November 30, 2021

Volume XI, Number 334

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November 30, 2021

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November 29, 2021

Subscribe to Latest Legal News and Analysis

FTC Takes Novel Approach to Seek Civil Money Penalties in the Wake of AMG Capital Ruling

On June 10, the Federal Trade Commission (FTC) filed an amended complaint for civil money penalties and other relief under Section 5 of the FTC Act prohibiting “unfair or deceptive acts or practices” and Section 521 of the Gramm-Leach-Bliley Act (GLBA) prohibiting the use of fraudulent statements to obtain consumer information.  Setting aside the substance of the allegations, the amended complaint is informative because while the initial complaint sought consumer redress under Section 13(b) of the FTC Act, the Supreme Court’s recent unanimous decision in AMG Capital Management foreclosed this avenue to consumer redress for the FTC, and thus the amended complaint removes that reference while otherwise replicating the substantive allegations of the initial complaint.  Further, in a creative side-step to its Section 13(b) predicament, the FTC claims authority to obtain civil penalties under the GLBA because it empowers the FTC to enforce it “in the same manner and with the same power and authority as the [FTC] has under the Fair Debt Collection Practices Act [FDCPA].”  15 U.S.C. § 6822(a).  In 2010, the Dodd-Frank Act amended the FDCPA stating that violations may be enforced “in the same manner as if the violation had been a violation of a Federal Trade Commission trade regulation rule.”  15 U.S.C. § 1692l(a).

The amended complaint seeks a permanent injunction to prevent future violations, rescission or reformation of contracts, the refund of monies paid, or other relief necessary to redress injury to consumers, and monetary civil penalties.

Putting it Into Practice:  It is apparent that the FTC will continue to push solutions for monetary redress in the wake of AMG Capital Management.  While the success of its new theory is likely to be tested in court, companies and individuals in the FTC’s crosshairs ought to remain vigilant against future FTC litigation and enforcement efforts.

Copyright © 2021, Sheppard Mullin Richter & Hampton LLP.National Law Review, Volume XI, Number 169
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About this Author

Moorari Shah Bankruptcy Lawyer Sheppard Mullin Law Firm
Partner

Moorari Shah is a partner in the Finance and Bankruptcy Practice Group in the firm's Los Angeles and San Francisco offices. 

Areas of Practice

Moorari combines deep in-house and law firm experience to deliver practical, business-minded legal advice. He represents banks, fintechs, mortgage companies, auto lenders, and other nonbank institutions in transactional, licensing, regulatory compliance, and government enforcement matters covering mergers and acquisitions, consumer and commercial lending, equipment finance and leasing, and supervisory examinations,...

213-617-4171
A.J. S. Dhaliwal Bankruptcy Attorney Sheppard Mullin Washington DC
Associate

A.J. is an associate in the Finance and Bankruptcy Practice Group in the firm's Washington, D.C. office. 

A.J. has over a decade of experience helping banks, non-bank financial institutions, and other companies providing financial products and services in a wide range of matters including government enforcement actions, civil litigation, regulatory examinations, and internal investigations.

With a diversified regulatory, compliance, and enforcement background, A.J. counsels financial institutions in matters involving...

202-747-2323
Brandon Faus Finance Lawyer Sheppard Mullin
Associate

Brandon Faus is an associate in the Finance and Bankruptcy Practice Group in the firm's Los Angeles office. 

Areas of Practice

Brandon represents lenders and borrowers in secured and unsecured debt transactions across a variety of industries. He focuses on both new originations and workouts for bi-lateral and syndicated loan structures.

Prior to joining Sheppard Mullin, Brandon enjoyed a decade-long career as a banker serving in both a business development and credit risk management capacity. He...

213.617.5410
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