What Happened? Trump Administration Freezes FCPA Requirements
As the Trump Administration's first 100 days continue, another executive order has come rolling in, pausing the enforcement of the Foreign Corrupt Practices Act (hereinafter referred to as FCPA), enacted in 1977.[1] Entities operating in various sectors, such as the fashion and retail industry, should pay close attention to the new order as it may implicate FCPA-related actions.[2] For 180 days following the order, the U.S. Attorney General must pause new FCPA investigations (with limited exceptions), review ongoing cases, and develop revised guidelines to reinforce presidential authority, promote U.S. interests, and optimize law enforcement resources.[3]
The FCPA prohibits individuals and businesses from bribing foreign officials to secure or maintain business.[4] Enforced by both the Department of Justice (DOJ) and the Securities and Exchange Commission (SEC), the FCPA has a broad reach prohibiting such conduct across the globe.[5] Originally in 1977, the FCPA solely applied to U.S. persons and certain foreign issuers of securities.[6] Following the amendments in 1988, the FCPA's anti-bribery provision extends to foreign firms and individuals facilitating bribes within U.S. territories.[7]
Impact on Fashion and Beauty
The fashion and beauty industry has had its share of clashes with the FCPA in the past. In 2014, the SEC charged global cosmetics company Avon Products, Inc. (Avon) and its subsidiary, Avon Products China, with FCPA violations.[8] According to the SEC’s complaint, from 2004 to 2008, Avon allegedly failed to maintain accurate financial records and engaged in corrupt practices by making improper payments to Chinese government officials.[9] These payments (which included cash, gifts, travel, and entertainment) were intended to secure a test license and direct sales business license for door-to-door sales in China.[10] Moreover, the SEC alleged that Avon had a “no penalty policy” by offering bribes to avoid fines and maintain a clean corporate image.[11] Eventually, Avon pleaded guilty and paid a steep total of $135,013,013 in U.S. criminal and regulatory penalties.[12]
Earlier, in 2013, another dominant fashion company, Ralph Lauren, paid nearly $600,000 in gifts and bribe payments to Argentine officials during a four-year period.[13] Yet, Ralph Lauren's Argentina subsidiary acted swiftly and, as a result of the company taking accountability for its FCPA violations, received a non-prosecution agreement instead of charges.[14] The SEC exclaimed that Ralph Lauren's prompt reporting, complete disclosure, and cooperation “saved the agency substantial time and resources ordinarily consumed in investigations of comparable conduct,” which significantly mitigated Ralph Lauren’s consequences.[15]
Why the Fashion Industry and “Others” Should Remain Compliant with the FCPA
Countless fashion companies operate worldwide, with many conducting international business across design, manufacturing, and sales.[16] Given the global reach of major U.S. fashion companies, strict compliance is crucial as other countries continue enforcing anti-bribery laws.[17] Companies may expect looser FCPA enforcement, but the statute remains unchanged.[18] Further, the order is merely pausing FCPA enforcement and is likely to resume once the DOJ issues new guidance.[19] Notably, with the FCPA's statute of limitations exceeding four years, legal advisors urge businesses to stay proactive in compliance plans, as the next administration may enforce stricter regulations.[20] Hence, the fashion world needs to think twice before switching up its style.
[2] See Pausing FCPA, supra note 1; see also Kevin B. Muhlendorf et al., What the FCPA Criminal Enforcement “Pause” Means for Companies, Wiley Rein LLP (Feb. 12, 2025), https://www.wiley.law/alert-What-the-FCPA-Criminal-Enforcement-Pause-Means-for-Companies ("It is unclear if or how the order impacts ongoing investigations and enforcement actions. Indeed, on February 11, a U.S. District Court judge asked DOJ to explain how the order impacts an upcoming FCPA trial.").
[3] Pausing FCPA, supra note 1.
[6] FCPA Unit, supra note 4.
[8] Complaint at 1–3, SEC v. Avon Prods., Inc., No. 14-cv-9956, (S.D.N.Y. Dec. 17, 2014); SEC v. Avon Prods., Inc., Civ. Action No. 14-Cv-9956 (KPF) (S.D.N.Y.), SEC Release No. 3616, 2014 WL 7184242 (Dec. 17, 2014).
[9] Complaint, supra note 8, at 1.
[18] Muhlendorf et al., supra note 2.
[20] Banham et al., supra note 17; see Cahill Gordon & Reindel LLP, supra note 19.
