FTC Acting Chairwoman Slaughter responds to trade group’s letter on proposed amendments to FTC Act Section 13(b)

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Earlier this week, FTC Acting Chairwoman Rebecca Kelly Slaughter sent a letter to the Chair and Ranking Member of the House Commerce Committee responding to a letter sent to the lawmakers by the U.S. Chamber of Commerce regarding the legislation that has been introduced to amend Section 13(b) of the FTC Act.  The legislation (H.R. 2668) would amend Section 13(b) to expressly give the FTC authority to seek, and a court to award, equitable monetary relief such as restitution or disgorgement.  Last month, in AMG Capital Management, the U.S. Supreme Court ruled that Section 13(b) does not provide such authority to the FTC.

Acting Chairwoman Slaughter’s letter follows her recent appearance before the House Commerce Committee at which she urged Congress to amend the FTC Act to expressly give the FTC the authority that the Supreme Court found it presently does not have.  At the hearing, Acting Chairman Slaughter was joined by Rohit Chopra, the other currently-serving Democratic FTC Commissioner, and Noah Phillips and Christine Wilson, the two currently-serving Republican Commissioners.  The three other Commissioners also voiced their support for amending the FTC Act.  (The Acting Chairwoman also recently appeared before the Senate Commerce Committee and asked Congress to act quickly to amend Section 13(b).)

In her letter, Acting Chairwoman Slaughter indicated that she saw the Chamber’s letter for the first time during the House hearing.  The Chamber’s letter raised concerns with the proposed legislation to amend Section 13(b).  The arguments made by Acting Chairwoman Slaughter in response to the Chamber’s letter include:

  • Contrary to the Chamber’s assertion, Congress has not always intended that Section 13(b) only be used for “fraud” cases. Congress “directly ratified the FTC’s reliance on Section 13(b) in all manner of cases by expanding its venue and service of process provisions without placing any limitations on the type of cases to which Section 13(b) applies.  It did so knowing that the Commission has relied on Section 13(b) to obtain monetary remedies….”
  • Chamber’s position that Section 13(b) should be limited to ongoing or imminent conduct “effectively gives the violator a free bite at the apple, creates weak incentives for compliance, and is an inefficient enforcement mechanism that will only result in more consumer harm.”  It would also “needlessly deny refunds to consumers harmed by past violations of the FTC Act, even in cases that involve ‘egregious’ frauds.”

Acting Chairwoman Slaughter also noted that the House bill would create a ten-year statute of limitations for monetary relief under Section 13(b).  She commented that this “would introduce a statute of limitations for the first time, representing the only significant change the bill imposes on the law as it has been understood for decades.”  She indicated that she “believe[s] [the new limitation] strikes an appropriate balance between the Chamber’s concerns of ‘unbounded’ liability and the need to provide refunds to consumers harmed by unlawful conduct.”

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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