Opinion ID: 3026290
Heading Depth: 2
Heading Rank: 4

Heading: the federal trade commission act

Text: Section 5(a) of the FTC Act, 15 U.S.C. § 45(a), prohibits, inter alia, “unfair or deceptive acts or practices in or affecting commerce.” Section 13(b), 15 U.S.C. § 53(b), provides that “in proper cases the Commission may seek, and after proper proof, the [district] court may issue, a permanent injunction.” “The deceptive acts or practices forbidden by the [FTC] Act include those used in the collection of debts.” Trans World Accounts, O:\PRECEDENTIAL\2005\053558p.wpd 21 Inc. v. FTC, 594 F.2d 212, 214 (9th Cir. 1979). Trans World was a debt collection agency that sent out a series of five or six dunning letters, in a format that closely resembled Western Union Telegrams, that threatened immediate legal action against the debtors if payment was not made within a specified period. Id. In reality, however, it took Trans World about ninety days from the receipt of the first letter to even consider whether legal action should be taken against any individual debtor. Id. The FTC issued an administrative complaint charging Trans World with the commission of unfair and deceptive practices in violation of Section 5 of the FTC Act. Id. The complaint alleged that the letters misrepresented the imminence of legal action, and that they were deceptive in format because they were made to look like Western Union telegrams. Id. An administrative law judge entered a decision sustaining the allegations of the complaint, and Trans World appealed to the O:\PRECEDENTIAL\2005\053558p.wpd 22 FTC. Id. The FTC adopted, in large measure, the findings and conclusions of the ALJ and entered an order prohibiting the practices used in the collection process. Id. On Trans World’s petition for review, the Court of Appeals for the Ninth Circuit found, inter alia, that there was substantial evidence supporting the finding of deception in the use of the letter format that closely resembled telegrams, which letters threatened legal action when no action was contemplated. Id. at 215. In Floersheim v. FTC, 411 F.2d 874 (9th Cir. 1969), the seller of forms used to help creditors collect debts petitioned for review of a cease and desist order of the FTC. The court held that the evidence supported the FTC’s finding that the seller’s forms, which were mailed from the seller’s Washington, D.C., office even though the seller lived in and sold the forms from Los Angeles, California, which repeated the words, “Washington, D.C.,” and used an elaborate type style so as to O:\PRECEDENTIAL\2005\053558p.wpd 23 simulate legal documents, were deceptive in exploiting the assumption of many low income debtors that anything that official-looking coming from Washington, D.C., had been sent by the federal government.