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Federal Trade Commission Act: Cross-Border Business Guide

Federal Trade Commission Act guide for foreign-owned and cross-border businesses: deceptive ads, fake reviews, online subscriptions and 2026 penalty amounts.

Last reviewed October 27, 2026 · 3 min read · General information, not legal advice

General information only, not legal advice. CPA Tax Payroll and Accounting Corp is a CPA firm, not a law firm. Laws change: confirm with the official source or a licensed attorney before you act. Read the full notice.

The Federal Trade Commission Act is a 1914 federal law at the center of U.S. advertising and consumer-protection enforcement. Its ban on unfair or deceptive acts or practices was added in 1938, and the Federal Trade Commission (FTC) enforces it. This page is for owners in India, Canada or the United States who sell to U.S. consumers from the U.S. or abroad.

Slide show: Seven slides on the FTC Act

  1. The basics

    A 1914 federal law enforced by the FTC. Section 5 bars any unfair or deceptive act or practice.

  2. Who it covers

    Persons, partnerships and corporations in or affecting commerce. Banks and a few other sectors are carved out.

  3. The test

    A claim is deceptive when a reasonable consumer is likely to be misled on something that matters to the purchase.

  4. The number

    $53,088 per violation is the civil penalty amount for 2026, unchanged from 2025.

  5. The date

    The Reviews Rule took effect on October 21, 2024. The 2024 click-to-cancel amendments were vacated on July 8, 2025.

  6. The penalty

    Knowing violations of an FTC rule, or of a final FTC order, can bring civil penalties.

  7. The tip

    Keep the proof for every claim before it runs. Page 2 turns this into the Three-Flag Claims Pass.

What does the Federal Trade Commission Act cover?

TopicAnswer
Size thresholdNo cutoff in the statute's text
Excluded from FTC authorityPackers and Stockyards Act entities, air carriers covered by federal aviation law, regulated common carriers, federal credit unions, certain savings institutions, and banks
Foreign commerceIncluded, under wording set for repeal in 2027, when it causes reasonably foreseeable U.S. injury or involves material conduct here

What does it mean for a foreign-owned or cross-border business?

SituationWhat the law saysWhat to check
U.S. company owned from Pune or Toronto, advertising to U.S. shoppersThe text sets no size or ownership testProof on file for each ad claim
Seller based in India or Canada, selling online to U.S. buyersForeign commerce counts when it causes reasonably foreseeable U.S. injury or involves material conduct hereWhere buyers live and where ad work happens. Enforcement across borders is for counsel
Paid influencers or reviewers abroadThe FTC's Endorsement Guides call for clear disclosure of payments, free products and ties the audience would not expect (16 CFR 255.5)Contracts requiring clear disclosure
Online subscription or free trial sold to U.S. buyersDisclose material terms before taking billing details, get express consent, offer a simple way to stop charges (15 U.S.C. 8403)The cancel path, tested as a U.S. buyer

The rules, numbers and checklist page has details. Marketing email falls under CAN-SPAM, tax preparers' data duties under GLBA and HIPAA, and Illinois has its own Consumer Fraud Act. For foreign founders see Indian companies entering the U.S., Canadian companies entering the U.S. and U.S. sales tax for foreign sellers.

Frequently asked questions

Can the FTC Act reach a business based outside the United States?

It can, when the practice causes reasonably foreseeable injury in the United States or involves material conduct here. An attorney can say whether it reaches your facts.

Official sources

This page summarizes public guidance in plain language. If anything here differs from the official source, the official source controls.