Acting Federal Trade Commission (FTC) Chairwoman Rebecca Kelly Slaughter on Tuesday called for Congress to pass legislation that would revive the agency’s ability to return money to constituents harmed by companies found to engage in deceptive practices.
Slaughter testified before the House Energy and Commerce Subcommittee on Consumer protection and Commerce roughly a week after the Supreme Court unanimously ruled that the FTC’s authority under a provision known as Section 13(b) does not grant the agency the ability to obtain equitable monetary relief.
“These recent decisions have significantly limited the commission’s primary and most effective tool for providing refunds to harmed consumers, and if Congress does not act promptly, the FTC will be far less effective in its ability to protect consumers and execute its law enforcement mission,” Slaughter testified.
Slaughter said the commission has 24 active federal court cases that “rely exclusively” on 13(b) for a monetary remedy, which represents $2.4 billion that should be returned to injured consumers.
Democrats on the committee supported Slaughter’s push for swift congressional action, and every Democrat on the subcommittee has co-sponsored a bill introduced by Vice Chairman Tony Cárdenas (D-Calif.).
The Consumer Protection and Recovery Act, introduced by Cárdenas last week, would amend Section 13(b) of the Federal Trade Commission Act to explicitly reaffirm the FTC’s authority to obtain injunctive and equitable relief, conducting monetary redress for consumers in court for violations of the laws it enforces.
The bill could also be key in reinsuring the FTC’s authority as the commission and state attorneys general across the country push forward with an antitrust lawsuit against Facebook.
Last month, Facebook filed to dismiss the antitrust case, in part over claims that the FTC lacks the authority to challenge past conduct.
Rep. Lori Trahan (D-Mass.) asked Slaughter if the Democratic-backed Consumer Protection and Recovery Act would make it clear that the FTC can obtain relief under 13(b) for consumers when a defendant has violated the law without demonstrating that the defendant is “still violating or will be violating the law again.”
Slaughter said it would.
But Republicans on the subcommittee pushed back on the need for such action.
Rep. Gus Bilirakis (Fla.), the subcommittee’s ranking member, stressed a desire for a bipartisan approach to move forward and criticized the process behind the hearing, noting that only Slaughter, a Democrat, appeared and that no Republican commissioners testified.
“If we are to find a balanced solution to addressing FTC authorities, we must work in good faith and in a bipartisan manner to do so,” Bilirakis said.
He also highlighted a bill that he and other Republican members introduced last week that would require the FTC to submit a report to Congress that includes all FTC enforcement actions involving allegations of fraud against senior citizens.
“I am disappointed it and the other reform bills are not included on the docket today,” Bilirakis added.
“Republicans all agree seeking financial restitution for victims is essential, but there is a history of regulatory overreach we must consider and how that impacts all business sectors as we rebound from the COVID-19 pandemic,” he said.
Rep. Neal Dunn (R-Fla.) similarly said he is “all for 13(b) being reestablished” but with “some guardrails on it so we understand who is going to be subject to the sometimes very high fines.”
Subcommittee Chairwoman Jan Schakowsky (D-Ill.) said legislation the minority proposed and other ideas put forward by Republican members will be “completely considered” but that Tuesday’s hearing was a “special day of urgency.”
In the opinion Supreme Court Justice Stephen Breyer delivered last week, he wrote that the ruling does not prohibit the FTC from using other provisions of the law to seek restitution.
During the hearing, however, Slaughter stressed that other provisions, such as under what’s known as Section 19, are more burdensome and less timely processes to get money back to consumers.
The entire process under Section 19, when used before, has taken “as little as seven” and as many as 12 years or more, Slaughter said.
“Our ability to find consumers after that 12 years is elapsed and get money back to them is really, really limited and inhibited, and moreover, in the intervening 12 years, the consumers have lost the benefit of that money that was gone from them,” she said.
In order to recover money under that provision, the FTC is also limited to “dishonest and fraudulent activity,” which wouldn’t cover consumer protection or any competition cases, Slaughter said.