Flexing Agency Muscles: What the FTC Notice of Criminal Offenses Really Means for Advertisers - Media, Telecom, IT, Entertainment

Flexing Agency Muscles: What the FTC Notice of Criminal Offenses Really Means for Advertisers – Media, Telecom, IT, Entertainment

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A few months ago, a few months ago, 700 companies and 70 for-profit colleges were informed of the Federal Trade Commission (“FTC” or “Commission”) intention to pursue civil penalties under the ‘Section 5 (m) (1) (b) of the FTC Act if such businesses and colleges engage in conduct that the FTC considers to be unfair or deceptive.

The notices were intended to accomplish two important goals of the FTC:

  • First, forcing recipients to consider their marketing messages and compliance programs; and
  • Second, reintroduce (or strengthen) the threat of significant financial penalties for those who need discipline.

The warnings will undoubtedly change the dynamics of new investigations as parties examine the costs and benefits of negotiating consent orders that include the payment of a remedy for consumers.

But what if the parties resist and the FTC is forced to litigate? There, a third objective – convincing a court that the FTC’s Penalty Offense Authority entitles it to civil penalties on the basis of those opinions – is much less likely to be achieved.

UNITED STATES V. DODGE

United States v Hopkins Dodge, Inc., 1 is relevant and not favorable to the FTC. In that case, the United States Court of Appeals for the First Circuit upheld the district court’s motion for summary judgment “on the grounds that the FTC failed to make the specific findings required by 15 USC 45 (m) (1) (B). “

Why is it important here? Well, take a look at the language of 5 (m) (1) (b):

(B) If the Board determines in a proceeding under paragraph (b) of this section that an act or practice is unjust or deceptive, and issues a final cease and desist order, other than an order by consent, with respect to that act or practice, then the Commission may bring a civil action for civil sanction in a district court of the United States against any person, partnership or corporation that engages in such an act or practice –

Here is the critical passage in 5 (b):

If, at the end of this hearing, the Commission is of the opinion that the mode of competition or the act or practice in question is prohibited by this subchapter, it makes a written report in which it sets out its findings of fact and issue and cause to be served on such person, company or company an order compelling that person, company or company to cease and desist from using such competitive method or such act or practice.

In the two civil penalties notices the FTC sent out, she cited a case that should not warrant civil penalties for any conduct. The case was MacMillan, in which the FTC made no finding. Indeed, he never took the case

The FTC said this:

FINAL ORDER On June 12, 1980, Council postponed the effective date of the original final decision in this matter, pending a determination of whether or not the matter should be placed on the record for consideration. After further consideration, the Commission decided not to put the matter on its list, but rather to lift the suspension and allow the original decision to become the decision of the Commission. It is hereby ordered, That the initial decision become the decision of the Commission, and that the Cease and Desist Order be entered.

Enough to satisfy a next court AMG capital management? Unlikely. The Commission has explicitly stated that it has not considered the matter, let alone made any conclusions or determinations.

Now consider 5 (m) (2). It allows anyone who is not a party to the administrative proceeding (s) prior to both a de novo examination of questions of fact, including whether the behavior of the non-party is sufficiently similar to that of the underlying proceeding (s), and a review, by the court before which the sanction is sought, of the FTC’s prior determination that a particular act or practice is unfair or deceptive.

The cases that the FTC cites in its opinions date back decades and involve practices and industries that are very different from today’s practices and industries. The 1984 Cliffdaledecision, for example, the most recent case on the list, involved claims to increase the mileage of cars.

How will this apply to requests for internet access, smart devices, technology services and other products and services that did not exist when the cases were brought to court? It seems overkill to say the least.

Yet another hurdle: unlike 13 (b) actions, which the FTC can take on its own, it will have to persuade the DOJ to initiate civil proceedings.

CONCLUSION

In short, we can be sure the FTC will wield the sword of synopses and astronomical penalties ($ 43,280 for every false or misleading statement) on anyone who received the notice and whose statements vaguely resemble the generic nuggets delivered. by the Commission. . These efforts can also be expected to generate more Hopkins and AMG-as decisions if the Commission attempts to assert its position in court.

One also has to wonder how this appears to Congress, to whom it has been repeatedly said that without the 13 (b) Monetary Authority, the Commission is almost powerless to continue its enforcement program. It will be interesting to see if this flexing of the muscles could undermine that claim, making it less likely that we will see Congress pass a change in the law.

Footnote

1 United States v Hopkins Dodge, Inc., 849 F.2d 311 (8th Cir. 1988).

Originally published by the Journal of Intellectual Property and Technology Law

The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.

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