Supreme Court takes away FTC’s ability to provide restitution to defrauded consumers

Photo (c) Bo Zaunders - Getty Images

The agency is pushing for legislation that will restore its power to help victims

With the stroke of a pen, the U.S. Supreme Court has undercut the Federal Trade Commission’s (FTC) power to force lawbreaking companies to repay consumers or surrender profits they fraudulently gained. 

In the matter of the FTC vs. AMG Capital Management, the Court ruled in favor of AMG and its founder, Scott Tucker, who took more than $1.3 billion from consumers through a deceptive payday lending scheme. That scheme -- which involved various AMG companies such as 500FastCash and Advantage Cash Services -- allowed the FTC to defend defrauded consumers and provide $505 million in restitution.

However, that might be one of the FTC’s last hurrahs. The Court’s opinion in the case could forever change how the FTC handles privacy and antitrust cases on behalf of consumers. 

Under a provision in the FTC Act that’s been in place for more than 40 years, the FTC had the ability to seek monetary relief from companies that have harmed consumers in one way or another. Monetary damages to the consumer have been made possible in a wide variety of cases, including telemarketing fraud, anticompetitive pharmaceutical practices, data security and privacy, charity scams, and even COVID-related scams that bilked consumers out of more than $600 million.

FTC stripped of its strongest tool

The Court’s opinion immediately caught the ire of FTC Acting Chairwoman Rebecca Kelly Slaughter.

“In AMG Capital, the Supreme Court ruled in favor of scam artists and dishonest corporations, leaving average Americans to pay for illegal behavior,” she wrote in a statement sent to ConsumerAffairs. 

“With this ruling, the Court has deprived the FTC of the strongest tool we had to help consumers when they need it most. We urge Congress to act swiftly to restore and strengthen the powers of the agency so we can make wronged consumers whole.”

Slaughter isn’t giving up on the FTC’s rights anytime soon. Sensing that the Court’s opinion could go the wrong way, the full Commission testified before the U.S. Senate Committee on Commerce, Science, and Transportation earlier this week to discuss legislation protecting consumers. Slaughter is also scheduled to appear before Congress to push the agency’s pro-consumer agenda even further.

Others offer their opinion

Ira Rheingold, executive director of the National Association of Consumer Advocates, expressed his dismay at the Supreme Court’s decision. 

"We are very disappointed in the Supreme Court Ruling taking away an extremely important tool that the FTC has successfully used to hold wrongdoers accountable and provide redress to harmed consumers,” he told ConsumerAffairs. “We would hope that both Congress acts swiftly power to restore this authority to the FTC, and that the FTC aggressively uses other parts of its authority to sanction bad actors and provide greater protection to consumers."

Francis Perdue, a “publicist turned serial entrepreneur,” told ConsumerAffairs that this decision has the power to rock the world of many consumers and business owners, especially those wronged by companies. 

“The thought of medical patients who were wronged and can't sue companies or get the help of the FTC is frightening especially in the middle of a pandemic.”

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