WASHINGTON — The Federal Trade Commission (FTC) has upped the ante on abuses

of the FTC Act by increasing the maximum civil penalty for unfair and deceptive

acts and practices

from $11,000 to $16,000 per violation.

The 45 percent fee hike, which became effective in February,

is not automatically applied to rules governed by the

FTC,

regulations such as the Fair Credit Reporting Act, the Safeguards

Rule and the Red Flags Rule.

However, if a

violation of one of those rules is also deemed a violation of the FTC Act, or

if the FTC can make an independent case that violation is an unfair and

deceptive practice under the FTC Act, then the agency can petition the court

for the enhanced fine.

“In general, where trade rule violations are involved, the

FTC must first determine that the rule was violated, issue a

‘cease and desist’ to the offender, and then determine that the offender has subsequently violated the cease and desist order,” said attorney Michael Benoit. “So, there's a bit involved in

getting to the bigger penalties.”

In the case of a violation of the

Red

Flags Rule – which will be enforced beginning

on May 1 –

the FTC can petition for up to $16,000 per

violation if it finds the dealership committed an unfair and deceptive act or

practice. Prior to the rule change

,

the FTC was

limited to incurring an $11,000 penalty per violation.

“I would only expect that they would take that route in the

case of an egregious and knowing violation of the rule, but they have the

option in any case,” Benoit added.