Seyfarth Synopsis: The FTC has adjusted its per violation penalties, in some cases by substantial amounts.
In a federal rulemaking published last week, the Federal Trade Commission (FTC) has finalized amendments to Commission Rule 1.98 to adjust the maximum civil penalty dollar amounts for violations of sixteen provisions of law. 81 Fed. Reg. 42476 (June 30, 2016).
The U.S. Congress had mandated the formula for calculating the increases under the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015, which included a catch-up provision for inflation. See related Implementation of the Federal Civil Penalties Inflation Adjustment Act, OMB Memorandum M-16-06 (February 24, 2016).
Based on the FTC’s interim final rule recalculation, violations of final Commission orders issued under section 5(b) of the FTC Act, and violations of certain trade regulation rules and other laws enforced by the FTC with civil penalty provisions, will increase significantly from $16,000 to $40,000.
In addition, specifically under the Fair Credit Reporting Act Section 621(a)(2) (duty to correct and update information) for knowing violations of the Act, the per violation penalty will increase from $3,500 to $3,756.
The adjusted violation amounts will take effect on August 1, 2016.
It is interesting that the FTC suggests that the best way to avoid any penalties is to “comply with the law”. That sounds simple, when writing it in a blog, but real life may be more complicated. Employers and credit reporting agencies conducting background checks should be sure to evaluate their policies and processes in light of these new penalty provisions, and should also train their Human Resources professionals on these laws — to help “comply with the law”.