Supreme Court Cuts Federal Trade Commission Powers to Recover Ill-Gotten Gains

The Supreme Court curbed the Federal Trade Commission’s longtime practice of seeking to recover ill-gotten gains in court from companies and individuals who cheat or mislead consumers, upending a central enforcement tool the agency has relied on for decades. The court, in an opinion by Justice Stephen Breyer, ruled unanimously that a 1973 law, which gives the FTC the right to seek court injunctions to stop fraudulent or deceptive commercial activity, doesn’t grant the commission the power to seek financial judgments as well. The court said if the FTC wants to seek financial recoveries on behalf of defrauded consumers, it needs to rely on other, more-limited legal provisions that require it to go through detailed administrative proceedings aimed first at identifying and halting the fraudulent conduct. The commission had argued such an approach would be slow and ineffective. Relying on those means alone, it said, would leave the commission only able to stop future fraudulent conduct while allowing defendants to keep the profits they already made at consumers’ expense. “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,” Justice Breyer wrote.

Federal Trade Commission Acting Chairwoman Rebecca Kelly Slaughter 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.”