Why You Should Not Trust Regulatory Agencies to Protect You

Consider that an agency, say the federal trade commission, has approved the labeling that a company uses on its products. The average citizen would expect that use of this labeling implies that the product does what the labeling implies and that the product is safe for them to use.

Unfortunately, this is not a good expectation :

The lawsuit, involving 1.1 million people who bought “light” cigarettes in Illinois, claimed Philip Morris knew when it introduced such cigarettes in 1971 that they were no healthier than regular cigarettes. But the company hid that information and the fact that light cigarettes actually had a more toxic form of tar, the suit claimed.

A Madison County judge ruled in favor of the smokers in March 2003, saying the company misled customers into believing they were buying a less harmful cigarette.

But the state high court overturned that ruling, saying that, because the Federal Trade Commission allowed companies to characterize their cigarettes as “light” and “low tar,” Philip Morris could not be held liable under state law even if the terms it used could be found false or misleading.

Read that last paragraph again. Philip Morris lied to the public, misled people into buying an ostensibly safer cigarette. The federal trade commission blessed their labeling and as a result the victims have no legal recourse against this fraudulent behavior.

Not only do they have no recourse but the entity that is supposed to protect them, the citizens, from fraudulent behavior was apparently in bed with the perpetrator.

Perhaps the ftc was fooled by Philip Morris. That’s fine, not everyone is perfect. Nevertheless, it is not acceptable that citizens can not sue just because some federal administrative agency has said something is ok.

But then, is that not a big reason companies seek out regulation? To protect themselves from accountability. All they have to do is meet the minimum standards enshrined in the regulatory rules for their industry. Rules that they often have helped write. Once they meet the rules they are protected from suit and Joe and Mary Citizen are screwed.

Joe and Mary need recourse. It is clear that agencies like the ftc and their supporting legislation are not providing the deserved protection. Failing on this account what justification is left for their existence.

The money spent on the myriad of federal, state and local regulatory agencies might be better spent by investing in a legal system that provides easy and timely access to citizens. A legal system that acts under the rule of law not the rule of legislation or administrative rule making. A system that can punish fraud by providing full restitution to victims.

Better yet the money should be returned to the tax payers. Isn’t that the appropriate option when the product you have bought is broken and the vendor can not provide a working replacement.