Unanimous SCOTUS Weakens FTC Redress Authority

The agency can seek restitution for consumers under Sections 5 and 19, said the 9-0 opinion, delivered by Justice Stephen Breyer. “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." Many seek just that. Section 13(b) lets the agency pursue injunctive relief to stop illegal business practices, the court said, noting that the other sections allow avenues for seeking monetary redress for consumers.

The ruling deprives the FTC of its “strongest tool” for helping consumers “when they need it most,” said acting Chairwoman Rebecca Kelly Slaughter. “We urge Congress to act swiftly to restore and strengthen the powers of the agency so we can make wronged consumers whole.” She noted that all four FTC members discussed the need for 13(b) legislation before the Senate Commerce Committee this week. Chair Maria Cantwell, D-Wash., said she would explore legislation if the court delivered an adverse decision for the FTC. Rep. Tony Cardenas, D-Calif., introduced legislation to clarify the statute, and the House Consumer Protection Subcommittee will consider his bill at a virtual hearing Tuesday; the start time was delayed to 1 p.m. EDT. Slaughter said she will testify and ask Congress to move quickly.

"Protecting consumers and compensating them for harm is a paramount duty of the FTC,” Cantwell said in a statement on Thursday’s decision. “We are working to move legislation immediately to make sure this authority is properly protected.” Slaughter accused the Supreme Court of siding with “scam artists and dishonest corporations, leaving average Americans to pay for illegal behavior.” She said AMG and Scott Tucker “stole more than $1.3 billion from consumers through a deceptive payday lending scheme.” They misrepresented loan terms and caused “borrowers to pay more than seven times the interest they were told they would pay,” she said. Lawyers in the case who appear to represent AMG or other interests didn't comment, nor did DOJ.

Section 13(b) as written doesn’t grant the commission authority to obtain equitable monetary relief, SCOTUS ruled. A provision’s “grant of an ‘injunction’ or other equitable powers does not automatically authorize a court to provide monetary relief,” said the opinion. Section 13(b) allows the commission to go directly to district court when seeking injunctive relief pending administrative proceedings or when seeking a permanent injunction, the court said. Section 19 confirms this, it said: “It is highly unlikely that Congress, without mentioning the matter, would grant the Commission authority to circumvent its traditional Section 5 administrative proceedings.”

TechFreedom applauded the decision, noting its amicus brief argued the agency must use Section 5 or 19 to “obtain refunds and other monetary relief for consumers.” President Berin Szoka said the FTC has “long overstepped its authority in ways that bypass basic due process protections built into the FTC Act.”

The decision “effectively strips the FTC of its ability to compensate consumers harmed by companies and organizations that violate the agency’s rules,” said Public Knowledge. Policy Counsel Alex Petros noted the opinion’s suggestion that Congress can “easily fix this problem by clarifying that the FTC can seek equitable remedies along with an injunction.” Given bipartisan interest, it should be a legislative priority, he said.

The National Consumer Law Center, Public Citizen, Open Markets Institute, American Antitrust Institute, a group of ex-FTC officials and some 30 states sided with the agency in the case. In 2020, all FTC commissioners wrote the Senate and House Commerce committees, calling 13(b) a “critical” enforcement tool. The New Civil Liberties Alliance, U.S. Chamber of Commerce, Washington Legal Foundation and Americans for Prosperity supported AMG.