Last week, the Supreme Court heard oral argument in AMG Capital Management v. FTC. As we’ve previously discussed, the Supreme Court is set to decide whether Section 13(b) of the FTC Act, which expressly grants the FTC the right to obtain “a permanent injunction,” also grants the FTC the authority to obtain “equitable monetary relief.” During oral argument, certain Justices expressed doubt that the plain language of Section 13(b), when viewed in the context of the entirety of the FTC Act, authorized the FTC to obtain “equitable monetary relief” when proceeding under Section 13(b). While none of us can predict the future, after last Wednesday’s oral argument, we can’t help but wonder: What will happen if the FTC loses? Below, we have outlined the potential avenues for the FTC if the decision doesn’t go its way.

First, Congress could revise the language of Section 13(b) to allow the FTC to seek equitable monetary relief, a request the FTC made in October 2020. There’s precedent for such a move. After the Supreme Court significantly curtailed the SEC’s calculation of equitable monetary relief in Liu, Congress codified the SEC’s authority to seek disgorgement in federal district court as part of the 60th annual National Defense Authorization Act in January 2021, by amending the Securities Exchange Act of 1934. Congress could pass a similar amendment to the FTC Act to unambiguously allow the FTC to obtain equitable monetary relief under Section 13(b) or otherwise. Whether that potential authority would come with a statute of limitations, allow for joint and several liability, or be subject to other restrictions will be important in assessing any potential legislation.

Second, the FTC could bring more cases in administrative litigation obtaining cease and desist orders. After obtaining, and defending on appeal, an administrative order, the FTC could then pursue monetary relief in federal court, using Section 19 of the FTC Act. However, the Commission must demonstrate that “a reasonable man would have known under the circumstances [that the conduct] was dishonest or fraudulent.”

Third, the FTC could refer more cases involving alleged wrongful conduct in the consumer financial space to the CFPB. Commissioner Chopra—who Biden recently tapped to lead the CFPB—has previously advocated for precisely that approach. His rationale is that, particularly in cases where there are little funds to distribute from defendants, victims could qualify for redress through the CFPB’s Civil Penalty Fund. Whether these recommendations become a reality will likely be a question for the new Chair, but it could be one avenue by which the FTC could continue to obtain redress for consumers—albeit indirectly.

Fourth, Section 19 of the FTC Act also authorizes the FTC to go directly to federal court to obtain restitution and redress for violations of rules enforced by the FTC (such as the Telemarketing Sales Rule (TSR)) and some statutes (such as the Restore Online Shoppers Confidence Act (ROSCA)).

Fifth, the FTC could refer more cases to the Department of Justice (DOJ) to pursue civil penalties for rule violations and certain statutory violations that provide for civil penalties. The FTC’s core statute, Section 5 of the FTC Act, does not provide for civil penalties. Those penalties vary depending on the statute or rule involved and go all the way up to $43,792 per violation.

Finally, the FTC could utilize a somewhat unused avenue for obtaining redress—the Penalty Offense Authority, which we’ve previously discussed here. This Authority authorizes the FTC to seek civil penalties (directly not through the DOJ) against a defendant in federal court where (1) the FTC has obtained a litigated cease and desist order against another party through an administrative proceeding pursuant to Section 5(b) of the FTC Act; (2) the cease and desist order identifies a specific practice as unfair or deceptive; and (3) a party on notice of the order (i.e., someone with actual knowledge that the practice is unfair or deceptive) then engages in that same violating conduct after the order is final.

The Supreme Court should issue its decision in AMG Capital Management prior to the end of its term on June 28, 2021. If the Supreme Court does close the door on the FTC’s ability to seek equitable monetary relief through Section 13(b) in federal court, the FTC will not be defunct. Its response will be interesting to watch.

Interested in an in-depth discussion of the Supreme Court’s oral argument in AMG and its potential impact on the FTC? Stay tuned for details on our February 11 webinar: Reading Tea Leaves: Breaking Down Oral Argument in AMG Capital Management v. FTC.