Supreme Court Curbs FTC’s Power to Seek Monetary Awards

The Supreme Court issued a ruling Thursday, April 22, that will significantly limit the Federal Trade Commission’s (FTC) ability to extract monetary relief for consumers when companies are found to use deceptive practices, reported CNBC.

In a unanimous opinion delivered by Justice Stephen Breyer, the court ruled that Section 13(b) of the FTC Act does not authorize the agency to seek monetary relief for violations of the law, as it has commonly been used. The court noted that 13(b) doesn’t explicitly authorize the agency to obtain such a remedy, but instead allows the FTC to seek “a permanent injunction” pending administrative proceedings.

“It is highly unlikely that Congress, without mentioning the matter, would grant the Commission authority to circumvent its traditional §5 administrative proceedings,” Breyer wrote. Given that Congress later enacted a law that authorizes the agency to seek monetary relief, the court stated it did not believe Congress would have done so if 13(b) already granted that authority.

The decision will significantly hamper the FTC’s ability to return money to consumers duped by deceptive business practices, as the four sitting commissioners testified to Congress on Tuesday. The two Democrats and two Republicans all advocated for a legislative fix should the Supreme Court rule against its authority to grant monetary relief under Section 13(b), though Republican Commissioner Noah Phillips suggested a more narrow approach focused on restitution rather than additional repayment for ill-gotten gains. The House Energy and Commerce Committee had already slated a hearing for next week to discuss legislative fixes to reaffirm the FTC’s power to provide redress to consumers.

The ruling could have far-reaching impacts in cases where the FTC has invoked Section 13(b). Facebook, for example, argued in its motion to dismiss the FTC’s ongoing antitrust lawsuit that it lacks statutory authority under 13(b). While the issue isn’t directly about monetary relief, Facebook argued the FTC should not be able to claim authority under that law to remedy past conduct, since it only allows the FTC to stop ongoing or imminent legal violations.