The FTC’s Penalty Offenses authority seems good for consumers and businesses. It allows the FTC to warn businesses about specific practices that would constitute unfair and deceptive conduct under its statute, the FTC Act, with the threat of punishing penalties if they nevertheless engaged in the conduct. This warning ideally deters the misconduct and eliminates potential and systemic harm to consumers.
Tax preparation companies are officially on notice following the Commission’s latest Penalty Offenses announcement, in which it generally said to these companies: don’t use or share consumers’ confidential data that was collected while preparing their taxes, for “other unrelated purposes, such as advertising, without first obtaining consumers’ consent.”
The FTC sent letters this month to H&R Block, Inc., Intuit Inc., TaxAct, Inc., TaxSlayer LLC, and the Lampo Group, LLC d/b/a Ramsey Solutions. They can face civil penalties of up to ~ $50k per violation if they disregard the warning.
Unfair and deceptive trade practices under this Penalty Offenses notice, include: using a person’s confidential information without consent where they reasonably expected that the information would remain confidential; and making false, misleading, or deceptive representations or omissions on the use or confidentiality of information, such as telling consumers or implying that their information will only be used for the service requested, but then their data is used for unexpected reasons.