Civil penalties undergo inflation recalculation

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If you’d like details about how the Federal Civil Penalties Inflation Adjustment Act was amended to recalculate penalties using a formula based on the percentage by which the Department of Labor’s October 2015 Consumer Price Index exceeds the Index for October in the year in which the penalty was enacted or last adjusted by law, the FTC has issued a Federal Register Notice explaining it.

Or you can read this summary of what maximum civil penalties will be as of August 1, 2016, for certain violations of the FTC Act and other laws enforced by the FTC.

As the Federal Register Notice explains, Congress mandated the formula, which includes a catch-up for inflation. Based on that recalculation, here are some of the new consumer protection-related civil penalties that will take effect on August 1, 2016.

Consult the Federal Register Notice for the complete list, including civil penalty recalculations for competition-related statutes.

Recalculations aside, there are three big-picture points for businesses when considering civil penalties. First, the new amounts reflect maximum civil penalties per violation. The actual figure will depend on a fact-specific analysis of each case. For certain rule violations and other violations under section 5(m), the law specifies that relevant factors include “the degree of culpability, any history of prior such conduct, ability to pay, effect on ability to continue to do business, and such other matters as justice may require.”  

Second, the FTC has a civil penalty leniency program for small businesses that meet certain criteria.

Third, there’s a way to make these new civil penalty amounts inapplicable to your company: Comply with the law.



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