In a unanimous ruling, the Supreme Court recently came down hard on the Federal Trade Commission by eliminating its ability to seek monetary relief in court under Section 13(b) of the Federal Trade Commission Act (FTC Act). The ruling comes as quite a blow to the FTC which has been recovering monetary penalties from defendants under Section 13(b) of the FTC Act for nearly half a century. The full impact of this ruling remains to be seen and may not become clear for several years.

Section 13(b) monetary relief is among the FTC’s primary tools for obtaining recovery in the cases it pursues, particularly in consumer protection matters. For instance, in fiscal year 2019 alone, the FTC filed 49 complaints in federal court and obtained 81 permanent injunctions and orders, resulting in more than $723 million in consumer redress or disgorgement. The ruling is also likely to affect antitrust enforcement in the pharmaceutical industry where the FTC has pursued disgorgement amounts as high as $1.2 billion. Going forward, the FTC will be limited to injunctive relief in the vast majority of matters unless it pursues other avenues of recovery available under different sections of the FTC Act.

The case, AMG Capital Management, LLC v. Federal Trade Commission, began when the FTC filed a lawsuit in federal court against payday lender AMG Capital Management, its owner, Scott Tucker, and several other entities under Section 5(a) of the FTC Act for allegedly misleading consumers with certain terms of payday loans. A payday loan is a high-interest, short-term loan, typically marketed to low-income consumers in need of quick cash. They generally come with exorbitantly high interest rates and short repayment schedules and have been called predatory by a number of consumer rights advocacy groups, such as the National Association of Consumer Advocates.

In its complaint, the FTC alleged that AMG Capital Management and other related entities engaged in numerous deceptive acts and practices in connection with how it collected loan payments from borrowers, often resulting in consumers paying hundreds or thousands of dollars more than the cost of the loan disclosed in the loan application documents.

The FTC could have initiated the case by using administrative proceedings available to it under Sections 5 and 19 of the FTC Act. Instead, though the FTC skipped these administrative proceedings and initiated the case directly in federal court seeking a permanent injunction and equitable monetary relief in the form of restitution and disgorgement under Section 13(b) of the FTC Act. The district court directed the defendants to pay $1.27 billion in restitution and disgorgement. On appeal from the judgment, the Ninth Circuit affirmed, citing circuit precedent interpreting the statutory text of Section 13(b) broadly to include the authority to award restitution and other forms of monetary relief as “necessary to accomplish complete justice.”

AMG Capital Management and the other defendants petitioned the Supreme Court to overrule the judgment against them contending that the FTC did not have authority to obtain monetary relief under Section 13(b) of the FTC Act. As the defendants pointed out, the text of this section of the statute does not include monetary relief as an available remedy but expressly authorizes only a “temporary restraining order or a preliminary injunction” or a “permanent injunction.” The Ninth Circuit was hardly alone in its interpretation that Section 13(b) allowed the FTC to seek consumer redress, including disgorgement and restitution. In fact, eight circuits had endorsed a similar interpretation until 2019 when the Seventh Circuit broke with the other circuits and past decisions in FTC v. Credit Bureau Center. A year later, the Third Circuit in FTC v. AbbVie followed the Seventh Circuit’s lead in Credit Bureau Center and came to a similar conclusion.

The Court began its analysis by recognizing the FTC’s desire to seek monetary relief directly from courts and the benefits that the FTC have accomplished for victims by doing so. The benefit from the FTC’s actions alone is insufficient and the Court stated the key inquiry is whether the FTC possessed the authority granted by Congress to bypass the administrative process and obtain monetary relief under Section 13(b)’s injunctive relief provision.

The Court unanimously held that the FTC did not possess this authority and that Congress did not intend the “permanent injunction” language of Section 13(b) to include the authority to obtain monetary relief directly in federal court. In reaching its conclusion, the Court relied on standard rules of statutory interpretation and explained that the text of the statute explicitly refers only to injunctions, which typically do not include awards of monetary relief. The Court was quick to point out that its ruling did not completely block the FTC’s ability to obtain monetary relief and disgorgement from defendants. It noted that Congress enacted other provisions that provide for monetary relief, such as Sections 5 and 19. The Court closed its opinion with the observation that: “If the Commission believes that authority too cumbersome or otherwise inadequate, it is, of course, free to ask Congress to grant it further remedial authority.”

The Court’s full opinion is available here.

If you’re facing an FTC investigation or action or a business or class-action lawsuit, or the possibility of one, Lubin Austermuehle’s experienced Chicago consumer fraud and business fraud defense lawyers assist businesses that are the target of investigation by the Illinois Attorney General or the FTC or have been accused of fraud navigate these investigations and defend lawsuits or actions. Our Chicago business lawyers have more than thirty-five years of experience helping business clients defend against complex business fraud and breach of fiduciary duty cases. Our Chicago business, commercial, and class-action litigation lawyers represent individuals, family businesses and enterprises of all sizes in a variety of legal disputes, including disputes among partners and shareholders as well as lawsuits between businesses and consumer rights, auto fraud, and wage claim individual and class action cases. In every case, our goal is to resolve disputes as quickly and successfully as possible, helping business clients protect their investments and get back to business as usual. From offices in Elmhurst and Wilmette, we serve clients throughout the Chicagoland area and Illinois.


The experienced Illinois FTC defense attorneys at Lubin Austermuehle can help defend your business and guide you through an FTC investigation. To set up a consultation with one of our Naperville and Chicago business law attorneys and class action and consumer trial lawyers, please call us toll-free at 833 306-4933, locally at 630 333-0333 or contact us online.