Congress and FTC push for consumer protection and recovery law


Late last month, members of Congress and the Federal Trade Commission (“FTC”) pushed for emergency legislation, the Consumer Protection and Recovery Act (HR 2668). HR 2668 would amend Section 13 (b) of the FTC Act “to explicitly reaffirm the FTC’s long-standing power to obtain an injunction and fair remedy, including monetary redress for consumers in the courts for all cases. violations of the laws it applies ”. As CPW readers will recall, this was in response to the Supreme Court’s unanimous opinion curtailing the FTC’s ability to seek monetary rewards in court, finding that Congress had not intended to give the agency that power in a section of the Federal Trade Commission Act granting the FTC the ability to seek injunctions.

Several witnesses have testified in Congress in support of HR 2668, which is summarized below.

Testimony of Rebecca Kelly Slaughter, Interim President of the Federal Trade Commission.

Written testimony presented by President Slaughter urged the subcommittee “to address the legal challenges to the critical authority that has enabled the FTC to do its consumer and competition protection work” by enacting the Law on consumer protection and recovery. Namely, President Slaughter discussed the two important judicial limitations in Section 13 (b) of the FTC Act and requested that Congress act to clarify Section 13 (b) with respect to those two limitations.

The first limitation was based on AMG Capital Management, LLC v. FTC, what precedes Supreme Court decision. President Slaughter explained that for forty years the FTC has used Section 13 (b) to reimburse consumers in various cases of data security and privacy, scams, deceptive marketing practices, telemarketing fraud, anti-competitive pharmaceutical practices and other cases. President Slaughter said such Section 13 (b) cases resulted in $ 11.2 billion in refunds to consumers over the past five years and AMG capital management severely limited the authority of the FTC in enforcement actions. As such, Congress should step in and clarify section 13 (b) to “revive the FTC’s ability to.” . . give consumers back the money they lost, which will go a long way [FTC’s] efforts to protect consumers.

The second limitation stems from recent court cases, which ruled that the FTC could not seek a Section 13 (b) injunction in cases where unlawful behavior had not occurred, but there was a reasonable probability that it may recur in the future. President Slaughter quoted the 2019 FTC c. Shire ViroPharma, Inc. case in which the court ruled that the FTC could only initiate section 13 (b) enforcement actions when the violation was ongoing or imminent. President Slaughter argued that this case (and others) severely limited the FTC’s ability to protect consumers from the offender’s illegal activities when the violation was no longer occurring, but that such illegal activity was reasonably likely to occur. reproduce. President Slaughter concluded that “these recent decisions have significantly limited the Commission’s primary and most effective tool to reimburse aggrieved consumers and, if Congress had not acted quickly, the FTC would be far less effective in its ability. protect consumers and carry out its law enforcement duties.

Testimonial from Anna Laitin, Director, Financial Equity and Consumer Reports Legislative Strategy

Ms. Laitin has addressed Congress to urge passage of the Consumer Protection and Recovery Act to restore the FTC’s ability to take enforcement action under section 13 (b). Ms Laitin argued that although the FTC is underfunded and must rely on limited enforcement powers, the FTC continues to offer consumers protection against unfair and deceptive acts and practices, although after the AMG Capital Management, LLC v. FTC ruling last week, the FTC cannot obtain the necessary civil penalties to significantly deter illegal activity.

Ms. Laitin discussed the facts surrounding the AMG Capital Management, LLC v. FTC and how, although the court ruled that AMG Services, a fraudulent payday loan company, must cease its fraudulent activities, defrauded consumers had no way of getting back the money they lost from AMG Services. Ms Laitin argued that while nothing prevents the FTC from relying on Sections 5 and 19 of the FTC Act to compensate consumers, those sections were not as effective as Section 13 (b). . Without the power conferred by section 13 (b), Ms. Laitin argued, the FTC was severely limited in its ability to protect consumers. As such, she urged Congress to quickly enact the Consumer Protection and Recovery Act to restore the authority of the FTC to prevent businesses from profiting from consumer fraud and deception.

Testimony of Ted Mermin, Executive Director, Center for Consumer Law & Economic Justice, UC Berkeley School of Law

Mr Mermin urged Congress to restore the authority of the FTC to recover money consumers lost due to fraudulent and deceptive activity by enacting the Consumer Protection and Recovery Act. Mr. Mermin pointed out that even the Supreme Court of AMG Capital Management, LLC v. FTC case discussed that if the FTC wanted more restorative authority, it should have gone to Congress.

Mr Mermin said he worked with the FTC while working as a deputy attorney general in a state attorney general’s office. Before AMG Capital Management, LLC v. FTC, the FTC brought relief to consumers through restitution – consumers were able to recover the money they had lost. Not only is the FTC severely limited in its enforcement capabilities (for example, the FTC cannot impose civil monetary penalties in many cases), but now the FTC cannot even protect consumers by reinstating them. Mr Mermin argued that the FTC needs more authority and power, especially in the wake of the COVID-19 pandemic. The powers given to the FTC under the Consolidated Appropriations Act of December 2020 and the COVID 19 Consumer Protection Act are expected to expire once the pandemic is no longer a public health crisis. Mr Mermin argued that enactment of the Consumer Protection and Recovery Act, at a minimum, is necessary to give the FTC the proper authority to do its job – protecting consumers and deterring businesses from fraudulent and illegal activity.

Mr Mermin argued that the Consumer Protection and Recovery Act only addressed two limits on the authority of the FTC, and Congress should have enacted more laws to “restore the FTC to its legitimate and logical position as national leader in consumer protection ”.

Howard Beales III, Emeritus Professor of Strategic Management and Public Policy, George Washington School of Business.

Mr. Beales told the story of the FTC using section 13 (b) to “attack fraud” in the FTC’s consumer protection enforcement program; the FTC has been able to return billions of dollars to defrauded consumers – however, the AMG Capital Management, LLC v. FTC decision deprived the FTC of this ability.

Mr. Beales urged Congress to allow the FTC to seek equitable relief under section 13 (b), subject to the standards set out in section 19. Namely, Mr. Beales argued that although the FTC should have more power to grant monetary relief, the FTC should not have unlimited discretion to seek financial sanctions. Mr Beales proposed that if a court finds that a violation has occurred, but does not meet Section 19 standards, the court should grant an injunction and not grant the FTC the power to seek redress. pecuniary in all situations.

Mr Beales expressed concern that the FTC’s unlimited authority, for example, in the enforcement of FTC advertising, could curb truthful claims. Mr Beales explained how the FTC has strict standards for health-related claims and how recent evidence supporting the benefits of wearing masks may not necessarily meet those standards. If, for example, the FTC were to pursue action limiting such claims, removing those claims would harm consumers rather than protect them. Mr Beales argued that the FTC’s prosecutorial discretion might not be enough to avoid cooling down truthful speech and that the FTC’s default rule should not be monetary penalties. He argued that companies cannot rely solely on the FTC’s prosecutorial discretion to protect their truthful speech and avoid monetary penalties. Overall, Mr. Beales urged Congress to consider legislation allowing the FTC to seek equitable relief under section 13 (b), subject to the substantive standards set out in section 19. In addition Beales predicted that Congress should set the standards for when money is appropriate, rather than granting an agency unlimited discretion to seek financial penalties whenever it deems appropriate.

© Copyright 2021 Squire Patton Boggs (US) LLPRevue nationale de droit, volume XI, number 137


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