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FTC Civil Investigative Demands: Know Your Rights and Obligations
FTC Civil Investigative Demands: Know Your Rights and Obligations
Dealing with a civil investigative demand (CID) from the Federal Trade Commission can be intimidating. As a business owner or executive, you likely have a lot of questions about your rights and responsibilities when responding to a CID.
This guide breaks down the key things you need to know about FTC CIDs, including:
- What is an FTC Civil Investigative Demand?
- Why You Might Receive a CID
- Your Rights and Obligations
- Responding to Document Requests
- Handling Interviews and Written Reports
- Seeking Legal Counsel
What is an FTC Civil Investigative Demand?
A civil investigative demand is a subpoena for information issued by the FTC during an investigation into potential violations of antitrust or consumer protection laws. CIDs allow the FTC to gather documents, written reports, and oral testimony related to the investigation.
While it may sound scary to receive a CID, it doesn’t necessarily mean you or your company did anything wrong. The FTC uses CIDs to collect evidence during an initial investigation before determining if any legal action is warranted.
Why You Might Receive a CID
There are a few common reasons why the FTC may issue a civil investigative demand:
- A complaint was filed against your business by a consumer, competitor, advocacy group, whistleblower, or government agency alleging deceptive practices, antitrust violations, data security lapses, etc.
- Your company was identified during an FTC investigation into your industry.
- Your business dealings sparked internal interest at the FTC in potential consumer protection issues.
Essentially, receiving a CID means that something about your business caught the FTC’s attention, so they want more information through the investigative process to determine if any FTC Act or Sherman Act violations occurred.
Your Rights and Obligations
When you receive an FTC civil investigative demand, you have certain rights and obligations under the FTC Act. Here is a quick overview:
Rights
- Receive written notice stating the nature and purpose of the investigation and whether any violations are alleged.
- Be represented by legal counsel.
- Get reimbursement for reasonable attorney and expert witness fees if the investigation finds you did not violate the law.
- Petition to modify or set aside CIDs that are overly broad or burdensome.
Obligations
- You must respond to the CID within the timeframe specified, which is typically within 10-30 days.
- Comply fully and truthfully with all document requests and interrogatories.
- Sitting for interviews and providing oral testimony if required.
- Keeping the investigation confidential throughout the process.
Failure to comply with the terms of a civil investigative demand could lead to an enforcement action alleging obstruction of justice.
Responding to Document Requests
One key part of responding to an FTC CID is providing the requested business records and documents. The FTC may request:
- Marketing materials
- User agreements and privacy policies
- Consumer complaints
- Internal communications
- Sales scripts and call center records
- Qualitative research studies
- Employee training manuals
- Contracts and financial statements
Essentially, any documents related to your business dealings with consumers may be requested. You are expected to conduct a diligent search to find responsive documents.
If locating all the information is overly burdensome, you can petition the FTC to modify the CID. But otherwise, you need to provide complete and accurate records, including electronically stored information, to avoid obstruction allegations.
Handling Interviews and Written Reports
In addition to document requests, a civil investigative demand may require face-to-face interviews with company executives. This gives FTC lawyers the chance to ask you detailed questions about your business practices and records.
CIDs may also require you to prepare written reports answering specific questions relevant to the potential violations being investigated.
It is essential that any oral testimony or written reports you provide are completely truthful. Even minor misstatements could be considered deceptive practices and lead to legal action.
You generally have the right to be accompanied by legal counsel during interviews. Your lawyer can prepare you for questioning, assert privileges where appropriate, and ensure your rights are protected.
Seeking Legal Counsel
Navigating FTC investigations can be complex, even if you have done nothing wrong. Experienced regulatory counsel can help ensure you meet your obligations while also protecting privileged information and asserting your rights.
An attorney can also petition for any unreasonable or unduly burdensome CID requests to be set aside. They can further negotiate the scope of document production or testimony where appropriate.
It is wise to loop in counsel early on when responding to a civil investigative demand. They can provide experienced guidance at every stage of the process. The sooner you engage legal help, the more effectively they can represent your interests.
Working with skilled regulatory counsel provides assurance that you are putting your best foot forward in responding to the FTC. This is vital whether the investigation ultimately finds violations or not.
Have more questions about your rights and obligations with an FTC civil investigative demand? Consult with a lawyer to discuss your specific situation.
Resources
Here are some additional resources on responding to FTC civil investigative demands: