According to a recent article in Law 360 (paywall), What FTC’s ‘Penalty Offense Notices’ Mean For Companies, three attorneys at Manatt wrote that
[i]n recent weeks, the agency resurrected a long-dormant penalty enforcement scheme, by sending several hundred companies, including some of the nation’s largest, what it describes as notices of penalty offenses.’
The notices contain zero accusations of any wrongdoing, but purport to put each company ‘on notice that engaging in conduct described [in the notice] could subject the company to civil penalties of up to $43,792 per violation.’
The article by Joseph Reilly, Jonathan Joshua, and Richard Gottlieb attempt to answer questions like “[w]hat is this resurrected penalty scheme, which the FTC calls its penalty offense authority? What challenges may the FTC face in actually trying to penalize companies based on this authority? What lessons should be drawn by financial institutions and others that have not received a notice — and what’s next?”
Past may be prologue for penalities in the FCRA space. Although Rohit Chopra is no longer at the FTC, he casts a long shadow over the Commission. Last year, Commissioner Chopra coauthored a paper with Samuel A.A. Levine, now the director of the FTC’s Bureau of Consumer Protection. The paper, The Case for Resurrecting the FTC Act’s Penalty Offense Authority (free), suggested penalty authority could develop in the FCRA ecosystem (pp. 43-46).
As the Manatt article notes,
The argument that a prior FCRA determination may count as a prior UDAP finding raises the question of whether the agency will seek to extend that argument to prior determinations under the many other consumer protection statutes the FTC enforces. We have not seen that argument yet, but we would not be surprised if the issue arises in the near future.
Further, these notices make clear we can expect a newly emboldened and active FTC, seeking to stretch the limits of its authority to target established industry participants in connection with what may have formerly been considered business as usual. Stay tuned.