Wages may be stagnant in the United States, but one thing on the rise is the price of getting on the wrong side of the Federal Trade Commission.
Effective August 1, 2016, the maximum civil penalty dollar amount for violating section 5 of the Federal Trade Commission Act, or failing to comply with COPPA or any of the FTC’s other trade regulation rules, will go up 2.5 times—from $16,000 to $40,000. This significant increase was authorized by the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015. The Act directed agencies to implement a “catch-up” inflation adjustment based on a prescribed formula.
The following FTC enforcement penalties will get much stiffer:
- Penalties imposed for violation of an order imposed by the FTC arising from deceptive or unfair acts or practices
- Penalties imposed for violation of a trade regulation issued by the FTC, such as the Telemarketing Sales Rule, the Children’s Online Privacy Protection Act, and the CAN-SPAM Rule
- Penalties imposed for violation of section 7A(g)(1) of the Clayton Act concerning premerger filing notification requirements under the Hart-Scott-Rodino Improvements Act
This is a maximum dollar amount, so the FTC will continue to take into account the degree of culpability, any history of prior such conduct, ability to pay, and the effect on ability to continue to do business. The Commission also has a civil penalty leniency program for small businesses that establishes criteria that the Commission will consider when determining the propriety of a penalty waiver or reduction for small businesses that are not in compliance with the law.
The cost of violating FTC orders and rules was already more than just a slap on the wrist, and now businesses must prepare for that cost to go up dramatically.