The US Department of Justice and other Federal agencies use a Civil Investigative demand to gather evidence to prove civil charges’ authenticity. By definition, a Civil Investigative demand only signifies inquiries made in search of the truth. However, if the CID leads to solid evidence, it might cause the pressing of criminal charges.
Both the Federal Trade Commission (FTC) and Consumer Financial Protection Bureau (CFPB) have the authority to raise such CIDs. They mostly do so to obtain documents related to testimonies in regard to privacy, data security, financial fraud, and deceptive marketing.
Since there are multiple risks involved in facing any Federal agency, the serving of CID should be taken seriously. Ignorance in the matter could prove dangerous and cause damage to your reputation. If you are also the subject of a CID serving, here are some considerations you must keep in mind.
What exactly does a CID imply?
CID is basically a form of administrative subpoena, and that has two powerful implications. Firstly being administrative in nature, the CID is not subject to approval from the court.
This means that agencies serving the CID can do so at their discretion without any interference. In fact, these CIDs could be issued without any formal legal proceedings.
Second, being the form of a subpoena, the CID is eligible for judicial enforcement. Meaning that though a judge’s approval is not required, agencies can request his assistance in case of non-compliance of the CID from the other party.
Non-compliance with a CID could lead to contempt and a subsequent federal criminal charge. Read on to know things to keep in mind while responding to a Civil Investigative Demand.
What should a party do after receiving the CID?
Once the party receives a CID from any Federal agency, they should take the matter very seriously. Firstly understand the scope of the request. A CID could just ask you for some papers, or it may ask for the testimony of a company representative.
You should identify if an individual is the recipient of the CID, how much effort it would need to respond to the request, and whether your company would be able to meet the deadline set for adherence to the CID.
Once you receive the CID, stop all the proceedings that could damage the documents that are needed for the CID. Once the recipient has analyzed all the above points, it should contact the attorney and arrange an initial conference.
This is known as the ‘meet and order,’ and mostly, you have to conduct it within 14 days of receiving the CID. During the meeting, the parties would discuss how they will provide electronic documents; negotiate any changes to the CID requirements so that the burden on the recipient is reduced.
What happens if the party does not wish to respond to the CID?
If the party feels that the CID is wrong and is unable to solve the matter with its attorney, it should try and limit or quash the CID. Under the FTC’s rule of practice, if that is the case, the recipient could raise an application for quashing within 20 days of receiving the CID.
The FTC commissioners would then review this petition. One of them will decide on whether they can quash or limit the CID. On the flip side, if your arguments are not strong enough, the commissioner might choose to deny the petition.
Remember that when you raise a plea to quash or limit the CID, the process becomes public in nature. These are public documents that are placed in the FTC public records.
This means that there is no secrecy left, and your matter is now in the open for everybody to ponder and comment on. The agency can also go to the judge and ask them to compel the recipient to provide them the necessary documents. Again this is a situation that most parties want to avoid.
What happens when the company complies with the CID?
Once the recipient submits all the information that is required, the agency’s staff has to review the file and give their verdict. It will take some time for their team to go through the complete information.
The response period depends on the complexity of the information, stretched resources, and other external factors. Publicly the FTC admits that they are bound to respond to CID replies within six months of receiving them.
During this period, the FTC cannot reveal any part of the CID in public. That means the critical data you have provided to the agency remains safe with them.
Once the staff is done with the review, they can act in various forms. Firstly they could close the CID without any further action. This happens in case you give them the complete detail that was required to prove your innocence in the matter.
The second option could be the agency contacting you for a possible chance of legal settlement of the matter. In case the party is unable to reach a point of a legal settlement with the agency, they could file a lawsuit.
In case this situation arises, the agency is free to use the documents you provided to make their case stronger. This implies that your papers are now up for public disclosure and your reputation at stake. The agency, however, gives you a chance to stop this from happening by solving the matter before it escalates.
It is usual for Federal agencies to serve CID to parties. However, the party in question has to respond to these CID rather seriously. This is because the agencies have complete discretion to take the matter in court if required.
Once that happens, your prestige and reputation are at stake. The consumers, as well as competitors, get to know about the case, and that is not a fruitful situation.
But, if you are sensible enough, try and keep the matter in wraps. Consult your attorney and professionally respond to the CID. Your intelligence in the matter will lead to everything ending amicably without any information to external parties.