I received a government notice. Which agency, and what does it want?

3.1The common thread

Government notices share three features. The sender has statutory authority to ask, and often to compel. The notice is usually the first step of a process with several stages, not the last. And the response is reviewed by people who will compare it with what they find elsewhere, so a response that is late, incomplete or wrong is worse than one that is honest about a problem. Speak to a lawyer before replying to any of them. The four below are the ones small businesses most often see.

3.2A state attorney general inquiry

Every state attorney general enforces that state's consumer protection law, usually a statute prohibiting unfair or deceptive acts and practices. The office can send an informal inquiry letter, or a civil investigative demand or subpoena, which has legal force and a return date. Triggers include consumer complaints, advertising, auto-renewal practices, data incidents, and telemarketing.

What it is: a request for documents and answers, under state authority, that can lead to a settlement (often called an assurance of voluntary compliance), a lawsuit by the state, or closure. What it is not: a private claim for money, and not yet a finding against you. Respond by the date, produce what is asked, and do not volunteer beyond it without advice. The scope and the state's powers vary by state; the state attorney general's own site describes the process.

3.3An FTC civil investigative demand

The Federal Trade Commission enforces Section 5 of the FTC Act, which prohibits unfair or deceptive acts or practices,¹ along with specific rules on telemarketing, email marketing, endorsements and more. A civil investigative demand is the FTC's compulsory process for documents, written answers and testimony.² It has a return date and a procedure for seeking modification.

What it is: a formal, compulsory request in an investigation that may or may not become an enforcement action. What it is not: a complaint or a fine. A small business receiving one should treat the date as fixed, engage a lawyer with FTC experience before producing anything, and preserve all relevant records from the day it arrives.

3.4An FCC citation

The Federal Communications Commission regulates telemarketing calls and texts under the Telephone Consumer Protection Act and its own rules.³ For a business that does not hold an FCC licence, the Communications Act generally requires the Commission to issue a citation before it can propose a monetary forfeiture, and the citation gives the recipient a chance to respond.⁴ A citation is therefore a warning with teeth: it describes the conduct, cites the rule, and says that continued violations can lead to fines.

What it is: formal notice of a violation and a chance to respond. What it is not: a private claim, and not the same as a demand letter from a person who received calls, which is covered in chapter 6. Respond within the stated period, fix the practice, and keep records of the fix.

3.5A Department of Labor letter

The Wage and Hour Division of the U.S. Department of Labor enforces the Fair Labor Standards Act: minimum wage, overtime, record-keeping and child labour rules.⁵ A letter usually announces an investigation, often triggered by a complaint, and asks for payroll records, time records and employee classifications for a period.

What it is: a compliance investigation that can end in a finding of back wages owed, which the Division can supervise the payment of, and in some cases civil penalties or referral for litigation. What it is not: a lawsuit by an employee, although an employee can bring one separately. Respond by the date, produce accurate records, and get advice before the investigator's interviews. State labour agencies run parallel processes under state wage law. Wage and employment demand letters covers the employee's own claim.

3.6What to do this week, for any of them

1. Identify the agency and the type of notice: informal inquiry, compulsory demand, citation, investigation.
2. Write down the return date. Compulsory process dates can be extended only by the agency or a court.
3. Preserve records. Issue a written hold to staff.
4. Engage a lawyer who deals with that agency before producing anything or speaking to an investigator.
5. Notify your insurer in writing; some policies cover regulatory defence costs.
6. Fix what can be fixed now, and document the fix. Agencies weigh remediation.