Surviving an FTC Investigation: An Excerpt from the Advertising Law Tool Kit

By Leonard L. Gordon & Roger A. Colaizzi

Join us as we spotlight select chapters of Venable’s popular Advertising Law Tool Kit, which helps marketing teams navigate their organization’s legal risk. Click here to download the entire Tool Kit, and tune in to the Ad Law Tool Kit Show podcast, to hear the authors of this chapter dive deeper into surviving an FTC investigation in this week’s episode.

If your advertising or marketing practices have triggered a Federal Trade Commission (FTC) investigation and you have received a civil investigative demand (CID) (i.e., administrative subpoena) or access letter, what’s next? Every situation is unique, and every strategy, heavily fact dependent. Below are a few points to consider based on our considerable years of experience handling significant FTC matters and working with and against senior FTC officials.

Keep these points in mind when navigating an FTC investigation:

• This isn’t private litigation, and a scorched‑earth strategy likely will backfire.
• Know that the FTC can play the roles of investigator, prosecutor, and judge.
• The FTC staff’s goals are to determine whether a violation of law has occurred, how to remedy any resultant harm to consumers, and how to deter others from engaging in similar practices. Keeping the lines of communication with FTC staff open from the outset provides the opportunity to correct any staff misimpressions before they solidify, and to help you better understand staff’s concerns and frame your response.
• Consider whether to take steps to proactively remedy the problem the FTC believes may exist, or to put in place a more rigorous compliance program. Although there are countervailing considerations related to admitting “guilt,” dealing early with a possible problem may yield benefits later.
• If you are facing related or overlapping legal problems on multiple fronts (e.g., class actions, state attorneys general), consider a strategy to coordinate a resolution that minimizes redress and fees, and avoids inconsistent injunctive provisions.
• Carefully review the CID’s instructions and defined terms; they contain important information about your procedural rights, relevant deadlines, and the scope of the investigation. The FTC Act and FTC rules also set forth the ground rules that both the FTC and the recipient of a CID must follow.
• Before negotiating with FTC staff on modifications to the CID and a schedule of productions, bring all relevant stakeholders at your company together to carefully assess the volume and nature of the documents, information, and data sought by the CID. The earlier you involve your IT professionals, the better.
• Provide written advocacy when producing information or documents in response to a CID to properly frame the materials.
• Consider taking businesspeople, if relevant, to meetings. Although there are risks, the FTC typically would rather hear from them than from you (or your outside counsel).
• Last, there is a proper protocol for going over the head of staff, and it is important to follow it, as the FTC staff is charged with preparing the arguments provided to the FTC commissioners for any resolution of the case.

To learn more about lead generation, contact Len Gordon or Roger Colaizzi. For more insights into advertising law, bookmark our All About Advertising Law blog and subscribe to our monthly newsletter.