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The Supreme Court in AMG foreclosed the FTC’s ability to pursue monetary remedies under Section 13(b) of the FTC Act. That, however, AMG has not stopped the FTC from pursuing monetary relief directly in court, while attempting to bypass the statutory prerequisite of an administrative proceeding. The FTC is continuing to use Section 13(b) of the Act to attempt to obtain preliminary and permanent injunctive relief. At the same time, the Commission is coupling its 13(b) requests for injunctive relief with other (sometimes creative) statutory requests for money.

Given the Commission’s newfound interest in exploring non-13(b) statutory avenues to obtain monetary remedies, we have expanded our Post-AMG chart to include a wider swath of ongoing cases in which the FTC is attempting to collect money absent the use of 13(b). The latest version of our expanded chart follows.

Continue Reading Post-AMG Scorecard: The FTC Pivots to Other Statutory Bases for Monetary Relief

In its third recent Penalty Offense Authority notice, the FTC today notified more than 1,100 companies offering “money-making opportunities” that it intends to pursue civil penalties of up to $43,792 per violation for misrepresentations related to potential earnings and related characteristics about the opportunity.  Recipients of the notice include virtually every major direct selling company and others in the gig economy such as Amazon, DoorDash, Lyft, and Uber.

That makes more than 1,800 companies that have been put on notice of penalty offenses in the past month.  It also crosses another alleged deceptive practice off the list laid out in the October 2020 paper authored by current Bureau Director Sam Levine and former FTC Commissioner Rohit Chopra, entitled The Case for Resurrecting the FTC Act’s Penalty Offense Authority.  Next up?  Well, if the Chopra/Levine paper points the way (and it appears to), we should expect future notices that focus on allegedly unfair and deceptive data harvesting and targeted marketing.

In addition to the eight categories of misrepresentations in today’s notice ranging from the amount of earnings possible to the amount of training provided, the sample cover letter published online also includes a section on endorsements and testimonials.  This means that each company receiving today’s notice also will receive the notice published last week on endorsements and testimonials, which over 700 companies also received (with some minimal overlap in that list).
Continue Reading Next Up – Earnings Claims:  Notice of Penalty Offenses Sent to 1,100 Direct Selling Companies and Others in the Gig Economy

Flexing the Agency’s Muscles: What FTC Notice of Penalty Offenses Really Means for AdvertisersOver the last ten days, 700 companies and 70 for-profit colleges received notice of the FTC’s intent to pursue civil penalties under Section 5(m)(1)(b), if these companies and colleges engage in certain conduct deemed by the FTC to be unfair or deceptive.  The notices sought to achieve two important Agency objectives: first, force addressees to consider their marketing messages and compliance programs; and second, reintroduce (or reinforce) the threat of significant monetary penalties for those who need discipline.  The warnings will undoubtedly alter the dynamic of new investigations as parties consider the costs and benefits of negotiating consent orders that include payment of consumer redress.

But what if parties resist and the Commission were forced to litigate?  There, a third objective – to convince a court that the FTC’s Penalty Offense Authority entitles it to civil penalties based on these notices – is much less likely to be realized.
Continue Reading Flexing the Agency’s Muscles: What FTC Notice of Penalty Offenses Really Means for Advertisers

FTC Blankets Companies With Warning Letters Over Endorsements and ReviewsAs we have noted in earlier posts, in the wake of the Supreme Court’s holding that Section 13(b) of the FTC Act does not allow for monetary restitution, the Federal Trade Commission has been attempting to creatively utilize other provisions of the Act in order to obtain money from the companies and individuals it

It was an extraordinary week as the FTC continued to press the frontier of the post-AMG Capital Management landscape.

On Friday, the Commission, making good on promises to creatively explore all of its options for enforcement, announced by a 3-2 vote that it had reached a settlement pursuant to Section 19 of the FTC Act with Resident Home LLC and its owner Ran Reske.  At issue were allegedly false claims that the company’s imported mattresses are made from materials fully manufactured in the United States. As part of the settlement, Resident Home and Reske agreed to pay $753,000.

This action follows the FTC’s announcement earlier in the week that it had notified 70 for-profit higher educational institutions that it intends to make use of its long dormant Penalty Offense Authority.  As contemplated by the FTC, the Penalty Offense Authority would allow the Agency to obtain civil penalties when institutions make misrepresentations about their programs, and job and earnings prospects.
Continue Reading Pushing the Boundaries of Existing Authority: Section 19 Post-AMG Capital Management

Making good on promises to creatively explore all of its options for enforcement, the FTC yesterday notified 70 for-profit higher educational institutions that it intends to use its long dormant Penalty Offense Authority to obtain civil penalties when institutions make misrepresentations about their programs and job and earnings prospects.  The move closely follows recommendations proposed

Over the past ten years, new technologies have forced a dizzying pace of evolution in advertising and marketing.  All of this change begs the question:  what will the next ten years bring?  How will AI eliminate inefficiencies and create new challenges?  In what ways will advertising enable access to content and enable consumer purchase decisions? 

As AMG recedes further into the past, lower courts are becoming more comfortable disposing of 13(b) actions where the proceedings are attempting to obtain monetary restitution as a matter of course. In many instances below, the FTC has conceded its inability to obtain monetary relief and has focused on the injunctive relief it seeks. However, there are still outstanding cases wherein, despite AMG, the FTC refuses to concede defeat on the issue of monetary relief under Section 13(b).

Latest update follows.
Continue Reading Post-AMG Scorecard (Updated): FTC Claims for Monetary Relief in 13(b) Actions Dwindle

On July 20, the U.S. House of Representatives passed H.R. 2668, the Consumer Protection and Recovery Act, to clarify the Federal Trade Commission’s enforcement authority under Section 13(b) of the FTC Act. H.R. 2668, authored by Representative Tony Cárdenas (D-CA), would explicitly authorize the FTC to seek permanent injunctions and other equitable relief, including