Civil Investigative Demand
Recently a potential client inquired as to how to respond to a Civil Investigative Demand (CID), sometimes called an access, letter from the Federal Trade Commission (FTC).
The first question is why this person was receiving this CID. While the FTC is not often forthcoming in regards to what led to an investigation, you can rest assured when the FTC issues such a demand that it is gathering information regarding the conduct, practice, and the management of your business as it impacts consumers.
As the FTC’s role becomes even more significant, the breadth of its investigative and enforcement power has increased. Protecting competition and consumers is its function.
If you have become the target of an FTC investigation, here are some basic steps to take in defending such a claim:
- Promptly preserve ALL relevant information and documents, including papers, notes, files. Absolutely do NOT destroy or modify evidence. Obstruction of justice is a serious crime.
- Understand why you are being investigated. If you don’t understand the CID or access letter, get help. If you don’t know what the problem is, you cannot address it. It is your responsibility. The more you know, the better able you will be to gather documents, information, and prepare an effective defense.
- Your attorney will conduct an internal investigation by interviewing witnesses and employees to ensure your business is in compliance.
- If the company’s behavior has not been in compliance, then consider corrective action. This should be discussed with your lawyer to determine which actions are the best under the circumstances.
- Consider contacting the FTC staff as soon as possible after receiving the CID. This lets the FTC know you are cooperative. This early communication also ensures a clear understanding of the issues and what’s needed to resolve the problem.
- You might also want to determine early in the process if your company insurance policy covers costs in defending the investigation. Also, is this something your board, shareholders, creditors have a need to know.
There are many more things to consider when receiving a CID from the FTC. You would be well served securing competent legal counsel immediately.