The Slows

Since its inception, the FTC has been described as being too slow in resolving investigations. Henderson’s 1924 report argued that remedies for dishonest advertising must be immediate, but recounted a case that took almost four years from issuance of the complaint to preliminary injunction.[fusion_builder_container hundred_percent=”yes” overflow=”visible”][fusion_builder_row][fusion_builder_column type=”1_1″ background_position=”left top” background_color=”” border_size=”” border_color=”” border_style=”solid” spacing=”yes” background_image=”” background_repeat=”no-repeat” padding=”” margin_top=”0px” margin_bottom=”0px” class=”” id=”” animation_type=”” animation_speed=”0.3″ animation_direction=”left” hide_on_mobile=”no” center_content=”no” min_height=”none”][1] The Hoover Commission Report in 1949 concluded that the agency needed to delegate more responsibility to staff and to cut “unnecessary red tape.”[2] The 1960 Landis transition report for President Kennedy observed, “The Federal Trade Commission as of June 30, 1959, had 309 cease and desist orders pending, of which 118 had been pending for more than one year and 30 for more than 3 years.”[3] Landis attributed the problem to the early history of the agency. He argued that the Court’s narrow interpretation of the agency’s power caused it to engage in too much fact-finding to support its cases.[4] Senator Warren Magnuson and Jean Carper, in their 1968 book on consumer protection, noted that Holland Furnace, a company notorious for “tear down and scare tactics” operated for 35 years after the FTC first investigated it.[5] (In defense of the FTC, the defendant in the case was intractable and the agency was eventually successful in charging its leadership with criminal contempt.[6]) The agency waged a sixteen-year saga against Carter’s Little Liver Pills, a 19th-century patent medicine that the FTC claimed was deceptive because it mentioned “liver.” The pills are still sold today as “Carter’s Little Pills.”

The FTC has always occupied a difficult position between Congress, which orders it to speed up, and the realities of adjudicating cases against companies. If the FTC accelerates, it likely comes at a cost to the due process of companies. The enactment of the Administrative Procedure Act and respondents’ legitimate interests militates in favor of adopting more court-like procedures.

[1] Gerald C. Henderson, The Federal Trade Commission: A Study in Administrative Law and Procedure 232–233 (1924).

[2] The Commission on Organization of the Executive Branch of the Government: The Independent Regulatory Commissions (Mar. 1949)(“The Hoover Commission Report.”)

[3] Report on Regulatory Agencies to the President-Elect (Dec. 21, 1960) (“The Landis Report.”).

[4] “If the advertiser of a drug states that ‘four out of five doctors’ recommend it, to prove the falsity of such an allegation much massing of evidence ensues.”

[5] The Dark Side of the Marketplace: The Plight of the American Consumer 22–23 (1968). A “tear down and scare” scam occurs where a serviceperson takes apart some appliance and then refuses to reassemble it, asserting that it is too dangerous to operate. The authors wrote that the Holland Furnace salespeople were, “…merciless. In New England, branch salesmen from one office sold an elderly infirm woman nine new furnaces in six years, for a total take of $18,000.”

[6] In re Holland Furnace Co., 341 F.2d 548 (7th Cir. 1965) aff’d sub nom. Cheff v. Schnackenberg, 384 U.S. 373 (1966)(only the president of the company was held criminally liable, the directors were just grossly negligent).[/fusion_builder_column][/fusion_builder_row][/fusion_builder_container]

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