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New FTC Rule Would Fortify Defenses Against Frauds, Scams; Samuel Levine Quoted

3 mins read

In order to counteract a spike in costly scam activity over the last several years, the U.S. Federal Trade Commission has put forward a potential new rule that would allow for financial justice to be served to fraudulent wrongdoers and their victims.

The legislation seeks to codify that acts wherein a criminal impersonates a government or business in order to extract money or identity is in violation with the FTC Act and would assist the FTC in taking action against scammers in the form of compensation or civil penalties, the FTC said Thursday.

Samuel Levine, director of the bureau of customer protection at the FTC, stated that the rule would necessarily strengthen the resources at the Commission’s disposal to fight back against this perpetuating and widespread problem.

“We look forward to comments from the public on our efforts to deter fraud, hold impersonators accountable, and secure redress for consumers,” Levine added.

The rule builds on an Advanced Notice of Proposed Rulemaking that was introduced in December 2021, which was received positively by the public in over 160 public comments in support of the action.

If accepted, the rule would deem unlawful perpetrators’ misuse of government seals or business logos; the imitation of government business emails and web addresses; and providing misleading and untrue information about one’s affiliation with a government agency or business via implication or outright lie.

The FTC’s proposed law is attempting to mitigate a problem that has reportedly been growing exponentially since 2017. The bad actors often impersonate a lottery official, government personnel or a staff member of a reputable business or charity, employing deceitful branding tactics and digital disguises to feign legitimacy. Scammers are ostensibly seeking personal information that can be invoked to commit identity fraud and are known to demand funds through wire transfer, gift cards or, in a recent surge of popularity, cryptocurrency.

In the recent case AMG Capital Management LLC v. FTC, the Supreme Court put constrictions on the Commission’s power to compensate and return funds to scammed citizens. Thus, the FTC sees the new rule as a way forward to try and regain a fortified defense against this wave of fraudulent behavior.