Fact Checked

What is the FTC?

Woman paying bills on laptop, thanks to help from the FTCImage: Woman paying bills on laptop, thanks to help from the FTC

In a Nutshell

The Federal Trade Commission, or FTC, is a federal agency that aims to protect consumers by regulating unfair, deceptive or fraudulent business practices, and by promoting fair competition.
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You’ve likely heard of the FTC but may not know what it actually is or does. Officially known as the Federal Trade Commission, it’s a federal agency that plays an important and sometimes overlooked role in consumers’ lives.

The FTC serves to protect consumers from what it describes as “anticompetitive, deceptive and unfair business practices.” Essentially, it serves as a watchdog agency for consumers and businesses to stop unfair business practices in the market.

In addition, the FTC provides access to resources, tools and protections for consumers. Read on to learn more about the FTC and how it can help empower you as a consumer.



What does the FTC do?

The FTC works to protect consumers and businesses alike by preventing unfair, deceptive and fraudulent practices in the market. This work is split across three bureaus, each with its own focus.

  • The Bureau of Competition assesses anticompetitive mergers and other potentially anticompetitive practices.
  • The Bureau of Consumer Protection aims to protect consumers from unfair, fraudulent and deceptive acts or practices.
  • The Bureau of Economics assesses the potential impact of the FTC’s actions on the economy.

Much of this work involves monitoring businesses by conducting investigations and fielding complaints. The FTC may also share its information with other government and law enforcement agencies and creates tools and resources to empower consumers.

But the FTC also has the power to enforce antitrust and consumer protection laws. The agency can seek relief for consumers and in some cases go after the perpetrators for civil penalties.

On top of that, the agency can create and implement trade regulations relating to unfair or deceptive acts or practices while also making relevant economic recommendations to Congress.

The FTC seeks to maintain its legitimacy and trust with the public by staying bipartisan. It’s run by five commissioners, with each serving a seven-year term after being nominated by the President of the United States and confirmed by the Senate. But the FTC cannot include more than three commissioners of the same political party at any one time.

A brief history of the FTC

Around the turn of the 20th century, megabusinesses considered “trusts” — U.S. Steel and Standard Oil, to name two — monopolized markets and controlled prices.

To combat these monopolies, Congress passed specific antitrust laws along with the Federal Trade Commission Act in 1914, creating a long-term solution for investigating and regulating unfair competition and deceptive practices that can harm consumers. While previous organizations had been tasked with investigating businesses, the FTC’s creation helped strengthen and formalize the government’s efforts to protect businesses and consumers.

Over time, the FTC has been handed increased power and authority to fight unfair competition and deceptive practices in the market. In 1938, Congress amended the FTC Act to prohibit unfair or deceptive acts or practices in addition to unfair competition. More than 35 years later, in 1975, the FTC was granted the authority to adopt industry-wide trade regulations.

How can the FTC help you?

Throughout the past 100 years, the FTC has played a crucial role in maintaining market fairness and protecting consumers. On top of the acts they enforce, they also offer a variety of tools to help consumers.

If you think you’re being taken advantage of or duped by a company, you may wonder what recourse you have. In such matters, the FTC often has the ability to act on your behalf. You can submit complaints and reports related to various issues, including identity theft and other scams, via the agency’s website. You can also add yourself to the National Do Not Call registry and sign up for email alerts about the latest scams.

The FTC also upholds many of the laws that help determine your overall credit profile. For instance, it helps enforce the Fair Credit Reporting Act, which gives consumers the right to request a free copy of their credit reports from each of the three major consumer credit bureaus — Equifax, Experian and TransUnion — once every 12 months.

If you take advantage of these resources thoughtfully, you could end up a more knowledgeable and empowered consumer.


Bottom line

The FTC works to ensure that businesses act fairly toward consumers and conduct their business in the spirit of fair competition. If you encounter a serious issue such as fraud or theft, you have the ability to submit a consumer complaint with the FTC. If you’re dealing with a different consumer issue, you can check out the agency’s consumer information page for a potential solution. The FTC is meant to help protect you, the consumer, from harm.


About the author: Melanie Lockert is a freelance writer and editor currently living in Portland, Oregon. She is passionate about education, financial literacy and empowering people to take control of their finances. Her work has been f… Read more.