Corporate Accountability

Intuit, Inc. v. Federal Trade Commission

In Intuit Inc v. Federal Trade Commission, the United States Court of Appeals for the Fifth Circuit is considering whether the FTC’s authority to issue cease-and-desist orders against false and misleading advertising is constitutional.

Case Summary

The Federal Trade Commission (FTC) can issue orders requiring parties to cease and desist from engaging in conduct that the Commission determines to be unlawful. In this case, the FTC issued a cease-and-desist order requiring Intuit to stop using advertisements that incorrectly implied that its tax-preparation services were free, when its services are, in fact, not free for most customers. An Administrative Law Judge issued a final order confirming that Intuit was engaged in unlawful deceptive advertising and ordering it to stop misleading customers in the future. Intuit challenged the ruling in the United States Court of Appeals for the Fifth Circuit, arguing that in issuing the order, the FTC “adjudicated private rights reserved for Article III courts.” CAC filed an amicus brief in the Fifth Circuit in support of the FTC.

Our brief makes three principal points. First, the prospective relief ordered does not implicate “private rights” because regulated parties do not have a vested right to be free from future regulation. “Private rights” are generally understood to be those legal interests that have fully “vested” in private persons, and no individual or company enjoys a vested right to conduct its business, use its property, or advertise its wares without government intervention. As early as the nineteenth century, when the Court first articulated the public rights doctrine, courts and commentators made clear that there was no such thing as a vested right to be exempt from regulation when running a business.

Second, neither the Fifth Circuit nor the Supreme Court has ever held that an administrative proceeding in which the government seeks only prospective relief impermissibly adjudicates private rights. This is unsurprising: unlike monetary damages or penalties, actions for prospective relief seek future compliance, rather than “redress.” Furthermore, a cease-and-desist order represents ongoing equitable relief that is always subject to congressional control—a key component of the public rights definition. For this reason, rejecting Intuit’s claim that it has a private right to advertise in the future is also consistent with separation-of-powers precedent. Unlike a dispositive judgment that cannot be changed by Congress, prospective relief is inherently subject to legislative change.

Finally, the FTC Act’s history and structure are consistent with the understanding that cease-and-desist orders do not infringe on private rights. In establishing the FTC, Congress sought to create an agency that would redress unfair or deceptive business practices without usurping judicial powers. The Act thus permits the FTC to authorize prospective relief on its own, but requires judicial involvement for penalties and other monetary remedies to be assessed. The procedural division between orders halting unlawful activity and orders imposing monetary penalties or resolving contractual or property rights stems from the original FTC Act. During debates about the original FTC Act, lawmakers distinguished the Commission’s cease-and-desist orders from orders that could affect vested private rights. In response to objections that the statute unlawfully delegated judicial power to the Commission, lawmakers emphasized that the Commission could order only prospective relief. Intuit’s request that this Court invalidate the order against it is therefore at odds with history and precedent.

Case Timeline

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