Key Differences Between FTC Subpoenas and Civil Investigative Demands

Key Differences Between FTC Subpoenas and Civil Investigative Demands

The Federal Trade Commission (FTC) relies heavily on information requests to conduct investigations into potential violations of consumer protection and antitrust laws. The FTC has two main investigative tools at its disposal – subpoenas and civil investigative demands (CIDs). While subpoenas and CIDs serve similar functions, there are some key differences businesses should understand.

What are FTC Subpoenas and CIDs?

Subpoenas – Allow the FTC to compel testimony and the production of documents, tangible things, and other information. Subpoenas are issued under the FTC Act’s Section 9 authority and are used for antitrust investigations.

Civil Investigative Demands (CIDs) – Function like administrative subpoenas to collect information related to investigations. CIDs are authorized under Section 20 of the FTC Act and are used for consumer protection inquiries.

Both subpoenas and CIDs are legally enforceable demands. If the recipient fails to comply, the FTC can petition federal courts to order compliance.

Key Differences

1. Purpose and Scope

The purpose and scope differs between subpoenas and CIDs:

• Subpoenas focus strictly on antitrust matters to determine if business practices harm competition.
• CIDs relate to consumer protection cases probing for unfair or deceptive acts.

So subpoenas have a narrower purpose tied to antitrust enforcement. CIDs encompass a broader range of consumer protection issues.

2. Information Obtainable

Subpoenas and CIDs can demand similar information like documents, tangible things, and testimony.

But CIDs provide more flexibility to require:

• Written reports
• Answers to written questions

So the FTC has expanded options when using CIDs to gather details relevant to an investigation.

3. Basis for Issuance

There is a small but meaningful difference in the basis for issuing subpoenas vs. CIDs:

• Subpoenas require a Commission resolution authorizing compulsory process.
• CIDs do not require a Commission resolution. Staff can initiate the demand for information.

So there is an extra procedural step for subpoenas that offers more oversight and accountability.

4. Meet and Confer Requirement

The FTC Act mandates a “meet and confer” process for CIDs but not for subpoenas.

CID recipients can discuss modifying the demand with staff at an informal meeting.

There is no meet and confer requirement for subpoenas.

This gives CID respondents more opportunity to narrow the scope.

5. Judicial Enforcement

Both subpoenas and CIDs are judicially enforceable if the recipient fails to comply.

For subpoenas, Section 9 expressly authorizes federal court orders to compel responses.

For CIDs, Section 20 states district courts can order compliance.

In both cases, noncompliance can spur contempt proceedings and penalties.

6. Ability to Petition to Limit/Quash

Recipients can file petitions challenging both subpoenas and CIDs to limit or quash them, but the standards differ:

• For subpoenas, petitions must be filed within 20 days per FTC Rule 2.7(d). Courts balance intrusiveness vs. need.
• For CIDs, petitions must be filed within 20 days under Section 20(c)(2). Courts use a “not unduly burdensome” test.

So both have time limits, but courts apply different standards.

Responding to Subpoenas vs CIDs

Given the potent investigative power behind subpoenas and CIDs, targets should consult experienced legal counsel when served. Key tips include:

Meet and Confer

• For CIDs, take full advantage of the meet and confer process to narrow requests.
• For subpoenas, request a meeting with staff explaining issues and proposing reasonable modifications.

Conduct Internal Review

• Perform a thorough internal review to understand relevant facts and assess risks.
• Collect responsive documents systematically to show a good faith effort at compliance.

Petition to Limit, If Necessary

• Petition the FTC if requests seem overly broad or unduly burdensome.
• Be specific about issues and suggest reasonable limitations.

Assert Privileges

• Properly assert any claims of legal privilege or protection over responsive information.

Submit Timely and Complete Responses

• Provide information in a timely, organized, and compliant manner. This helps demonstrate cooperation.
• Work closely with experienced counsel during the response process.

Consequences of Noncompliance

Failing to adequately respond to an FTC subpoena or CID can spur legal action in federal court leading to substantial penalties:

• Court orders compelling responses
• Steep daily fines for contempt
• Jail time

So while subpoenas and CIDs differ in certain respects, it is essential to take both seriously given the FTC’s broad authority to enforce these demands.

References

• FTC Subpoena and CID Enforcement
• FTC Investigative Tools
• Responding to CIDs
• Petitioning to Quash Subpoenas and CIDs