FTC Threatens 70 Colleges With Civil Penalties In Attempt To Resurrect Penalty Offense Authority – Consumer Protection

FTC Threatens 70 Colleges With Civil Penalties In Attempt To Resurrect Penalty Offense Authority – Consumer Protection

October 11, 2021 0 By administrator


United States:

FTC Threatens 70 Colleges With Civil Penalties In Attempt To Resurrect Penalty Offense Authority


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Making good on promises to creatively explore all of its options
for enforcement, the FTC yesterday notified 70 for-profit higher educational
institutions that it intends to use its long dormant Penalty
Offense Authority to obtain civil penalties when institutions make
misrepresentations about their programs and job and earnings
prospects. The move closely follows recommendations proposed in a
paper authored by Commissioner Rohit Chopra and Bureau of Consumer
Protection Director Sam Levine, which we previously discussed here.

Chopra was confirmed last week as CFPB Director and the
announcement is likely to be one of his last acts as FTC
Commissioner before he departs for the CFPB on Friday. Levine was
formally named Director of the Bureau of Consumer
Protection last week by Chair Lina Khan, following his stint as
Acting Director. In prepared remarks announcing the notices, Chopra
characterized the Penalty Offense Authority as “a unique
authority in consumer protection enforcement . . . that past
Commissioners largely ignored, depriving our hardworking staff of
the ability to pursue the full range of sanctions against bad
actors.” Chopra emphasized that its use was particularly
important in the wake of the Supreme Court’s decision in
AMG Capital Management. The move also follows last
month’s cease and desist letters issued to companies
making diabetes treatment claims, which were structured to include
references to the FTC’s Penalty Offense Authority.

In yesterday’s notice, the FTC identifies seven categories of
claims made by for-profit colleges that the FTC has determined to
be deceptive or unfair, including misrepresentations about the need
or demand for consumers who have graduated from the institution,
employment prospects, the number or percentage of graduates who
have obtained employment, and typical or potential earnings for
graduates. The notice includes cites to three dated decisions from
1980, 1971, and…

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