Last week two different bills were noticed by the House of Representatives that would provide additional remedial tools to the FTC to restore or replace some of what the agency lost when the Supreme Court struck down the agency’s ability to obtain equitable monetary relief under Section 13(b) of the FTC. Whether any of these bills ultimately become law is most uncertain.
The Budget reconciliation bill noticed by the Democratic Majority in the House last week has a significant change to the FTC’s remedial authority. Buried in the 2,135 page long bill is a provision that would allow the FTC to seek civil penalties for first time violations of the FTC Act by amending Section 5(m)(1)(A) of the Act.
The proposed legislation would add the bolded and underlined language to Section 5(m)(1)(A).
The Commission may commence a civil action to recover a civil penalty in a district court of the United States against any person, partnership, or corporation which violates this Act’s prohibition of unfair or deceptive acts or practices or any rule under this subchapter respecting unfair or deceptive acts or practices (other than an interpretive rule or a rule violation of which the Commission has provided is not an unfair or deceptive act or practice in violation of subsection (a)(1)) with actual knowledge or knowledge fairly implied on the basis of objective circumstances that such act is unfair or deceptive and a violation of this Act or is prohibited by such rule. In such action, such person, partnership, or corporation shall be liable for a civil penalty of not more than [$43,792] for each violation
Interestingly, this remedy would only be available for consumer protection cases brought by the agency not antitrust cases. Also, the recovery of civil penalties has not been viewed as the type of remedy that would justify an asset freeze against defendants. Finally, nothing in the bill indicates that this civil penalty authority would apply retroactively to cases already brought by the agency.
In July the House passed a bill along party lines that would restore and expand the FTC’s Section 13(b) authority and have that authority apply retroactively to cases already filed by the FTC. That legislation has not moved in the Senate. Last week as part of a privacy bill, the House Republicans released legislation that also would restore the FTC’s 13(b) authority. The bill is materially different from the legislation that passed the House earlier this year. The Republican bill contains a scienter standard similar to Section 19 requiring the FTC show the defendant engaged in conduct that a reasonable person under the circumstances knew was unfair or deceptive. The Republican bill also would not apply retroactively and contains a five year statute of limitations.
Whether any of these bills become law remains most uncertain. For now they are just bills sitting on Capitol Hill.