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In the wake of AMG Capital Management v. FTC and Liu v. SEC, uncertainty has loomed as to how courts should measure the consumer redress available to the FTC under Section 19 of the FTC Act. Earlier this month, a court in the District of Arizona squarely addressed this issue.

Before AMG, the FTC used its ability to obtain injunctive relief in federal court under Section 13(b) of the FTC Act for violations of Section 5 of the FTC Act to also obtain equitable monetary relief. As we’ve previously discussed, the Supreme Court’s decision in AMG put an end to that. As a result, the FTC turned to its authority under Section 19 to obtain redress for rule violations.

The Supreme Court’s decision in Liu, which we also previously covered, held that equitable monetary relief cannot exceed a defendant’s gains after legitimate business expenses. This results in the quandary of how to reconcile this with the text of Section 19, which provides for “such relief as the court finds necessary to redress injury to consumers.”…

Continue Reading Addressing the Redress: District Court Limits the Scope of FTC Consumer Redress for Rule Violations

As the dust settles from the Supreme Court’s decision in AMG Capital Management, LLC v. FTC, 141 S. Ct. 1341 (2021), which gutted the Federal Trade Commission’s authority to obtain equitable monetary relief in court, the contours of the FTC’s remedial authority continue to be shaped by the lower courts.

Most recently, the Eleventh Circuit weighed in on whether Section 19 of the FTC Act authorizes the FTC to obtain an asset freeze and impose a receiver. Prior to AMG, the FTC routinely obtained such preliminary relief against companies and individuals the FTC believed were engaging, or about to engage, in unfair deceptive business practices. In doing so, the FTC would rely on its authority under Section 13(b) of the FTC Act. However, after AMG, the FTC can only use Section 13(b) to obtain forward-looking injunctive relief.…

Continue Reading Eleventh Circuit Says FTC Can Seek Asset Freezes and Receivership Under Section 19

“Free” must mean free?

Last week, the attorneys general for all 50 states and the District of Columbia announced a settlement with Intuit, Inc., the owner of TurboTax, which will require the company to hand over $141 million to consumers as restitution for allegedly tricking consumers into paying for tax-filing services when they qualified for free tax-filing services.

Recently, we wrote about the Federal Trade Commission’s legal action against Intuit for its advertisements regarding “free” tax-filing services. In that action, the FTC sought to definitively resolve that very question. As part of last week’s settlement agreement, Intuit will cease its advertising campaign promoting its “free, free, free” services in addition to paying the hefty restitution sum. The state settlement essentially ended the FTC action as well.

While the states’ investigation overlapped with the FTC’s action concerning Intuit’s alleged bait-and-switch advertising (i.e., representing the service is “free” but later requiring an upgrade to a paid version), their investigation also had another focus: “dark patterns,” which refers to a digital design feature that is intended to subtly influence a consumer’s online decisions.…

Continue Reading Intuit Will Pay $141 Million in State Attorneys General Settlement Over Deceptive TurboTax Advertising

The latest edition of the FTC’s recent practice of holding open meetings brings a potential rule regarding earnings claims to the forefront. During the FTC’s open meeting, the Commission unanimously approved issuing an Advance Notice of Proposed Rulemaking with respect to earnings claims. As the Commissioners pointed out in their comments (additional information below), the motivation for this rulemaking is to repair the FTC’s ability to recover monetary relief for consumers after the Supreme Court’s decision in AMG Capital Management.

Prior to the vote, the Commissioners allowed Melissa Dickey from the Division of Marketing Practices to give a presentation on the FTC’s historical experience with earnings claims and the Division’s recommendation. Ms. Dickey recommended that the Commission move forward with the rulemaking process, and pointed to two primary reasons. First, the Division views false, misleading, and unsubstantiated earnings claims as especially problematic to consumers who, as Ms. Dickey postulated, ultimately rely on these assurances and, as a result, end up in significant debt. Second, the Bureau believes that these earnings claims are widespread, and impact almost every community, especially during the pandemic era, where purported bad actors target those who are seeking to earn extra income while working remotely.…

Continue Reading FTC Approves Rulemaking Process for Earnings Claims

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…

Last week, the Supreme Court heard oral argument in AMG Capital Management v. FTC. As we’ve previously discussed, the Supreme Court is set to decide whether Section 13(b) of the FTC Act, which expressly grants the FTC the right to obtain “a permanent injunction,” also grants the FTC the authority to obtain “equitable monetary relief.” During oral argument, certain Justices expressed doubt that the plain language of Section 13(b), when viewed in the context of the entirety of the FTC Act, authorized the FTC to obtain “equitable monetary relief” when proceeding under Section 13(b). While none of us can predict the future, after last Wednesday’s oral argument, we can’t help but wonder: What will happen if the FTC loses? Below, we have outlined the potential avenues for the FTC if the decision doesn’t go its way.

First, Congress could revise the language of Section 13(b) to allow the FTC to seek equitable monetary relief, a request the FTC made in October 2020. There’s precedent for such a move. After the Supreme Court significantly curtailed the SEC’s calculation of equitable monetary relief in Liu, Congress codified the SEC’s authority to seek disgorgement in federal district court as part of the 60th annual National Defense Authorization Act in January 2021, by amending the Securities Exchange Act of 1934. Congress could pass a similar amendment to the FTC Act to unambiguously allow the FTC to obtain equitable monetary relief under Section 13(b) or otherwise. Whether that potential authority would come with a statute of limitations, allow for joint and several liability, or be subject to other restrictions will be important in assessing any potential legislation.…

Continue Reading So…What If the FTC Loses AMG Capital Management v. FTC?

Yesterday, the Third Circuit issued an opinion in Federal Trade Commission v. AbbVie, Inc., joining the Seventh Circuit in holding that the FTC is not entitled to seek disgorgement under Section 13(b) of the FTC Act. The decision reflects a potential turning of the tides on how courts view FTC’s statutory authority to seek monetary relief.

By way of background, the district court ordered the AbbVie defendants to disgorge $448 million in alleged ill-gotten profits from anticompetitive conduct regarding the patented drug AndroGel. Though the Third Circuit held that the district court properly concluded that AbbVie had monopoly power in the relevant market, it struck down the $448 million award.…

Continue Reading Disgorgement Denied: Third Circuit Hands FTC a Tough Pill to Swallow Over Section 13(b) Authority

Two weeks ago, the Supreme Court handed down its opinion in Liu v. SEC where it limited the SEC’s disgorgement authority to net profits returned to investors. Today, the Supreme Court granted certiorari in two FTC cases to decide whether Section 13(b) of the FTC Act providing for “injunctive relief” includes the authority to obtain…

On September 20, 2018, the FTC and Utah Department of Commerce held a symposium in Salt Lake City, Utah, discussing, among other things, how the two work together to combat consumer fraud in various areas. The panels provided a unique insight into how law enforcement agencies coordinate and their respective priorities. Below are two key takeaways from the various panels.

  1. State and Federal Agencies Are Working Together

Although it may seem like no one is getting along these days, there continues to be a significant degree of coordination and cooperation between the federal government and state counterparts to achieve the common goal of battling consumer fraud. Agencies are forming partnerships to better understand vulnerable areas for consumers and better situate themselves to obtain the most consumer redress. Some groups, such as the Investment Fraud Working Group, which comprises both federal and state agencies, meet formally every quarter to discuss strategic plans. For example, as a panelist noted, depending on the size of a given case and whether it involves activities crossing state lines, the Utah Department of Commerce may refer a case to the FTC because it can cross state borders and can obtain asset freezes and temporary restraining orders.…

Continue Reading Insights into the FTC and the Utah Department of Commerce: Consumer Fraud and Business Symposium

gift boxIn part II of our series on our wish list for the new FTC, we look at the issue of the pace of FTC investigations. And just like Tom Cruise, we feel the need, the need for speed.

Now it’s no secret that, for the most part, FTC investigations proceed slowly. Some of that is no doubt due to resource limitations and a wish for more FTC resources is just not likely one that Santa can make come true. Putting aside more resources, are there other creative alternatives that could be considered?…

Continue Reading FTC Wish List Part II