The Federal Trade Commission Improvement Act of 1975 (FTCIA) expressly authorizes the FTC to promulgate rules that “define with specificity acts or practices which are unfair or deceptive,” the knowing violation of which may result in a “civil penalty” of $10,000. The FTC has thus become a powerful consumer protection agency. Whether consumer welfare will thereby be enhanced depends on the manner in which this rule making authority is implemented by the FTC, particularly the care with which the Commission constructs its Trade Regulation Rules (TRRs) to comport with the economic realities of the marketplace. As the more detailed analysis of specific TRRs in succeeding chapters confirms, the experience to date is disquieting.

This chapter addresses in a general way the question of whether the FTC is implementing its rule-making power in a manner that will effectively improve consumer welfare. Particular rules are analyzed in depth in the chapters that follow. This chapter provides an overview of some of the recurring problems in the FTC's approach to rule making, and draws for the most part upon rules that are not the subjects of intensive particularized analysis in later chapters. It begins with a brief description of the origin and framework of the Commission's rule-making authority and summarizes the types of rules adopted or proposed. Because the statute authorizes rules that proscribe practices found to be “unfair or deceptive,” the Commission's efforts to provide some content to those vague concepts are then analyzed.