Practice Area
FTC Enforcement Actions, Asset Freezes, and Receiverships
A company may first learn of an FTC enforcement action after a federal court has entered an emergency order. The FTC often files under seal and seeks a temporary restraining order without advance notice. Depending on the claims asserted, the order may freeze assets, restrict business operations, authorize expedited discovery, and appoint a temporary receiver.
The available relief depends on the authority invoked. Section 13(b) authorizes injunctive relief but does not, standing alone, authorize restitution or disgorgement.
The order may already have been served on banks, PayFacs, and other companies holding funds or records. Defendants may therefore lose access to accounts or systems before appearing in court.
Rome LLP represents businesses, owners, officers, and payment companies in FTC enforcement actions and related disputes over merchant accounts, settlement funds, and payment records.
The firm has represented businesses and individual defendants in FTC enforcement actions involving ex parte asset freezes, receiverships, and stipulated orders for permanent injunction and monetary judgment.
Contact Rome LLP
To discuss an FTC TRO, asset freeze, enforcement action, or receiver demand.
The Temporary Restraining Order
A TRO may impose immediate restraints once it is entered and served. It may freeze identified assets, prohibit transfers, require financial disclosures and preservation of business records, and authorize access to premises or electronic systems.
The order may require banks, PayFacs, and other companies holding funds or records to freeze accounts, stop transfers, preserve records, or provide account and balance information.
Before responding to the FTC or receiver, counsel should compare the request with the order itself. The definitions and operative provisions determine whether the account, asset, entity, or records are covered.
The Receiver’s Authority
The order may authorize the receiver to take custody of identified assets, access company systems and records, or control specified business functions.
Disputes may arise over privileged material, personal or nonparty records, and the defendants’ access to documents needed for the defense.
If the freeze prevents payment of legal fees or necessary operating expenses, the defendants may seek release of a defined amount from a specified account. The request should identify the amount, its purpose, and the provision allowing the payment, or explain why the order should be modified. If the court does not release frozen funds, legal fees may need to be paid from assets outside the freeze or with third-party assistance.
The court order defines the receiver’s authority. A demand from the receiver does not enlarge it.
Merchant Accounts, Settlement Funds, and Payment Companies
An asset freeze may reach merchant reserves and settlement funds held for a defendant or receivership entity. Once served, the company holding them must preserve the funds and determine what the order requires before making any deduction, transfer, or release.
The receiver may demand turnover, while the holder may assert contractual rights based on chargebacks, refunds, card-brand assessments, or other liabilities. Those rights may remain relevant, but they do not displace the court order. A company seeking to use frozen funds for chargebacks or other obligations may need to obtain court approval.
The order may also require the company to identify affected accounts and balances, stop transfers, preserve records, and provide account information. If the company is itself named as a defendant, the case may focus on its underwriting, monitoring, and account-management decisions, including what it knew about the merchant and what authority it exercised.
Preliminary-Injunction Proceedings
At the preliminary-injunction hearing, the court considers whether the emergency relief should continue. Defendants may challenge the basis for the injunction, the scope of the asset freeze, and the receiver’s continued authority.
The TRO continues to govern unless the court modifies it. Defendants may therefore need earlier relief to obtain records, secure funds for legal fees or essential expenses, or establish that a particular account or entity falls outside the freeze. Any request should identify the specific account, funds, records, or provision at issue and explain why relief is needed.
Contact Rome LLP
To discuss an FTC TRO, asset freeze, enforcement action, or receiver demand.
