The Direct Selling Association (DSA) has filed a brief challenging the authority of the Federal Trade Commission (FTC).
On October 2, DSA filed an amicus brief in the United States Supreme Court with the United States Chamber of Commerce and National Retail Federation in FTC v. AMG Capital Management LLC.
The brief supports the position of AMG Capital Management regarding an enforcement action brought by the Federal Trade Commission (FTC). Consistent with enforcement actions against direct selling companies and other businesses, the FTC brought the action using the authority they deemed having under Section 13(b) of the Federal Trade Commission Act to demand monetary damages for alleged illegal practices. Under this statute, there only needs to be an accusation of “unfair” practices occurring.
AMG Capital Management contends the Commission cannot claim monetary damages under this statute since it does not expressly authorize it as a remedy.
The brief argues that the FTC is only also authorized to seek monetary rewards under Section 19 of the FTC Act, which affords businesses important procedural and substantive protections designed to ensure fair notice before imposing such financial remedies. These procedural and notice requirements include proving that a clear rule under the FTC Act was violated or if no such evidence or rule exists, a cease and desist order must be issued first.
AMG Capital Management is not a direct selling company. Still, the outcome of this case could have important implications for ongoing and future enforcement actions in the industry if the FTC is required to undergo these procedures before claiming monetary damages from companies.
An entity described in whole as SBH A & I filed a brief in support of AMG as well. The entity as a group of 271 individuals who have been adversely impacted by the FTC’s actions under 13(b). The substance of the brief is devoted to the actions taken by the FTC in its ongoing enforcement action against DSA non-member Success by Health. It argues the individual distributors are being harmed by the actions taken by the Commission, including asset freezes, which make it impossible for the company to defend itself. Other Washington, DC-based organizations also filed briefs in support of AMG.
DSA is also speaking with Members of Congress to ensure any legislation passed aligns the FTC’s ability to impose monetary damages under Section 13(b) if those actions undertake the same or a similar process required of the FTC under Section 19. We will also discuss these tactics with other interested organizations in the case.