FTC Commissioner calls for stricter penalties and structural remedies against recidivist companies that violate consent orders

Federal Issues FTC Enforcement Civil Money Penalties

On May 14, FTC Commissioner Rohit Chopra released a memo to FTC staff and commissioners calling for more forceful penalties and structural remedies against companies and individuals that fail to comply with consent orders. Chopra announced that a key consideration for the FTC will be “whether the proposed remedies address the underlying causes of the noncompliance.” He proposed several “structural remedies” for the FTC to consider implementing against “recidivist” companies such as (i) banning certain business practices; (ii) forcing divestiture or closure of problematic operating units; (iii) removing company executives and board directors responsible for overseeing conduct that violates an order; (iv) dismissing third-party compliance consultants who fail to detect conduct that violates an order; (v) targeting company executives and through “clawbacks, forfeitures, and reforms to executive compensation agreements;” and (vi) requiring firms to raise equity capital should corporate debt “create risks to consumers and competition in the form of an order violation.” Chopra stated that repeat offenders who “flout our orders must face severe consequences—irrespective of whether they are small-time scammers or sophisticated corporations.”