Justices strip power from FTC on redress

The U.S. Supreme Court slashed the Federal Trade Commission’s power to seek monetary awards in court, throwing out a legal tool the consumerprotection agency has used to collect billions of dollars over the past decade.

The justices on Thursday unanimously said the FTC can’t seek consumer redress when it invokes a provision that lets the agency go straight to federal court to try to stop an alleged fraud. The ruling is a triumph for business trade groups, which had urged the court to curb the agency’s powers.

The FTC in 2012 dramatically ramped up its use of the decades-old provision to recoup money for consumers.

The agency reported winning so-called restitution and disgorgement of almost $12 billion in 2016 alone, including $10 billion in a settlement with Volkswagen AG stemming from its diesel-emissions scandal.

“With this ruling, the court has deprived the FTC of the strongest tool we had to help consumers when they need it most,” FTC Acting Chairwoman Rebecca Kelly Slaughter said in an emailed statement. “We urge Congress to act swiftly to restore and strengthen the powers of the agency so we can make wronged consumers whole.”

Writing for the Supreme Court, Justice Stephen Breyer said Congress didn’t authorize efforts to recoup money in 1973 when it amended the Federal Trade Commission Act to let the agency seek a court-ordered “permanent injunction.”

Breyer said the text and structure of the added provision “taken as a whole, indicate that the words ‘permanent injunction’ have a limited purpose -- a purpose that does not extend to the grant of monetary relief.”

Breyer said the FTC retains other avenues to get restitution for consumers, though those tools involve a more complicated process. “If the commission believes that authority too cumbersome or otherwise inadequate, it is, of course, free to ask Congress to grant it further remedial authority,” Breyer wrote.