5 reforms when FTC issues civil investigative demands

WASHINGTON, D.C. - 

If a federal investigation into your dealership or finance company ever happens, perhaps here is some good news regarding how it might unfold.

Federal Trade Commission acting chairman Maureen Ohlhausen on Monday announced several internal process reforms in the agency’s Bureau of Consumer Protection that are designed to streamline information requests and improve transparency in commission investigations.

The FTC explained the reforms are part of Ohlhausen’s efforts to further the agency’s mission to protect consumers and promote competition without unduly burdening legitimate business activity.

“It is our duty to carry out our vital mission in the most effective and efficient way possible,” Ohlhausen said. “The changes announced today will reduce unnecessary and undue burdens of FTC investigations without compromising our ability to protect American consumers.”

This past April, Ohlhausen announced new internal working groups on agency reform and efficiency to improve processes and focus resources where they will do the most good for the public. As part of this initiative, Ohlhausen directed the Bureau of Consumer Protection to identify best practices to streamline information requests and improve transparency in investigations. 

The process reforms announced on Monday addressed civil investigative demands (CIDs) in consumer protection cases and include:

—Providing plain language descriptions of the CID process and developing business education materials to help small businesses understand how to comply

—Adding more detailed descriptions of the scope and purpose of investigations to give companies a better understanding of the information the agency seeks

—Where appropriate, limiting the relevant time periods to minimize undue burden on companies

—Where appropriate, significantly reducing the length and complexity of CID instructions for providing electronically stored data

—Where appropriate, increasing response times for CIDs (for example, often 21 days to 30 days for targets, and 14 days to 21 days for third parties) to improve the quality and timeliness of compliance by recipients.

In addition, to ensure companies are aware of the status of investigations, the FTC said it will adhere to its current practice of communicating with investigation targets concerning the status of investigations at least every six months after they comply with the CID.  

At least one compliance expert applauded the FTC’s actions. Steve Levine currently is chief legal and compliance officer at Ignite Consulting Partners.

"I’m encouraged by the acting chairman’s proposals for internal reform,” Levine said in an email to SubPrime Auto Finance News. “These will increase transparency and understanding and help small businesses meet the expectations of the FTC. 

“I’m especially glad to see emphasis on plain language and business education as CIDs can take a small business by surprise and they are often unprepared to respond as quickly as is required,” continued Levine, who also has been chief legal and compliance officer of AutoStar Solutions, Sigma Payment Solutions and SecureClose as well as general counsel for Regional Acceptance Corp.

The FTC noted Ohlhausen initiated this project in part to address concerns raised by members of Congress and the American Bar Association Antitrust Section’s Presidential Transition Report about the investigational burdens on legitimate companies.

“The agency continues to consider other reforms,” the FTC said.

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