## Facts

- Ford Motor Company manufactured and distributed automobiles nationwide through franchised dealers, with vehicles shipped in interstate commerce.
- Ford dealers offered purchasers deferred (installment) payment plans; financing was handled through Universal Credit Corporation, originally organized by Ford to provide credit to dealers and retail buyers.
- Ford advertised its installment plan nationally as a “six percent plan” or “6% plan.”
- The “6%” charge was computed on the original unpaid balance (with certain additions) for the full term, rather than as 6% annual interest on a declining balance.
- The effective annual cost to consumers was substantially higher than 6%.
- The FTC found Ford’s use of “six percent” or “6%” was likely to lead consumers to believe the credit charge was a 6% per annum interest rate.
- The FTC initiated an administrative complaint alleging Ford used unfair methods of competition in violation of § 5 of the Federal Trade Commission Act through deceptive credit-cost advertising.
- After hearings, the FTC issued a cease-and-desist order restricting Ford’s use of “six percent” and “6%” in specified advertising contexts related to installment-plan charges.

## Issues

1. Whether Ford’s “six percent”/“6%” installment-plan advertising was likely to mislead consumers about the true cost of credit and therefore constituted an unfair method of competition under § 5 of the Federal Trade Commission Act.
2. Whether the FTC’s findings were supported by substantial evidence and reasonable inferences from the record.
3. Whether the FTC’s cease-and-desist order was reasonably related to preventing the deceptive practice and within the Commission’s remedial discretion.
4. Whether widespread industry use of similar “6% plan” terminology barred the FTC from finding the practice unlawful.

## Decision

- The Sixth Circuit denied Ford’s petition for review and upheld the FTC’s cease-and-desist order.
- The court agreed that the FTC could treat the “net impression” of the advertising on ordinary consumers as determinative of deceptiveness.
- The court concluded substantial evidence supported the FTC’s finding that “six percent”/“6%” conveyed a misleading impression of a 6% annual interest rate.
- The court rejected Ford’s reliance on industry custom as a defense to a finding of deception under § 5.
- The court held the order’s restrictions were appropriately tailored to prevent recurrence of the misleading representation.

## Legal Principles

- Under FTC Act § 5, advertising that is likely to mislead consumers about a material term (including credit cost) may be condemned as an unfair method of competition.
- Deception is assessed by the advertisement’s overall or “net” impression on the general public, not by technical plausibility or fine-print qualifications aimed at sophisticated readers.
- Industry-wide usage of a misleading advertising practice does not immunize the practice from FTC enforcement.
- On judicial review, FTC factual findings are conclusive if supported by substantial evidence; courts do not reweigh evidence where reasonable inferences support the Commission’s conclusions.
- The FTC has discretion to craft cease-and-desist relief reasonably related to preventing the unlawful practice, including barring recurring use of misleading terminology in similar contexts.

## Conclusion

The Sixth Circuit sustained the FTC’s determination that Ford’s “6% plan” advertising was deceptive because it implied a 6% annual interest rate despite a higher effective credit cost, and it affirmed a cease-and-desist order limiting Ford’s use of “six percent” and “6%” in installment-plan advertising notwithstanding the practice’s prevalence in the automobile industry.


Ford Motor Co. v. Fed. Trade Comm’n, 120 F.2d 175 (6th Cir. 1941)