Unanimous court curtails FTC’s ability to obtain restitution for deceptive practices

Unanimous court curtails FTC’s ability to obtain restitution for deceptive practices

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By James Romoser

at 11:14 am

The Supreme Court unanimously ruled Thursday against the Federal Trade Commission in a dispute with a payday loan company over the level of the commission’s authority to seek cashbacks from companies involved in fraudulent practices.

In a statement from Judge Stephen Breyer, the court ruled that Section 13 (b) of the Federal Trade Commission Act does not authorize the FTC to seek (and not grant to the courts) “fair financial relief, such as restitution or disgorgation.” This is because the legal language in question only allows dispositions, not monetary relief.

The dispute, AMG Capital Management v FTC, arose out of a lawsuit the FTC brought against companies involved in short-term or payday loans. A district court upheld the FTC’s motion that these companies pay more than $ 1 billion in restitution. The companies challenged the reimbursement price.

The FTC argued in the Supreme Court that the power to seek injunctions under Section 13 (b) has historically included “restorative money relief.” But the court rejected that theory on Thursday.

“Overall, the provision focuses on prospective rather than retrospective relief,” wrote Breyer.

“To read these words in such a way that they allow what they do not say, namely that the Commission can dispense with administrative procedures in order to also obtain financial relief, means reading the words in such a way that they go far beyond the purpose of the provision. Given the historical importance of administrative procedures, this reading would enable a small legal tail to wag a very large dog. “

Breyer added that the FTC continues to have the authority to obtain financial refunds on behalf of consumers under other sections of FTC law.

Check back soon for an in-depth analysis of the opinion.