House to vote on restoring FTC powers to compensate victims of corporate crime
The U.S. House is expected to vote on critical legislation next week
Next week, the full House of Representatives is expected to vote on HR2668, The Consumer Protection and Recovery Act (Cardenas-CA), critical legislation to restore Federal Trade Commission authority to disgorge ill-gotten gains from corporate wrongdoers to use to compensate victims of the crime under Section 13(b) of the FTC Act. This spring, the Supreme Court had held, in a unanimous opinion, that the power was not clearly defined in law, even though courts had upheld the authority for many years, allowing the FTC to return billions of dollars to consumers.
That Supreme Court decision was widely expected (and due solely to a plain reading of statutory text) but that doesn’t make it any less disappointing — or dangerous — for U.S. consumers. In response, Congress must act with urgency to protect Americans by restoring the FTC’s power to get money back from unscrupulous companies and people such as convicted payday lender Scott Tucker, who challenged the FTC’s authority in this case. The egregiousness of Tucker’s criminal scheme was not at issue in the ruling. As a Deputy U.S. Attorney said in 2018 when he was sentenced to 200 months in prison (note the FTC case sought only civil, not criminal, penalties):
“For more than 15 years, Scott Tucker and Timothy Muir made billions of dollars exploiting struggling, everyday Americans through payday loans carrying interest rates as high as 1,000 percent. And to hide their criminal scheme, they tried to claim their business was owned and operated by Native American tribes. But now Tucker and Muir’s predatory business is closed and they have been sentenced to significant time in prison for their deceptive practices.”
Disappointingly, this SCOTUS ruling both harms the victims of his illegal schemes and leaves the door open for other bad actors — fraudsters, scammers, prescription drug companies, payday lenders, tech companies, credit bureaus — virtually any violator of the FTC Act, to follow his lead without fear of serious financial repercussions.
In joint testimony to the Senate Commerce Committee, approved by all commissioners in April, just prior to the Supreme Court holding, the FTC had warned that recent lower court holdings jeopardized years of FTC actions to hold wrongdoers accountable and compensate victims:
“For example, in 2019, the Seventh Circuit, in FTC v. Credit Bureau Center, LLC, overruled its three decades of precedent and held that Section 13(b) no longer allows the FTC to obtain monetary relief. […] In AbbVie, for example, the [Third Circuit] held that the defendant drug company violated the antitrust laws by engaging in sham litigation to keep out generic competition, but nonetheless reversed the district court’s award of $448 million meant to repay overcharged consumers. The net effect of the AbbVie ruling is that an adjudicated violator is nonetheless free to keep substantial ill-gotten profits extracted from consumers, based on a legal interpretation of Section 13(b) that no court of appeals had adopted prior to 2019. […] If the Supreme Court were to adopt the Seventh and Third Circuit’s interpretation of Section 13(b), it would eliminate the primary tool that the FTC uses today to return money to consumer victims.”
Of course, the Supreme Court followed the two circuits in its analysis, stripping the FTC’s primary tool “to return money to consumer victims.”
In a followup letter to the Committee following that hearing and the Supreme Court’s decision, then-acting chair and current Commissioner Rebecca Slaughter criticized severely-flawed assertions made by the U.S. Chamber of Commerce to the Committee and said:
“The recently introduced House bill [HR2668] and other proposals to amend Section 13(b) do not “dramatically extend FTC authority in unbounded ways” or lack “safeguards against misuse” as the Chamber wrongly asserts. Rather, these proposals simply codify the way the Commission used Section 13(b) on a bipartisan basis for four decades, but with an additional ten-year statute of limitation on the Commission’s ability to obtain monetary relief.”
Here’s a joint consumer group fact sheet on HR2668. It’s a critical proposal that helps a tiny agency that often fights with one hand behind its back because, over the years, powerful special interests have slashed(!) away at its rulemaking and enforcement authorities. It’s time to restore the FTC’s ability to disgorge ill-gotten gains from corporate wrongdoers and use the funds to compensate victims. U.S. PIRG strongly backs HR2668, the Consumer Protection and Recovery Act. Without it, wrongdoers win.
Originally published at https://uspirg.org.
