The Supreme Court’s judgment in AMG Capital barred the FTC from pursuing monetary remedies in court under Section 13 of the FTC Act (b). However, the recent Neora judgment indicates that the FTC has substantial power under Section 13(b) that may be utilized to inflict significant harm on direct sellers in court.
The court decided in Neora that the FTC can seek injunctive relief in court without first going through the lengthy and onerous administrative processes outlined in Section 5 of the FTC Act. In addition, the court decided that the FTC’s motion for injunctive relief would not be rejected since the complaint properly alleged that Neora “was violating or about to violate” the FTC Act.
This was true even though many of the charges stemmed from previous behavior, such as social media posts with potentially false income and product promises and a prior compensation plan with allegedly unlawful pyramid scheme features.
To summarise, AMG Capital did not render the FTC impotent, and direct sellers should continue to detect and correct red flag conduct that the FTC is searching for to avoid becoming an FTC target.
