The US Supreme Court delivered a major blow to the Federal Trade Commission's enforcement capabilities on Tuesday, ruling that the agency cannot seek monetary relief in federal court. The 6-3 decision, written by Justice Clarence Thomas, effectively strips the FTC of a key tool it has used for decades to recover billions of dollars from companies that engage in deceptive or unfair practices.
What the Ruling Means
The case, AMG Capital Management LLC v. FTC, centered on whether Section 13(b) of the FTC Act authorizes the agency to seek equitable monetary relief, such as restitution or disgorgement of profits. The Court held that it does not, concluding that the provision only allows for injunctive relief—court orders to stop future violations. The ruling overturns decades of precedent in lower courts, which had consistently interpreted the law to allow the FTC to demand refunds for consumers.
According to the majority opinion, "the text of Section 13(b) says nothing about monetary relief. It authorizes the Commission to seek 'a permanent injunction' in federal court, but that is all." The decision limits the FTC to administrative proceedings for monetary remedies, a slower and less powerful process.
Impact on Consumer Protection
The ruling is a significant setback for consumer protection efforts. The FTC has relied on Section 13(b) to recover more than $11 billion from companies for consumers since 2000. Recent high-profile cases include actions against Amazon for allegedly charging customers for subscriptions they did not authorize and against Facebook for privacy violations. The agency had sought billions in penalties from Amazon and was investigating Microsoft's Activision Blizzard acquisition.
Senator Elizabeth Warren, a longtime critic of corporate power, called the decision "a gift to corporate cheats." She said, "This ruling makes it easier for companies to scam families and harder for the FTC to hold them accountable. Congress must act quickly to restore the FTC's authority."
Dissenting Opinion
Justice Stephen Breyer, joined by Justices Elena Kagan and Sonia Sotomayor, dissented, arguing that the majority's interpretation was too narrow. Breyer wrote that the FTC has used Section 13(b) for over 40 years to obtain monetary relief, and Congress had implicitly approved this practice by not amending the law. He warned that the decision would "severely undermine the Commission's ability to protect consumers from fraud and deception."
Congressional Response
The ruling places pressure on Congress to update the FTC Act. Democratic lawmakers have already introduced legislation to explicitly grant the FTC authority to seek monetary relief in federal court. However, with a divided Congress, the bill's prospects are uncertain. White House Press Secretary Jen Psaki said President Biden "strongly supports restoring the FTC's authority to hold bad actors accountable and urges Congress to act."
The FTC itself acknowledged the setback but pledged to continue its work. Acting Chair Rebecca Kelly Slaughter said, "We will use all available tools to protect consumers, but today's decision significantly hampers our ability to return money to victims of illegal practices. We urge Congress to restore our authority."
