2021 SCOTUS decision gutted FTC “13(b)” authority which returned $11.2B to victims during prior 5 years
Commerce Committee Report punctuates urgency for Congress to act
WASHINGTON, D.C. – U.S. Senator Maria Cantwell, (D-Wash.), Chair of the Committee on Commerce, Science, and Transportation, announced that today Democrats advanced the Consumer Protection Remedies Act of 2022 out of the Commerce Committee and to the Senate Floor. Sen. Cantwell introduced the bill earlier this month along with Senators Amy Klobuchar (D-Minn.), Ben Ray Luján (D-N.M.), Chair of the Subcommittee on Communications, Media, and Broadband, and Rev. Raphael Warnock (D-Ga.) to restore the Federal Trade Commission’s (FTC) decades-long authority to return money to consumers victimized by illegal scams, fraud and other unfair or deceptive practices. In April 2021, the Supreme Court slashed the FTC’s “Section 13(b)” authority which the commission utilized to return $11.2 billion dollars to consumers in the five years prior to the decision.
“In the last couple of years, we have seen the explosion of fraud and scams trying to take advantage of the COVID 19 pandemic to rip off consumers,” said Sen. Cantwell during today’s executive session. “Whether it's selling fake cures, counterfeit N-95 masks, or promising big payoffs to work from home. A report issued last week by this committee that we authored found that in 2021 alone, consumers reported to the FTC losing more than 5.8 billion to fraud and deceptive practices and it's not getting any better. That's why we introduced legislation to restore the FTC’s authority to go to court and obtain redress for consumers who've been scammed out of their hard-earned money, or for small business owners who've been locked out of competitive marketplaces.”
Cantwell continued: “Ensuring the FTC can protect consumers from bad actors has always been a bipartisan pursuit. In fact, Senators Wicker and Blackburn introduced originally this legislation as part of the 2020 Safe Data Act. The one thing, and the broad range of stakeholders can agree on, is that the authority should be restored to the FTC.”
“As our nation’s top consumer protection agency, the FTC must be empowered with the necessary tools to stand up for consumers and small businesses that have fallen victim to scams and fraud schemes,” said Sen. Klobuchar. “This legislation will re-establish the FTC’s ability to return money to victims of unfair or anticompetitive practices, and hold scammers and monopolists accountable for their unlawful conduct.”
"One of the FTC's primary responsibilities is defending consumers from predatory scams and fraud," said Sen. Luján. "It is high-time that Congress reinstate the FTC's authority to return billions of dollars to victims of unfair and deceptive practices. That’s why I'm proud to join Senators Cantwell, Klobuchar, and Warnock in introducing this legislation. I won't stand by as New Mexican families and small businesses get ripped off."
The vote on the legislation split along party lines, 14-14, and will be reported to the Senate floor. In order to receive a vote by the full Senate, Majority Leader Schumer must file a discharge petition to add it to the Senate calendar.
The Consumer Protection Remedies Act of 2022 fully restores the FTC’s ability to obtain monetary and other relief for consumers under Section 13(b) of the FTC Act by going directly to federal court. The legislation:
Protects consumers and fosters a fair marketplace by:
- Allowing the FTC to go to court and ask the judge to order scammers and law breakers to return the money they unlawfully took from consumers and give up their ill-gotten gains so that it is not profitable to break the law.
- Permitting the FTC to go to court to seek monetary remedies for consumers who were harmed because of anticompetitive conduct, in addition to unfair and deceptive or other unlawful conduct.
- Confirming that the FTC may sue for injunctions and consumer redress for prior conduct, not just ongoing conduct, to stop law breakers from reverting back to their unlawful conduct.
Affirms 13(b)’s due process protections with impartial court-ordered redress 13(b) by:
- Ensuring that the FTC must argue its case in front of a neutral federal judge, with opportunity to appeal contested decisions through the federal judiciary.
- Requiring that refunds or other relief be “in the public interest,” as determined by the judge.
The Commerce Committee released a report outlining the implications of the Supreme Court’s April 2021 decision in AMG Capital Management LLC v. FTC that gutted the commission’s enforcement authority under Section 13(b) of the FTC Act. For more than 40 years, the FTC relied on this enforcement power to refund money illegally taken from consumers and small business owners through unlawful and unfair business practices including telemarketing fraud, pyramid schemes, and data security and privacy scams. It had been especially critical in cases involving technology and pharmaceutical companies including Amazon, Uber, AT&T, Teva and Tracfone, which returned millions of dollars to victims of illegal conduct. Immediately following the Supreme Court action, even FTC cases that had been decided in favor of consumers were halted, allowing corporations to keep hundreds of millions of dollars in redress owed to victims.
During the COVID-19 pandemic, consumer complaints to the FTC of fraud, identity theft and deceptive practices skyrocketed as scammers peddled offers of fake cures, counterfeit masks and bogus opportunities to earn money working from home. In 2020, consumer complaints rose more than 45% over 2019. Complaints continued to grow in 2021, and reported losses hit a record $5.9 million.