FTC Articles from JD Supra

Articles – FTC Looking to Bolster Enforcement Efforts

After having their authority to obtain monetary relief from Section 13(b) taken away last year, the Federal Trade Commission (FTC) continues to look for alternative methods to step up its enforcement efforts. And developments at the commission, including the recent appointment of Alvaro Bedoya and increased usage of the Penalty Offense Authority, only signal that more enforcement action is highly likely. Two recent articles (noted below) from JD Supra highlight these points.

According to the first story regarding alternative enforcement avenues for the FTC …

“Many of the speakers at the agency’s open meeting discussed how the FTC has had to pivot its enforcement efforts in the year following AMG.

FTC Chair Lina Khan described Section 13(b) as the “key engine” of the Commission’s previous enforcement and noted that the agency now is required to more frequently use its enforcement power under Section 19 of the FTCA. In addition, the FTC is undertaking new rulemakings “to codify conduct that courts had already determined was unfair or deceptive.” It has also pursued more FTC administrative proceedings and partnered with state attorneys general to obtain monetary relief through their state law powers. Still, Khan described the lack of 13(b) authority as a major gap in the FTC’s ability to make consumers whole and ensure lawbreakers aren’t profiting from unlawful practices.

In her comments, Commissioner Rebecca Kelly Slaughter highlighted that the loss of 13(b) enforcement authority has meant that companies are able to settle for less money and consumers are receiving less relief. Slaughter cited enforcement actions against entities where alleged violations that cost consumers hundreds of millions of dollars were settled for only a fraction of those sums. Slaughter estimated the lost consumer equitable relief in the year after AMG at $1.5 billion.”

To read this article in its entirety, click here.

And regarding the FTC’s use of the Penalty Offense Authority, the second article states …

“The Federal Trade Commission (FTC) is ramping up enforcement of deceptive advertising with formal notices to new industries, to companies using influencers and by harking back to notices it released more than 50 years ago.

Last year, the US Supreme Court held in AMG Capital Management that Section 13(b) of the FTC Act (the Act) does not permit the FTC, in federal court, to seek equitable monetary relief.[i] In response, the FTC has focused its claims for monetary relief on its Penalty Offense Authority under Section 5 of the Act. To do so, the FTC sends companies a “Notice of Penalty Offenses” listing conduct determined to violate the Act in prior administrative orders. If a company engages in such conduct after receiving the Notice, the FTC may seek civil penalties of up to $43,792 per violation.

Since AMG Capital, the FTC has sent out Notices of Penalty Offenses to over 700 companies relating to use of endorsements and testimonials (including by influencers); to over 1,000 companies that advertise “money-making opportunities” to address claims regarding participants’ potential earnings and risks; and to 70 for-profit educational institutions to address claims regarding graduates’ job prospects and earnings. Those industries are watching carefully for follow-up enforcement actions by the FTC, seeking monetary remedies based on the Notices.”

To continue reading the full article, click here.

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