I 108th CONGRESS 2d Session H. R. 4996 IN THE HOUSE OF REPRESENTATIVES July 22, 2004 Mr. Stearns (for himself and Ms. Schakowsky) introduced the following bill; which was referred to the Committee on Energy and Commerce A BILL To enhance Federal Trade Commission enforcement against cross-border fraud and deception.

1.

Short title

This Act may be referred to as the International Consumer Protection Act of 2004.

2.

Foreign law enforcement agency defined

Section 4 of the Federal Trade Commission Act (15 U.S.C. 44) is amended by adding at the end the following: Foreign law enforcement agency means— (A)any agency or judicial authority of a foreign government, including a foreign state, a political subdivision of a foreign state, or a multinational organization constituted by and comprised of foreign states, that is vested with law enforcement or investigative authority in civil, criminal, or administrative matters; and (B)any multinational or multiagency organization to the extent that it is acting on behalf of an entity described in subparagraph (A). .

3.

Availability of remedies

Section 5(a) of the Federal Trade Commission Act (15 U.S.C. 45(a)) is amended by adding at the end the following: (4) (A) For purposes of this subsection, the term unfair or deceptive acts or practices shall include such acts or practices involving foreign commerce that— (i)cause or are likely to cause reasonably foreseeable injury within the United States; or (ii)involve material conduct occurring within the United States. (B)All remedies available to the Commission with respect to unfair and deceptive acts or practices shall be available for acts and practices described in this paragraph, including restitution to domestic or foreign victims. .

4.

Powers of the Commission

(a)

Publication of information; reports

Section 6(f) of the Federal Trade Commission Act (15 U.S.C. 46(f)) is amended— (1)by inserting (1) after such information the first place it appears; and (2)by striking purposes. and inserting purposes, and (2) to any officer or employee of any foreign law enforcement agency under the same circumstances that making material available to foreign law enforcement agencies is permitted under section 21(b).. (b)

Other Powers of the Commission

Section 6 of the Federal Trade Commission Act (15 U.S.C. 46) is further amended by inserting after subsection (i) and before the proviso the following: (j)

Investigative assistance for foreign law enforcement agencies

(1)

In general

Upon a written request from a foreign law enforcement agency to provide assistance in accordance with this subsection, if the requesting agency states that it is investigating, or engaging in enforcement proceedings against, possible violations of laws prohibiting fraudulent or deceptive commercial practices, or other practices substantially similar to practices prohibited by any provision of the laws administered by the Commission, other than Federal antitrust laws (as defined in section 12(5) of the International Antitrust Enforcement Assistance Act of 1994 (15 U.S.C. 6211(5))), the Commission may provide the assistance described in paragraph (2) without requiring that the conduct identified in the request constitute a violation of the laws of the United States. (2)

Type of assistance

In providing assistance to a foreign law enforcement agency under this subsection, the Commission may— (A)conduct such investigation as the Commission deems necessary to collect information and evidence pertinent to the request for assistance, using all investigative powers authorized by this Act; and (B)when the request is from an agency acting to investigate or pursue the enforcement of civil laws, or when the Attorney General refers a request to the Commission from an agency acting to investigate or pursue the enforcement of criminal laws, seek and accept appointment by a United States district court of Commission attorneys to provide assistance to foreign and international tribunals and to litigants before such tribunals on behalf of a foreign law enforcement agency pursuant to section 1782 of title 28, United States Code. (3)

Criteria for determination

In deciding whether to provide such assistance, the Commission shall consider all relevant factors, including— (A)whether the requesting agency has agreed to provide or will provide reciprocal assistance to the Commission; (B)whether compliance with the request would prejudice the public interest of the United States; and (C)whether the requesting agency’s investigation or enforcement proceeding concerns acts or practices that cause or are likely to cause injury to a significant number of persons. (4)

International agreements

If a foreign law enforcement agency has set forth a legal basis for requiring execution of an international agreement as a condition for reciprocal assistance, or as a condition for provision of materials or information to the Commission, the Commission, with prior approval and ongoing oversight of the Secretary of State, and with final approval of the agreement by the Secretary of State, may negotiate and conclude an international agreement, in the name of either the United States or the Commission, for the purpose of obtaining such assistance, materials, or information. The Commission may undertake in such an international agreement to— (A)provide assistance using the powers set forth in this subsection; (B)disclose materials and information in accordance with subsection (f) and section 21(b); and (C)engage in further cooperation, and protect materials and information received from disclosure, as authorized by this Act. (5)

Additional authority

The authority provided by this subsection is in addition to, and not in lieu of, any other authority vested in the Commission or any other officer of the United States. (6)

Limitation

The authority granted by this subsection shall not authorize the Commission to take any action or exercise any power with respect to a bank, a savings and loan institution described in section 18(f)(3) (15 U.S.C. 57a(f)(3)), a Federal credit union described in section 18(f)(4) (15 U.S.C. 57a(f)(4)), or a common carrier subject to the Act to regulate commerce, except in accordance with the proviso following the last designated subsection of section 6 (15 U.S.C. 46). (7)

Assistance to certain countries

The Commission may not provide investigative assistance under this subsection to a foreign law enforcement agency from a foreign state that the Secretary of State has determined, in accordance with section 6(j) of the Export Administration Act of 1979 (50 U.S.C. App. 2405(j)), has repeatedly provided support for acts of international terrorism, unless and until such determination is rescinded pursuant to section 6(j)(4) of that Act (50 U.S.C. App. 2405(j)(4)). (k)

Referral of evidence for criminal proceedings

(1)

In general

Whenever the Commission obtains evidence that any person, partnership, or corporation, either domestic or foreign, has engaged in conduct that may constitute a violation of Federal criminal law, the Commission may transmit such evidence to the Attorney General, who may institute criminal proceedings under appropriate statutes. Nothing in this paragraph affects any other authority of the Commission to disclose information. (2)

International information

The Commission shall endeavor to ensure, with respect to memoranda of understanding and international agreements it may conclude, that material it has obtained from foreign law enforcement agencies acting to investigate or pursue the enforcement of foreign criminal laws may be used for the purpose of investigation, prosecution, or prevention of violations of United States criminal laws. (l)

Expenditures for cooperative arrangements

The Commission may expend appropriated funds for— (1)operating expenses and other costs of bilateral and multilateral cooperative law enforcement groups conducting activities of interest to the Commission and in which the Commission participates; and (2)expenses for consultations and meetings hosted by the Commission with foreign government agency officials, members of their delegations, appropriate representatives and staff to exchange views concerning developments relating to the Commission’s mission, development and implementation of cooperation agreements, and provision of technical assistance for the development of foreign consumer protection or competition regimes, such expenses to include necessary administrative and logistic expenses and the expenses of Commission staff and foreign invitees in attendance at such consultations and meetings including— (A)such incidental expenses as meals taken in the course of such attendance; (B)any travel and transportation to or from such meetings; and (C)any other related lodging or subsistence. . (c)

Authorization of Appropriations

The Federal Trade Commission is authorized to expend appropriated funds not to exceed $100,000 per fiscal year for purposes of section 6(l) of the Federal Trade Commission Act (15 U.S.C. 46(l)) (as added by subsection (b) of this Act), including operating expenses and other costs of the following bilateral and multilateral cooperative law enforcement agencies and organizations: (1)The International Consumer Protection and Enforcement Network. (2)The International Competition Network. (3)The Mexico-U.S.-Canada Health Fraud Task Force. (4)Project Emptor. (5)The Toronto Strategic Partnership and other regional partnerships with a nexus in a Canadian province. (d)

Conforming amendment

Section 6 of the Federal Trade Commission Act (15 U.S.C. 46) is amended by striking clauses (a) and (b) in the proviso following subsection (l) (as added by subsection (b) of this section) and inserting subsections (a), (b), and (j).

5.

Representation in Foreign Litigation

Section 16 of the Federal Trade Commission Act (15 U.S.C. 56) is amended by adding at the end the following: (c)

Foreign litigation

(1)

Commission attorneys

With the concurrence of the Attorney General, the Commission may designate Commission attorneys to assist the Attorney General in connection with litigation in foreign courts on particular matters in which the Commission has an interest. (2)

Reimbursement for Foreign Counsel

The Commission is authorized to expend appropriated funds, upon agreement with the Attorney General, to reimburse the Attorney General for the retention of foreign counsel for litigation in foreign courts, and for expenses related to litigation in foreign courts in which the Commission has an interest. (3)

Limitation on use of funds

Nothing in this subsection authorizes the payment of claims or judgments from any source other than the permanent and indefinite appropriation authorized by section 1304 of title 31, United States Code. (4)

Other authority

The authority provided by this subsection is in addition to any other authority of the Commission or the Attorney General..

6.

Sharing information with foreign law enforcement agencies

(a)

Material obtained pursuant to compulsory process

Section 21(b)(6) of the Federal Trade Commission Act (15 U.S.C. 57b–2(b)(6)) is amended by adding at the end the following: The custodian may make such material available to any foreign law enforcement agency upon the prior certification of an appropriate official of any such foreign law enforcement agency, either by a prior agreement or memorandum of understanding with the Commission or by other written certification, that such material will be maintained in confidence and will be used only for official law enforcement purposes, if— (A)the foreign law enforcement agency has set forth a bona fide legal basis for its authority to maintain the material in confidence; (B)the materials are to be used for purposes of investigating, or engaging in enforcement proceedings related to, possible violations of— (i)foreign laws prohibiting fraudulent or deceptive commercial practices or other practices substantially similar to practices prohibited by any law administered by the Commission; (ii)a law administered by the Commission, if disclosure of the material would further a Commission investigation or enforcement proceeding; or (iii)with the approval of the Attorney General, other foreign criminal laws, if such foreign criminal laws are offenses defined in or covered by a criminal mutual legal assistance treaty in force between the government of the United States and the foreign law enforcement agency’s government; (C)the appropriate Federal banking agency (as defined in section 3(q) of the Federal Deposit Insurance Act (12 U.S.C. 1813(q))) or, in the case of a Federal credit union, the National Credit Union Administration, has given its prior approval if the materials to be provided under subparagraph (B) are requested by the foreign law enforcement agency for the purpose of investigating, or engaging in enforcement proceedings based on, possible violations of law by a bank, a savings and loan institution described in section 18(f)(3) of the Federal Trade Commission Act (15 U.S.C. 57a(f)(3)), or a Federal credit union described in section 18(f)(4) of the Federal Trade Commission Act (15 U.S.C. 57a(f)(4)); and (D)the foreign law enforcement agency is not from a country that the Secretary of State has determined, in accordance with section 6(j) of the Export Administration Act of 1979 (50 U.S.C. App. 2405(j)), has repeatedly provided support for acts of international terrorism, unless and until such determination is rescinded pursuant to section 6(j)(4) of that Act (50 U.S.C. App. 2405(j)(4)). Nothing in the preceding sentence authorizes the disclosure of material obtained in connection with the administration of the Federal antitrust laws or foreign antitrust laws (as defined in paragraphs (5) and (7), respectively, of section 12 of the International Antitrust Enforcement Assistance Act of 1994 (15 U.S.C. 6211)) to any officer or employee of a foreign law enforcement agency.. (b)

Information supplied by and about foreign sources

Section 21(f) of the Federal Trade Commission Act (15 U.S.C. 57b–2(f)) is amended to read as follows— (f)

Exemption from public disclosure

(1)

In general

Any material which is received by the Commission in any investigation, a purpose of which is to determine whether any person may have violated any provision of the laws administered by the Commission, and which is provided pursuant to any compulsory process under this Act or which is provided voluntarily in place of such compulsory process shall not be required to be disclosed under section 552 of title 5, United States Code, or any other provision of law, except as provided in paragraph (2)(B) of this section. (2)

Material obtained from a foreign source

(A)Except as provided in subparagraph (B) of this paragraph, the Commission shall not be required to disclose under section 552 of title 5, United States Code, or any other provision of law— (i)any material obtained from a foreign law enforcement agency or other foreign government agency, if the foreign law enforcement agency or other foreign government agency has requested confidential treatment, or has precluded such disclosure under other use limitations, as a condition of providing the material; (ii)any material reflecting a consumer complaint obtained from any other foreign source, if that foreign source supplying the material has requested confidential treatment as a condition of providing the material; or (iii)any material reflecting a consumer complaint submitted to a Commission reporting mechanism sponsored in part by foreign law enforcement agencies or other foreign government agencies. (B)Nothing in this subsection shall authorize the Commission to withhold information from the Congress or prevent the Commission from complying with an order of a court of the United States in an action commenced by the United States or the Commission. .

7.

Confidentiality, delayed notice of process

(a)

In general

The Federal Trade Commission Act (15 U.S.C. 41 et seq.) is amended by inserting after section 21 the following:

21A.

Confidentiality and delayed notice of compulsory process for certain third parties

(a)

Application with other laws

The Right to Financial Privacy Act (12 U.S.C. 3401 et seq.) and chapter 121 of title 18, United States Code, shall apply with respect to the Commission, except as otherwise provided in this section. (b)

Procedures for delay of notification or prohibition of disclosure

The procedures for delay of notification or prohibition of disclosure under the Right to Financial Privacy Act (12 U.S.C. 3401 et seq.) and chapter 121 of title 18, United States Code, including procedures for extensions of such delays or prohibitions, shall be available to the Commission, provided that, notwithstanding any provision therein— (1)a court may issue an order delaying notification or prohibiting disclosure (including extending such an order) in accordance with the procedures of section 1109 of the Right to Financial Privacy Act (12 U.S.C. 3409) (if notification would otherwise be required under that Act), or section 2705 of title 18, United States Code, (if notification would otherwise be required under chapter 121 of that title), if the presiding judge or magistrate judge finds that there is reason to believe that such notification or disclosure may cause an adverse result, as defined in subsection (g); and (2)if notification would otherwise be required under chapter 121 of title 18, United States Code, the Commission may delay notification (including extending such a delay) upon the execution of a written certification in accordance with the procedures of section 2705 of that title if the Commission finds that there is reason to believe that notification may cause an adverse result, as defined in subsection (g). (c)

Ex Parte Application by Commission

(1)

In general

If neither notification nor delayed notification by the Commission is required under the Right to Financial Privacy Act (12 U.S.C. 3401 et seq.) or chapter 121 of title 18, United States Code, the Commission may apply ex parte to a presiding judge or magistrate judge for an order prohibiting the recipient of compulsory process issued by the Commission from disclosing to any other person the existence of the process, notwithstanding any law or regulation of the United States, or under the constitution, or any law or regulation, of any State, political subdivision of a State, territory of the United States, or the District of Columbia. The presiding judge or magistrate judge may enter such an order granting the requested prohibition of disclosure for a period not to exceed 60 days if there is reason to believe that disclosure may cause an adverse result, as defined in subsection (g). The presiding judge or magistrate judge may grant extensions of this order of up to 30 days each in accordance with this subsection, except that in no event shall the prohibition continue in force for more than a total of 9 months. (2)

Application

This subsection shall apply only in connection with compulsory process issued by the Commission where the recipient of such process is not a subject of the investigation or proceeding at the time such process is issued. (3)

Limitation

No order issued under this subsection shall prohibit any recipient from disclosing to a Federal agency that the recipient has received compulsory process from the Commission. (d)

No Liability for failure to notify

If neither notification nor delayed notification by the Commission is required under the Right to Financial Privacy Act (12 U.S.C. 3401 et seq.) or chapter 121 of title 18, United States Code, the recipient of compulsory process issued by the Commission under this Act shall not be liable under any law or regulation of the United States, or under the constitution, or any law or regulation, of any State, political subdivision of a State, territory of the United States, or the District of Columbia, or under any contract or other legally enforceable agreement, for failure to provide notice to any person that such process has been issued or that the recipient has provided information in response to such process. The preceding sentence does not exempt any recipient from liability for— (1)the underlying conduct reported; (2)a failure to comply with the record retention requirements under section 1104(c) of the Right to Financial Privacy Act (12 U.S.C. 3404), where applicable; or (3)any failure to comply with any obligation the recipient may have to disclose to a Federal agency that the recipient has received compulsory process from the Commission or intends to provide or has provided information to the Commission in response to such process. (e)

Venue and Procedure

(1)

In general

All judicial proceedings initiated by the Commission under the Right to Financial Privacy Act (12 U.S.C. 3401 et seq.), chapter 121 of title 18, United States Code, or this section may be brought in the United States District Court for the District of Columbia or any other appropriate United States District Court. All ex parte applications by the Commission under this section related to a single investigation may be brought in a single proceeding. (2)

In camera proceedings

Upon application by the Commission, all judicial proceedings pursuant to this section shall be held in camera and the records thereof sealed until expiration of the period of delay or such other date as the presiding judge or magistrate judge may permit. (f)

Section Not To Apply to Antitrust Investigations or Proceedings

This section shall not apply to an investigation or proceeding related to the administration of Federal antitrust laws or foreign antitrust laws as defined in paragraphs (5) and (7), respectively, of section 12 of the International Antitrust Enforcement Assistance Act of 1994 (15 U.S.C. 6211). (g)

Adverse Result Defined

For purposes of this section the term adverse result means— (1)endangering the life or physical safety of an individual; (2)flight from prosecution; (3)the destruction of, or tampering with, evidence; (4)the intimidation of potential witnesses; or (5)otherwise seriously jeopardizing an investigation or proceeding related to fraudulent or deceptive commercial practices or persons involved in such practices, or unduly delaying a trial related to such practices or persons involved in such practices, including, but not limited to, by— (A)the transfer outside the territorial limits of the United States of assets or records related to fraudulent or deceptive commercial practices or related to persons involved in such practices; (B)impeding the ability of the Commission to identify persons involved in fraudulent or deceptive commercial practices, or to trace the source or disposition of funds related to such practices; or (C)the dissipation, fraudulent transfer, or concealment of assets subject to recovery by the Commission.

. (b)

Conforming amendment

Section 16(a)(2) of the Federal Trade Commission Act (15 U.S.C. 56(a)(2)) is amended— (1)in subparagraph (C) by striking or after the semicolon; (2)in subparagraph (D) by inserting or after the semicolon; and (3)by inserting after subparagraph (D) the following: (E)under section 21A of this Act;.

8.

Protection for Voluntary Provision of information

The Federal Trade Commission Act (15 U.S.C. 41 et seq.) is further amended by adding after section 21A (as added by section 7 of this Act) the following:

21B.

Protection for voluntary provision of information

(a)

In General

(1)

No liability for providing certain material

An entity described in paragraphs (2) or (3) of subsection (d) that voluntarily provides material to the Commission that such entity reasonably believes is relevant to— (A)a possible unfair or deceptive act or practice, as defined in section 5(a) of this Act; or (B)assets subject to recovery by the Commission, including assets located in foreign jurisdictions;shall not be liable to any person under any law or regulation of the United States, or under the constitution, or any law or regulation, of any State, political subdivision of a State, territory of the United States, or the District of Columbia, for such provision of material or for any failure to provide notice of such provision of material or of intention to provide material. (2)

Limitations

Nothing in this subsection shall be construed to exempt any such entity from liability— (A) for the underlying conduct reported; or (B)to any Federal agency for providing such material or for any failure to comply with any obligation the entity may have to notify a Federal agency prior to providing such material to the Commission. (b)

Certain financial institutions

An entity described in paragraph (1) of subsection (d) shall, in accordance with section 5318(g)(3) of title 31, United States Code, be exempt from liability for making a voluntary disclosure to the Commission of any possible violation of law or regulation, including— (1)a disclosure regarding assets, including assets located in foreign jurisdictions— (A)related to possibly fraudulent or deceptive commercial practices; (B)related to persons involved in such practices; or (C)otherwise subject to recovery by the Commission; or (2)a disclosure regarding suspicious chargeback rates related to possibly fraudulent or deceptive commercial practices. (c)

Consumer Complaints

Any entity described in subsection (d) that voluntarily provides consumer complaints sent to it, or information contained therein, to the Commission shall not be liable to any person under any law or regulation of the United States, or under the constitution, or any law or regulation, of any State, political subdivision of a State, territory of the United States, or the District of Columbia, for such provision of material or for any failure to provide notice of such provision of material or of intention to so provide material. This subsection shall not provide any exemption from liability for the underlying conduct. (d)

Application

This section applies to the following entities, whether foreign or domestic: (1)A financial institution as defined in section 5312 of title 31, United States Code. (2)To the extent not included in paragraph (1) a bank or thrift institution, a commercial bank or trust company, an investment company, a credit card issuer, an operator of a credit card system, and an issuer, redeemer, or cashier of travelers’ checks, money orders, or similar instruments. (3)A courier service, a commercial mail receiving agency, an industry membership organization, a payment system provider, a consumer reporting agency, a domain name registrar or registry acting as such, and a provider of alternative dispute resolution services. (4)An Internet service provider or provider of telephone services.

.

9.

Staff Exchanges

The Federal Trade Commission Act (15 U.S.C. 41 et seq.) is amended by adding after section 25 the following new section:

25A.

Staff Exchanges

(a)

In General

The Commission may— (1)retain or employ officers or employees of foreign government agencies on a temporary basis as employees of the Commission pursuant to section 2 of this Act, or section 3101 or section 3109 of title 5, United States Code; and (2)detail officers or employees of the Commission to work on a temporary basis for appropriate foreign government agencies. (b)

Reciprocity and reimbursement

The staff arrangements described in subsections (a) need not be reciprocal. The Commission may accept payment or reimbursement, in cash or in kind, from a foreign government agency to which this section is applicable, or payment or reimbursement made on behalf of such agency, for expenses incurred by the Commission, its members, and employees in carrying out such arrangements. (c)

Standards of Conduct

A person appointed under subsection (a)(1) shall be subject to the provisions of law relating to ethics, conflicts of interest, corruption, and any other criminal or civil statute or regulation governing the standards of conduct for Federal employees that are applicable to the type of appointment.

.

10.

Information sharing with financial regulators

Section 1112(e) of the Right to Financial Privacy Act (12 U.S.C. 3412(e)) is amended by inserting the Federal Trade Commission, after the Securities and Exchange Commission,.

11.

Preservation of existing authority

The authority provided by this Act, and by the Federal Trade Commission Act (15 U.S.C. 41 et seq.) and the Right to Financial Privacy Act (12 U.S.C. 3401 et seq.), as such Acts are amended by this Act, is in addition to, and not in lieu of, any other authority vested in the Federal Trade Commission or any other officer of the United States.

12.

Report

Not later than 3 years after the date of enactment of this Act, the Federal Trade Commission shall transmit to Congress a report describing its use of and experience with the authority granted by this Act, along with any recommendations for additional legislation. The report shall include— (1)the number of cross-border complaints received by the Commission; (2)identification of the foreign agencies to which the Commission has provided nonpublic investigative information under this Act; (3)the number of times the Commission has used compulsory process on behalf of foreign law enforcement agencies pursuant to section 6 of the Federal Trade Commission Act (15 U.S.C. 46), as amended by section 4 of this Act; (4)a list of international agreements and memoranda of understanding executed by the Commission that relate to this Act; (5)the number of times the Commission has sought delay of notice pursuant to section 21A of the Federal Trade Commission Act, as added by section 7 of this Act, and the number of times a court has granted a delay; (6)a description of the types of information private entities have provided voluntarily pursuant to section 21B of the Federal Trade Commission Act, as added by section 8 of this Act; (7)a description of the results of cooperation with foreign law enforcement agencies under section 21 of the Federal Trade Commission Act (15 U.S.C. 57–2) as amended by section 6 of this Act; (8)an analysis of whether the lack of an exemption from the disclosure requirements of section 552 of title 5, United States Code, with regard to information or material voluntarily provided relevant to possible unfair or deceptive acts or practices, has hindered the Commission in investigating or engaging in enforcement proceedings against such practices; and (9)a description of Commission litigation brought in foreign courts.