AMG Capital Management, LLC v FTC was a U.S. Supreme Court case dealing with the ability of the Federal Trade Commission (FTC) to seek monetary relief for restitution or disgorgement from those it found in violation of trade practices. The Court ruled unanimously that the FTC misused its authority granted by the Federal Trade Commission Act under Section 13(b) to obtain monetary relief.
Background.
Scott Tucker ran several payday loan service companies under several different names (including AMG Capital Management) over a fifteen-year period. The companies drew consumer complaints for charging excessively high interest rates on these loans, with those using their services paying nearly triple what they had taken as a loan from undisclosed fees. The Federal Trade Commission filed a formal civil suit against Tucker's companies in 2012, asserting the companies were deceiving consumers, and sought to recover money that consumers had lost to these practices. Separately, Tucker was also criminally charged under RICO and TILA statutes, estimated to have cost over $2 billion to over 4.5 million consumers; he was convicted on 17 counts in October 2017.
The civil case against Tucker's businesses was heard in the District Court of Nevada by Judge Gloria Navarro. Judge Navarro ruled in October 2016 against Tucker's businesses, granting the $1.27 billion in fees that the FTC had sought in monetary relief for consumers that were harmed by the businesses' practices. The ruling also barred Tucker from engaging in any further consumer lending.
Legal counsel for Tucker appealed the decision to the Ninth Circuit. In addition to challenging the legality of their lending practices, the council also questioned the authority of the FTC to seek monetary damages for restitution under their charter, the Federal Trade Commission Act (FTC Act). Tucker's counsel referred to 15 U.S.C. § 53(b) (also known as Section 13(b) of the FTC Act), which grants the ability to seek injunctive relief in court against those found violating trade practices, a measure added by 1973 amendment to the FTC Act. Tucker's counsel questioned if this amendment was intended to include seeking equitable relief for restitution or disgorgement. The FTC had presumed §13(b) provided this allowance and used the amended language heavily since its introduction to seek monetary relief for consumers that were financially impacted by those the agency had found in violation of fair trade practices. The practice had been backed by prior case laws at lower courts, including FTC v Cephalon, Inc. and FTC v Mylan Labs., Inc..The three-judge panel ruled unanimously to uphold the District Court's ruling, rejecting the counsel's argument about the legality of their lending practices, and asserting that the FTC had the authority to seek monetary relief under the FTC Act.
