FTC Director Encourages Tolling Agreements for Companies Under Investigation

The FTC’s increased enforcement activity might be coming into conflict with restrictions on their ability to seek monetary relief. Prior to the Supreme Court’s decision in AMG Capital Management, LLC v. FTC, 141 S. Ct. 1341 (2021), the FTC could seek monetary relief under Section 13(b) of the FTC Act, 15 U.S.C. § 53(b). However, after the Court’s decision in AMG, the FTC must now often rely on Section 19, 15 U.S.C. § 57b. This distinction is important because while Section 13(b) has no statute of limitation, Section 19 says that the FTC can only seek remedies for conduct that occurred within the last three years.

Perhaps in response to this time pressure, FTC Director of Consumer Protection, Samuel Levine, recently authored a blog post encouraging companies under investigation to enter into tolling agreements with the Commission. Tolling agreements allow for an extension of the statute of limitations. In his letter, Director Levine advocates for tolling agreements by saying they enable the FTC to seek redress for consumers while providing the parties under investigation sufficient time to gather and submit pertinent information. Director Levine puts forth a number potential benefits of cooperation between the FTC and parties under investigation, including that cooperation facilitates a more informed decision-making process on whether to proceed with enforcement actions and offers pathways to resolve issues without resorting to lengthy and expensive legal battles.

In his letter, Director Levine wrote that by advocating for these agreements, the FTC is signaling a readiness to pivot towards litigation should negotiations stall. However, the Commission’s actual willingness to pivot toward litigation in absence of a tolling agreement is determined on a case-by-case basis and in some instances signing a tolling agreement may ultimately increase the likelihood of litigation being brought against a company. That is why consulting with counsel is crucial when facing an FTC investigation.

Director Levine’s letter is another clear signal that the FTC has no plans on slowing down their enforcement activity or shifting from their aggressive posture. Companies should continue to pay close attention to their consumer communications, making sure that what customers see is honest, fair, and substantiated.

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