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House of Representatives Votes to Restore FTC’s Legal Rights

FTC trying to recover the right to seek disgorgement of unjust enrichment in federal court

In April, we reported that the U.S. Supreme Court severely curtailed the enforcement power of the Federal Trade Commission (“FTC”) by ruling that the Federal Trade Commission Act (“FTC Act”) did not authorize the FTC to recover disgorgement awards in federal court. That ruling came in a case styled AMG Capital Management v. FTC. With no avenue of appeal from a Supreme Court ruling, the effort to restore the FTC’s power of monetary recovery has now shifted to legislative channels.

Last week, those efforts took a big step forward when the House of Representatives passed The Consumer Protection and Recovery Act (H.R.2668) by a vote of 221-205.

The Consumer Protection and Recovery Act, in its current form, would provide the FTC with the following powers:

  • The FTC may seek, in federal court, restitution for losses, rescission or reformation of contracts, refund of money, or return of property.
  • The FTC may also request disgorgement of any unjust enrichment obtained by a person, partnership, or corporation obtained as a result of a violation of the FTC Act.
  • In order to guard against double penalization, the proposed bill provides that the amount of disgorgement under the current proposal will be offset by any restitution, refund or return of property made directly to the aggrieved consumer or other party.
  • The FTC’s right of recovery will go back ten years from the date on which the FTC files suit.

TAKEAWAY: While the legislative process may take a while to complete, it is clear the federal government is determined to restore most of the FTC’s powers that were stripped away by the Supreme Court in April 2021.

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