KANSAS CITY -- The U.S. Supreme Court on Thursday agreed to hear an appeal by Kansas City payday loan tycoon Scott Tucker that challenges the Federal Trade Commission's authority to demand restitution, as the agency did in his case when it obtained a $1.3 billion order against him.
Lower courts have issued mixed opinions about whether the FTC, a federal watchdog agency, can order people and businesses to return money they obtained from consumers through ripoff schemes.
The Supreme Court consolidated Tucker's appeal with another case that poses similar questions, which justices will hear during oral arguments later this year.
"We look forward to proving to the Supreme Court that the FTC Act empowers us to fully protect consumers by ensuring that money unlawfully taken from them is rightfully returned," said FTC general counsel Alden Abbott in a written statement.
Tucker and several business entities tied to his payday lending operation were sued by the FTC in 2012 following an investigation that started 10 years earlier. The FTC accused the entire enterprise of extending small dollar loans to consumers under deceptive terms and then using unfair practices to collect on those debts.
In 2016, a federal judge in Nevada sided with the FTC and ordered Tucker and his businesses to pay $1.3 billion collectively to repay borrowers duped by the payday lending scheme. The penalty was a record-breaker for the FTC.
Tucker's appeal argues that while the Federal Trade Commission Act, the law that created the agency, allows it to seek injunctions and restraining orders from judges to require businesses to stop their deception of consumers, it should not have the ability to obtain restitution.
Tucker appealed the Nevada's judge's decision to the 9th Circuit Court of Appeals, which in 2018 upheld the judge's decision. Several other appellate circuits have supported the 9th Circuit's view.
The 7th Circuit Court of Appeals, however, took an opposite stance in a separate case, saying the FTC is not authorized to seek restitution.
"Whether the Commission can obtain such relief against defendants should not vary based on their geographic location," Tucker's appeal says.
Tucker's position has the support of pro-business and small government advocates like the U.S. Chamber of Commerce and the Washington Legal Foundation, which have filed friend of the court briefs that argue against the FTC.
The same year the FTC obtained its penalty against Tucker, federal prosecutors in New York brought him up on criminal racketeering charges, saying his payday lending businesses amounted to a $2 billion scheme that exploited 4.5 million borrowers. A jury found Tucker guilty and a judge sentenced him to serve 16 years and eight months in prison.
Tucker has also appealed his criminal conviction, but the 2nd Circuit Court of Appeals rejected his argument last month.
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