FTC v. Credit Bureau Center, LLC

In the

United States Court of Appeals
for the Seventh Circuit
____________________
No. 21-2945
FEDERAL TRADE COMMISSION,
Plaintiff-Appellee,
v.

CREDIT BUREAU CENTER, LLC,
and MICHAEL BROWN,
Defendants-Appellants.
____________________

Appeal from the United States District Court for the
Northern District of Illinois, Eastern Division.
No. 17-cv-194 — Matthew F. Kennelly, Judge.
____________________

ARGUED JUNE 3, 2022 — DECIDED AUGUST 30, 2023
____________________

Before SYKES, Chief Judge, and FLAUM and BRENNAN,
Circuit Judges.
SYKES, Chief Judge. This appeal is the latest chapter in a
complicated case that has had a long and winding journey
through the federal courts, including a trip to the Supreme
Court and back. Michael Brown owns and operates Credit
Bureau Center, a credit-monitoring business. His company
used an online marketing device known as a “negative
2 No. 21-2945

option feature” on its websites. The websites offered visitors
a free credit report but automatically enrolled them in a
$29.94 monthly membership subscription when they applied
for the free report; the information about the monthly mem-
bership was scant and buried in much smaller text. FTC v.
Credit Bureau Ctr., 937 F.3d 764, 766 (7th Cir. 2019). Brown’s
contractors ginned up website traffic by posting Craigslist
advertisements for fake rental properties and directing
applicants to the company’s websites for a “free” credit
score. Id.
This activity soon attracted the attention of the Federal
Trade Commission, which sued Brown and Credit Bureau
Center (collectively “Brown”) alleging violations of several
consumer-protection statutes. The litigation centered on
section 13(b) of the Federal Trade Commission Act (“FTCA”
or “the Act”), which authorizes the Commission to seek
restraining orders and permanent injunctions to enjoin
conduct that violates the Act’s prohibition of unfair or
deceptive trade practices. On its face, section 13(b) authoriz-
es only injunctive relief. But the Commission had long
interpreted it to also permit restitution awards—an interpre-
tation adopted in this circuit, see FTC v. Amy Travel Service,
Inc., 875 F.2d 564, 571 (7th Cir. 1989), and in others as well.
The district court entered a permanent injunction and or-
dered Brown to pay more than $5 million in restitution. We
affirmed the judgment in all respects but one: we held that
section 13(b) does not authorize restitution awards. We
therefore overruled Amy Travel and broke with the consen-
sus in other circuits adopting the Commission’s reading of
section 13(b).
No. 21-2945 3

To resolve the circuit split, the Supreme Court granted
certiorari in this case and one from the Ninth Circuit, FTC v.
AMG Capital Management, LLC, 910 F.3d 417 (9th Cir. 2018).
Ruling in the Ninth Circuit’s case, the Court held that
section 13(b) does not authorize equitable monetary relief
such as restitution and disgorgement. AMG Capital Manage-
ment, LLC v. FTC, 141 S. Ct. 1341, 1344 (2021).
Having endorsed our interpretation of the statute in
AMG Capital, the Court returned this case to us, and we sent
it back to the district court. The Commission immediately
moved to amend the judgment under Rule 59(e) of the
Federal Rules of Civil Procedure, arguing that the Court’s
decision in AMG Capital (and ours in this case) had signifi-
cantly changed the law. The Commission asked the judge to
reimpose the restitution award under the Restore Online
Shoppers’ Confidence Act (“ROSCA”) and section 19 of the
FTCA. The judge granted the motion and reinstated the
$5 million restitution award.
Brown now attacks the amended judgment on multiple
grounds. While numerous, his arguments are mostly merit-
less. The only error in the new judgment is its direction that
any funds remaining after providing consumer redress shall
be “deposited to the U.S. Treasury as disgorgement.” That
exceeds the remedial scope of section 19, which is limited to
redressing consumer injuries, as the Commission conceded
in oral argument. To wind up more than six years of litiga-
tion, we modify the judgment to excise that portion and
affirm the judgment as modified.
4 No. 21-2945

I. Background
We described the background of this case in the first ap-
peal, Credit Bureau Ctr., 937 F.3d at 767–68, so we provide an
abbreviated overview of Brown’s scheme here. In January
2014 Brown contracted with Danny Pierce to increase traffic
to websites advertising his credit-monitoring services. These
websites—with names like “eFreeScore.com” and
“FreeCreditNation.com”—promised visitors a “free credit
report and score.” Id. at 767. But requesting the free report
automatically enrolled applicants in a paid monthly sub-
scription. Fine print on the websites warned visitors that
ordering the free report would enroll them in an unspecified
“membership” subscription that cost $29.94 each month. A
letter from Brown followed, explaining to new subscribers
that the fee-based subscription was for credit monitoring.
Pierce later subcontracted with Andrew Lloyd to drum
up more referrals to Brown’s websites. Lloyd posted
Craigslist advertisements for fake rental properties at cheap
prices. Posing as the landlord, he directed prospective
tenants to Brown’s websites to obtain a free credit report.
Pierce and Lloyd’s efforts paid off. They referred more than
2.7 million customers to Brown, yielding just over
$6.8 million in revenue. Unsuspecting customers com-
plained, but Brown denied any involvement with Pierce and
refused to grant refunds. Ultimately, credit-card companies
canceled more than 10,000 of Brown’s charges.
The Commission eventually stepped in, suing Brown and
his company and alleging that the websites and the
Craigslist advertisements violated the FTCA, ROSCA, and
two other consumer-protection statutes not relevant here.
Proceeding under section 13(b) of the FTCA, 15 U.S.C.
No. 21-2945 5

§ 53(b), the Commission sought a permanent injunction and
restitution. The remedial options listed in section 13(b) are
limited to restraining orders and injunctions, but the
Commission had long and frequently used this provision to
win equitable monetary relief as well. AMG Capital, 141 S.
Ct. at 1346–47. Our circuit blessed this practice in Amy Travel,
875 F.2d 564, holding that section 13(b) implicitly authorizes
restitution in addition to injunctive relief; other circuits also
endorsed this approach. Credit Bureau Ctr., 937 F.3d at 779.
Ruling on cross-motions for summary judgment, the dis-
trict judge found Brown liable, issued a detailed permanent
injunction, and ordered Brown to pay over $5 million in
restitution to the Commission. Id. at 768.
Brown appealed, contesting the judge’s liability ruling
and challenging the court’s authority to award monetary
relief under section 13(b). We first addressed the judge’s
determination that Brown had violated ROSCA, agreeing
with his liability ruling and rejecting Brown’s arguments to
the contrary. As we explained, ROSCA specifically addresses
the use of a so-called “negative option feature” to sell goods
or services on the internet. Id. at 769. A negative-option
feature is “a provision [in an offer] under which the custom-
er’s silence or failure to take an affirmative action to reject
goods or services or to cancel the agreement is interpreted
by the seller as acceptance of the offer.” 16 C.F.R. § 310.2(w);
see also 15 U.S.C. § 8403 (incorporating the definition by
reference). As relevant here, the statute makes it unlawful for
any person to use a negative-option marketing device unless
he “clearly and conspicuously discloses all material terms of
the transaction before obtaining the consumer’s billing
information.” § 8403(1).
6 No. 21-2945

We had no difficulty affirming the judge’s determination
that Brown’s websites violated this provision. And because
“ROSCA violations are ‘unfair or deceptive acts or practices’
under the FTCA,” we explained that the Commission could
“use the FTCA’s enforcement regime against violators.”
Credit Bureau Ctr., 937 F.3d at 769 (quoting 15 U.S.C. § 8404).
We thus had no need to consider the Commission’s other
theories of liability. Id.
Turning to the restitution award, we explained that an
award of monetary relief—legal or equitable—was incom-
patible with the text of section 13(b), which by its terms
authorizes only injunctive relief. Id. at 771–75. That text, and
the language and structure of the FTCA’s other remedial
provisions—notably, section 19, which provides for mone-
tary relief but only if specific preconditions are met—called
into question the Commission’s view that section 13(b)
implicitly authorizes restitution awards. Id. We traced the
doctrinal path to our decision in Amy Travel, which had
“developed in the shadow of two [Supreme Court] decisions
that took a capacious view of implied remedies.” 937 F.3d at
776. “[T]he Court ha[d] [since] adhered to [a] more limited
understanding of judicially implied remedies,” so we revis-
ited and overruled Amy Travel, concluding that
“section 13(b)’s permanent-injunction provision does not
authorize monetary relief.” Id. at 781, 786.
The Commission petitioned for certiorari, so we stayed
the issuance of our mandate pending the disposition of the
petition. The Supreme Court ultimately granted certiorari in
two cases—this one and AMG Capital, 910 F.3d 417, a case
from the Ninth Circuit—to resolve the circuit split over the
remedial scope of section 13(b). The Court initially consoli-
No. 21-2945 7

dated the two cases for decision but later reversed course
and separated them. The Court then proceeded to the merits
in the Ninth Circuit’s case, concluding in a unanimous
opinion that section 13(b) “does not grant the Commission
authority to obtain equitable monetary relief” such as resti-
tution or disgorgement. AMG Capital, 141 S. Ct. at 1352. The
Court’s analysis followed the same path as ours in this case.
The decision in AMG Capital rests on the plain text of
section 13(b), the language and structure of the other reme-
dial provisions in the FTCA, and the Court’s recent caselaw
cautioning against judicially implied remedies. Id. at 1347–
51.
After issuing its decision in AMG Capital, the Court va-
cated its order granting certiorari in this case and returned it
to us. We lifted the stay, issued our mandate, and sent the
case back to the district court. The Commission immediately
moved to amend the judgment, arguing that our decision on
appeal and the Supreme Court’s decision in AMG Capital
worked an intervening change in the controlling law, justify-
ing relief under Rule 59(e). See Romo v. Gulf Stream Coach,
Inc., 250 F.3d 1119, 1121 n.3 (7th Cir. 2001). The Commission
asked the judge to reimpose the restitution award under
ROSCA and section 19 of the FTCA. Brown’s liability for
violating ROSCA had already been established earlier in the
litigation; the Commission now pointed to section 5 of
ROSCA, which treats a statutory violation as a rule violation
under the FTCA and permits the Commission to seek relief
under section 19 of the Act. That section, in turn, permits the
court to “grant such relief as the court finds necessary to
redress injury to consumers,” including “the refund of
money” and “the payment of damages.” 15 U.S.C. §§ 57b(a)–
(b), 8404(a).
8 No. 21-2945

Brown lodged a host of objections. He argued that the
Commission had knowingly “misused” section 13(b) and
should be barred by the doctrine of “unclean hands” from
seeking relief under ROSCA and section 19. He argued that
awarding monetary relief would defy the mandate rule and
the law-of-the-case doctrine. He insisted that no intervening
change in the law justified an amended judgment and that
the Commission had waived reliance on section 19. Still
more, he argued that the judgment covered websites that
had not been proved to violate ROSCA, that any award must
be limited to net profits, and that the Commission must trace
the funds to the underlying fraud. The judge rejected each
argument, reimposed the restitution award under section 5
of ROSCA and section 19 of the FTCA, and entered the
requested amended judgment.
II. Discussion
Brown’s appeal rehashes the litany of objections we’ve
just described. Some are frivolous and the rest are meritless,
with one exception.
We begin with Brown’s claim that the amended judgment
violates the mandate rule and runs counter to the law of the
case. “The mandate rule requires a lower court to adhere to
the commands of a higher court on remand.” United States v.
Polland, 56 F.3d 776, 777 (7th Cir. 1995). The law-of-the-case
doctrine “is a corollary to the mandate rule and prohibits a
lower court from reconsidering on remand an issue express-
ly or impliedly decided by a higher court.” Id. at 779. In
Brown’s first appeal, we held that section 13(b) does not
authorize equitable monetary relief. He casts our decision
more broadly, claiming that by vacating the monetary
award, we necessarily concluded that the Commission could
No. 21-2945 9

not obtain any monetary award. This argument plucks our
mandate from its context. We addressed only the availability
of restitution under section 13(b); we did not consider (let
alone decide) whether the Commission could obtain mone-
tary relief under any other statutory provision. The amended
judgment relies on ROSCA and section 19—not sec-
tion 13(b)—so it does not exceed the scope of the mandate or
disregard the law of the case.
Brown’s next argument targets the judge’s authority to
grant the Rule 59(e) motion. An “intervening change in the
controlling law” may justify a motion to amend the judg-
ment. Cosgrove v. Bartolotta, 150 F.3d 729, 732 (7th Cir. 1998).
Brown insists that our decision in the first appeal and the
Supreme Court’s decision in AMG Capital do not fit the bill.
This argument ignores the widespread consensus that had
developed before these decisions. Amy Travel was controlling
law in our circuit for over 30 years. Six other circuits had
similarly concluded that section 13(b) authorizes equitable
monetary relief. Our decision in Brown’s first appeal and the
Supreme Court’s in AMG Capital overturned a longstand-
ing—but mistaken—consensus among the circuits. In other
words, the decisions worked a radical change in the law that
supports the Commission’s Rule 59(e) motion.
Section 19 is the focus of Brown’s next cluster of argu-
ments. He claims that the Commission waived reliance on
section 19 by not raising it in the first round of litigation. But
the Commission’s original complaint alleged that Brown
violated section 5 of ROSCA. That provision incorporates
section 19 of the FTCA by reference, treating a statutory
violation under ROSCA as a rule violation under section 18
of the FTCA, which the Commission can redress under
10 No. 21-2945

section 19. 1 Still, Brown suggests that because the Commis-
sion chose to rely on section 13(b) of the FTCA over ROSCA
and section 19 earlier in the litigation, it cannot shift course
now. But as we’ve explained several times over, the
Commission relied on its established interpretation of
section 13(b), long endorsed by the appellate courts. Pursu-
ing the same monetary relief under ROSCA and section 19
was unnecessary and redundant. That route became relevant
only after our decision in the first appeal and the Supreme
Court’s decision in AMG Capital. The ROSCA violation was
established in the first judgment, and we affirmed that
liability finding in the first appeal. The Commission moved
to amend the judgment—to reflect a permissible alternative
basis for the monetary award—on the same day the case
returned to the district court. That is not waiver.
Brown suggests that we should penalize the Commission
for “circumventing” congressional limits on its authority by
originally seeking restitution under section 13(b). Once
again, this argument fails to contend with the widespread
consensus among the circuits prior to our first decision in
this case.
Brown next seizes on language in our earlier opinion to
argue that the Commission did not comply with the statuto-
ry requirements for relief under section 19. This argument is
a nonstarter. We explained that the Commission’s practice of

1 Moreover, section 5 of ROSCA generally provides: “The Federal Trade

Commission shall enforce this chapter in the same manner, by the same
means, and with the same jurisdiction, powers, and duties as though all
applicable terms and provisions of the Federal Trade Commission Act …
were incorporated into and made a part of this chapter.” 15 U.S.C.
§ 8404(a).
No. 21-2945 11

seeking restitution awards under section 13(b) threatened to
undermine the conditions precedent for monetary relief
outlined in section 19. Credit Bureau Ctr., 937 F.3d at 774. But
ROSCA expressly bypasses these procedural requirements,
authorizing the Commission to go directly to court to seek
relief under section 19 to enforce its provisions. So permit-
ting the Commission to enforce ROSCA through section 19—
unlike section 13(b)—does not undermine the remedial
structure that Congress created in the FTCA. To the contrary,
it ensures that we respect Congress’s decision to use the Act’s
enforcement mechanisms to implement ROSCA. 2
Brown’s last set of arguments challenge the amount of
the restitution award. The judge reinstated the original
award—a total of $5,260,671.36, which equals the revenue
Brown obtained through traffic that Pierce directed to the
websites minus refunds already paid, chargebacks custom-
ers obtained, and a settlement paid by Pierce and Lloyd.

2 Two related arguments merit less attention. Brown suggests that
ROSCA does not actually incorporate section 19. But the plain text of the
statute defeats that argument. See § 8404(a) (“Violation of this chapter or
any regulation prescribed under this chapter shall be treated as a
violation of a rule under section 18 of the Federal Trade Commission
Act … .”); 15 U.S.C. § 57b (identifying a rule violation under the Act as
the basis for a civil action).
Brown also suggests that the Commission has not complied with the
requirement to notify the Attorney General of its litigation. He cites no
evidence to support his claim that the Commission has not communicat-
ed with the Attorney General; he does not explain why his allegation, if
true, would require reversal; and he does not recognize that the statute
provides—for actions both under sections 13(b) and 19—that “the
Commission shall have exclusive authority to commence or defend …
such action.” 15 U.S.C. § 56(a)(2), (a)(2)(A)–(B).
12 No. 21-2945

Brown contends that the Supreme Court’s decision in Liu v.
SEC, 140 S. Ct. 1936 (2020), requires us to vacate the award
and remand for recalculation of the amount. In Liu the Court
considered the scope of equitable relief available in an SEC
civil-enforcement action and concluded that a disgorgement
award could not exceed a firm’s “net profits from wrongdo-
ing.” Id. at 1946. In CFPB v. Consumer First Legal Group, LLC,
we recognized that Liu’s holding extends to equitable reme-
dies authorized in other statutes. 6 F.4th 694, 710–11 (7th Cir.
2021) (extending Liu to a restitution award granted in favor
of the CFPB). Relying on Liu, Brown argues that a monetary
award under ROSCA and section 19 must be limited to net
profits that can be traced to the underlying fraud.
One commonality stands out between Liu and our deci-
sion in Consumer First: equity. The statute at issue in Liu
authorizes “equitable relief,” so the Court analyzed “those
categories of relief that were typically available in equity.”
Liu, 140 S. Ct. at 1942 (quotation marks omitted). And alt-
hough the statute at issue in Consumer First authorized legal
and equitable relief, the district court had granted only
equitable relief. In both cases, respecting Congress’s remedi-
al decision required cabining relief to the traditional scope of
the remedies available in equity.
Section 19 is not so limited; it permits all forms of redress
to make consumers whole, including “the refund of money.”
Accordingly, the amended monetary award appropriately
refunds to customers the amount that has not yet been
returned by Brown or his coconspirators. Brown’s argument
ignores Congress’s choice in section 19 to authorize the court
to “grant such relief as the court finds necessary to redress
injury to consumers,” including “the refund of money” and
No. 21-2945 13

“the payment of damages.” § 57b(b) Because the monetary
award consists of direct consumer redress in the form of
refunds—a form of relief expressly permitted by the stat-
ute—it need not be measured by net profits and tracing is
not required.
Brown’s final argument challenges the temporal scope of
the award. He draws a line between websites activated
before and after December 1, 2015, arguing that the
Commission’s complaint focused on the websites that were
specific to the Craigslist scam and that were activated on
December 1, 2015. He contends that the award should be
limited to the 14-month period in which the December 2015
websites were active and that his websites before that date
did not violate ROSCA.
But Brown has a problem: this argument was both “un-
derdeveloped” and raised too late (in his reply brief) in the
first round of this litigation in the district court, so the judge
declined to consider it in his original decision. FTC v. Credit
Bureau Ctr., LLC, 325 F. Supp. 3d 852, 869 n.5 (N.D. Ill. 2018)
(finding the argument forfeited for both reasons). Based on
our review of the record, that ruling was sound. Brown’s
summary-judgment brief did not explain why the websites
in place before December 2015 differed in a way that would
affect his liability under ROSCA, and he has offered us no
reason to excuse his failure to develop this argument at an
appropriate time in the district court or here. We decline to
disturb the judge’s forfeiture ruling.
* * *
The amended judgment contains one error that requires
correction. As we’ve explained, section 19 is limited to “such
14 No. 21-2945

relief as the court finds necessary to redress injury to con-
sumers.” § 57b(b). The judgment directs the Commission to
deposit any excess money not used for consumer redress
and administrative expenses “to the U.S. Treasury as dis-
gorgement.” The Commission acknowledged at oral argu-
ment that this part of the judgment sweeps beyond the
statute. We therefore modify part IX.D of the amended
judgment to remove this sentence: “Any money not used for
such equitable relief is to be deposited to the U.S. Treasury
as disgorgement.” As modified, the judgment is
AFFIRMED.