[House Report 117-90]
[From the U.S. Government Publishing Office]
117th Congress } { Rept. 117-90
HOUSE OF REPRESENTATIVES
1st Session } { Part 1
======================================================================
CONSUMER PROTECTION AND RECOVERY ACT
_______
July 16, 2021.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
_______
Mr. Pallone, from the Committee on Energy and Commerce, submitted the
following
R E P O R T
together with
DISSENTING VIEWS
[To accompany H.R. 2668]
The Committee on Energy and Commerce, to whom was referred
the bill (H.R. 2668) to amend the Federal Trade Commission Act
to affirmatively confirm the authority of the Federal Trade
Commission to seek permanent injunctions and other equitable
relief for violations of any provision of law enforced by the
Commission, having considered the same, reports favorably
thereon with an amendment and recommends that the bill as
amended do pass.
CONTENTS
Page
I. Purpose and Summary.............................................2
II. Background and Need for the Legislation.........................3
III. Committee Hearings..............................................4
IV. Committee Consideration.........................................5
V. Committee Votes.................................................6
VI. Oversight Findings.............................................13
VII. New Budget Authority, Entitlement Authority, and Tax Expenditur13
VIII. Federal Mandates Statement.....................................13
IX. Statement of General Performance Goals and Objectives..........13
X. Duplication of Federal Programs................................13
XI. Committee Cost Estimate........................................13
XII. Earmarks, Limited Tax Benefits, and Limited Tariff Benefits....14
XIII. Advisory Committee Statement...................................14
XIV. Applicability to Legislative Branch............................14
XV. Section-by-Section Analysis of the Legislation.................14
XVI. Changes in Existing Law Made by the Bill, as Reported..........15
XVII. Exchange of Letters............................................20
XVIII.Dissenting Views...............................................23
The amendment is as follows:
Strike all after the enacting clause and insert the
following:
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Consumer Protection and Recovery
Act''.
SEC. 2. FTC AUTHORITY TO SEEK PERMANENT INJUNCTIONS AND OTHER EQUITABLE
RELIEF.
(a) Permanent Injunctions and Other Equitable Relief.--Section 13 of
the Federal Trade Commission Act (15 U.S.C. 53) is amended--
(1) in subsection (b)--
(A) in paragraph (1), by inserting ``has violated,''
after ``corporation'';
(B) in paragraph (2)--
(i) by striking ``that'' and inserting ``that
either (A)''; and
(ii) by striking ``final,'' and inserting
``final; or (B) the permanent enjoining thereof
or the ordering of equitable relief under
subsection (e),''; and
(C) in the matter following paragraph (2)--
(i) by striking ``to enjoin any such act or
practice'';
(ii) by striking ``Upon'' and inserting ``In
a suit under paragraph (2)(A), upon'';
(iii) by striking ``without bond'';
(iv) by striking ``proper cases'' and
inserting ``a suit under paragraph (2)(B)'';
(v) by striking ``injunction.'' and inserting
``injunction, equitable relief under subsection
(e), or such other relief as the court
determines to be just and proper, including
temporary or preliminary equitable relief.'';
(vi) by striking ``Any suit'' and inserting
``Any suit under this subsection''; and
(vii) by striking ``In any suit under this
section'' and inserting ``In any such suit'';
and
(2) by adding at the end the following:
``(e) Equitable Relief.--
``(1) Restitution; contract rescission and reformation;
refunds; return of property.--In a suit brought under
subsection (b)(2)(B), the Commission may seek, and the court
may order, with respect to the violation that gives rise to the
suit, restitution for losses, rescission or reformation of
contracts, refund of money, or return of property.
``(2) Disgorgement.--In a suit brought under subsection
(b)(2)(B), the Commission may seek, and the court may order,
disgorgement of any unjust enrichment that a person,
partnership, or corporation obtained as a result of the
violation that gives rise to the suit.
``(3) Calculation.--Any amount that a person, partnership, or
corporation is ordered to pay under paragraph (2) with respect
to a violation shall be offset by any amount such person,
partnership, or corporation is ordered to pay, and the value of
any property such person, partnership, or corporation is
ordered to return, under paragraph (1) with respect to such
violation.
``(4) Limitations period.--
``(A) In general.--A court may not order equitable
relief under this subsection with respect to any
violation occurring before the period that begins on
the date that is 10 years before the date on which the
Commission files the suit in which such relief is
sought.
``(B) Calculation.--For purposes of calculating the
beginning of the period described in subparagraph (A),
any time during which an individual against which the
equitable relief is sought is outside of the United
States shall not be counted.''.
(b) Conforming Amendment.--Section 16(a)(2)(A) of the Federal Trade
Commission Act (15 U.S.C. 56(a)(2)(A)) is amended by striking
``(relating to injunctive relief)''.
(c) Applicability.--The amendments made by this section shall apply
with respect to any action or proceeding that is pending on, or
commenced on or after, the date of the enactment of this Act.
I. Purpose and Summary
H.R. 2668, the ``Consumer Protection and Recovery Act'',
amends section 13(b) of the Federal Trade Commission (FTC) Act
to provide the FTC the ability to obtain both injunctive and
monetary equitable relief, including restitution and
disgorgement, for all violations of the laws it enforces. The
bill also makes clear that under section 13(b) of the FTC Act
the FTC may seek temporary restraining orders and preliminary
injunctions without bond and that any relief sought under
section 13(b) may be for past violations in addition to ongoing
and imminent violations.
II. Background and Need for Legislation
The FTC is the premier federal consumer protection agency
in the United States, directed to enforce numerous statutes.
The heart of this enforcement regime is section 5 of the FTC
Act, which mandates the agency prevent unfair or deceptive acts
or practices and unfair methods of competition.\1\ Section
13(b) of the FTC Act authorizes the Commission to bring suit in
federal courts seeking relief for consumers and has long been a
critical enforcement tool the FTC uses to combat fraud and
scams under section 5.\2\ The FTC refunded $11.2 billion to
consumers targeted by illegal activities over the past five
years,\3\ including $482 million to more than 1.6 million
consumers in 2020 alone.\4\
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\1\15 U.S.C. Sec. 45(a).
\2\15 U.S.C. Sec. 53(b).
\3\House Committee on Energy and Commerce, Testimony of the Federal
Trade Commission, Hearing on The Consumer Protection and Recovery Act:
Returning Money to Defrauded Consumers, 117th Cong. (Apr. 27, 2021).
\4\Federal Trade Commission, FTC Returns More Than $482 Million to
Consumers in 2020 (Jan. 27, 2021) (press release).
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The FTC's authority under section 13(b) to obtain equitable
monetary relief for consumers as well as to disgorge unjust
profits from bad actors was settled law for over 40 years.\5\
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\5\See House Committee on Energy and Commerce, Testimony of Jessica
Rich, Distinguished Fellow, Institute of Technology Law and Policy,
Georgetown Law Center, Hearing on Safeguarding American Consumers:
Fighting Fraud and Scams During the Pandemic, 117th Cong. (Feb. 4,
2021).
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In 2019, the Seventh Circuit Court of Appeals reversed its
own precedent to hold that the FTC does not have authority
under section 13(b) to obtain monetary relief.\6\ The Court
further held that recent Supreme Court decisions require
adherence to the strict text of the statute instead of decades
of precedent.\7\ The Third Circuit followed, rendering close to
48 million Americans in six states unable to obtain monetary
redress under 13(b).\8\ That decision also hampered the FTC's
``ability to protect consumers by enjoining defendants from
resuming their unlawful activities in cases where the conduct
has stopped but there is a reasonable likelihood that the
defendants will resume their unlawful activities in the
future.''\9\
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\6\FTC v. Credit Bureau Center, LLC, 937 F.3d 764 (7th Cir. 2019).
\7\Id.
\8\FTC v. AbbVie, Inc., No. 18-2621 (3rd Cir. 2020).
\9\Senate Committee on Commerce, Science, and Transportation,
Prepared Statement of the Federal Trade Commission, Hearing on
Strengthening the Federal Trade Commission's Authority to Protect
Consumers, 117th Cong. (Apr. 20, 2021).
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On April 22, 2021, the United States Supreme Court held
that section 13(b) is limited to stopping or mandating certain
conduct and does not allow the FTC to seek equitable monetary
relief or require bad actors to return money earned through
illegal activity.\10\ The Supreme Court has not yet addressed
the question of whether section 13(b) of the FTC Act as written
allows the FTC to obtain relief for past conduct. To date, no
other circuit court has followed the approach of the Third
Circuit.
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\10\AMG Capital Management, LLC et al. v. FTC, 593 U.S. ____(2021).
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With the appellate court cases pending, the Commissioners
raised the issue and requested Congressional action before the
Committee on Energy and Commerce in May 2019.\11\ In 2020, all
five FTC Commissioners reiterated the need for Congress to take
quick action to pass legislation reaffirming the FTC's
authority under section 13(b) to recover ill-gotten gains from
bad actors and provide equitable monetary relief to
consumers.\12\
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\11\House Committee on Energy and Commerce, Hearing on Oversight of
the Federal Trade Commission: Strengthening Protections for Americans'
Privacy and Data Security, 116th Cong. (May 8, 2019).
\12\National Law Review, FTC Commissioners Urge Congress to Pass
Legislation to Restore Section 13(b) of the FTC Act (Nov. 3, 2020)
(www.natlawreview.com/article/ftc-commissioners-urge-congress-to-pass-
legislation-to-restore-section-13b-ftc-act).
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No alternative authorities under existing law can replace
what the FTC lost when section 13(b) was narrowed by the
Supreme Court. With section 13(b) limited solely to injunctive
relief, the FTC may only recover monetary relief for consumers
for a violation of a specific FTC rule (as opposed to the much
more frequent section 5 violation) or following lengthy
administrative and court proceedings.\13\ Moreover, the FTC
lacks any clear authority to freeze assets or seek other
preliminary injunctive relief when bringing an enforcement
action in court. In practice, the absence of that authority
means that money is often long gone by the time the FTC
negotiates a settlement or wins a favorable court decision for
consumers, precluding any practical monetary relief for those
victims.
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\13\15 U.S.C. Sec. 57b.
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H.R. 2668 restores the FTC's essential authorities under
section 13(b) to be able to bring enforcement actions in court
to seek and for courts to order equitable monetary relief for
consumer victims, including the disgorgement of ill-gotten
profits from bad actors. Consumers are not sufficiently
protected when the primary federal consumer protection agency
is allowed to bring suit to require bad actors stop illegal
behavior but lacks the authority to seek court orders for those
bad actors to disgorge illegal profits or require defendants
return to consumers what was taken from them. H.R. 2668
restores the monetary equitable relief authority previously
available to the FTC for over four decades that had become a
core component of the FTC's overall enforcement regime to
protect consumers. H.R. 2668 also removes any potential
ambiguity over whether the FTC may bring enforcement actions
under section 13(b) for past conduct even for consumers who
were harmed before the illegal action stopped. Without H.R.
2668, the FTC will be far less effective in fulfilling its
mission to protect consumers and execute its law enforcement
responsibilities.
III. Committee Hearings
For the purposes of section 3(c) of rule XIII of the Rules
of the House of Representatives, the following hearing was used
to develop or consider H.R. 2668:
The Subcommittee on Consumer Protection and Commerce held a
hearing on May 8, 2019. The hearing was entitled, ``Oversight
of the Federal Trade Commission: Strengthening Protections for
Americans' Privacy and Data Security.'' The Subcommittee
received testimony from:
The Honorable Joseph J. Simons, Chairman,
Federal Trade Commission
The Honorable Noah Joshua Phillips,
Commissioner, Federal Trade Commission
The Honorable Rohit Chopra, Commissioner,
Federal Trade Commission
The Honorable Rebecca Kelly Slaughter,
Commissioner, Federal Trade Commission.
The Honorable Christine S. Wilson,
Commissioner, Federal Trade Commission.
The Subcommittee on Consumer Protection and Commerce held a
hearing on February 4, 2021. The hearing was entitled,
``Safeguarding American Consumers: Fighting Fraud and Scams
During the Pandemic.'' The Subcommittee received testimony
from:
Bonnie Patten, Esq., Executive Director,
TruthInAdvertising.org
Jessica Rich, Distinguished Fellow,
Institute for Technology Law & Policy, Georgetown Law
School
The Honorable William E. Kovacic, Global
Competition Professor of Law and Policy, Professor of
Law, Director, Competition Law Center, George
Washington University Law School
Traci Ponto, Spokane COPS Crime Victim
Advocate, Spokane Community Oriented Policy Services.
The Subcommittee on Consumer Protection and Commerce held a
legislative hearing on April 27, 2021. The hearing was
entitled, ``The Consumer Protection and Recovery Act: Returning
Money to Defrauded Consumers.'' The Subcommittee received
testimony from:
The Honorable Rebecca K. Slaughter, then-
Acting Chairwoman, Federal Trade Commission
Anna Laitin, Director, Financial Fairness
and Legislative Strategy
Consumer Reports
Ted Mermin, Executive Director, Center for
Consumer Law and Economic Justice, University of
California, Berkeley School of Law
Dr. J. Howard Beales, Professor Emeritus of
Strategic Management and Public Policy, George
Washington University.
IV. Committee Consideration
H.R. 2668, the ``Consumer Protection and Recovery Act'',
was introduced on April 20, 2021, by Representative Cardenas
(D-CA) and 13 other original cosponsors, and was referred to
the Committee on Energy and Commerce. It was then referred to
the Subcommittee on Consumer Protection and Commerce on April
21, 2021. A hearing on the bill was held on April 27, 2021.
The Subcommittee on Consumer Protection and Commerce met in
virtual open markup session, pursuant to notice, to consider
H.R. 2668 on May 27, 2021. During consideration of the bill,
Representative Rodgers (R-WA) offered a motion to postpone
consideration of H.R. 2668 until June 16, 2021. A motion to
table the Rodgers's motion to postpone consideration until June
16, 2021, offered by Representative Pallone (D-NJ), was agreed
to by a roll call vote: 14 yeas to 9 nays (CPC Roll call no.
01). Subsequently, Representative Bilirakis (R-FL) offered a
motion to postpone consideration of H.R. 2688 indefinitely. A
motion to table the Bilirakis motion to postpone indefinitely,
offered by Representative Pallone, was agreed to by a roll call
vote: 13 yeas to 7 nays (CPC Roll call no. 02).
After deliberation of the motions offered to postpone
consideration of H.R. 2668, an amendment in the nature of a
substitute (AINS) offered by Representative Cardenas was agreed
to by a voice vote. An amendment to the Cardenas AINS, offered
by Representative Armstrong (R-ND), was defeated by a roll call
vote: 7 yeas to 14 nays (CPC Roll call no. 03). An amendment to
the Cardenas AINS, offered by Representative Latta (R-OH), was
defeated by a roll call vote: 8 yeas to 14 nays (CPC Roll call
no. 04). Five amendments to the Cardenas AINS, offered by
Representative Bilirakis, were withdrawn. Representatives
Armstrong, Guthrie (R-KY), and Dunn (R-FL) each offered an
amendment to the Cardenas AINS, but withdrew the amendments.
Upon conclusion of consideration of the bill, the Subcommittee
ordered H.R. 2668 reported favorably to the full Committee,
amended, by a voice vote.
On June 10, 2021, the full Committee met in virtual open
markup session to consider H.R. 2668. During consideration of
the bill, an AINS offered by Representative Cardenas was agreed
to by a voice vote. An amendment to the Cardenas AINS, offered
by Representative Bilirakis, was defeated by a roll call vote:
25 yeas to 28 nays (Roll call no. 27). Two amendments, offered
by Representative Duncan and Representative Rodgers, were ruled
out of order by the Chairman because the amendments violate
House rule XVI, clause 7. Representative Pallone, Chairman of
the committee, offered a motion to order H.R. 2668 reported
favorably to the House, amended. The motion on final passage
was agreed to by a roll call vote of 30 yeas to 22 nays (Roll
call no. 28), a quorum being present.
V. Committee Votes
Clause 3(b) of rule XIII of the Rules of the House of
Representatives requires the Committee to list each record vote
on the motion to report legislation and amendments thereto. The
Committee advises that there were six record votes taken on
H.R. 2668, including a motion by Mr. Pallone ordering H.R. 2668
favorably reported to the House, amended. The motion on final
passage of the bill was approved by a record vote of 30 yeas to
22 nays. The following are the record votes taken during
Committee consideration, including the names of those members
voting for and against:
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
VI. Oversight Findings
Pursuant to clause 3(c)(1) of rule XIII and clause 2(b)(1)
of rule X of the Rules of the House of Representatives, the
oversight findings and recommendations of the Committee are
reflected in the descriptive portion of the report.
VII. New Budget Authority, Entitlement Authority, and Tax Expenditures
Pursuant to 3(c)(2) of rule XIII of the Rules of the House
of Representatives, the Committee adopts as its own the
estimate of new budget authority, entitlement authority, or tax
expenditures or revenues contained in the cost estimate
prepared by the Director of the Congressional Budget Office
pursuant to section 402 of the Congressional Budget Act of
1974.
The Committee has requested but not received from the
Director of the Congressional Budget Office a statement as to
whether this bill contains any new budget authority, spending
authority, credit authority, or an increase or decrease in
revenues or tax expenditures.
VIII. Federal Mandates Statement
The Committee adopts as its own the estimate of Federal
mandates prepared by the Director of the Congressional Budget
Office pursuant to section 423 of the Unfunded Mandates Reform
Act.
IX. Statement of General Performance Goals and Objectives
Pursuant to clause 3(c)(4) of rule XIII, the general
performance goal or objective of this legislation is to enhance
the ability of the FTC to protect consumers from and provide
relief to consumers victimized by unlawful behavior by
restoring authority to the FTC under section 13(b) of the FTC
Act to seek and for federal courts to order equitable monetary
relief for any provision of law enforced by the Commission as
well as to clarify that such relief may be sought for illegal
conduct that is ongoing, imminent, or has already occurred.
X. Duplication of Federal Programs
Pursuant to clause 3(c)(5) of rule XIII, no provision of
H.R. 2668 is known to be duplicative of another Federal
program, including any program that was included in a report to
Congress pursuant to section 21 of Public Law 111-39 or the
most recent Catalog of Federal Domestic Assistance.
XI. Committee Cost Estimate
Pursuant to clause 3(d)(1) of rule XIII, the Committee
adopts as its own the cost estimate prepared by the Director of
the Congressional Budget Office pursuant to section 402 of the
Congressional Budget Act of 1974.
XII. Earmarks, Limited Tax Benefits, and Limited Tariff Benefits
Pursuant to clause 9(e), 9(f), and 9(g) of rule XXI, the
Committee finds that H.R. 2668 contains no earmarks, limited
tax benefits, or limited tariff benefits.
XIII. Advisory Committee Statement
No advisory committee within the meaning of section 5(b) of
the Federal Advisory Committee Act was created by this
legislation.
XIV. Applicability to Legislative branch
The Committee finds that the legislation does not relate to
the terms and conditions of employment or access to public
services or accommodations within the meaning of section
102(b)(3) of the Congressional Accountability Act.
XV. Section-by-Section Analysis of the Legislation
Section 1. Short title
Section 1 designates that the short title may be cited as
the ``The Consumer Protection and Recovery Act''.
Sec. 2. FTC Authority to seek permanent injunctions and other equitable
relief.
Section 2 amends section 13(b) of the FTC Act, 15
U.S.C.Sec. 53(b), to provide the FTC the ability to obtain both
injunctive and monetary equitable relief for all violations of
the laws it enforces.
Paragraph (1) of subsection (a) of this section amends
section 13(b) of the FTC Act to make clear that the FTC may
seek temporary restraining orders and preliminary injunctions
without bond and specifies that the FTC may seek any relief
under section 13(b) of the FTC Act for past violations in
addition to ongoing and imminent violations.
Paragraph (2) of subsection (a) of this section adds a new
subsection (e) to section 13 of the FTC Act that specifies
types of equitable relief the FTC may pursue: restitution for
losses, contract reformation and recission, money refunds, and
the return of property. The new subsection (e) also provides
the FTC with disgorgement authority to seek court orders
requiring bad actors to repay unjust gains acquired in
violation of the law. Any amount of restitution for losses,
contract reformation and recission, money refunds, or the
return of property a court orders to be returned must be offset
by any amount the court orders be paid in disgorgement. Such
relief is allowed for violations occurring up to the 10 years
before the date a suit is filed, including any violations that
occur after the suit is filed.
Subsection (b) of this section makes a technical conforming
amendment to section 16(a)(2) of the FTC Act, 15 U.S.C.
Sec. 56(a)(2), to conform to the changes made to section 13 of
the FTC Act.
Subsection (c) of this section specifies that the law would
apply to any currently pending FTC action or proceeding in
addition to those commenced on or after the date of enactment.
XVI. Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (existing law
proposed to be omitted is enclosed in black brackets, new
matter is printed in italics, and existing law in which no
change is proposed is shown in roman):
FEDERAL TRADE COMMISSION ACT
* * * * * * *
Sec. 13. (a) Whenever the Commission has reason to believe--
(1) that any person, partnership, or corporation is
engaged in, or is about to engage in, the dissemination
or the causing of the dissemination of any
advertisement in violation of section 12, and
(2) that the enjoining thereof pending the issuance
of a complaint by the Commission under section 5, and
until such complaint is dismissed by the Commission or
set aside by the court on review, or the order of the
Commission to cease and desist made thereon has become
final within the meaning of section 5, would be to the
interest of the public,
the Commission by any of its attorneys designated by it for
such purpose may bring suit in a district court of the United
States or in the United States court of any Territory, to
enjoin the dissemination or the causing of the dissemination of
such advertisement. Upon proper showing a temporary injunction
or restraining order shall be granted without bond. Any suit
may be brought where such person, partnership, or corporation
resides or transacts business, or wherever venue is proper
under section 1391 of title 28, United States Code. In
addition, the court may, if the court determines that the
interests of justice require that any other person,
partnership, or corporation should be a party in such suit,
cause such other person, partnership, or corporation to be
added as a party without regard to whether venue is otherwise
proper in the district in which the suit is brought. In any
suit under this section, process may be served on any person,
partnership, or corporation wherever it may be found.
(b) Whenever the Commission has reason to believe--
(1) that any person, partnership, or corporation has
violated, is violating, or is about to violate, any
provision of law enforced by the Federal Trade
Commission, and
(2) [that] that either (A) the enjoining thereof
pending the issuance of a complaint by the Commission
and until such complaint is dismissed by the Commission
or set aside by the court on review, or until the order
of the Commission made thereon has become [final,]
final; or (B) the permanent enjoining thereof or the
ordering of equitable relief under subsection (e),
would be in the interest of the public--
the Commission by any of its attorneys designated by it for
such purpose may bring suit in a district court of the United
States [to enjoin any such act or practice]. [Upon] In a suit
under paragraph (2)(A), upon a proper showing that, weighing
the equities and considering the Commission's likelihood of
ultimate success, such action would be in the public interest,
and after notice to the defendant, a temporary restraining
order or a preliminary injunction may be granted [without
bond]: Provided, however, That if a complaint is not filed
within such period (not exceeding 20 days) as may be specified
by the court after issuance of the temporary restraining order
or preliminary injunction, the order or injunction shall be
dissolved by the court and be of no further force and effect:
Provided further, That in [proper cases] a suit under paragraph
(2)(B) the Commission may seek, and after proper proof, the
court may issue, a permanent [injunction.] injunction,
equitable relief under subsection (e), or such other relief as
the court determines to be just and proper, including temporary
or preliminary equitable relief. [Any suit] Any suit under this
subsection may be brought where such person, partnership, or
corporation resides or transacts business, or wherever venue is
proper under section 1391 of title 28, United States Code. In
addition, the court may, if the court determines that the
interests of justice require that any other person,
partnership, or corporation should be a party in such suit,
cause such other person, partnership, or corporation to be
added as a party without regard to whether venue is otherwise
proper in the district in which the suit is brought. [In any
suit under this section] In any such suit, process may be
served on any person, partnership, or corporation wherever it
may be found.
(c) Any process of the Commission under this section may be
served by any person duly authorized by the Commission--
(1) by delivering a copy of such process to the
person to be served, to a member of the partnership to
be served, or to the president, secretary, or other
executive officer or a director of the corporation to
be served;
(2) by leaving a copy of such process at the
residence or the principal office or place of business
of such person, partnership, or corporation; or
(3) by mailing a copy of such process by registered
mail or certified mail addressed to such person,
partnership, or corporation at his, or her, or its
residence, principal office, or principal place or
business.
The verified return by the person serving such process setting
forth the manner of such service shall be proof of the same.
(d) Whenever it appears to the satisfaction of the court in
the case of a newspaper, magazine, periodical, or other
publication, published at regular intervals--
(1) that restraining the dissemination of a false
advertisement in any particular issue of such
publication would delay the delivery of such issue
after the regular time therefor, and
(2) that such delay would be due to the method by
which the manufacture and distribution of such
publication is customarily conducted by the publisher
in accordance with sound business practice, and not to
any method or device adopted for the evasion of this
section or to prevent or delay the issuance of an
injunction or restraining order with respect to such
false advertisement or any other advertisement,
the court shall exclude such issue from the operation of the
restraining order or injunction.
(e) Equitable Relief.--
(1) Restitution; contract rescission and reformation;
refunds; return of property.--In a suit brought under
subsection (b)(2)(B), the Commission may seek, and the
court may order, with respect to the violation that
gives rise to the suit, restitution for losses,
rescission or reformation of contracts, refund of
money, or return of property.
(2) Disgorgement.--In a suit brought under subsection
(b)(2)(B), the Commission may seek, and the court may
order, disgorgement of any unjust enrichment that a
person, partnership, or corporation obtained as a
result of the violation that gives rise to the suit.
(3) Calculation.--Any amount that a person,
partnership, or corporation is ordered to pay under
paragraph (2) with respect to a violation shall be
offset by any amount such person, partnership, or
corporation is ordered to pay, and the value of any
property such person, partnership, or corporation is
ordered to return, under paragraph (1) with respect to
such violation.
(4) Limitations period.--
(A) In general.--A court may not order
equitable relief under this subsection with
respect to any violation occurring before the
period that begins on the date that is 10 years
before the date on which the Commission files
the suit in which such relief is sought.
(B) Calculation.--For purposes of calculating
the beginning of the period described in
subparagraph (A), any time during which an
individual against which the equitable relief
is sought is outside of the United States shall
not be counted.
* * * * * * *
Sec. 16. (a)(1) Except as otherwise provided in paragraph (2)
or (3), if--
(A) before commencing, defending, or intervening in,
any civil action involving this Act (including an
action to collect a civil penalty) which the
Commission, or the Attorney General on behalf of the
Commission, is authorized to commence, defend, or
intervene in, the Commission gives written notification
and undertakes to consult with the Attorney General
with respect to such action; and
(B) the Attorney General fails within 45 days after
receipt of such notification to commence, defend, or
intervene in, such action;
the Commission may commence, defend, or intervene in, and
supervise the litigation of, such action and any appeal of such
action in its own name by any of its attorneys designated by it
for such purpose.
(2) Except as otherwise provided in paragraph (3), in any
civil action--
(A) under section 13 of this Act [(relating to
injunctive relief)];
(B) under section 19 of this Act (relating to
consumer redress);
(C) to obtain judicial review of a rule prescribed by
the Commission, or a cease and desist order issued
under section 5 of this Act;
(D) under the second paragraph of section 9 of this
Act (relating to enforcement of a subpena) and under
the fourth paragraph of such section (relating to
compliance with section 6 of this Act); or
(E) under section 21A of this Act;
the Commission shall have exclusive authority to commence or
defend, and supervise the litigation of, such action and any
appeal of such action in its own name by any of its attorneys
designated by it for such purpose, unless the Commission
authorizes the Attorney General to do so. The Commission shall
inform the Attorney General of the exercise of such authority
and such exercise shall not preclude the Attorney General from
intervening on behalf of the United States in such action and
any appeal of such action as may be otherwise provided by law.
(3)(A) If the Commission makes a written request to the
Attorney General, within the 10-day period which begins on the
date of the entry of the judgment in any civil action in which
the Commission represented itself pursuant to paragraph (1) or
(2), to represent itself through any of its attorneys
designated by it for such purpose before the Supreme Court in
such action, it may do so, if--
(i) the Attorney General concurs with such request;
or
(ii) the Attorney General, within the 60-day period
which begins on the date of the entry of such
judgment--
(a) refuses to appeal or file a petition for
writ of certiorari with respect to such civil
action, in which case he shall give written
notification to the Commission of the reasons
for such refusal within such 60-day period; or
(b) the Attorney General fails to take any
action with respect to the Commission's
request.
(B) In any case where the Attorney General represents the
Commission before the Supreme Court in any civil action in
which the Commission represented itself pursuant to paragraph
(1) or (2), the Attorney General may not agree to any
settlement, compromise, or dismissal of such action, or confess
error in the Supreme Court with respect to such action, unless
the Commission concurs.
(C) For purposes of this paragraph (with respect to
representation before the Supreme Court), the term ``Attorney
General'' includes the Solicitor General.
(4) If, prior to the expiration of the 45-day period
specified in paragraph (1) of this section or a 60-day period
specified in paragraph (3), any right of the Commission to
commence, defend, or intervene in, any such action or appeal
may be extinguished due to any procedural requirement of any
court with respect to the time in which any pleadings, notice
of appeal, or other acts pertaining to such action or appeal
may be taken, the Attorney General shall have one-half of the
time required to comply with any such procedural requirement of
the court (including any extension of such time granted by the
court) for the purpose of commencing, defending, or intervening
in the civil action pursuant to paragraph (1) or for the
purpose of refusing to appeal or file a petition for writ of
certiorari and the written notification or failing to take any
action pursuant to paragraph 3(A)(ii).
(5) The provisions of this subsection shall apply
notwithstanding chapter 31 of title 28, United States Code, or
any other provision of law.
(b) Whenever the Commission has reason to believe that any
person, partnership, or corporation is liable for a criminal
penalty under this Act, the Commission shall certify the facts
to the Attorney General, whose duty it shall be to cause
appropriate criminal proceedings to be brought.
(c) Foreign Litigation.--
(1) Commission attorneys.--With the concurrence of
the Attorney General, the Commission may designate
Commission attorneys to assist the Attorney General in
connection with litigation in foreign courts on
particular matters in which the Commission has an
interest.
(2) Reimbursement for foreign counsel.--The
Commission is authorized to expend appropriated funds,
upon agreement with the Attorney General, to reimburse
the Attorney General for the retention of foreign
counsel for litigation in foreign courts and for
expenses related to litigation in foreign courts in
which the Commission has an interest.
(3) Limitation on use of funds.--Nothing in this
subsection authorizes the payment of claims or
judgments from any source other than the permanent and
indefinite appropriation authorized by section 1304 of
title 31, United States Code.
(4) Other authority.--The authority provided by this
subsection is in addition to any other authority of the
Commission or the Attorney General.
* * * * * * *
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
XVIII. DISSENTING VIEWS
For the second full Energy and Commerce Committee markup of
the 117th Congress, the Energy and Commerce Democrats pursued a
partisan process strewn with process fouls that produced
defective legislation that reflected a lack of expert witnesses
and input from both sides of the aisle in the committee. Both
Republicans and Democrats want the Federal Trade Commission
(FTC) to have the tools necessary to protect consumers,
especially given the goal to provide increased authorities and
resources necessary to enforce a national privacy standard.
This legislation became a missed opportunity to protect
consumers on many fronts. Republicans are hopeful the Majority
will review the hearing record and the rebuke they received,
even by their own side of the aisle, on this legislation and
consider working with Republicans on important business, like
modernizing and empowering the FTC to take on enforcing data
protections for American consumers.
Since the creation of the FTC in the Federal Trade
Commission Act in 1914, Congress has deliberated on delegated
powers and specified additional authorities over the years to
level the playing field to combat unfair or deceptive acts or
practices including scams, misleading consumers about the costs
of products or services, whether such products or services are
in fact available, or companies selling a misleading product or
service.\1\ In the 1970s, Congress authorized additional FTC
authorities, including Section 13(b), to seek remedies in
court.\2\
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\1\See Federal Trade Commission Act, Section 5 Unfair or Deceptive
Acts or Practices at https://www.fdic.gov/resources/supervision-and-
examinations/consumer-compliance-examination-man-
ual/documents/7/vii-1-1.pdf.
\2\See Section 13(b) of the FTC Act at the Supreme Court: The
Middle Ground at https://www.americanbar.org/content/dam/aba/
publishing/antitrust_source/2020/dec-2020/v20_i3_dec2020_beales.pdf.
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The FTC has often invoked Section 13(b) to seek monetary
relief in addition to injunctive relief. However, the Supreme
Court recently ruled, in a rare 9-0 decision, that Section
13(b) does not authorize the Commission to seek, or the court
to award, monetary relief including disgorgement or
restitution.\3\
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\3\See the Opinion of Justice Breyer in AMG Capital Management, LLC
et al. v. Federal Trade Commission at https://www.supremecourt.gov/
opinions/20pdf/19/508_l6gn.pdf.
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Ensuring the FTC has the necessary tools to protect
consumers from bad actors is a shared goal by both Republicans
and Democrats. This has particularly been the case during the
COVID-19 pandemic when the Committee on Energy and Commerce led
the way on several bipartisan measures to increase protections
for Americans, especially seniors and those with disabilities.
This also included providing the FTC with first time civil
penalty authorities in cases relating to COVID-19 scams.
Unfortunately, H.R. 2668, the ``Consumer Protection and
Recovery Act'' is not one of those measures. From the time of
introduction, the legislation has been rushed through an
entirely partisan process without addressing significant
concerns from Republicans to protect due process and prevent
the FTC from operating unchecked as it did in the 1970's.
Representative Cardenas introduced H.R. 2668 on Tuesday,
April 20, 2021, which would grant the FTC with new authorities
and retroactive standing to seek, including cases up to 10
years, monetary relief such as disgorgement and restitution in
cases of unfair competition and unfair or deceptive acts or
practices.
The authorities, which the FTC historically never had, do
not include guardrails to ensure the FTC has a sound basis for
seeking monetary relief nor to incentivize the FTC to pursue
current bad actors in violation of law. Instead, the
legislation establishes a 10-year statute of limitations going
forward and neutralizes the unanimous Supreme Court decision to
allow the FTC to seek relief retroactively. Such a long statute
of limitations allows the assertion of claims long after the
conduct at issue, when evidence may be stale or no longer
available.\4\
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\4\See Professor Howard Beales responses to Additional Questions
for the Record at https://docs.house.gov/meetings/IF/IF17/20210427/
112501/HHRG-117-IF17-Wstate-BealesJ-20210427-SD001.pdf.
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Seven days after introduction, H.R. 2668 was the sole piece
of legislation considered at a hearing before the Subcommittee
on Consumer Protection and Commence, even when Republicans
introduced FTC reform bills to move in tandem with H.R. 2668.
At the Subcommittee hearing, the Majority invited Acting
Chairwoman Rebecca K. Slaughter to testify without her fellow
FTC Commissioners, despite our request that all of the current
Commissioners testify as they did in the Senate one week prior.
If that discourse were allowed, the committee would have heard
expert testimony from Republican FTC Commissioners who
justified the appropriate guardrails needed in any legislation
addressing Section 13(b).
The Committee would have benefited from hearing the
viewpoints of all current FTC Commissioners, some of which
raised several factors Congress should consider while drafting
a legislative fix during the Senate hearing. Such factors
included, ensuring there are guardrails that set boundaries on
when the FTC may seek disgorgement and restitution, similar to
the 2003 FTC Policy Statement on Monetary Equitable Remedies in
Competition Cases,\5\ and how Congress can examine the
authorities granted under Section 19 of the FTC Act as a
possible solution to allow the Commission to seek monetary
relief in cases of fraudulent or dishonest behavior.\6\ None of
these considerations were included in the legislation moving
forward.
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\5\See the FTC Policy Statement on Monetary Equitable Remedies in
Competition Cases at https://www.govinfo.gov/content/pkg/FR-2003-08-04/
pdf/03-19722.pdf.
\6\The Senate Committee on Commerce, Science, and Transportation
held an information hearing with the FTC at https://
www.commerce.senate.gov/2021/4/strengthening-the-federal-trade-
commission-s-authority-to-protect-consumers.
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After holding a hearing without the input from pertinent
experts, the Majority continued a partisan process to markup
H.R. 2668 in both the subcommittee and the full committee.
During the subcommittee markup, Republicans offered
amendments to address potential unintended consequences of
granting the FTC new authority. Republican's proposed ensuring
the FTC conducts an economic analysis before seeking
disgorgement or restitution, increasing transparency, and
eliminating duplicative efforts including the recently
announced centralized rulemaking office.\7\ In addition to
pointing out the impact on the seventy plus consumer protection
laws the FTC is charged with enforcing, Republicans also
highlighted for the need--and the opportunity H.R. 2668
presented--to establish a national privacy framework.
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\7\See FTC Acting Chairwoman Slaughter Announces New Rulemaking
Group at https://www.ftc.gov/news-events/press-releases/2021/03/ftc-
acting-chairwoman-slaughter-announces-new-rulemaking-group
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Prior to the full committee markup, and in keeping within
the jurisdiction of the committee, Republicans proposed a
compromise amendment to clarify the FTC may only seek
restitution and disgorgement in cases involving unfair or
deceptive acts or practices in which a reasonable person would
have known the potential violation under consideration was
unfair or deceptive. This compromise would have also reduced
the statute of limitations from 10 years to 5 years, but
included an avenue to allow the FTC to seek (under the approval
from the courts) equitable relief with respect to violations
where a corporation engaged in intentionally deceptive or
fraudulent conduct that prevented the Commission from bringing
the suit within the 5 year statute of limitations--a sincere
offer to address Democratic desires for longer statutes of
limitations.
Even after the Republican compromise garnered bipartisan
support, Democrats rejected the commonsense approach and moved
forward with their partisan legislation with no consideration
for its consequences.
The Committee should have received input from all of the
FTC Commissioners and worked in a bipartisan manner to reach
common ground to provide the FTC the tools to protect
consumers, rather than providing the FTC with new, blanket
authorities without guardrails and insurances.
We are disappointed that the Democrats failed to manage a
bipartisan process on H.R. 2668. However, when Democrats wish
to engage in bipartisan solutions for the American people, the
Energy and Commerce Republicans will still be there, ready to
work.
Cathy McMorris Rodgers,
Republican Leader.
Gus Bilirakis,
Republican Leader,
Subcommittee on Consumer
Protection and Commerce.
[all]