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

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

Receiving a civil investigative demand (CID) from the Federal Trade Commission can be intimidating for any business, large or small. A CID is essentially an administrative subpoena that compels the production of documents, tangible items, written reports and answers to questions, or oral testimony related to an FTC law enforcement investigation

Overview of FTC Investigative and Enforcement Authority

The FTC enforces a wide variety of consumer protection and antitrust laws under which it has broad investigative powers. This includes the ability to issue judicial subpoenas to obtain evidence and testimony. CIDs invoke similar compulsory process and are a critical tool for the FTC to collect information in investigations.

The FTC doesn’t need probable cause to issue a CID – just reasonable grounds to believe the law may have been violated and that the information sought is reasonably relevant. Recipients must respond in full or face court-ordered enforcement and penalties.

Responding to an FTC Civil Investigative Demand

Meet and Confer

Before anything else, schedule a “meet and confer” with the FTC attorney listed on the CID within 14 days of receipt. This gives you an opportunity to understand the investigation’s scope and narrow overly broad or unduly burdensome requests. FTC staff appreciates this direct engagement as it signals willing compliance.

Request Reasonable Extensions

While the FTC expects timely submissions, they understand the realities of compiling extensive records and will often grant reasonable deadline extensions. File extension requests promptly and ensure you can fully comply by the proposed new date.

Submit Responsive Documents

Carefully review and produce all information responsive to the CID requests. Submitting only partial records prompts further FTC demands and court orders. Demonstrating you made a good faith effort to provide everything sought, however, helps curtail expanding inquiries.

Protect Privileged Materials

Take care not to inadvertently disclose protected documents like those covered by attorney-client privilege or work product doctrine. Discuss protocols for properly marking privileged items with FTC staff.

Meet Continued Requests

Even after an initial production, expect follow-up demands as FTC reviewers identify gaps or require clarification. Cooperate with these additional information requests as you did the first.

Benefits of Cooperation

While no company wants an FTC investigation, cooperating with their compulsory process allows you to help guide the inquiry, provide proper context around any problems unearthed, and build goodwill.

Specific benefits of working collaboratively with FTC investigators include:

• Narrow Investigation Scope
• Explain Mitigating Factors
• Demonstrate Responsiveness
• Negotiate Favorable Settlements
• Reduce Litigation Risk

While the FTC possesses broad authority to investigate potential violations, companies served with a CID can still greatly influence the inquiry’s direction through strategic cooperation. Responding appropriately lets you get out ahead of the probe, provide proper context, and work towards an efficient resolution. In many cases, this collaboration is enough for the FTC to close the investigation with no further action.

Even when violations occurred, however, cooperating with FTC compulsory process allows you to shape the narrative in your favor and negotiate reduced penalties. The benefits of coordination thus make fully complying with an FTC CID well worth the effort.

References

1. https://www.federallawyers.com/criminal-defense/understanding-ftc-civil-investigative-demands-a-guide-for-businesses/
2. https://www.ftc.gov/about-ftc/mission/enforcement-authority
3. https://www.ftc.gov/news-events/media-resources/what-ftc-does
4. https://www.ftc.gov/enforcement/civil-investigative-demands
5. https://www.ftc.gov/news-events/news/press-releases/2023/11/ftc-takes-its-subpoenas-cids-seriously-you-should-too
6. https://www.ftc.gov/enforcement/cases-proceedings/civil-investigative-demands
7. https://www.ftc.gov/advice-guidance/blog/2018/01/so-you-received-cid-faqs-small-businesses
8. https://www.federallawyers.com/criminal-defense/seeking-an-extension-for-responding-to-an-ftc-civil-investigative-demand/
9. https://www.federallawyers.com/criminal-defense/ftc-civil-investigative-demand/