Much Ado About Penalties

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So we have been writing quite a lot about the recent deluge of FTC Notice of Penalty Offense letters. And as we have told you, at their core, the letters are a vehicle that would potentially allow the agency to seek significant civil penalties against companies with actual knowledge that their actions violate the principles described in the letters. My colleagues recently wrote a great blog discussing some of the limitations of this authority and raising questions about the legal underpinnings of aspects of this authority.

But there are other ways the FTC can seek to impose penalties. One way is through a company violating its own administrative order. Another is through Congress expressly giving the FTC penalty authority, and we have seen that in specific areas such as telemarketing and children’s privacy. But there is language afoot in current budget legislation that would dramatically change the landscape and allow the FTC to broadly seek civil penalties for initial violations of the FTC Act’s prohibitions on unfair or deceptive acts or practices. This would be a significant game changer if it becomes law. Longtime FTC watchers may recall that back in 2010, there was a somewhat similar move afoot to give the FTC this type of broad fining authority. It never happened.

After 23 years of living in D.C., I have learned to never predict what Congress will or will not do, but we will be watching this provision to see if it disappears or actually becomes law. For now, we aren’t running around screaming that the sky is falling, but this would be a very big deal if it actually happened. We will keep you posted on this and other FTC developments.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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