America's consumer watchdog has pleaded with lawmakers to pass legislation to restore its ability to recover ill-gotten gains from scammers and pass the money back to victims cheated by the crooks.
This comes after the US Supreme Court ruled last month that the FTC cannot effectively force fraudsters to hand back the cash they swindled out of people.
Using Section 13(b) of the FTC Act, the regulator has for decades sued companies on behalf of scam victims to claw back billions of dollars for them. In a unanimous decision, in the case of AMG Capital Management v FTC, though, the Supremes put a stop to that, saying the commission doesn't actually have the authority to do so unless and until Congress specifically grants it.
Without this ability, the maximum damages the FTC can pursue in a lawsuit for civil penalties is peanuts; it ranges from as little as roughly $500 to $1.2m. Acting FTC chairwoman Rebecca Kelly Slaughter is now lobbying hard in favor of the proposed Consumer Protection and Recovery Act, a law bill introduced by House reps this year that promises to restore the agency’s previously assumed powers.
At a Senate commerce committee hearing on April 20, Slaughter attempted to persuade lawmakers to pass the bill. She faced opposition, however, from US Chamber of Commerce representatives. In a followup letter [PDF] this week to Senators Maria Cantwell (D-WA) and Roger Wicker (R-MS), who head the committee, Slaughter accused the chamber of not understanding or appreciating the aforementioned section 13(b).
“I support this bill, which would restore Section 13(b) to the way that it operated for over 40 years. The Chamber, however, does not … it is my view that the Chamber’s position is based on a fundamental misunderstanding of the history and function of Section 13(b),” she wrote.
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Slaughter said the chamber thought the FTC had overstepped its authority and should only be able to compensate victims in cases of clear-cut fraud rather than a wide range of scams and swindles, and should only be able to sue companies if they were still cheating customers. She argued, however, that the FTC Act did not include such restrictions and that companies ultimately shouldn’t be able to get away with just a slap on the wrist.
“The Chamber’s approach would needlessly deny refunds to consumers harmed by past violations of the FTC Act, even in cases that involve 'egregious' frauds," she wrote.
"Take for example a defendant who sold snake oil falsely advertised to cure cancer. As the Chamber would have it, the Commission should be powerless to do anything if the defendant stopped making sales before the Commission sued.
“Defrauded consumers would get no relief and the defendant could not only keep the money, but would also avoid being subject to a federal court injunction. That result defies common sense. Section 13(b) should be amended to make clear that the Commission is authorized to seek monetary and injunctive relief for all violations, whether past, ongoing, or imminent.”
The proposed law, HR 2668, is still in its very early stages. The Register has asked the US Chamber of Commerce for comment. ®