By: Christopher D. Carusone and Steven M. Williams
The Pennsylvania Unfair Trade Practices and Consumer Protection Law (UTPCPL), 73 P.S. § 201-1 et seq., and the Administrative Code of 1929, specifically y71 P.S. § 307-3, vest the Pennsylvania Office of Attorney General with the power to investigate “unfair methods of competition” and “unfair or deceptive acts or practices” by companies doing business in Pennsylvania.
The statutory definition of these phrases is quite lengthy, consisting of twenty-one separate, prohibited acts ranging from deceptive advertising and pyramid schemes to unlawful telephone solicitations and excessive shipping delays. 71 P.S. § 201-2(4). But this catch-all definition perhaps best sums up the essence of what conduct is prohibited under the UTPCPL: “[F]raudulent or deceptive conduct which creates a likelihood of confusion or of misunderstanding.” Id. at § 201-2(4)(xxi).
Penalties for violating the UTPCPL include what you would expect—civil penalties and the payment of costs and restitution. But these penalties often pale in comparison to the Attorney General’s power to petition for injunctive relief and/or forfeiture of the right to do business in Pennsylvania if the investigation is mishandled.
In light of the broad investigative power of the Attorney General’s Office to investigate consumer protection violations, and the dire consequences possible under the UTPCPL, below are five tips for successfully representing businesses during consumer protection investigations.
- Pay attention to the signs. An official l consumer protection investigation is usually kicked off by a letter or administrative subpoena from a Deputy Attorney General assigned to the Bureau of Consumer Protection demanding an extremely broad amount of information. This often sends the company scrambling for outside counsel before the deadline for production set by the Attorney General expires. However, there are often warning signs that trouble may be brewing. These generally consist of repeated correspondence from special agents of the Attorney General’s Bureau of Consumer Protection asking the company to respond to informal complaints filed against the company using the Attorney General’s website. In these cases, the Attorney General’s Office acts more like a mediator than an investigator. While the occasional consumer complaint may not warrant the attention of the C-Suite, repeated consumer complaints evidencing a pattern of misconduct should be addressed comprehensively and proactively to avoid the likelihood of an official investigation.
- Hire experienced counsel. Perhaps this goes without saying, but hiring counsel experienced in consumer protection investigations in general and the Attorney General’s Office, in particular, is essential to a successful outcome. Ideally, this should include counsel who formerly worked in the Attorney General’s Office and speak the AG’s language. Using the same outside counsel that handles commercial litigation for the company may result in an overly contentious exchange with the Attorney General’s Office which while entirely appropriate in litigation often proves to be extremely harmful in government consumer protection investigations.
- Communicate early and often. While the Attorney General’s opening salvo of requests to the company demanding every document under the sun may appear calculated to overwhelm and intimidate the company into an early settlement, it is most often the result of a lack of understanding of the company’s operations and record-keeping practices. This is completely understandable given the multitude of industries the Attorney General’s Bureau of Consumer Protection investigates each year. The fact of the matter is that the Attorney General’s Office does not want to wade through thousands of irrelevant documents any more than the company wants to collect them. A good starting point for all parties is a candid discussion about the nature and extent of the consumer complaints that most often precipitate an official investigation. While the AG’s Office may be reluctant to reveal too much, and default to a citation to its broad investigative power in consumer protection matters, that power is limited (both legally and practically) to an investigation of “unfair methods of competition” and “unfair or deceptive acts or practices” under the UTPCPL.
Since any challenge to the AG’s authority will often force it to explain why the requested documents are relevant to an investigation that it has the jurisdiction to conduct, many Deputies Attorney General will err on the side of limiting their original request to get the documents they need while avoiding the imposition of an undue burden on the company.
- Lend some perspective. A Deputy Attorney General conducting a consumer protection investigation may be under the impression that 5-10 consumer complaints against the company for a specific transaction or series of transactions is “a lot.” However, this may be a minuscule number when compared to the total number of transactions conducted by the company in a given year for which no complaints have been made. As a result, it is important for counsel to educate the Attorney General’s Office on the full scope of the company’s consumer operations to lend the Attorney General’s office the proper perspective. This may in turn lead the Attorney General’s Office to close its investigation early and devote its limited resources elsewhere.
- Use caution when settling. The UTPCPL allows the Attorney General’s Office to enter into an Assurance of Voluntary Compliance in order to resolve an official consumer protection investigation. But these agreements can be onerous, allowing the Attorney General (by agreement) to monitor the activities of the company and investigate matters that would otherwise fall outside of its jurisdiction. These agreements are also publicly filed and may be accompanied by a loud press release that will dog the company on the Internet for years to come. Therefore, it is important to understand all of the consequences of any proposed settlement before the company agrees to it.