Piano World Home Page Forums Our Most Popular Forums Piano Forum Federal Trade Commission Targets Piano Teachers!

This was a very interesting article about the recent investigation that the FTC has been conducting against the Music Teacher's National Association. I've been a member of MTNA for the past few years, and it makes me sad that they are having to spend so much time and resources defending themselves. They do a lot of positive things to promote teaching music, especially piano. What a waste!

http://online.wsj.com/news/articles/SB10001424052702303562904579224251626379422

Child Protective Services will probably weigh in next on whether a one hour piano lesson should be labeled punishment.

This is already being hashed out ad-nauseum on the teachers board.

This is unenforceable on two fronts;

First the FTA has no authority over 501(c) 3 groups, so this is an opinion from the FTA only. Further and more importantly Congress has never acted on the request from the FTA for more control over these groups, so their opinion of ethics is just that; an opinion which is not enforceable.

Secondly, the part where the MTNA is required to read some paper at every event, along with getting all 500 affiliates to sign up is un-enforceable. Who checks the signatures and whether or not the affiliates are actually a person or people?

Any good lawyer would tell the commission to buzz off until such time as it got a court order, which is unlikely given the fact that Congress has not given any response to further authority over 501’s.

Leaves one to wonder why the MTNA signed any compliance agreement with anyone previous to a court order stating so.

Seems like poor legal advice for that part given that there would be reams of evidence that would go contrary to the FTA opinion of fixing lesson pricing.

Another example of a government agency over-reaching its bounds of authority.

Wonder what would have happened if Gibson Guitar told the govt. to buzz off when they stormed the place over some wooden blanks.

Read the article again. Especially the part about non-profits which are in a category labelled 501(c) 3 and do not come under the authority of the FTA.

Gibson’s guitars is not listed as a non-profit, it is actually the opposite, a corporation to make money.


The FTA getting the MNTA to sign a compliance agreement; the FTA can then take that agreement to Congress as evidence that the MTNA is willing to see the FTA as having authority over the non-profits.

It is a way to legitimize the FTA request to Congress through to back door. It is called and end run around the law as it stands today. As of this moment the FTA has no authority over these groups.

Once Congress rolls over like the MTNA then the FTA can continue its fishing expedition for evidence of price fixing.

The FTA has to justify its existence so going after the low hanging fruit is usually the way.

Handcuffs would have happened, for one!

Larry.

Yep, it was a comment about cherry-picking and force, not bottom line.

If the FTC even enters a lawsuit, the adversarial nature of judicial process will still exhaust the resources of a small group like MTNA's organization. Right or wrong, every spurious argument that seems to be relevant has to be evaluated, researched and responded to at the $$$ per hour. And if you win on 95% of the arguments, because it was not 100%, you can probably forget about being reimbursed for costs.

It is absolutely a waste and a shame.

With all due respect, Mr. Silverwood, the FTC absolutely does, indeed, have jurisdiction over professional and trade organizations organized under section 501 (c) 6, to the extent that those groups provide "substantial economic benefit" to their members. The Supreme Court so held by unanimous decision back in 1998.

I don't know what MTNA chapters typically do for members, but if they offer things like insurance discounts and website listings of area teachers, for example, then it would be hard to argue against jurisdiction. Plus, as Mr. Bennett says, the cost even to try to make the argument is prohibitive.

As one poster in the teacher's forum suggested, this whole thing almost surely arose from a complaint by a disgruntled member.

Great use of taxpayer dollars here, Mr. Obama.

The eighth para in the article states otherwise, so something is not accurate;

"The FTC didn't care. Nor did it blink when the MTNA pointed out that the agency has no real authority over nonprofits (it is largely limited to going after sham organizations) and that Congress has never acted on the FTA's requests for more control over 501(c) 3 groups."

I was curious about this, both because of the discussion in the teachers forum, and because I have several nonprofits as clients.

I can't think of an exact parallel with the MTNA at the minute, since the MTNA doesn't exam or license anyone, and the other examples of nonprofits having to revise their code of ethics that were given in the other forum were organizations which do license or test their members, and/or members of the profession have to be also members of the org. But perhaps a little closer was the PTG, so I looked them up.

Of course, the PTG *does* examine its members, and gives them a title if they pass - RPT, registered piano technician. However, one does *not* have to be a member of the PTG in order to be a piano tuner and/or tech - there is no legal requirement to be a member.

The PTG Code of Ethics says this:

"I will engage only in business practices that are in accord with the antitrust guidelines as set forth by the Piano Technicians Guild."

So I tried to find the antitrust guidelines. But I couldn't find them on the site. I *did* find the disciplinary actions the PTG can take if a member is accused of violating the Code of Ethics, in their By-Laws. They can, of course, eventually revoke someone's membership.

So there are similarities and differences between MTNA and PTG - both organizations are voluntary and emphasize education of their members, but MTNA apparently has no enforcement procedures or consequences at all for their code of ethics.

But at some point the PTG felt the need to directly address "antitrust guidelines." Does anyone know the history of this? Does anyone know what those guidelines are? PTG certainly can't, as an organization, bar entry to the trade, as can the Bar Association. So what antitrust guidelines are they asking their members to adhere to? (Not getting together and setting prices?)

Just curious.

I guess the MTNA's prior ethics code on soliciting other teachers' students doesn't really seem like a monopoly in the making to me, but to emphasize that in their code of ethics has always struck me as a little defensive or overprotective at best. That's just me, of course, and it doesn't make it wrong.

But I'd still like to know what the PTG has to say about antitrust guidelines.

Cathy

In the USA, price fixing is considered a violation of the Sherman Antitrust Act. Guilds and associations whose memberships are comprised of independent businesses must be very careful not to even imply or intimate such via bylaws, et al. By agreeing not to solicit other teachers' students, who knows how the government could be viewing the implications?

I agree, it is a waste of time.

I just looked at the American Institute of Certified Bookkeepers Code of Ethics. While it addresses integrity, professionalism, etc, the only explicit admonishment it makes to the "profession of bookkeeping" is to "not bring discredit" to the profession, and to share nonproprietal knowledge with others in the profession. Nothing about not soliciting others' clients.

Again, it says nothing about whether MTNA's Code of Ethics was right or wrong. But it seems more concerned with not soliciting others' customers than similar orgs, and explicitly so, so, if a member complained (and that's the scuttlebutt in the teachers forum) someone saw it as a problem. As to whether the FTC has jurisdiction, there seems to be some evidence on both sides of that issue, to me.

Cathy

You are correct. The reference in the article to a 501(c)3 is a red herring, since both the MTNA and the trade association in the Supreme Court case are 501(c)6 entities. My post above should cite 501(c)6 as the applicable code section.

Sad but true

All of this reminds of the time when a certain city discovered a private piano teacher. "Where there's one, there must be more!" More there were, and none had purchased a city privilege license. Some teachers thought that in-home piano lessons were exempt. Others were unaware of the license altogether. Fact was, the city had no fee category for private in-home piano teachers. Making no distinction between the part-time teacher with a couple of students and the full-timer with 100, an arbitrary one-size-fits-all whopper of a fee was pulled out of thin air. Top city investigators were assigned to the case: "Find 'em all and get addresses." Letters went out to those who were located. What a stir that created.

It was another waste of time.

I read this on the Linkedin Piano Tech forum;

Awhile back, not sure of when, the non-profit PTG was cautioned about members attending meetings and discussing tuning and repair prices as the FTC was of the opinion that this was communication to fix pricing or could be interpreted that way.

So members cannot talk about prices, fine then, and no problem right? A bit silly of course because who has not asked a competitor “hey BTW what do you charge for this or that?” I mean it is part of usual conversation with competitors in any business when they talk shop….

Now read this paragraph taken from the article; this is especially important:

“That's a common enough provision among professional organizations (doctors, lawyers), yet the FTC avers that the suggestion that Miss Sally not poach students from Miss Lucy was an attempt to raise prices for piano lessons. Given that the average lesson runs around $30 an hour, and that some devoted teachers still give lessons for $5 a pop, this is patently absurd.”

Here is one absurd scenario I thought of;

“I am going to take lessons with Miss Lucy because she charges less”…..or gives better service…..or picks up students…….or gives out stickers…or whatever the perceived bonus is in the clients mind.

So Miss Sally decides to “match” Miss Lucy’s pricing, service, student pickup, etc, in order to retain the student. Seems like a process to eliminate competition and encourage price fixing rather than discourage. The FTC seems to be of the mindset that poaching will create competition, a race to the bottom, with each instructor viciously undercutting the next.

Moreover, the MTNA with 22,000 instructors as members, each one could send a hand written note on their letterhead, signed and witnessed, to the MTNA with their prices for lessons. Some will be the same, some will be more expensive and some will be lower. This proves a competitive marketplace, and undermines the FTC claims.

The sad part is that so many people will go for the cheapest under the impression that is the best value. How rarely is such the case. I am reminded of this:

Quality and price
It is unwise to pay too much, but worse to pay too little, when you pay too much, you lose a little money, that is all.
When you pay too little, you sometimes lose everything, because the thing you bought was incapable of doing the things it was bought to do.
The common law in business balance prohibits paying a little and getting a lot. It can’t be done. If you deal with the lowest bidder, it is as well to add something for the risk you run. And if you do that, you will have enough to pay for something better.
There is hardly anything in the world that someone can’t make a little worse and a little cheaper- and people who consider the price alone are this man’s lawful prey.