FTC Members Support Legislative Effort to Protect 13(b) Authority

Congress needs to protect FTC Act Section 13(b) authority, all four current commissioners told the Senate Commerce Committee Tuesday. Acting Chairwoman Rebecca Kelly Slaughter asked not to wait for a Supreme Court decision (see 2104190059). Sen. Jerry Moran, R-Kan., said he’s open to engaging in bipartisan legislative discussions with committee Chair Maria Cantwell, D-Wash.

There haven’t been direct conversations with Moran yet, Cantwell told us, noting his questioning aligned with her goals. Cantwell wants to move quickly to avoid any lapse in authority, she said: “A lot of people want to protect what the FTC has as authority. Let’s just see what happens.” The committee convenes again Wednesday for a confirmation hearing with FTC nominee Lina Khan (see 2103300002).

If SCOTUS rules against the agency in AMG Capital Management v. FTC (see 2102040049), the FTC will “need a fix,” Commissioner Noah Phillips testified. He noted Section 13(b) authority is used to address harms from fraud, antitrust, privacy, data security, mergers and deceptive advertising, calling it central to the design of the agency. Without additional clarification, the agency will need to seek penalties through disgorgement, a “problematic” model different from seeking restitution, said Phillips.

Ranking member Roger Wicker, R-Miss., noted that his Safe Data Act, introduced in 2020, included provisions that would “restore” the agency’s authority to obtain monetary remedies for consumers. He wants to examine how Congress can further clarify the statute to empower the FTC to enjoin bad behavior and compensate victims for losses. He cited a U.S. Chamber of Commerce letter questioning the agency’s legal ability to obtain monetary relief under Section 13(b). Slaughter said the Chamber made problematic assertions and interpretations, with which the agency disagreed in several cases. Slaughter said 13(b) enforcement has returned much money consumers, including $11.2 billion in the past five years.

Moran noted the “significant” impact on FTC ability to restitute consumers if there’s an adverse high court decision. He cited his privacy legislation that would grant the commission first-time civil penalty authority and new rulemaking powers. Asked if she’s open to collaborating with committee members on bipartisan legislation, Sen. Marsha Blackburn, R-Tenn., told us: “I’ll see what they have to say on it. I want to just see where this is going to go.”

Congress needs to clarify 13(b) authority, enact privacy legislation and approach “antitrust reform judiciously,” said Commissioner Christine Wilson. Commissioner Rohit Chopra agreed with colleagues that when violators steal, the least the agency should do is force them to forfeit illegal gains. But he said 13(b) authority isn’t enough, noting that if a company defrauds consumers of $1 million, the most the agency can retrieve is $1 million. All four members told Cantwell they support monetary redress for consumers, though Phillips shied away from disgorgement.

All commissioners voiced support for an agency data security rulemaking that would be subject to a lengthy Magnuson-Moss rulemaking process (see 2103190055). Given congressional inaction and members’ desire for such a rulemaking, Cantwell asked what’s holding the agency back. “I do” support such a rulemaking, said Slaughter, adding that it’s “something we need to explore.” Phillips would prefer that Congress pass a federal statute; failing that, he supports a rule. Wilson would be thrilled to pursue a rulemaking only to have Congress preempt that effort with federal privacy legislation.

The committee plans a hearing on the abuse of market power in May, Cantwell said. Senate Consumer Protection Subcommittee Chairman Richard Blumenthal, D-Conn., said his panel plans a hearing next week on pandemic-related fraud.