In a Clear Signal to CFPB and White House, FTC Announces CID Process Improvements
Friday, July 21, 2017

Acting Federal Trade Commission (FTC) Chairman Maureen Ohlhausen has released a list of changes to how the agency’s Bureau of Consumer Protection (BCP) will issue civil investigative demands (CIDs)—the principal consumer protection investigative tool the agency wields. These changes result from Chairman Ohlhausen’s previously announced effort to reduce administrative burdens on legitimate businesses.

The changes are facially modest and do not appear to envision formal changes to the FTC’s Rules of Practice, but they serve two purposes. First, they will provide meaningful relief—and more information—to companies facing FTC consumer protection investigations. Second, and more importantly, the changes send a signal to the administration, Congress, and the Consumer Financial Protection Bureau (CFPB), which uses a CID authority historically derived from the FTC’s, about how CID practices should be reformed. This signal is all the more meaningful because BCP (through its Division of Financial Practices) has parallel investigative and enforcement jurisdiction with the CFPB over nondepository financial institutions.

Of greatest note are the two changes related to what information BCP will now communicate to CID recipients. First, the CID itself will now provide “detailed descriptions of the scope and purpose of” the investigation and more narrowly tailor the applicable time period. Historically, FTC and CFPB CIDs have provided only brief, cryptic descriptions of the possible violation of law under investigation—such as “unfair or deceptive practices concerning mortgage advertising”—that offer no meaningful information. Second, BCP staff will notify companies under investigation of the status of the matter every six months. While the announcement states that this notification process is the agency’s “current practice,” BCP staff have often failed to adhere to it in the past.

The announcement also explains that the agency will now generally provide greater flexibility on timelines for responding to CIDs and clearer instructions about how to comply with CIDs, particularly for small businesses.


These changes, taken together, respond to critiques leveled equally—or perhaps more heavily—on the CFPB’s use of the CID process as compared with the FTC’s approach. Indeed, as we have previously blogged, the CFPB’s inadequate substantive description of the purpose of its CIDs has been singled out for criticism by both the Treasury Department’s recent financial regulation report and the Court of Appeals for the District of Columbia Circuit. By announcing these changes now, Chairman Ohlhausen makes clear that there are steps the CFPB could and should take to reduce the burdens of its CID process that would not undercut the agency’s mission—and places pressure on the CFPB to do so. Whether the CFPB will follow the FTC’s lead, however, remains to be seen.

Further, with this step, Chairman Ohlhausen bolsters her credibility with the White House by affirmatively advancing an agenda in line with the Treasury Department report and the president’s Core Principles for Regulating the United States Financial System Executive Order.


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