    [House Hearing, 110 Congress]
    [From the U.S. Government Publishing Office]

                    COMBATING SPYWARE: H.R. 964, THE SPY ACT

    =======================================================================

                                    HEARING

                                   BEFORE THE

                        SUBCOMMITTEE ON COMMERCE, TRADE,
                            AND CONSUMER PROTECTION

                                     OF THE

                        COMMITTEE ON ENERGY AND COMMERCE
                            HOUSE OF REPRESENTATIVES

                           ONE HUNDRED TENTH CONGRESS

                                 FIRST SESSION

                                       ON

                                    H.R. 964

                                   __________

                                 MARCH 15, 2007

                                   __________

                               Serial No. 110-21

          Printed for the use of the Committee on Energy and Commerce

                            energycommerce.house.gov

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                        COMMITTEE ON ENERGY AND COMMERCE

                      JOHN D. DINGELL, Michigan, Chairman

    HENRY A. WAXMAN, California          JOE BARTON, Texas
    EDWARD J. MARKEY, Massachusetts          Ranking Member
    RICK BOUCHER, Virginia               RALPH M. HALL, Texas
    EDOLPHUS TOWNS, New York             J. DENNIS HASTERT, Illinois
    FRANK PALLONE, Jr., New Jersey       FRED UPTON, Michigan
    BART GORDON, Tennessee               CLIFF STEARNS, Florida
    BOBBY L. RUSH, Illinois              NATHAN DEAL, Georgia
    ANNA G. ESHOO, California            ED WHITFIELD, Kentucky
    BART STUPAK, Michigan                BARBARA CUBIN, Wyoming
    ELIOT L. ENGEL, New York             JOHN SHIMKUS, Illinois
    ALBERT R. WYNN, Maryland             HEATHER WILSON, New Mexico
    GENE GREEN, Texas                    JOHN B. SHADEGG, Arizona
    DIANA DeGETTE, Colorado              CHARLES W. ``CHIP'' PICKERING,
        Vice Chairman                    Mississippi
    LOIS CAPPS, California               VITO FOSSELLA, New York
    MIKE DOYLE, Pennsylvania             STEVE BUYER, Indiana
    JANE HARMAN, California              GEORGE RADANOVICH, California
    TOM ALLEN, Maine                     JOSEPH R. PITTS, Pennsylvania
    JAN SCHAKOWSKY, Illinois             MARY BONO, California
    HILDA L. SOLIS, California           GREG WALDEN, Oregon
    CHARLES A. GONZALEZ, Texas           LEE TERRY, Nebraska
    JAY INSLEE, Washington               MIKE FERGUSON, New Jersey
    TAMMY BALDWIN, Wisconsin             MIKE ROGERS, Michigan
    MIKE ROSS, Arkansas                  SUE WILKINS MYRICK, North Carolina
    DARLENE HOOLEY, Oregon               JOHN SULLIVAN, Oklahoma
    ANTHONY D. WEINER, New York          TIM MURPHY, Pennsylvania
    JIM MATHESON, Utah                   MICHAEL C. BURGESS, Texas
    G.K. BUTTERFIELD, North Carolina     MARSHA BLACKBURN, Tennessee
    CHARLIE MELANCON, Louisiana
    JOHN BARROW, Georgia
    BARON P. HILL, Indiana

                                     ______

                               Professional Staff
                     Dennis B. Fitzgibbons, Chief of Staff
                       Gregg A. Rothschild, Chief Counsel
                          Sharon E. Davis, Chief Clerk
                     Bud Albright, Minority Staff Director

                                      (ii)

            Subcommittee on Commerce, Trade, and Consumer Protection

                       BOBBY L. RUSH, Illinois, Chairman
    JAN SCHAKOWSKY, Illinois             CLIFF STEARNS, Florida,
    G.K. BUTTERFIELD, North Carolina          Ranking Member
    JOHN BARROW, Georgia                 J. DENNIS HASTERT, Illinois
    BARON P. HILL, Indiana               ED WHITFIELD, Kentucky
    EDWARD J. MARKEY, Massachusetts      CHARLES W. ``CHIP'' PICKERING,
    RICK BOUCHER, Virginia                   Mississippi
    EDOLPHUS TOWNS, New York             VITO FOSSELLA, New York
    DIANA DeGETTE, Colorado              GEORGE RADANOVICH, California
    CHARLES A. GONZALEZ, Texas           JOSEPH R. PITTS, Pennsylvania
    MIKE ROSS, Arkansas                  MARY BONO, California
    DARLENE HOOLEY, Oregon               LEE TERRY, Nebraska
    ANTHONY D. WEINER, New York          SUE WILKINS MYRICK, North Carolina
    JIM MATHESON, Utah                   MICHAEL C. BURGESS, Texas
    CHARLIE MELANCON, Louisiana          MARSHA BLACKBURN, Tennessee
    JOHN D. DINGELL, Michigan            JOE BARTON, Texas

                                 C O N T E N T S

                                  ----------
                                                                       Page
    H.R. 964, to protect users of the Internet from unknowing
      transmission of their personally identifiable information
      through spyware programs, and for other purposes...............     3

    Barton, Hon. Joe, a Representative in Congress from the State of
      Texas, opening statement.......................................    36
    Bono, Hon. Mary, a Representative in Congress from the State of
      California, opening statement..................................    39
    Hooley, Hon. Darlene, a Representative in Congress from the State
      of Oregon, opening statement...................................    37
    Rush, Hon. Bobby L., a Representative in Congress from the State
      of Illinois, opening statement.................................     1
    Schakowsky, Hon. Jan, a Representative in Congress from the State
      of Illinois, opening statement.................................    35
    Stearns, Hon. Cliff, a Representative in Congress from the State
      of Florida, opening statement..................................    34
    Towns, Hon. Edolphus, a Representative in Congress from the State
      of New York, opening statement.................................    38

                                   Witnesses

    Cerasale, Jerry, senior vice president, government affairs,
      Direct Marketing Association, Inc..............................    74
        Prepared statement...........................................    76
    Maier, Fran, executive director, TRUSTe..........................    95
        Prepared statement...........................................    97
    Morgan, Dave, founder and chairman, Tacoda, Inc..................    87
        Prepared statement...........................................    89
    Schwartz, Ari, deputy director, Center for Democracy and
      Technology.....................................................    40
        Prepared statement...........................................    42
    Varney, Christine A., Hogan & Hartson LLP, on behalf of Zango,
      Inc............................................................   131
        Prepared statement...........................................   134

                    COMBATING SPYWARE: H.R. 964, THE SPY ACT

                                  ----------

                            THURSDAY, MARCH 15, 2007

                  House of Representatives,
                Subcommittee on Commerce, Trade
                               and Consumer Protection,
                              Committee on Energy and Commerce,
                                                        Washington, DC.
        The subcommittee met, pursuant to call, at 11:10 a.m., in
    room 2322 of the Rayburn House Office Building, Hon. Bobby L.
    Rush (chairman of the subcommittee) presiding.
        Members present: Representatives Schakowsky, Barrow, Towns,
    Ross, Hooley, Matheson, Stearns, Bono, Terry and Barton [ex
    officio].

     OPENING STATEMENT OF HON. BOBBY L. RUSH, A REPRESENTATIVE IN
                  CONGRESS FROM THE STATE OF ILLINOIS

        Mr. Rush. The subcommittee will come to order.
        Today the Subcommittee on Commerce, Trade and Consumer
    Protection tackles the problem of spyware, the insidious
    software that consumers unwittingly download onto their
    computers only to have their personal private information
    extracted for commercial or fraudulent purposes.
        Spyware comes in many forms. Sometimes it takes the form of
    adware that tracks the Web sites an individual visits in order
    to facilitate target marketing and develop pop-up ads tailored
    to sites he or she visits. At other times it is far more
    offensive, redirecting his or her Web searches to gambling or
    pornographic sites. And sometimes at its very worst, spyware
    monitors and steals a consumer's sensitive secret information
    such as account passwords and credit card numbers. Spyware
    surreptitiously makes its way onto one's computer by fooling
    the computer into downloading the nefarious software. Spyware
    is often secretly bundled with free software from Web sites
    that a consumer willingly downloads onto his or her computer.
    At other times spyware is installed as an add-on to a browser's
    toolbar or it simply pops up as a seemingly innocuous Web site
    or window, innocently asking for permission to install. Perhaps
    the worst of all, some spyware masquerades as anti-spyware with
    promises of cleaning up a person's computer only to install its
    own version of spyware.
        Whatever its form and however it is installed, at its worst
    spyware can lead to the unwanted exposure of offensive Web
    content to unsuspecting individuals, particularly children. It
    can also lead to outright fraud resulting in significant
    financial damages. At its best, spyware is simply nasty stuff
    that clogs computers, slows down processing power and is costly
    to remove. According to a survey in Consumer Reports as cited
    in the Washington Post, consumers paid as much as $7.8 billion
    over 2 years to protect or repair their computers with anti-
    spyware and anti-virus software.
        In the past two Congresses, Mrs. Bono and Mr. Towns
    introduced the bipartisan Spy Act and both times the bill
    enjoyed overwhelming support. Twice this subcommittee and the
    full committee unanimously reported the bill. Twice the full
    House passed the bill with near unanimity and twice the Spy Act
    met its demise in the Senate. This year Mr. Towns and Mrs. Bono
    are once again teaming up to introduce the Spy Act as H.R. 964.
    It is my full intent as chairman of this subcommittee to do
    everything I can to make it three times that this bill passes
    this subcommittee and the full committee and the House of
    Representatives and finally makes its way to the President's
    desk. Let us all hope that the Senate can get its act together
    this time around. Three times should be the charm for the
    Senate.
         H.R. 964 provides a broad regulatory framework that
    empowers consumers with knowledge and allows them to be in
    charge of what goes on their personal computers. First, the
    bill outright prohibits deceptive practices and acts related to
    spyware that wreak havoc on a computer's operating system or is
    a harmful invasion of one's privacy. Moreover, the bill creates
    a regime where an entity cannot execute any program that
    collects personal information without first giving explicit
    notice to the consumer and subsequently receiving his or her
    consent. The bill further requires that once installed, the
    information collection program can be easily removed or
    disabled. Lastly, H.R. 964 provides that the FTC will enforce
    the Spy Act and that any violation of these provisions will be
    treated as an unfair and deceptive act or practice violating a
    rule promulgated under section 18 of the FTC Act. Accordingly,
    the Commission will be able to impose significant penalties,
    and I firmly believe, as do most of today's witnesses, that
    this bill strikes an appropriate and workable balance that will
    allow honest commerce and innovation to occur.
        Last year, not only did this bill receive an overwhelming
    support from our members but also from many technology
    companies and associations including Yahoo, eBay, AOL Time
    Warner, Dell, Microsoft, EarthLink and the U.S. Telecom
    Association. We will carefully consider the testimony of our
    witnesses and the comment letters that we have received from
    the FTC, consumer groups and industry experts.
        Again, I want to commend Mr. Towns and Mrs. Bono for the
    terrific work that they have done on the Spy Act and for
    exhibiting yet another example of quality bipartisan
    cooperation that is really rather unique to this subcommittee,
    and I welcome our guests, who have graciously agreed to appear
    before us today and I hope that today marks the first step
    towards making this important bill into law.
        Thank you.
        At this time I will submit a copy of H.R. 964 for inclusion
    in the record.
        [H.R. 964 follows:]

        Mr.  Rush. I recognize the ranking member of the
    subcommittee, the gentleman from Florida, Mr. Stearns.

     OPENING STATEMENT OF HON. CLIFF STEARNS, A REPRESENTATIVE IN
                   CONGRESS FROM THE STATE OF FLORIDA

        Mr. Stearns. Thank you, Mr. Chairman.
        As you have mentioned, we hope that the third time is the
    charm here. It has been nearly 3 years since the committee
    first held hearings on the subject of spyware. Although the
    Internet may seem like it has been around for a long time to
    many of us, the reality is that it has only been commercially
    available for a little more than a decade. As rapidly as usage
    has spread, so too has industry and user practices evolved. We
    have learned about some of these practices. Obviously spyware
    is one of those.
        Where circumstances warranted, we tried to respond with
    legislation in this committee, which we did. Some of our
    efforts of my colleagues resulted in public laws such as Can
    Spam. Although we like to respond as quickly as possible, we
    usually try to be as careful as possible to avoid unintended
    consequences. I don't think we did. I would say, Mr. Chairman,
    we are on this side ready to move to markup. We think we could
    move to markup after this hearing because we have had so much
    support for this bill in the past and we would like to see a
    markup out of this subcommittee as soon as possible.
        Mrs. Bono has showed leadership and Mr. Towns has in the
    108th Congress. We have discovered all the bad things about
    spyware and what it creates. We also learned that most
    pernicious forms of spyware have more malicious intentions than
    we realized. Criminals often in other countries have developed
    programs that can potentially be used to steal a person's
    identity. A keystroke logger is one example of a program that
    can capture a consumer's data, which can then be used to commit
    fraud. Other types of spyware software have been used to hijack
    a user's computer or to redirect a user's computer to bogus Web
    sites.
        After investigating the damage of potential harm caused by
    spyware to consumer computers, we passed the bill out of the
    subcommittee in the 108th. The House likewise passed it, as you
    have mentioned. Unfortunately, the Senate did not take up the
    bill and we tried again in the 109th. The committee again
    unanimously passed the legislation. H.R. 964 is the same bill
    we unanimously passed in the committee and nearly unanimously
    in the House last Congress.
        There has been, I think, much progress in the industry, I
    would compliment them, with the adoption of best practices and
    recognition of the need for consumer consent. We also have seen
    an increase in the number of enforcement actions. This is all
    good. That being said, the threat of spyware and the havoc it
    can inflict on a consumer's computer--or worse, on the
    identity--remains a real threat. Consumers and businesses are
    now spending billions of dollars to protect themselves and
    their computers. To that end, I believe there is still a need
    for this legislation and so I support H.R. 964. A company that
    is a bad actor is generally the exception rather than the rule.
    While criminals may never disappear, legitimate companies are
    not in business to offend their customers.
        I would like to welcome the distinguished panel here. I
    look forward to their views on H.R. 964.
        Mr. Chairman, in closing I would like to thank Mr. Barton
    for his leadership on this issue during the last two
    Congresses. I also obviously commend my colleagues, Mrs. Bono
    and Mr. Towns, and finally I would like to recognize my
    colleague, the chairman, Mr. Dingell, and Ms. Schakowsky, who
    was the ranking member when I was the chairman, for her hard
    efforts in this area too.
        With that, Mr. Chairman, I look forward to the hearing.
        Mr. Rush. Thank you.
        The committee recognizes the fine gentlewoman from
    Illinois, Ms. Schakowsky.

     OPENING STATEMENT OF HON. JAN SCHAKOWSKY, A REPRESENTATIVE IN
                  CONGRESS FROM THE STATE OF ILLINOIS

        Ms. Schakowsky. Thank you, Chairman Rush, for holding
    today's hearing on H.R. 964, the Spy Act.
        The proliferation of spyware, covertly installed software
    that can snatch personal information, has made it necessary
    that we pass this legislation. And while I am proud to be an
    original cosponsor of the Spy Act, I hope this is the last time
    that I say that.
        Our committee wanted to be proactive on this issue; we
    were. I was very proud to work with Mr. Towns and Mrs. Bono and
    Mr. Stearns and the chairman at the time, Mr. Barton, and Mr.
    Dingell. We did our work. We got it out of the subcommittee,
    the committee and the House. And when we first started working
    on this issue 4 years ago, spyware was not a household word; it
    is now. People used to be baffled when they found that their
    Web page settings changed or when their computers became
    sluggish. They would think that the problem was their computer
    or the Internet service provider but now the suspect is
    spyware.
        Spyware is a nationwide problem that affects millions of
    computers from large financial institution servers to home
    computers. America Online has put occurrences of spyware as
    high as 80 percent among households with broadband. As
    broadband becomes more popular in American households, we can
    only assume spyware will continue to affect our home computers
    until we give the Federal Trade Commission all the authority it
    needs to shut down spyware purveyors.
        Again, spyware is much more than little annoyances such as
    slow computers and unwanted popup ads. Those are just symptoms
    of the real trouble spyware can cause. The spyware is so
    resourceful that it can snatch personal information from
    computer hard drives, track every Web site visited and log
    every keystroke entered. Spyware is a serious threat to
    consumer privacy and a powerful tool for identity theft, the
    fastest-growing financial crime. With all the current threats
    to our country, our homes and our wallets, our computers should
    not have another worry.
        Although we don't want to stop legitimate uses of the
    software, underlying spyware such as allowing easy access to
    online newspapers, we do want consumers to have control of
    their computers and personal information. We have passed this
    bill with overwhelming bipartisan support in the past two
    Congresses and I hope this is the Congress that will get the
    bill signed into law.
        So I thank you, Mr. Chairman.
        Mr. Rush. Thank you.
        Now the committee will recognize the ranking member of the
    full committee, Mr. Barton of Texas, for 5 minutes.

       OPENING STATEMENT OF HON. JOE BARTON, A REPRESENTATIVE IN
                    CONGRESS FROM THE STATE OF TEXAS

        Mr. Barton. Thank you, Mr. Chairman. I appreciate the
    courtesy. I was just downstairs in the Energy and Air Quality
    Subcommittee in one of our hearings on climate change and
    rushed up here, so I appreciate the courtesy of being allowed
    to speak as soon as I get here.
        Thank you for holding the hearing on the Spy Act and making
    it a priority. As everyone knows, this is round 3. The
    committee sent the Spy Act to the floor by unanimous vote in
    the last Congress and a nearly unanimous vote in the Congress
    prior to that. The House likewise passed the legislation by a
    nearly unanimous vote in the last two Congresses. We are here
    today because the Senate has twice failed in the last
    Congresses to act on this bill for reasons that are absolutely
    a mystery to me.
        This legislation ought to be an automatic-passage bill. It
    is a key component to solving the problem of Internet spying,
    and protecting our constituents from invasions of their
    privacy. The bill not only receives broad bipartisan support in
    this institution but many of the big technology players also
    support the Spy Act: Yahoo, eBay, AOL Time Warner, Dell,
    Microsoft, EarthLink, the U.S. Telecom Association, just to
    name a few. We have differences of opinion on the issue of
    network neutrality, for example, among some of these folks. On
    this issue, there is 100 percent unanimity.
        The reason for the support is evident. Internet spying is
    more than just an annoyance and more than an invasion of
    consumers' privacy. It also poses the very real danger of
    identity theft. Furthermore, spyware often proves dangerous to
    the consumer's physical property, their personal computers. The
    scariest part of spyware is that you can have an unwanted,
    unnoticed program on your computer that captures and reports
    your keystrokes. What is at stake is a treasure chest of your
    life's financial secrets, your Social Security number, your
    bank account number, your credit card number and all kinds of
    personal passwords. Many consumers don't even know that this is
    possible, much less that these applications are alive on their
    computers right now, and as easy as it was to acquire a batch
    of spyware, sometimes it is almost impossible to get rid of it
    because of deceptive or nonexistent instructions for
    uninstalling these applications. You can pick up a batch of
    spyware by a click of a mouse but you may need the help of a
    computer expert and all day to get rid of it.
        Industry groups have taken strong steps, luckily, towards
    combating the dangers of spyware. However, it will take a mix
    of technology, consumer awareness, industry best practices,
    consumer education, strong enforcement of existing law and I
    think new law to effectively fight spyware.
        The bill before us does that. It places strong enforcement
    tools in the FTC's toolbox. It provides stiff penalties to hold
    various actors accountable for their action. It still balances
    the interests that are legitimate business interests of the
    bill.
        I could go on and on but let me simply say that this has
    been a bipartisan effort on our committee. Congresswoman Bono,
    Congressman Towns, Congressman Stearns, Congresswoman Jan
    Schakowsky as well as Chairman Dingell and myself have worked
    diligently to bring this legislation to the floor. And now with
    your efforts, Mr. Chairman, I am sure that we will finally get
    it across the finish line and get it through the Senate too. It
    just takes somebody from Chicago to get it done.
        With that, Mr. Chairman, I yield back the balance of my
    time.
        Mr. Rush. What else do you want?
        The gentle lady from Oregon, Ms. Hooley, is recognized for
    5 minutes.

     OPENING STATEMENT OF HON. DARLENE HOOLEY, A REPRESENTATIVE IN
                   CONGRESS FROM THE STATE OF OREGON

        Ms. Hooley. Thank you, Mr. Chairman, and I am thankful to
    all of the witnesses for being here today and your testimony on
    this issue.
        Although I am new to the Energy and Commerce Committee and
    this subcommittee, I have been involved for the last 8 years
    with fraud prevention efforts. I am pleased to join this
    subcommittee and have the opportunity to address these
    important issues as they relate to commerce. I commend my
    colleagues for taking up this issue of spyware, not only this
    Congress but for the last two Congresses, and I, like the chair
    and ranking member, hope this legislation can finally get all
    the way through and become law.
        Software that is installed without your consent to monitor
    or control your computer, known as spyware, threatens the
    security of our personal information and private transactions.
    It threatens commerce on the Internet and consumers' confidence
    of Web purchases and pollutes computers to the point they no
    longer function. Despite the efforts of FTC, which has
    completed 11 spyware enforcement cases, and the passage of the
    Safe Web Act, more needs to be done and I think this
    legislation is the answer. I do, however, have some concerns
    with regard to the lack of an exemption for fraud detection
    software. As I understand it, fraud detection software that is
    used to make consumers safer and helps protect them from
    fraudulent activity might be curtailed by this legislation. I
    hope we can look at this issue before markup.
        Again, I applaud this subcommittee for their diligent work
    on spyware and look forward to working with all of you and
    passing this piece of legislation.
        Thank you, and I yield back.
        Mr. Rush. Thank you.
        The gentleman from Nebraska, Mr. Terry, is recognized for 5
    minutes.
        Mr. Terry. I pass.
        Mr. Rush. The gentleman from Utah is recognized for 5
    minutes.
        Mr. Matheson. I will waive.
        Mr. Rush. The gentleman from New York, the coauthor of the
    bill, Mr. Towns, is recognized for 5 minutes.

     OPENING STATEMENT OF HON. EDOLPHUS TOWNS, A REPRESENTATIVE IN
                  CONGRESS FROM THE STATE OF NEW YORK

        Mr. Towns. Thank you very much, Mr. Chairman. I want you to
    know that I feel very confident and comfortable that this is
    going to make it all the way with you in the chair and of
    course seeing Mr. Morgan down from New York and I know that we
    are going to finish this thing off this time, no doubt about
    it.
        I also want to thank you for holding this important hearing
    today on H.R. 964, the Spy Act, and for your strong commitment
    to protecting consumers' privacy on the Internet. As the
    primary Democratic sponsor, I have been proud to work with
    Congresswoman Mary Bono. Her tireless efforts on this issue
    have been unmatched, and I want to thank her for her dedication
    and commitment to this issue.
        We passed this bill out of committee a few times already so
    perhaps the third time will be a charm. That is why it is
    important to hold this hearing. We want to make sure to get it
    right.
        Spyware continues to be a nuisance to many of our
    constituents, even as new and innovative Internet business
    models have sprung up. There is still some debate about the
    approach Congress should take to protect consumers from these
    harmful programs. One computer manufacturer has said that
    problems related to spyware cause most of their customer
    complaints. Another company said that spyware accounts for
    about 50 percent of all tech support calls. Although hard to
    quantify, this is adding hundreds of millions of dollars in
    costs for companies.
        More importantly, spyware programs can invade consumer
    privacy by recording and transmitting personal information,
    monitoring the Web sites you visit or even stealing documents
    from our computers. Other programs hijack your computer,
    forcing you to click through multiple screens until you
    download a program. Finally, all of these programs impair the
    functionality of a consumer's computer, often slowing its
    operation to a grinding halt.
        Although the problem seems clear, the solution is far from
    it. Technology changes at a tremendous rate, often making
    legislation outdated. Additionally, some computer programs
    which serve legitimate functions such as scanning your system
    for problems or security breaches or customizing our browser or
    advertising experience could be classified as spyware if we do
    not legislate carefully. It seems to me that a key issue is
    notice. Consumers must get meaningful and accurate notice
    before they make a decision to download programs that could
    harm their computers. The FTC should be prosecuting companies
    that do not provide notice or that provide deceptive notice.
    Certainly the egregious violators can be prosecuted under
    existing statutes and the FTC has taken steps in this regard,
    possibly in reaction to our continued interest in this
    legislation.
        Finally, let me conclude by saluting my colleagues, first
    Congresswoman Bono for her legislation and leadership on this
    issue, and of course, let me thank Ranking Member Barton of the
    full committee and of course former Chairman Stearns and of
    course former Ranking Member Schakowsky and also Mr. Dingell,
    who is the chairman of the full committee. I want to thank all
    of you for your work and I know that at the end of the day we
    are going to get this done, so thank you very much, Mr.
    Chairman.
        Mr. Rush. Thank you. Before we hear the best that we have
    for today, I want to just bring to the attention of Ms. Hooley,
    on page 19, line 3, there are provisions here for the detection
    or prevention of fraudulent activities.
        Ms. Hooley. OK. What line is it, Mr. Chairman?
        Mr. Rush. Page 19, line 3.
        Ms. Hooley. Line 3?
        Mr. Rush. Right.
        Now I have to personally apologize to the next speaker, a
    fine member of this subcommittee. Mrs. Bono, I want you to know
    that we are indeed saving the best for the last, so you are
    recognized now for 5 minutes.

       OPENING STATEMENT OF HON. MARY BONO, A REPRESENTATIVE IN
                 CONGRESS FROM THE STATE OF CALIFORNIA

        Mrs. Bono. Thank you, Mr. Chairman, and I just want to
    mention to my colleague, Mr. Towns, whom I have known for many
    years, that you reminded me of one of my favorite stories that
    I ran into Bono in an elevator when I was with my late husband,
    Sonny Bono, and the two of them had an argument over how to
    pronounce the name, but Sonny won with ``Bono''. That is one of
    my favorite stories and we love to laugh about that.
        I want to begin by thanking Chairman Rush and Ranking
    Member Stearns, again, my colleague, Ed Towns, Ms. Schakowsky
    and the long list of staff who have worked so hard, especially
    David Cavicke. They have worked so hard for many years in
    crafting the Spy Act. I would also like to thank full committee
    Chairman Dingell and Ranking Member Barton for their leadership
    and support throughout the past three Congresses. Without their
    commitment to addressing the problem of spyware, this bill
    would not be the bipartisan lovefest piece of legislation it is
    today. In the 108th Congress, I introduced H.R. 2929, the
    Safeguard Against Privacy Invasions Act. That bill passed the
    House by a vote of 399 to 1. In the 109th Congress, I
    reintroduced my spyware bill as H.R. 29, the Securely Protect
    Yourself Against Spyware Act, or Spy Act, and you don't know
    how that delights staff to come up with such clever acronyms.
    But just as it did in the 108th Congress, my bill passed the
    House by a large margin of 393 to 4.
        I remain a strong proponent of spyware legislation because
    of my belief that our constituents deserve adequate protections
    when they are online. This means that the computer user should
    be able to maintain control over his or her computer and the
    information they store on it. The Spy Act prohibits perverse
    behavior such as keystroke logging and drive-by downloads.
    Moreover, it establishes a simple notice regime so that
    computer users can make informed decisions regarding the
    programs they wish to put on their computers. Simply stated,
    this bill works to restore privacy on the personal computer,
    which has become the control center for our business
    transactions as well as our personal interactions.
        There was a time when the Internet was an occasional tool.
    However, today the Internet is used by most on a daily basis
    for practically everything. For this reason, it is crucial that
    computer users can securely carry out their lives on the
    Internet without fear that an unknown party may gain access to
    sensitive information. It is my firm belief that the Spy Act
    does this while at the same time preventing negative impacts to
    legitimate industry and the overall integrity of the Internet.
        I look forward to listening to the testimony from our panel
    today and I am sure that we all agree that spyware is a problem
    that could undermine the Internet's integrity and needs to be
    addressed.
        I would once again like to thank the committee for its
    support. I would like to urge my colleagues to support H.R.
    964, the Towns-Bono Spy Act.
        Again, thank you very much, Mr. Chairman. I yield back my
    time.
        Mr. Rush. Now we will hear from our fine array of
    witnesses. We certainly want to thank you for taking your time
    out from your busy schedule to testify before this subcommittee
    on this very important matter. I will introduce you
    individually and we will ask that you restrict your comments,
    please, to 5 minutes, and then be available for questioning.
        Our first witness today is Mr. Ari Schwartz. He is the
    deputy director of the Center for Democracy and Technology,
    CDT. CDT is a nonprofit public-interest organization devoted to
    promoting privacy, civil liberties and democratic values online
    through legislative, regulatory, self-regulatory and public
    education efforts. In this capacity, they have been a vocal
    supporter of comprehensive privacy legislation and further
    support the goals of H.R. 964, the Spy Act.
        Mr. Schwartz, you are recognized for 5 minutes.

        STATEMENT OF ARI SCHWARTZ, DEPUTY DIRECTOR, CENTER FOR
                         DEMOCRACY & TECHNOLOGY

        Mr. Schwartz. Chairman Rush, Ranking Member Stearns,
    members of the committee, thank you for holding this public
    hearing today on the Spy Act and for inviting me to
    participate.
        This committee has consistently followed the spyware issue
    over the past 4 years and CDT is pleased to see this much-
    needed attention continue.
        I come back to the committee today to offer good news and
    bad news on the spyware issue. First the bad news. As predicted
    by members of this committee in the past, spyware has
    unquestionably become one of the most serious threats to the
    Internet's future. Consumer Reports magazine estimates that
    consumers lost $2.6 billion to spyware alone last year, and one
    in eight consumers have spyware on their computer and according
    to the magazine, about 1 million consumers had to throw away
    their computer because they were so riddled with spyware.
        On the other side, in terms of good news, there are new
    indications that the combination of law enforcement, anti-
    spyware technology, industry self-regulation, consumer
    education, legislative efforts and increased responsibility on
    the part of advertisers are beginning to impact the marketplace
    that had allowed spyware to flourish.
        On the law enforcement front, spyware actions at both the
    Federal and State level have increased dramatically over the
    past 2 years. The FTC has now successfully prosecuted 11 cases,
    which we detailed in our written testimony. Based on the
    experiences of these cases, it is now clear that the Commission
    desperately needs increased civil penalty authority in order to
    be comprehensively effective. The Spy Act, H.R. 964, provides
    such authority.
        Spyware enforcement has also been developing at the State
    level with 10 cases across four States so far. Although H.R.
    964 safeguards State-level enforcement under consumer
    protection statutes, it does not explicitly preserve the
    ability for State attorneys general to bring civil actions
    under statutory provisions specific to spyware. With so much
    enforcement work now occurring at the State level, we feel it
    is important to safeguard the role of the State attorney
    general by empowering them to help enforce Federal law.
        On a final note, I would like to stress that the Center for
    Democracy & Technology still strongly believes that the real
    long-term solution to spyware and other privacy issues in front
    of this committee will require baseline consumer privacy
    legislation based on fair information practices. General
    privacy legislation would provide businesses with guidance as
    they deploy new technologies and business models that involve
    the collection of information and it would give consumers some
    measure of confidence that their privacy is being protected as
    companies roll out these new ventures. If we do not begin to
    address privacy issues more comprehensively, this committee
    will need to continue to address new emerging privacy threats
    every few months with new legislation in order to protect
    consumers in the networked economy.
        We have seen a number of issues already begin to increase
    with the most recent including spam, do-not-call lists, search
    information, data breaches, use of Social Security numbers,
    pretexting and spyware. While we appreciate the committee's
    hard work on all these important issues, we believe that the
    members of this committee should join with the 13 companies and
    multiple consumer groups that have actively supported
    comprehensive consumer privacy legislation in an attempt to
    address these issues at the source rather than continue a
    piecemeal approach each time a new privacy threat arises.
        Thank you for your attention. I look forward to your
    questions.
        [The prepared statement of Mr. Schwartz follows:]

        Mr. Rush. Thank you.
        Our next witness, and Mr. Cerasale, if I mispronounce your
    name, please correct me, is Mr. Jerry Cerasale, a senior vice
    president of government affairs for the Direct Marketing
    Association Incorporated, DMA. DMA represents 3,600 member
    companies that are engaged in direct database and interactive
    marketing and electronic commerce. Last year the association
    developed and adopted standards for software downloads as part
    of its guidelines for ethical business practice. DMA opposes
    this bill and a broad regulatory approach in general because it
    believes that self-regulation coupled with existing FTC
    authority is working to crack down on harmful spyware.
        Mr. Cerasale, you are recognized for 5 minutes.

    STATEMENT OF JERRY CERASALE, SENIOR VICE PRESIDENT, GOVERNMENT
              AFFAIRS, DIRECT MARKETING ASSOCIATION, INC.

        Mr. Cerasale. Thank you very much, Mr. Chairman. With a
    last name like mine, I respond to anything that comes close. So
    that is fine. Cerasale is how it is pronounced but Cerasale is
    all right as well. I am not ashamed of my heritage.
        I do thank you for inviting us here and I would ask that my
    written testimony be placed in the record, and I thank you for
    recognizing DMA, the leading trade association. We have been
    around since 1917 and our members are part of the economy, very
    much part of this new e-commerce as they are providers of
    Internet service. They sell goods on the Internet and so forth.
    This is very important for us.
        We agree fully with the subcommittee and the committee that
    we want to try and rid the Internet of spyware. That is really
    a goal that I think we should all be working toward, and I want
    to commend this committee especially because you were the
    instigator. You were the catalyst for moving forward in trying
    to get industry looking at spyware. You were the catalyst to
    DMA in producing our guidelines for spyware, for downloading of
    software on the computers. You were the catalyst for browsers
    taking any spyware software and putting it in their browser.
    You are the catalyst for computer manufacturers adding that
    onto computers. You are the catalyst for software providers
    creating anti-spyware software. And I believe you are the
    catalyst for the FTC and the States for moving and trying to go
    against those bad actors putting on spyware deceptively onto
    consumers' computers and stealing information, stealing their
    computer, slowing it down and forcing those many people who had
    to throw away their computers.
        We have made progress since you started this investigation.
    It is not over, and I don't think it will ever be over. As
    technology changes, bad actors adapt. They get new technology
    and we are going to have to be ever vigilant as we go forward
    here. We don't think at the DMA that there is really a magic
    bullet that is an all-purpose answer to everything here, which
    is why we look at going forward with our guidelines because we
    can change them fairly rapidly and try and adjust to what is
    happening in the marketplace and try and keep this Internet
    open for e-commerce.
        We are really pleased that e-commerce has grown. One of the
    great things is as we look at the growth, we have statistics to
    show it is growing at 24 percent right now. It had been larger
    but it is continually growing, and one of the great things was
    that Cyber Monday was larger than Black Friday this holiday
    season and the gap is going to get larger and larger as e-
    commerce becomes more and more part of our American experience
    for the benefit of consumers and the benefit of businesses.
        As we look at H.R. 964, we support granting the attorneys
    general the opportunity to and the authority to enforce the
    law. We think that is a major part of balancing for preemption.
    We also support the efforts and what is in section 2 of the
    law. We think going after the bad actors is really what is
    important and strikes the right balance.
        We have some concerns with section 3 of the bill. We think
    that the broad definition of software, and we had a very
    difficult time trying to define software in our guidelines so
    it is not something that is new. A broad definition of software
    will take into account and cover things that are part of the
    seamless use of the Internet that Americans are used to, that
    provides advertising-supported contents, there is so much free
    content on the Internet and so we think that section 3 probably
    goes further than we would want. We believe you need
    conspicuous notice, you need choice for the consumer, you need
    an ability to uninstall or at least totally disengage, disable
    any software that is put on your computer. We think there
    should be a link to the privacy policy of the person putting on
    the software and the name of the company should be known. We
    think that strikes the balance for consumer choice plus
    advertising marketing-supported Internet content which is
    available free to most Americans.
        The DMA has a concern with the Good Samaritan provision. We
    are worried that the Good Samaritan provision in the bill could
    become a means, an anti-competitive means and so we want to
    make sure that we look at that and strike that balance and make
    sure that is there. We also think that the monitoring provision
    in 5(b) is a little bit too narrow. That provision for the
    anti-fraud thing looks at certain companies. There are other
    companies that do anti-fraud that aren't covered in that
    exemption and we think that they are there.
        We want to thank you very much for having me here today.
        [The prepared statement of Mr. Cerasale follows:]

        Mr. Rush. Our next witness is Mr. Dave Morgan. Mr. Morgan
    is the founder and the chairman of TACODA, Incorporated. Mr.
    Morgan will testify on behalf of his company and on behalf of
    the Interactive Advertising Bureau, which represents more than
    300 leading companies that are responsible for selling more
    than 86 percent of online advertising. TACODA, which develops
    innovative technologies for target marketing, says on page 4 of
    its written statement that it supports H.R. 964, the next three
    pages detailing its complaints against everything but section
    2.
        Now we will recognize Mr. Morgan for 5 minutes.

      STATEMENT OF DAVE MORGAN, FOUNDER AND CHAIRMAN, TACODA, INC.

        Mr. Morgan. Thank you. Chairman Rush, Ranking Member
    Stearns and members of the subcommittee, thank you very much
    for inviting me to testify on H.R. 964.
        I am Dave Morgan, and as you can tell, I am wearing two
    hats here today. One is the founder and chairman of TACODA,
    Inc., a New York-based online advertising company, and also as
    the chairman of the Public Policy Council of the Interactive
    Advertising Bureau, which is the trade body of basically the
    largest majority of the online advertising today.
        Consideration of this legislation in past Congresses has
    been an extraordinarily open and bipartisan effort and we
    welcome the opportunity to participate with the committee and
    the staff in developing appropriate language that balances
    consumer protection with fostering continued growth on the
    Internet. It is clear to me and the IAB that this subcommittee
    intends to address the legislation to combat purveyors of
    malicious software while at the same time not adversely
    affecting legitimate online practices such as those employed at
    TACODA.
        The consumer experience with respect to spyware and online
    advertising has improved in the last few years and I would say
    I think the primary driver of that has been this committee's
    focus on the issue and the clear intent that the bad practices
    and this kind of action will not be tolerated. Second, we have
    certainly seen significant prosecutions and actions from the
    Federal Trade Commission and we have also seen a lot of
    industry self-regulatory effort, and as a member of the
    industry, I can tell you much of that has also been driven from
    a reaction from your attention to this issue, and also the
    self-regulation in areas of downloadable software. Given these
    developments and particularly with respect to the broader
    online advertising industry, we do think that there are issues
    around section 3 where there could be some unintended
    consequences.
        A little bit about TACODA. It was created in 2001 as a
    company to target online advertising. We deliver billions of
    advertisements online every day in the pages of major Web sites
    like the New York Times or Chicago Tribune or Orbitz, not pop-
    up advertising and the protection of consumer privacy and the
    principles of relevancy, transparency and freedom of choice
    have been hallmarks of TACODA's business practices from the
    beginning. We are a board member of the Network Advertising
    Initiative, the NAI, the Direct Marketing Association and its
    interactive marketing advisory board.
        Interactive and online advertising is the primary means of
    funding a cost-free rich Internet as well as free access to
    unparalleled products and services. Online advertising is
    paying the bills for what people are spending more than 20
    percent of all of their media consumption today. TACODA and the
    IAB have worked closely with Web sites to develop guidelines to
    address topics including e-mail, popup ads, lead generation.
    Most people are probably surprised by the impact of online
    advertising and the fact that it is supporting this content but
    that is the reality because the vast majority of the content
    online is free today because advertising has paid for it.
        We support H.R. 964's efforts to combat spyware. We
    strongly agree that spyware is bad for consumers, business and
    the online advertising industry. The bill does not impinge on
    certain legitimate practices like those of TACODA which make it
    very easy at TACODA to be supportive of this legislation. But
    there is always a risk of legislation that governs technology
    and technology practices and that is where there are the areas
    of concern across the broader industry, that there may be some
    unintended consequences of defining technology, and given the
    dramatic advances in combating spyware and the guidance now
    available from enforcement and self-regulatory initiatives that
    did not exist at the outset of the last Congress, we believe
    that certain provisions of the bill are worth re-examining: the
    broad definitions of computer software and personally
    identifiable information as well as requirements in connection
    with the collection of both personal information and non-
    personal information. In addition, there are new technologies
    that really weren't even utilized as recently as 2 years ago in
    areas of some certain uses of cookies and java and java script.
        Additionally, the IAB hopes to ensure that the anti-spyware
    providers can continue to remove bad software. We recognize the
    goal of the Good Samaritan provision. However, we would have
    concerns that with changes that have broadened this language to
    create a more extensive immunity provision, that would afford
    companies broad discretion to remove legitimate software which
    is often misidentified as spyware.
        Thank you for considering the views of TACODA and the IAB
    on these issues. The success of the Internet has helped fuel
    this country's economy. We look forward to working together
    with you. Thank you, Chairman Rush. Thank you, Ranking Member
    Stearns. Thank you, members of the subcommittee. I look forward
    to your questions.
        [The prepared statement of Mr. Morgan follows:]

        Mr. Rush. Thank you, Mr. Morgan.
        Our next witness is Ms. Fran Maier. Ms. Maier is the
    executive director of TRUSTe. TRUSTe is an independent,
    nonprofit organization that helps consumers and businesses
    identify trustworthy online organizations through its Web
    privacy seal. The organization is very supportive of H.R. 964,
    which establishes many of the same requirements included in
    TRUSTe's Trusted Download Program.
        Ms. Maier, you are recognized for 5 minutes.

          STATEMENT OF FRAN MAIER, EXECUTIVE DIRECTOR, TRUSTe

        Ms. Maier. Chairman Rush and Ranking Member Stearns and
    members of the subcommittee, I am Fran Maier, executive
    director and president of TRUSTe. We are, as you said, an
    independent, nonprofit organization and our mission is to
    advance privacy and trust for a networked world. We do this by
    serving as a trust authority, bringing together stakeholders
    and developing programs and best practices. Throughout
    programs, we aim to recognize and reward, elevate better
    industry players, responsible industry players.
        I want to thank you for the opportunity to speak to the
    committee about industry self-regulation and our insights on
    H.R. 964.
        First, I would like to talk a little bit about the Trusted
    Download Program. We have been working on this almost as long
    as you have been working on this bill for over a couple of
    years because spyware and unwanted software has really eroded
    consumer trust in the Internet. We developed the Trusted
    Download Program with a broad range of stakeholders including
    our founding partners, AOL, CNET Networks, Computer
    Associations, Microsoft, Verizon, Yahoo, and the Center for
    Democracy and Technology. Our program certifies that
    applications meet requirements for consent, uninstall and
    affiliate control as well as a number of other rigorous
    requirements. It is designed to bring accountability and
    transparency to the downloadable consumer market by creating
    market incentives for responsible best practices. Our program
    requirements are rigorous and have been shared with the
    committee. I would like to add that our certification program
    includes complete evaluation and monitoring and we use an
    outside testing lab to make sure that the benefits of
    certification only go to responsible players.
        Interestingly, I think our program requirements are tiered
    to take into account the many variations in software
    applications and distribution, so the greater the potential
    harm to a consumer, the stricter the standards for
    certification. For example, providers of advertising and
    tracking software in our program must take full responsibility
    for how their software is promoted and distributed. This
    includes the methods used by affiliates, distributors and
    bundling partners. The first group of nine certified
    applications were announced on our Whitelist on our Web site
    last month. We are happy to report that we think that the
    Trusted Download Program has already had a big impact for the
    consumer's benefit. One hundred percent of the companies'
    applications that were certified last month made changes,
    significant changes to their disclosure or to some of their
    activities. We have seen that publishers are reducing the size
    of their affiliate networks in response to the program and the
    press that they have received. CNET's download.com, which is a
    portal where consumers download software, is indicating when
    one of our certified applications is certified so that
    consumers can make that choice when they decide to download
    some software, and AOL and Yahoo among others are using the
    program to make some decisions about who they will partner with
    and advertise with. We believe to improve consumers'
    experience, we need both the stick of effective regulation
    against the bad actors as well as the carrot of market
    incentives to motivate more responsible players.
        Now, to H.R. 964, the Spyware Act. TRUSTe applauds the
    committee's work on the proposed legislation and you should
    know that your work has informed the development of the
    program. Baseline protections for consumers from spyware
    together with private sector self-regulatory initiatives such
    as we have will provide tangible relief to consumers. Section
    2, which outlines egregious software behavior, and section 3,
    requirements for notice, consent and uninstall, are very
    similar to the Trusted Download Program. However, we believe
    H.R. 964's effectiveness would be strengthened and its impact
    magnified by inclusion of a safe harbor for self-regulatory
    compliance programs modeled on the safe harbor provision of the
    Children's Online Privacy Protection Act. As part of the Safe
    Harbor, we would want participation in a self-regulatory
    program as a factor for the court to consider when determining
    penalties under section 4. A strong safe harbor would further
    incent companies to implement best practices. We believe that
    self-regulatory can complement legislation by going beyond
    legal requirements, respond quickly to consumer concerns and
    evolve at the fast pace of industry.
        I would like to conclude by saying that now that the
    Trusted Download Program has been launched, there are no more
    excuses. Advertisers can't say they can't control how their
    advertising is presented to consumers. Publishers should know
    whether their software is lacking adequate consumer controls
    and consent and companies should be able to maintain now that
    they can see the good software from the bad.
        Thank you for this opportunity. We respectfully request
    that you include a safe harbor to encourage adherence to best
    practices.
        [The prepared statement of Ms. Maier follows:]

        Mr. Rush. Thank you, Ms. Maier.
        Our next and final witness for this morning's hearing is
    Ms. Christine A. Varney from the law firm of Hogan and Hartson
    LLP. She is speaking on behalf of Zango Incorporated. Zango is
    an online media company that provides consumers with proper
    online media and programming in exchange for their consent to
    download adware onto their computers. Previously, as 180
    Solutions, the company settled FTC charges that it used unfair
    and deceptive practices to install unwanted adware that was
    deliberately difficult to remove. The settlement disgorged
    Zango of $3 million in ill-gotten gains and presently bars the
    company from installing any adware software onto a consumer's
    computer without his or her explicit consent and an easy means
    of removing it. Zango was lost in the dark and now they see the
    light. They support H.R. 964 except for section 5(c), the Good
    Samaritan section, which it believes to be anti-competitive and
    subject to abuse.
        Ms. Varney, you are recognized for 5 minutes for your
    opening statement.

       STATEMENT OF CHRISTINE A. VARNEY, HOGAN & HARTSON LLP, ON
                         BEHALF OF ZANGO, INC.

        Ms. Varney. Thank you, Mr. Chairman. I was getting a little
    worried there until you got to the ``see the light'' part.
        Chairman Rush, Ranking Member Stearns and members of the
    subcommittee, as the chairman said, I am Christine Varney. I am
    head of the Internet practice at Hogan and Hartson, and in the
    spirit of full disclosure, I am a founder and past chair and
    current board member of TRUSTe. I am also a former Federal
    Trade commissioner.
        As the chairman said, I am appearing here today on behalf
    of my client Zango and Zango appreciates the opportunity to
    share its support for 964 and join the chorus of support that
    you are hearing for the bill. Just a moment about Zango and
    then we will talk just for a few moments about the specific
    provisions of the bill.
        Zango provides consumers with access to a large and
    expanding catalog of more than 100,000 pieces of Web content
    including online video, games, music tools and utilities. Much
    like television, this content is funded by advertising and
    available to consumers without charge. Twenty million consumers
    have chosen to enjoy this content and tens of thousands of
    consumers elect to download Zango software every day. At the
    same time, this business model offers smaller content providers
    and Web publishers the opportunity to monetize their creations
    and their online traffic by delivering to advertisers a
    receptive consumer when that consumer is most likely to be
    making an online purchasing decision. The company has more than
    3,000 advertising partners. Zango's desktop advertising model
    differs from other marketing applications in several respects.
    First and foremost, Zango's pre-download notice and consent
    process will meet the requirements of H.R. 964 as does its
    uninstall and labeling features. Second, Zango does not track
    or collect any user's personally identifiable information. In
    short, Zango is not spying on anyone. Third, instead of merely
    providing links in response to a search query or distracting
    the user with multiple click-throughs, Zango delivers an
    advertiser's specific Web page in response to the consumer's
    search for a related product or service. This gives the
    consumer the benefit of comparative offers on the Web at the
    time the consumer is looking to acquire something.
        Although, as I have emphasized, Zango is not spyware, the
    company long ago recognized that its success and ultimately the
    success of its business model was dependent upon Internet users
    understanding and trusting its value proposition and upon a
    level regulatory playing field for all online advertisers.
    Thus, Zango has supported congressional action in this area
    since the 108th Congress when it endorsed the bill reported by
    this committee. As with that bill, H.R. 964's greatest strength
    is its recognition that conduct and intentions underlying
    different forms of downloadable software require different
    approaches.
        Zango supports section 2 and 3 of the bill which
    appropriately and carefully distinguish between software
    functions that are per se unacceptable versus those for which
    consumer choice and consumer benefits are preserved with
    appropriate consumer protection. Zango also commends the
    authors of the bill for continuing to include the preemption
    provisions of section 6 and the tracking cookie study in
    section 8.
        We are concerned, however, about subsection 5(c), which has
    been described as a liability exception for the so-called Good
    Samaritans. This provision unnecessarily restricts the FTC's
    ability to pursue enforcement action against those parties the
    FTC believes warrant it. Equally important, the presence of
    such an immunity provision in the bill opens the door wide to
    judicial application and expansion of the concept in private
    litigation between commercial parties. Some companies selling
    scanning applications to consumers compete by issuing
    inflammatory warnings designed to frighten consumers about
    software lurking on their computers. It will not be long before
    purported congressional policy protecting Good Samaritans is
    cited as a legal basis for defending against or dismissing a
    civil claim brought by a software provider against one of these
    applications or even a claim brought by one of these
    applications against another. There is no compelling reason in
    this instance to alter the standard that commercial disputes
    between commercial parties should be settled commercially or
    short of that, in the courts in private litigation. The conduct
    of commercial parties should not be exempted from the FTC
    enforcement authority merely due to the alleged nature of the
    particular product or service being sold. Zango respectfully
    urges the committee to delete subsection 5(c).
        All participants in the online advertising industry should
    embrace and implement the standards set forth in section 3 of
    H.R. 964, as Zango has, but unfortunately, not all will. Too
    many in fact will not until they are compelled to do so. As the
    desktop advertising industry evolves, Zango will continue to
    strengthen its business practices and enhance its technology to
    make the online economy increasingly valuable by enabling
    consumers, advertisers, publishers and content providers to
    seamlessly work together. With the one modification suggested,
    H.R. 964 is fully supported by Zango and we urge its enactment.
        I have submitted longer written remarks for the record, and
    I look forward to your questions.
        [The prepared statement of Ms. Varney follows:]

        Mr. Rush. Thank you very much.
        The chair recognizes himself for 5 minutes of questioning.
    I am going to ask a series of questions of this entire panel
    and I ask you in the interest of time, I only have 5 minutes,
    that you do not filibuster, just answer the question with a yes
    or no answer. I will give you ample opportunity if I have time
    remaining to expand on your answers after we have gone through
    this entire series.
        So I want to start with Mr. Schwartz. Mr. Schwartz, do you
    support H.R. 964?
        Mr. Cerasale. Not as written.
        Mr. Rush. Mr. Morgan?
        Mr. Morgan. On behalf of TACODA, we support the bill.
        Mr. Rush. Ms. Maier?
        Ms. Maier. Yes.
        Mr. Rush. Ms. Varney?
        Ms. Varney. Yes.
        Mr. Rush. Next question. Do you believe that consumers
    should be protected from the dangers of significant economic
    losses inherent in spyware programs, and if your answer is yes,
    do you support section 2 of the bill?
        Mr. Schwartz?
        Mr. Schwartz. Yes, and yes.
        Mr. Rush. Mr. Cerasale?
        Mr. Cerasale. Yes to both.
        Mr. Rush. Mr. Morgan?
        Mr. Morgan. Yes to both.
        Ms. Maier. Absolutely.
        Ms. Varney. Yes to both.
        Mr. Rush. Do you believe that consumers should receive
    clear and conspicuous notice of advertising and tracking
    software, especially programs that collect personal information
    on consumers, Mr. Schwartz?
        Mr. Schwartz. Yes.
        Mr. Cerasale. Yes, Mr. Chairman.
        Mr. Morgan. Yes, Mr. Chairman.
        Ms. Maier. Yes.
        Ms. Varney. Yes.
        Mr. Rush. I am tempted to start from this end but I am
    winning starting from that end so I think I am going to keep on
    going. I am not going to change.
        Do you believe that consumers should be provided the right
    to consent to such intrusive applications on their computers?
        Mr. Schwartz. Yes.
        Mr. Cerasale. No, we believe in consumer choice, not
    necessarily one size fits all.
        Mr. Morgan. On behalf of the IAB, we believe that one size
    does not fit all.
        Mr. Rush. So what is your answer?
        Mr. Morgan. My answer would be no, not broadly.
        Ms. Maier. Yes.
        Ms. Varney. Yes.
        Mr. Rush. I am going to start at this end now.
        Ms. Varney, do you believe that such programs should
    provide consumers with a simple installation procedure?
        Ms. Varney. And simple uninstallation, yes.
        Ms. Maier. Agree with that, yes.
        Mr. Morgan. Yes.
        Mr. Cerasale. Yes, it should be if they can't fully
    uninstall, it should be at least totally disabled.
        Mr. Schwartz. Yes.
        Mr. Rush. Ms. Varney, do you support section 3 of the bill?
        Ms. Varney. Yes.
        Ms. Maier. Yes.
        Mr. Morgan. And as I said before, yes, TACODA is supportive
    of the entire bill. On behalf of the online advertising
    industry, we would like a few parts of section 3 re-examined.
        Mr. Rush. Mr. Cerasale?
        Mr. Cerasale. Section 3, not totally as written.
        Mr. Schwartz. We support the goals of section 3. We have
    some comments in our written testimony regarding some of the
    details.
        Mr. Rush. Ms. Varney, do you believe that the Congress
    should provide a single, coherent, pro-competitive regime for
    consumer protection in this area rather than a patchwork quilt
    of different State laws?
        Ms. Varney. Yes, I do, Chairman.
        Ms. Maier. Yes, I do.
        Mr. Morgan. Yes, I do.
        Mr. Cerasale. Yes, we support preemption.
        Mr. Schwartz. In general, yes.
        Mr. Rush. Mr. Schwartz, I have a few moments.
        Mr. Schwartz. I would say that we would like the States to
    be able to act under the Federal bill though. I understand that
    that raises some jurisdictional questions but we hope that that
    can be addressed on the floor that attorneys general will be
    able to act under this bill as a Federal bill.
        Mr. Rush. We have had some earlier commentary on the Good
    Samaritan provision. Is there anybody else that would like to
    add some other commentary on the Good Samaritan provision?
        Mr. Schwartz. I will make a statement about the Good
    Samaritan provision. I think that the goals of the Good
    Samaritan provision are good ones. The goals seem to be to
    promote anti-spyware software. Really, the first line of
    defense for a consumer today is anti-spyware software and we
    have seen that it has had a major effect, positive effect on
    the issue. I have worked with the anti-spyware coalition, with
    anti-spyware groups and with privacy groups and public interest
    groups, working together to build best practices and standards
    for how anti-spyware companies work. We think that we have come
    up with a good set of best practices, putting out more actually
    just today that have gone through an extensive public comment
    period.
        I question the concern over the provision, more because I
    don't think it is going to be effective in doing what the goals
    intend it to do. The goal is, as I said, to promote anti-
    spyware software but it really only protects anti-spyware
    software from the provisions, from the penalties in the bill
    and not from things that an anti-spyware company is most likely
    to be sued over, defamation, for example, or raising concerns
    about software. There are no penalties in this bill that go
    after anti-spyware software in that way so I question how
    effective it is going to be, but the concerns that have been
    raised here I don't see as really getting at the main problem
    with the provision.
        Mr. Rush. My time has expired.
        Now I will recognize the ranking member, Mr. Stearns.
        Mr. Stearns. Thank you, Mr. Chairman.
        Mr. Schwartz, you mentioned in your opening statement that
    sometimes it is so difficult to get rid of the spyware that you
    have to throw away your computer and there is not really a
    program out there that can just sweep through and get rid of
    the spyware?
        Mr. Schwartz. We have seen a real increase in the ability
    of these programs to embed themselves in computers.
        Mr. Stearns. So it is almost impossible to get rid of them?
        Mr. Schwartz. In many cases, if they have something that is
    called a root kit, it can be imbedded into the operating
    system, so when you are looking for the program, you ask the
    operating system, the operating system basically tells you this
    program isn't there because the question goes to the operating
    system and the root kit basically tells the operating system--
    and this is a very simplistic version of what happens but----
        Mr. Stearns. With that in mind, I ask the staff, there are
    only four States in the United States that have actually passed
    spyware: New York, Texas, California and Washington. Utah tried
    to do it and the courts threw it out. What was the reason why
    the courts threw it out? Does anyone in the panel know?
        Mr. Schwartz. It was a different kind of a spyware bill. It
    really tried to focus on copyright provisions, intellectual
    property of ads showing up over the other ads, the place where
    the consumer was trying to go instead of at the deceptive
    practices that this bill and that most of the other bills have
    gone after.
        Mr. Stearns. Ms. Maier, some critics have suggested that
    the online environment has changed with new software, new
    programming so that this legislation really perhaps is not
    needed, and maybe, Mr. Schwartz, you can help me too. Do you
    think that it is possible that it would be accurate that--there
    are some software companies that are not in favor of this bill.
    Some of them are concerned because we have a study on cookies
    and others are concerned, say well, just let the software
    handle it. What is your opinion in terms of software being able
    to prevent software from coming in and that would take of the
    problem, we don't need legislation?
        Ms. Maier. Sir, there is always the good players and the
    bad players and I think the good players can look to self-
    regulatory efforts, to look to best practices and----
        Mr. Stearns. So there is no software out there that would
    prevent the bad players from getting into the computer?
        Ms. Maier. I don't think there is a perfect solution. I
    think it really is a partnership between legislation,
    technology, self-regulatory and other efforts, and so I see
    legislation as necessary.
        Mr. Stearns. Does the rest of the panel agree with that,
    that there is no software out there that at least would cover
    90 percent of the spyware?
        Mr. Schwartz. That is correct.
        Mr. Cerasale. That is correct. As a matter of fact, if
    there were one tomorrow, it might not be effective as
    technology is constantly changing.
        Mr. Stearns. So as much as technology is moving forward for
    software, bad guys can find another way?
        Mr. Cerasale. Absolutely. They may be more technologically
    advanced the more people are trying to stop them.
        Mr. Morgan. Yes, I would agree with that. I mean, it is
    absolutely impossible for technology to be a silver bullet
    here.
        Mr. Stearns. Ms. Varney?
        Ms. Varney. I agree with that.
        Mr. Stearns. OK. The next question is, it appears that
    section 3 of this bill is the area that a lot of people are
    concerned about. I guess for the panel, are cookies used for
    the purpose of serving advertisements? Should cookies be
    treated differently than spyware that does not use personally
    identifiable information to serve advertisements?
        Mr. Schwartz, would you start?
        Mr. Schwartz. Cookies are a somewhat complex issue but I do
    think that they should be treated differently than software.
        Mr. Cerasale. Cookies are so much embedded in how the
    Internet works. It clearly is a different animal. Cookies and
    similar-type technologies are different from a software
    download.
        Mr. Stearns. OK. Mr. Morgan?
        Mr. Morgan. Yes, cookies and what I would call relatively
    passive technologies are very different than the kind of
    invasive software that has been used with the computer
    programs. I think the issues that people have around section 3
    are, it is really hard to figure out the wording of how you can
    get between that passive and active from a practical
    standpoint.
        Mr. Stearns. Mr. Morgan, when this got out of our
    committee, they put in this study on cookies, and I cautioned
    them, I said that was going to create a lot of concern and
    angst in the industry because once you have a study on cookies,
    the study might come out, you never know where it is going to
    go and everybody has these cookies. Do you think cookies by
    themselves are innocuous and----
        Mr. Morgan. I think they are largely innocuous but I
    actually think that the study is a fine idea. I think that this
    is one of those examples, as they say, that sunshine is the
    best antiseptic. If there are problems, I don't think anything
    is hurt by having attention brought.
        Mr. Stearns. Ms. Maier, and you might also point out,
    answer the first question, but the second intuitively is this
    study on cookies, is that necessary?
        Ms. Maier. First of all, I think that cookies are outside
    the scope of what we call software or downloadable applications
    in our program. A study on cookies I think is a great idea. I
    think there are a lot of things going on. Our Web cell program
    requires consumers to know about other cookies and other
    tracking software so if there is a study on cookies, I hope it
    would be including other----
        Mr. Stearns. Is it possible cookies could replicate the
    software once they are in the computer?
        Ms. Maier. What it is technically possible continues to
    amaze me but I don't think that is----
        Mr. Stearns. Do cookies track and do the same thing that
    spyware does in another way that could be considered harmful?
        Ms. Maier. Not generally.
        Mr. Stearns. Mr. Schwartz, do you want to answer that?
        Mr. Schwartz. Cookies basically give an ID number from a
    particular Web site and they can be used--the uses of them have
    changed over time and--but there are more harmful pieces of ID
    tracking that have come up over time so it is kind of--there
    has been a change in that. I do think that a study would be
    helpful at getting at how they are being used.
        Mr. Stearns. Ms. Varney, let me just close. My time is
    running out. If you don't mind just answering the question.
        Ms. Varney. Sure. I think the study is a terrific idea. I
    think the tension around section 3 is on two levels. Cookies,
    java script, HTML, all devices used in the seamless delivery of
    content that consumers want today on the Internet can be
    abused, and the question is, where does this bill land on those
    type of seamless technologies.
        I think there is another tension maybe unspoken in public.
    Yahoo, Google, AOL all have toolbars and those toolbars
    absolutely collect information and deliver advertising.
    Currently, those companies give you great notice and get great
    consent inside their master agreement. They don't pull it out
    separately. I think there is a question about whether or not
    they should and whether or not that bill requires them too.
        Mr. Stearns. Thank you, Mr. Chairman.
        Mr. Rush. Ms. Schakowsky is recognized for 5 minutes.
        Ms. Schakowsky. Mr. Schwartz, you frequently talk about
    baseline privacy legislation and I wondered if you could
    describe for us what you would envision for such a bill and
    also because you mentioned--I can't remember if you said it but
    in your written testimony there are some downsides to not
    having a more comprehensive piece of legislation in dealing,
    for example, with spyware alone. So I wonder if----
        Mr. Schwartz. Let me start with the problems and then move
    to what we would like to see. Some of the problems that we see,
    you have different--we start coming up with these different
    privacy bills in all of these areas, I mentioned seven in my
    testimony, but for those of you who have been on this
    subcommittee know, there are dozens, literally dozens of
    privacy issues that have come before this subcommittee over the
    past 10 years or so, as we start coming up with different
    standards for different types of information, it becomes harder
    for consumers to know what the particular standard is for that
    type of information. If we don't have a safety net there, and
    there are some areas that still fall outside of that so a new
    technology arises and you have to create a new standard for
    that new technology. You have to compare it to all these other
    differing standards, go through this whole process again. We
    think that it makes more sense to come up with really a
    baseline safety net kind of standard where we know that if
    something falls out of it, at least it is covered by this new
    standard of where personal information is being directly
    collected, and we would like to see something that covers the
    fair information practices. I think that the Federal Trade
    Commission, actually started by the work of Commissioner Varney
    at the end of the table over there, has at one point back in
    the 1990's endorsed privacy legislation. We thought that that
    was an excellent starting point: notice, choice and consent,
    depending on the situation, access and security and enforcement
    as a great starting point to look at to getting at these
    issues. We feel there have been a number of bills over the
    years that have started us down that path. We now have 13
    companies that testified in front of the, I think it was the
    full committee, last year in support of looking at general
    privacy legislation. We think consumer groups are behind it.
    There is momentum now we think to get at this issue so that we
    don't have these kind of different standards across different
    kinds of industry, across different kinds of technology.
        Ms. Schakowsky. I would really like to hear from other
    panelists on their view of having a comprehensive baseline
    bill.
        Mr. Cerasale?
        Mr. Cerasale. Yes. Well, DMA does not have a set position
    on an overall comprehensive privacy bill. We want to be open
    and talk and discuss it. There are an awful lot of privacy laws
    in the United States and how they do come together and so forth
    and what information is covered and not covered. An overall
    privacy bill could in fact really create the different
    standards that financial information is treated one way whereas
    as marketing information another that may be more restrictive
    and so it is a very complicated issue and we have an awful lot
    of guidelines. It is not just DMA but OPA and others have
    guidelines that companies like Yahoo, AOL and Google follow
    with notice and choice and I think that right at the moment you
    have in the United States a series of laws and guidelines as
    industry works together that seems to work. One of the problems
    with an overall bill is that technology is changing so quickly,
    it makes it very difficult as we see, for example, the
    computer----
        Ms. Schakowsky. I am going to have to stop you because I
    want others to speak. But it is also a problem with technology
    changing with very specific bills that deal with a specific
    problem.
        Yes?
        Mr. Morgan. Both TACODA and IAB, we don't have a formal
    position but we are certainly open to dialog on that kind of
    legislation.
        Ms. Schakowsky. Ms. Maier.
        Ms. Maier. We have been working with a number of companies
    in trying to encourage better privacy protections for consumers
    and in general we think baseline privacy legislation could be
    good. That said, I think we still need spyware legislation
    because a lot of this doesn't even have to do with personal
    information but computers installing things and tracking and
    that could be outside the scope of privacy legislation.
        Ms. Varney. Congresswoman, I am here on behalf of Zango and
    they really have not examined whether or not it would be for or
    against any baseline privacy legislation. They strongly support
    this bill and they don't collect personally identifiable
    information. So I think there is a need--even if there a
    baseline privacy bill that we get out of the Congress and
    signed by this President, there probably still is a need for
    this type of legislation.
        Ms. Schakowsky. I am not suggesting that we don't do this
    legislation. Thank you.
        Mr. Rush. Mrs. Bono is recognized for 5 minutes.
        Mrs. Bono. Thank you, Mr. Chairman.
        First, I just want to comment on the discussion about
    cookies. I think the study or the report on cookies in the bill
    is a good thing and I didn't really have a problem with cookies
    in the beginning because anybody with a slightly elevated
    degree of sophistication on the Internet knows how to go ahead
    and delete your cookies. It is not that hard to do. So I think
    the report obviously is a good thing. That is why we didn't
    really give it more weight than that because there is a removal
    tool.
        And I just want to comment, the question that Ranking
    Member Stearns asked was about software and how effective it is
    at removing spyware/adware and I just want to applaud Microsoft
    because I think Windows Vista--I am a user of Vista on one of
    my computers--and I think they have come a long way and with
    Windows Defender I think they have certainly tried to tackle
    the issue. As soon as Windows Vista works with iTunes, it might
    be a perfect world, but until then, I do want to applaud them
    for their efforts to address the issue.
        But I would like to ask a question of Mr. Morgan, and that
    is, can you tell us about the current state of the online
    advertising industry and how popup ads are currently being
    used? There has been obviously a lot of restraint, best
    practice put into place but they are still out there. Can you
    go over what they are doing now?
        Mr. Morgan. Certainly, Congresswoman. Well, first I would
    like to say I have been in the online advertising industry for
    about 15 years and we have probably had some forms of spyware
    for the better part of the last 10, and I applaud you,
    Congresswoman Bono, because until you made it an issue and
    brought it to the forefront, it wasn't being talked about, and
    I won't say it wasn't being talked about in Congress. It wasn't
    being talked about inside the online advertising industry. I am
    one of the first to say self-regulation and self-regulatory
    practices help solve problems but we weren't solving it, and
    that is one of the reasons you probably hear sometimes a little
    balance of my position in TACODA in talking about other things.
    But I will say that since you got involved and you and
    Congressman Towns introduced the bill, there has been a lot of
    attention in the industry and I have not seen any issue that
    has had more attention in the industry over the last several
    years, and what we have seen is, we have seen a significant, I
    would say a dramatic reduction in the use of popup advertising.
    We have certainly seen companies like Microsoft make
    extraordinary leaps forward in software and technology. We have
    seen a lot of practices go forward and I think that has been a
    great thing.
        Mrs. Bono. Can you describe then how interactive
    advertising helps provide consumers with free online content?
        Mr. Morgan. I think that--and this is a tiny anecdote but
    one of the things I have found in talking to people about this
    is that a lot of people think the Internet works like cable
    television and that you pay a bill to an Internet service
    provider and you get access to a bunch of channels and content,
    and what most people haven't realized is the money that is paid
    by a consumer never actually makes it to the people that make
    the content. Not a penny of that goes to the New York Times or
    to Orbitz or to iVillage. They are 100 percent supporting what
    they give for free to consumers with advertising and one of the
    reasons it has been such a robust industry that we have really
    supported the actions against spyware because it had the
    capability and still has some capability that really had the
    capability to really harm or destroy what was really emerging
    in strong industry.
        Mrs. Bono. I think on your point there, I just picked up--
    the committee did a great job providing a ton of information up
    here including a Business Week article from July 17. I hadn't
    even seen this before, but for those of you who have seen it,
    the opening quote says consumers have strong opinions about
    direct revenue software, and this is a quote: ``If I ever''--I
    don't even know if I should say this for the record but it
    says, ``If I ever meet anyone from your company, I will kill
    you,'' a person who identified himself as X said in an e-mail
    to Direct Revenue last summer, ``I will * * * * kill you and
    your families.'' That is what it says. Such sentiments aren't
    unusual. ``You people are evil personified,'' and this
    gentleman goes on to say, ``I would like the 4 hours of my life
    back I have wasted trying to get your stupid uninvited software
    off of my now-crippled system,'' and I think that last sentence
    really identifies people's frustration with adware and spyware
    and it is not a matter of direct advertising and good
    practices. It is a matter of really interfering with people's
    lives and the fact is I believe we own our own computers, not
    an outside source, and that is where this whole thing came
    from.
        I see Mr. Chairman, that I am just about out of time and I
    just want to thank all of you on the panel who have worked with
    us in the past on this bill and I know Ed Towns and I will
    continue to work with you and hear your concerns as we go
    through the process. So thank you very much.
        Mr. Rush. Does the gentlelady request unanimous consent
    that this be included into the record, the article?
        Mrs. Bono. Yes, Mr. Chairman, thank you, and also to notice
    that I was quoting because I don't know if I violated rules by
    quoting the F-word but I did not say that word so I don't want
    to get in trouble.
        Mr. Rush. No, since you complimented the committee, we will
    accept that. Thank you.
        Mr. Rush. Ms. Hooley, you are recognized for 5 minutes.
        Ms. Hooley. Thank you, Mr. Chairman, and I thank all of my
    colleagues who have worked so hard on this bill and Mrs. Bono,
    for all of your hard work.
        I am a cosponsor of the bill. I strongly support this bill
    and I want to make sure there are not any unintended
    consequences and I am concerned that there may be unintended
    consequences if there is detection software, then that they
    can't be used to keep consumers safe them from fraudulent
    activity. I know, Mr. Chairman, you pointed out the exemption
    clause but I don't know if that clause actually does what it
    needs to do to make sure that there is an exemption here for
    the software that helps keep fraudulent activity out of your
    life, software that determines the legitimacy of a transaction
    or to verify information supplied by that consumer, and I guess
    I would like to hear from you if you think again that we don't
    have some unintended consequence in this piece of legislation.
        Ms. Varney. May I comment on that?
        Ms. Hooley. Yes, please.
        Ms. Varney. Zango has commented on that provision,
    Congresswoman, and the way that we read the language, and if I
    may, I will just quote it. It says that ``No provider of
    computer software may be held liable under this Act on account
    of any action voluntarily taken or service provided in good
    faith to disable a program used to violate section 2 or 3.''
    There is a couple of concerns we have. Remember, this Act is
    enforceable by the FTC.
        Ms. Hooley. Right.
        Ms. Varney. It doesn't create a private right of action. So
    what this in effect is saying to the FTC is that anybody can
    hide behind the defense of hey, we are just a scanning ap
    trying to take bad stuff off people's computers. We think that
    is an unwise standard to put in this Act. The FTC is very
    judicious about its enforcement and I cannot foresee a
    circumstance under which they would go after a legitimate
    provider of a scanning application. However, the providers of
    scanning applications ought to be under the same requirements
    when it comes to notice and consent and uninstall. So we think
    that the better course here, since this is an act empowering
    the FTC to prosecute bad actors, is to leave that exemption
    out, let the FTC prosecute those who do have the requisite bad
    intention or who fail to provide the adequate notice, consent
    and uninstall.
        Ms. Hooley. Yes, Mr. Cerasale?
        Mr. Cerasale. I want to look at the exemption provision in
    section 5(b) where the monitoring or interaction of your anti-
    fraud software you are exempted from the Act totally so in the
    notice and all of that but it is limited to telecommunications
    carrier, cable operator, computer hardware or software provider
    or provider of information, service or interactive computer
    service to the extent that it is more for anti-fraud. Those are
    not the only people--they are not really software providers.
    They are not the only people running the anti-fraud programs,
    creating the software and sending it in. So we need to expand
    to financial institutions to use this, credit card companies,
    so forth, retailers even use because they collect credit cards
    or direct marketers so we need to look at expanding 5(b), not
    that the exemption is bad but to expand it to help us in the
    prevention of financial fraud.
        Ms. Hooley. OK. I am assuming that you would have a list of
    what else needs to be added to those exemptions?
        Mr. Cerasale. Yes. I will provide that list and try and
    work out--we probably need to talk with committee staff to make
    sure that we are as inclusive or not too inclusive in the
    exemption.
        Ms. Hooley. Did this fix this in the Senate, by the way?
    Did they do something different in the Senate, anybody know?
        Mr. Cerasale. They did make a change in the Senate so we
    can use--we will provide the Senate language.
        Ms. Hooley. OK. Thank you.
        Mr. Rush. Thank you so very much. I certainly want to
    extend our thanks to the witnesses who have come and helped us
    and informed us so much and participated in this hearing.
    Again, thank you for taking the time out from your busy day.
        With that said, we will call the committee adjourned. The
    committee is now adjourned.
        [Whereupon, at 12:30 p.m., the subcommittee was adjourned.]