On March 26, 2018, the staff of the Federal Trade Commission’s Bureau of Consumer Protection (“BCP”) filed a comment in response to the Consumer Financial Protection Bureau’s Request for Information on the procedures for issuing Civil Investigative Demands.
In large part, the comment summarizes the BCP’s experience with its own CID program and highlights the BCP’s recent reform efforts. However, the FTC staff comment also provides recommendations to the CFPB, several of which are summarized here:
- The comment notes that the CFPB Director, Assistant Director, and Deputy Assistant Directors of the Office of Enforcement all have the authority to issue CIDs, whereas this authority at the FTC is limited by statute to the FTC Commissioners themselves, who review and often modify CIDs or even decline to issue them. FTC staff suggest that review by a “very senior official” is appropriate because of the seriousness of a CID and that the CFPB may wish to consider revising its delegation of authority accordingly. Moreover, the comment emphasizes that agency-head approval “ensures that there will be an independent assessment of the costs and benefits of the CID by someone who is not conducting the investigation.”
- FTC staff also recommend applying an oversight approach to opening and closing investigations that is more consistent with the FTC’s. The heads of both agencies delegate the authority to initiate investigations. At the FTC this delegation includes delegation to managers in the BCP, led by the BCP Director. The comment notes that the BCP Director meets “regularly” with the Commissioners to maintain a close understanding of their enforcement priorities and objectives. In turn, the BCP Director must ensure that the other BCP managers make decisions about opening, furthering, or closing investigations consistent with those priorities and objectives.
- The comment suggests that the CFPB use its response to the RFI to publicly “ratify” the agency’s recently adopted policy that CIDs include a more specific description of the relevant investigation and how the requested information is connected to that investigation. The comment notes that the CFPB’s new policy brings it in line with FTC practice.
- FTC staff also suggest that the CFPB pair its meet-and-confer requirement with delegated authority to enforcement staff allowing the staff to modify the time and manner of complying with a CID, contingent on a CID recipient demonstrating progress toward compliance with the information demands.
- The BCP staff also recommend that the CFPB shorten and simplify the production requirements for electronically stored information. The comment notes that the BCP’s guidelines are “significantly shorter and less complex.”
- The comment also recommends that the CFPB continue to provide witnesses in investigational hearings with the same rights afforded by 12 C.F.R. § 1080.9, including the limitations on the role of the witness’s counsel that are described therein (such as the prohibition on objecting to questions for reasons other than to defend a privilege). The comment notes that the Bureau’s approach on this topic is consistent with the FTC’s approach in its own investigational hearings.
- FTC staff recommend that, when issuing a CID to an entity for oral testimony, the CFPB continue to make clear that the standards in Federal Rule of Civil Procedure 30(b)(6) apply (such as the requirement that the CID advise a nonparty entity of its duty to designate persons to testify on its behalf). The comment recommends that the CFPB continue both to include language in CIDs that tracks Rule 30(b)(6) and to state publicly the agency’s intent to follow case law applicable to the Rule, including case law establishing that the oral testimony will be binding upon the entity. To avoid ambiguity, the comment recommends against incorporating Rule 30(b)(6) by reference.
- Similarly, the comment recommends that the CFPB continue to use language that tracks Federal Rule of Evidence 502 in terms of its protections for the inadvertent disclosure of privileged information (but that the CFPB not incorporate Rule 502 by reference).