I wrote a letter to my representatives in Congress in August of 2021. See below for the contents. The letter was sent to clearly oppose the FTC’s efforts to expand their power via Congress. This is how a democracy works…the agencies seek consent from the governed by way of our elected leaders. I made my opinions clear to my representatives and will continue to do so. If you have strong opinions on the subject, you should do the same. The letter was sent to Senators Blackburn and Hagerty and House Member Mark Green. I received positive responses from two of the three.
I’m Kevin Thompson, co-founder of a law firm based out of Franklin, Tennessee. Thompson Burton PLLC is the largest law firm in Williamson County. We appreciate your work in the Senate. I’ve never written a member of Congress. Please excuse the lack of formality. I’m writing to make a point, not score points. I’ll try to be brief.
The Federal Trade Commission (FTC) should not be trusted at this time. I represent companies that operate in the network marketing industry. These would be companies similarly situated to Amway, Rodan & Fields, etc. It’s my job to understand the FTC and advise clients accordingly based on guidance from the FTC. The FTC is the primary agency that regulates the industry. Over the past several years, it’s been nearly impossible to make sense of the FTC’s signals. They provide guidance on their website and give speeches. In litigation, they take contradictory positions using outlandish theories from economic “experts” while using the threat of “reputational ruin” to intimidate parties into settlements they otherwise would never accept.
As a backdrop for their approach against companies they deem unfit, they relied heavily (almost exclusively) on a power that’s come to be known as “13(b)” power. Without boring you of the legal minutia, the Supreme Court recently considered whether the FTC was appropriately wielding this power. In a unanimous decision, 9-0, the Supreme Court beautifully framed the issue by holding:
Did Congress, by enacting 13(b)’s words, ‘permanent injunction,’ grant the Commission authority to obtain monetary relief directly from courts, thereby effectively bypassing the process set forth in section 5 and section 19? Several considerations have been taken together, convince us that 13(b)’s ‘permanent injunction’ language does not authorize the Commission directly to obtain court-ordered monetary relief.
In summary, the FTC has been abusing its power by suing companies dry for almost 40 years. The sycophants of the FTC will argue the FTC wields this power responsibly. They’ll argue the FTC only targets scammers; thus, it’s no big deal. Their chosen language reflects an “ends justify the means” outlook. To the contrary, I along with my clients believe in strong due process rights. Thankfully, the Supreme Court unanimously holds a similar opinion.
Instead of expressing regret and taking steps to regain the public’s trust, the FTC’s immediate reaction is telling. Then-Acting Chairwoman Slaughter said, “In AMG Capital, the Supreme Court ruled in favor of scam artists and dishonest corporations, leaving average Americans to pay for illegal behavior.” In other words, the Supreme Court justices (all of them) are wrong and sympathetic to scammers. This is not the behavior of an agency that deserves MORE power. They deserve less. Maureen Ohlhausen, a former commissioner and acting FTC chair, had a more intelligent statement. She said, “The FTC over time strayed from seeking monetary remedies in obvious fraud cases to also seeking money judgments in gray-area cases where defendants offered legitimate products and services. . . I think it will restore the FTC’s role as Congress envisioned it.”
As the expression goes, it’s better for 9 guilty go free than 1 innocent go to prison. The FTC is not always righteous in its exercise of power. I can think of many clear examples of the FTC falsely maligning companies, companies that would have been able to defend themselves if they had a fair crack at it. I can also think of many companies that would never have settled but for the intimidation of the FTC’s usage of 13(b). It’s a violent tool, one the FTC used 49 times in 2019 to collect $723 million.
The FTC has a vanity issue, viewing itself as a fair and final arbiter of justice. They have slowly usurped all three powers of government, wrongfully in my opinion. They (a) write the rules (a legislative function); (b) initiate investigations and actions to enforce the rules (an executive function); and (c) adjudicate the alleged violations (a judicial function). The FTC could have restrained itself over the past few decades. They made a conscious decision to press, all in the name of “protecting consumers.” They have strayed far from the path of being an agency responsible for ensuring fairness in markets. Thankfully, they have been held to account.
I along with many of my clients do not support the FTC’s request to Congress to pass HR 2668. This bill, authored by California Representative Tony Cardenas, would restore the FTC’s 13(b) power. This is the power they recently lost via unanimous decision in the Supreme Court. If passed, this law would give the FTC the ability to resume its practice of screaming fire in every courtroom, bulldozing defendants without the slightest regard for constitutional protections. Additionally, I do not support ANY of their efforts to increase their rulemaking powers or any other powers. As I’ve stated prior, this agency cannot be trusted. The FTC’s power needs to be clearly articulated and reformed via the legislative process. I’m happy to assist in the effort if you have questions.