In the regulatory arena, 2013 has already been a rocky year for many industries, with the Federal Trade Commission (FTC) and various state Attorneys General aggressively investigating companies for allegedly engaging in unfair and deceptive business practices. Unsolicited text message campaigns, electronic cigarettes, online lending, payment processing, supplements/pharmaceuticals, data collection relating to online dating and credit reports, and telemarketing issues are directly under the microscope.
A case in point occurred yesterday when Automated Electronic Checking Inc. (AEC), a payment processor, and its owners were banned from engaging in payment processing or similar industries and will also pay close to $1 million to the FTC as part of a settlement. The settlement comes after the FTC alleged that AEC knew, or should have known, that the merchants for whom it was processing payments had obtained consumers’ financial information through unfair and deceptive business practices. In working as a middleman between merchants and consumers, AEC made millions of dollars charging small processing fees per transaction. It appears that AEC was unaware that it could be held liable for the transactions of the merchants, for whom it provided payment processing.
The best way to avoid an FTC or state Attorney General investigation is to consult with an experienced attorney to monitor your compliance with ever-evolving FTC and state regulations. If you find yourself being investigated by the FTC or an Attorney General it is imperative that you retain counsel that has extensive experience handling investigations and actions brought by the FTC and/or state Attorneys General. Also, it is critical that you retain counsel familiar with each individual state law because the commencement of an FTC or an Attorney General investigation, can often lead other state Attorneys General to join the investigation or commence their own.
This blog should be of interest to any company or individual engaging in a commercial venture within the United States, especially those involved in the marketing, data collection and/or online lending/processing industries.
If you are interested in ensuring that you are compliant with current regulations or are facing investigation from the FTC or a state Attorney General, please e-mail us at info@kleinmoynihan.com, or call us at (212) 246-0900.
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