The new layers will add time and cost to the FTC's process and possibly deter the agency from attempting to pursue monetary relief at all, according to Hudson Cook partner Michael Goodman.
"It basically comes close to closing off the option of monetary relief for the FTC altogether in its typical cases," Goodman said. "It's unclear how many defendants will have money still available after all that process has come and gone."
The FTC's governing statute references "injunctions and restraining orders" with respect to false advertising cases, but the agency frequently seeks restitution in these cases — particularly with auto dealers.
Historically, the FTC has been able to bring cases against companies in two ways: going before an administrative law judge within the agency to obtain an injunction or pursuing an injunction in federal court and possibly a monetary award, according to Anthony Badaracco, a partner at law firm Dorsey & Whitney, headquartered in Minneapolis. In the past few decades, the FTC frequently would go directly to the federal courts, he said.
The Supreme Court decision could add substantial time and cost to a process that already takes the FTC several years to complete.
"If they've got to go first through the administrative process ... that could add [another] two or three years to the process," Badaracco said. "If you're a scammer, it might be a little easier to get away with what you're trying to do because the FTC is a little less likely to be able to come after you. That certainly is the FTC's position."
The FTC is already working to reverse the decision through strengthening its statutory authority.
In testimony last month before the House Energy and Commerce Subcommittee on Consumer Protection and Commerce, the FTC called upon Congress to pass legislation to revive its ability to seek financial redress. It's likely Congress will work to amend the FTC Act in that regard, Goodman said.
"The FTC is arguing to Congress, 'Let's go back to what we have been doing for decades that was working for everybody,' " Goodman said. "So rewrite the FTC Act however you need to to clarify that we have this power."