Closed encounters of the third kind

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Savvy executives like to stay in the loop on FTC activities that could affect their industry.   They make it a habit to scan the headlines or check for relevant workshops or reports.  But there’s a third category of information a bit less understood: closing letters from BCP staff.

In the spirit of transparency, the agency posts them online.  Here in the BCP Business Center, recent letters appear in the Compliance Documents section of each topic area.

So what can companies glean from these letters?  Perhaps the easiest way to describe what closing letters are is say what they aren’t.

Closing letters aren’t an indication that a company has violated the law.   Only after an investigation is complete and the Commission has issued a complaint can you definitively conclude that the agency thinks a company has crossed the line.

Nor are closing letters an indication that BCP staff thinks what a company did was hunky-dory.  In fact, based on an initial evaluation of the facts, they may suspect what was going on was neither hunky nor dory, but other considerations led to the conclusion that a law enforcement action wasn’t called for under the circumstances.

The best indication of what BCP staff is thinking can be found within the four corners of the letter.  The letter usually details the business practice or ad claim that attracted law enforcement attention in the first place.  Often it will explain the factors that led the staff to conclude that further action wasn’t warranted in that particular case.  But you don’t need to consult the Magic 8-Ball to figure out from the face of many closing letters that the staff may be flagging issues that could raise concerns in the future.

So it may sound like a Zen koan, but here’s the bottom line:

Don’t read too much into closing letters.

Don’t read too little into closing letters

But definitely read them.

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