many agency records were destroyed.
• 1933 – Congress passes the Securities Act of 1933
  • The FTC originally enforced the Securities Act, although enforcement of that Act shifted to the Securities and Exchange Commission (SEC) after the SEC was created in 1934.  Two FTC Commissioners and one FTC staff member became three of the original five SEC Commissioners.  One of the FTC alums, James Landis, later became SEC Chairman – and still later became Dean of Harvard Law School, Chairman of the Civil Aeronautics Board, and a key adviser on regulatory matters to President Kennedy.
  • In 1933, Congress passed the National Industrial Recovery Act, which creates the National Recovery Administration’s (NRA).  The NRA’s Codes of Fair Competition” were not only anticompetitive, but the Supreme Court deemed key provisions of the statute unconstitutional as well.    The FTC had a few key responsibilities under the act.  Indeed, violations of NRA codes were deemed to be Section 5 violations.  FDR twice intervened in a controversy between the FTC and the NRA over the Steel Code.
• 1937 – The FTC moves to permanent home at 600 Pennsylvania Avenue, N.W.

  

  • The FTC established its headquarters at 600 Pennsylvania Avenue, N.W., with President Franklin D. Roosevelt laying the cornerstone himself – using the same silver trowel, legend has it, that George Washington had used to lay the cornerstone of the U.S. Capitol in 1793.  Roosevelt remarked, “May this permanent home of the Federal Trade Commission stand for all time as a symbol of the purpose of the government to insist on a greater application of the golden rule to conduct the corporation and business enterprises in their relationship to the body politic.” The building is located at the apex of the Federal Triangle, and was the culmination of the massive Depression-era government building project.  Commissioners and staff officially moved in on April 21, 1938, and the building continues to function as the FTC’s headquarters, serving the agency’s adjudicative, executive, policy, and administrative functions.
• 1938 – The Wheeler-Lea Act (first major amendments to the FTC Act)
  • The Wheeler-Lea Act provided civil penalties for violations of Section 5 orders.  It also amended Section 5 to proscribe “unfair or deceptive acts or practices” as well as “unfair methods of competition.”  The Act rendered unnecessary the proof required by a previous Supreme Court ruling that, when challenging such problems as deceptive advertising, the FTC had to show harm to competitors.  The new law also addressed food and drug advertising, as well as authorizing pre-complaint injunctions in a limited number of cases.
• 1950 – The Celler-Kefauver Act
  • The act was the initial step towards modern merger enforcement.  It amended the previous merger provisions and closed the loophole for asset acquisitions.
• 1950 – Harry Truman’s Reorganization Plan, which resulted from a Commission headed by former President Herbert Hoover, changes the nature of the FTC’s Chairmanship 
  
  • Previously, the Commissioners elected their own Chair, and, under a resolution passed in 1916, the Commissioners had rotated the position annually.  The Chairman had no special administrative responsibilities.  Indeed, for parts of the agency’s early history, the full Commission sometimes voted on promotions and performance ratings during Commission meetings.  Under the Reorganization Plan, developed as a joint effort between President Truman and his close friend and collaborator Herbert Hoover the President designates a Chairman from among the Commissioners to act as the agency’s executive and administrative head.  The Chair would now be able to serve more than a 12-month term, which eliminated the continuing disruptions of leadership at 600 Pennsylvania Avenue.  
• 1952 – As one of a series of five reports on international cartels, the FTC issues its report on the International Oil Cartel. 
  • The report described the activities of seven major oil companies that controlled the bulk of production and marketing, and issues like price-fixing that surrounded the companies’ control over the international oil industry.  It received a heavy propaganda backlash from articles in petroleum periodicals and speeches by oil executives, and one oil company even distributed a 32-page booklet various government officials and news outlets that compiled all of the articles that were critical of the FTC’s report.
• 1957 – The FTC’s new Radio-TV monitoring unit develops the first system for monitoring television advertising 
  • The FTC began listening to and viewing commercials, including the “ad-libbing” of television announcers, instead of simply looking over written scripts ahead of broadcasts.  Each of the FTC’s field offices was made responsible for monitoring a certain number of hours of television broadcasts each month, since monitoring programs as they came over the air assured a more comprehensive examination of potentially false and misleading claims, taking into account ad-lib claims and visual deception on screen.  The public was also invited to give assistance in spotting dubious advertising claims and to alert the FTC.  In this first year of monitoring, six formal complaints were issued against firms in the drug and cosmetics field, such as one against Rolaids, which claimed that the company misrepresented the acid neutralizing properties of the product, put down other competing products, and falsely claimed that doctors recommended the product’s use.
• 1961 – Paul Rand Dixon is appointed Chairman of the FTC
  • Except for Naval Service during World War II and four years as Counsel and Staff Director of the Senate Antitrust and Monopoly Subcommittee (1957-1961), Dixon served at the FTC on multiple levels, including as a staff member, Commissioner, and Chairman, from 1930 to 1981. 
• 1962 – President Kennedy appoints Leon Higginbotham as a Commissioner
  • Leon Higginbotham was the first African-American to serve the FTC in this capacity.  Higginbotham stayed only two years, and then moved on to a career as an accomplished jurist.   
• 1964 – The Cigarette Rule
  • The rule required that cigarette advertising and labeling warn of the health risks of smoking. 
  • After the Surgeon General’s Advisory Committee on Smoking and Health issued a report stating all of the various health complications that arise from smoking, calling it a “substantial health hazard”, the FTC moved quickly into action.  The Commission’s proposed rule provided that cigarette packs and advertisements should prominently display warnings that “cigarette smoke is dangerous to health and may cause death from cancer and other diseases.”  Legislation soon required a different warning instead of that which the FTC would have mandated – the new warning read “Caution: Cigarette Smoking May Be Hazardous To Your Health.”  It was the Commission’s first significant use of legislative rulemaking. 
• 1964 – President Johnson appoints Mary Gardiner Jones as a Commissioner, the first woman to serve in that capacity. 
  • Four Kennedy appointees would serve together for nine years.  Jones and Philip Elman, who came to the FTC from the Solicitor General’s office (where he had played an important role in civil rights litigation), often clashed with chairman Paul Rand Dixon and with Commissioner Everett MacIntyre. 
• 1968 – The FTC issues a study on marketing in the inner city of the District of Columbia
  • The FTC issued a total of four reports on the subject: an Economic Report on Installment Credit and Retail Sales Practices; Automobile Warranties; Use of Games of Chance in Food Retailing; and a Study of Pricing Policies Used by Food Retailers.  The study resulted in the issuing of twelve complaints and eight cease-and-desist orders for Section 5 violations.  The study later became the basis for recommendations by the FTC to Congress for nationwide consumer protection. 
• 1969 – The Commission faces a myriad of critics
  • The FTC’s performance was challenged in a report by “Nader’s Raiders.”  In response, President Nixon asked the American Bar Association to study the FTC.  That study, headed by future FTC Chairman Miles Kirkpatrick, was also critical of the agency.  President Nixon took action, and called for the adoption of a buyer’s bill of rights and for the reactivation and revitalization of the FTC.
• January 1970 – President Nixon appoints a new Chairman, Caspar Weinberger
  
  • Although Weinberger was only Chairman through that summer, he consolidated the FTC’s layers into two principal operating bureaus, the directors of which would be housed at 600 Pennsylvania Avenue: the Bureau of Competition, and the Bureau of Consumer Protection.  Economists remained in a separate Bureau, providing independent advice to the Commissioners.  The same organizational structure has been used since. 
• 1973 – 1976 – The FTC’s authority is broadened
  • 1973 - Congress authorized the FTC to seek preliminary injunctions and permanent injunctions.  It would use this authority, starting in the 1980s, to obtain a fair amount of consumer financial redress from companies that violated the FTC’s policies.  
  • 1975 – The Federal Trade Commission Improvement Act
  • New remedies included civil penalties for violations of trade regulation rules.
  • 1976 – The Hart-Scott-Rodino Act.
  • Building on the updated merger law in the Celler-Kefauver Act (1950), the law imposed a statutory premerger notification requirement and a waiting period before covered mergers could be made official.  This act also greatly expanded the antitrust agencies’ ability to fashion effective relief to maintain competition in merger challenges. 
• 1978 – The proposed Children’s Advertising Rule
  • The law would have put limits on certain advertising directed to children, or even banned it in some cases.  The basis for the proposed law was that the purpose of advertising, when put to children too young to understand, is “inherently unfair and deceptive.”  It proposed 3 things: a ban on all TV advertising where audiences were substantially children, a ban on the TV advertising of highly sugared food when audiences were substantially 8-12 years old, and that TV advertising of other sugared food be shown with facts about health an nutrition when audiences were substantially 8-12 years old.  The Commission faced strong criticism of this “Kid Vid” proposal, including a Washington Post editorial that called the agency a “national nanny.” 
• 1978 – The FTC issues the Ophthalmic Practices Rule (“Eyeglasses Rule”)
  • First, the rule removed restrictions on price advertising of eyeglasses, contact lenses, and eye exams.  In states where advertising had been restricted, prices were ranging 25-40 percent higher than where advertising was permitted.  Lifting the rule for restrictions on price advertising was estimated to save consumers as much as $500 million a year.  Further, it required that that ophthalmologists and optometrists provide their patients with copies of their prescriptions, so that patients can shop around to buy their glasses.
• 1979 – The FTC charges the American Medical Association with anticompetitive practices.
  • The FTC found that the American Medical Association (AMA), the nation’s largest association of physicians, had unlawfully limited consumer access to information about the price and availability of medical services, and imposed restrictions on the ability of hospitals and other institutions to employ doctors on salary.  Further, the FTC found a ban that the AMA had on advertising, which deprived consumers of a free flow of information about the availability of healthcare services.  The FTC ordered the AMA to revoke any existing guidelines that restricted doctors’ advertising, solicitation, or contractual relations.  The decision was subsequently upheld in Court.
• 1981 – James C. Miller, III is appointed as Chairman

  

  • Miller was the first Ph.D economist to serve as an FTC Commissioner and Chairman; 
• April 30, 1984 – The Funeral Rule

   

  • Funerals rank among the most expensive purchases many consumers will ever make, many running well over $10,000. The funeral rule required the funeral directors to give consumers written lists, in person or over the phone, of those services including price, a short description, and specific disclosures for the consumers before they selected which services to purchase.   Many funeral directors often offer “packages” of commonly selected services, but the funeral rule reinforced the consumer right to buy them individually, and not to accept a package that might include items they didn’t want.
• May 1995 – www.FTC.gov is born
  • The FTC implemented a World Wide Web server on its computer host, at www.ftc.gov, with information about the commission, news releases, and links to the Gopher service (which disseminated consumer education and telemarketing rulemaking information).  An Internet Steering Committee was established to provide input on content for the home page.  By the end of the year, news releases, speeches, selected Commission documents from each Bureau, and transcripts of Commission-sponsored proceedings were regularly being updated on the Commission website.  The ConsumerLine, the electronic version of nearly 140 consumer and business publications, was also created to enhance the FTC’s outreach activities.  
• July 1995 – “Project Telesweep”
  • "Project Telesweep" was a nationwide federal-state crackdown on business opportunity fraud that snared nearly 100 marketers of vending machine business opportunities for failure to provide critical pre-purchase information to potential buyers.  Many firms were also charged with making exaggerated earnings claims and false promises about the amount and type of assistance they would provide franchisees. The FTC's Franchise Rule requires franchisors to give potential buyers detailed up-front disclosures about the financial and litigation history of their firms and their current and past franchisees, and also to provide documentation supporting any claims they make about earnings.
• 1996 – The FTC holds its first Internet Privacy workshop.
  • The proliferation of newly available personal information in the Internet was raising significant concerns about issues of personal privacy and possible fraud and deception.  The FTC’s Advertising Practices Program and Credit Practices Program coordinated the first Internet Privacy workshop, which allowed parties to express their views on internet privacy issues and online protections for consumer privacy in the online marketplace, and the role of government in the evolving online world.  The report that followed described the diverse views and efforts to address concerns about information privacy online. 
• May 1996 – The FTC makes its first large law enforcement action against fraud on the Internet. 
  • The FTC halted the fraudulent actions of Fortuna Alliance, L.L.C. with promoting a hard-core investment fraud scheme, which turned out to be an intense pyramid scheme.  Fortuna advertised over the Internet, promising participants in the scheme a $5,000-per-month return on a $250 investment and encouraged multiple investments. 
• April 1997 – FTC wins court order blocking Staples and Office Depot merger 
  • The proposed merger of the two office supply-giants would have resulted in a loss of competition and significant harm to consumers.  Competition had brought lower prices to consumers with each store having around 500 locations at the time. The FTC argued in court that the Staples/Office Depot merger would violate federal antitrust laws by substantially reducing competition in the retail sale of office supply superstores in various markets throughout the country where each firm directly competes against each other.
• 1998 – The FTC creates the Consumer Sentinel

  

  • The Consumer Sentinel was the first bi-national, multi-state consumer fraud database that tracked consumer complaints about identity theft in multiple jurisdictions.  The original Consumer Sentinel used the Internet to provide secure access to consumer complaints submitted to law enforcement organizations across the U.S. and Canada, and also provided law enforcement access to telemarketing, direct mail, and Internet complaints from the Commission’s Consumer Information System database and from various law enforcement partners.  Today, the Consumer Sentinel has evolved into an investigative cyber-tool for law enforcement that gives access to a secure online database of millions of consumer complaints from around the world in areas including Internet fraud, telemarketing, sweepstakes, work-at-home schemes, and financial issues.
• September 2002 – Citigroup Inc. fined $215 million to settle predatory lending charges
  • The $215 million fine went to consumers who bought credit insurance in connection with loans made by Citigroup between December 1995 and November 2000.  The FTC charged that Citigroup engaged in deceptive practices designed to induce borrowers unknowingly to purchase optional credit insurance products, a practice known as "packing." These insurance products were intended to cover the borrower's loan payments in various circumstances, such as death or illness, and the premiums were added to the principal amount of the loan ("single-premium credit insurance"). If the consumer noticed that the credit insurance products were being added to the loan, Citigroup’s employees used various tactics to discourage them from removing the insurance, the complaint alleged. The complaint also charged Citigroup with additional deceptive practices and law violations.
• 2003 – The Do Not Call Rule
  • The rule created a National Do Not Call (DNC) Registry to help consumers dealing with unwanted telemarketing calls, the number of which had grown to over 16 billion a year.  Although a number of states had registries for their residents, the FTC proposed a simple solution to reduce the number of calls nationwide, and shift power from the telemarketers to the consumers.  The Commission received an overwhelmingly positive public response, almost 3 to 1.  After the National DNC Registry was created, consumers would call or email in to FTC staff to register their choice not to receive any telemarketing calls.  The FTC now requires telemarketers to view the list and purge their sales lists of consumers who do not wish to receive the sales calls.  After only 3 days in existence, the National DNC Registry had grown to 10 million numbers, and now boasts over 60 million.  Although there have been challenges to the rule, the Commission successfully defended National DNC Registry.   

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