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Posted on July 27th, 2012, by

In the contemporary business environment, customers often turn out to be unprotected in face of sophisticated marketing strategies and tools used by companies to maximize their profits. In such a situation, there exists a risk of frauds and violations of customers’ rights, but customers are not always aware of possible risks they may face, while dealing with modern companies. Moreover, often customers cannot protect adequately their interests with the external assistance. Hence, the regulation of the modern trade and company-customer relationships is needed. In this respect, it should be said that the regulation should be conducted an independent agency which stands for interests of customers, but not for interests of some private organizations. In order to protect customers’ interests and rights, the Federal Trade Commission was created, which is actually destined to control and regulate trade in order to minimize the risk of the violation of customers’ rights. In such a way, the Federal Trade Commission has become a main state body which has the official power to regulate trade and maintain the dominance of principle of fair trade and competition and prevention of frauds and violation of customers’ rights.

The Federal Trade Commission was originally created to protect American customers from possible frauds and violation of their rights by companies operating in American market. Initially, the creation of the Federal Trade Commission was determined by the necessity to prevent the growing impact of huge trusts and monopolies that attempted to establish their control over different industries and, through the monopolization of the market, they developed their business in accordance with their own interests, ignoring needs and demands of the customers, which were either deceived or had no choice. Obviously, the risk of deception of customers inevitably undermines the stability of the national economy because customers’ loyalty is crucial for many companies, while the use of frauds en mass is likely to result in the decrease of consumption because customers will be very careful in their spending being anxious of the possibility being deceived.

At the same time, the Federal Trade Commission is a complex agency, which comprises three main branches: Bureau of Consumer Protection, Bureau of Competition, and Bureau of Economics. Basically, this organizational structure allows the Federal Trade Commission to focus on specific fields which need the regulation from the part of the Commission. In fact, the subdivision of the Federal Trade Commission into three bureaus apparently increases the efficiency of the performance of the Commission because it can respond adequately on the violation of existing regulations or efforts of frauds which affect either consumers’ protection, fair competition principles, or produce a negative impact on the economic development of the USA at large.

The Bureau of Consumer Protection is mainly concerned with the protection of consumers’ rights. It should be said that the Bureau of Consumer Protection regulate the customer-company commercial relationship aiming at the minimization of risks of frauds and unfair methods being implemented by companies in relation to their customers.

In this respect, it important to underline the fact that the customers’ interests is the major priority of the Bureau of Consumer Protection, while policies of companies are critically evaluated by the Bureau and, if they are defined as fraudulent or unfair, the Federal Trade Commission can introduce sanctions against the company violating regulations or using frauds.

The work of Bureau of Competition and Bureau of Economics is closely intertwined because they aim at the maintenance of fair conditions and rules of trade and commercial activities of companies. It proves beyond a doubt that the violation of principles of fair competition can affect the development of certain industries or even national economy. Hence, sanctions introduced by the Bureau of Competition can also be supported by sanctions introduce by the Bureau of Economics. This is why the mutual work of the Bureaus is important for the effective functioning of the Federal Trade Commission.

In spite of the fact, that the present business environment has changed considerably since 1914, when the Federal Trade Commission was created, the problem of frauds and violation of rights of customers are still widely spread. In this respect, it should be said that since 1990 the Federal Trade Commission is forced to focus on new types of frauds and new industries where companies tend to violate customers’ rights and interests. Among these industries, it is possible to single telemarketing and IT industry, while among the most serious and rapidly growing frauds that represent a serious threat to customers, it is possible to name the identity theft. In such a situation, it is necessary to dwell upon all these problems in order to better understand the current challenges the Federal Trade Commission has to cope with and its current policy.

Obviously, the Federal Trade Commission is very concerned with emergence of new industries because they can represent a potential threat to customers’ rights. In fact, the introduction of a new product or a new service implies that a company introducing this product or service is in an advantageous position compared to its competitors.

Moreover, the company can hide some information about the product which can be harmful for customers. In such a situation, the interference of the Federal Trade Commission is needed since it can regulate the trade policies and, if a company tends to fraud, the Commission can undertake sanctions against this company.

However, the function of the Federal Trade Commission evokes quite controversial reactions from the part of businessmen and economists. In actuality, the problem is that, on the one hand, the Federal Trade Commission regulates trade policies, protecting customers’ rights and minimizing the risk of frauds, which could have put some companies into an advantageous position compared to its competitors, while, on the other hand, the Federal Trade Commission is a state agency, which actually interferes in the economic activities of companies. In other words, the Federal Trade Commission is viewed as an instrument of the state regulation and pressure on business that actually contradicts to basic principles of traditionally liberal American economy (Sheesley, 2001). At this point, it should be said that, traditionally, the interference of the state in economy in the USA was minimal.

Nevertheless, the criticism of the Federal Trade Commission is not justified because the Commission does not intend to influence the fair marketing policies of companies. In stark contrast, the Federal Trade Commission enhances the principle of fair competition as it prevents companies from using frauds in their marketing strategies, which apparently threaten to the principle of fair competition. Consequently, the Federal Trade Commission should be rather viewed as a guardian of the fair competition principle than an repressive machine used by the state to control the national economy.

Finally, the Federal Trade Commission performs an important function of an anti-monopolist body. To put it more precisely, the Federal Trade Commission aims at the prevention of the formation of trusts and monopolies which represent a serious threat not only to customers, but also to the development of national economy at large. It proves beyond a doubt that the development of trusts and monopolies lead to the decrease of the competition and, therefore, gradual degradation of monopolists which are not really concerned with the quality of their products and services, but which can sell their products and services at exorbitant prices maximizing their profits.

Thus, taking into account all above mentioned, it is possible to conclude that the role of the Federal Trade Commission is extremely important, especially in the contemporary business environment. The rapid development of new technologies naturally opens new ways for frauds and manipulations which are extremely harmful for consumers. Obviously, the Federal Trade Commission should react immediately on the violation of rights of consumers and frauds. Among the most serious threats that consumers face at the moment, it is possible to name the identity theft, frauds related to telemarketing sales, and the monopolization of the market which restricted consistently consumers’ rights. On analyzing the actions of the Federal Trade Commission, it is possible to estimate that the acts and regulations implemented by the Commission are essential, but some of them need improvements.

In actuality, the Federal Trade Commission has to cope with the problem of catching-up with technological progress, because the introduction of new technologies occurs faster than the Federal Trade Commission counter-action starts.

As a result, many consumers suffer from frauds and violation of their rights. Hence, the significance of the Federal Trade Commission can be hardly underestimated since the effective functioning of the Commission contributes to the stability in the national economy of the USA.

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