OBTAINING REFUNDS FOR CONSUMERS UNDER SECTION 19 OF THE FEDERAL TRADE COMMISSION ACT - 15 USC 57B (1976)

• NCJ Number: 58033
• Journal: Syracuse Law Review Volume: 29 Issue: 4 Dated: (FALL 1978) Pages: 1025-1070
• Author(s): E W KINTNER; J T WESTERMEIER
• Date Published: 1978
• Length: 46 pages
• Corporate Author: Syracuse University
• Publication Format: Article
• Language: English
• Country: United States of America

Annotation

SOME OF THE DIFFICULTIES THAT MUST BE OVERCOME BEFORE THE FEDERAL TRADE COMMISSION'S REMEDIAL POWERS, GRANTED UNDER SECTION 19, CAN BE USED AS AN EFFECTIVE MECHANISM FOR OBTAINING RESTITUTION FOR CONSUMERS ARE DISCUSSED.

Abstract

UNDER THE 1975 MAGNUSON-MOSS WARRANTY-FEDERAL TRADE COMMISSION IMPROVEMENT ACT, THE ENFORCEMENT POWERS THAT THE FEDERAL TRADE COMMISSION (FTC) CAN USE TO REDRESS CONSUMER ABUSE HAVE BEEN GREATLY STRENGTHENED. SECTION 19 IS THE MOST FAR-REACHING ENFORCEMENT PROVISION. IT AUTHORIZES THE COMMISSION TO BRING CIVIL ACTIONS IN COURT TO OBTAIN REDRESS FOR CONSUMERS OR OTHER PERSONS WHO HAVE BEEN INJURED BY PERSONS VIOLATING EXISTING TRADE REGULATION RULES OR VIOLATING THE FEDERAL TRADE COMMISSION ACT, IF THE VIOLATION RESULTED IN A CEASE AND DESIST ORDER AND A REASONABLE MAN WOULD HAVE KNOWN UNDER THE CIRCUMSTANCES THAT THE ACTS OR PRACTICES WERE DISHONEST OR FRAUDULENT. NO COURT HAS ORDERED THAT RESTITUTION BE MADE TO CONSUMERS UNDER THIS GRANT OF AUTHORITY, AFTER 4 YEARS, AND NO SUCH ORDER APPEARS LIKELY IN THE NEAR FUTURE. ONLY TWO CONSUMER REDRESS ACTIONS HAVE BEEN FILED UNDER SECTION 19 SINCE ITS ENACTMENT. MUCH OF THE CONTROVERSY OVER SECTION 19 CONCERNS SERIOUS INTERPRETATIVE PROBLEMS PRESENT IN THE STATUTORY LANGUAGE. FOLLOWING THE PRESENTATION OF A BRIEF LEGISLATIVE HISTORY OF SECTION 19, THE PROBLEMS INVOLVED IN LITIGATION USING SECTION 19 ARE IDENTIFIED AND DISCUSSED. THE PROBLEM AREAS CONSIDERED ARE COURT JURISDICTION, RULE VIOLATION AND FINAL CEASE AND DESIST ORDER, TIME RESTRICTIONS, RESPONDENT'S KNOWLEDGE THAT ACTS WERE DISHONEST OR FRAUDULENT, 'NECESSARY' RELIEF, THE APPROPRIATE MEASURES OF RELIEF, EVIDENTIARY STANDARD, AND NOTICE PROVISIONS. BECAUSE OF THE UNAVOIDABLE PROBLEMS THE COMMISSION MUST FACE UNDER SECTION 19 AT THIS TIME, A COST-BENEFIT ANALYSIS OF PROPOSED CONSUMER REDRESS SUITS IS LIKELY TO TIP DECIDEDLY IN FAVOR OF NOT FILING THE COURT ACTION REQUIRED BY SECTION 19. PROTRACTED LITIGATION OR A STATUTORY AMENDMENT WILL PROBABLY BE NECESSARY TO RESOLVE THE PROBLEMS THAT MAKE IT IMPRACTICAL TO FILE SUIT UNDER SECTION 19. (RCB)