FTC: SC’s AMG decision has cost consumers over $1.5 billion

The Supreme Court’s April 2021 AMG decision has cost consumers at least $1.5 billion in recovered funds, according to the Federal Trade Commission (FTC). This ruling stripped the agency of its primary tool for seeking monetary penalties against fraudulent operators.

The FTC had relied for forty years on Section 13(b) of the FTC Act to secure damages, restitution, and disgorgement from wrongdoers. This statutory provision allowed the agency to recover billions of dollars for victims of various scams, including telemarketing fraud, anticompetitive business practices, and elder exploitation. The Supreme Court, however, declared that the FTC could not use Section 13(b) to obtain monetary relief.

FTC Commissioner Kelly Slaughter, joined by Chair Lina Khan, issued a statement on May 31st detailing the consequences. The decision has created a predictable outcome: wronged consumers are not recovering their money, and bad actors feel emboldened. The agency reported that between 2016 and 2022, Section 13(b) had facilitated $11.2 billion in relief across a wide array of enforcement actions.

The impact is starkly illustrated by several cases. In one instance, a fraudulent investment scheme defrauded consumers of at least $137 million. Despite winning the case, the FTC could only recover $2.4 million due to the limitations imposed by the AMG decision, forcing a settlement that left the majority of the ill-gotten gains with the perpetrators.

Similarly, a loan company bilked consumers out of more than $1.5 billion. The FTC secured only $18 million in redress after the ruling, allowing the company to retain the vast majority of the funds. Another case involved a pharmaceutical company that inflated drug prices, defrauding consumers of $493 million. The court denied the FTC’s request for monetary relief, enabling the company to keep its illegal profits while consumers received nothing.

These examples paint a grim picture of the post-AMG landscape. The FTC estimates that consumers have already lost over $1.5 billion in potential relief, a figure that continues to climb. The agency's ability to penalize and compensate victims in cases involving pyramid schemes and other fraudulent operations has been severely curtailed. The FTC v. Redwood S case, for instance, now presents significant new challenges for the agency in recovering funds for victims.

Consumers seeking to report fraud or find resources for recovery can visit the FTC’s website at www.ftc.gov.