In the 1902 case of American School of Magnetic Healing v. McAnnulty, the U.S. Supreme Court ruled that fraudulent misrepresentations made through interstate commerce could be regulated by federal law, even if they were not explicitly prohibited by state law. The court held that Congress had broad authority to regulate all forms of interstate commerce under the Commerce Clause of the Constitution and this included mail fraud schemes such as those perpetrated by the American School of Magnetic Healing which claimed to cure diseases using "magnetic healing" techniques taught via correspondence courses. This decision was significant because it expanded federal power over commercial activities and established a precedent for future cases involving fraudulent business practices conducted across state lines.

In the dissenting opinion for American School of Magnetic Healing v. McAnnulty, Justice Harlan argued that the majority's decision was a dangerous expansion of federal power over state affairs. He believed that it was not within the jurisdiction of federal courts to determine whether or not a business practice is fraudulent unless there are clear violations of law involved. In this case, he saw no such violation and therefore felt that it should be left up to individual states to regulate businesses as they see fit. Furthermore, he expressed concern about potential abuse by government officials who could use their expanded powers to unfairly target certain businesses based on personal biases or political motivations rather than objective legal standards.