The Federal Trade Commission (FTC) announced in a Statement of Commissioner Rohit Chopra that it will begin looking for other methods to seek restitution or disgorgement from companies in the wake of the U.S. Supreme Court ruling that the Commission could not do so using Section 13(b) of the FTC Act. The FTC has relied on Section 13(b) for more than four decades as a means to enact injunctions and extract monetary damages from companies without the administrative and court processes required in Sections 5 and 19 of the FTC Act.
“Last month, the Supreme Court ruled that the Federal Trade Commission cannot seek restitution or disgorgement from lawbreaking firms through Section 13(b) of the FTC Act. However, Section 13(b) is not the FTC’s only tool. It is long overdue for Commissioners to take steps to use other authorities that allow the agency to make victims whole and that deter misconduct in the first instance,” the statement read.
The Commission’s predecessors are described in the statement as leaders who “largely ignored decades of directives and authorities that Congress provided to protect consumers, workers and honest businesses,” and announced that the Commission will begin a review of the Business Opportunity Rule as its first step in finding methods to seek civil penalties, damages and other relief against violators.
The statement points to previous votes by Commissioners to exempt multilevel marketing companies and their representatives from the Business Opportunity Rule’s requirements, but makes it clear that the current Commission plans to codify prohibitions and “seek restitution and penalties against multilevel marketers, gig economy platforms, and others who cheat workers and entrepreneurs through false earnings claims, without imposing any new obligations on honest businesses.”
