Federal Trade Commission v. Credit Bureau Center, LLC, No. 21-2945 (7th Cir. 2023)
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Brown’s credit-monitoring business used a “negative option feature” on its websites, offering visitors a free credit report but automatically enrolling them in a $29.94 monthly subscription when they applied for that report. Information about the monthly membership was buried . Brown’s contractors created website traffic by posting Craigslist advertisements for fake rental properties and directing applicants to the websites for a “free” credit score. The FTC sued under Federal Trade Commission Act (FTCA) section 13(b), which authorizes restraining orders and permanent injunctions to enjoin conduct that violates its prohibition of unfair or deceptive trade practices. On its face, section 13(b) authorizes only injunctive relief but the Commission long interpreted it to permit restitution awards—an interpretation adopted by the Seventh Circuit and others.
The district court entered a permanent injunction and ordered Brown to pay more than $5 million in restitution. The Seventh Circuit overruled its precedent and held that section 13(b) does not authorize restitution awards.
The Supreme Court granted certiorari and held that section 13(b) does not authorize equitable monetary relief. On remand, the Commission argued that the Court’s decision had significantly changed the law and successfully requested the reimposition of the restitution award under the Restore Online Shoppers’ Confidence Act and FTCA section 19. The Seventh Circuit modified the new judgment. Its direction that any funds remaining after providing consumer redress shall be “deposited to the U.S. Treasury as disgorgement” exceeds the remedial scope of section 19, which is limited to redressing consumer injuries.
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