The Federal Trade Commission (“FTC”) was created by Congress in 1914 as an antitrust and consumer protection agency. The FTC is tasked with issuing regulations and enforcing over 70 federal laws including the Federal Trade Commission Act, the Telemarketing Sale Rule, the Identity Theft Act, the Fair Credit Reporting Act and others. More generally, the FTC is tasked with the following:

• Preventing fraud, deception and unfair business practices
• Enforcing federal antitrust laws with respect to anticompetitive mergers
• Regulating any type of business practice that has anticompetitive effects, causes higher prices, creates fewer consumer choices or results in a loss of innovation
• Combating telemarketing fraud, internet scams and/or price-fixing schemes
• Regulating business practices with respect to data cybersecurity and protection of consumer data privacy

If your company or business comes to the attention of the FTC with respect to a violation of statutes within its regulatory purview, you can expect an investigation. Sometimes, the FTC will conduct an informal investigation. But, just as often, an information investigation will morph into a formal investigation that can have significant legal and financial impacts on your business. Either way, you will need experienced regulatory compliance and FTC lawyers to provide legal services concerning the investigation. If you are being investigated by the FTC, call us here at Revision Legal. You need the best FTC law firm. Here is a brief summary of the stages of an FTC investigation.

Informal Investigation

As noted, most FTC inquiries begin with an informal investigation. Generally, the first indication that the FTC has concerns is a letter received from an FTC investigator. Typically, documentation is requested and a series of questions are posed. The FTC may — or may not — offer information as to why they are conducting an investigation. The FTC can start an investigation based on its own initiative, at the request of other governmental agencies or because of complaints from consumers.

Generally, the requested documentation is reviewed. Often, additional information is requested and requests are made for interviews with key company personnel. There may also be third party interviews conducted (but your company may receive no notice of such interviews). If the legal issues are technical — such as a claim of lax cybersecurity — then the FTC’s information requests might be very detailed and granular and reviewed by an FTC team of relevant experts. The purpose of this information review is to determine if violations have occurred and if further action is required.

As also noted, you will need to hire excellent FTC response attorneys to help at this initial stage. The goal is to have the information investigation end with “no further action.” Alternatively, the goal is to reach some sort of informal resolution with the FTC.

Full Investigation

Sometimes, the FTC is sufficiently concerned with alleged violations of statutes and regulations that a full investigation is commenced from the start. As with an information investigation, this will entail demanding extensive documentation with respect to the legal issue involved and, again, interviews will be conducted by FTC investigators of key company personnel and third parties.

At some point, a full investigation will also entail the filing of some form of litigation in federal court (which is sometimes, at the request of the FTC, initiated by the Department of Justice). Obviously, once litigation is commenced, legal matters have become quite serious. If a resolution can be reached with the FTC, likely, a formal Settlement and Consent Order will be filed with and entered by the relevant federal court.

For more information, call Revision Legal’s experienced FTC compliance and internet attorneys today for assistance. You can contact us through the form on this page or call (855) 473-8474.

The FTC’s Compulsory Process Authority

Once an FTC investigation becomes formal, the Commission has broad compulsory process authority under Section 6(b) of the FTC Act, 15 U.S.C. § 46(b), and Section 20 of the FTC Act, 15 U.S.C. § 57b-1. Formal investigations are initiated by a resolution of the Commission and authorized through a document called a Civil Investigative Demand (CID). A CID functions similarly to a grand jury subpoena and can compel the production of documentary material, the submission of written reports or answers to questions, and oral testimony from company officers and employees. Unlike a voluntary informal request, a CID is legally enforceable — failure to comply can result in federal court proceedings to compel compliance and significant sanctions.

CIDs are extremely broad in scope. The FTC has authority to demand virtually any documents, communications, or data related to the conduct under investigation. There is no attorney-client privilege shield for non-privileged communications, and courts have consistently upheld the FTC’s broad investigatory powers. When a CID arrives, it should be immediately placed in the hands of experienced FTC attorneys who can assess the scope of the demand, assert valid privileges, negotiate with FTC staff over burden and scope, and manage the complex document review and production process.

Consent Orders and Settlements

The vast majority of FTC investigations that progress beyond the informal stage resolve through negotiated consent orders rather than litigation. A consent order is an agreement between the FTC and the investigated party in which the party agrees to specific conduct requirements or prohibitions going forward, without admitting liability. Consent orders are published for public comment before final approval and become legally binding once finalized. Importantly, violating a consent order subjects the company to civil penalties of up to $51,744 per day per violation — penalties that can rapidly escalate into tens of millions of dollars for ongoing noncompliance.

Negotiating favorable consent order terms requires deep knowledge of FTC practice and strong advocacy. The FTC will push for broad prohibitions, mandatory compliance reporting, third-party audits, and long duration — often 20 years. Your lawyers must push back strategically to narrow the scope of prohibitions to conduct actually at issue, limit monitoring requirements, and obtain the shortest possible duration. The difference between a well-negotiated and a poorly negotiated consent order can determine whether your business can continue to operate effectively.

FTC Litigation: What to Expect If the Case Goes to Court

If settlement negotiations fail, the FTC can file a complaint in federal district court or initiate administrative proceedings before an FTC Administrative Law Judge. In federal court, the FTC can seek injunctive relief, consumer redress, and disgorgement of ill-gotten gains. In its administrative proceedings, the FTC can order a company to cease and desist from the challenged practices. An adverse administrative decision can be appealed to the full Commission and then to a federal court of appeals.

Recent Supreme Court decisions have constrained certain FTC remedies. In AMG Capital Management, LLC v. FTC, 593 U.S. 67 (2021), the Court held that the FTC lacks authority under Section 13(b) of the FTC Act to seek equitable monetary relief (such as restitution and disgorgement) in federal court — a ruling that significantly limited one of the FTC’s most powerful enforcement tools. Congress has since acted to restore some of those powers through the Consumer Protection Action, and the FTC has adapted its enforcement strategies accordingly. Your legal team must stay current on these rapidly evolving developments.

Contact Revision Legal If You Are Under FTC Investigation

An FTC investigation, whether at the informal or formal stage, is a serious matter that can threaten the viability of your business. Early engagement of experienced FTC attorneys is critical. At Revision Legal, we counsel businesses through every stage of FTC investigations — from the initial response to an informal inquiry through negotiation of consent orders and, where necessary, federal court and administrative litigation. Contact us immediately if the FTC has reached out to your company.