FTC Asks Congress To Restore Fraud Victim Compensation Authority

The Federal Trade Commission (FTC) is asking Congress to restore its authority to return funds to victims of fraud and other illegal activity, according to a Tuesday (April 27) press release.

Testifying before the House Energy and Commerce Subcommittee on Consumer Protection and Commerce, acting FTC Chair Rebecca Kelly Slaughter said that recently introduced legislation is crucial to protecting consumers in light of a Supreme Court ruling that eliminates the commission’s authority to recover money to compensate consumers who have been harmed by fraud.

Other recent court rulings have hampered the FTC’s power to take court action against illegal conduct, which “have significantly limited the Commission’s primary and most effective tool for providing refunds to harmed consumers,” Slaughter testified.

Section 13(b), the law affected by the Supreme Court ruling April 22, has allowed the FTC to bring billions — including $11.5 billion in just the past five years — to consumers in cases ranging from telemarketing fraud and deceptive business practices to data and security privacy and scams targeting seniors and veterans.

And that was before the pandemic. In the wake of the COVID-19 outbreak, the FTC used the law to take legal action against COVID-related scammers.

The FTC says the April 22 court ruling upends decades of years of court rulings based on established precedent, holding that the commission has the authority to restore funds to people who have been victims of illegal activity.

Other court rulings have harmed the FTC’s antitrust case against Facebook, the commission says, the social media giant arguing the Section 13(b) bars federal court action.

“Targets of FTC investigations now routinely argue that they are immune from suit in federal court because they are no longer violating the law, despite a likelihood of re-occurrence, and they make these arguments even when they stopped violating the law only after learning that the FTC was investigating them,” the commission said.