Local lawyer happy with outcome of FTC payday loan case
The Las Vegas lawyer who successfully defended a race car driver in a case in the nation’s highest court said he was pleased with the unanimous decision that would restrict the power of the Federal Trade Commission to recover badly won acquired for deceived consumers.
But the federal regulatory agency is not happy with the decision and warns that it will deprive the FTC of its most powerful enforcement tool.
On Tuesday, the acting FTC chairperson called on Congress to explicitly allow the agency to rekindle its authority to collect money for deceived consumers.
The call to action comes just days after a unanimous Supreme Court sided with professional race car driver Scott Tucker, who was convicted of cheating on consumers through his payday loan companies. The 9-0 decision overturns an award of nearly $ 1.3 billion against Tucker.
The High Court ruling removes what the FTC has called “one of its most important and effective enforcement tools,” which has been used to recover billions of dollars over the past decade.
Lawyer Paul Ray, of Las Vegas-based Paul C. Ray, Chtd., Told the Review-Journal in an interview on Tuesday that the decision was good news.
“We were happy with the decision,” Ray told the Review-Journal in an interview Tuesday. “We are very happy about it and we like the decision because it follows the law.”
The FTC accused Tucker, of Leawood, Kansas, of using his payday loan companies to trick consumers across the United States into illegally charging them undisclosed and inflated fees.
As the Review-Journal previously reported, the FTC filed its second lawsuit against a payday lender in 2012 in federal court in Nevada because six out of 17 defendants have addresses in Las Vegas or Henderson.
Tucker is a former American Le Mans Series champion who, according to prosecutors, used the proceeds of the loan activity to fund a professional car racing team. The case centered on Section 13 (b) of the FTC Act, which the federal regulator used to extract billions of dollars in monetary rewards from businesses.
Ray said he was glad the judges unanimously agreed that the FTC had overstepped its authority. The ruling, he said, clarifies the status.
“What was happening was that if the FTC received a complaint about a company’s practices and someone said it was fraudulent, rather than going through the required legal process, they would use it to to collect money for consumers, ”he said. “The statute was really designed to stop a practice, not to bankrupt the business. And there are a number of companies that have gone bankrupt because of this use of the law where it was used to get massive judgments.
“The good thing for business is that there is clarity on how this is supposed to be done,” added Ray.
FTC calls Congress
Judge Stephen Breyer wrote in his opinion for the court that the provision of federal law on which the FTC relied does not authorize the commission to seek, nor a federal court to order, restitution or restitution of profits. .
But Breyer noted that other parts of the Federal Trade Commission Act could be used to obtain restitution for consumers who have been deceived. “If the Commission considers that this authority is too heavy or insufficient, it is, of course, free to ask Congress to grant it additional remedial power. Indeed, the Commission recently asked Congress for this same authority. “
On Tuesday, days after the Supreme Court ruling, Acting FTC Chairman Rebecca Kelly Slaughter urged congressional lawmakers to pass legislation that would allow the agency to recover money for cheated consumers .
Last week’s ruling threatens 24 active FTC Federal Court lawsuits that “rely exclusively” on the status of monetary remedies, Slaughter said. That’s $ 2.4 billion that the FTC says should be returned to injured consumers.
U.S. Representative Tony Cardenas, D-California, introduced the Consumer Protection and Recovery Act last week that would explicitly confirm the FTC’s ability to seek permanent injunctions and other fair remedies.
“I cannot stress enough the importance of early congressional action on this legislation,” Slaughter, a Democrat, said in her opening speech Tuesday before a consumer and trade protection subcommittee. the Chamber of Energy and Commerce. “The Supreme Court ruling eliminates the board’s primary and best tool for seeking monetary remedies when a company violates the FTC.”
The statutory rule, she said, has been used by the FTC for 40 years. The rule has been used to stop and recover money in a wide variety of cases, including telemarketing fraud, data security and privacy, scams targeting seniors and veterans, and deceptive marketing practices.
Slaughter said Tuesday that several high-profile cases have seen monetary remedies – including Volkswagen’s $ 9.5 billion settlement to resolve its clean diesel emissions scandal, the $ 200 million Herbalife settlement and the settlement. Amazon’s $ 61.7 million to resolve flex driver tip withholding allegations – was made possible ‘only. by our now defunct authority 13 (b) ”.