On April 20, 2021, in anticipation of an adverse Supreme Court ruling, the Senate Committee on Commerce, Science, and Transportation held a hearing titled, “Strengthening the Federal Trade Commission’s Authority to Protect Consumers.” Two days after the hearing, on April 22, 2021, the U.S. Supreme Court ruled that Section 13(b) of the Federal Trade Commission Act (the “Act”) does not authorize the FTC to seek, or a court to award, equitable monetary relief such as restitution or disgorgement. At the hearing, the four currently serving FTC Commissioners presented testimony urging Congress to amend the Act to expressly provide the authority that the Supreme Court found not to presently exist.
The four FTC Commissioners who testified at the hearing were: Rebecca Kelly Slaughter, who currently serves as Acting Chairwoman, Noah Phillips, Rohit Chopra, and Christine Wilson.
Redress to Consumers under §13(b) of the Act. Although the Commissioners’ individual viewpoints varied with respect to the appropriate use of the FTC’s §13(b) authority, each Commissioner generally acknowledged that the FTC should be permitted to obtain monetary redress for consumers.
- Acting Chairwoman Slaughter proposed that the FTC should have “independent litigation authority for civil penalty cases.” § 5(l) of the Act mandates that “any person, partnership, or corporation” who violates a final order issued by the FTC will be liable for a “civil penalty of not more than $10,000 for each violation” and such penalties may be recovered by the Attorney General of the United States. This proposed authority would presumably enable the FTC to directly recover civil penalties rather than to recover civil penalties only for violations of final FTC orders.
- Commissioner Phillips asserted that Congress’s focus should be on “helping consumers” and not “inappropriately punishing businesses.” Commissioner Phillips’s stance on the FTC’s § 13(b) monetary disgorgement and restitution power was that it should be utilized in a manner that is commensurate with the consumer harm at issue.
- Commissioner Chopra (President Biden’s nominee for CFPB Director) noted that a “§ 13(b) fix will not fix many of the FTC’s challenges.” He repeated his previously expressed view that the FTC does not meaningfully deter wrongdoing as the agency frequently enters into no-fault settlements with repeat wrongdoers. He proposed that victims and state attorney generals be allowed to file for injunctive relief in court to halt violations of final FTC orders.
- Commissioner Wilson urged Congress to integrate a statute of limitations into the Act to limit the FTC’s §13(b) power and to amend §13(b) to allow disgorgement only under a specific set of factual circumstances (i.e., fraud cases but not deception cases).
Protecting Data Privacy in the Digital Era. In addition to the Supreme Court’s potential rollback of the FTC’s § 13(b) authority, the other significant topic discussed was the protection of data privacy. Commissioner Wilson noted that FTC Commissioners on a bipartisan basis have consistently pressed Congress to enact a data security and privacy law. She suggested that if Congress decides not to act swiftly, the FTC may move forward on its own under §18 of the Act, which is widely referred to as Magnuson-Moss rulemaking. This would enable the FTC to create a rule that specifies the standard by which data security is to be regulated in the absence of Congressional legislation.