15 Sep 23

Preventing FTC Abuses of Power During Investigations

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Last Updated on: 19th September 2023, 05:30 am

Preventing FTC Abuses of Power During Investigations

The Federal Trade Commission, or FTC, is an important government agency that protects consumers and promotes competition. The FTC investigates companies and enforces laws related to unfair or deceptive business practices. However, like any powerful agency, there is potential for the FTC to abuse its authority and overstep its bounds. It’s important to have checks and balances to prevent misconduct and protect the rights of businesses under investigation.

Understanding FTC Investigative Powers

The FTC has broad investigative powers granted by Congress. These include:

  • Issuing subpoenas to require companies and individuals to provide documents, testimony, and other information
  • Conducting hearings to gather evidence
  • Issuing civil investigative demands (CIDs) to investigate possible legal violations

While these powers are necessary for the FTC to do its job, they must be wielded judiciously. Unfortunately, there are instances where the FTC has abused its authority when investigating and enforcing laws against companies. Preventing future abuses requires putting proper limits and oversight on the FTC’s activities.

Past Abuses of Power

Looking back, we can see times when the Federal Trade Commission went too far in exercising its investigative powers:

  • In the 1970s, the FTC launched an extremely broad investigation of the breakfast cereal industry. They subpoenaed many companies asking for huge amounts of data that exceeded what was relevant or necessary.
  • In the 1990s, the FTC demanded a company hand over highly sensitive pricing information from its hard drive. This went beyond what was needed and risked exposing trade secrets.
  • In recent years, the FTC has aggressively subpoenaed documents from decades ago or issued incredibly broad CIDs. These make compliance difficult and seem more focused on forcing settlements.

While the FTC should be thorough in its investigations, these examples show it sometimes goes too far. Sweeping and intrusive information requests can harm businesses even if no legal violations are found.

Potential Dangers of Unchecked Investigations

Giving any agency unlimited investigative power can lead to abuses. Some potential dangers of unchecked FTC investigations include:

  • Fishing expeditions – Broad investigations without sufficient evidence of wrongdoing.
  • Confirmation bias – Only seeking evidence that fits a preconceived theory of violation.
  • Lack of focus – Demanding excess documents and data irrelevant to the investigation.
  • Coercing settlements – Using aggressive tactics to pressure companies to settle even if no violation occurred.

Unrestrained investigations can morph into fishing expeditions driven by confirmation bias. They can balloon in scope and become unduly burdensome on businesses. Ultimately, this risks coercing settlements or pushing legal boundaries too far.

Oversight and Limits on the FTC’s Power

Maintaining proper oversight and limits on the FTC’s investigative powers protects against abuses while still enabling effective law enforcement. Some ways to achieve this include:

  • Judicial review – Having courts review subpoenas and CIDs prevents issuing excessive or irrelevant demands.
  • Internal checks – Clear policies and training for FTC staff on appropriate investigative practices.
  • Congressional oversight – Monitoring investigations to ensure they align with legislative intent.
  • Transparency – Making details of investigations and information requests public to deter overreach.

No single solution is sufficient. We need a combination of external judicial and legislative oversight along with strong internal policies. Transparency also helps hold the FTC accountable to using its powers properly.

Protecting Confidential Information

One important issue during FTC investigations is protecting sensitive company information. There are cases where the FTC improperly handled confidential data it obtained:

  • In one situation, the FTC inadvertently exposed confidential information by failing to redact documents before releasing them publicly.
  • In another case, an FTC employee improperly shared sensitive pricing data with competitors during an investigation.

To prevent these types of breaches, the FTC should have strict data handling procedures. All employees should receive training on properly managing confidential data. There should also be penalties for unauthorized leaks of sensitive information.

Safeguarding Due Process Rights

Another priority is preserving the due process rights of companies under investigation. Unfortunately, some FTC tactics have raised concerns about violating due process:

  • Threatening small businesses with financial ruin to quickly force settlements.
  • Not allowing companies sufficient time and opportunity to respond to charges against them.
  • Holding press conferences portraying unproven charges as facts.

To protect due process, we need to ensure:

  • Reasonable deadlines for responding to subpoenas and CIDs.
  • Adequate access to evidence and charges against the company.
  • Refraining from public statements assuming guilt before completing an investigation.

Having clear policies around these issues will help guarantee due process rights.

Increasing Transparency Around Investigations

Transparency is one of the best ways to prevent FTC abuses of power. Making more details about investigations public sheds light on any improper conduct. The FTC should proactively release information about:

    • The scope and purpose of new investigations.
    • The number and types of subpoenas and CIDs issued.
    • How many investigations each year target small businesses versus large corporations.
    • The details of any improper document leaks or mishandling of confidential data.
    • Statistics on investigation duration and outcomes (e.g. settlements, charges filed, or cases closed).
    • Policies around due process rights and protections for companies under investigation.
    • Rules governing public statements about ongoing investigations.
    • Results of internal audits or oversight reviews of investigative practices.

Releasing more data around FTC investigations will enable greater public scrutiny. It allows assessment of whether investigations stay within reasonable bounds or improperly expand. Transparency measures like regular reports to Congress and publicizing investigation details are proactive ways the FTC can demonstrate commitment to avoiding abuses of power.

Implementing Reforms

Making meaningful reforms to prevent FTC overreach will take commitment across government:

      • Congress can pass legislation mandating transparency around investigations and limiting excessively broad demands.
      • Courts must rigorously review subpoenas and CIDs to halt fishing expeditions.
      • The FTC itself needs updated internal policies, training of staff, and controls on data handling.
      • State governments can also provide oversight and help ensure due process rights.

With diligence across these fronts, we can have effective consumer protection without wrongfully burdening businesses. Ongoing vigilance is needed to maintain proper checks and balances on the FTC’s authority.

Balancing Competing Priorities

There are always tradeoffs when balancing oversight of government agencies with letting them operate effectively. We want the FTC to be able to fully investigate and sanction lawbreaking. But we also want to minimize disruptions and burdens on lawful businesses.

There are good arguments on both sides here. Some key considerations include:

      • What limits can provide accountability without excessively hampering investigations?
      • How can we ensure due process without allowing violations to hide behind legal obstacles?
      • What transparency will deter abuses of power without compromising enforcement?

Reasonable people can disagree on where to strike the right balance. By having an open discussion of these issues, hopefully we can find solutions that address all sides’ valid concerns.


The Federal Trade Commission plays a vital role in protecting consumers and markets. However, its broad investigative powers carry risks of abuse that demand sufficient oversight. Striking the right balance requires transparency, judicial review, Congressional monitoring, due process protections, and updated FTC policies. With appropriate checks against overreach, the FTC can continue effectively enforcing the law without wrongfully harming businesses.