Answer · confidence: partial
When did the US start checking income promises to sellers, and what rules now?
Research question: When did US regulators first begin policing income claims made to people selling products or business opportunities, and what rules exist today?
The records show that the FTC's general authority dates to 1914, when the Federal Trade Commission Act outlawed unfair methods of competition 12. A 1929 Special Board of Investigation was created to look into false and misleading advertising 11, and the Wheeler-Lea Act of 1938 extended the Act to unfair or deceptive acts or practices, protecting consumers from false advertising 58. The facts do not say when income claims specifically were first policed. Today, franchisors must have a reasonable basis and substantiation for any financial performance representations and must disclose their basis in Item 19 of the disclosure document 16, and they must give prospective franchisees a disclosure document with 23 specific items 17. The facts also mention 2012 legislation targeting fraudulent non-franchised business opportunities 18, but they do not describe its current income-claim rules. The newest fact is from 2012, about 14 years before October 2026, so the facts may not reflect current law.
Checked 2026-10-21. Only documented and supported facts are used.
Dig deeper on this questionSources
[1] supported
The Federal Trade Commission Act of 1914 was signed into law by President Woodrow Wilson and outlaws unfair methods of competition and unfair acts or practices affecting commerce.
"The Act was signed into law by US President Woodrow Wilson in 1914 and outlaws unfair methods of competition and unfair acts or practices that affect commerce."Federal Trade Commission Act of 1914
[2] supported
The FTC Act prohibits unfair methods of competition and unfair or deceptive acts or practices in or affecting commerce.
"The FTC Act prohibits unfair methods of competition, unfair or deceptive acts or practices in or affecting commerce."Federal Trade Commission Act of 1914
[3] supported
The Commission is empowered to prescribe trade regulation rules defining unfair or deceptive acts or practices with specificity and requiring measures to prevent them.
"prescribe trade regulation rules defining with specificity acts or practices that are unfair or deceptive, and establishing requirements designed to prevent such acts or practices"Federal Trade Commission Act of 1914
[4] supported
The Wheeler–Lea Act was signed into law on March 21, 1938.
"Signed into law by President Franklin D. Roosevelt on March 21, 1938"Wheeler-Lea Act - Wikipedia
[5] supported
The Act amended Section 5 of the 1914 Federal Trade Commission Act to prohibit 'unfair or deceptive acts or practices' in addition to unfair methods of competition.
"The Wheeler–Lea Act of 1938 is a United States federal law that amended Section 5 of the 1914 Federal Trade Commission Act to proscribe "unfair or deceptive acts or practices" as well as "unfair methods of competition.""Wheeler-Lea Act - Wikipedia
[6] supported
The legislation provided for civil penalties for violations of Section 5 orders.
"It provided civil penalties for violations of Section 5 orders."Wheeler-Lea Act - Wikipedia
[7] supported
Prior to this amendment, the Federal Trade Commission was limited to restricting practices that were unfair to competitors, not consumers.
"Until this amendment was passed, the Federal Trade Commission could only restrict practices that were unfair to competitors."Wheeler-Lea Act - Wikipedia
[8] supported
The amendment broadened the FTC's powers to include protection for consumers from false advertising practices.
"This broadened the FTC's powers to include protection for consumers fr...om false advertising practices."Wheeler-Lea Act - Wikipedia
[9] documented
The Federal Trade Commission was established as an independent agency by the Federal Trade Commission Act on September 26, 1914.
"Established: As an independent agency by the Federal Trade Commission Act (38 Stat. 717), September 26, 1914."Records of the Federal Trade Commission [FTC] - National Archives
[10] documented
The FTC's functions include regulating the advertising of food, drugs, curative devices, and cosmetics.
"Regulates the advertising of food, drugs, curative devices, and cosmetics."Records of the Federal Trade Commission [FTC] - National Archives
[11] documented
The Special Board of Investigation was created in 1929 to investigate charges of false and misleading advertising.
"Created in 1929 to investigate charges of false and misleading advertising."Records of the Federal Trade Commission [FTC] - National Archives
[12] documented
The Bureau of Corporations, a predecessor to the FTC, was established in 1903 to investigate and publish reports on the operation of interstate corporations.
"Established in the Department of Commerce and Labor by the act creating the department, February 14, 1903 (32 Stat. 825), to investigate and publish reports on the operation of interstate corporations (except common carriers)."Records of the Federal Trade Commission [FTC] - National Archives
[13] documented
The FTC develops and administers federal regulations to prevent unfair methods of competition and undue restraint of trade in interstate commerce.
"Develops and administers federal regulations to prevent unfair methods of competition and undue restraint of trade in interstate commerce."Records of the Federal Trade Commission [FTC] - National Archives
[14] supported
The FTC began examining franchising practices in 1970 and started a formal rulemaking proceeding in 1971 that could lead to rules on disclosure and unfair practices in franchise sales.
"The Federal Trade Commission began examining practices in franchising in 1970. In 1971 the FTC began a formal rule making proceeding, to possibly develop a regulation requiring disclosure and prohibiting unfair practices in offering and selling franchises."Franchise rule
[15] supported
The FTC Franchise Rule was originally adopted in 1978, though another passage in the same article gives 1979 as the year it was promulgated.
"The FTC franchise rule was originally adopted in 1978."Franchise rule
[16] supported
Under current rules, franchisors must have a reasonable basis and substantiation for any financial performance representations they make to prospective franchisees, and must disclose the basis and assumptions in Item 19 of the FDD.
"In addition, franchisors must have a reasonable basis and substantiation for any financial performance representations (FPRs) made to prospective franchisees, as well as disclose the basis and assumptions underlying any such FPRs in Item 19 of the FDD."Franchise rule
[17] supported
The current franchise rule requires franchisors to give all potential franchisees a disclosure document with 23 specific items of information.
"The franchise rule requires franchisors to provide all potential franchisees with a disclosure document containing 23 specific items of information about the offered franchise, its officers, and other franchisees."Franchise rule
[18] supported
In 2012 the FTC enacted legislation specifically targeting fraudulent non-franchised business opportunities, which the article says are not fraudulent by definition but are more likely to lead to consumer fraud.
"In 2012 the Federal Trade Commission enacted legislation specifically to address the issue of fraudulent non-franchised business opportunities."Franchise rule