Which venture would be subject to the requirements of Section 5 of the Federal Trade Commission Act?

Question

Options

• AA local nonprofit charity's fundraiser
• BAn online merchant's free shipping offer
• CA national bank's no-fee checking promotion
• DA city bus system's frequent rider program

• A
  6% (1)
• B
  88% (14)
• D
  6% (1)

Explanation

Section 5 of the Federal Trade Commission Act (FTC Act) prohibits "unfair or deceptive acts or practices in or affecting commerce." This prohibition applies to all persons engaged in commerce, including banks, but also exempts some entities, such as nonprofit organizations and common carriers, from FTC jurisdiction. Therefore, among the four options, only an online merchant's free shipping offer would be subject to the requirements of Section 5, as it involves a commercial activity that could potentially mislead or harm consumers. For example, if the online merchant fails to disclose the terms and conditions of the offer, or charges hidden fees, or delivers the products late or damaged, it could violate Section 5 by engaging in a deceptive practice.

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