Measuring the Effectiveness of Business Practice Laws
Jennifer Torres Fuentes
DeVry University

Measuring the Effectiveness of Business Practice Laws In the world of business, laws that are intended to protect and ensure fairness amongst competitors and consumers have their ups and downs when it comes to how effective they really are. There are various policies and procedures that are put in place in an attempt to promote fair, balanced and competitive business practices, whose effectiveness suffers because of a lack of enforcement to their terms. Until society as a whole owns up to how badly we have reverted into unethical and demoralized behavior, the effectiveness of laws put into place to encourage us to practice socially responsible behavior will not be effective. When the needs of the many supersedes the needs of the few, only then will these laws, policies and procedures put in place to encourage socially responsible behavior being to have any real effect.

The Federal Trade Commission (FTC) enforces federal consumer protection laws that prevent fraud, deception and unfair business practices. The Commission also enforces federal antitrust laws that prohibit anticompetitive mergers and other business practices that could lead to higher prices, fewer choices, or less innovation. The Commission has enforcement or administrative responsibilities under more than 70 laws. They are grouped in three categories: (a) Statutes relating to both the competition and consumer protection missions; (b) statutes relating principally to the competition mission; and (c) statutes relating principally to the consumer protection mission.
The Federal Trade Commission Act is the primary statute of the Commission. Under this Act, the Commission is empowered, among other things, to (a) prevent unfair methods of competition, and unfair or deceptive acts or practices in or affecting commerce; (b) seek monetary redress and other relief for conduct injurious to consumers; (c) prescribe trade regulation rules defining with specificity acts or practices that are unfair or deceptive, and establishing requirements designed to prevent such acts or practices; (d) conduct investigations relating to the organization, business, practices, and management of entities engaged in commerce; and (e) make reports and legislative recommendations to Congress. Statutes Enforced or Administered by the Commission. (n.d.). Retrieved from: http://www.ftc.gov/enforcement/statutes

With so many responsibilities, how does the FTC successfully enforce all the laws and regulations that fall under their supervision? They do have “The Division of Enforcement litigates civil contempt and civil penalty actions to enforce federal court injunctions and administrative orders in FTC consumer protection cases; coordinates FTC actions with criminal law enforcement agencies through its Criminal Liaison Unit; develops, reviews, and enforces a variety of consumer protection rules; coordinates multi-pronged initiatives to address current consumer protection issues; and administers the Bureau of Consumer Protection's bankruptcy program.” Division of Enforcement. (n.d.). Retrieved from: http://www.ftc.gov/about-ftc/bureaus-offices/bureau-consumer-protection/our-divisions/division-enforcement. How effective can their enforcement division be is there are still companies out there not following the rules. Recently “the online platform Yelp, which allows users to discover and review local stores, restaurants and other businesses, has agreed to pay a $450,000 settlement after the Federal Trade Commission said that Yelp violated the Children’s Online Privacy Protection Act (COPPA) by collecting information from users under the age of 13 without first notifying parents and getting their consent.” Caulderwood, K. (2014, September 18). FTC Says Yelp Violated COPPA Child Privacy Rules, Fined $450K. Retrieved from: http://www.ibtimes.com/ftc-says-yelp-violated-coppa-child-privacy-rules-fined-450k-1691229. If the only consequence is a fine, is that truly enough incentive to stop businesses from taking advantage and pushing the limits. A $450,000 fine, although a hefty price for many, in terms of the business world means nothing to a company like Yelp who the Wall Street Journal values at $1-$2 billion dollars. $450,000 is like nothing to a company worth so much. Once caught, things probably do change for a business, most likely the business will be watched more carefully and risk of being caught may detour them from any future violations.

When profit becomes the main objective for businesses their moral obligation to exercise socially responsible behavior becomes obsolete. Although there are laws, statues, regulations, and policies in place to prevent them from taking advantage of workers and producers, it is not something that is enforced enough to make businesses respect the authority of the FTC. Unless the FTC begins to monitor companies more closely and fine them greater amounts of money for their violations, the cycle will continue. Perhaps, dependent on the class of violation committed the punishments could vary. There are more than 70 laws that the FTC has to enforce, it may not seem like a large number but imagine the vast number of businesses those laws apply to and have to be investigated. Does the FTC have the manpower to carefully look through all the information needed to verify that a business is complying with their more than 70 rules? If they are provided with the tools they need their likeliness of success will increase and less violations will go un-noticed.

References
Statutes Enforced or Administered by the Commission. Retrieved from: http://www.ftc.gov/enforcement/statutes

Federal Trade Commission. Division of Enforcement. Retrieved from: http://www.ftc.gov/about-ftc/bureaus-offices/bureau-consumer-protection/our-divisions/division-enforcement.

Caulderwood, K. (2014). FTC Says Yelp Violated COPPA Child Privacy Rules, Fined $450K. Retrieved from: http://www.ibtimes.com/ftc-says-yelp-violated-coppa-child-privacy-rules-fined-450k-1691229.