ADventures in Law

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As we enter the third week of the government shutdown, we notice that the FTC announced a brand-new consumer protection action, which is something we rarely see during a shutdown. The FTC is one of the federal agencies that takes a pretty significant hit during a shutdown, with most staff being furloughed, along with most investigations and litigations being stayed.

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Indeed a note on the agency’s website notes, “The FTC is closed due to the lapse in funding,” and a <a href="https://www.ftc.gov/ftc-is-closed" target="_blank" rel="noreferrer noopener">more-detailed page</a> on the FTC website details whether various FTC services continue during the shutdown. For those with even more curiosity about how the agency determines what to do and not do during a shutdown, much like other agencies, the FTC has a <a href="https://www.ftc.gov/system/files/ftc_gov/pdf/FTC%20Shutdown%20Plan.pdf" target="_blank" rel="noreferrer noopener">14-page guide</a> that explains how the agency approaches shutdowns. The guiding principle is that the FTC can generally continue with activities that address a threat to human life or property of such a nature that immediate action is necessary. (And commissioners are excepted from the shutdown because they are paid an annual salary that is not dependent on the amount of time they work.)

In connection with consumer protection investigations and litigations, this generally means that most actions are stayed (provide that a court approves of a stay in matters in litigation), but the FTC can continue to work on law enforcement matters that they deem to be required to protect against an imminent threat to life or property. And the case just announced seems to fall within this exception, particularly given the fact that the FTC sought and obtained a <a href="https://www.ftc.gov/system/files/ftc_gov/pdf/2523026atscomplaint.pdf" target="_blank" rel="noreferrer noopener">Temporary Restraining Order</a> that included an asset freeze. (It should be noted that because the agency is seeking money in the new action in connection with rule violations, an asset freeze can make sense here.) With that, let’s take a look at the new case.

FTC v. American Tax Service LLC, et al. 

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The FTC, alongside the State of Nevada, filed its complaint against American Tax Service (ATS), its operators and several affiliates on Oct. 17, 2025. The complaint alleges that the defendants have, since at least 2019, engaged in misleading practices surrounding their tax debt relief services. The complaint alleges that the defendants would mail deceptive and threatening debt collection letters that impersonated the government in order to solicit inbound telemarketing calls. According to the FTC, when speaking to consumers, sales representatives for ATS would lie about the severity of the consumers’ tax debt issues to trick them into paying for ATS’ services. The complaint further alleges that ATS’ operators made false claims regarding the services themselves, failing to fulfill the promised tax debt relief and refusing to provide refunds to dissatisfied consumers.

In claiming that the defendants engaged in multiple illegal acts, the FTC alleges that the defendants’ conduct violated the FTC Act, the Gramm-Leach-Bliley Act, the Telemarketing Sales Rule and the Impersonation Rule. In addition, the State of Nevada is alleging that the defendants’ conduct is violative of Nevada law.

The case reflects the agency’s continued partnership with states and also the continued pleading of rule violations that allow the agency to seek monetary relief pursuant to Section 19 of the FTC Act.

Government Shutter Does Not Deter FTC from Creating Tax Telemarketer Shudders