On July 20, the U.S. House of Representatives passed legislation that would restore the Federal Trade Commission’s (FTC) ability to obtain equitable monetary remedies under Section 13(b) of the FTC Act. The legislation — H.R. 2667, the Consumer Protection and Recovery Act — passed by a vote of 221-205, with all House Democrats and two House Republicans voting in favor of the bill. The legislation now moves to the Senate, where it may be incorporated into the $3.5 trillion budget reconciliation package as a revenue-increasing “pay-for.”
The Consumer Protection and Recovery Act comes as a direct response to the Supreme Court’s April 22 decision in AMG Capital Management v. FTC. In that case, the Supreme Court upended decades of FTC practice by holding that Section 13(b) of the FTC Act does not in fact authorize equitable monetary remedies.
In response to the Court’s decision, the Consumer Protection and Recovery Act will, if enacted, provide the FTC with express authority to seek “restitution for losses, rescission or reformation of contracts, refund of money, or return of property,” as well as “disgorgement of any unjust enrichment.” In other words, the Consumer Protection and Recovery Act will provide the FTC with express authority to seek all traditionally available equitable monetary remedies. That authority will be cabined, somewhat, by a new 10-year statute of limitations.
But House Republicans have argued that the legislation goes too far. Representative Cathy McMorris Rodgers (R-WA), for instance, argued that that the legislation does not include needed “guardrails to protect due process.” Moreover, Representative Gus Bilirakis (R-FL) argued that the legislation would “provide the FTC with new authorities that far outpace the need supported by a consensus of the FTC Commissioners,” while also “signal[ing] a return to the broad overreach we saw with the FTC in previous decades.”
That said, President Biden and congressional Democrats strongly support the legislation. Indeed, in response to the vote, the White House issued the following statement: “The Administration applauds this step to expressly authorize the FTC to seek permanent injunctions and pursue equitable relief for all violations of law enforced by the Commission and ensure that the cost of illegal practices falls on bad actors, not consumers targeted by illegal scams.”
Our Take. As a standalone bill, the Consumer Protection and Recovery Act cannot pass in the Senate without Republican support. However, the legislation may be incorporated into the $3.5 trillion budget reconciliation package currently under consideration by the Senate, and via that package, it may pass on a party-line vote with no Republican support.
While predicting what will happen in the Senate is a bit speculative for our taste, Democratic support for the Consumer Protection and Recovery Act serves as another signal that the Biden administration intends to ramp up consumer enforcement efforts at both the FTC and the CFPB. As such, we recommend that companies take proactive steps to avoid government scrutiny by, for instance, reviewing their compliance programs and taking steps to reduce their risk profiles.