FTC's green light to shoddiness

October 28, 1981

If American consumers in recent years have tended to overlook the harsh rule of marketplace economics - caveat emptor (''let the buyer beware'') - they would be unwise to do so now. For new Federal Trade Commission Chairman James Miller III has announced that the commission will no longer seek to protect consumers from defective products. Moreover, the commission will no longer shield consumers from unsubstan-tiated advertising claims.

By what reasoning did Mr. Miller arrive at this clearly significant shift in policy for the FTC? ''Imperfect products,'' says Mr. Miller, should be available because purchasers have ''different preferences for defect avoidance.'' Adding, ''Those who have a low aversion to risk - relative to money - will be most likely to purchase, cheap, unreliable products.''

We're not totally certain what that means, but the new policy seems to be conveying to businessmen that they can in effect get away with the marketing of imperfect products and even questionable advertising, so long as the product is not blatantly imperfect and the advertising message outrageously false.

The American people should reject such a shortsighted policy. And, for moral and practical reasons, would it not be in the best interests of the business community to ensure that the hucksters of shoddy merchandise and spurious sales pitches are not allowed to taint the entire corporate community?

What is particularly disturbing about the FTC's policy shift is that barring public outrage there may be no effective check on the commission. The agency now has a three-to-one Republican makeup. A second Democrat has been nominated to fill the required two-seat Democratic (minority party) slot on the panel, but he turns out to have headed up the ''Democrats for Reagan.'' Both houses of Congress could overturn an FTC decision by a simple majority vote, but Republicans control the Senate.

Political consideration should not be allowed to nudge the FTC away from its historic and crucially important role. President Wilson perhaps said it best in a message to Congress back in 1914 when the agency was first proposed. ''Penalties and punishments,'' he remarked, ''should not fall upon business itself, to its confusion and interruption, but upon the individuals who use the instrumentalities of business to do things which public policy and sound business practice condemn.'' That principle remains good politics -- and good business.