On April 27, 2021, the House Committee on Energy and Commerce held a hearing titled, “The Consumer Protection and Recovery Act: Returning Money to Defrauded Consumers.” This hearing was held five days after the U.S. Supreme Court ruled that § 13(b) of the Federal Trade Commission Act (the “Act”) does not authorize the FTC to seek, or a court to award, equitable monetary relief such as restitution or disgorgement. Following the court’s decision, U.S. Representative Tony Cárdenas introduced H.R. 2688 (the “Consumer Protection and Recovery Act”). If enacted, the Consumer Protection and Recovery Act would amend §13(b) to expressly give the FTC authority to seek, and a court to award, equitable monetary relief. At the hearing, FTC Acting Chairwoman Rebecca Kelly Slaughter presented testimony urging members of the House to support and ratify the Consumer Protection and Recovery Act.
The Future of the FTC’s § 13(b) Authority
Although members of the House disagreed about the magnitude of authority the FTC should be granted under § 13(b) of the Act, each member—whether Democrat or Republican—by and large acknowledged that the FTC’s power to seek financial restitution for American consumers is one of the federal agency’s primary responsibilities.
- Acting Chairwoman Slaughter urged Congress to pass the Consumer Protection and Recovery Act. In the last five years, the FTC has returned funds totaling $11.2 billion to defrauded consumers. Furthermore, without §13(b) authority, Chairwoman Slaughter suggested that the FTC will have a difficult time prevailing in court. Presently, the FTC has 24 pending federal court cases that rely exclusively on § 13(b) for a monetary remedy. Chairwoman Slaughter noted that those cases represent a total of $2.4 billion in funds that the FTC will not be able to recover and return to consumers due to the U.S. Supreme Court’s limitation of its § 13(b) authority. Nevertheless, §5(l) of the Act remains unscathed and it permits the FTC to seek “civil penalties” and “equitable relief” against defendants who violate final FTC cease and desist orders.
- Representative Frank Pallone noted that “[t]here are no adequate substitutes in the current law that can simply replace what the FTC lost.” He urged his colleagues to support the passage of the Consumer Protection and Recovery Act to reinstate the FTC’s § 13(b) authority to obtain equitable monetary relief.
- Representative Jan Schakowsky declared that the Consumer Protection and Recovery Act is “urgent and necessary and it is an important step that Congress must take in order to protect consumers.” She further asserted that “[Congress] should not allow criminals to victimize American consumers with impunity. They must pay (literally) what they owe.”
- Representative Gus Billrakis expressed concerns about the FTC’s history of regulatory overreach pursuant to its use of § 13(b). On April 20, 2021, he introduced a bill (“H.R. 2672”) to amend the Act. If enacted, H.R. 2672 would require the FTC to submit a report to Congress of any enforcement actions regarding fraud against senior citizens.
The recorded live stream of the hearing can be found here. Acting Chairwoman Slaughter’s prepared hearing statement can be found here.