Practice Area
FTC Civil Investigative Demands
A Civil Investigative Demand is a formal demand used by the FTC to obtain information during an investigation. A CID may require documents, written answers, oral testimony, or a combination. The recipient may be the subject of the investigation or a third party believed to have relevant information.
A payment-related CID may examine the merchant accounts the business used to accept customer payments and receive settlement proceeds. FTC staff may request merchant applications, underwriting files, transaction and refund data, chargeback information, customer communications, and settlement records. The demand may also ask who owned or controlled each account, how related companies were involved, and why processing or settlement activity moved among accounts.
Rome LLP represents businesses, owners, and officers responding to FTC CIDs, including demands involving merchant accounts and payment activity.
Responding to the Demand
A CID recipient should retain counsel promptly and preserve potentially responsive information. Unless excused or extended, FTC rules require the recipient to meet and confer with staff within 14 days after receiving the demand or before the deadline to petition to quash, whichever comes first. The conference can address the scope and timing of the response, the relevant custodians and systems, and the form of any electronic production.
Requests may be narrowed or sequenced by agreement. A petition to limit or quash generally must be filed within 20 days after service or before the return date, whichever is earlier. The petition and the Commission’s ruling ordinarily become public, except for information granted confidential treatment. Failure to comply may lead the FTC to seek enforcement in federal court.
Defining the Scope of the Response
A CID may cover several companies and information systems. The first task is to determine which entities, custodians, and accounts are covered and where the responsive information is stored.
The meet-and-confer can narrow definitions, establish priorities, and set a realistic sequence for collection and production. Any agreement on scope, search methods, timing, or format should be confirmed in writing.
Collecting and Producing Information
Responsive information may be stored in email, messaging platforms, customer-service systems, transaction databases, and merchant-account files. The recipient must identify who controls each source and whether older records were archived, transferred, or deleted under ordinary retention policies.
Some payment records may need to be obtained from third parties. The acquiring bank or PayFac may hold settlement and reserve records. The ISO may hold the application and account-management file. Authorization data, transaction logs, and technical settings may reside with the processor or gateway.
Each production should preserve the context needed to understand the information. A transaction export, CRM note, or account message may be misleading without the related fields, attachments, identifiers, or communications.
Written Responses and Investigational Testimony
A CID may require written answers in addition to documents. Those answers should be based on a factual investigation, not one employee’s recollection or an incomplete file.
Oral testimony requires the same preparation. Counsel should identify what the witness knows personally, what the company’s records show, and where the witness must rely on information held by others.
Written answers and testimony may later be used in settlement negotiations or litigation. Counsel should ensure that the company’s responses, produced documents, and testimony are consistent, and that any apparent differences can be explained.
Incomplete or Conflicting Information
Records from different systems may use different names, account numbers, or descriptions for the same business. CRM notes may not match underwriting files, and transaction data may show that volume moved without explaining why.
Before production, counsel should investigate material discrepancies and resolve them where possible. That may require locating missing onboarding materials, matching account identifiers across systems, and determining which entity controlled each account or decision.
If the records remain incomplete or inconsistent, the response should explain the gap rather than leave the FTC to infer what happened. Counsel should also identify privileged communications before production and seek protected treatment for confidential commercial information. Communications involving consultants or other third parties should be reviewed separately because their participation may affect privilege.
From Investigation to Enforcement
As the investigation develops, FTC staff may request further documents or testimony, identify the conduct they believe violates the law, or propose settlement terms. The CID response may later be used in negotiations or litigation.
The company should therefore treat the response as part of its defense, not merely as a document production. The documents, written answers, and testimony should present a consistent and supported account of the conduct under review.
If the investigation also triggers account restrictions, reserve holds, or suspended settlements, those payment issues may need to be addressed while the CID response is underway.
