Major U.S. Federal Regulatory Agencies in Business: Types, Functions & Authority

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  • 0:01 Regulatory Agency
  • 0:41 Types
  • 5:10 Lesson Summary
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Lesson Transcript
Instructor: Jennifer Lombardo
In order to ensure that U.S. corporations are maintaining ethical business practices, the federal government has established regulatory agencies to protect employees, customers and the general public. This lesson explores major regulatory agencies and their functions.

Regulatory Agency

Have you ever wondered if it is safe to eat the food you buy? How about if the products you purchase are safe to use? The federal government has set up safeguards to help protect all consumers. Companies have numerous federal regulatory agencies that oversee their operations to ensure ethical, safe and professional business practices. A regulatory agency is a governmental body that is formed by a legislature to oversee and enforce laws. In this lesson, you will learn about the major business regulatory agencies, their functions and how they can enforce laws in order to protect all consumers.

Types of Business Regulatory Agencies

The Consumer Product Safety Commission (CPSC) administers federal safety standards through powers endowed by Congress. Their function is to protect the public from unreasonable risk of injury or death from manufacturers of products. For example, many clothing manufactures have been fined by not following CPSC laws requiring elimination of drawstrings on children's coats. The drawstrings have been shown to become entrapped in small places or car doors leading to injury or other dangers. Most consumers are informed by a recall mailing and can receive a full refund for the product.

Another regulatory agency is the Environmental Protection Agency (EPA), which establishes and enforces pollution standards, monitors insecticide use, and protects water sources, etc. The federal government has given the agency power to fine firms that damage the environment.

Recently, the EPA fined a recreational vehicle manufacturer close to one million dollars for importing and selling ATVs that did not meet environmental emission standards. The fine was issued because the vehicle causes air pollution, an increase in smog and respiratory illnesses to citizens.

The Equal Employment Opportunity Commission (EEOC) is another federal regulatory commission that oversees Title VII, or the Civil Rights Act of 1964 (fair employment). Its mission is to protect all employees and job applicants from any form of discrimination including race, sexual orientation, disability, pregnancy or religion. Businesses need to be educated on how they need to treat their employees in order to cooperate with the EEOC. For instance, a large chain of bakery goods was recently sued by the EEOC for refusing to hire a job applicant due to their religious orientation. The applicant's religion forbids them to work from sundown Friday night until sunset Saturday. The applicant's job offer was revoked when he told his boss that he could not work that time frame.

Financial organizations also have the Federal Deposit Insurance Corporation (FDIC) to monitor their business practices. The FDIC insures bank deposits, approves mergers and audits banking practices. This regulatory agency protects consumers and other businesses from unsavory financial practices. Just this year, the FDIC sued numerous banks that violated safe and sound lending processes through illegal real estate loans.

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