On July 17th, the Federal Trade Commission (FTC) announced reforms to its civil investigative demand (CID) process designed to streamline information requests and improve transparency in FTC investigations. The process reforms that will be implemented for consumer protection cases 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 recipient; and
- Ensuring companies are aware of the status of investigations by adhering to the current practice of communicating with investigation targets concerning the status of investigations at least every six months after they comply with the CID.
The reforms are part of the FTC’s broader initiative to implement Presidential directives aimed at eliminating wasteful, unnecessary regulations, and processes. The FTC had previously announced other efforts that are already underway:
- Forming new groups within the Bureau of Competition and the Bureau of Consumer Protection working to eliminate unnecessary costs to companies and individuals who receive CIDs.
- Reviewing FTC dockets and closing older investigations, where appropriate.
- Working to identify unnecessary regulations that are no longer in the public interest.
- The FTC Bureau of Consumer Protection is actively reviewing closed data security investigations to extract key lessons for improved guidance and transparency.
- The FTC Bureaus of Consumer Protection and Economics are working together to integrate economic expertise earlier in FTC investigations to better inform agency decisions about the consumer welfare effects of enforcement actions.
- Acting Chairman Ohlhausen has established a new capability within her office to collect and review ideas on process streamlining and operational efficiency opportunities from across the agency.
The CFPB, which originally modeled many of its own investigatory processes on the FTC model, should consider whether any of these reforms make sense for its own CIDs, which have been frequently criticized as being expansive in scope, vague, and unduly burdensome.