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Federal Deception Law: Listing of Provisions

15 U.S.C.

§ 8401 Findings; declaration of policy

§ 8402 Prohibitions against certain unfair and deceptive internet sales practices

§ 8403 Negative option marketing on the Internet

§ 8404 Enforcement by Federal Trade Commission

§ 8405 Enforcement by State attorneys general

Federal Deception Law: 15 U.S.C. § 8403. Negative option marketing on the internet

It shall be unlawful for any person to charge or attempt to charge any consumer for any goods or services sold in a transaction effected on the Internet through a negative option feature (as defined in the Federal Trade Commission’s Telemarketing Sales Rule in part 310 of title 16, Code of Federal Regulations), unless the person—

(1) provides text that clearly and conspicuously discloses all material terms of the transaction before obtaining the consumer’s billing information;

Federal Deception Law: 2.4.1 Scope of the Used Car Rule

The FTC’s trade regulation rule on the sale of used motor vehicles (“the Used Car Rule”)231 applies to “motor vehicles,” defined as any motorized vehicle other than a motorcycle, with a gross vehicle weight rating under 8500 pounds, a curb weight less than 6000 pounds, and a frontal area less than forty-six square feet.232 The Used Car Rule applies to any “used vehicle,” defined as a vehicle driven more than the limited use necessary in moving or road testing a new vehicle prior to delivery to a

Federal Deception Law: 2.4.4 Remedies for Used Car Rule Violations

Violations of the Used Car Rule violate the FTC Act, and the FTC has brought enforcement actions for such violations.265 As with any FTC rule, there is no private right of action under the FTC Act for rule violations.266 Nevertheless, a rule violation should be actionable under a state UDAP statute, since an FTC rule should guide courts in interpreting state UDAP statutes.267

Federal Deception Law: 2.4.5 When Buyers Guide Warranty Disclosure Conflicts with Warranty Provided in the Sales Agreement

The Used Car Rule states clearly that the dealer may not make any statements, oral or written, that contradict the disclosures in the Buyers Guide. The dealer can negotiate the warranty coverage so that the final sale has different terms than those first disclosed on the Buyers Guide. However, in such a case, the final warranty terms have to be identified in the contract of sale and summarized on the copy of the Buyers Guide that is provided to the consumer.271

Federal Deception Law: 2.1.1 Introduction

The Federal Trade Commission (FTC) has broad authority under the FTC Act to prohibit unfair or deceptive acts and practices in trade or commerce and to enact trade regulation rules that define and prevent such practices.1 The FTC has issued sixteen such trade regulation rules, and many of them establish important standards and requirements for sellers, creditors, and others.

This chapter focuses on eight FTC trade regulation rules of special relevance to consumer law:

Federal Deception Law: 2.2.1 The Nature of Trade Regulation Rules

Trade regulation rules (TRRs) “define with specificity acts and practices which are unfair or deceptive acts or practices. . . . Rules under this subparagraph may include requirements prescribed for the purpose of preventing such acts or practices.”22 Trade regulation rules not only enumerate practices that are unfair or deceptive but add requirements to prevent such practices—for example, three-day cooling-off periods, required disclosures, and notices placed in contracts that alter substantive rights.

Federal Deception Law: 2.2.2 Scope

The FTC can enact trade regulation rules (TRRs) with respect to unfair and deceptive practices “in or affecting commerce.”29 This is a broad standard applying to almost any commercial activity. Nevertheless, there are a number of statutory exemptions to the FTC’s authority and thus to the scope of its TRRs.