A new Federal Trade Commission (FTC) rule, finalized in mid-February, will enable the agency to directly file federal court cases to force scammers who profit from business or government impersonation scams.
The FTC would be able to seek monetary relief in federal court from fraudsters who:
- Use business logos or government seals when using mail or online consumer communication.
- Spoof business and government emails and web addresses, including lookalike emails addresses/websites that misspell a company’s name.
- Falsely imply business or government affiliation by using terms known to be affiliated with a business or government agency.
The rule is the FTC’s first new rulemaking under its Section 18, or Magnuson-Moss Rule, authority since 1980. The rulemaking followed changes to the FTC’s Rules of Practice, led by Commissioner Rebecca Kelly Slaughter and approved in July 2021.
The new Government and Business Impersonation Rule was introduced in December 2021, advanced to a notice of proposed rulemaking in September 2022 and was the subject of an informal hearing in May 2023.
FTC Chairman Lina Kahn said, “Thanks to efforts initiated under Commissioner Slaughter’s leadership to align the procedural requirements for Section 18 rulemaking with the FTC Act’s statutory text, Section 18 rulemakings can now proceed more efficiently. This effort took two years from proposal to find rule, finally putting lie to the old idea that this must be an impossibly long process.”
The Government and Business Impersonation Rule targets a fraud category in which consumers lost $2.7 billion in 2023. The rule follows a 2020 Supreme Court decision that significantly limited the agency’s ability to force defendants to return money to harmed consumers.
“Rulemakings—which not a substitute for a legislative fix,” Kahn said, “can help ensure that lawbreakers do not profit from their lawbreaking and that wronged consumers can be made whole.”
Along with finalizing the rule, the FTC issued a supplemental notice of proposed rulemaking to prohibit the impersonation of individuals. The FTC said the notice seeks to prevent fraudsters from using artificial intelligence tools to impersonate individuals.
