FTC Consumer Protection Orders: The Case for a New Sunset Policy

In this working paper, authors John E. Villafranco and Andrea deLorimier (Kelley Drye/Washington Legal Foundation) examine the evolution of the Federal Trade Commission (FTC) from its founding in 1914 to its current regulatory practices, particularly in relation to the use of consent orders. Originally envisioned as a business-friendly advisor with limited enforcement tools, the FTC has since developed expansive authority, including the ability to impose monetary penalties and seek injunctive relief. Consent orders have become the FTC’s primary enforcement tool, allowing companies to settle allegations without admitting wrongdoing—often to avoid litigation costs and reputational damage.

However, Villafranco and deLorimier highlight the burdens associated with consent orders, which typically include long-term obligations such as monetary payments, conduct restrictions, and extensive compliance requirements. Until 1995, these orders lasted indefinitely, and although the FTC introduced a 20-year sunset policy for administrative orders, federal court orders still have no expiration. The authors argue that such lengthy order terms are misaligned with modern business realities, overly burdensome, and inconsistent with practices of other federal agencies. Moreover, the current process for modifying or terminating orders is complex and rarely successful, leaving companies trapped under outdated requirements.

To address these issues, the paper proposes three alternative sunset policy frameworks: a flexible term based on case specifics, a uniform five-year sunset policy, and a ten-year term with negotiable provisions for earlier expiration. Each of these models is designed to support innovation and reduce unnecessary regulatory burdens while preserving consumer protection. The authors also recommend reforming the FTC’s modification and early termination processes, including allowing petitions for early relief where companies demonstrate compliance, ideally supported by third-party monitors. These reforms, they argue, would better reflect today’s dynamic market conditions and restore a more balanced regulatory approach…

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