The Federal Trade Commission (FTC) investigates companies and individuals suspected of engaging in fraudulent, deceptive, and unfair business practices. FTC investigations can lead to civil or criminal charges that carry substantial penalties.
While the Federal Trade Commission (FTC) is perhaps most well-known for its role in policing companies and individuals suspected of engaging in consumer fraud, its scope of authority is much broader. In fact, the FTC’s law enforcement jurisdiction is extremely broad, and virtually all companies in the United States are subject to the FTC’s oversight, or at least bound by the laws the FTC enforces in some form.
The FTC has been increasingly active in its law enforcement efforts in recent years. It pursues investigations targeting a wide range of offenses, and it pursues charges in both administrative proceedings and in federal district court. In federal court cases, FTC charges can be either civil or criminal in nature, and penalties can range from civil monetary penalties (CMP) to criminal fines and federal imprisonment.
Federal Defense Lawyers for FTC Investigations and Charges
At Oberheiden P.C., we defend companies and individuals in FTC investigations across the country. Our lawyers include both career federal defense lawyers and former federal prosecutors all of whom bring extensive real-world experience to the table. We also work with a network of non-lawyer federal defense experts located in major cities throughout the United States, whose experience includes assisting with FTC investigations while working for the Federal Bureau of Investigation (FBI), the U.S. Department of Justice (DOJ), and other federal law enforcement agencies.
We have extensive experience defending clients in matters involving all substantive issues falling within the FTC’s jurisdiction. This extends from matters involving allegations of consumer fraud to allegations of anti-competitive conduct in connection with large-scale mergers and acquisitions. Collectively, our lawyers and former federal agents bring centuries of relevant experience to the table, and we use this experience to help our clients avoid charges and penalties by all means available.
FTC Investigations: Is Your Company (or are You) Facing FTC Scrutiny?
The FTC conducts two different types of investigations: informal and formal (or “full”). However, while informal and full investigations involve different procedures, they both have the same potential outcomes; and, as a result, all FTC investigations need to be approached with equal caution and tact.
The FTC Has a Variety of Investigative Tools at Its Disposal
Most FTC investigations begin informally. Typically, the FTC will receive a complaint from a private party (i.e. a dissatisfied customer or disgruntled former employee), or it will identify publicly-available information that suggests a possible violation of the Federal Trade Commission Act (FTCA), the Clayton Act, or another federal statute falling within the agency’s jurisdiction. An informal FTC investigation may also result from a tip from the FBI, DOJ, or another agency. In any case, a prompt response is critical, and the focus should be on resolving the investigation before it leads to formal action.
In full FTC investigations, the agency relies on formal investigative tools such as target letters, civil investigative demands (CIDs), and subpoenas to gather evidence from the target of the investigation and from potential witnesses. Oftentimes, CIDs and subpoenas will request voluminous records, and companies must be extremely careful to both (i) ensure that they adequately comply with the FTC’s demands, and (ii) avoid unnecessarily disclosing records or inadvertently waiving the attorney-client privilege. Of course, it is necessary to defend against the investigation on its merits as well, and building a targeted and strategic defense requires an intimate understanding of the allegations involved.
The FTC Investigates an Extremely Broad Range of Statutory Offenses
Our lawyers and former federal agents handle FTC investigations involving all allegations falling within the agency’s enforcement jurisdiction. This includes, but is not limited to, allegations of:
Unfair, Deceptive, and Fraudulent Practices
As the nation’s chief consumer protection agency, the FTC devotes a substantial portion of its resources to combatting unfair, deceptive, and fraudulent practices in the consumer markets. This includes unfair, deceptive, and fraudulent practices involving the sale of everything from consumer electronics to prescription drugs, and from Internet and data services to investment securities.
The FTC policies companies practices involving the collection of consumer data as well. In today’s world, this is increasingly becoming a central focus for the FTC and other agencies. Companies must have comprehensive compliance policies and procedures in place; and, if they do not, this alone can lead to FTC penalties. We also represent companies and individuals in FTC investigations targeting:
- Advertising violations (print and online)
- Collections scams
- COVID-19 scams
- Financial fraud
- Investment fraud
- Imposter scams
- Phishing and cold call scams
Consumer Data Privacy and Security Breaches
In addition to enforcing the company’s legal obligations with regard to the collection and storage of consumer data, the FTC enforces the company’s legal obligations with regard to protecting consumer data and responding to data privacy and security breaches as well. In consumer data privacy and security breach investigations, companies can face a host of allegations, and avoiding substantial penalties requires a knowledgeable and strategic approach that takes into account both the nature and the scope of the issues at hand.
According toFTC data, identity theft is the most-common complaint the agency receives from consumers. As a result, the FTC is consistently pursuing investigations targeting allegations of identity theft by both companies and individuals.
In most cases, identity theft can be prosecuted as aggravated identity theft under federal law. Aggravated identity theft carries a mandatory prison sentence of two years, which must be served consecutively with any other term of imprisonment imposed.
Anticompetitive Mergers and Acquisitions
Anticompetitive business practices also fall within the FTC’s law enforcement jurisdiction, as they have the potential to lead to widespread consumer harm. Among other anticompetitive activities, the FTC places particular emphasis on scrutinizing mergers and acquisitions that have the potential to dangerously limit the options that are available to consumers. While the FTC’s merger and acquisition investigations that target major companies often make headlines, the FTC routinely investigates corporate transactions outside of the public eye as well.
Other Antitrust Violations
In addition to mergers and acquisitions, the FTC also investigates other corporate activities that raise antitrust concerns. This includes everything from price-fixing and horizontal price restraints to unilateral efforts to monopolize segments of the consumer market. While corporate antitrust investigations are often civil in nature, this is not always the case. Additionally, civil investigations can become criminal if they reveal evidence of intentional illegality, and even civil penalties for antitrust violations can have business-threatening consequences.
FTC Administrative, Civil, and Criminal Defense: What is at Risk When the FTC Files Charges?
When an FTC investigation leads to charges, the focus must promptly shift to preventing the government’s attorneys from meeting their burden of proof. At Oberheiden P.C., we defend companies and individuals in administrative, civil, and criminal FTC cases involving charges under statutes including, but not limited to:
- Health Information Technology (HITECH) provisions of the American Recovery and Reinvestment Act
- Children’s Online Privacy Protection Act (COPPA)
- Clayton Act
- Consumer Leasing Act (CLA)
- Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act)
- Equal Credit Opportunity Act (ECOA)
- Fair Credit Reporting Act (FCRA), Economic Growth, Regulatory Relief, and Consumer Protection Act (EGRRCPA), and Fair and Accurate Credit Transactions Act (FACTA)
- Fair Debt Collection Practices Act (FDCPA)
- Fair Packaging and Labeling Act (FPLA)
- Federal Trade Commission Act (FTCA)
- Gramm-Leach-Bliley Act (GLBA)
- Truth in Lending Act (TILA), Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA), and Credit Card Accountability Responsibility and Disclosure Act (Credit CARD Act)
Due the potential for substantial penalties, when facing FTC enforcement action, it is imperative to swiftly build and execute a comprehensive and targeted defense strategy. At Oberheiden P.C., when we defend companies and individuals during FTC administrative, civil, and criminal enforcement proceedings, our approach includes:
1. Challenging the Investigative and Discovery Processes
Oftentimes, it will be possible to prevent FTC enforcement actions from going to a hearing or trial by raising issues with the investigative process. If the government’s evidence was obtained illegally, or if there are other reasons why the government’s evidence may be either unreliable, insufficient, or inadmissible, our lawyers can use this to seek to prevent the case from going forward. The same is true with regard to the evidence obtained through discovery following the institution of formal litigation proceedings.
2. Pursuing Favorable Pre-Trial Resolutions
We target favorable pre-trial resolutions whenever possible whether this means negotiating a plea deal or filing a successful motion to dismiss. Our lawyers will thoroughly assess the merits of the government’s case and advise you regarding the options you have available. If an unfavorable result appears likely should the case move forward, we will seek to negotiate a favorable outcome that avoids the inherent uncertainty of litigation. If it is clear that the government does not have a viable case, we will work to convince the tribunal that a hearing or trial is unwarranted and a waste of government resources.
3. Providing Effective Defense Representation During Hearings and Trials
When it is in our client’s best interests to take an FTC enforcement action to an administrative hearing or civil or criminal trial, we provide defense representation that is custom-tailored to the circumstances at hand. This includes not only the substance of the allegations and the volume of the government’s evidence but also the nature of the proceedings. Our lawyers have extensive experience on both sides of federal administrative, civil, and criminal proceedings, and we rely on this experience to achieve positive outcomes for our clients.
4. Arguing For Mitigated Sentencing When Necessary
If it is not possible to avoid sentencing entirely, then we shift our focus to mitigating the consequences of our client’s FTC investigation to the fullest extent possible. Depending on the circumstances involved, this could mean negotiating a reduced fine that allows our client to remain in business without filing for bankruptcy, or it could mean keeping our client out of federal prison. Regardless of the circumstances involved, we use our experience to protect our clients to the fullest extent possible, and we do so by all means available.
5. Preserving Grounds for Appeal and Challenging Unfavorable Outcomes Through Appropriate Channels
Since the outcome of litigation is inherently uncertain, we also maintain a focus on preserving all available grounds for filing an appeal throughout the pre-litigation and litigation processes. In addition to our litigators, we have experienced appellate counsel as well, and we are able to represent companies and individuals in appeals from administrative, civil, and criminal FTC enforcement proceedings at all levels.
FAQs: Defending Against FTC Investigations and Enforcement Proceedings
Q: Why is my company (or why am I personally) being targeted by the FTC?
There are several potential triggers for an FTC investigation. The most likely scenario is that someone typically either a customer or employee has filed a complaint with the agency. While these complaints occasionally raise legitimate issues, they are frequently misguided, and they are often motivated by either (i) a personal vendetta, or (ii) a fundamental misunderstanding of the protections afforded by federal law. Even so, the FTC has an obligation to investigate these complaints; and, even if the complaint itself is misguided, the FTC may find something else that it can target in an investigation.
FTC investigations can also be triggered by publicly-available information and by information received from other agencies. In these cases, investigations can move swiftly, and targeted companies and individuals must react promptly in order to avoid falling behind. At Oberheiden P.C., we take a proactive approach to defending clients during FTC investigations, and our lawyers and former federal agents are available 24/7.
Q: Is it necessary to retain legal counsel for an FTC investigation?
Yes. If your company is the target of an FTC inquiry (or if you personally are being targeted), your first step should be to engage experienced federal defense counsel. You need to get out in front of the investigation to the extent that you can, and you need to execute a defense strategy that is informed by prior experience handling FTC inquiries.
Q: What are the potential outcomes of an FTC investigation?
An FTC investigation can have five potential outcomes: (i) no charges or liability, (ii) a negotiated pre-charge resolution, (iii) administrative charges, (iv), civil charges, or (v) criminal charges. In all cases, the focus should be on resolving the FTC’s investigation without charges being filed. If it is not possible to avoid charges entirely, then an informed decision will need to be made about whether to work toward negotiating a resolution or fight for an outcome that absolves your company (or you personally) of any and all potential liability.
Q: What are the potential penalties in an FTC enforcement proceeding?
The potential penalties in an FTC enforcement proceeding depend on whether the proceeding is administrative, civil, or criminal in nature. In administrative and civil proceedings, penalties can include fines, other financial penalties, injunctions, and loss of eligibility for government programs and contracts. In criminal cases, these same types of penalties remain on the table, but individuals targeted for prosecution can face long-term federal imprisonment as well.
Q: What legal defenses are available during FTC investigations and enforcement proceedings?
The legal defenses that are available during FTC investigations and enforcement proceedings are almost entirely dependent on the specific allegations involved. Due to the breadth of the statutes falling within the FTC’s enforcement jurisdiction, developing an informed defense strategy first requires an understanding of the specific statutory provisions that are at issue. Once this has been determined, then it is possible to identify the defenses that are available to build a strategy focused on convincing the FTC’s agents and attorneys that penalties are unwarranted.
Schedule a Free Consultation with a Senior FTC Defense Lawyer at Oberheiden P.C.
If you need legal counsel for an FTC investigation or enforcement proceeding, we encourage you to contact us promptly. For a free consultation with one of our senior FTC defense lawyers, call 214-251-4238 or inquire online now.