Supreme Court Ruling Lessens FTC Options For Consumer Monetary Relief

Supreme Court

Under a new Supreme Court ruling, the Federal Trade Commission (FTC) will have much less authority to enable monetary relief for customers when companies are found to use deceptive practices, CNBC reports.

The decision was unanimous and, in an opinion, Justice Stephen Breyer said section 13(b) of the FTC Act doesn’t give the agency the right to seek relief for violations of the law as it’s been done before. The court said 13(b) does not explicitly say the agency will be able to get a remedy, but instead lets the FTC get a “permanent injunction” against 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, according to CNBC.

Because Congress later put a law in place to let the agency seek monetary relief, the court said Congress wouldn’t have done that if 13(b) had already allowed such a thing.

This decision will make it much more difficult for the FTC to return money to consumers who have been the victims of deceitful business practices. The four sitting commissioners testified as such to Congress on Tuesday (April 20). The two Democrats and two Republicans all said a legislative fix would be necessary. However, Republican Commissioner Noah Phillips recommended a more narrow fix, focused more on restitution rather than additional repayment for illicit schemes.

The FTC received over 2.1 million reports of fraud from consumers in 2020, with the bulk of them being imposter scams, and the second-most being online shopping fraud. The rest of the top five categories are rounded out by prizes, sweepstakes and lotteries and telephone and mobile services fraud.

Consumer losses from fraud hit up to $3.3 billion in 2020, which was an increase from $1.8 billion in 2019. Around $1.2 billion from last years’ losses came from imposter scams.