Serious Business: The FTC's Re-Deployment of the Penalty Defense Authority
By: Kevin Grimes
From the perspective of the FTC, the POA would appear to be a perfect weapon for quickly bringing about industry-wide change
The Penalty Offense Authority (POA) allows the Federal Trade Commission (FTC) to seek civil penalties against a wrongdoing party where: (1) a final cease and desist order has been entered against a party in an administrative proceeding under Section 5(b) of the FTC Act; (2) the order identifies a specific practice as unfair or deceptive; and (3) a party with actual notice of the order has engaged in that practice after the order became final. Civil penalties can accumulate stratospherically. Under certain FTC statutes, there is liability of up to $43,792 per violation. Moreover, there is no statute of limitations for the POA.
A History of the POA
In 1976, the Commission launched a pilot program in which it notified dozens of businesses regarding FTC orders that declared specific practices as unlawful. The notices warned the recipients that if they violated the terms of the orders they could be subject to civil penalties.
Thereafter, the FTC conducted follow-up investigations to determine whether the firms continued to engage in the unlawful practices. In 1977, the Commission announced its first civil penalty actions under the POA program.
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