The Federal Trade Commission (FTC) is acting swiftly to restore its authority to obtain consumer redress under Section 13(b) of the FTC Act after the Supreme Court’s recent decision in AMG Capital Management, LLC v. FTC, discussed in our blog post here, rejecting the agency’s longstanding position that Section 13(b) authorizes monetary remedies.
In testimony before the House Energy and Commerce Subcommittee on Consumer Protection on April 27, the FTC asked Congress to pass legislation to re-establish its ability to obtain monetary remedies via Section 13(b). In addition, the FTC’s testimony noted that two other recent decisions in the Third Circuit have hampered the FTC’s ability to protect consumers. In one case, the Third Circuit held that the FTC could bring enforcement actions under Section 13(b) only when a violation is either ongoing or “impending” at the time the suit is filed. In another ruling, the court held that the FTC cannot sue under Section 13(b) unless conduct is imminent or ongoing.
Acting FTC Chairwoman Rebecca Kelly Slaughter stated, “[t]hese recent decisions have significantly limited the Commission’s primary and most effective tool for providing refunds to harmed consumers, and, if Congress does not act promptly, the FTC will be far less effective in its ability to protect consumers and execute its law enforcement mission.”
Historically, seven of the 12 courts of appeal interpreted Section 13(b) of the FTC Act to authorize district courts to award equitable remedies necessary to provide relief to consumers. In 1994, Congress ratified its intent to enable the FTC to obtain monetary remedies by expanding the venues available for FTC enforcement cases. However, a shift in judicial decisions over recent years concluded in last week’s Supreme Court ruling that Section 13(b) does not authorize returning money to harmed consumers.
The FTC has relied on Section 13(b) of the FTC Act to secure consumer redress in a multitude and variety of cases. Notably, the FTC has returned $11.2 billion to consumers in the past five years. It is now up to Congress to pass legislation to restore the FTC’s authority to provide consumer redress and clarify other wavering enforcement abilities, such as the ability to receive an injunction.