The FTC’s toolkit to enforce unfair and deceptive practices in the privacy and cybersecurity realm was reduced last week when the Supreme Court ruled that Section 13 of the FTC Act does not allow for monetary relief. Read more about the decision and its impact. The FTC retains authority to obtain monetary relief but must now proceed through additional procedural steps and meet the higher burden of proof under Section 19.
Many predicted that the Supreme Court would follow the Seventh and Third Circuits in rejecting the FTC’s authority to obtain monetary relief under 13(b), and that uncertainty was imbued in FTC negotiations during the pendency of the decision. Now, both the FTC and companies facing FTC enforcement will have to consider how the extended timeline for monetary relief under Section 19 procedures might change the outcomes of investigations (e.g., whether the makeup of the commission might differ by the time appeals are exhausted). The change could also herald more aggressive attempts by the FTC to use injunctive relief to force companies to the negotiating table.
Regardless of the extent of the impact of the court’s decision, it almost certainly will be substantial. Companies subject to FTC oversight should pay attention.