On April 20, 2021, Acting Chairwoman Rebecca Kelly Slaughter and Commissioners Rohit Chopra, Noah Phillips, and Christine Wilson testified before the Senate Committee on Commerce, Science, and Transportation and provided an overview of the FTC’s consumer protection priorities. In addition, the hearing addressed the Commission’s imperiled consumer redress authority under Section 13(b) of the FTC Act and the agency’s continuous efforts to combat COVID-19-related scams.
As we have previously written, the Supreme Court is set to decide the scope of FTC’s Section 13(b) authority to obtain a permanent injunction and equitable monetary relief. At the hearing, the Commission emphasized that Section 13(b) authority is the FTC’s “bread and butter” and requested that Congress clarify that authority. Chair Maria Cantwell (D-WA) and Ranking Member Roger Wicker (R-MS) showed an interest to move quickly with a legislative fix if the Supreme Court decides against the FTC. Specifically, Senator Cantwell gave two examples of how the FTC has used its Section 13(b) power to get consumer redress. In 2019, the FTC returned more than $34 million to consumers who were allegedly tricked into buying computer repair products and services, and the FTC sent settlement payments of nearly $50 million to students allegedly lured by a university’s deceptive advertisements that it worked with reputable companies to create job opportunities.
Acting Chairwoman Slaughter reiterated the FTC’s reliance on Section 13(b) authority to provide monetary relief to consumers, including $11.2 billion in refunds during just the past five years. Most importantly, she discussed how the current uncertainty is hurting ongoing enforcement efforts and the understandable reluctance of many defendants to settle, given the uncertainty regarding the FTC’s authority. Commissioner Phillips focused on the use of Section 13(b) to seek restitution to provide consumer redress rather than inappropriately punish businesses in the guise of disgorgement. Commissioner Chopra also recognized that additional penalties and remedies are needed to stop repeat offenders and that deterrence is undermined when companies, especially big tech players, are merely asked not to break the law again without suffering a financial penalty. Overall, the Commission requested Congress to clarify Section 13(b) authority, preserve the FTC’s ability to enjoin illegal conduct, and return money to consumers.
Next, the hearing highlighted that combating COVID-19-related scams will remain a top priority for the Commission, including through law enforcement efforts, consumer education and outreach, and seeking civil penalties for COVID-19-related cases under the newly enacted COVID-19 Consumer Protection Act, as we recently discussed. The Commission plans to use the recent $30.4 million funding provided in the American Rescue Plan Act for consumer protection matters, including processing and monitoring COVID-19-related consumer complaints.
In deciding to pursue COVID-19-related scams, especially those used against vulnerable populations, the FTC plans to work closely with state attorneys general and community legal aid organizations through its Community Advocate Center initiative to encourage consumers to report more fraud.
Acting Chairwoman Slaughter pointed to the role social media platforms play in the spread of COVID-19 scams, such as the recent selling of fake vaccine cards or a bogus vaccine survey that offered consumers a “free reward” and how platforms should be held more accountable. Commissioner Wilson noted that the FTC is not equipped to police speech, but whether this possible difference in approach is real and will manifest itself in disagreements over cases remains to be seen.
A decision in the AMG case should be rendered before the end of the Supreme Court’s term in June. A victory for the defendant there might have short-lived benefits, given the apparent bipartisan support at the Commission and on Capitol Hill for restoring any authority the Court finds the Commission lacks. Stay tuned.