Section 13b of the FTC Law for Fair Monetary Relief

In AMG Capital Management v. FTC, the Supreme Court unanimously ruled that Section 13 (b) of the FTC Act does not allow the FTC, in federal lawsuits, to seek fair pecuniary relief. 141 S. Ct. 1341 (2021). However, the FTC can still claim pecuniary relief under other sections of the law.

In AMG Capital Management v. FTC, petitioner AMG Capital Management (AMG) offered short-term payday loans to borrowers. By marketing these loans, he misled clients by suggesting that they would only have to make one payment on a loan. This was misleading because customers who had not opted for automatic renewal of these payments would continue to be charged the original payment amount on their loans. As a result of these deceptive practices, AMG has accumulated more than $ 1.3 billion in deceptive charges.

The Federal Trade Commission (FTC) brought an action in federal court against AMG under Section 5 (a) of the Federal Trade Commission Act (the Act) (see 15 USC § 45 (a) (1)) . Relying on Section 13 (b), the FTC sought a permanent injunction and asked the court to order monetary relief in the form of restitution and restitution of ill-gotten AMG profits. The district court granted the FTC’s request for monetary relief. AMG appealed, arguing that Section 13 (b) did not authorize the courts to grant, or the FTC to receive, monetary relief. The United States Court of Appeals for the Ninth Circuit upheld the district court’s decision, relying on precedents that supported the interpretation of Article 13 (b) as authorizing the courts to grant a remedy pecuniary to the FTC. AMG has applied for and obtained certiorari from the Supreme Court of the United States.

The Court reversed, finding that Section 13 (b) does not authorize the FTC to seek monetary relief from companies engaging in deceptive marketing practices. In a unanimous opinion, the Court agreed that Section 13 (b) cannot be interpreted as authorizing equitable monetary relief, such as the restitution and restitution of profits that the FTC has requested here. Instead, the Court interpreted the wording of section 13 (b) to have its ordinary meaning – that courts can only grant the FTC an injunction in a civil action, if any.

When it was created, the FTC was only empowered to take enforcement action through administrative channels. Decades later, Congress enacted Section 13 (b) of the FTC Act, which authorized the FTC to sue in federal court and seek a temporary and permanent injunction. There followed a series of rulings interpreting the newly added article to mean that federal courts adjudicating on FTC actions were not limited to granting fair relief in the form of injunctions, but could instead use the ‘all their equitable powers to also grant other types of equitable reparation, such as restitution and restitution of benefits. In its decision, the Supreme Court rejected this precedent, holding that, read in conjunction with other sections of the Act, the remedy available in section 13 (b) was intended to be an exclusive list of options which concerned only the “injunctive prospective” and not “retrospective monetary relief”.

While the ruling terminates the FTC’s ability to seek pecuniary relief under Section 13 (b), it has not resulted in a blanket ban on the FTC’s ability to seek some form of financial relief. pecuniary relief. As part of its analysis, the Court recognized that other provisions of the Act specifically authorize the FTC to seek certain forms of monetary relief. For example, the FTC can still seek pecuniary relief under section 19 of the act, which authorizes federal courts to issue “relief orders”.[ing] harm to consumers ”, such as a“ refund of money, ”but only after the FTC initiated an administrative proceeding, obtained a cease and desist order in such proceeding, and applied to the federal court to ” execute this order under section 19 (d).

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