Following a hearing in the Senate Committee on Commerce, Science, and Transportation last month, Federal Trade Commission Acting Chairwoman Rebecca Kelly Slaughter wrote to the Committee regarding the FTC’s position that the ability of the agency to return money unlawfully taken from consumers should be restored. The aforementioned Congressional Committee is currently working on draft language for a new Section 13(b) of the FTC Act.
Acting Chairwoman Slaughter’s letter was written in response to a letter from the U.S. Chamber of Commerce regarding the Commission’s ability to use Section 13(b) of the FTC Act to seek consumer compensation in antitrust and consumer protection cases. The Chamber’s letter notes that the legislative history of the FTC Act requires the FTC to use Section 19’s administrative processes to obtain monetary relief for past violations, and that monetary relief should be reserved for the most egregious types of cases.
In short, Acting Chairwoman Slaughter’s letter explains that the Chamber’s argument against legislation to restore the FTC’s authority is based on fundamental misunderstandings of the history of Section 13(b) which, in 2020 alone, resulted in more than $483 million in refunds to consumers who lost money due to alleged unlawful conduct. Specifically, the letter explains that the Chamber’s proposals would allow companies and individuals to keep the gains they earned from breaking the law, hurt honest competitors who did not break the law, and leave consumers who suffered losses out in the cold.
On April 22, 2021, the Supreme Court ruled the FTC lacks authority under Section 13(b) to seek monetary relief in federal court. According to a unanimous Court, “[t]he Commission may obtain monetary relief by first invoking its administrative procedures and then § 19’s redress provisions . . . By contrast, the Commission’s broad reading would allow it to use §13(b) as a substitute for §5 and §19.”
The Commission has urged Congress to restore the FTC’s ability to get money back for consumers as it has over the past four decades in a wide variety of cases, including telemarketing fraud, anticompetitive pharmaceutical practices, data security and privacy, scams that target seniors and veterans, and deceptive business practices, among many others.
In her letter, the Acting Chairwoman reiterated her support for legislation to swiftly restore Section 13(b) and preserve the FTC’s ability to enjoin illegal conduct, disgorge ill-gotten gains, and return to consumers money they have lost.
It will be interesting to see if Congress decides that the FTC should be able to use Section 13(b) to pursue monetary and injunctive relief for all violations, regardless of whether they occurred in the past, they are ongoing or they are imminent, or whether the Chamber’s view that monetary relief should be available only for clearly fraudulent cases that are found to be in violation of the law.
Consult with an experienced FTC lawyer if you are interested in discussing applicable claim substantiation requirements and FTC regulatory policy.
Richard B. Newman is an FTC defense attorney at Hinch Newman LLP. Follow FTC defense lawyer on National Law Review.
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