Do online marketers in Canada have to follow U.S. promotional regulations laid out by the Federal Trade Commission? The answer: “Yes the FTC extends its jurisdiction to Canadians who do business with American residents.”
Canadian Online Marketer Sued By the American FTC
A 2011 FTC complaint filed in Washington State accused several entities of unfair or deceptive business practices related to online advertising and sales. What was surprising was that “most of the defendants [were] located in Alberta.”
Will a lack of jurisdiction argument work?
In FTC v. Compagnie de Saint-Gobain-Pont-a-Mousson the court reasoned:
“Federal courts have long acknowledged that the investigatory and regulatory reach of domestic agencies may, and often must, extend across national boundaries.”
Consequences For Canadians Caught By The US FTC
What consequences can a Canadian expect when faced with an FTC investigation?
For starters, actions brought in US courts can apply in foreign lands. Temporary restraining order and permanent injunctions secured in stateside courts can be used to freeze Canadian business owners’ assets and enjoin them from moving or deleting records.
Additionally, the FTC has the power to repatriate and garnish assets. In other words, even if money is in a Canadian bank account, the US FTC can freeze it and seize it.
Even if the account holder doesn’t comply, most Canadian banks have U.S. counterparts that will abide by court orders in the interest of staying out of an international entanglement.
If you live outside of the United States and find yourself facing an FTC action, do these three things immediately:
- Contact a U.S. law firm skilled in international FTC litigation. These cases are complex; experience could mean the difference between winning and losing.
- Don’t transfer assets or destroy records. The type of TRO served with almost every FTC case likely prohibits doing these things.
- Don’t ignore the action. Just because you’re not geographically within the United States, doesn’t mean you’re not legally culpable. A Quebec man ignored a California spamming lawsuit; the court awarded a billion dollar judgment against him; subsequently, a Quebec court upheld the decision, and now the man is on the hook.
Speak With A U.S. Attorney Who Has Helped Canadian Marketers Facing U.S. FTC Investigations
Hopefully, the FTC won’t ever slap you with an action. But, if it does, consider the points raised in this article and contact an attorney who has successfully helped Canadian businesses with U.S. FTC troubles.