The National Attorneys General Training & Research Institute
Handling Consumer Protection Matters through Joint Approaches by Prosecutors and Investigators and Effective Methodologies
Since 2011, the National Attorneys General Training and Research Institute (NAGTRI) has hosted an annual International Fellows (IF) program, where a group of remarkable international and domestic government attorneys have the opportunity to work collaboratively on critically important global legal issues. They jointly work on these issues while also meeting and interacting with experts in the field.
At the conclusion of the program, the Fellows produce, as a group project, papers on the subject of that year’s IF program. The focus of the 2018 program, held in June 2018, was “Prosecutorial Strategies to Protect Consumers Against Deceptive and Fraudulent Products.” Two group papers are being published in this issue of the NAGTRI Journal.
Gillian Andrews, Assistant Unit Head, Deputy Attorney General, Delaware Department of Justice
Rodolfo Montes de Oca Mena, Attorney General, State of Sonora, Mexico
Shannon Smith, Division Chief, Consumer Protection Division, Washington Attorney General’s Office
Paul Stimson, Deputy Chief Crown Prosecutor, Crown Prosecutions Service, England & Wales
Ganbat Tsetsegmaa, Acting Head of Foreign Relations & Mutual Legal Assistance, Office of the Prosecutor General, Mongolia
Law enforcement exists to protect the public and serve the public interest in lawful, fair, and non-deceptive marketplaces. Globalization of trade in goods and services includes the proliferation of fraudulent and illicit products. Consumer frauds and scams cannot easily be contained within physical borders. Combatting consumer fraud on a global scale requires targeted and cogent strategies that define the problem and devise an appropriate legal response as well as the advanced investigative techniques necessary to implement the chosen strategies.
Enforcement is only beneficial if it achieves meaningful results. Laws that are not enforced or have no teeth will do little to prevent bad acts. Many jurisdictions have the ability to protect consumers and represent the interests of their individual constituents under a traditional police power theory. In some instances, the government is the best or only authority for bringing actions against consumer fraud.
Prosecutors and investigators must work together – and with their international counterparts – to protect their citizens from the harms caused by fraudulent products and services. Prosecutors and investigators each have unique skills and work together using their different techniques and methods to investigate and prosecute consumer protection cases, despite gaps in the law and insufficient resources. Both groups have joint and distinct roles in addressing these cases and achieving the desired outcomes. This paper will address ways for prosecutors and investigators to work together to handle consumer protection matters jointly and develop and adopt effective methodologies in an ever-changing and more sophisticated environment.
Genesis of Consumer Protection Cases
Agencies charged with protecting consumers through law enforcement action, whether criminal or civil, begin all of their cases with information regarding potential violation of laws. These agencies learn about potential cases in a variety of ways:
- Consumer complaints or inquiries
- Media reports
- Outside law enforcement agencies; lawmakers; other regulators
- Advocacy agencies
- Sister jurisdictions, both domestic and international
- Private sector/industry participants
Agencies should prioritize methods for gaining this initial knowledge of consumer protection issues and violations. Most agencies, criminal or civil, have dedicated portals for consumer victims to contact them directly to report violations. Agencies can maximize their effectiveness by developing and maintain strong relationships with other law enforcement agencies, regulators, and the private sector.
In some agencies, it is common for the investigator and prosecutor to learn about the case at the same time. In these situations, it is not unusual for the prosecutor to work with the investigator to develop the initial case strategy and investigative plan. This is a typical model for state attorneys general consumer protection units. In consumer protection offices, the investigators and prosecutors may have the same chain of command and, if not, they all ultimately report to their Attorney General. This structure allows the prosecutor to be more actively involved in individual investigations.
Criminal law prosecutors often work with investigators who are members of different agencies with different chains-of-command. In these situations, the prosecutors often learn of a consumer protection case when the investigative agency delivers a completed investigation report. These reports will contain witness interviews and other evidence, such as documents, photographs, and physical items. In this model, the prosecutor usually is not directly involved in the investigation. Prosecutors commonly have the authority to request that the investigator gather additional evidence necessary for the prosecution. Prosecutors also typically are available to consult with investigators to provide advice about the investigation and what may be needed to prove the case.
The Role of Consumers in Consumer Protection Cases
The consumer victim is an important factor in many jurisdictions. As noted above, consumers often bring issues to the attention of law enforcement in the first instance. In most jurisdictions, consumer victims are very active in the investigation and prosecution of the case. At a minimum, they are witnesses who are interviewed or testify about their experiences. In some jurisdictions, the consumer victim is actually the client of the law enforcement agency and the matter is prosecuted on behalf of the consumer victim.
Although the nature of the investigative tools varies given the different roles of consumer protection enforcers in different countries, i.e. criminal versus civil, the investigative tools to be deployed in any investigation need to be considered at the outset by the prosecution team and embedded in their strategy. In the United Kingdom, prosecutors often deploy prosecution strategy documents which set out the instigative methods to be used and the consequences for disclosure (discovery).
The ever-increasing challenge for investigation into consumer protection, as in all investigations, is the explosion of material generated by digital devices. Enforcers must use a broad range of techniques from the traditional to those assisted by new technologies. A typical smart telephone can produce the equivalent of 26,000 pages of paper, so artificial intelligence and proactive coding are becoming ever more critical to successful investigations. The challenge in this area will become the selection of meaningful search terms and the careful consideration of what devices are interrogated. Equally important will be the careful drafting of subpoenas. The private sector can have an important role to play in this regard. For example, organizations such as Western Union offer assistance to investigators in ensuring subpoenas are drafted appropriately. The common theme is that, at every point in the investigation, collaboration with all involved, whether investigators or private business, is key.
Proactive investigative tools such as interception of communications evidence, test purchase operations, and use of recording devices are important in consumer protection investigations. There are some interesting differences between both states in the U.S. and U.S. states and jurisdictions outside the U.S. Because this may present challenges where investigations cross state and international boundaries, it further emphasizes the need for collaboration with all those involved at all stages of the investigation. The strategy in selecting these methods should be a legal decision for a prosecutor but should also be informed by the experience of investigators. Determination of appropriate targets for investigation may be informed by collaboration with private business. For example, Microsoft has established a Digital Crimes Unit that can offer intelligence about email addresses, domain names, IP addresses, and other information.
Evidentiary and Ethical Considerations
Although there was a broad commonality of investigative techniques used by prosecutors within the group, the evidence produced by those techniques and how it is treated by their respective courts varied. Given the ever-increasing global nature of fraud, the differences in the rules of evidence in different jurisdictions will become more important. Prosecutors involved in investigations that cross boundaries need to appreciate how evidence is collected and how it can be used. In particular, enforcers need both formal and informal networks. Programs such as the NAGTRI International Fellows Program have a clear role to play here. Equally important is the assistance provided by organizations such as Interpol, the FBI, and liaison prosecutors. Further cooperation on a bi-lateral basis or through the Mutual Legal Assistance process is vital in ensuring a consistent and effective approach to consumer cases.
The ethical considerations involved in differing evidence-gathering techniques need to be understood by all those involved in these cases. Independence of the prosecution authority should be paramount. Most ethical difficulties can be avoided with clear delineation of tasks and roles within any given case, whether the case is domestic or global in reach. This is achieved on a macro level by constitutional principles, codes of prosecution, and statements of mission. On a micro level, individual staff must consider conflicts and must be trained on ethical issues. Prosecutors have a key role in assisting investigators to ensure that the investigative methods used are not susceptible to legal challenge resulting in rulings of inadmissibility. In addition to this duty, prosecutors must show leadership with investigators and private business.
Understanding and being passionate about why prosecutors do what they do will inspire development of clear strategies that lead to strong cases being put before the courts. This will, in turn, ensure better results for the victims of consumer fraud.
Case Selection and Prosecutorial Considerations
After a consumer protection investigation has been concluded and the matter is ready for decision or action by the prosecutor, there are several key considerations before the case may proceed to a formal indictment or litigation. Prosecutors typically make the decision as to next steps, but certain high-profile or complex matters may require higher level approval. Generally, the stronger and more thorough an investigation, the greater the likelihood the prosecutor will be able to proceed to litigation.
Selection of consumer protection cases turns on many factors, including (1) breadth of harm to consumers and the number of consumer complaints received; (2) strength of evidence and strength of claims; (3) seriousness of conduct; (4) potential for the conduct to continue or have ongoing negative effects on a large group of consumers; (5) jurisdictional considerations; (6) potential to make new law or policy, and conversely, bad law or policy; (7) ability to make an impact on industry or industry practices; (8) whether better remedies are available elsewhere; (9) the resources or bandwidth available in the investigating and prosecuting offices; and (10) the success or failure of prior, similar prosecutions. A prosecutor must balance these factors when deciding whether to file a case.
An important consideration is the enforcement goal. Most authorities have constraints on their jurisdiction and resources, as well as enforcement policies they must follow in deciding what, if any, action to take. Prosecutors often must analyze the goals of prosecution in a particular case, including: (1) deterrence; (2) restitution; (3) punishment; (4) disgorgement; (5) enjoining or preventing future bad conduct; and (6) vindicating the authority of the government.
Prosecutors have various means to accomplish their goals. Some have options other than litigation, such as formal or informal settlements or plea agreements. Where non-litigated results are not possible, prosecutors will proceed to formal enforcement litigation. The nature of the charges and proposed resolution should be closely tied to the prosecutorial goal. Where consumer restitution is a goal, it is important to consider tracing and seizing assets during an investigation. Where deterrence is the primary goal, many prosecutors seek injunctions. The stronger the injunctive relief, the less likely the investigators and prosecutors (and other law enforcement agencies) are to see the defendant again.
Investigative Strategy for Global Consumer Protection Cases
The strategy for investigating an international or global consumer protection case should be directed by an expert prosecutor who has some knowledge about the laws and culture in the countries where the crimes or violations occur. The prosecutor may have other prosecutors and investigators reporting to him or her, but the lead prosecutor should establish the strategy and ensure the others are working toward that goal of determining the facts and charging the guilty parties. Importantly, if the prosecutor thinks the bad actors may flee the jurisdiction or abscond with ill-gotten gains, the prosecutor should ask the court for a precautionary order. In international or global cases, this necessarily could involve close collaboration with authorities of a different country or countries.
In global or international consumer protection, cases are prosecuted by authorities in the country where the unlawful conduct took place. Where the unlawful conduct is occurring in more than one country simultaneously, agencies in the two countries should communicate. If one country has already opened a file, it should have priority to complete its process (assuming the other country does not need to act quickly to address immediate harm). The offense may also be enforced civilly under applicable consumer fraud statutes in one or multiple jurisdictions.
Developing a joint investigation strategy is an effective way to handle case successfully. When developing this strategy, the following should be considered:
- Assessing the merits of the case or potential case;
- Identifying the roles of the participants;
- Exploring all available statutes and provisions;
- Studying the available resources and data which may help for prosecution, including interagency cooperation;
- Assessing the consequence of investigative actions which may be taken;
- Whether overseas investigation should be required and, if yes, when and how to organize.
Recently, many crimes against consumers (e.g., identity theft fraud, intellectual property crimes, and illegal trafficking of goods) have crossed borders and have had a greater effect on the environment and public. Investigation of those cases has required more comprehensive global commitment from prosecutors. Developing informal channels between prosecutors and investigators is one of the significant steps for tackling cross-border crimes against consumers. In particular, processes that take a long time and involve diplomatic formalities may undermine the investigative result. Prosecutors and investigators must be aware of these processes and formalities and include them in their strategy.
Seeking mutual legal assistance in criminal matters is a crucial formal process by countries to assist each other in gathering evidence for solving a criminal case. This type of request is most often governed by a Mutual Legal Assistance Treaty (MLAT), which may be bilateral or multilateral. MLATs differ, but generally they can be used to obtain witness testimony (either voluntarily or by compulsion); execute search warrants; obtain bank records; obtain a user’s online records, subscriber details, email content, metadata, and social media; and freeze or forfeit the proceeds of crime.
Prosecutors should develop contact points for requests under an MLAT, should provide a template of an MLAT request for use by their office, and should provide a comprehensive list of the legal requirements under the MLAT. For example, a request usually requires details of the crime under investigation, the name and address of the person under investigation, and the basis for believing the information will be located in the jurisdiction of the receiving state.
Prosecutors also should determine whether the information may be available through other open source and local professional and international organizations and whether they need to use international professional networks, such as Interpol, Europol and Egmont. They must decide if they need to reach out less formally with other law enforcement officers, such as police-to-police or prosecutor–to-prosecutor contacts.
Challenges for Prosecutors
In addressing international and global consumer protection, the primary challenge is jurisdiction. Not all countries are willing to allow another country’s law enforcement agencies to obtain evidence. Some countries do not allow extradition. Knowing these limitations in advance will help guide the strategy and avoid setbacks in the investigation. Political awareness regarding the other countries involved is crucial.
Successful prosecution of consumer protection cases on a global basis requires significant resources. Critically, limited resources means limited investigative and enforcement results. If governments are committed to stopping global crime and fraud, they should fully fund prosecutors and investigators. At the end of the day, these amounts will not be an expense but an investment that will protect consumers worldwide. Enforcing authorities may also be able to recoup the costs of the investigation and prosecution, which reinforces the importance of viewing the expenditures as an investment in future consumer protection.
Additional funding should be used to develop investigatory expertise in technology-based fraud, forensic accounting, and other skills. Consumer protection cases are more successful when investigators have experience in a variety of techniques. Lack of expertise can endanger an investigation and allow consumer frauds to continue. Prosecutors also will benefit from the assistance of an international law specialist to advise on how to collect evidence in foreign jurisdictions and ultimately extradite defendants and enforce foreign judgments. This expert should be familiar with applicable bilateral and multilateral treaties.