The Internet brings people together in all sorts of new ways. And when people come together, there can be all sorts of problems. So, is there a federal watchdog looking out for the rights of consumers in cyberspace? The answer is “yes” — the Federal Trade Commission (the FTC).
The FTC was created in 1914, long before the Internet, to prevent unfair methods of competition in commerce. The Federal Trade Commission Act later expanded the authority of the FTC to police unfair and deceptive acts or practices generally.
The FTC has not confined its oversight to the historical bricks and mortar world. Indeed, the FTC now handles diverse issues and laws applicable to cyberspace activities.
In going about its work relating to the Internet and otherwise, the FTC considers at least three important factors: 1) does a commercial practice injure consumers; 2) does the commercial practice violate public policy; and 3) is the commercial practice unethical. And the FTC has a laser beam focus on false and misleading representations.
The types of website issues handled by the FTC include:
Privacy policies and adherence to them (platinum policies vs. actual practice in realty)
Unsolicited commercial email (spam)
Internet auctions (compliance with laws and regulations)
Credit card fraud (including identity theft); e) marketing pyramids (online Ponzi schemes)
Vacations schemes (usually too good to be true)
Business opportunities/investments (e.g., “Nigerian” email scams)
Health care products/services (e.g., fraudulent anti-acne phone app)
So much online fraud that gets in the cross-hairs of the FTC comes in the form of Internet advertisements . To avoid the FTC’s wrath in this area, an online ad must be truthful and not misleading; it should be backed up by evidence supporting its claims; and it cannot be unfair.
The FTC looks for deception and unfairness in banner ads, pop ups, social media reviews , blogger endorsements, online targeted ads, and in-game ads. To stay clear of the FTC, online advertisers should include disclosures that ensure that consumers receive material information about transaction terms.
Websites most easily get into trouble with the FTC when wonderful promises are made to consumers that are not fulfilled.
For example, a company might make terrific promises to its consumers guaranteeing that the consumers’ privacy will be protected in all respects and that its site is completely secure from outside hacking and other threats. While the company may have had a positive motivation in making such promises, if the company really is not in a position as a matter of fact to fulfill such promises under all circumstances, it could get into FTC hot water. Company are better off promising the actual level of privacy and security that they truly can deliver.
The FTC was created more than 100 years ago. And now, in our new online world, the FTC is here to protect consumers in Cyberspace.
Eric Sinrod (@EricSinrod on Twitter) is a partner in the San Francisco office of Duane Morris LLP, where he focuses on litigation matters of various types, including information technology and intellectual property disputes. You can read his professional biography here. To receive a weekly email link to Mr. Sinrod’s columns, please email him at firstname.lastname@example.org with Subscribe in the Subject line. This column is prepared and published for informational purposes only and should not be construed as legal advice. The views expressed in this column are those of the author and do not necessarily reflect the views of the author’s law firm or its individual partners.