During the Federal Trade Commission’s April 28 open meeting, Commissioners utilized the one-year anniversary of the Supreme Court’s decision in AMG Capital Management, LLC v. FTC to highlight the implications of the ruling that gutted their enforcement authority under Section 13(b) of the FTC Act. Commissioners called yet again for a legislative fix and were encouraged by public remarks from a counsel to Senate Commerce Committee Chair Maria Cantwell (D-WA), who delivered an update from the chair that she “hope[d] to have a bipartisan solution soon” – whether that solution can get over the line remains far from certain.
Following a presentation from Bureau of Consumer Protection Acting Deputy Director Audrey Austin, the Commissioners opined on the loss of – in Chair Lina Kahn’s words – “the key engine of our law enforcement efforts for four decades” and the inability to adequately obtain monetary relief for consumers.
Chair Kahn and fellow Democratic Commissioner Rebecca Slaughter commended the agency’s alternative enforcement approaches over the past year in AMG’s wake. They highlighted the use of Section 19; new rulemakings to codify conduct that the courts had already determined was unfair or deceptive; additional administrative proceedings to “preserve a pathway” for monetary relief; warning letters to businesses and the threat of civil penalties; and coordination with State Attorneys General. Under those alternative enforcement pathways, however, Commissioner Slaughter said the agency’s “best outcomes are still justice diminished or delayed.”
While all four current Commissioners indicated support for legislation to clarify the agency’s enforcement authority under Section 13(b), comments from Republican Commissioner Christine Wilson reflect ongoing stakeholder concerns that appear to have stood in the way of Senate action following the House’s passage last summer of Representative Cárdenas’s (D-CA) Consumer Protection and Recovery Act on a nearly party-line vote (see more on the Cárdenas bill here).
Specifically, Commissioner Wilson stressed the need for statutory guardrails to address: (1) the absence of a statute of limitations; (2) the potential “unbounded” use of Section 13(b) to achieve disgorgement in antitrust cases; and (3) the application of Section 13(b) in consumer protection cases involving legitimate businesses selling legitimate products and services, albeit with deceptive claims. Another potential legislative flash point is the possible retroactive application of any new penalty authority. Today, Commissioner Slaughter noted that $1 billion in relief “could be preserved if action were taken now to restore 13(b) to all current and future cases.” While one can imagine a legislative framework that satisfies both sides, such a framework has not yet materialized.
Further, the agency’s internal politics could portend trouble for champions of an expeditious legislative solution. In a broad rebuke of Chair Kahn’s Federal Trade Commission, Commissioner Wilson warned that Congress may be wary to expand the FTC’s power given recent examples of the agency using its authority in a way that exceeds statutory boundaries or undermines Congressional intent. She urged her colleagues to “tread carefully” and noted the importance of demonstrating the agency will be “careful stewards” of any new enforcement authority bestowed upon it.
As we have written before, while there is bipartisan support for holding “scammers and fraudsters” accountable and providing for consumer redress, Congress’s sense of urgency to pass legislation clarifying the FTC’s authority under Section 13(b) seems to have waned as partisan tensions – both in Congress and the agency – have intensified.
Meanwhile, the Senate may vote as soon as next week on Alvaro Bedoya’s nomination to serve on the Federal Trade Commission. The confirmation vote had originally been expected this week, but was delayed due to the absence of two Democratic Senators. Perhaps reflective of those above-mentioned partisan tensions, Commissioner-designate Bedoya is expected to need the votes of all 50 Senate Democrats, in addition to the tie-breaking vote of Vice President Kamala Harris.