Supreme Court Case Could Affect Facebook

( Another Supreme Court decision may have far-reaching repercussions across the country in ways few could have imagined.

In a unanimous decision for AMG Capital Management, LLC, et al. v. Federal Trade Commission written by Justice Stephen Breyer, the court dramatically scaled back the power of the FTC, the agency charged with a slew of consumer protections.

The case arose from a suit the FTC filed successfully against payday loan tycoon Scott Tucker in 2012. The FTC alleged that Tucker’s companies went beyond the already shady practices of payday loan companies to swindle customers into signing contracts that automatically renewed the loans after a period of time.

Afterward, Tucker returned to file suit against the FTC, arguing that the agency had no authority to seek damages by going directly to the court. At first, the U.S. Court of Appeals for the 9th Circuit rejected Tucker’s appeal, but a decision from the Supreme Court has now reversed that call.

The Supreme Court found that the law only authorized the FTC to seek monetary penalties after the agency issued a final cease-and-desist to the offending company or individual. Not only that, the court added that a company would have to show repeated violations after receiving a cease-and-desist to be penalized.

Now, legal analysts are advising that the results of this case could have consequences far beyond that of the payday loan industry.

Acting FTC Chair Rebecca Kelly Slaughter began sounding the alarm in April, saying that the Supreme Court ruling had effectively defanged the agency in issues of consumer protection. Slaughter pointed to 24 active FTC cases that translated to a combined $2 billion in penalties for wronged parties that could now be endangered.

One of those cases involves Martin Shkreli, the notorious former head of pharmaceutical companies Retrophin and Turing made famous for an exponential price inflation of the drug Daraprim.

Facebook is also already seizing upon the ruling to its benefit. In December, the FTC sued Facebook for buying up potential competitors in monopolistic fashion. Since the ruling, the company has already claimed that the statute at play in the AMG case applies to them as well.