power in numbers: insight into state ag/ftc collaborations
TRANSCRIPT
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Power in Numbers: Insight Into State AG/FTC Collaborations
Affiliate Summit East Conference: August 1, 2016
Rachel Hirsch, Senior Associate
Lori Kalani, Co-Chair State AG Group
Michael C. Turpen, Shareholder
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The FTC’s Mission
FTC’s “Bread and Butter” Mission Falls Primarily Into Three Categories:
1. Fighting Fraud
2. Stopping Deceptive Advertising
3. Protecting Consumer Privacy
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What’s In The FTC’s Arsenal?
The FTC Enforces Consumer Protection Statutes, Including:
Fair Credit Reporting Act
Fair Debt Collection Practices Act
Federal Trade Commission Act
Gramm-Leach-Bliley Act
Lanham Trade-Mark Act
CAN-SPAM Act
Telemarketing And Consumer Fraud And Abuse Act
Truth in Lending Act
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The FTC’s Most Powerful Weapon
The Most Powerful Weapon The FTC Uses To Combat Consumer Fraud
Section 5(a) Of The Federal Trade Commission Act
Prohibits “Unfair Or Deceptive Acts Or Practices In Or Affecting Commerce”
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What Constitutes “Unfair” Acts Or Practices?
An Act Or Practice Is “Unfair” Where It
• Causes Or Is Likely To Cause Substantial Injury To Consumers;
• Cannot Be Reasonably Avoided By Consumers; And
• Is Not Outweighed By Countervailing Benefits To Consumers Or To Competition.
Public Policy (As Established By Statute), Regulation, Or Judicial Decisions May Be Considered.
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What Constitutes “Deceptive” Acts Or Practices?
An Act Or Practice Is Deceptive Where
• A Representation, Omission, Or Practice Misleads Or Is Likely To Mislead The Consumer;
• A Consumer’s Interpretation Of the Representation, Omission, Or Practice Is Considered Reasonable Under The Circumstances; And
• The Misleading Representation, Omission, Or Practice Is Material.
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FTC Act – Enforcement
Statutory Right To Obtain Temporary Restraining Order & Preliminary Injunctions Against Any Person, Corporation, Or Partnership That Is Violating/About To Violate Any Law Enforceable By The FTC If The FTC Believes It To Be In the Public Interest.
Requires Standard Balancing Of Equities, Consideration of FTC’s Likelihood of Success.
Permits Courts To Exercise All Ancillary Equitable Powers In Action For An Injunction, Including:
• Asset Freezes• Appointment of Receivers• Restitution And Other Relief
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“Mini-FTC Act”
Each Of The 50 States Has Its Own Version Of the FTC Act – Collectively Known As The “Little Acts.”
Generally Tailored To Meet Specific Policy Preferences Of Each Particular State.
Usually Applied To State-Specific Matters, While FTC Act Used To Regulate Broader Consumer Protection Issues On National Scale.
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Role of State Attorney Generals
Moving Force Behind All Multi-State Investigations
Akin To Managing Partner Of Law Firm
Enforcement Arm Of State For Consumer Protection
Broad Discretion To Pursue Matters Of “Public Interest”
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Election Vs. Appointment Of AGs
Popularly Elected In 43 States (Including CA), Guam, D.C.
Appointed By Governor In 5 States (AK, HI, NH, NJ, WY), 4 Jurisdictions (American Samoa, Northern Mariana Islands, Puerto Rico, Virgin Islands)
Selected By Secret Ballot Of Legislature (ME)
Selected By State Supreme Court (TN)
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National Association Of Attorney Generals (NAAG)
Mission: “To Facilitate Interaction Among Attorneys General As Peers And To Facilitate The Enhanced Performance Of Attorneys General And Their Staffs.”
Membership: Attorneys General Of The 56 States And Territories
Key Projects:
• Antitrust• Bankruptcy• Civil Rights• Consumer Protection• Criminal Law• Cybercrime
• Environment• Legislation• Medicaid Fraud• Supreme Court• Tobacco• Violence Against Women
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FTC’s Joint Mission With State AGs
Joint Investigations And Enforcement• Robocalls• Timeshare Resale Fraud• Weight Loss Scams• Mortgage Rescue Scams• Business Opportunity Schemes
Education And Outreach• National Consumer Protection Week• Military Consumer Protection Week
Sharing Consumer Complaints• Access To FTC Sentinel Database
Holding Common Ground Events And Working Together Through Task Forces And Working Groups
Charities
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Triggers For Investigation
Consumer Complaints Industry-Wide Sweeps
CompetitorsMonitoring/ “Surf” Days
Media Stories
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Why The Rise In Collaborations?
POWER IN NUMBERS!
Availability of Civil Penalties Under State Law
Information Sharing
Broad Investigative Authority
Pooling of Resources
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FTC/STATE AG COLLABORATIONS – CASE STUDY #1
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FTC/STATE AG COLLABORATIONS – CASE STUDY #2
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FTC/STATE AG COLLABORATIONS – CASE STUDY #3
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FTC/STATE AG COLLABORATIONS – CASE STUDY #
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FTC/STATE AG COLLABORATIONS – CASE STUDY #5
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Lessons From Recent Enforcement Actions
Respond
Re-Evaluate
Train
Monitor
Maintain
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When A CID Issues
Call A Lawyer.
Preserve Your Documents.
• When You Receive A CID/Subpoena, All Relevant Documents And Electronic Information Must Be Preserved Through A Legal Hold.
• Make A Concerted Effort To Identify Key Employees And Systems Using Storing Information.
• Have Lawyers Draft a Legal Hold That Clearly Defines The Information That Must Be Preserved.
• Hold Should Be Issued To A Carefully Identified Group of Employees That May Have Knowledge Of The Potentially Responsive Information.
• Revisit Hold On A Regular Basis.Failure To Implement An Adequate And Timely Legal Hold May Result In Sanctions.
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Navigating The CID Response
Read Thoroughly
Preserve Immediately
Negotiate Carefully
Maintain Confidentiality
Produce Cautiously
Choose Wisely
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Getting To Settlement
Pre/Post-Litigation Timing
Monetary/Injunctive Relief Settlement Documents
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Rachel [email protected]: @TheRealMsHirschBlog: www.ftcbeat.com
Lori [email protected]: @lorikalani
Michael C. [email protected]: @MikeCTurpen
Questions?
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THANK YOU!