Did Your Business Receive a CID? FTC Investigations are Going Strong

What is a CID?

Section 20 of the FTC Act gives the Commission authority to issue CIDs to investigate potentially unfair or deceptive acts or practices.  CIDs are a form of compulsory process—like a subpoena—that the Commission can use to seek documents, testimony, tangible things, reports, or answers to questions.  The FTC is tasked with using its CID authority responsibly, tailoring requests to target the specific information needed without unnecessarily burdening businesses and individuals.

Who receives CIDs?

The FTC uses CIDs in a few contexts.

First, teh FTC uses CIDs to seek information from people or businesses it thinks may have violated the law.  But the fact you received a CID does not necessarily mean you’re the target of an investigation.  The Commission also sends CIDs to people and businesses that may have information related to the subject of an ongoing investigation.  If you get a CID, it should identify the subject matter of the investigation and any laws or rules we think may have been violated.

Is a response mandatory? 

CIDs are legally enforceable demands.  If you get one, you must respond completely and on the specified schedule, unless you reach an alternative agreement with BCP staff and their management.

If you want to request more time or have another concern, you must reach out to start that discussion with BCP staff as soon as possible.   Do so with the assitance of a seasned FTC CID lawyer.

Consistent with the FTC’s Rules of Practice, BCP staff may work with CID recipients to narrow requests, or sequence responses in a way that makes sense for the agency’s and business’s schedules, if appropriate to the situation.  BCP staff may also ask you to sign a tolling agreement.  But this is not an opportunity for unnecessary delay.  And any discussion must happen well in advance of your deadline to respond.

Timing of responses.

If you receive a CID, there are two deadlines you should note right away.

First, find the deadline for response, which will be printed clearly on the CID form.  Then, identify the deadline to contact and engage and FTC CID lawyer to meet with BCP staff.

Although it can be waived, the FTC’s Rules of Practice generally require such a meeting relatively quickly after receiving a CID.  That meeting is your counsel’s opportunity identify any issues, problems, or concerns that might affect your ability to comply.

Compliance Certification Requirement.

CIDs include a Certification of Compliance that recipients must sign to certify their compliance with the CID and verify the truth and accuracy of any interrogatory responses.  Federal law requires that CID recipients produce a “sworn certificate” assuring the Commission that the recipient has produced “all of the documentary material” responsive to the CID, and that interrogatory answers have been made “under oath.”. See 15 U.S.C. § 57b-1(c)(11), (13); 28 U.S.C. § 1746.

Are there consequences for noncompliance?

Do not ignore or refuse to comply with a CID.  If you do not respond or cooperate, you are impeding FTC law enforcement efforts,and the agency may seek judicial enforcement of the Commission’s process.

Note, in recent litigation, a court sanctioned Amazon.com — and purpotedly found that the company had engaged in conduct “tantamount to bad faith” — in part because it had allegedly wrongfully withheld documents responsive to a CID.  The evidence the court cited included the purpotedly inaccurate compliance certificate that a company lawyer had signed.

So, what’s the bottom line? 

The FTC wants to work cooperatively with CID recipients to get the information it needs, purportedly without unnecessary burden on legitimate businesses and judicial intervention.  However, preventing harm to consumers is the agency’s priority and the FTC moves cases in a timely manner.

Informational purposes only. Not legal advice. This article is not intended to and should not be construed as legal advice. May be considered attorney advertising.