The FTC Act allows the FTC to recover monetary relief only in certain circumstances. Under Sections 5 and 19, the Commission can recover monetary relief in federal court by showing that a party violated a final cease and desist order issued through administrative processes. Until recently, the FTC extensively used Section 13 of the Act, which courts had interpreted to provide some pathways to monetary relief. But the Supreme Court recently ruled in AMG that Section 13 only permits injunctive, rather than monetary, relief. After the case had been decided, many, including the FTC chair, predicted that this would erode the Commission’s ability to police fraud and pursue monetary redress.
However, that does not seem to be the case. A substantial majority of FTC enforcement actions still involve monetary redress of some form. The FTC continues to pursue such redress through novel interpretations of the laws it enforces. For instance, the FTC recently made headlines for initiating an enforcement action against Walmart using a novel interpretation of the Telemarketing Sales Rule. This approach, what I term to be a pattern of novel interpretation, raises serious concerns of notice and overbreadth, potentially leading to a system of regulation by enforcement.
A better alternative to the pattern of novel enforcement is Penalty Offense Authority. Sending parties notices of penalty offenses can achieve the same goal as the pattern of novel enforcement but with fewer drawbacks, particularly in areas of due process and notice. This Comment first discusses the circumstances that led to the pattern of novel enforcement and subsequently describes the drawbacks of this practice through examples of recent FTC actions before concluding with a discussion of how Penalty Offense Authority is superior.
"The Commission Goes to Walmart: Changing Patterns of FTC Enforcement,"
The University of Chicago Business Law Review: Vol. 2:
2, Article 5.
Available at: https://chicagounbound.uchicago.edu/ucblr/vol2/iss2/5