On March 27, the FTC’s Bureau of Consumer Protection (BCP) released its comment letter responding to the CFPB’s Request for Information (RFI) on Civil Investigative Demands (CIDs) – the first RFI in a series seeking feedback on the CFPB’s operations (previously covered by InfoBytes here). According to the BCP, good government requires an agency to use restraint both when deciding to issue compulsory CIDs and when making specific demands because courts are deferential to an agency’s request. The BCP emphasizes the need for a balance between the enforcement of laws by an agency and the potential burden on the party whom receives the demand.

The FTC response is notable as it is not common for a federal agency to submit comments to another agency’s RFI. However, as the BCP points out, the CFPB originally used the FTC’s Rules of Practice and Procedure as a model when establishing its CID process, and in July 2017, the BCP implemented several reforms to its consumer protection CID process. (Previously covered by InfoBytes here.) The comment letter notes the BCP’s belief that the reforms “have been quite successful in lessening burdens on recipients and improving transparency while continuing to allow the agency to obtain the information it needs to enforce the law.” In response to the CFPB’s specific requests, the BCP outlined its internal processes and provided the Bureau with specific recommendations, while recognizing the inherent differences in each agency’s authority, mission and organizational structure. The BCP recommendations include:

  • Opening/closing investigations. Increase oversight by senior agency leadership with respect to the opening and closing of investigations by staff in the Office of Enforcement.
  • Issuing CIDs. Delegate authority to issue CIDs to more senior officials (as opposed to the Deputy Assistant Directors of the Office of Enforcement) or to officials who are not directly involved in the investigation.
  • Explaining purpose of investigation. Ratify the Bureau’s currently informal process of articulating a more specific purpose for the CID and using the CFPB’s “meet-and-confer” requirement under 12 C.F.R. § 1080.6(c) to constructively engage with the recipient to better improve their understanding of the CID’s purpose.
  • Scope of requests. Use the meet-and-confer process to resolve or narrow concerns regarding potentially broad CID requests in order to avoid unnecessary burdens on the recipient and delays caused by a petition to limit or quash a CID.
  • Incorporating certain Federal Rules by reference. For the taking of testimony of an entity and the handling inadvertent production of privileged information, publicly acknowledge the intent to follow the relevant standards under the Federal Rules of Civil Procedure and Evidence.
  • Rights afforded to individuals in investigational hearings. Continue to prevent witnesses from consulting with counsel while a question is pending and counsel from objecting to a question or instructing the witness not to answer (except with regard to privilege). The BCP stated that, in addition to being consistent with its rules, these limitations are “consistent with federal court practice and are appropriate given that the investigational hearing is part of the agency’s non-public investigation to determine whether a violation has occurred and whether an action would be in the public interest.”
  • Response requirements. Consider streamlining guidelines for document submission of electronically stored information

As for the process for petitions to modify or set aside CIDs, without providing a specific recommendation to the Bureau, the BCP spent considerable time outlining certain criticisms of its own process, including that petitioners do not receive the BCP rely brief given to the assigned Commissioner in response to a petitions and that the Commissioner’s ruling on the petition is placed on the public record, revealing the underlying non-public investigation. The BCP defended these practices, emphasizing that the reply briefs contain protected information regarding the FTC’s internal investigation process and the burden to redact the information outweighs the minimal benefit to the petitioner. Additionally, the BCP stated that publicly disclosing the Comissioner’s ruling is consistent with ensuring the government is subject to the “watchful eye” of the public.

As previously covered by InfoBytes, all comments to the CFPB RFI are now due by April 26.