U.S. Supreme Court Halts FTC’s Ability to Obtain Ill-Gotten Gains

On April 21, 2020 in the matter of AMG Capital Management, the U.S. Supreme Court effectively made it more difficult for the Federal Trade Commission to force those that engage in deceptive business practices to return ill-gotten gains obtained from consumers.

The unanimous ruling was written by Justice Stephen Breyer and is a victory of sorts to digital marketers.  In short, the Court held that the FTC does not possess the authority under the FTC Act to seek court orders that direct wrongdoers to return money via restitution or disgorgement.

In the absence of a legislative fix, the FTC will not be forced to initiate and utilize a much more burdensome and lengthier process to obtain monetary redress for consumers.

“Section 13(b) as currently written does not grant the Commission authority to obtain equitable monetary relief,” Breyer wrote, noting that the FTC can seek restitution under other provisions of the law.  “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.”

“Taken as a whole, the provision focuses upon relief that is prospective, not retrospective,” Breyer wrote.

“To read those words as allowing what they do not say, namely, as allowing the Commission to dispense with administrative proceedings to obtain monetary relief as well, is to read the words as going well beyond the provision’s subject matter.  In light of the historical importance of administrative proceedings, that reading would allow a small statutory tail to wag a very large dog.”

It is anticipated that the Supreme Court’s ruling will directly impact the Credit Bureau Center case currently pending before the Court.

The ruling is nothing short of a huge blow to FTC’s consumer protection, privacy and antitrust efforts.

“Enforcement actions will slow and redress for consumers will dry up if Congress does not act quickly to affirm our full authority under 13(b),” acting FTC Chair Rebecca Kelly Slaughter testified at a Senate hearing Tuesday.

Breyer added that the FTC still has the authority to obtain financial restitution on behalf of consumers under other sections of the FTC Act.

Here is the opinion.

Congress is already considering legislation to address the Supreme Court decision.

Richard B. Newman is an FTC defense lawyer at Hinch Newman LLP.

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