Consumer Protection Remedies Act
January 24, 2023
Consumer Protection Remedies Act
“In the last couple of years, we have seen the explosion of fraud and scams trying to take advantage of the COVID-19 pandemic to rip off consumers. Whether it's selling fake cures, counterfeit N-95 masks, or promising big payoffs to work from home. That's why we introduced legislation to restore the FTC’s authority to go to court and obtain redress for consumers who've been scammed out of their hard-earned money, or for small business owners who've been locked out of competitive marketplaces.” - Sen. Cantwell
Angela, of Olympia, Washington, took out a payday loan through AMG to pay for her car repairs. She chose the loan because it was advertised as charging only $30 in fees. But she soon realized that on top of the principal and $30 fee, she was on the hook for exorbitant interest. To make matters worse, Angela was physically assaulted and had to stop working. After she alerted AMG of her situation, AMG began withdrawing money from her bank account, racking up $240 in bank overdraft fees. AMG then confiscated her last paycheck and funds she received from insurance. All in all, the $500 payday loan cost her over $1400. The Federal Trade Commission was able to return $397.50 to Angela in its successful lawsuit against AMG and its unfair and deceptive practices.
These situations are all too common. Bad actors are always finding new ways to cheat consumers out of their hard-earned money. Last year alone, phone scammers took an estimated $40 billion from 70 million Americans. Scammers often prey on veterans or the elderly because they are the least likely to report fraud. In 2021, seniors reported losing $147 million from investment scams, $151 million from business impersonation scams, and $122 million from government impersonation scams—all significantly up from 2020.
For decades, the Federal Trade Commission (FTC)—the nation’s primary consumer protection agency—took scammers to court and secured refunds for consumers cheated out of their hard-earned money.
But in 2021, the Supreme Court stripped the FTC of this ability, known as Section 13(b) authority. Today, the FTC can no longer go straight to court to seek refunds for consumers—even when they prove consumers lost money to fraud or deceptive practices. The result: lawbreakers can keep hundreds of millions of dollars they unlawfully took from consumers. According to the FTC, consumers reported losing more than $5.8 billion to fraud in 2021, up over 70% from 2020.
The Consumer Protection Remedies Act would put that money back into the pockets of consumers.
“When the FTC could no longer rely on a law it had used for decades to seek court orders and secure refunds for scammed seniors, veterans, small businesses, and others, it was a huge blow. So, it is truly inspiring that fellow advocates across the country have come together to urge their members of Congress to support the Consumer Protection Remedies Act, which will restore this key FTC role.” - Christine Hines, Legislative Director, National Association of Consumer Advocates
Sens. Cantwell, Ben Ray Luján, Amy Klobuchar and Raphael Warnock introduced the Consumer Protection Remedies Act of 2022 to restore the FTC’s authority to go to court and ask a judge to order scammers and lawbreakers to return the money they took from consumers through unfair, deceptive or anticompetitive practices.
The bill was voted out of Committee last May without the support of a single Republican, preventing it from moving quickly to a full Senate vote. The Committee will continue to work on this in the new Congress.
When introducing the legislation, Sen. Cantwell released a report emphasizing that in the five years prior to the Supreme Court’s decision, the FTC returned more than $11.2 billion to consumers and small businesses who were cheated by telemarketing fraud, business opportunity scams, deceptive advertising and other abuses. The report detailed, state-by-state, how valuable the FTC’s Section 13(b) authority was for consumers across the country.
Report: “Decades of precedent have been overturned, denying consumers billions in refunds, creating loopholes for fraudsters, and weakening oversight of Big Tech and Pharma”
Additionally, the Act makes clear that the FTC can sue for injunctions and consumer refunds for prior conduct, not just ongoing conduct. The law ensures that the refund decision will be made by a neutral federal judge and businesses will retain their right to appeal contested decisions.
