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Seventh Circuit Review

Authors

Jamie N. Noonan

Abstract

The Federal Trade Commission (“FTC”) has been the most efficient regulator of commerce for over a century. It serves as the primary line of defense against anticompetitive, deceptive, and unfair business practices. Between July 2017 and July 2018 alone the FTC obtained a total of 114 court orders totaling $563 million and led refund programs that delivered $2.3 billion in refunds to wronged customers. To continue obtaining such results and ensuring a fair marketplace, the FTC requires a broad range of enforcement powers. But key FTC enforcement powers under Section 13(b) of the FTC Act—the primary provision that the FTC uses to challenge fraud—has recently fallen under attack. Traditionally, and for over three decades, the FTC has had the ability to seek restitution awards under Section 13(b) even though the only remedies that are explicitly stated in the language of the statute are temporary restraining orders and injunctions. Courts have nonetheless implied that the FTC has the power to seek and obtain restitution awards from the language of Section 13(b). In FTC v. Credit Bureau Centers, a Seventh Circuit panel determined that the FTC is not entitled to an implied remedy of restitution under Section 13(b) of the FTC Act. This decision separates the Seventh Circuit from eight of its sister circuits and overturns the Circuit’s own thirty-year-old precedent. The Seventh Circuit strictly interpreted Section 13(b)’s text and found that an implied restitution remedy “does not sit comfortably” with recent Supreme Court precedent that advised against finding implied statutory remedies. A majority of the Seventh Circuit sitting en banc denied a rehearing of the case, and three judges penned a sharp dissent to that denial. The dissent illustrates the very real implications that follow this limitation of FTC enforcement power. The limitation offers “brazen scammers” a grant of immunity and leaves the FTC more vulnerable than ever before. The reasoning of the Seventh Circuit in Credit Bureau Centers should be rejected by other Circuit Courts, as it defies congressional intent at the time of the drafting of the FTC Act and belittles decades of sound precedent. To restore the breadth of FTC enforcement power following this decision, the Supreme Court should grant the FTC’s petition for certiorari in this case and reverse the decision of the Seventh Circuit.

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