Evening star., 1938-08-14
The Federal Trade
Commission.
By FREDERIC J. HASKIN.

most vigilant agency Of the Federal Gov
ernment from the standpoint Of the
number Of people served. 1t Is q protec-
tive court OF all the people. However,
the vast majority aided by this agency
never appeal to it, and comparatively few
know how 1t functions.
The Federal Trade Commission was
created by Congress a quarter century
ago to prevent unfair methods OF COM
petition in commerce" This broad man
date gave the commission weapon with
which to fight misrepresentation OF mer-
chandise. About TO per cent Of the cases
which come before the commission in
volve advertising.
The general mandate given the COM
mission by Congress opened field OF
debate on what constitutes unfair meth
ods of competition. The subject Is still
being debated. The tendency OF the
courts has been to limit the commissions
powers by placing emphasis on competl-
ton rather than on unfair methods. This
restriction by the courts has often made
the commissions work non-eneccve.
For instance, in q case coming before
the Supreme Court in 1881 involving the
question of injuries to q consumer by
using q fat-reducing PREPARATION. the
court ruled that 1t was essential TO DEM
onstrate that some legitimate competitor
making the same or similar preparation
had suffered loss OF trade Proof be-
fore the court was satisfactory as TO the
injury, but failing to establish that there
were any legitimate competitors in the
same business, the case against the COM
pany was dismissed.
The last session Of Congress made
revision of the Federal Trade Commis-
sion Act, giving the agency power to
deal with all types Of unfair competition
in commerce and misleading advertising
The new law defines what constitute
unfair methods OF composition In COM
merce. and more specifically states what
false advertising Is. Thus. the Federal
Trade Commission has entered upon
new era in its functions for the general
public.
Charges Of unfair methods Of competi-
ton may come from the public, or more
usually. from aggrieved competitors, or
from trade associations. All complaints
are investigated and may lead to one Of
three results: For lack of evidence or
Jurisdiction the charges may be dropped;
a negotiation may be made with the Of
Tending concern. or the commission may
issue a complaint.
When a stipulation is entered into 1t
involves promise by the concern to dis
continue the unlawful practices. No
penalty is attached If the offending con-
cern lives up to Its promise. II the
promise is not carried out, . complaint
is entered.
When a complaint is entered evidence
is taken before a trial examiner Of the
commission. Final argument is made
before the commission. The commission
may dismiss the charges or instruct the
firm to cease and desist from its unfair
practices.
Until the recent revision Of the COM
missions authority. enforcement of a
commission order had to be affirmed b.
the United States Circuit Court OF Ap-
peals. This is not now the case. for the
new act empowers the commission to
make it's orders effective. Violation of
an order may be punishable by fine up
to $1,000. However. cease and desist Or
ders do not become effective until 6n
days after they have been issued. and
uuliAlB IlllS PCi AOu SO1lCCAA AlNONOi
may appeal to the courts for . review
of the case.
A newly acquired Jurisdiction Of the
commission relates to mislabeling and
advertising of foods and drugs covered b.
the Pure Food and Drug Act passed in
1906. The Federal Food and Drug Ad-
ministration has authority to see that
no falsely labeled or adulterated food or
drug products are shipped across State
lines, but has no control over advertising
Of foods and drugs.
y =
A special board of the commission is
charged with the duty of reading maga-
zines, newspapers and radio script to de-
tect cases of false and misleading adver-
tising. Last year about $50 newspapers.
700 magazines, involving nearly 10000
advertisements. were read. In addition
4700 radio continuities were examined
amounting to 1000 900 typewriter pages
A first reading indicated % 900 adver-
tisements representing 1890 advertisers.
and 25,000 radio ads by / 1,275 advertisers
as misleading. A further elimination re-
suited in the starting of $40 cases.
This special board writes the advertiser
for samples of products In question. a
quantitative formula if the product Is
compound and a copy of all advertising
published during the year. If the re-
quest is granted, the sample, formula and
claims made for the product are referred
to technical agencies of the Government
for scientific opinion. If representations
are made by the advertiser which do not
seem justified he is given an opportunity
to submit further evidence or explain his
claims The advertiser may respond by
| letter or come to Washington and confer
with the board Many such conferences
are held. approximately 800 each year
| If the board decides that the advertising
| claims are false or misleading, 1t recon-
mends to the Federal Trade Commission
| that stipulation be negotiated. whereby
the advertiser agrees to refrain from Ger
tain advertising claims in the future.
Should an advertiser refuse to respond
| to the boards communication, the case
| is referred to the commission for han
ding through the regular channels of
| investigation. Likewise. if an advertiser
| after correspondence or conference with
the board, is requested to sign a promise
to desist from certain advertising and
refuses, the case goes to the commission
The new law under which the commits
sion now operates makes it possible to. 10
to Federal District Court and request a
temporary injunction against the publi-
cation of false advertisement, pending
an investigation. Such an injunction,
however, will be denied If the publisher
ran Shouy that IL would ho1d IN q =, ieey,c