Introduction: What Is the Federal Trade Commission (“FTC”)?

The Federal Trade Commission (“FTC”) is a federal agency that enforces consumer protection laws and competition regulation in the United States. Its dual mission is (1) to protect consumers (2) promote competition. It protects consumers by preventing unfair, deceptive, or fraudulent practices in the marketplace through its authority to investigate and sue for violations of the law. It promotes competition by keeping prices low and both quality and consumer choice high through its power to challenge anticompetitive mergers or other business practices that could harm consumers. The FTC has investigative, enforcement, and rulemaking authority.

Briefly, in the United States, the federal laws enforced by the FTC aim to prevent fraud as well as unfair and deceptive business practices while also promoting competition. The key statute regulating consumer protection is the Federal Trade Commission Act. This statute is enforced by the FTC and vests it with the authority to prevent injury to consumers or prevent impediments to competition.

What is the Investigative Scope of the FTC?

Under the Federal Trade Commission Act, the FTC is authorized to prosecute any inquiry necessary to its duties; to gather information; and to investigate the business, conduct, and practices of any person or entity that affects commerce (with limited exceptions). The Act also authorizes the FTC to issue subpoenas to parties and require the production of documentary and/or electronic information as well as the testimony of named individuals—both of which must be related to the matter under investigation. As a part of its investigative powers, the FTC is authorized to seek monetary redress, makes legislative recommendations to Congress, and prescribe rules to prevent certain unfair or deceptive practices.

Before the initial complaint is filed, FTC investigations are generally non-public. However, the FTC may determine from time to time that disclosure of the investigation is appropriate. Additionally, the FTC is authorized to deem it necessary to share certain confidential information with other federal enforcement agencies.

Consumer Protection Under the Federal Trade Commission Act (“FTC Act”)

The Federal Trade Commission Act (“FTC Act”) provides that unfair or deceptive acts or practices that affect commerce are unlawful. The term “deceptive” refers to acts or practices that involve material misrepresentations or omissions that are likely to mislead a consumer acting reasonably under the circumstances. The term “unfair” refers to acts or practices that are likely to cause substantial injury to consumers that the consumers cannot reasonably avoid and that cannot be outweighed by countervailing benefits.

Competition Under the FTC Act and the Clayton Act

The FTC enforces its mission to ensure healthy competition by enforcing antitrust legislation—specifically, Section 5(a) of the FTC Act and the Clayton Act. Section 5(a) of the FTC Act prohibits unfair methods of competition such as conduct that would constitute violations of the Clayton Act or the Sherman Act. The Clayton Act prohibits corporations from undertaking certain acquisitions that would result in substantially less competition in the marketplace.

FTC Subpoena versus FTC Civil Investigative Demand (“CID”)

The FTC’s Bureau of Competition often uses subpoenas as a critical part of its investigations into the alleged competition and antitrust violations. Under the amendments to the FTC Act, the Bureau is also authorized to use “civil investigative demands” (“CIDs”) for alleged competition and antitrust violations. A subpoena can either demand document production or witness testimony regarding the matter under investigation by the FTC. A CID can also be used to request documents and elicit testimony; however, CIDs are broader in that they may require the recipient to make written reports or answer certain questions. Also, with respect to investigations for unfair or deceptive practices or acts, the FTC can only use CIDs.

In summary, the FTC has broad authority under its investigative power to subpoena documents and elicit testimony as well as issue CIDs in connection with both civil and criminal investigations, as explained by the FTC Defense Attorneys at Oberheiden, P.C.

Failure to Comply with an FTC Subpoena

The failure to comply with the terms of FTC subpoenas can be devastating for your case. If an individual fails to comply with the subpoena, the FTC is authorized to seek enforcement of its terms in the district courts of the United States. To do this, the FTC would file a petition for enforcement and the individual would have to file a response. The court is then authorized to order compliance. At this point, if the party still fails to comply with the terms of the subpoena, the individual may incur substantial penalties for contempt. The individual could also be charged with obstruction of justice and/or charges for providing false information to the FDA depending on the circumstances—both of which are criminal offenses that could lead to penalties and jail time.

It is possible, however, for an individual to challenge a subpoena in cases where its terms are unreasonable, oppressive, or excessive. An FTC subpoena attorney experienced in handling the subpoena process and with FTC investigations can help you make this determination. If it is decided to have merit, your attorney can file a petition to limit or quash the subpoena. The FTC has the authority at this stage to decide whether or not to have the subpoena enforced.

How to Respond to FTC Subpoenas

Receiving a subpoena from the FTC can be a worrisome time. It may be requesting mounds of documents over a span of decades and may require that you appear to provide testimony. While it can be tempting to try to ignore the subpoena, this is detrimental. Ignoring the problem will not make the matter go away. Fortunately, there are several important steps that you can take to prepare for the subpoena and investigative process. Below are several of these steps:

• Always retain a defense attorney experienced in the federal subpoena process and in negotiating and dealing with the FTC in internal investigations.
• Make sure you comply with all deadlines and requests on the subpoena. Failure to do so may lead to contempt and obstruction of justice charges. If you are unable to comply with all terms by a certain deadline, your FTC subpoena lawyer may be able to request an extension.
• Ask questions to your attorney. Remember, your attorney is on your side. If there is something you do not understand or have questions regarding the compliance of the subpoena or document production, ask your attorney.
• Do not forget that some information may be subject to privilege. As some examples, certain information that is protected by the attorney-client privilege cannot be compelled by the subpoena. Additionally, if documents or testimony would incriminate you—lead to criminal liability—you can claim your Fifth Amendment right against self-incrimination. Your FTC subpoena lawyer can help you decide whether a document is privileged material.
• When preparing documents to submit, never falsifying anything. The same applies to testimony: never lie. It is a good practice to always be prompt and truthful throughout the subpoena process.

“Retaining legal counsel is definitely the most important step you can take to protect yourself in an active FTC investigation. Your attorney will not only help you prepare for document production and testimony, but your attorney can also ascertain your role in the FTC's investigation, which helps us structure a personalized defense strategy.” – Dr. Nick Oberheiden, Founding Attorney of Oberheiden P.C.

Conclusion

The FTC is a powerful federal agency that is vested with the authority to protect consumers and promote competition in the United States. In order to accomplish this, the FTC may investigate alleged instances of fraud and unfair and deceptive practices as well as investigate situations where competition may be threatened. The FTC Act is the main statute enforced by the FTC. Subpoenas are frequently used by the FTC to request documentary evidence and/or elicit testimony from individuals. Failure to comply with the terms of an FTC subpoena could lead to penalties for contempt. It is important to remember that following the subpoena is critical to your defense. The best approach to take after receiving a subpoena from the FTC is to retain a dedicated FTC subpoena attorney who is trained in navigating the subpoena process and is experienced in negotiating with the FTC.