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Executive Summary

FTC DECEPTION POLICY CHANGES COULD ENCOURAGE SALE OF DIET PILLS and other "inexpensive items" through deceptive conduct, Vermont and Iowa Attorneys General John Easton and Thomas Miller maintained in a joint statement to Rep. Dingell's Energy & Commerce/Oversight Subcmte. March 26. Commenting on FTC Chairman James Miller's proposed interpretation of the law, the state officials asserted: "Business selling diet pills, baldness cures, fake magazine subscriptions or other inexpensive but fraudulent items will thrive in an unrestricted atmosphere." The hearing is the latest round in a dispute between Subcmte. Chairman Dingell (D-Mich.) and FTC Chairman Miller over FTC deception policy ("The Pink Sheet" March 12, p. 12). The two Attorneys General asserted that under the FTC chairman's view of the deception standard, the states' burden of proof would be more diffcult. "States may have to offer proof on whether a consumer was 'reasonable,' whether a misrepresentation is 'likely' to mislead, and whether materiality must include injury," they said. In addition, the Attorneys General asserted that FTC action should be independent of "reasonable" consumer behavior. "In deciding merely to protect the consumer who 'acts reasonably,' the commission would be reversing its long history of acting in behalf of the unsophisticated, the unwary, and the gullible." The two also noted that 20 states have statutes modeled after the FTC Act, which require state courts to follow the interpretation of the federal act by both the commission and federal courts when enforcing state consumer protection laws. Concern over the impact the changes could have on state enforcement of consumer protection statutes led to the passage of a formal resolution opposing the policy last December by the Natl. Assn. of Attorneys General, they said. At the opening of the hearing, Dingell noted that FTC had sought unsuccessfully to legislatively change its deception authority in the spring of 1982. Dingell further noted: "The subcmte.'s review of the events and the work product of the last two years convinces me now, more than ever, that a change in the law is not called for." In testimony responding to Dingell's criticisms, FTC's Miller labeled as "false" charges that the commission's majority has "inaccurately summarized the way in which the commission exercises its deception authority"; is "attempting to change the law of deception by administrative fiat"; and is "failing to enforce the consumer protection laws." These charges "seriously misrepresent both the content of the policy statement and the important nature of our consumer protection law enforcement initiatives," Miller said. "Under the policy statement, the commission will continue to prosecute deceptive get-rich-quick schemes, land speculation offers, quick weight loss programs, baldness cures, and other practices of like ilk."

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