Woah: Supreme Court Strips FTC Of Key Ability to Obtain Monetary Relief in Court

Well this is a big one. And although it doesn’t relate directly to the TCPA, the cross-over issues here are pretty clear.

So there’s this agency–the FTC– and it has a number of powers at its disposal. But much like the FCC, its enforcement capabilities are limited by certain statutes that give it those powers. Some of them are pretty broad–like Section 5 of the FTC Act–and some of them seem pretty narrow –like Section 13 of that Act. Essentially Section 13 just gave the FTC power to seek injunctive relief–not to recover any money in Court.

The FTC has acted (very slowly and incrementally) to unilaterally expand its powers under Section 13 over the years because its way faster than using its other powers. Essentially it gave itself the right to go to court and quickly recover profits that were obtained by clearly illegal conduct in “exceptional cases.” And over time it used this power with increasing frequency–now bringing dozens of these cases each year.

Well today the Supreme Court–in another 9-0 decision–put an end to these lawsuits. Much like the textualist approach it adopted in Facebook the Supremes explained that the FTC lacks the power to seek monetary recovery under Section 13 because.. the statute doesn’t give it the power to do that:

Several considerations, taken together, convince us that §13(b)’s “permanent injunction” language does not authorize the Commission directly to obtain court-ordered monetary relief. For one thing, the language refers only to injunctions. It says, “in proper cases the Commission may seek, and after proper proof, the court may issue, a permanent injunction.”

And in a statement that echoes Facebook‘s “take it up with Congress” narrative:

Nothing we say today, however, prohibits the Commission from using its authority under §5 and §19 to obtain restitution on behalf of consumers. If the Commission believes that authority too cumbersome or otherwise inadequate, it is, of course, free to ask Congress to grant it further remedial authority.

On that topics, members of Congress have acted swiftly (perhaps too swiftly?) to convene hearings following the Supreme Court’s ruling today.

Indeed, Energy and Commerce Committee Chairman Frank Pallone, Jr. (D-NJ) and Consumer Protection and Commerce Subcommittee Chair Jan Schakowsky (D-IL) announced today that the Consumer Protection and Commerce Subcommittee will hold a fully remote legislative hearing on Tuesday, April 27, at 1 p.m. (EDT). The hearing is entitled, “The Consumer Protection and Recovery Act: Returning Money to Defrauded Consumers.”

In their words:

“The Federal Trade Commission (FTC) is the nation’s premiere consumer protection agency, but its ability to return money to people who have been scammed is under attack in the Courts. An uncertain impending Supreme Court decision on the FTC’s 13(b) authorities has given scammers new opportunities to take advantage of people, including those who are isolated at home due to the pandemic. Next week, we will hold a hearing to consider legislation that would restore the FTC’s longstanding authorities to provide redress to consumers who’ve been scammed.”

The hearing will be conducted remotely via Cisco Webex video conferencing. Members of the public may view the hearing via live webcast accessible on the Energy and Commerce Committee’s website. Information for the hearing, including the Committee Memorandum, the legislation to be discussed, witnesses, testimony, and a live webcast will be posted HERE as they become available.

Contrast this swift action to the lack of Congressional action on the TCPA–called it.

(BTW-NO ONE on the defense side better be lobbying Congress on the TCPA without chatting with me. I’m leading this effort. Organize folks.)

The Supreme Court’s decision is AMG Capital Management v FTC and it is available: here.