The Las Vegas attorney who successfully defended a race car driver in a case in the nation’s highest court has said he is pleased with the unanimous decision that will limit the Federal Trade Commission’s power to recoup badly winnings. acquired for cheated consumers.
But the federal regulator is not happy with the move and warns it will deprive the FTC of its most powerful enforcement tool.
On Tuesday, the acting FTC chairperson called on Congress to explicitly allow the agency to restore its authority to recover money from cheated consumers.
The call to action comes just days after a unanimous Supreme Court sided with professional racing driver Scott Tucker, who was convicted of deceiving consumers through its payday loan companies. The 9-0 decision nullifies a nearly $ 1.3 billion award against Tucker.
The High Court ruling removes what the FTC has called “one of its most important and effective enforcement tools,” which has been used to recover billions of dollars over the past decade.
Las Vegas-based attorney Paul Ray, Paul C. Ray, told the Review-Journal in an interview on Tuesday that the decision was good news.
“We were happy with the decision,” Ray told the Review-Journal in an interview Tuesday. “We are very happy about it and we like the decision because it respects the law. “
The FTC accused Tucker, of Leawood, Kansas, of using his payday loan companies to trick consumers across the United States into illegally charging them undisclosed and inflated fees.
As the Review-Journal previously reported, the FTC filed its second lawsuit against a payday lender in 2012 in federal court in Nevada because six out of 17 defendants have addresses in Las Vegas or Henderson.
Tucker is a former American Le Mans Series champion who, according to prosecutors, used the proceeds of the loan activity to fund a professional car racing team. The case centered on Section 13 (b) of the FTC Act, which the federal regulator has used to extract billions of dollars in monetary rewards from businesses.
Ray said he was happy the judges unanimously agreed that the FTC overstepped its authority. The ruling, he said, clarifies the law.
“What was happening was that if the FTC received a complaint about a company’s practices and someone said it was fraudulent, rather than following the required legal process, they used it to collect money for consumers, ”he said. “The law was really designed to stop a practice, not to bankrupt the business. And there are a number of companies that have gone bankrupt because of this use of the law where it was used to get massive judgments. “
“The good thing for business is that there is clarity on how this is supposed to be done,” added Ray.
FTC calls Congress
Judge Stephen Breyer wrote in his opinion for the court that the provision of federal law on which the FTC relied does not authorize the commission to seek, or a federal court to order, restitution or restitution of profits .
But Breyer noted that other parts of the Federal Trade Commission Act could be used to seek restitution for consumers who have been deceived. “If the Commission considers that this authority is too onerous or inadequate, it is, of course, free to ask Congress to grant it another remedial power. Indeed, the Commission recently asked Congress for this same authority.
On Tuesday, days after the Supreme Court ruling, Acting FTC Chairman Rebecca Kelly Slaughter urged congressional lawmakers to pass legislation that would allow the agency to recover money for cheated consumers .
Last week’s ruling threatens 24 pending cases in federal FTC courts that “rely exclusively” on the law for monetary remedies, Slaughter said. That’s $ 2.4 billion that the FTC says should be returned to aggrieved consumers.
U.S. Representative Tony Cardenas, D-Calif., Introduced the Consumer Protection and Recovery Act last week that would explicitly confirm the FTC’s ability to seek permanent injunctions and other fair action.
“I cannot stress enough the importance of early congressional action on this legislation,” Slaughter, a Democrat, said in her opening remarks Tuesday before a House Energy and Commerce subcommittee on consumer and trade protection. “The Supreme Court ruling eliminates the board’s primary and best tool for seeking monetary remedies when a company violates the FTC.”
The statutory rule, she said, has been used by the FTC for 40 years. The rule has been used to stop and recover money in a wide variety of cases, including telemarketing fraud, data security and privacy, scams targeting seniors and veterans, and deceptive marketing practices.
Slaughter said Tuesday that several high-profile cases have seen monetary remedies – including Volkswagen’s $ 9.5 billion settlement to resolve its clean diesel emissions scandal, the $ 200 million Herbalife settlement and the $ 61.7 million from Amazon to resolve flex driver tip retention allegations – was made possible “only through our now defunct 13 (b) authority”.