Purpose and Promise Unfulfilled: A Different View of Private Enforcement Under the Federal Trade Commission Act

In its September-October issue of 1974, this Review published a student comment concerning private enforcement and rule making under the Federal Trade Commission Act.10 The Comment took the position that a private right of action should not be implied under section 5 of the Act, which unambiguously declares that "unfair or deceptive acts or practices in commerce are . . . unlawful."' The Comment thus endorsed the holding in Holloway v. Bristol-MyersCorp. that a consumer who has suffered economic harm as the proximate result of the commission of an unfair or deceptive trade practice should not be entitled to redress pursuant to the Act. To support its position, the Comment argued that a private right of action may be implied only where Congress intended one and cited legislative history as indicating that Congress did not so intend. In addition, it was argued that a private right would ultimately prove self-defeating to consumers and that the FTC was better able to enforce the Act.

The purpose of this Critique is to respond to that Comment, which, because of misapplication of legislative history, the oversight of several important cases, and an indifference to the realities of the FTC's enforcement of the statute, presented a misleading picture of this issue. Contrary to the view supported by the Comment, on first impression it would appear that there exists no valid reason why an injured consumer should not be entitled to the protection of the Act, nor why an errant business should be allowed to retain the fruits of its wrongdoing. The federal courts have nevertheless historically found that no private action could be implied from the FTC Act. While commentators have virtually unanimously criticized this result, their conclusions were again rejected in Holloway v. Bristol- Myers," the first modem decision to deny implication of a right of action for consumers on an analysis of the requirements of the doctrine of implication.'" The Comment, approving of the Holloway analysis, thus serves as an appropriate impetus to a reconsideration of the applicability of the doctrine of implication to the FTC Act.