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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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Speakers

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The FTC’s Mission
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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?
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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
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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?
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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?
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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
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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”
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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
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 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
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 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)
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 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
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 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
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Consumer Complaints Industry-Wide Sweeps
Competitors
Monitoring/ “Surf” Days
Media Stories

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Why The Rise In Collaborations?
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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
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Respond
Re-Evaluate
Train
Monitor
Maintain

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When A CID Issues
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 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
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Read Thoroughly
Preserve Immediately
Negotiate Carefully
Maintain Confidentiality
Produce Cautiously
Choose Wisely

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Getting To Settlement
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Pre/Post-Litigation Timing
Monetary/Injunctive Relief Settlement Documents

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Rachel Hirsch
rhirsch@ifrahlaw.com
Twitter: @TheRealMsHirsch
Blog: www.ftcbeat.com
Lori Kalani
lkalani@cozen.com
Twitter: @lorikalani
Michael C. Turpen
Mturpen@riggsabney.com
Twitter: @MikeCTurpen
Questions?

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THANK YOU!