College Athletes: The Feds Are Watching. Now What?

Back in January, the Federal Trade Commission sent formal information requests to 20 unnamed Division I universities. The subject: sports agent compliance under the Sports Agent Responsibility and Trust Act (SPARTA). The deadline for universities to respond was March 23rd.

Senate Democratic leaders for the 118th Congress gather for a photo in the Ohio Clock Corridor of the U.S. Capitol following elections on Dec. 8, 2022. From left, West Virginia Sen. Joe Manchin, Wisconsin Sen. Tammy Baldwin, Virginia Sen. Mark Warner, Nevada Sen. Catherine Cortez Masto, Massachusetts Sen. Elizabeth Warren, Michigan Sen. Debbie Stabenow, New York Sen. Chuck Schumer, Illinois Sen. Dick Durbin, Minnesota Sen. Amy Klobuchar, Vermont Sen. Bernie Sanders, New Jersey Sen. Cory Booker and Hawaii Sen. Brian Schatz. (Jennifer Shutt/States Newsroom)

That deadline just passed.

Let that sit for a second. A federal consumer protection agency -- not the NCAA, not a state official, not a conference officer -- formally demanded that universities explain how they're handling agent oversight during the transfer portal process. That's not a warning letter. That's not a press release. That's an official federal inquiry with a response deadline.

Here's why athletes need to pay attention to this. SPARTA imposes real obligations on agents. Under SPARTA, have to make specific disclosures, they can't make false statements, and they can't offer benefits to athletes as a way of locking them into a representation agreement.

The problem is enforcement in the college space has historically been close to nonexistent. Schools aren't equipped to police it. The NCAA doesn't have the jurisdiction. And the athletes themselves often don't know the law exists until something goes wrong.

That's starting to change.

Senator Richard Blumenthal has proposed the Student Athlete Fairness and Enforcement Act (the SAFE Act), which would require, among other things, agents to register with their state and cap agent fees at 5 percent. Five percent.

That number matters because right now there's no federal ceiling on what an agent can charge a college athlete. None. Agents have charged college athletes upwards of 30%.

The House settlement and the transfer portal created opportunity. Real, meaningful, financial opportunity for college athletes. But the same laws and portal that opened the door to life-changing deals also opened the door to people who want to take a piece of those deals without having any legal obligation to protect the athlete on the other side of the table. Athletes need to understand the role of agents, how agents are charging them, and what the agents' legal responsibilities are in their representation.

The FTC showing up is a signal that someone in Washington is starting to treat this like the consumer protection issue it actually is. Whether it leads to real enforcement or just a pile of paperwork is still an open question. Honestly, I don't like that the federal government is getting involved and asking questions. But the questions are being asked. Make sure your equipped to answer those questions and protect yourself.