Unfairness doctrine

Not to be confused with Fairness Doctrine.

The unfairness doctrine is a doctrine in United States trade regulation law under which the Federal Trade Commission (FTC) can declare a business practice “unfair” because it is oppressive or harmful to consumers even though the practice is not an antitrust violation, an incipient antitrust violation, a violation of the “spirit” of the antitrust laws, or a deceptive practice.

The doctrine was first authoritatively recognized in FTC v. Sperry & Hutchinson Trading Stamp Co.,[1] although earlier Supreme Court decisions had suggested it in obiter dicta.[2]

The FTC has on occasion invoked the doctrine against oppressive practices that were not antitrust violations and not recognizably deceptive practices, such as the use of the holder in due course rule by retailers catering to the very poor[3] and the practice of mail-order sellers suing consumers in states remote from where they live.[4] The FTC has recently invoked the doctrine against spyware.[5]

References

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  1. ↑ 405 U. S. 233 (1972). In that case the Court said:
    [T]he Federal Trade Commission does not arrogate excessive power to itself if, in measuring a practice against the elusive, but congressionally mandated standard of fairness, it, like a court of equity, considers public values beyond simply those enshrined in the letter or encompassed in the spirit of the antitrust laws.
    Sperry & Hutchinson, 405 U.S. at 244.
  2. ↑ See, e.g., FTC v. R. F. Keppel & Bro., Inc., 291 U.S. 304, 310 (1934):
    Neither the language nor the history of the Act suggests that Congress intended to confine the forbidden methods to fixed and unyielding categories. The common law afforded a definition of unfair competition and, before the enactment of the Federal Trade Commission Act, the Sherman Act had laid its inhibition upon combinations to restrain or monopolize interstate commerce, which the courts had construed to include restraints upon competition in interstate commerce. It would not have been a difficult feat of draftsmanship to have restricted the operation of the Trade Commission Act to those methods of competition in interstate commerce which are forbidden at common law or which are likely to grow into violations of the Sherman Act, if that had been the purpose of the legislation.
  3. ↑ Compare All-State Industries, Inc. v. FTC, 423 F.2d 423 (4th Cir. 1970) (requiiring fair notice) with 16 CFR Part 433 (prohibiting practice entirely) and American Fin. Servs. Ass'n v. FTC, 767 F.2d 957 (D.C. Cir. 1985) (upholding FTC rule entirely prohibiting household goods security interests and wage assignments).
  4. ↑ See Spiegel, Inc. v. FTC, 540 F.2d 287 (7th Cir. 1976).
  5. ↑ See FTC cracks down on spyware and PC hijacking, but not true lies, Micro Law, IEEE Micro (Jan.-Feb. 2005).
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