At issue, was a complaint the FTC filed against former race car driver Scott Tucker, for his business AMG Capital Management's alleged payday lending practices in violation of the law against unfair practices in commerce. The District Court granted the FTC's request for a permanent injunction under provision 13(b) of the FTC Act to stop the illegal practice and ordered Tucker to pay $1.27 billion in restitution under the same provision.
Tucker appealed to the Ninth Circuit, which rejected Tucker's argument that 13(b) does not authorize such monetary relief. The Supreme Court overturned the Ninth Circuit's judgment in a 9-0 ruling Thursday.
Justice Stephen Breyer wrote in the 18-page opinion that while the 13(b) provision authorizes the FTC to obtain "in proper cases" a "permanent injunction," to stop illegal acts, it does not authorize the Commission to seek 'equitable monetary relief' as restitution.
Section "13 (b) as currently written does not grant the Commission authority to obtain equitable monetary relief," Breyer wrote, adding that the FTC can seek restitution under other provisions of the law. "If the Commission believes that authority too cumbersome or otherwise inadequate, it is, of course, free to ask Congress to grant it further remedial authority."
FTC Chaiwoman Rebecca Kelly Slaughter warned Tuesday during a Senate hearing of a "need to act quickly" regarding the "uncertainty around 13(b)," which she said was making it harder for the FTC to provide consumer redress.
The House Energy and Commerce Committee has announced a hearing for next Tuesday on the FTC's authority to offer consumer redress.
Slaughter said in a statement Thursday Section 13(b) enforcement cases have resulted in $11.2 billion in refunds to consumer over the past five years.
"In AMG Capital, the Supreme Court ruled in favor of scam artists and dishonest corporations, leaving average Americans to pay for illegal behavior," Slaughter's statement said. "With this ruling, the court has deprived the FTC of the strongest tool we had to help consumers when they need it most. We urge Congress to act swiftly to restore and strengthen the powers of the agency so we can make wronged consumers whole."