Research · 8 min read
What a Consumer-Protection Case Can Require a Company to Do
Three separate statutory doors lead to three different outcomes: an injunction that stops conduct, a redress action that returns money, and a penalty action that punishes a knowing rule violation.
Key takeaways
- Three distinct provisions produce three distinct outcomes: an injunction under 15 U.S.C. 53(b), consumer redress under 15 U.S.C. 57b, and civil penalties under 15 U.S.C. 45(l) and (m).
- Redress under 57b may include rescission or reformation of contracts, refunds, return of property, damages and public notification, but the subsection is not intended to authorize exemplary or punitive damages.
- A redress action must generally be brought within three years of the violation, with a limited extension tied to a final cease and desist order.
- Civil penalties accrue to the United States. A penalty for violating a rule requires actual knowledge or knowledge fairly implied on objective circumstances, and each day of a continuing failure counts as a separate violation.
- 16 CFR 1.98 prints $53,088 as the adjusted maximum for each of section 5(l), 5(m)(1)(A) and 5(m)(1)(B), for penalties assessed after January 17, 2025.
- After an order, a respondent files a detailed written compliance report within sixty days — ten days for an interim report where the order concerns a false advertisement of a food, drug, device or cosmetic that may be injurious to health — and neither a stay application nor a review petition postpones that deadline.
Answer first: stopping it, undoing it, and penalising it are three different actions
The Federal Trade Commission Act does not have one enforcement provision. It has several, and they are not interchangeable. Understanding which one is in play explains why some outcomes involve money going back to customers and others do not.
15 U.S.C. 53(b) is the injunction provision. Where the Commission has reason to believe a person "is violating, or is about to violate, any provision of law enforced by the Federal Trade Commission," and that enjoining it pending administrative proceedings "would be in the interest of the public," the Commission may "bring suit in a district court of the United States to enjoin any such act or practice." The relief named in the subsection is a temporary restraining order or preliminary injunction, granted "Upon a proper showing that, weighing the equities and considering the Commission's likelihood of ultimate success, such action would be in the public interest, and after notice to the defendant," with a proviso that "in proper cases the Commission may seek, and after proper proof, the court may issue, a permanent injunction."
15 U.S.C. 57b is the redress provision, and it is where money returning to consumers is described.
15 U.S.C. 45(l) and 45(m) are the penalty provisions, and they operate on a company that has violated a rule or a final order rather than on conduct in the abstract.
A fourth provision, 15 U.S.C. 53(a), addresses advertising specifically. It permits suit to enjoin the dissemination of an advertisement "in violation of section 52 of this title" — the Act's false-advertisement section — pending the Commission's administrative process, and provides that "Upon proper showing a temporary injunction or restraining order shall be granted without bond."
The redress provision, and what it can and cannot include
Section 57b(a) sets out two triggers. The first is a rule violation: if a person "violates any rule under this subchapter respecting unfair or deceptive acts or practices," other than an interpretive rule or a rule the Commission has said is not itself an unfair or deceptive practice, "the Commission may commence a civil action against such person, partnership, or corporation for relief under subsection (b)."
The second trigger is narrower and has a state-of-mind element. Where a person engages in an unfair or deceptive act "with respect to which the Commission has issued a final cease and desist order which is applicable to such person," the Commission may sue, and "If the Commission satisfies the court that the act or practice to which the cease and desist order relates is one which a reasonable man would have known under the circumstances was dishonest or fraudulent, the court may grant relief under subsection (b)."
Subsection (b) then describes the relief itself. The court "shall have jurisdiction to grant such relief as the court finds necessary to redress injury to consumers or other persons, partnerships, and corporations resulting from the rule violation or the unfair or deceptive act or practice." The listed examples are "rescission or reformation of contracts, the refund of money or return of property, the payment of damages, and public notification respecting the rule violation or the unfair or deceptive act or practice."
The same sentence contains a limit: "except that nothing in this subsection is intended to authorize the imposition of any exemplary or punitive damages." Redress under this section is compensatory, and the list is preceded by "may include, but shall not be limited to," so it is illustrative rather than exhaustive.
There is a clock. Section 57b(d) bars an action "more than 3 years after the rule violation" or after the act or practice, with an extension where a cease and desist order became final in a proceeding commenced within three years, in which case suit may be brought "at any time before the expiration of one year after such order becomes final."
Section 57b(e) states that these remedies "are in addition to, and not in lieu of, any other remedy or right of action provided by State or Federal law."
The penalty provisions, and what makes them available
Section 45(l) addresses violating an order. "Any person, partnership, or corporation who violates an order of the Commission after it has become final, and while such order is in effect, shall forfeit and pay to the United States a civil penalty of not more than $10,000 for each violation, which shall accrue to the United States and may be recovered in a civil action brought by the Attorney General of the United States." It adds that "Each separate violation of such an order shall be a separate offense," and that in a case of continuing failure to obey, "each day of continuance of such failure or neglect shall be deemed a separate offense." The same subsection empowers district courts "to grant mandatory injunctions and such other and further equitable relief as they deem appropriate in the enforcement of such final orders."
Section 45(m)(1)(A) addresses violating a rule. The Commission may commence a civil action for a civil penalty against anyone who violates a rule respecting unfair or deceptive acts or practices "with actual knowledge or knowledge fairly implied on the basis of objective circumstances that such act is unfair or deceptive and is prohibited by such rule."
Section 45(m)(1)(B) provides a route where no rule exists, and it is longer. It requires that the Commission has determined in an administrative proceeding that a practice is unfair or deceptive and "issues a final cease and desist order, other than a consent order," after which it may sue anyone who engages in that practice after the order becomes final — whether or not that party was subject to the order — and "with actual knowledge that such act or practice is unfair or deceptive and is unlawful." Where the order was not issued against the defendant, § 45(m)(2) provides that "the issues of fact in such action against such defendant shall be tried de novo."
Section 45(m)(1)(C) treats each day of a continuing failure as a separate violation and directs the court, in setting the amount, to "take into account 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."
The $10,000 in the statute is not the operative maximum. 16 CFR 1.98 adjusts the Commission's civil penalty amounts for inflation and states that they "apply only to penalties assessed after January 17, 2025." Its paragraphs (c), (d) and (e) each print $53,088 — for section 5(l), section 5(m)(1)(A) and section 5(m)(1)(B) of the FTC Act respectively.
What happens after an order is in place
An order is not self-executing, and the Commission's own procedural rules describe what a company must do next.
16 CFR 2.41(a) requires that in every proceeding where the Commission has issued an order under section 5 of the FTC Act, each respondent "shall file with the Commission, within sixty (60) days after service thereof, or within such other time as may be provided by the order or the rules in this chapter, a report in writing, signed by the respondent, setting forth in detail the manner and form of his compliance with the order," and shall file further compliance reports as required. Reports "shall be under oath if so requested."
The same paragraph carries a faster clock for one category, and it is worth quoting because it names health products directly. "Where the order prohibits the use of a false advertisement of a food, drug, device, or cosmetic which may be injurious to health because of results from its use under the conditions prescribed in the advertisement, or under such conditions as are customary or usual, or if the use of such advertisement is with intent to defraud or mislead, or in any other case where the circumstances so warrant, the order may provide for an interim report stating whether and how respondents intend to comply to be filed within ten (10) days after service of the order."
The section also removes a common assumption. Neither an application for a stay nor a petition for judicial review "shall operate to postpone the time for filing a compliance report." And an extension of time to file, or the filing of a report that does not show full compliance, "does not in any circumstances suspend or relieve a respondent from his obligation under the law with respect to compliance."
Section 2.41(a) also names the enforcement route for an order that is not obeyed: the Commission may institute proceedings "including certification of facts to the Attorney General pursuant to the provisions of section 5(l) of the Federal Trade Commission Act," without first advising the respondent whether its compliance report shows compliance and "without prior notice of any kind."
Section 2.41(d) offers the reverse: a respondent may ask the Commission whether a proposed course of action would constitute compliance. The Commission will answer on the facts submitted, but the request "does not in any circumstances suspend or relieve a respondent from his obligation," and § 2.41(e) permits the Commission to rescind or revoke advice it has given, with notice and an opportunity to be heard, while protecting action taken in good faith reliance where all relevant facts were fully and accurately presented.
Reading this as a consumer rather than as a party
Three things follow from the structure above, and they are the practically useful part.
First, an injunction and a refund are different outcomes reached by different provisions. A case brought under 15 U.S.C. 53(b) is about stopping conduct. Money returning to consumers is described in 15 U.S.C. 57b, which has its own triggers and its own three-year clock.
Second, penalties under 45(l) and 45(m) run to the United States, not to consumers. Section 45(l) says so in terms: the penalty "shall accrue to the United States and may be recovered in a civil action brought by the Attorney General."
Third, none of these provisions is a route a member of the public walks. The actions described belong to the Commission and, under 45(l), to the Attorney General. This page describes what those bodies may seek and what a company must do once an order exists. It does not tell any reader that they have a claim, that they are owed anything, or that any conduct they have encountered violates anything.
What it does give a reader is a way to read a headline accurately. "Ordered to stop," "ordered to refund," and "assessed a civil penalty" are three different legal events with three different sources, and a company can be subject to one without the others.
The procedural route by which a matter reaches any of these outcomes — how an investigation opens, what compulsory process looks like, and how most matters end in a negotiated order rather than a trial — is set out in a separate article here on the Commission's nonadjudicative procedures.
Sources
- 15 U.S.C. 45 — Unfair methods of competition unlawful; prevention by Commission (subsections (l) and (m))The order-violation penalty at 45(l), including the statutory figure of not more than $10,000 per violation, the accrual to the United States, recovery by the Attorney General, the separate-offense and per-day provisions, and the courts' power to grant mandatory injunctions and further equitable relief; the rule-violation penalty action and knowledge standard at 45(m)(1)(A); the alternative route at 45(m)(1)(B) requiring a final cease and desist order other than a consent order and actual knowledge; the de novo trial provision at 45(m)(2); and the continuing-violation rule and the culpability, prior conduct, ability to pay and ability to continue in business factors at 45(m)(1)(C).
- 15 U.S.C. 53 — False advertisements; injunctions and restraining ordersThe advertising injunction provision at 53(a), including its cross-reference to section 52 and the sentence that upon proper showing a temporary injunction or restraining order shall be granted without bond; and the general injunction provision at 53(b), including the reason-to-believe and public-interest conditions, the weighing of equities and likelihood of ultimate success, notice to the defendant, and the proviso permitting a permanent injunction in proper cases.
- 15 U.S.C. 57b — Civil actions for violations of rules and cease and desist orders respecting unfair or deceptive acts or practicesThe two triggers in subsection (a), including the dishonest-or-fraudulent showing required under (a)(2); the description of available relief in subsection (b), including rescission or reformation of contracts, refund of money or return of property, payment of damages and public notification, and the exclusion of exemplary or punitive damages; the three-year limitation and the one-year extension in subsection (d); and the statement in subsection (e) that these remedies are in addition to, and not in lieu of, other state or federal remedies.
- 16 CFR 1.98 — Adjustment of civil monetary penalty amountsThe statement that the listed maximum amounts apply only to penalties assessed after January 17, 2025, and the $53,088 figures printed in paragraphs (c), (d) and (e) for section 5(l), section 5(m)(1)(A) and section 5(m)(1)(B) of the FTC Act.
- 16 CFR 2.41 — General compliance obligations and specific obligations regarding acquisitions and divestitures (16 CFR Part 2, Nonadjudicative Procedures)The sixty-day signed written compliance report requirement and the further-reports and oath provisions in § 2.41(a); the ten-day interim report provision for orders prohibiting a false advertisement of a food, drug, device or cosmetic which may be injurious to health; the statement that a stay application or petition for judicial review does not postpone the report deadline; the statement that an extension or an incomplete report does not suspend the compliance obligation; the reference to certification of facts to the Attorney General under section 5(l) without prior notice; and the advice procedure and its rescission provisions in § 2.41(d) and (e).
Frequently asked questions
Which provision covers money going back to customers?
15 U.S.C. 57b. Subsection (b) gives a court jurisdiction to grant relief necessary to redress injury to consumers, listing rescission or reformation of contracts, refund of money or return of property, payment of damages, and public notification. The same sentence says the subsection is not intended to authorize exemplary or punitive damages.
Is there a deadline on a redress action?
Section 57b(d) bars an action more than three years after the rule violation or the unfair or deceptive act. Where a cease and desist order became final in a proceeding commenced within three years, an action may be brought up to one year after the order becomes final.
Do civil penalties go to the people affected?
Section 45(l) states that the penalty for violating a final order "shall accrue to the United States" and may be recovered in a civil action brought by the Attorney General. It is a payment to the government, not a distribution to consumers.
What has to be shown for a civil penalty over a rule violation?
Under 45(m)(1)(A), that the person violated a rule respecting unfair or deceptive acts or practices with actual knowledge, or knowledge fairly implied on the basis of objective circumstances, that the act is unfair or deceptive and is prohibited by the rule.
What is the current maximum penalty amount?
The statute states not more than $10,000 for each violation. 16 CFR 1.98 adjusts the figures for inflation, states that they apply only to penalties assessed after January 17, 2025, and prints $53,088 for each of section 5(l), section 5(m)(1)(A) and section 5(m)(1)(B) of the FTC Act.
What does a company have to do once an order is in place?
16 CFR 2.41(a) requires a written, signed compliance report within sixty days of service, setting out in detail the manner and form of compliance, with further reports as required and under oath if requested. Where the order concerns a false advertisement of a food, drug, device or cosmetic that may be injurious to health, the order may require an interim report within ten days of service.