You Have Received a Regulatory Subpoena. Now What?

By:  Richard B. Newman

State AGs can issue subpoenas during an investigation, before initiating a legal case.  Receiving a subpoena from an AG can be an intimidating prospect.  Related investigations often seek substantial monetary settlements from online marketers.

Generally speaking, AGs possess investigatory powers that permit them to seek documents, testimony and other information from witnesses and potential targets in order to assess whether an advertising law has been violated.   When receiving a subpoena, immediately contact an online marketing compliance lawyer who should critically assess whether or not the subpoena is part of a  “friendly,” independent fact-finding investigation, or whether your business is an actual target.

Upon receipt of a subpoena, you must be certain that you immediately preserve all relevant paper and electronically stored information.  AGs are increasingly seeking audio and video recordings of consumer communications so is imperative that you timely select files for collection, and notify staff and third party vendors of their obligation to cease routine destruction and preserve metadata.  The failure to implement a methodical and adequate litigation hold may result in the imposition of rather severe sanctions.

Experienced regulatory defense counsel will also meet and confer with the relevant regulatory body in order to negotiate modifications to the scope of the subpoena, ascertain the focus of the investigation and whether there are any production priorities.  The subpoena itself may also be objectionable on various grounds, including the creation of an undue burden.  Some documents and information may simply prove to be inaccessible.

The subpoena may also demand the production of confidential and secret documentation.   Subpoenas inherently tend to be drafted broadly and, whether intentional or not, often demand confidential information.  Legally qualified confidential materials and communications may be considered privileged in nature.  Disclosure may be prohibited.  The potential for a stipulated confidentiality agreement in order to preserve trade secret information should be considered.

Depending upon the relevant circumstances, you may want to consider seeking judicial relief in the form of a protective order or a motion to nullify the subpoena.  There is a very short time frame in order to seek such relief, further illustrating the importance of notifying experienced counsel immediately upon notice or receipt of a subpoena.

When navigating the process of a regulatory subpoena and investigation, it is vital that your attorney have experience designing document review and preservation strategies within the interactive advertising space because counsel has an affirmative duty to proactively supervise the collection of relevant information.  In fact, there is legal precedent, both statutory and in case law, that establishes that it is not enough for counsel to simply give instructions to clients and count on them to fulfill their discovery obligations.

If you suspect that you may be a potential target, deliberately consider how to quickly mitigate potential exposure.  Do not underestimate the importance of your third party marketing agreements and telemarketing scripts either as they are almost always examined by regulators.  Efforts to educate and monitor third party marketers are also often the subject of inquiry.

You may be requested to provide sensitive documentation or testimony regarding the business interests of valued clients.  Therefore, you will want to carefully consider how to protect those interests, as well as your own.

Failing to properly comply with a subpoena can have serious consequences.  You do, however, have options.  If you have received a subpoena or civil investigative demand from the Federal Trade Commission, the Consumer Financial Protection Bureau, a United States Attorney, a State AG or a local regulatory agency, call an experienced regulatory defense attorney immediately to assess your compliance obligations and to mitigate any potential monetary liability.

This matter should be of interest to any company or individual engaging in internet marketing, including corporate counsel.  If you are interested in discussing the design and implementation of meticulous compliance controls, or if you are already the subject of a regulatory investigation or enforcement action, please contact the author at (212) 756-8777, rnewman@hinchnewman.com and www.hinchnewman.com.

Richard B. Newman is a leading FTC Compliance Lawyer at Hinch Newman LLP specializing in advertising and digital media matters. His practice includes conducting legal compliance reviews of advertising campaigns, representing clients in investigations and enforcement actions brought by the Federal Trade Commission and state attorneys general, commercial litigation, advising clients on promotional marketing programs, and negotiating and drafting legal agreements.

Information conveyed in this article is provided for informational purposes only and does not constitute, nor should it be relied upon, as legal advice. This information is not intended to substitute for obtaining legal advice from an attorney. No person should act or rely on any information in this article without seeking the advice of an attorney.