FTC Notice of penalty offense Attorney and penalty offense authority Lawyer

FTC Penalty Offense Attorney

Richard Newman assists companies and invididuals that have received an FTC Notice of Penalty Offenses pursuant to the FTC's penalty offense authority.  Recipients of FTC Notices of Penalty Offenses look to FTC Notice of Penalty Offense attorney and Penalty Offense Authority lawyer Richard Newman to address potential legal regulatory rule violations and  update applicable compliance protocols.

What is the FTC Penalty Offense Authority?

Beginning in 2021, the FTC began deploying its Penalty Offense Authority to remind businesses of the law and deter them from breaking it.  By sending Notices of Penalty Offenses to companies, the agency effectively places them on notice that they could incur significant civil penalties—more than $50,000, per violation—if they or their representatives run counter to prior FTC administrative cases.

The FTC began using this statutory remedial option in order to obtain monetary relief in consumer protection enforcement actions following the agency’s Supreme Court loss in AMG Capital Management, LLC v. FTC, which stripped the FTC of its ability to obtain monetary remedies pursuant to Section 13(b) of the FTC Act.

Under What Circumstances May the FTC Obtain Civil Penalties Pursuant to the Penalty Offense Authority?

Section 5(m)(1)(B) of the FTC Act authorizes the FTC to obtain civil penalties from parties engaging in conduct with actual knowledge that the conduct has previously been found to be unfair or deceptive via a prior administrative order by the FTC.  Importantly, a consent order will not be sufficient to invoke the Penalty Offense Authority.  Until recently, the FTC has invoked its Penalty Offense Authority sparingly, in large part, because it utlized Section 13(b) of the FTC Act to obtain restitution and disgorgement in federal court.  The agency now relie, in part,  upon this alternative route by which it can obtain monetary relief from defendants.

What is Contained in an FTC Notice of Penalty Offense?

Generally speaking, an FTC Notice of Civil Penalty Offense will outlines a number of practices that the FTC has determined to be unfair or deceptive in prior administrative cases, along with citations.  For example, cases that found it to be unlawful to make false, misleading or deceptive representations concerning the profits or earnings that may be anticipated by a participant in a money-making opportunity.  Such as, for example, representations that participants will make a profit, represented profits are typical, and falsely telling consumers they do not need experience to earn income or that they must act immediately to participate.

Experienced FTC Notice of Penalty Offense Attorney  

In October 2020, the FTC authored an article urging the FTC to resurrect Section 5(m)(1)(B) of the FTC Act in order to obtain monetary settlements from defendants.  By notifying parties of prior administrative orders, the FTC asserted tha the Penalty Offense Authority would trigger monetary penalty liability if similar practices were undertaken.

Since then, the FTC has sent thousands of Notices of Penalty Offenses to companies concerning misuse of information collected in confidential contexts, claim susbtantiation, money-making opportunities, endorsements and for-profit higher education institutions, auto rentals, bait and switch, business opportunities, debt collection, defective merchandise, energy savings, feather and down, fur, home improvement, imitation coins, idea or invention promotion, the sale of used and/or rebuilt merchandise, sales practices, textiles, toys, merchandise, weight loss and wool.

In November 2022, the FTC announced its first enforcement action against a company that, despite receiving a Notice of Penalty Office Notice from the FTC, allegedly did not curtail the purported conduct.

If your company have received an FTC Notice of Penalty Offense, contact an experienced FTC Notice of Penalty Offense attorney and Penalty Offense Authority lawyer promptly in order to review and modify compliance protocols, as appropriate.

FTC Penalty Offense Lawyer on Statutory Limitations Surrounding FTC Penalty Offense Authority

According to FTC Penalty Offense attorney Richard Newman, the FTC often takes the position that the mere receipt of a notice of an FTC Notice of Penalty Offense places the recipient on notice that engaging in the cites conduct could subject it to harsh civil monetary penalties.

However, when doing so, does the FTC in fact overstate the effect thereof?

Statutorily speaking, the FTC only possesses authority to pursue monetary civil penalties pursuant to the Penalty Offense Authority when the recipient possesses “knowledge” either “actual knowledge or knowledge fairly implied on the basis of objective circumstances that such act is unfair or deceptive and is prohibited by such rule.”

In other words, the Federal Trade Commission has the burden of establishing that the defendant committed the same conduct with actual knowledge that it was unfair or deceptive.

In a March 2023 dissenting statement, former FTC Commission Christine S. Wilson opined that general statements of the agency's legal terpretations without specific information that defines conduct that the FTC considers violative constitute inadequate notice for the imposition of monetary civil penalties pursuant to the FTC Penalty Offense Authority.  "[T]he Commission must demonstrate that the conduct of the proposed defendant is sufficiently similar to the litigated cases cited in the Notice, former Commission Wilson stated.

An FTC Notice of Penalty Offense is not an allegation of any wrongdoing, nor is it an indication that an investigation or enforcement action is imminent.  FTC Notices of Penalty Offense are reminders that applicable legal regulations must be complied with.

If you or your comapny have received an FTC Notice of Penalty Offense, contact an experienced FTC Notice of Penalty Offense attorney to carefully evaulate  advertising and marketing practices.