THE HOUSE is scheduled to vote today on the Federal Trade Commision Improvement Act, which includes a provision that would allow consumers to bring class-action suits against companies that violate the FTC's rules or orders. According to a 1967 study cited by the commission, business fraud and deception cost the consumer $1.3 billion annually; 10 years later, the figure (which does not include price-fixing) is put at nearly $3 billion.
The class-action provision would fill a gap in current law by giving consumers a federal right to sue to regain their losses from fraud or deception. Because these losses are often too small to justify an individual's going to court, a class-action suit means that the costs of litigation would be shared, and would thus be likely to be much less than the refunds or returns of property.
The legislation has been vigorously opposed by parts of the business community, who are trying to defeat it largely it largely by confusing the issue. It is being said, first, that the FTC already has the power to act - which is technically true. But protection to the consumer because it lacks bothe the funds and staff to investigate fully the torrent of complaints it receives of violations of its orders and rules. Some 9,000 complaints of violations come to the FTC annually but it can get to fewer than 1,500 of them.
A second argument against this class-action provision is that the courts are already so clogged that they could not handle the increased case load. One answer to that, from Rep. Bob Eckhardt (D-Tex.), is that this is not the experience in states that have class-action suits under the antitrust and securities laws does not offer grounds for such a fear.
On this last point, Rep. Echardt calls attention to a curious inconsistency on the part of the business community. He notes that in recent months much of the opposition to the proposed consumer protection agency has been beased on the notion that the federal bureaucracy is "too big" and "too inefficient." And yet the alternative to giving the power of the class-action suit to consumers is to leave the job of enforcement to the bureaucracy - in this case the FTC - which insists it can only do it with more manpower and money. In other words, to do this part of its job right, together with its other obligations to set standards and make rules, FTC would have to get bigger. Under those circumstances, we think the idea of having consumers join together to seek legitimate relief from frauds and injuries is not at all unreasonable.