InfoBytes Blog
District Court awards injunctive relief to FTC in deceptive advertising case
On August 9, the U.S. District Court for the Northern District of Georgia ruled that the FTC provided “broad and detailed” evidence of alleged deceptive advertising and unfair fee practices in its $550 million case against a technology company and its CEO (collectively, “defendants”). As previously covered by InfoBytes, the FTC filed a suit in 2019, alleging the defendants made deceptive representations to customers and charged hidden, unauthorized fees in connection with the company’s “fuel card” products in violation of Section 5 of the FTC Act. In 2019, when the agency filed its lawsuit, legal precedent held that the FTC could obtain restitution for consumers directly through such civil proceedings in federal court. However, in April of 2021, the Supreme Court held in AMG Capital Management, LLC v. FTC that the FTC does not have statutory authority to obtain equitable monetary relief under Section 13(b) of the FTC Act. (Covered by InfoBytes here.) Following that decision, the FTC filed a motion to stay or voluntarily dismiss in an attempt to preserve the possibility of obtaining monetary relief for injured consumers in federal court while pursuing claims against the defendants through the agency’s administrative process, but the district court denied the motion, concluding that the “balance of equities does not weigh in favor of a stay or dismissal without prejudice.”
In its most recent order, the district court ruled that the FTC provided compelling and overwhelming evidence, including advertisements, internal marketing studies, and a “plethora of customer complaints” that showed the defendants are liable for multiple violations of the FTC Act. Among other things, the court noted that the evidence showed that the defendants knew that many customers were unaware of certain fees when they signed up for the fuel cards and that the defendants’ terms and conditions governing the fees were “inscrutable” and confusing. However, the district court partially granted defendants’ request for summary judgment on monetary relief, ruling that in light of the Supreme Court’s decision in AMG Capital Management, the FTC cannot obtain a monetary award for the violations until the agency exhausts its administrative litigation process. A hearing will be held to determine the nature of the required injunctive relief.