tl;dr Practical steps to take when confronted with a CID from the FTC.
When the FTC serves a Civil Investigation Demand (“CID”), it does not necessarily mean that the business is automatically doomed. Formal FTC investigations are typically conducted through CIDs, which are, simply, judicially enforceable demands for documents and written answers to questions.
Knowing how to respond effectively and efficiently to a CID can mean the difference between an early, pre-litigation resolution of the investigation versus a protracted legal court battle.
Here are the top five suggestions for helping to bring the FTC’s investigation to an early resolution:
1. Read thoroughly
This seems obvious enough, but many people hastily skim through a CID, and, in doing so, miss important items, such as deadlines for productions and key definitional sections.
2. Preserve immediately
Once a company becomes aware of a formal investigation, it must institute a litigation hold, preserving all evidence necessary to the investigation. Sometimes, preserving evidence also means suspending any scheduled systems maintenance that may affect relevant information. In addition, a company under investigation should take measures to preserve the confidentiality of all submissions to the FTC.
3. Negotiate carefully
If the CID in its current form proves to be too burdensome, do not be afraid to open a line of communication between the company and FTC staff counsel to explore alternatives. These may include extending the deadline for completion of production of documents or narrowing the scope of the inquiry. A simple conversation with the FTC may yield insights that can help a company understand the Commission’s concerns and focus the company’s response to the inquiry.
4. Produce cautiously
This does not mean simply withholding documents because they are “bad” for the company. Rather, reduce the potential for a misreading of the documents to be produced by explaining their context in writing, perhaps through the submission of a white paper. What might, at first glance, look like a “smoking gun” to the FTC Staff may in fact be easily explained through substantive written responses.
5. Choose wisely
In actuality, this should be a company’s first step – hiring experienced counsel at the outset, who may have interacted with the FTC Staff in prior cases and are familiar with the procedures of the investigation. Experienced counsel can reduce a company’s overall anxiety and help guide the business in responding quickly and efficiently to the information demands.
Even if you take all of these steps and do everything that is asked of you, it still may take months, or even a year, for the FTC to make a decision regarding its investigation. Be patient. Time can often work in your favor.
If you know how to react and tailor your response to an FTC CID, your patience ultimately may be rewarded with a call from the FTC indicating that it has closed its investigation.
Rachel Hirsch is a Senior Associate at Ifrah PLLC, a law firm in Washington, D.C.
This article appeared in issue 28 of FeedFront Magazine, which was published in October 2014.http://issuu.com/affiliatesummit/docs/feedfront-28