The Seventh Circuit has once again weighed in on the scope of the Federal Trade Commission’s (FTC’s) remedial authority. The case, FTC v. Credit Bureau Center, LLC, has had, in the words of the court, “a long and winding journey through the federal courts, including a trip to the Supreme Court and back.” Last week’s decision focused on monetary relief under Section 19 of the FTC Act—specifically, on how to calculate redress under Section 19 and whether monetary relief imposed under Section 19 can be deposited into the U.S. Treasury as disgorgement.
The lower court entered a judgment of $5,260,671.36, which equaled Credit Bureau Center’s total revenues minus refunds already paid and chargebacks. On appeal, Credit Bureau Center argued that a monetary award under Section 19 must be limited to net profits that can be traced to the underlying fraud (as opposed to net revenues). Credit Bureau Center relied on Liu v. SEC, 140 S. Ct. 1936 (2020), in which the Supreme Court found that a disgorgement award could not exceed a firm’s net profits from wrongdoing. The Seventh Circuit rejected this because Section 19—unlike the statute at issue in Liu—explicitly permits the refund of money to make consumers whole, and, therefore, relief under Section 19 is not limited to the traditional scope of remedies available in equity.
Accordingly, the Seventh Circuit upheld the judgment amount imposed by the district court. It did, however, strike language in the judgment that directed the FTC to deposit any excess money not used for consumer redress with the U.S. Treasury as disgorgement because, as the FTC conceded, such disgorgement exceeds the statute’s authority.
As the FTC’s post-AMG lawsuits wind their way through litigation, courts continue to provide additional clarity and nuanced interpretations of the FTC’s ability to seek monetary relief from parties.
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