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Strategic Considerations When Responding to an FTC Target Letter

Strategic Considerations When Responding to an FTC Target Letter

Getting a target letter from the Federal Trade Commission can be scary. It means they think you broke some law about ads, privacy, or competition. But try not to panic! With the right strategy, you can respond in a way that protects your interests. This article will walk through some key things to think about when you get that dreaded letter.

What is a target letter anyway?

A target letter is how the FTC tells you they think you violated a law they enforce[1]. It doesn’t mean you’re guilty or will be charged. But it does mean they’re investigating and want info from you. The letter will explain what specific laws they think you broke. It will also ask you to provide documents, data, or testimony. So it’s the first step in a long legal process.

Take a breath – don’t panic!

It’s totally normal to feel anxious or upset when you get a target letter. But try not to make any rash decisions! Take some deep breaths and don’t do anything until you’ve thought it through. You’ll need a clear head to respond strategically. And overreacting could make things worse, not better. So buy yourself some time by asking for an extension on providing the info. That’ll give you space to craft your response thoughtfully.

Get legal help ASAP

You shouldn’t try to handle a target letter alone. These investigations are complex, with major legal implications. So your first call should be to an experienced attorney. Preferably one who specializes in FTC matters. They’ll know all the rules and strategies. And they can deal with the FTC so you don’t have to. Having a lawyer guide you will make the process much less stressful. And it will help ensure your rights are protected. So don’t delay – get top-notch legal help on your side right away.

Carefully review the allegations

Now it’s time to closely examine that target letter. Make sure you understand exactly what violations they think occurred. And what specific laws or regulations apply. Look at what proof or basis they cite for the allegations. Having your lawyer help analyze this info is key. They can start to formulate defenses and response strategies. The better you understand the allegations, the better you can fight them. Don’t just skim the letter and assume what it says. Scrutinize it closely so you know what you’re up against.

Gather relevant documents

The FTC will request a ton of documents and data from you. So start gathering anything that could relate to their investigation. Financial records, internal communications, promotional materials, and more. You’ll need to review all this with your attorney to decide what to produce. The key is being thorough at this stage. You don’t want to scramble later or accidentally withhold important stuff. Making organized document collections now will help streamline the process down the road.

Evaluate your public response

News of the investigation may become public through leaks or official announcements. So discuss crisis PR strategies with your lawyer and communications staff. You’ll want to shape the narrative and reassure stakeholders like investors. But be careful not to obstruct the investigation or make false statements. Any press releases or talking points should be run by counsel first. Transparency is usually the best policy. But you must avoid undermining your legal defense too.

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Consider who should produce information

The FTC may request info from your company, specific employees, or third parties. Think carefully about where documents should come from. Your attorney can help protect sensitive materials through privileges and confidentiality. Producing info can also create liability for the source. So review closely to determine the best ones to handle each piece. You want to comply with requests. But also avoid creating unnecessary risk.

Assert privileges carefully

Some requested info may be protected under attorney-client privilege, work product doctrine, or other privileges[2]. But you can’t just refuse to provide it. You must create a detailed log justifying each privilege claim. And only assert privilege where truly appropriate. Overbroad claims may prompt court challenges. It’s a balancing act between protecting sensitive info and not obstructing the investigation. So work closely with counsel to invoke privileges thoughtfully.

Negotiate the scope of requests

The FTC typically makes very broad requests at first. But that doesn’t mean you have to produce everything. Confer with your lawyer about narrowing the scope through negotiations. For example, limiting date ranges or excluding irrelevant materials. Pushing back on unduly burdensome demands is often successful. But be reasonable to avoid appearing obstructionist. Offer alternatives like sampling data instead of all records. The goal is satisfying requests efficiently while protecting your interests.

Correct any compliance issues

If the allegations have merit, take action to fix problems. End questionable practices and bring activities into compliance. Then showcase these corrective measures to the FTC. Demonstrating you’ve addressed their concerns can really help. It shows you’re acting in good faith and not trying to hide anything. But be careful not to make admissions that could support charges. Work closely with counsel to strike the right balance.

Consider self-reporting violations

For some cases, self-reporting violations to the FTC proactively can be beneficial[3]. It signals cooperation and taking responsibility. The FTC may then grant leniency or reduced penalties. But there are risks too, so discuss thoroughly with your attorney. Timing, scope of admission, and eligibility for immunity programs are all key factors. Don’t rush into self-reporting without fully understanding the implications. It’s not the right path for every situation.

Explore early settlement options

Settlement may be an option before charges are even filed. The FTC often pursues it to avoid lengthy litigation. So if you want to resolve the case, notify them you’re open to discussing it. But the devil is in the details when settling. Onerous injunctive relief, damages, or admissions could hurt your business. So don’t agree to anything without your lawyer’s guidance. Settlement seems easier but requires strategy too.

Don’t try to destroy evidence

This should go without saying. But don’t delete, shred, or hide any information requested. Understandably, your instinct may be to make potentially damaging material disappear. But that could constitute serious obstruction of justice charges[4]. And it basically guarantees the FTC will come down hard on you. Be transparent and retain all relevant documents. That’s far less risky than getting caught concealing them.

Watch what you say to employees

A target letter triggers a tense time in any organization. Staff will naturally have lots of questions and concerns. Be thoughtful in internal communications about the investigation. Don’t say anything that could be seen as coercing employees. And avoid even the appearance of impropriety. Discuss talking points with counsel to strike the right tone. Reassure staff without making promises or revealing too much. Keep responses simple – you don’t want misinformation spreading.

Refuse informal interviews

FTC attorneys may try contacting you or staff informally to ask questions. Politely decline such interviews and refer them to your lawyer. It’s risky answering questions without counsel present. You could accidentally make damaging admissions. Insist any interviews be scheduled formally with your attorney. And don’t discuss the case with anyone outside your legal team. Loose lips sink ships, so be vigilant about avoiding careless comments.

Testify truthfully if compelled

After reviewing the evidence, the FTC may demand sworn investigative testimony from you[5]. If so, you must comply. But your lawyer can still protect you by lodging objections on the record. Answer questions transparently but stick to the facts. Speculating or exaggerating is dangerous. And never lie! Correct any prior false statements too. Perjury only makes things exponentially worse. Tell the truth then let your attorney handle explaining it.

Stay positive and focus on cooperation

The FTC stresses cooperation when deciding how to proceed with cases[6]. So emphasize working collaboratively and in good faith. Even if you dispute the allegations, don’t take an adversarial stance. Frame responses as trying to find common ground and resolve issues efficiently. If violations did occur, showcase the steps you’ve taken to fix them. Polite, professional cooperation gives you the high ground.

Conclusion

An FTC target letter marks the start of a complex legal process. But with the right strategy guided by experienced counsel, you can get through it intact. Stay calm, understand the allegations, and focus on cooperation. Transparency and proactive corrective actions are key. And never try to obstruct the investigation or destroy evidence. With patience and preparation, you can respond effectively. The stakes are high but it’s survivable if you make smart strategic choices.

References

[1] https://www.federallawyers.com/criminal-defense/strategic-considerations-when-responding-to-an-ftc-target-letter-3/

[2] https://www.jdsupra.com/legalnews/the-art-of-responding-to-an-ftc-cid-by-4609189/

[3] https://www.ftc.gov/about-ftc/mission/enforcement-authority

[4] https://federal-lawyer.com/subpoenas/ftc/

[5] https://www.ftc.gov/about-ftc/mission/enforcement-authority

[6] https://www.ftc.gov/system/files/ftc_gov/pdf/fy-2022-2026-ftc-strategic-plan.pdf

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