Almost everyone working in the Internet marketing space, whether providing marketing services or selling products, has heard the horror stories of peers and competitors (or worse yet their principals) that have been subjected to investigations or lawsuits by various states’ attorneys general. Those who address these investigations or actions properly have the best chance of obtaining a positive outcome. An attorney general investigation can come in many forms, from a simple letter to a Civil Investigative Demand (“CID”) or subpoena. Sometimes, however, the first time one hears from an attorney general is after a lawsuit has been filed. The first steps you take after hearing from an attorney general are critical.
A Brief List of Do’s and Don’ts:
First, do not panic. You will get through the ordeal, and get the best possible result, if you stay calm and take the appropriate steps. Many companies and individuals have been down this road before you. Your fate will often be determined by your initial response.
Second, resist the temptation to create or destroy documents. In our digital age, document tampering or spoliation will generally be uncovered during the discovery portion of the action. Not only will this dramatically increase the attorney general’s interest in the underlying case, but such activities can create an entirely distinct and additional basis for the attorney general to pursue the company as well as the individuals involved. The cover-up often is worse than the crime.
Third, contact experienced counsel immediately. Attorneys general commence investigations for a wide variety of reasons. Perhaps they are seeking information about, or are investigating, your industry generally. Perhaps they are seeking information about a third-party with whom you do business. Experienced counsel can help determine what is at the core of the investigation and who the real targets are – which can help limit the investigation or point it in the proper direction. If the investigation does in fact target your business, experienced counsel can help prevent an investigation from turning into a lawsuit. If a lawsuit has been commenced, the goal is to get the quickest, most cost effective and painless resolution. If the resolution involves a written settlement, it is critical that the injunctive provisions therein be narrowly crafted, not only to allow for lawful business, but also to contemplate future technologies, business models and business interests. Unfortunately, there are countless examples of attorneys who, through the wrong tactics or lack of industry knowledge, turn winnable cases into nightmares.
Finally, a penny of prevention is worth a pound of cure. The best way to succeed in an attorney general investigation is to never appear on their radar screen in the first place. Retaining counsel that is knowledgeable and experienced in Internet practices and online marketing, that knows the red flags Attorneys general will look for, could save you substantial time and money, as well as allow you to avoid the distraction of dealing with a regulatory inquiry or action.
This topic should be of interest to any company or individual engaging in a commercial venture within the United States, especially those involved in the online and offline marketing, data collection and/or consumer product industries.
If you are interested in ensuring that you are compliant with current regulations or if you are facing an investigation from a state attorney general or other regulatory agency, please e-mail us at info@kleinmoynihan.com, or call us at (212) 246-0900.
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