[Federal Register Volume 59, Number 127 (Tuesday, July 5, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-16181]
[[Page Unknown]]
[Federal Register: July 5, 1994]
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FEDERAL TRADE COMMISSION
Policy Statement Concerning Errors and Omissions Clauses in
Consent Decrees
AGENCY: Federal Trade Commission.
ACTION: Statement of policy.
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SUMMARY: The Commission has determined that it is unnecessary and
inappropriate to include in any of its consent decrees any provision
establishing as a defense to an action brought to enforce the consent
decree that the defendant's errors and omissions were inadvertent and
unintentional and that the causes and consequences of these errors and
omissions were quickly remedied.
EFFECTIVE DATE: July 5, 1994.
FOR FURTHER INFORMATION CONTACT:
Joel N. Brewer, Division of Enforcement, Bureau of Consumer Protection,
Federal Trade Commission, Washington, DC 20580, (202) 326-2967.
SUPPLEMENTARY INFORMATION: In each of two previous Consent Decrees,
Damark International, Inc., Civ. No. 4-91-275 (D. Minn. 1991), and
Lillian Vernon Co., 92 Civ. 7537 (CLB) (S.D.N.Y. 1992), the Commission
included a provision that provided a defense against an enforcement
action if the defendant could establish that (1) any order violations
arose from inadvertent and unintentional errors that may have occurred
despite the defendant's good faith maintenance of records and
procedures to prevent such errors, and (2) the defendant took prompt
action to remedy any cause of, or injury resulting from, those errors.
The Commission now has decided that such provisions are unnecessary in
light of the Commission's inherent prosecutorial discretion.
The Commission initiates law enforcement actions under Section 5 of
the FTC Act, 15 U.S.C. 45, only when it has reason to believe both that
the law has been violated and that an action is in the public interest.
In deciding whether an action is in the public interest, the Commission
considers, among other things, the scope of the alleged violation, the
circumstances in which it occurred and the extent of any resulting
injury. Accordingly, the Commission believes that the inclusion of the
language referred to above from the decisions and orders in Damark and
Lillian Vernon is redundant to its public interest considerations and
could cause confusion concerning the Commission's exercise of
prosecutorial discretion within the terms of Section 5. Therefore, the
Commission's policy will be to refuse to approve proposed consent
decrees containing provisions designed to circumscribe liability for
inadvertent and promptly remedied errors, or otherwise to delineate the
Commission's discretion in initiating law enforcement proceedings.
Authority: 15 U.S.C. 41-58.
List of Subjects
Trade practices.
By direction of the Commission.
Donald S. Clark,
Secretary.
Dissenting statement of Commissioner Deborah K. Owen, regarding the
Commission's policy statement concerning errors and omissions clauses
in consent decrees.
I have voted against the proposed change in Commission policy,
which would preclude a defense in consent decrees relating to
inadvertent and unintentional errors by defendants. In my view, such
language is harmless with respect to any legitimate Commission
interest, and may serve to reassure parties as to the judicious
exercise of our prosecutorial discretion.
[FR Doc. 94-16181 Filed 7-1-94; 8:45 am]
BILLING CODE 6750-01-M
