Judging in payday loan case, Supreme Court limits FTC’s ability to obtain restitution

Supreme Court of the United States

Judging in payday loan case, Supreme Court limits FTC’s ability to obtain restitution

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The Federal Trade Commission will have to follow a more cumbersome process to obtain restitution or restitution following a unanimous decision of the U.S. Supreme Court on Thursday.

The the high court ruled that the FTC cannot use Section 13 (b) of the Federal Trade Commission Act – which authorizes the agency to obtain permanent injunctions – to seek restitution or restitution in cases filed directly in federal court.

A different provision in the law allows the FTC to go to federal court to seek a refund for consumers, but the commission must first obtain a cease-and-desist order in administrative proceedings .

The Supreme Court has ruled in a federal lawsuit filed by the FTC against Scott Tucker, who controlled several payday loan companies. The FTC had claimed that the companies had misled many customers by describing the essential terms of their loans online.

As a result, a client who took out a $ 300 payday loan without opting out of the automatic loan renewal, as described in the fine print, could end up having to pay $ 975, Judge Stephen G. Breyer wrote in his notice to court.

The FTC has sought a permanent injunction in federal court prohibiting future unfair or deceptive practices and demanding restitution and restitution. The court ordered $ 1.27 billion in restitution and restitution.

The commission did not initiate administrative proceedings before filing the federal complaint.

The commission used section 13 (b) to demand the return of illegally obtained funds “with great frequency,” Breyer said. In fiscal 2019, for example, the FTC filed 49 complaints in federal court that resulted in $ 723.2 million in consumer redress or restitution.

Breyer said the court’s task was not to say whether the substitution of section 13 (b) was desirable. Rather, the question was whether the wording of the permanent injunction in Section 13 (b) gave the FTC the power to bypass the administrative process and receive monetary relief directly from the courts.

Breyer said the wording and structure of the provision has a limited purpose that does not extend to providing monetary relief.

“Nothing that we are saying today prevents the commission from using its authority by virtue of [other provisions of the law] to obtain restitution on behalf of consumers, ”Breyer said. “If the committee considers that this authority is too onerous or inadequate, it is, of course, free to ask Congress to grant it another remedial power. “

The case is AMG Capital Management v. Federal Trade Commission.

Hat tip to SCOTUSblog.

See also:

ABAJournal.com: “Reversing its own precedent, 7th Circuit limits the ability of the FTC to obtain restitution”


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