A bill passed last week by the U.S. House of Representatives would restore the Federal Trade Commission's ability to seek monetary relief in federal court from companies, including auto dealers, for unfair or deceptive business practices.
The Democratic-controlled House voted 221-205 on July 20 to pass the measure known as the Consumer Protection and Recovery Act, which authorizes the FTC to go to court and seek financial redress from businesses that engage in "unlawful commercial practices such as false advertising, consumer fraud and anticompetitive conduct," according to the bill's summary.
The agency previously has leveraged the powers when pursuing enforcement against dealerships, including Bronx Honda, the New York dealership that agreed last year to pay $1.5 million to settle charges levied by the FTC for racial discrimination and other violations.
The House's efforts to strengthen the FTC's enforcement powers follows a U.S. Supreme Court decision on April 22 that curbed the commission's ability to sue and seek monetary relief for consumers targeted by scams and other deceptive business practices.
The court ruled in favor of payday lender AMG Capital Management regarding the FTC's ability to punish businesses for false or misleading advertising.
In the case, the FTC secured $1.27 billion in restitution from AMG on the grounds that it misrepresented loan terms to consumers.
The court ruled that the powers the FTC had been using under the FTC Act to obtain monetary relief never authorized the agency to disgorge companies of ill-gotten gains through the process it had used for the past 40 years.
The House bill would amend a section of the FTC Act to reaffirm its authority to pursue monetary relief for consumers in court.
FTC Commissioner Rebecca Kelly Slaughter, who was acting chairwoman at the time, urged Congress in a statement following the high court's ruling to "act swiftly to restore and strengthen the powers of the agency so we can make wronged consumers whole."
In testimony Wednesday before the House Subcommittee on Consumer Protection and Commerce, the FTC argued that "unless the agency has clear authority to obtain monetary relief, this decision will continue to impede our ability to provide refunds to Americans harmed by deceptive, unfair or anticompetitive conduct."
The American Financial Services Association, which includes major auto lenders among its members, joined other groups such as the National Retail Federation and U.S. Chamber of Commerce in a July 12 letter to Congress opposing the bill.
"We would like to see a bipartisan solution, one that gives the FTC the potential to pursue monetary relief but cannot support legislation without a reasonable statute of limitations, a differentiation between consumer protection and antitrust cases, and guidance as to when equitable relief is an appropriate remedy," the groups wrote in the letter.
Groups including Consumer Reports, the Center for Responsible Lending and the National Consumer Law Center support the bill.