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Managing an FTC Consent Decree Foley’s Privacy College Presentation Number 3.

1. Managing an FTC Consent Decree Foley’s Privacy College Presentation Number 3. Andrew B. Serwin aserwin@foley.com (858)847-6728. 2. Understanding FTC Enforcement. There are several major areas of FTC jurisdiction. The FTC has acted in concert with other agencies recently.

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Managing an FTC Consent Decree Foley’s Privacy College Presentation Number 3.

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  1. 1 Managing an FTC Consent DecreeFoley’s Privacy College Presentation Number 3. Andrew B. Serwinaserwin@foley.com (858)847-6728

  2. 2 Understanding FTC Enforcement. • There are several major areas of FTC jurisdiction. • The FTC has acted in concert with other agencies recently. • The Frank-Dodd law implicates similar standards as the FTC Act.

  3. 3 Understanding FTC Enforcement. • FTC Act (including unfair and deceptive conduct, as well as false advertising). • GLB. • FCRA. • COPPA. • CAN-SPAM. • TCPA. • Others.

  4. 4 Understanding Section 5 Jurisdiction. • Section 5 has two main prongs: • Deception. • In the Matter of Cliffdale Associates, Inc., 103 F.T.C. 110 (1984), Deception Statement. • Unfairness authority. • In the Matter of International Harvester Company, 104 F.T.C. 949 (1984), Unfairness Statement. • Application in the privacy arena.

  5. Elements of a Section 5 Case Deception. Material misrepresentation; That is likely to mislead consumers who are; Acting reasonably in the circumstances. Significant consumer harm is not required in the FTC’s view.

  6. Elements of a Section 5 Case Unfairness (not limited to antitrust claims—FTC v. The Sperry and Hutchinson Co, 405 U.S. 233, 92 S.Ct. 898. Amendments to Section 5. Elements: Substantial consumer injury; That is not outweighed by any offsetting consumer or competitive benefits; and The injury is not reasonably avoidable by consumers.

  7. 7 Understanding a Consent Decree. • Why do they happen? • What is it? • What does it mean for your company? • What are the other consequences? • How is it enforced?

  8. 8 Why Do They Happen? • The FTC will initiate an investigation, or litigation in some cases. • Not all investigations result in a consent decree. • There were a number of FTC Act, COPPA, financial, and other litigation matters.

  9. What is It? A negotiated settlement that has injunctive and (usually) monetary provisions. They are entered in District Court. They can follow a negotiation or litigation.

  10. 10 What is the Effect of A Consent Decree on Other Companies? • They are not precedential as published court decisions are, but they are viewed by the FTC as putting companies on notice of issues or concerns.

  11. 11 What is the Impact of A Consent Decree? • Cost. • Business impact. • Bad PR. • Other lawsuits.

  12. The Anatomy of A Section 5 Consent Decree. Limitations on Misrepresentations. Information Security Requirements. Third-Party Assessments. Document Retention/Maintenance. Reporting. Term.

  13. 13 Requirements of a Consent Decree. • Compliance requirements. • Legal compliance. • Cessation of conduct. • No misrepresentations. • Others. • Process improvement. • Particularly in the information security arena.

  14. 14 Requirements of A Consent Decree. • Compliance Monitoring. • Reporting. • Some require an initial report. • Subsequent reports are required in most cases. • The scope of reporting can vary depending on the conduct and the laws that are allegedly violated. • Bar Orders.

  15. How is It Enforced? The Bureau of Enforcement manages these matters. They are ultimately enforced as court orders.

  16. Conclusion Understand the requirements of the FTC Act and other laws enforced by the FTC. Review prior consent decrees to understand the FTC’s position. Proactively address any potential concerns.

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