Unfair Or Deceptive Under The FTC
Section 5 of the FTC Act makes unfair or deceptive acts or practices unlawful. One statutory phrase carries two separate doctrines, and CIPP/US questions pull them apart constantly. Deception and unfairness have different elements, different histories and different evidence. Treating unfair or deceptive as a single idea costs marks.
The CIPP/US Body of Knowledge is the IAPP document that sets out what the exam covers. It places enforcement in Domain I. Two policy statements supply the tests, and the Commission still works to both.
Deception has three elements
The Commission set out its deception analysis in a letter of 14 October 1983 to Representative John D. Dingell. It has been known since as the Policy Statement on Deception.
A representation likely to mislead
There must be a representation, omission or practice likely to mislead the consumer. The test asks whether the practice is likely to mislead. It does not ask whether anyone was actually deceived.
Express claims establish their own meaning. Implied claims come from the document as a whole. Sometimes they need extrinsic evidence of how consumers understood them.
A consumer acting reasonably
The Commission examines the practice from the perspective of a consumer acting reasonably in the circumstances. Where a claim targets a particular audience, that group sets the standard. So claims aimed at children or at seriously ill people face a different test from claims aimed at doctors.
Materiality
The representation, omission or practice must be material. A material claim is likely to affect a consumer’s choice of, or conduct regarding, a product. Express claims are presumed material. So is information about purpose, safety, efficacy or cost.
The Commission treats materiality and injury as two names for one concept. Consumers would have chosen differently but for the deception.
Two practical consequences follow. Advertising answers to its net impression, which the statement calls the entire mosaic rather than each tile separately. Fine print will not always cure a misleading headline. Obvious puffery generally escapes attention, unless the exaggeration is pitched so that consumers take it seriously.
Unfairness has a different three-part test
The unfairness standard came first, in a letter of 17 December 1980 to the Senate consumer subcommittee, published as the Policy Statement on Unfairness. Congress codified it at 15 U.S.C. 45(n) in 1994. So the unfairness half of unfair or deceptive rests on a statutory floor that deception does not have.
An act or practice is unfair on three conditions. It causes or is likely to cause substantial injury to consumers. Consumers cannot reasonably avoid that injury themselves. And countervailing benefits to consumers or to competition do not outweigh it.
The 1980 statement puts limits on each element. Substantial injury usually means monetary harm. Unwarranted health and safety risks can also support a finding. Emotional impact and other more subjective harms will not ordinarily make a practice unfair. The Commission states plainly that trivial or merely speculative harms do not concern it.
Injury can still count as substantial in two further situations. It does small harm to a very large number of people. Or it raises a significant risk of concrete harm.
Established public policy may serve as evidence. Under the codified standard it may not serve as the primary basis for a finding.
Why privacy cases sit on both sides of unfair or deceptive
The split matters most in the area the exam cares about.
A company publishes a privacy notice and then does something else. That is a deception case. It made a representation likely to mislead consumers acting reasonably about something material to their choice.
A company made no promise at all and simply secured data badly. That is an unfairness case, and the three-part test has to be worked element by element.
So deception looks at what a company told people, while unfairness looks at what it did to them.
Reading an unfair or deceptive question
A stem that quotes a marketing claim, a privacy policy line or an app store description points at deception. The work is deciding which of the three elements the facts satisfy.
A stem that describes harm with no promise attached points at unfairness. Run the analysis in order: substantial injury, reasonable avoidability, then countervailing benefits.
A stem mentioning emotional distress alone rarely supports unfairness. A stem spreading a small harm across a large population may well support it. That is the distinction the drafters test.
The piece on separating look-alike exam options sets out a method for this area. The guide to qualifier words that decide answers covers stems built on words such as likely, substantial and reasonable.
