The Federal Trade Commission (FTC) uses three primary tactics to investigate your Internet marketing efforts: (1) Undercover Operations; (2) Civil Investigative Demands; and (3) Informal Inquiries.
Also known as a “sting,” an FTC undercover operation typically involves its employees posing as clients and buying your products and/or services offered via the Internet.
Unlike your normal client, the goal of the undercover operative isn’t to obtain what you sell. It is to decide if you’ve broken the law. How you conduct business in these particular transactions will likely determine whether or not the Federal Trade Commission decides to pursue a case against you.
Civil Investigative Demands
A Civil Investigative Demand (CID) is like a subpoena on steroids. Unlike a sting operation, the FTC is letting you know that you’re being targeted for investigation.
If you receive a CID, it may require you to answer written questions, produce a lot of documents, create written reports, and/or testify. To fight a CID, you have to go to federal court.
The only thing “informal” about these types of communications with the Federal Trade Commission is that the requests are polite…but you’re still under the gun. Whether meeting face-to-face or talking by telephone, the FTC is in fact investigating you. If you refuse to cooperate, expect a CID to issue demanding you turn over the same documents, etc. that were “informally” requested.