[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]



 
H.R. --------, A BILL TO RENEW THE FEDERAL TRADE COMMISSION'S AUTHORITY 
TO COMBAT CROSS-BORDER SPAM, SPYWARE, AND FRAUD THROUGH REAUTHORIZATION 
                    OF THE U.S. SAFE WEB ACT OF 2006

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

                                HEARING

                               BEFORE THE

           SUBCOMMITTEE ON COMMERCE, MANUFACTURING, AND TRADE

                                 OF THE

                    COMMITTEE ON ENERGY AND COMMERCE
                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED TWELFTH CONGRESS

                             SECOND SESSION

                               __________

                             JULY 12, 2012

                               __________

                           Serial No. 112-164


      Printed for the use of the Committee on Energy and Commerce

                        energycommerce.house.gov



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                    COMMITTEE ON ENERGY AND COMMERCE

                          FRED UPTON, Michigan
                                 Chairman

JOE BARTON, Texas                    HENRY A. WAXMAN, California
  Chairman Emeritus                    Ranking Member
CLIFF STEARNS, Florida               JOHN D. DINGELL, Michigan
ED WHITFIELD, Kentucky                 Chairman Emeritus
JOHN SHIMKUS, Illinois               EDWARD J. MARKEY, Massachusetts
JOSEPH R. PITTS, Pennsylvania        EDOLPHUS TOWNS, New York
MARY BONO MACK, California           FRANK PALLONE, Jr., New Jersey
GREG WALDEN, Oregon                  BOBBY L. RUSH, Illinois
LEE TERRY, Nebraska                  ANNA G. ESHOO, California
MIKE ROGERS, Michigan                ELIOT L. ENGEL, New York
SUE WILKINS MYRICK, North Carolina   GENE GREEN, Texas
  Vice Chairman                      DIANA DeGETTE, Colorado
JOHN SULLIVAN, Oklahoma              LOIS CAPPS, California
TIM MURPHY, Pennsylvania             MICHAEL F. DOYLE, Pennsylvania
MICHAEL C. BURGESS, Texas            JANICE D. SCHAKOWSKY, Illinois
MARSHA BLACKBURN, Tennessee          CHARLES A. GONZALEZ, Texas
BRIAN P. BILBRAY, California         TAMMY BALDWIN, Wisconsin
CHARLES F. BASS, New Hampshire       MIKE ROSS, Arkansas
PHIL GINGREY, Georgia                JIM MATHESON, Utah
STEVE SCALISE, Louisiana             G.K. BUTTERFIELD, North Carolina
ROBERT E. LATTA, Ohio                JOHN BARROW, Georgia
CATHY McMORRIS RODGERS, Washington   DORIS O. MATSUI, California
GREGG HARPER, Mississippi            DONNA M. CHRISTENSEN, Virgin 
LEONARD LANCE, New Jersey            Islands
BILL CASSIDY, Louisiana              KATHY CASTOR, Florida
BRETT GUTHRIE, Kentucky              JOHN P. SARBANES, Maryland
PETE OLSON, Texas
DAVID B. McKINLEY, West Virginia
CORY GARDNER, Colorado
MIKE POMPEO, Kansas
ADAM KINZINGER, Illinois
H. MORGAN GRIFFITH, Virginia

                                 7_____

           Subcommittee on Commerce, Manufacturing, and Trade

                       MARY BONO MACK, California
                                 Chairman
MARSHA BLACKBURN, Tennessee          G.K. BUTTERFIELD, North Carolina
  Vice Chairman                        Ranking Member
CLIFF STEARNS, Florida               CHARLES A. GONZALEZ, Texas
CHARLES F. BASS, New Hampshire       JIM MATHESON, Utah
GREGG HARPER, Mississippi            JOHN D. DINGELL, Michigan
LEONARD LANCE, New Jersey            EDOLPHUS TOWNS, New York
BILL CASSIDY, Louisiana              BOBBY L. RUSH, Illinois
BRETT GUTHRIE, Kentucky              JANICE D. SCHAKOWSKY, Illinois
PETE OLSON, Texas                    JOHN P. SARBANES, Maryland
DAVID B. McKINLEY, West Virginia     HENRY A. WAXMAN, California (ex 
MIKE POMPEO, Kansas                      officio)
ADAM KINZINGER, Illinois
JOE BARTON, Texas
FRED UPTON, Michigan (ex officio)


                                  (ii)


                             C O N T E N T S

                              ----------                              
                                                                   Page
Hon. Mary Bono Mack, a Representative in Congress from the State 
  of California, opening statement...............................     1
    Prepared statement...........................................     4
Hon. G.K. Butterfield, a Representative in Congress from the 
  State of North Carolina, opening statement.....................     8
Hon. Henry A. Waxman, a Representative in Congress from the State 
  of California, prepared statement..............................    41
Hon. Edolphus Towns, a Representative in Congress from the State 
  of New York, prepared statement................................    43

                               Witnesses

Hugh G. Stevenson, Deputy Director for International Consumer 
  Protection, Federal Trade Commission...........................     9
    Prepared statement...........................................    11

                           Submitted Material

Discussion Draft of H.R. --------, A Bill To extend the 
  Undertaking Spam, Spyware, And Fraud Enforcement With Enforcers 
  beyond Borders Act of 2006, and for other purposes, dated July 
  3, 2012, submitted by Mrs. Bono Mack...........................     6


H.R. --------, A BILL TO RENEW THE FEDERAL TRADE COMMISSION'S AUTHORITY 
TO COMBAT CROSS-BORDER SPAM, SPYWARE, AND FRAUD THROUGH REAUTHORIZATION 
                    OF THE U.S. SAFE WEB ACT OF 2006

                              ----------                              


                        THURSDAY, JULY 12, 2012

                  House of Representatives,
Subcommittee on Commerce, Manufacturing, and Trade,
                          Committee on Energy and Commerce,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 10:00 a.m., in 
room 2322 of the Rayburn House Office Building, Hon. Mary Bono 
Mack (chairman of the subcommittee) presiding.
    Members present: Representatives Bono Mack, Harper, Lance, 
Cassidy, Guthrie, Butterfield, and Gonzalez.
    Staff present: Paige Anderson, Commerce, Manufacturing, and 
Trade Coordinator; Kirby Howard, Legislative Clerk; Brian 
McCullough, Senior Professional Staff Member, Commerce, 
Manufacturing, and Trade; Gib Mullan, Chief Counsel, Commerce, 
Manufacturing, and Trade; Andrew Powaleny, Deputy Press 
Secretary; Shannon Weinberg Taylor, Counsel, Commerce, 
Manufacturing, and Trade; Michelle Ash, Democratic Chief 
Counsel, Commerce, Manufacturing, and Trade; Felipe Mendoza, 
Democratic Senior Counsel; and Will Wallace, Democratic Policy 
Analyst.

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

    Mrs. Bono Mack. We will now come to order.
    Good morning, everybody. The purpose of today's hearing is 
to provide subcommittee members with an opportunity to review 
and discuss the U.S. SAFE WEB Act of 2006. And the chair now 
recognizes herself for an opening statement.
    When it comes to the future of electronic commerce, 
consumer trust and online privacy are certainly ``trending 
topics.'' Even though it serves billions of users worldwide--
with e-commerce in the United States topping $200 billion last 
year for the first time and up 15 percent so far this year--the 
Internet very much remains a work in progress. Still, in just 
over 25 years, the Internet already has spurred transformative 
innovations. It has incalculable value. It has become part of 
our daily lives. And it has unlimited potential to affect 
positive social and political change. But do Americans really 
believe enough is being done today to protect them from online 
fraud?
    Frankly, I am concerned that e-commerce will cease to grow 
and flourish if consumers lose faith in their ability to be 
protected from online predators, jeopardizing future innovation 
as well as our Nation's fragile economic recovery.
    One important tool in combating cross-border fraud, spam, 
and spyware is the U.S. SAFE WEB Act of 2006, which is set to 
expire next year. Today we will be considering legislation 
which I plan to introduce this week to reauthorize this 
important crime-fighting and consumer protection law for 
another 7 years.
    Clearly, there is a lot at stake. About a decade ago, the 
FTC began to highlight the growing problems it encountered in 
effectively combating Internet scams and fraud directed at 
American citizens by foreign operators, oftentimes involving 
organized crime rings. By 2005, an estimated 20 percent of 
consumer complaints the FTC received involved fraud originating 
outside of the U.S. According to an analysis of those 
complaints from the Consumer Sentinel Network, Americans 
suffered annual losses to foreign operators totaling nearly 
$220 million.
    The FTC subsequently identified severe limitations in its 
authority to combat cross-border fraud, spam, and spyware 
relative to that of other U.S. regulators. The biggest 
roadblock to protecting consumers was the Commission's lack of 
authority to share information with foreign law enforcement 
agencies.
    In order to expand its ability to effectively fight online 
fraud, the FTC sent Congress legislative recommendations in 
2005 seeking additional authorities. Without objection, 
Congress passed the U.S. SAFE WEB Act on December 6 of 2006, 
and it was then signed into law by President Bush on December 
22 of 2006. Pursuant to the Act, the FTC issued a report in 
2009, ``The U.S. SAFE WEB Act: The First Three Years,'' 
detailing its use and day-to-day experience with the authority 
granted by the law.
    Over a 3-year period, covering 2006 through 2008, the FTC 
received more than a quarter of a million cross-border 
complaints by American consumers. The FTC also reported that it 
shared confidential information in response to 38 requests from 
14 foreign agencies in six countries, resulting in numerous 
enforcement proceedings.
    By any measure, the U.S. SAFE WEB Act has been a clear 
success to date and should be reauthorized before its 
expiration next year. Let me emphasize a very important point: 
Our goal is to pass a clean reauthorization of the law, and my 
draft legislation does exactly that.
    The U.S. SAFE WEB Act amends the FTC Act, authorizing the 
Commission to share information involving cross-border fraud 
with foreign consumer protection agencies, subject to important 
safeguards; protect from public disclosure confidential 
information received from foreign consumer protection agencies 
that otherwise would not be shared; pursue a broader class of 
frauds, involving international activity that harms U.S. 
consumers; seek redress on behalf of foreign as well as U.S. 
consumers victimized by U.S.-based wrongdoers; and finally, 
make criminal referrals for cross-border criminal activity when 
violations of FTC law also violate U.S. criminal law. This is 
necessary because some foreign agencies address consumer fraud 
as a criminal--rather than civil--law enforcement issue.
    Today, with nearly 1.5 billion credit cards now in use in 
the United States, nearly everyone in America has a stake in 
making certain that the FTC has the powers it needs to combat 
cross-border fraud, spam, and spyware.
    In closing, let me emphasize, this is a very important 
bill, and I am asking for your favorable consideration as we 
begin the process of reauthorizing the U.S. SAFE WEB Act. It is 
good for American consumers, it is good for the future of e-
commerce, and it is the right thing to do.
    And with that, I would like to now recognize the ranking 
member of our subcommittee and my friend, Mr. Butterfield of 
North Carolina, for his opening statement.
    [The prepared statement of Mrs. Bono Mack and the proposed 
legislation follow:]

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OPENING STATEMENT OF HON. G.K. BUTTERFIELD, A REPRESENTATIVE IN 
           CONGRESS FROM THE STATE OF NORTH CAROLINA

    Mr. Butterfield. Madam Chairman, I thank you for holding 
today's hearing on reauthorizing the U.S. SAFE WEB Act of 2006.
    When the Act passed in the 109th Congress, it was 
overwhelmingly supported by both Republicans and Democrats, and 
it passed the House under suspension of the rules. The law 
provides the FTC with expanded and enhanced authorities with 
the aim to combat cross-border spyware and spam attacks against 
the United States, as well as to help protect consumers against 
phony Internet rip-offs and telemarketing scams. The enhanced 
authority has empowered the FTC to better protect American 
consumers through robust cross-border information sharing, 
investigative assistance and correlation-building with foreign 
consumer protection agencies.
    In a 2009 report to Congress, the FTC noted that ``the Act 
has helped overcome cross-border enforcement challenges it 
faced in the past, and it is critical to the FTC's ability to 
combat global scams that consumers will face in the future.'' 
Simply put, the expanded authorities are working to protect the 
American people.
    The SAFE WEB Act included a sunset provision that will 
cause these enhanced authorities to expire in December of 2013 
if Congress does not act. The proposed bill we are discussing 
today will, if passed, extend the law to September 2020. While 
I support these important consumer protection provisions being 
extended, I join the current commissioners of both political 
parties in calling for this reauthorization to be continued in 
perpetuity.
    I hope that my colleagues will agree that this law is 
paying dividends to the American people. Instead of including 
another sunset provision in any reauthorization, we should 
strongly weigh the unanimous support of the commissioners to 
make it permanent.
    I look forward to hearing from today's witness from the 
Commission, Mr. Stevenson, and appreciate him being here today.
    Madam Chairman, I look forward to working with you and our 
colleagues on the subcommittee in fully authorizing this very 
important and successful law. Thank you.
    Mrs. Bono Mack. Thank you, Mr. Butterfield.
    And seeing no other members who wish to make opening 
statements, we will turn our attention to our one witness that 
is joining us today. We have Hugh G. Stevenson, Deputy Director 
for International Consumer Protection at the Office of 
International Affairs at the Federal Trade Commission. Thank 
you very much for being here. Mr. Stevenson has prepared an 
opening statement that will be placed into the record. He will 
now have 5 minutes to summarize his statement in his remarks.
    Again, thank you for coming. If you can just look at the 
little clock in front of you--it is a timekeeper, kind of 
typical American values--green means goes, yellow means start 
wrapping it up or hit the gas, and red means try to come to a 
conclusion. Please just remember to turn your microphone on and 
bring it close to your mouth so that the TV audience at home 
can hear you.
    And with that, Mr. Stevenson, you are recognized for your 5 
minutes.

      STATEMENT OF HUGH G. STEVENSON, DEPUTY DIRECTOR FOR 
  INTERNATIONAL CONSUMER PROTECTION, FEDERAL TRADE COMMISSION

    Mr. Stevenson. Thank you very much. Chairman Bono Mack, 
Ranking Member Butterfield, honorable members of this 
committee, my name is Hugh Stevenson. I am the deputy director 
for International Consumer Protection at the Federal Trade 
Commission, and I am here on behalf of the FTC to speak in 
support of renewing the U.S. SAFE WEB Act.
    As you know, part of our bread and butter is bringing 
enforcement actions to protect U.S. consumers from fraud, from 
deception, from other commercial misconduct. And more and more, 
these enforcement actions cross borders. The defendants can be 
in other countries, the money can go to other countries, the 
evidence can sometimes only be found in other countries. The 
SAFE WEB Act of 2006 has provided us with key enforcement tools 
we need more and more to do this bread-and-butter work. And as 
you have recognized, unless you take action, we lose the Act's 
powers next year.
    Now, what does this problem--cross-border fraud--look like? 
If we look at our joint database and consumer sentinel, we see 
hundreds of thousands of cross-border complaints from your 
constituents. We see millions of robocalls sent from outside 
the United States. We have seen millions of bogus debt-
collection calls. In our cross-border cases, we have seen 
hundreds of millions of dollars in injury to U.S. consumers. 
And in our spam work, in one case alone, we have seen billions 
of spam messages sent.
    Technology with a global reach has become even more 
prevalent, even more the new normal since 2006. The new 
technologies--and not just the web and email but increasingly 
also mobile devices--Smartphones, new methods of payment, 
voiceover IP, robocalls--all this means the frauds are faster, 
the frauds can reach farther, and the frauds are harder to 
discover.
    What does the SAFE WEB Act do to help us here? It helps us 
to work together with agencies in other countries to 
investigate and bring cases using our subpoena power to get 
information, share it, get more information back. Easy example: 
We subpoenaed information from a U.S. company and shared it 
with the Toronto Police Service, which was investigating a scam 
that was targeting both U.S. and Canadian consumers, helped 
link the suspects to the scam, led to 14 arrests. Another 
simple example, payday lender case: We shared information with 
a U.K. agency, they shared information with us, we filed an 
action in court and obtained a million-dollar settlement with 
U.S. and U.K. defendants. The SAFE WEB Act also confirms that 
we have jurisdiction to pursue these cases and helps us build 
networks so necessary with our fellow enforcers.
    Let me emphasize also what the SAFE WEB Act does not do. 
The Act does not set new substantive rules for business. It 
hasn't given us any new substantive rulemaking powers. What it 
does is provide us with enforcement tools.
    The Act also does not cover every conceivable case. It 
limits cooperation to cases of fraud, deception, and other 
misconduct that is substantially similar to practices that 
already violate the FTC's consumer laws.
    The FTC has referred many times in many contexts over many 
years to the need for just this kind of legislation, and we 
need the SAFE WEB Act now more than ever to meet the challenge 
of effective protection for U.S. consumers.
    Thank you for your attention and I would be glad to answer 
any questions.
    [The prepared statement of Mr. Stevenson follows:]

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    Mrs. Bono Mack. Mr. Stevenson, I think that is a world 
record. Good job. So I will recognize myself for 5 minutes for 
questioning. And again, thank you for your testimony.
    Can you just give us sort of a worst-case scenario of what 
exactly happens or could happen if you lose this authority that 
you are granted under this U.S. SAFE WEB Act?
    Mr. Stevenson. Well, first and foremost, we would lose the 
enforcement tools of investigation and information sharing that 
we use now increasingly, frequently, to work with these other 
agencies. That means we would be less effective in a number of 
these cases. It would take more time to do these cases or, in 
some cases, we just couldn't bring the cases at all. We also 
wouldn't be in the position we are now to assist agencies in 
other countries that often are acting on investigations--take 
the Toronto example I mentioned--to protect U.S. consumers. And 
so we lose that benefit as well.
    Mrs. Bono Mack. Can you talk a little bit about what the 
consumer might see rather than in the halls of the FTC? What do 
you think will happen? What would the consumer see, perhaps, if 
you cease to have these opportunities under this Act?
    Mr. Stevenson. Well, the consumer is going to have more and 
more of these kinds of challenges as we see it. Just by 
carrying around our Smartphone, you know, we can be spammed and 
spimmed and spear phished and robocalled and just ripped off, 
and that is from anywhere in the world. And so the challenge 
is, what can we do and step in to deal with these problems? 
There are some things that we can try to continue to do as we 
did before the Act, but we are simply not in the position to be 
as effective as we are now.
    Mrs. Bono Mack. How did you pursue these things before the 
Act?
    Mr. Stevenson. Well, we could share limited forms of 
information, consumer complaint information, for example, under 
our statute. We could bring our own actions and coordinate as 
well as we might with agencies in other countries. But we 
weren't in the position, really--which is so critical--of being 
able to share information, particularly as the investigation 
goes on. Sometimes we don't even know where the fraud is 
located when we start the investigation. Neither do some of our 
counterparts. So some of it is just that challenge of even 
finding the people we want to go after.
    Mrs. Bono Mack. Was the FTC ever denied from bringing cases 
prior to SAFE WEB?
    Mr. Stevenson. There are certainly cases that I think it is 
fair to say would have been very difficult if not impossible to 
investigate for that kind of reason. When we would come to the 
border in terms of information, if the evidence is somewhere 
else--for example, the domain name registrar information about 
who is behind a Web site was somewhere else and we didn't have 
a way to get at it without using these powers, or maybe an 
agency that was working with us didn't have the ability to get 
at it because we were able to assist them--that kind of thing 
could shut down investigations. It is a matter of degree of how 
fast and how well we can bring these cases in terms of 
developing the evidence, but fast is important here because 
fraud is even faster.
    Mrs. Bono Mack. Thank you. And turning to something that we 
all care deeply about in this town, and that is the amount of 
money it costs. CBO originally scored U.S. SAFE WEB at $9 
million over 5 years from 2006 through 2011. Do you believe 
that that score was accurate, and if not, do you know how much 
the activities pursued under the U.S. SAFE WEB authority have 
cost?
    Mr. Stevenson. Well, it is difficult to provide an exact 
estimate since these authorities are all intertwined with the 
FTC Act. And indeed, a lot of these tools are part and parcel 
of this sort of ongoing enforcement activity. Since we don't do 
our budget items by statute, it is hard to parcel all of that 
out.
    Having said that, I would also add there was no specific 
appropriation for SAFE WEB when it was enacted and we did the 
implementation work, for example, in the beginning without an 
additional--beyond our regular appropriation.
    In terms of the $9 million figure, while there are various 
ways in which, depending on exactly what one counts in 
calculating this, we think under any reasonable calculation it 
would be significantly less than 9 million. Probably less than 
half that would be the cost attributable to this. The fact is a 
lot of it is just that we were able to do the same work but 
better, and we were able also--and bearing in mind not only the 
costs here but the benefits--to stop more frauds involving tens 
of millions of dollars, even recover money in some cases that 
we may not have recovered otherwise.
    Mrs. Bono Mack. Thank you. Doing the same work but better, 
would you say your office has grown larger or small since the 
passage of the SAFE WEB Act?
    Mr. Stevenson. The Office of International Affairs has, I 
think, grown a little larger. But looking at it from the point 
of view of the FTC, as I said, the work was generally done 
within the appropriation envelop that we had when we were doing 
the first implementation. The other thing I might mention is 
that some of the costs that we have here such as doing the 
report, such as writing the internal procedural rules to 
implement this, would not be necessary to repeat as we go 
forward.
    Mrs. Bono Mack. Thank you very much.
    I am going to recognize Mr. Butterfield for 5 minutes.
    Mr. Butterfield. Thank you, Madam Chairman.
    In your testimony, Mr. Stevenson, you mentioned spammed, 
spimmed, and spear phish. I know what spam means but I don't 
know the other two. Would you elaborate on those two?
    Mr. Stevenson. Well, I think spim is sort of like the spam 
equivalent but in terms of messaging on phones. Phishing 
spelled with a ``ph'' is the idea that you might get the 
message from Wells Fargo Bank saying we have a problem with 
your account, please sign in here with your account details, 
when in fact it is somebody else trying to----
    Mr. Butterfield. Um-hum.
    Mr. Stevenson [continuing]. Steal those. And spear phishing 
is using some particular information that they may know about 
you to make the phishing even more effective.
    Mr. Butterfield. All right. I have learned something. All 
right. You also indicate that the full commission--I believe 
there are five of you on the Commission, Democrats and 
Republicans--that the five of you have twice called on Congress 
to completely repeal the sunset provision. Are you reflecting a 
sentiment that is part of the record or are these the informal 
feelings of the commissioners?
    Mr. Stevenson. The Commission in its 3-year report to 
Congress did request the repeal of the sunset provision.
    Mr. Butterfield. And that opinion is unanimous among your 
colleagues?
    Mr. Stevenson. Yes, as I understand.
    Mr. Butterfield. All right. Can you please discuss with us 
some of the disadvantages to renewing these authorities for 
only 7 years, some of the disadvantages?
    Mr. Stevenson. Well, one issue that arises is that as the 
time comes for the provisions to expire that obviously 
investigations can take months, cases can take years, and as we 
get closer to the end of the time available to us, then the 
time left on the statute, so to speak, is less than the time 
that we need to pursue those cases. It also does affect, of 
course, the end of the sunset period and the potential 
willingness of others to cooperate with us. Underlying a lot of 
this is developing this kind of cultural reciprocity of going 
back and forth, and obviously we want to be in the position as 
strongly as we can to assure our partners that indeed we will 
be in the position to reciprocate just as we expect that they 
will be.
    Mr. Butterfield. And the opposite of that, can you think of 
any benefits to sunsetting at 7 years?
    Mr. Stevenson. Well, the process of oversight--obviously, I 
defer to you on the possible benefits of oversight. I would 
emphasize here that the type of law that we are dealing with 
here involves not the kind of substantive rules but more of the 
enforcement tools that the need for which we don't expect to be 
going away any time soon.
    Mr. Butterfield. And finally, can you please discuss with 
us why it is important to reauthorize the Act now and not wait 
until sometime closer to December 2013? In particular, can you 
please address how delaying this reauthorization might affect 
your international investigative and enforcement efforts?
    Mr. Stevenson. Well, mostly for the reasons that I 
mentioned. In terms of particular investigations in cases, as 
we get closer to the time that it expires, the time for which 
we exercise these powers may run out before the investigation 
is completed, for example. So that is one kind of concern. We 
do have the power also under the Act to negotiate formal 
agreements where those are necessary according to the opposite 
side's law, which they aren't always required. But we have been 
negotiating some of those. It is difficult to pursue 
negotiations of that sort as we get very close to the end of a 
sunset period, and so that is why we are requesting a prompt 
renewal.
    Mr. Butterfield. Can you please discuss what kinds of 
complaints by and frauds against the U.S. consumer you are 
seeing originating in other countries?
    Mr. Stevenson. We see all manner of frauds. As I say, the 
technology these days means the communications can come from 
anywhere and the money can go anywhere, so we see pretty much 
the full range of frauds and deceptions. I would say that they 
tend to be the particularly egregious ones that we have seen or 
certainly that we have acted on when we are dealing with the 
cross-border----
    Mr. Butterfield. But Canada is in the number one position, 
are they not?
    Mr. Stevenson. Canada has been historically where we have 
seen the most complaints going back to the 1990s where we saw 
extensive telemarketing issues. One of the interesting trends 
is that more and more though we see other countries involved. 
And so in the testimony we gave the example of these bogus debt 
collection calls from India and we had two cases there, the 
robocall case that used facilities in the Philippines to send 
complaints, and we are seeing a larger and larger percentage of 
the cross-border fraud complaints by U.S. consumers to involve 
these other countries. We also have a range of countries where 
we have seen the money go and have tried to----
    Mr. Butterfield. The U.K. is an example? Would the U.K. be 
an example?
    Mr. Stevenson. The U.K. would be one of the----
    Mr. Butterfield. Yes.
    Mr. Stevenson [continuing]. Countries where we have seen 
the numbers. We do about a 100-page report a year from our 
Consumer Sentinel Database, which is combined data from the 
FTC, the FBI, the U.S. Postal Inspection Service, Better 
Business Bureau, various Canadian sources, and we have seen in 
that data an increase in frauds from other countries so that 
the largest number would be from Canada, for example. But then 
the United Kingdom would be after that, Nigeria, Jamaica, 
India, Spain, China, Mexico, and Ghana would be the top ones in 
terms of complaints. Obviously, the complaint data doesn't give 
us a precise calculation of what is happening out there, but it 
is certainly indicative of general trends.
    Mr. Butterfield. Thank you.
    Mrs. Bono Mack. Thank you, Mr. Butterfield.
    The chair now recognizes Dr. Cassidy for 5 minutes.
    Mr. Cassidy. Good morning, Mr. Stevenson. I am a doctor so 
as I was reading your testimony I was struck by some of the 
prosecutions or cooperations you have had regarding bogus 
medical products sold. So none of this is the challenge. All of 
this is for me to learn. We may have a restriction on the sale 
of a drug without a medical prescription but Mexico may not. So 
if the online pharmacy is originating a drug from Mexico--one, 
do you know that that pharmacy is based in Mexico, that online 
pharmacy; and two, do you get cooperation not just from Mexico 
but from any country for a statute which is U.S.-specific but 
doesn't necessarily apply to their methods of dispensing drugs 
as one example?
    Mr. Stevenson. Well, the powers the SAFE WEB Act give us, 
as I mention, are limited in the kinds of cases we can 
cooperate on, are ones where the law is substantially similar 
to practices that violate our Act. So in the case----
    Mr. Cassidy. Now, if Mexico does have a requirement that 
for controlled substances there be a physician's prescription 
with their version of a DEA number and we have that same and 
someone is buying controlled substances from an overseas online 
pharmacy, would they cooperate with us on that regard?
    Mr. Stevenson. Well, it would require under our statute for 
us to cooperate with them that it would be substantially 
similar to practices that violate the FTC consumer law. So if 
we, the United States, might have such a provision, it wouldn't 
give the FTC the power----
    Mr. Cassidy. I see. So it would have to be fraudulent. It 
couldn't be, ``Here is pure-grade morphine.'' We would require 
a prescription--they do--but it is still being sold. It would 
have to be adulterated morphine. Yes. So if they were saying 
adulterated morphine, billing it as pure grade, you could 
prosecute?
    Mr. Stevenson. Yes. If it was something that was a fraud, 
for example, and the large, large percentage of the cases that 
really have implicated SAFE WEB have been hard core fraud and 
deception.
    Mr. Cassidy. So do you know those Web sites which are 
notorious for fraudulent sales? I mean do you have a roster, a 
registry of those Web sites? Wow, man, we are getting 
adulterated drugs from this particular Web site.
    Mr. Stevenson. I think that the drug issues tend to be 
addressed more by other agencies, the FDA, for example----
    Mr. Cassidy. The only reason I raise that, though, is you 
mentioned a couple of--and I don't have your testimony in front 
of me open now----
    Mr. Stevenson. Right.
    Mr. Cassidy [continuing]. But you mentioned a couple of 
medical-type stuff, drugs-type stuff that you did prosecute on.
    Mr. Stevenson. Yes.
    Mr. Cassidy. So what would make those your jurisdiction if 
you will as opposed to someone else's, FDA's?
    Mr. Stevenson. Right. Well, it is partly what we can cover 
with our law. Although the fraud provisions reach broadly, they 
wouldn't reach everything. So another would be just in terms of 
allocating where the expertise lies for doing certain kinds of 
things----
    Mr. Cassidy. So you mentioned a----
    Mr. Stevenson [continuing]. For example, we are not in a 
position to do a medical analysis of drugs or----
    Mr. Cassidy. But you mentioned that there was a cancer 
agent that was sold that turned out to be nothing but white 
powder.
    Mr. Stevenson. Yes.
    Mr. Cassidy. So did you all prosecute that one or did the 
FDA?
    Mr. Stevenson. In fact, in that case I think it was 
prosecuted by the Department of Justice and the FBI made the 
arrest. So that was in that case a criminal one. And that is 
actually an important point to emphasize, that we accomplish 
things with this law not only by bringing our own cases but 
where we can cooperate as appropriate with other authorities--
--
    Mr. Cassidy. So let me go back----
    Mr. Stevenson [continuing]. That may be more in a----
    Mr. Cassidy. I accept that, but I just have limited time--
--
    Mr. Stevenson. Sorry.
    Mr. Cassidy [continuing]. And I might interrupt. I 
apologize. But again, do you have a registry, if you will, of 
Web sites that we know these are the bad actors, we are going 
to watch them for promoting fraudulent products, and we are 
just going to hover over them, if you will? Do you keep such a 
list or does it just kind of randomly pop up that, wow, 
somebody saw white powder, called it a cancer cure?
    Mr. Stevenson. Well, our cases can start in a number of 
ways but one major way is from looking at the complaint data 
that we get from consumers and from other agencies.
    Mr. Cassidy. But I guess my specific question is do you 
monitor certain Web sites? You have a certain amount of 
complaints; a lot of them come back to a particular Web site. 
Does that go on your monitor-this-one-closely list?
    Mr. Stevenson. As I say, we look at the complaints; we look 
at other factors that may influence whether the case is an 
appropriate one to bring. We usually don't lack for potential 
targets. There are usually a lot of different fraud targets.
    Mr. Cassidy. But somehow you are not answering my 
question----
    Mr. Stevenson. Sorry.
    Mr. Cassidy [continuing]. Asking my question correctly. 
Intuitively I know that there are going to be some Web sites 
that you are able to identify as being particular bad actors in 
terms of purveying fraudulent material. Do they go on a watch-
closely list or is it always generated from your complaints and 
it may be this Web site and it may be another next time?
    Mr. Stevenson. I would say we do not have a watch-closely 
list as in the sense that you are describing. The other thing 
about that is that, in terms of Web sites, what we see is often 
fraud operators operate multiple fraud Web sites, move around 
quite a bit, use the process of registering them to use phony 
names and whatnot so that actually that is a chunk. But we do 
not have the list that you are asking about.
    Mr. Cassidy. May I have one more question? The only thing 
in the medical sphere, people are obviously depositing 
prescriptions on the Web site and then they are getting 
refills. It is not a one-time, you know, buy a bicycle that 
whatever, whatever; it is, no, I want refills. So even in those 
sorts of pharmaceutical-oriented Web sites, do you find this 
constant changeover?
    Mr. Stevenson. That, I am sorry, I don't know the answer to 
that.
    Mr. Cassidy. Thank you for your indulgence, Madam Chair.
    Mr. Stevenson. Thank you.
    Mrs. Bono Mack. Thank you, Dr. Cassidy.
    And good morning, Mr. Gonzalez. You are recognized for 5 
minutes.
    Mr. Gonzalez. Thank you very much, Madam Chair.
    Mr. Stevenson, let me ask you. Democratic staff has 
prepared a memo, in essence, telling us what we would be 
reauthorizing, whether it is for a limited period of time or no 
restriction, but it says it exempts financial institutions, 
payment system providers, Internet service providers, telephone 
service providers, and domain name registrars, among others, 
from liability for voluntarily providing certain information to 
the FTC when they might otherwise be prohibited from sharing 
such information. Now, that is very important, is it not, that 
provision?
    Mr. Stevenson. Yes, that is one of the provisions in the 
SAFE WEB Act, yes.
    Mr. Gonzalez. And the reason is there may not be any 
liability, but it definitely might interfere with the business 
relationships that some of these providers of this information 
have with customers that utilize their services? Would that be 
true? Now, they may be bad purpose, bad actors, but they still 
have a business relationship. What I am getting at is a very 
simple proposition, and that is surely not everyone is happy 
with this particular authority that you have. I agree that you 
should have the authority. I don't think that we have to sunset 
the thing either and I commend the work that you have done. I 
just want to get at all of the different stakeholders because I 
think we are all in agreement that this is a good authority for 
you to have and we need to accommodate you.
    The question comes down to surely someone out there in the 
business community, in the Internet or in the stakeholders, 
business stakeholders have some concerns that they expressed to 
you regarding this authority and the exercise of it. So what is 
it out there in the business community that we might have some 
stakeholders, legitimate ones, that are complaining to you, the 
nature of the complaint, and your response?
    Mr. Stevenson. Thank you. We have not had any complaints 
about this provision since the Act was passed. We did have 
concerns raised in the several years leading up to the passage 
of the Act about the scope and nature of this provision, and 
then accordingly, it was narrowed. You mentioned that this 
information can be shared in certain instances. The certain 
instances here really are focused on essentially where there is 
a third party that has some reason to believe there may be a 
fraud or a deception or a violation of our law going on, or 
they have reason to believe that they have information about 
money that is ours to recover. So it is focused on those 
instances where they essentially have some reason to say we 
have complaints, we have suspicious charged back rates, or in 
some manner they have information to say this is something that 
we should notify the authorities about. And the effect of the 
provision is really just aimed at the liability or, in this 
case, lack of liability for the act of notifying us.
    So we have not heard complaints about that since the Act 
was passed. It is something that is useful to us. It has not 
been as central as the information sharing and investigation, 
other provisions that I have already talked about.
    Mr. Gonzalez. Now, as much is going out there in the 
Internet world, and you just indicated it has revolutionized 
just in the past couple of years the use of mobile devices and 
how people get information out there, tremendous opportunities 
for many good things and tremendous opportunities for many bad 
things, as happens. Bottom line, though, is the consumer needs 
to be protected and we need to educate the consumer. And the 
best thing always--and Dr. Cassidy probably would agree if he 
was here--and that is prevention. So what is it that the FTC 
does to educate the consumer, to protect them and so they don't 
fall victim, so that then you are not there investigating and 
pursuing on the civil side and maybe DOJ pursuing things on the 
criminal side? What about education?
    Mr. Stevenson. We place a very high priority actually on 
education, have a number of different campaigns we have done, 
including with foreign partners in a number of cases. One 
example of an education campaign that I think we launched just 
this week if I am not mistaken involves, for example, the 
problem of robocalls, which we mentioned earlier. And so we 
have done videos to put out for consumers. We have robocall 
advice on what to do if you receive them if you are a consumer. 
We also have a robocall action plan with several items and 
several steps we are trying to take to alert consumers to the 
problems that they see.
    Another example is in the area of remittances, sending 
money back home to another country, and this is an issue that 
affects us as Americans, including when we don't speak English. 
And so we have actually put that piece of advice in six 
different languages to make sure that we are reaching as many 
people as we can with the important messages. Some of these 
messages about the fraud prevention are not exclusively 
international obviously because it has become so much part of 
our sort of everyday life and the kind of thing we have to 
communicate to consumers.
    Mr. Gonzalez. Thank you very much for your testimony.
    And I yield back, Madam Chair.
    Mrs. Bono Mack. Thank you.
    The chair recognizes Mr. Guthrie for 5 minutes.
    Mr. Guthrie. Thank you, Madam Chair.
    Thank you so much for being here today. I was trying to get 
kind of a better feel for the process that the FTC uses to 
engage in international cooperation to the SAFE WEB Act. So in 
SAFE WEB I believe parts of it are self-executing and there are 
other areas that you have to have Memorandums of Understanding 
with other countries. Can you walk through that process? What 
are the impediments of those Memorandums of Understanding?
    Mr. Stevenson. Sure. Well, one of the things that the Act 
requires is, before we share information, that the other side 
certify that they have the law to keep the information 
confidential, that they are investigating laws that are fraud, 
deception, or something substantially similar to our statutes.
    Mr. Guthrie. Um-hum.
    Mr. Stevenson. We have actually developed a sort of form, 
the checklist of the factors that we have to take into account. 
We have to look at whether their law meets that standard. 
Usually, it is fraud and deception as I mentioned and that part 
is straightforward. We also need to take into account the 
general public interest, the likelihood of reciprocity if we 
assist another party, and the amount of injury and the number 
of consumers affected. And we have to use our resources wisely 
in choosing where to provide that assistance. If we want to go 
and get investigative assistance, that needs to go through one 
of our commissioners to use that process.
    We don't require a formal agreement in the formal sense in 
order to do that kind of cooperation, but there are some 
countries where their laws may require that.
    Mr. Guthrie. OK.
    Mr. Stevenson. And in that event, then, we work with the 
State Department to develop the text to negotiate--in this case 
with the European Commission and Canada where it appeared that 
their law would require a more formal arrangement.
    Mr. Guthrie. You mentioned other emerging threats like 
Jamaica and some other countries that aren't European 
Commission or Canada--have the same kind of systems, I guess, 
that we have. I mean who are the big emerging threat countries 
and what are the impediments between us being able to work with 
them or them working with us I guess? I think you mentioned 
Jamaica earlier.
    Mr. Stevenson. Right. Well, there can be several sort of 
issues. In some cases there may not be a clear counterpart 
agency for us, and that is why it is important that the 
authority enables us to cooperate not just with civil 
regulatory agencies but also criminal agencies. So that part is 
important to us. And in some cases, obviously, language is a 
certain kind of barrier, and others not so much. And the 
challenges can differ. And it does take time to develop the 
relationships. We want to make sure that we can trust the 
agency we are dealing with on the other side; they want to be 
able to trust us. So that is also part of the ongoing process.
    Mr. Guthrie. Is there like a top two or three countries 
that you are most concerned about----
    Mr. Stevenson. As I mentioned----
    Mr. Guthrie [continuing]. International fraud that we are 
not able to really----
    Mr. Stevenson. Yes.
    Mr. Guthrie [continuing]. Get an agreement with or work 
with?
    Mr. Stevenson. As I mentioned, the complaint data suggests 
that there are certain countries that are where there are a 
particularly large number of complaints. I think I mentioned 
India, Jamaica among them. The----
    Mr. Guthrie. So there are large complaints with them and 
they are cooperating with us, or are there large complaints in 
those countries and we are really having trouble cooperating 
with them?
    Mr. Stevenson. Well, we are working in a number of 
countries on further improving our relationship. As I say, it 
varies depending on also the state of their agency in that 
country, the degree to which we have had occasion to work with 
them before.
    Mr. Guthrie. I guess the question--the worst-offending 
countries, are they serious about it and want to get it fixed? 
Or this is just something that is not on their agenda?
    Mr. Stevenson. Well, sometimes there is a challenge of 
making this high enough on the agenda from the point of view of 
the agencies in another country, and that is something then we 
also try to work on in our enforcement work and technical 
assistance work.
    Mr. Guthrie. Because location is not important. It is the 
web so people can just gravitate, and once you fix it in one 
country, it is going to gravitate to another. So I appreciate 
the struggle you are in and how difficult it is for what you 
are doing. And the anonymity of the web allows people to do 
things that we don't want them to do. So I appreciate what you 
are doing.
    And I yield back.
    Mr. Stevenson. Thank you.
    Mrs. Bono Mack. Thank you, Mr. Guthrie.
    Mr. Harper, you are recognized for 5 minutes.
    Mr. Harper. Thank you, Madam Chair.
    Thank you, Mr. Stevenson, for being here with us today. 
Your written testimony indicates that the Act authorizes the 
FTC to share confidential information with its foreign 
counterparts subject to certain safeguards such as restrictions 
on foreign governments' use of information for a purpose other 
than the investigation that triggered the information request. 
Have you received any complaints of misuse of information?
    Mr. Stevenson. Misuse by agencies in other countries?
    Mr. Harper. Yes.
    Mr. Stevenson. No, I don't believe so.
    Mr. Harper. OK. Are you aware of any such misuses of 
information whether you have received complaints about that or 
not?
    Mr. Stevenson. No.
    Mr. Harper. OK. Does the FTC have formal agreements with 
other nations to address information sharing, and if so, how 
many agreements are in place?
    Mr. Stevenson. In terms of SAFE WEB Act agreements, we have 
no formal agreements. We have, dating from before the SAFE WEB 
Act, mostly some informal Memoranda of Understanding. And as I 
mentioned, we can cooperate case-by-case if they provide the 
required certifications of information. So we do have those 
kinds of arrangements.
    Mr. Harper. Do the protections for information shared 
internationally closely resemble those for sharing with State 
attorneys general or are they different?
    Mr. Stevenson. They are very similar.
    Mr. Harper. OK. Are there any countries where you have 
shared information that did not have reciprocal information 
sharing agreements with the U.S.?
    Mr. Stevenson. Well, as I said, we don't have the formal 
agreements. One of the factors that we take into account in 
sharing is whether there is the likelihood of reciprocal 
assistance, and we do find that--I can't think of an example 
where someone has indicated they will not provide that under 
any circumstances, and certainly generally they are more than 
happy to. And that is part of what we are trying to achieve. 
Sometimes they have their own legal restrictions on doing it. 
So if they didn't have that ability to share everything back 
with us, we take that into account. But there are sometimes 
limited things they can do and other things they can't. And we 
see the important issue as getting the bad buys.
    Mr. Harper. Well, what are the conditions you look for or 
establish in order to share information?
    Mr. Stevenson. Well, so, first and foremost, they provide 
the certification that they can maintain the information in 
confidence. They tell us the nature of their legal authority to 
do investigations. So we ask them under what authority are you 
pursuing a possible violation? So often they will cite to us 
their fraud statute, their deception statute, or whatever. 
Then, we will look at whether that complies with the statutory 
requirement, that it is substantially similar. We also would 
look at the general public interest, as I mentioned, the 
likelihood of reciprocity, and also whether there is real 
injury involved and whether there is a significant number of 
people. We don't want to be doing this kind of work for, you 
know, one-off disputes obviously or even, you know, small 
disputes.
    Mr. Harper. You testified earlier that Canada recently 
enacted a law similar to our SAFE WEB. Does their law affect 
your ability to investigate or litigate fraud originating from 
Canada?
    Mr. Stevenson. Yes, it does. We have seen that as a very 
positive development in testifying in support of the 
legislation, they are actually--the government official, the 
head, I think, of the FCC pointed to the experience of the SAFE 
WEB Act in the United States and the importance of that kind of 
reciprocal assistance. It hasn't yet all played out. I don't 
believe it is completely in effect, but we are already seeing 
the benefits. We have several Canadian agencies--the 
Competition Bureau, the CRTC, which is more like the FCC--have 
already detailed people to us to work with us under his cases 
and that has been very effective.
    Mr. Harper. Are you doing anything to encourage other 
countries to enact similar laws to what Canada has done?
    Mr. Stevenson. We had done work at the OECD on protecting 
consumers from cross-border fraud and deception focusing 
particularly on those kinds of practices and encouraging a 
consensus on the approach to be taken. And a number of the 
items in that OECD recommendation are reflected in the SAFE WEB 
Act and are indeed reflected in some aspects of European Union 
law and now in the Canadian provisions. Different countries 
have obviously variations on that theme, which is part of the 
challenge here of working it out so that the rails of the two 
train tracks fit together when they meet.
    Mr. Harper. Thank you, Mr. Stevenson.
    I yield back.
    Mr. Stevenson. Thank you.
    Mrs. Bono Mack. Thank you, Mr. Harper.
    Mr. Lance? OK. He waives his questions.
    Mr. Lance. That is you, then.
    Mrs. Bono Mack. Then, it is me. All right. We are going to 
move to a quick second round of questions, and I recognize 
myself for 5 minutes.
    If a foreign government--kind of continuing on in the same 
vein--if they are not interested in cooperating with the FTC, 
what can the FTC do about perpetrators in that nation? Do you 
ever pursue enforcement in such cases? And does the FTC ever 
obtain default judgments against absent foreign defendants?
    Mr. Stevenson. Starting with the last one first, we do 
sometimes obtain default judgments. We have had cases where we 
have done that. There then becomes the challenge obviously of 
taking those to enforce them in some other country. We do work 
with the office of foreign litigation at the Department of 
Justice, which is another provision we haven't had a chance to 
talk about in SAFE WEB Act. That does require the development 
of case law and the development of other arrangements for us to 
hire counsel to pursue the money.
    In some occasions, we can get the receiver, who is 
appointed in the case by the court, to take some action in 
another country by virtue of being the court-appointed trustee, 
if you will, to take action. So that is another possibility.
    Sometimes there are assets that are reachable in some other 
country even if the defendants are in some way not reachable. 
Sometimes there are assets in the United States for some 
defendants but not others. So there are various of those kinds 
of measures that we can take, and it really is a case-by-case 
challenge how we handle that.
    Mrs. Bono Mack. Thank you.
    There have been a handle of U.S.-based large, multinational 
companies that have been the target of FTC investigations or 
legal action that have also been the subject of investigations, 
reviews, or legal actions abroad for the same activities. Has 
the FTC shared information gleaned from its legal actions here 
that has been used in international legal actions for the same 
activities?
    Mr. Stevenson. The Act permits us to share information in 
our files with agencies in other countries that are doing 
investigations. We do take into account various public interest 
factors and do take into account whether the laws that they are 
investigating are substantially similar. So there might be some 
examples where the laws that they may be looking at to pursue, 
the other companies may not be substantially similar to the 
laws that we have.
    Mrs. Bono Mack. Thank you. I think that is very important.
    And how would you explain the pattern of complaints against 
foreign businesses since the U.S. SAFE WEB Act passed? For a 
few years it declined and then just last year, which was 2011, 
the number jumped substantially and exceeded the number of 2006 
complaints for the first time. Is the number of complaints 
rising generally, or are the complaints about foreign companies 
increasing disproportionately? And are complaints based on 
Internet fraud rising generally, foreign and domestic? That is 
a mouthful but----
    Mr. Stevenson. Well, in terms of the trends, it is, as I 
mentioned, somewhat challenging to really discern the exact 
trend versus the data that we have in the system, because it 
sometimes comes in--it depends on the sources. Our sources from 
the U.S. and Canada are more extensive, obviously, in 
contributing to the database, so that has some effect on what 
the data looks like. And I think we had seen a higher 
percentage of foreign complaints in 2006 than we have in the 
last couple of years where it has remained stable and around, I 
think, 13 percent.
    Having said that, a number of complaints that aren't marked 
as cross-border may indeed be cross-border because all we are 
reporting is what the consumer knows or thinks they know about 
where the problem is. They don't know about those cases where 
maybe the money went somewhere else, so they don't know about 
those cases where the web host is in another country. They 
don't know about a lot of these instances. Or they may think 
that the company is in the United States but it is really a 
mail drop that then sends it on to some other country. So we 
take it as indicative in a larger sense of this being a 
substantial part of what is going on, but it is all woven in to 
the general fraud challenge of finding the bad guys and their 
money.
    Mrs. Bono Mack. All right. Thank you.
    Lastly, the Act permits the FTC to issue compulsory process 
for documents and testimony from a U.S. citizen upon request 
for investigative assistance by foreign governments. Has the 
FTC ever refused such a request because a foreign government's 
request does not meet the legal burden under U.S. law?
    Mr. Stevenson. Yes, if I understood the question. We have 
certainly been approached by agencies who asked us about help 
in cases where their laws were not--or at least the legal 
provisions they we're dealing with were not substantially 
similar. This might come up, for example, in the context of 
European privacy laws which are not, in a number of respects, 
substantially similar.
    Mrs. Bono Mack. All right. Thank you very much.
    Mr. Butterfield, would you like 5 minutes for question?
    Mr. Butterfield. Five minutes or less, thank you.
    Mrs. Bono Mack. OK. You are recognized.
    Mr. Butterfield. All right.
    Mr. Stevenson, I am informed that cross-border fraud 
complaints remain steady at about 13 percent of all fraud 
complaints in '09, '10, and '11. However, as a raw number, both 
non-cross-border and cross-border fraud complaints grew in each 
of those years. Specifically, in '09 the fraud complaints were 
about 700,000. In 2010 that number was about 815,000. In 2011 
it was pretty close to a million with nearly one million fraud 
complaints in total. Cross-border fraud complaints stood at 
about 88,000 in '09, 104,000 in '10, 132,000 in '11. With that 
background, the percentage of cross-border fraud complaints 
dropped from 2006 to 2007 and then remained steady following 
enactment of the WEB Act. Do you think that there is a 
relationship between enactment of that law and the decline and 
then leveling of cross-border fraud complaints as a percentage 
of total complaints in the last 3 years?
    Mr. Stevenson. I would like to think so but it is difficult 
to see cause and effect there. We did have an international 
program before that. We certainly think that we have become 
more effective in addressing these problems. The scale though, 
as I mentioned, of the problems make it difficult to quantify 
the exact effect. And you are correct that the numbers--
although the percentage in terms of cross-border fraud 
complaints has been largely flat--in absolute numbers we have 
seen, for example, this year over 100,000 U.S. consumers making 
such a complaint even with the caveat that there are probably 
more that don't even realize they are cross-border complaints.
    Mr. Butterfield. Can you tell us whether particular types 
of frauds are driving the increase in the overall number of 
consumer complaints about fraud, both with respect to cross-
border and non-cross-border?
    Mr. Stevenson. Particular types of frauds?
    Mr. Butterfield. Yes.
    Mr. Stevenson. We certainly see and lay out in our reports 
the trends that we have seen and certain kinds of problems 
being more apparent. Robocalls, for example, I think have been 
an area where we have seen more activity. There has been 
probably more activity in the kind of grandparent imposter 
fraud and that kind of thing, people contacting someone saying, 
``I am out of money, you need to wire it to me really 
quickly,'' that kind of thing. So we have seen various trends 
of that sort.
    The cases we brought in India recently involve bogus debt 
collection fraud where people were called and said we are going 
to put you in jail, we are going to get you fired, that kind of 
thing, if you don't pay off this couple-hundred-dollar debt 
that it turned out the consumer in fact didn't owe to them or 
didn't owe at all.
    Mr. Butterfield. Can you speak for a moment about the FTC's 
Consumer Sentinel Database? Is that in any way related to the 
watch list that one of my colleagues raised a few moments ago?
    Mr. Stevenson. Yes, the Consumer Sentinel Database is a 
database that we set up to try to combine from as many sources 
as possible the complaints that people were seeing. And 
consumers don't all report to the same place, and so we want no 
wrong door, that wherever they get reported, we try to gather 
it together. If we just rely on FTC complaints, we might see 
them arriving 10 in a week, 20 in a week. We combine it all 
together, we might see them coming in at 100 a week. We can see 
where there is the real problem as opposed to the legitimate 
disputes that obviously consumers have with businesses. And so 
it has been very useful for that purpose.
    We are trying to combine more and more data from other 
participants. We get data from the Canadian enforcement 
agencies, the complaint data. We get data through something 
called econsumer.gov that now is, I think, in eight languages 
of complaints involving ecommerce online that we have 20-some 
partner agencies around the world. So we are trying to collect 
that information.
    I hope I did not misunderstand your colleague's message, 
but that is different from a watch list. And this is 
unverified, obviously. We want to look at it as the lead, as 
the starting point for our investigations, but it gives us a 
tremendous running start if we have it.
    Mr. Butterfield. Are there law enforcement agencies or 
governmental agencies or even other countries that you would 
like to work with to enforce the law that you are not currently 
working with?
    Mr. Stevenson. We certainly are interested in developing 
further our relationships with a lot of other countries. As I 
mentioned, in some ways the relationships we have built with 
the Canadians are a model and have been very extensive. In 
other countries we have had less experience, it is a newer 
issue, they may have newer agencies, it may be not yet the 
higher priority for them, and so we are certainly doing that. 
And some of our technical assistance work in consumer 
protection, it also has the benefit, in addition to the good 
government--larger sense--benefits of developing our 
relationships with those agencies in those other countries, and 
to make them aware of this work and to make them aware of why 
it should be a high priority.
    Mr. Butterfield. Very good. Thank you.
    Mr. Stevenson. Thank you.
    Mrs. Bono Mack. All right. Seeing no other members present, 
we are going to begin wrapping up.
    I want to again thank you very much, Mr. Stevenson, for 
being with us today. You have been very gracious for your time. 
I know I certainly appreciate what you are doing. I look 
forward to working with you in the future as the U.S. SAFE WEB 
Act moves through the legislative process.
    I remind members that they have 10 business days to submit 
questions for the record and I would ask the witness to please 
respond promptly to any questions that you might receive.
    And with that, the hearing is now adjourned.
    Mr. Stevenson. Thank you.
    [Whereupon, at 10:55 a.m., the subcommittee was adjourned.]
    [Material submitted for inclusion in the record follows:]

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