If the FTC decides to pursue a case against you, the two common routes are a lawsuit in a federal district court or an administrative trial within the agency. Each has its pros and cons, but the FTC seems to prefer going the district court route because there are some powerful legal remedies it can obtain.

Let’s examine both types of cases so you understand what you’re facing if either occurs.

Administrative Cases

If there is an unusual legal issue or some type of precedent that the FTC wants to set, it will likely go after you in a trial before an administrative law judge (ALJ).

Why?

Because the ALJ is actually issuing an agency decision by applying the FTC’s own practice rules. It is a stacked deck in favor of the FTC.

Remember that the FTC considers itself a watchdog whose purpose is to protect the public. Whether you’ve done anything wrong or

not, there is an unspoken presumption of misconduct once the FTC decides to investigate you.

What’s even worse is that any appeal of the agency decision is reviewed by a federal circuit court of appeals in a way that heavily defers to the findings of fact made by the ALJ during your administrative trial.

In short, the FTC writes rules, an agency judge makes factual findings as to whether you broke the rules, and the appellate court leans in favor of finding that the ALJ made the right decision.

U.S. District Court Cases

On the plus side, cases brought by the FTC against you in federal district court have a greater chance of impartiality. The federal judge is independent of the agency and the lawsuit will be handled as one of many types of cases this judge hears. His livelihood doesn’t depend upon the FTC.

That being said, the FTC likes to bring suits in federal district courts because of the powerful court orders it can obtain if you are found to have violated the law.

These remedies may include:

* Obtaining an injunction or a restraining order against you.

* Monetary judgments against you, including orders to make restitution or disgorge your profits.

* Having your assets frozen or seized.

* Appointing a receiver to control your assets.

* Requiring you to change your advertising and even publicly retract prior advertising.

All it takes is a preliminary injunction or a temporary restraining order, and suddenly you’re out of business until you can convince the judge otherwise. Try paying for a lawyer to do that if your assets have been frozen in the process.

About the Author

With an advanced international law degree from Georgetown University and more than 14 years of real world legal experience, Attorney Mike Young shows entrepreneurs how to protect and grow their businesses online. He's the author of Internet Marketing Legal Secrets Revealed. Not just a lawyer who focuses exclusively on Internet and marketing law, Mike’s been working with computers for more than 27 years (his first computer was an Atari 400 with 8 KiB RAM) and started representing Internet businesses back in 1996.