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Section 13b

How Pending Legislation Could Affect Your Company’s Compliance Strategy
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How Pending Legislation Could Affect Your Company’s Compliance Strategy

By:  Larry Steinberg and William Miller

For companies that use web-monitoring services to identify possible policy violations, is it a reasonable business practice to limit the search parameters to only go back a certain number of years?

When it reversed 40 years of appellate precedent by ruling that Section 13(b) does not authorize the Federal Trade Commission to seek monetary relief, the Supreme Court relied not only on the language of Section 13(b), but also on the presence of other provisions in the FTC Act, which expressly allow the FTC to obtain monetary relief for consumers. 

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September 1, 2021 0 comment
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FTC on the Defensive as Supreme Court Addresses Section 13(b)
ComplianceLegalRisk Roundup

FTC on the Defensive as Supreme Court Addresses Section 13(b)

Skeptical court probes FTC’s approach to seeking ill-gotten gains

By:  Larry Steinberg, Guest Contributor

If the FTC loses this case, the agency will no longer be able to rely on Section 13(b) to obtain an order requiring a wrongdoer to return all of the money it illegally obtained.

FTC Commissioner Rohit Chopra, who will leave the FTC  after the  Senate confirms him as the newly appointed director of the Consumer Financial Protection Bureau, is known as one of the more prolific commissioners. He has spoken and written extensively in his three years on the FTC including, notably, in a November 2020 paper wherein he called the AMG Capital Management v. Federal Trade Commission case an “existential threat to the agency’s ability to hold wrongdoers accountable.” 

The previous month, in a letter to Congress, Commissioner Chopra, joined by the other four FTC commissioners, described Section 13(b) as the primary tool that the FTC uses to return money to consumer victims, and pleaded for Congress to amend the statute so that it would expressly provide for monetary relief.

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February 1, 2021 0 comment
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Supreme Court to Weigh In on FTC Authority to Order Monetary Relief
Cover StoryDirect SellingFeatures

Supreme Court to Weigh In on FTC Authority to Order Monetary Relief

Recent court decisions concerning Section 13(b) of FTC Act could change decades of precedent

By: David Rauf

The FTC has taken the position that the injunctive relief permitted by 13(b) allows it to disgorge revenue from scammers and corporations as well as regain restitution for victims.

“There’s an existing process outside of 13(b) for the FTC to pursue monetary relief, but it is cumbersome and requires more due process, which is why the FTC doesn’t like it.”    —Larry Steinberg, Chair, Multilevel Marketing Industry Group, Buchalter

This could dramatically affect the relationship between the direct selling industry and the FTC.     —Larry Steinberg, Chair, Multilevel Marketing Industry Group, Buchalter

The U.S. Supreme Court has agreed to decide whether the Federal Trade Commission (FTC) can continue to seek monetary rewards when it sues scammers and firms accused of deceptive business practices, setting the stage for a ruling that will have wide-ranging ramifications for the direct selling channel.

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September 1, 2020 0 comment
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U.S. Supreme Court Decision Could Impact FTC’s Ability to Seek Injunctive Relief
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U.S. Supreme Court Decision Could Impact FTC’s Ability to Seek Injunctive Relief

June 22 decision in Liu v. SEC allows agency to seek monetary relief; major setback to limiting FTC’s authority

By:  John Villafranco

John Villafranco, partner with Kelley Drye LLP

The Supreme Court issued an 8-to-1 decision on June 22 in the highly anticipated case of Liu v. SEC. The opinion, authored by Justice Sotomayor (with Justice Thomas dissenting), holds that a “ disgorgement award that does not exceed a wrongdoer’s net profits and is awarded for victims is equitable relief,” and allows the Securities and Exchange Commission (SEC) to seek such relief under the Securities Act. 

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July 1, 2020 0 comment
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FTC Under Pressure; Ability to ‘Ambush’ Companies Comes Under Scrutiny
ComplianceLegalRisk Roundup

FTC Under Pressure; Ability to ‘Ambush’ Companies Comes Under Scrutiny

Courts may be signaling concern over the regulator’s authority to obtain injunctions and freeze assets in enforcement cases

By Spencer Reese, founder and partner at Reese Poyfair Richards LLC

The FTC uses the media to their advantage by issuing a press release that it has shut down a “purported” pyramid scheme, knowing that such a press release will effectively kill the company by scaring its distributors away.

The bottom line for direct sellers is that if the FTC loses its §13(b) authority, it loses its punch. Legitimate direct selling companies do not fear squaring off against the FTC so long as they are not blind-sided.

In 2014, a court-appointed receiver under the direction of the Federal Trade Commission (FTC) arrived at the corporate headquarters of Vemma with police in tow. Within a few days they had for all intents and purposes forced the company out of business. The company was given very little advance warning, and no time to mount any sort of sufficient defense. 

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July 4, 2019 0 comment
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