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For over four decades, the FTC has brought court actions against companies for disseminating false advertisements or engaging in other “unfair or deceptive acts or practices.” 15 U.S.C. § 45(a), 52. However, on April 22, 2021, the U.S. Supreme Court unanimously ruled that the FTC does not have statutory authority to seek monetary relief in a court action under Section 13(b) of the FTC Act, 15 U.S.C. § 53(b).
AMG Capital Management, LLC v. FTC, No. 19-508, 2021 WL 1566607 (Apr. 22, 2021).
In the action before the Court, the FTC sued a payday lender that advertised loan products online. The written explanations of the loans mislead many customers regarding the amount they had to repay, because, “in fine print the explanations said that the loan would be automatically renewed unless the customer took affirmative steps to opt out.” As a result of the automatic renewals, customer
U S Supreme Court Limits the FTC s Authority to Seek Monetary Relief in Deceptive Practices Enforcement Cases | Insights
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US Supreme Court: FTC Cannot Seek Equitable Monetary Relief in Section 13(b) Cases | Morgan Lewis
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U.S. Supreme Court Limits the FTC’s Authority to Seek Monetary Relief in Deceptive Practices Enforcement Cases Friday, April 23, 2021
In a unanimous decision released on April 22, 2021, the U.S. Supreme Court upended decades of lower court precedent by finding that Section 13(b) of the Federal Trade Commission Act (FTC Act) does not authorize the FTC to seek, or a court to award, equitable monetary relief such as restitution or disgorgement. Instead, in
AMG Capital Management, LLC v. FTC,
1 the Court pointed to other sections of the FTC Act, notably the administrative procedures contained in section 5 and the consumer redress available under section 19, as the proper legal avenues for the FTC to seek consumer redress and restitution in most cases. The ruling substantially curbs the FTC’s ability to obtain consumer redress under section 13(b), the FTC’s preferred means of seeking monetary damages due to its administrative efficiency compared to other Commission
Summary
On April 1, 2021, in
Facebook v. Duguid, 592 U.S. (2021), the Supreme Court issued a unanimous and long-awaited ruling clarifying the definition of an “automatic telephone dialing system” (“ATDS”) under the Telephone Consumer Protection Act of 1991 (“TCPA”), 47 U. S. C. § 227(a)(1): an ATDS is a system that uses a random or sequential number generator to dial or store telephone numbers for call. The key piece of this holding is that the “random or sequential” phrase applies to both storing the telephone numbers and dialing the telephone numbers. Otherwise, the Supreme Court reasoned,
any phone capable of storing numbers (
e.g., “virtually all modern cell phones”) would be subject to the TCPA’s onerous prior written consent requirements. Instead, unless the device has the capacity “to store . . . telephone numbers to be called, using a random or sequential number generator” or to “produce telephone numbers to be called, using a random or