Five Strategies to Survive the Dynamic Duo: FTC + State AGs

By Rachel HirschSeptember 2, 2015

We have all seen the headlines that start with the same ominous language: “FTC Takes Action Against…,” or “FTC Sues to Stop…,” or even the dreaded: “At FTC’s Request, Court Shuts Down….” These headlines signal a new FTC priority, such as shutting down illegal robocallers or stopping supplement makers from deceptive advertising and illegally debiting consumers’ accounts.

Lately, however, the FTC has been taking a Batman and Robin approach to enforcement actions. Rather than acting alone, the FTC teams up with a State AG’s office or an agency such as the CFTC to put even more muscle behind their enforcement actions. Taking the concept to a DC Comics extreme, the FTC recently announced a Justice League-style collaboration with all 50 State AGs offices and the District of Columbia, charging four cancer charities with bilking more than $187 million from contributors. These powerful FTC/State AG collaborations typically arise from consumer complaints made to the State AG’s office, since those state agencies generally act as the first responders to illegal or deceptive marketing practices.  

Ifrah Law has identified five survival strategies to deploy in the face of dual enforcement actions that can help you stay in business, address customer complaints, and smooth the waters when state and federal regulators come in strong and hard.   

  1. Respond. The first course of action when confronted with a State AG complaint is to respond and to respond thoughtfully. Make sure you investigate the claims being presented and that your formal written response reflects the findings of your investigation and your overall commitment to customer care. In most cases, a full customer refund will do the trick.
  2. Re-Evaluate. If your company is receiving multiple consumer complaints, especially from the same State AG office, it may be time to examine and re-evaluate your customer policies. Generally, your terms and conditions and refund policies will likely need to be revamped to ensure that material terms are disclosed clearly and conspicuously and are written in customer-friendly format.
  3. Train. Most State AG complaints arise from customers dissatisfied with their ability to cancel future shipments of a product or to obtain refunds of past product purchases. These types of problems can be the result of unqualified customer services representatives. Make sure that all customer service representatives are trained to respond to these requests efficiently and effectively.
  4. Monitor. Sometimes consumer complaints do not emanate from your business practices, but rather, the business practices of your partners. Make sure to monitor your partners to ensure compliance with all applicable laws through periodic auditing and iron-clad agreements.
  5. Maintain. To the extent you respond to a customer complaint, make sure you maintain thorough records of your responses. And, if your company has received any positive customer feedback, keep track of those records as well to demonstrate good business practices if you are ever the subject of any investigation.

Remember, there is only one FTC, but there are 50 State AG offices (plus, the District of Columbia). Keeping their offices happy can be key to avoiding future collaborations that will put your company in the headlines. 

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