To adjust for inflation, authorities increased the maximum FTC civil penalty amount from $16,000 to $40,000 for all violations listed in the Federal Register Notice. These increases will affect 16 provisions that the FTC enforces.
The Federal Trade Commission
Under the Federal Trade Commission Act of 1914, the Federal Trade Commission (FTC) was established as an independent government agency. The main goal of the FTC is to protect consumers from unfair or deceptive business practices and fraud. Originally, its purpose was to prevent unfair competition in commerce, but through the years Congress has passed additional laws giving the agency greater authority to police anti-competitive business practices. The FTC also enforces federal antitrust laws that prohibit unethical business practices such as business mergers that could lead to higher prices and fewer choices for consumers and less innovation for new business.
Beginning August 1, 2016, the maximum dollar amount for civil penalties on certain FTC violations increased from $16,000 to $40,000. Changes were mandated to adjust for maximum inflation under provisions of the Federal Civil Penalties Inflation Adjustment Act. Beginning August 1, 2016, new maximum civil penalties apply to all affected violations, even if the date of the associated violation is prior to that date. After August 1, 2016, the maximum civil penalty will be adjusted each January to meet annual inflation.
Certain violations will be highly impacted by increased penalties due to the way the FTC computes and enforces penalties under certain statutes. Under the Clayton Act and HSR Act, the statute sets the civil penalty on a daily basis, so the maximum total civil penalty of $40,000 could be multiplied by the number of days a person is in violation. For violations that continue without resolve, the FTC looks at each day as a separate violation of the order or statute.
Although the FTC has no power to assess civil penalties, the statutes that they enforce authorize federal courts to assess civil penalties in civil actions brought by an FTC attorney. Courts are allowed to assess civil penalties up to specified maximum dollar amounts against persons found guilty of associated FTC statute violations. To determine a dollar amount, the FTC and court look at the degree of culpability, effect on continued business, history of previous violations or similar conduct, and ability to pay. To ease financial hardship, small businesses may apply for a leniency program.
In addition to civil penalties, the FTC often seeks monetary restitution for customers. Under the FTC Act, the FTC can seek not only business profits but any ill-gotten revenue.Contact Us Today »