Power in Numbers: Insight Into State AG/FTC Collaborations

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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

http://www.ifrahlaw.com/

www.ifrahlaw.com

Speakers



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



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



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”



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.



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.



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



“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.



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”



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)



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



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



Triggers For Investigation

Consumer Complaints Industry-Wide Sweeps

CompetitorsMonitoring/ “Surf” Days

Media Stories



Why The Rise In Collaborations?

POWER IN NUMBERS!

Availability of Civil Penalties Under State Law

Information Sharing

Broad Investigative Authority

Pooling of Resources



FTC/STATE AG COLLABORATIONS – CASE STUDY #1









FTC/STATE AG COLLABORATIONS – CASE STUDY #






Lessons From Recent Enforcement Actions

Respond

Re-Evaluate

Train

Monitor

Maintain



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.



Navigating The CID Response

Read Thoroughly

Preserve Immediately

Negotiate Carefully

Maintain Confidentiality

Produce Cautiously

Choose Wisely



Getting To Settlement

Pre/Post-Litigation Timing

Monetary/Injunctive Relief Settlement Documents



Rachel [email protected]: @TheRealMsHirschBlog: www.ftcbeat.com

Lori [email protected]: @lorikalani

Michael C. [email protected]: @MikeCTurpen

Questions?


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THANK YOU!

