Congressional leaders look to reverse SCOTUS decision limiting the FTC

Photo (c) Douglas Rissing - Getty Images

The proposed Consumer Protection and Recovery Act could make the agency’s power stronger

U.S. lawmakers are attempting to flip last week’s Supreme Court decision that takes away the Federal Trade Commission’s (FTC) ability to provide restitution to defrauded consumers. If the new ruling sticks, the FTC’s only avenue to compensate customers who have fallen victim to deceptive business practices would come in the form of injunctions, not money.

Three Representatives -- Frank Pallone Jr., (D-NJ), Jan Schakowsky (D-IL), and Tony Cárdenas (D-CA) -- are leading the fight. Cárdenas has submitted a proposed bill called the Consumer Protection and Recovery Act that would give the FTC more power to provide restitution to fraud victims.

“The FTC, we know, lost the case, but it’s the American people that will suffer,” Pallone said in a joint Facebook Video conference with Schakowsky. “What my colleagues and I have been saying for over a year was a problem is now unfortunately an emergency.”

“The FTC used section 13(b) for over 40 years to sue in court to get consumers the money stolen from them and to force fraudsters to give up illegal profits,” Pallone continued. “And for over 40 years, it was effective in providing relief.” 

As an example of the FTC taking care of consumers, Pallone pointed to the agency’s distribution of $37.5 million in restitution paid to 167,000 residents of New Jersey since 2018.

Giving power back to the FTC

Timing is everything, and Cárdenas wasted none in tying his proposed bill to the increase in scams and fraud that preyed on consumers’ fears and financial insecurities during COVID-19. The hit that consumers took during the pandemic might go down as the worst in history. As of April 29, there have been 272,650 fraud reports, fleecing Americans out of $420.68 million -- an average of $349 per person.

“The FTC’s ability to return money taken from Americans through scams or fraud is under attack in the courts. Inaction is not an option and will only embolden these bad actors,” Cárdenas said. He stated that his proposed bill will give power back to the FTC so that it can put money back in the pockets of hard-working Americans.

While reversing a Supreme Court decision sounds like a daunting task, Professor Shubha Ghosh from the Syracuse University College of Law told ConsumerAffairs that it’s not unusual for Congress to amend legislation to overrule a Court’s reading of a statute. In fact, the Court’s decision essentially invited Congress to rework the legislation, and this could make consumer protections even stronger.

"As for consumer impact in the long run, if Congress responds as indicated, it can strengthen the power of the FTC to fight for consumers,” Ghosh said.

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