Criminal Defense Lawyers

FTC Civil Investigative Demand

How Cooperation With an FTC Civil Investigative Demand Can Reduce Litigation Exposure

Getting a civil investigative demand (CID) from the Federal Trade Commission (FTC) can be intimidating. However, cooperating with the investigation and providing the requested information in a timely and transparent manner can significantly reduce the risk of subsequent litigation. This article provides an overview of FTC investigations, how to respond to a CID, and the benefits of cooperation.

Overview of FTC Investigations

The FTC is empowered to investigate “unfair or deceptive acts or practices” that affect commerce under Section 5 of the FTC Act. Common areas of investigation include false advertising, data security and privacy violations, anticompetitive practices, and violations of consumer protection regulations.Investigations typically start with the FTC issuing a CID to collect information. CIDs are similar to subpoenas and require the recipient to provide documents, written reports, answers to interrogatories, or oral testimony related to the investigation. Once the FTC reviews the information, they determine if further action is warranted.

Responding to a CID

Receiving a CID can be daunting, but it’s important not to panic. Consulting with legal counsel is highly recommended to understand your obligations and strategy. Key things to know:

• Timelines are tight – The FTC generally gives companies 20 days to produce documents and information requested in the CID. Extensions are possible but not guaranteed.
• Obligation to respond – Unlike subpoenas, parties served with CIDs generally cannot “quash” them on grounds that they are unreasonable. Courts expect parties to negotiate in good faith with FTC staff. If you believe the CID is inappropriate, note objections but still provide substantive responses.
• Certification is required – A company officer or legal representative must certify that responses are complete and accurate, often under penalty of perjury.
• Confidentiality may be limited – While the FTC treats most investigative information as confidential, some disclosures may eventually be made public or shared with other agencies. Mark truly sensitive documents appropriately.

Benefits of Cooperation

Cooperating with an FTC investigation has significant upside, even if violations occurred. It enables the company to shape the narrative, demonstrate responsiveness, and build goodwill with investigators. Potential benefits include:

• Narrowing the scope – Being transparent about issues allows you to focus the investigation on specific areas of actual concern rather than having investigators search broadly.
• Explaining mitigating factors – Where problems occurred, you can contextualize why, what controls are now in place, and efforts being made to address root causes.
• Avoiding litigation – In many cases, companies that cooperate are able to resolve the investigation by entering into a consent decree formalizing remedial measures. This avoids protracted litigation.
• Lowering penalties – Demonstrating cooperation and early remediation can result in lower civil penalties, relaxed injunctive provisions, and more favorable settlement terms if charges are filed.
• Preventing referrals – In some cases, cooperating with FTC staff may head off referrals of the matter to other agencies for criminal investigation.

The FTC remains committed to bringing enforcement actions where warranted. However, companies that respond earnestly to address issues identified in an investigation are likely to fare better than those attempting to obfuscate problems or evade inquiries.While daunting, an FTC investigation also represents an opportunity to strengthen compliance practices moving forward. Consult capable legal counsel to interface with investigators, demonstrate willingness to remedy concerns, and emphasize the steps your company is taking to prevent recurrences. This cooperative posture can pay dividends versus taking an adversarial stance.

Dealing With an FTC Civil Investigative Demand (CID)

Getting hit with a civil investigative demand (CID) from the Federal Trade Commission can be intimidating. But don’t panic – with the right help, you can get through it. This article will walk you through what to expect and how best to respond if your company receives a CID.

What is a CID?

A CID is basically a subpoena that the FTC uses to investigate potential violations of laws they enforce, like antitrust regulations or laws against unfair and deceptive practices. It requires you to provide information, documents or testimony related to their investigation.You don’t have to be the target of the investigation to get a CID – even companies with useful information can get dragged in. And while it’s not as severe as a criminal subpoena, it does come with legal penalties if you don’t comply.So yeah, it’s a big deal. But the good news is there are things you can do to manage the process.

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The CID Arrives – Now What?

Take a breath. I know it’s stressful, but panicking won’t help.Carefully review the CID and try to get a sense of what exactly the FTC is investigating. Look at what information and documents they’re requesting and think about what you have that’s responsive.Notify leadership at your company and start thinking about who needs to be looped in to handle responding. You’ll likely need to get your legal team involved.Do not start destroying documents. I know the temptation is there if you think you have something to hide, but that can cause way more legal issues down the road. Just don’t.Consider reaching out to the FTC to ask for more time if you need it. They may say no, but it never hurts to ask nicely.From there, you‘ll want to bring in professionals to help formulate your response strategy.

Getting Legal Help With Your CID Response

Responding to something like a CID takes experience – it’s not something you want to handle completely internally unless you really know what you‘re doing.Here are some ways to get help:

Hire outside legal counsel who has experience specifically with FTC investigations. They’ll know all the rules and regulations to make sure you respond appropriately. Shop around to find someone within your budget.

Consult a law firm that offers CID response services. Some firms have packaged services to help guide companies through the response process. This can be cheaper than hiring a lawyer full time.

Use legal tech tools that help compile and review documents requested by the FTC. This can cut down on lawyer fees for document review. Just make sure to still have a lawyer verify your final production.The right legal help will allow you to respond confidently while protecting your company’s interests.

Negotiating the Scope of the CID

One important thing your lawyers can help with is trying to narrow the scope of the CID to reduce your burden. This involves negotiating with the FTC.Some strategies include:

• Request limiting the date range of responsive documents. For example, ask them to only go back 3 years instead of 10.
• Try narrowing keywords and custodians for document searches if the requests seem overly broad.
• Ask for sampling instead of having to produce every single document on a topic.
• Seek to shift certain production costs to the FTC if complying would be unreasonably costly.

While the FTC doesn’t always agree to limit scope, it’s worth asking – the worst they can do is say no. Just be prepared to have backup compromise solutions in your negotiations.

Making Sure Your Productions Are Compliant

You’ll also want to ensure that your actual document productions and interrogatory responses fully comply with the CID. Having them be as buttoned-up as possible will show the FTC you’re taking it seriously.Your lawyers can make sure all your I’s are dotted and T‘s crossed, but here are some biggies:

• Carefully and completely respond to any interrogatories (written Q&A) in the CID. Leave no stones unturned – now is not the time to get cute with your answers.
• Conduct exhaustive document collection and review to find everything that could possibly be responsive. Missing something can lead to accusations of hiding documents.
• Log and describe your collection methodology to show regulators the process you used if you do end up missing anything.
• Add redaction logs, privilege logs and other requirements specified by the rules around CID responses. Don’t make the FTC ask you to fix sloppy work.