[Congressional Record Volume 156, Number 166 (Wednesday, December 15, 2010)]
[House]
[Pages H8374-H8376]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                RESTORE ONLINE SHOPPERS' CONFIDENCE ACT

  Mr. BOUCHER. Madam Speaker, I move to suspend the rules and pass the 
bill (S. 3386) to protect consumers from certain aggressive sales 
tactics on the Internet.
  The Clerk read the title of the bill.
  The text of the bill is as follows:

                                S. 3386

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Restore Online Shoppers' 
     Confidence Act''.

     SEC. 2. FINDINGS; DECLARATION OF POLICY.

       The Congress finds the following:
       (1) The Internet has become an important channel of 
     commerce in the United States, accounting for billions of 
     dollars in retail sales every year. Over half of all American 
     adults have now either made an online purchase or an online 
     travel reservation.
       (2) Consumer confidence is essential to the growth of 
     online commerce. To continue its development as a 
     marketplace, the Internet must provide consumers with clear, 
     accurate information and give sellers an opportunity to 
     fairly compete with one another for consumers' business.
       (3) An investigation by the Senate Committee on Commerce, 
     Science, and Transportation found abundant evidence that the 
     aggressive sales tactics many companies use against their 
     online customers have undermined consumer confidence in the 
     Internet and thereby harmed the American economy.
       (4) The Committee showed that, in exchange for ``bounties'' 
     and other payments, hundreds of reputable online retailers 
     and websites shared their customers' billing information, 
     including credit card and debit card numbers, with third 
     party sellers through a process known as ``data pass''. These 
     third party sellers in turn used aggressive, misleading sales 
     tactics to charge millions of American consumers for 
     membership clubs the consumers did not want.
       (5) Third party sellers offered membership clubs to 
     consumers as they were in the process of completing their 
     initial transactions

[[Page H8375]]

     on hundreds of websites. These third party ``post-
     transaction'' offers were designed to make consumers think 
     the offers were part of the initial purchase, rather than a 
     new transaction with a new seller.
       (6) Third party sellers charged millions of consumers for 
     membership clubs without ever obtaining consumers' billing 
     information, including their credit or debit card 
     information, directly from the consumers. Because third party 
     sellers acquired consumers' billing information from the 
     initial merchant through ``data pass'', millions of consumers 
     were unaware they had been enrolled in membership clubs.
       (7) The use of a ``data pass'' process defied consumers' 
     expectations that they could only be charged for a good or a 
     service if they submitted their billing information, 
     including their complete credit or debit card numbers.
       (8) Third party sellers used a free trial period to enroll 
     members, after which they periodically charged consumers 
     until consumers affirmatively canceled the memberships. This 
     use of ``free-to-pay conversion'' and ``negative option'' 
     sales took advantage of consumers' expectations that they 
     would have an opportunity to accept or reject the membership 
     club offer at the end of the trial period.

     SEC. 3. PROHIBITIONS AGAINST CERTAIN UNFAIR AND DECEPTIVE 
                   INTERNET SALES PRACTICES.

       (a) Requirements for Certain Internet-Based Sales.--It 
     shall be unlawful for any post-transaction third party seller 
     to charge or attempt to charge any consumer's credit card, 
     debit card, bank account, or other financial account for any 
     good or service sold in a transaction effected on the 
     Internet, unless--
       (1) before obtaining the consumer's billing information, 
     the post-transaction third party seller has clearly and 
     conspicuously disclosed to the consumer all material terms of 
     the transaction, including--
       (A) a description of the goods or services being offered;
       (B) the fact that the post-transaction third party seller 
     is not affiliated with the initial merchant, which may 
     include disclosure of the name of the post-transaction third 
     party in a manner that clearly differentiates the post-
     transaction third party seller from the initial merchant; and
       (C) the cost of such goods or services; and
       (2) the post-transaction third party seller has received 
     the express informed consent for the charge from the consumer 
     whose credit card, debit card, bank account, or other 
     financial account will be charged by--
       (A) obtaining from the consumer--
       (i) the full account number of the account to be charged; 
     and
       (ii) the consumer's name and address and a means to contact 
     the consumer; and
       (B) requiring the consumer to perform an additional 
     affirmative action, such as clicking on a confirmation button 
     or checking a box that indicates the consumer's consent to be 
     charged the amount disclosed.
       (b) Prohibition on Data-Pass Used To Facilitate Certain 
     Deceptive Internet Sales Transactions.--It shall be unlawful 
     for an initial merchant to disclose a credit card, debit 
     card, bank account, or other financial account number, or to 
     disclose other billing information that is used to charge a 
     customer of the initial merchant, to any post-transaction 
     third party seller for use in an Internet-based sale of any 
     goods or services from that post-transaction third party 
     seller.
       (c) Application with Other Law.--Nothing in this Act shall 
     be construed to supersede, modify, or otherwise affect the 
     requirements of the Electronic Funds Transfer Act (15 U.S.C. 
     1693 et seq.) or any regulation promulgated thereunder.
       (d) Definitions.--In this section:
       (1) Initial merchant.--The term ``initial merchant'' means 
     a person that has obtained a consumer's billing information 
     directly from the consumer through an Internet transaction 
     initiated by the consumer.
       (2) Post-transaction third party seller.--The term ``post-
     transaction third party seller'' means a person that--
       (A) sells, or offers for sale, any good or service on the 
     Internet;
       (B) solicits the purchase of such goods or services on the 
     Internet through an initial merchant after the consumer has 
     initiated a transaction with the initial merchant; and
       (C) is not--
       (i) the initial merchant;
       (ii) a subsidiary or corporate affiliate of the initial 
     merchant; or
       (iii) a successor of an entity described in clause (i) or 
     (ii).

     SEC. 4. NEGATIVE OPTION MARKETING ON THE INTERNET.

       It shall be unlawful for any person to charge or attempt to 
     charge any consumer for any goods or services sold in a 
     transaction effected on the Internet through a negative 
     option feature (as defined in the Federal Trade Commission's 
     Telemarketing Sales Rule in part 310 of title 16, Code of 
     Federal Regulations), unless the person--
       (1) provides text that clearly and conspicuously discloses 
     all material terms of the transaction before obtaining the 
     consumer's billing information;
       (2) obtains a consumer's express informed consent before 
     charging the consumer's credit card, debit card, bank 
     account, or other financial account for products or services 
     through such transaction; and
       (3) provides simple mechanisms for a consumer to stop 
     recurring charges from being placed on the consumer's credit 
     card, debit card, bank account, or other financial account.

     SEC. 5. ENFORCEMENT BY FEDERAL TRADE COMMISSION.

       (a) In General.--Violation of this Act or any regulation 
     prescribed under this Act shall be treated as a violation of 
     a rule under section 18 of the Federal Trade Commission Act 
     (15 U.S.C. 57a) regarding unfair or deceptive acts or 
     practices. The Federal Trade Commission shall enforce this 
     Act in the same manner, by the same means, and with the same 
     jurisdiction, powers, and duties as though all applicable 
     terms and provisions of the Federal Trade Commission Act (15 
     U.S.C. 41 et seq.) were incorporated into and made a part of 
     this Act.
       (b) Penalties.--Any person who violates this Act or any 
     regulation prescribed under this Act shall be subject to the 
     penalties and entitled to the privileges and immunities 
     provided in the Federal Trade Commission Act as though all 
     applicable terms and provisions of the Federal Trade 
     Commission Act were incorporated in and made part of this 
     Act.
       (c) Authority Preserved.--Nothing in this section shall be 
     construed to limit the authority of the Commission under any 
     other provision of law.

     SEC. 6. ENFORCEMENT BY STATE ATTORNEYS GENERAL.

       (a) Right of Action.--Except as provided in subsection (e), 
     the attorney general of a State, or other authorized State 
     officer, alleging a violation of this Act or any regulation 
     issued under this Act that affects or may affect such State 
     or its residents may bring an action on behalf of the 
     residents of the State in any United States district court 
     for the district in which the defendant is found, resides, or 
     transacts business, or wherever venue is proper under section 
     1391 of title 28, United States Code, to obtain appropriate 
     injunctive relief.
       (b) Notice to Commission Required.--A State shall provide 
     prior written notice to the Federal Trade Commission of any 
     civil action under subsection (a) together with a copy of its 
     complaint, except that if it is not feasible for the State to 
     provide such prior notice, the State shall provide such 
     notice immediately upon instituting such action.
       (c) Intervention by the commission.--The Commission may 
     intervene in such civil action and upon intervening--
       (1) be heard on all matters arising in such civil action; 
     and
       (2) file petitions for appeal of a decision in such civil 
     action.
       (d) Construction.--Nothing in this section shall be 
     construed--
       (1) to prevent the attorney general of a State, or other 
     authorized State officer, from exercising the powers 
     conferred on the attorney general, or other authorized State 
     officer, by the laws of such State; or
       (2) to prohibit the attorney general of a State, or other 
     authorized State officer, from proceeding in State or Federal 
     court on the basis of an alleged violation of any civil or 
     criminal statute of that State.
       (e) Limitation.--No separate suit shall be brought under 
     this section if, at the time the suit is brought, the same 
     alleged violation is the subject of a pending action by the 
     Federal Trade Commission or the United States under this Act.

  The SPEAKER pro tempore. Pursuant to the rule, the gentleman from 
Virginia (Mr. Boucher) and the gentleman from Nebraska (Mr. Terry) each 
will control 20 minutes.
  The Chair recognizes the gentleman from Virginia.


                             General Leave

  Mr. BOUCHER. Madam Speaker, I ask unanimous consent that all Members 
have 5 legislative days to revise and extend their remarks and include 
extraneous material.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Virginia?
  There was no objection.
  Mr. BOUCHER. Madam Speaker, I yield myself such time as I may 
consume.
  I am pleased to rise in support this afternoon of S. 3386, the 
Restore Online Shoppers' Confidence Act. The legislation makes 
essential protections to consumers in the Internet marketplace.
  The rapid growth of online commerce has brought great benefits to 
merchants and consumers alike. Creative retailers can reach a broader 
market, while resourceful shoppers can compare deals and find exactly 
the right product for themselves. Internet commerce is now a core part 
of the daily lives of millions of Americans, and overall, more than 
one-half of all adults, at some point, have made an online purchase. 
But large percentages of consumers also report feeling frustrated, 
overwhelmed, and confused by online shopping, often because they face 
unfamiliar, aggressive sales tactics online.
  Last year, an investigation by the Senate Commerce, Science, and 
Transportation Committee confirmed the

[[Page H8376]]

pervasive use of misleading tactics by even some of the Web's most 
prominent, trusted retailers. The committee concluded that while 
consumers are heavily involved in Internet commerce, they are 
struggling to stay free of unwanted charges on their credit cards or 
their debit cards.
  The bill now before the House focuses on two common deceptive 
tactics: post-transaction marketing and ``data pass.''
  Post-transaction marketing occurs when a consumer purchasing 
something from a trusted vendor is presented with offers from unrelated 
sellers promising savings on the initial transaction as well as future 
purchases. These third-party sellers often do not make clear that they 
are distinct entities and that agreeing to their offer constitutes a 
wholly separate transaction with an entirely new set of terms. The 
legislation would bring these transactions into the light and make them 
much easier for consumers to follow. It would also put an end to ``data 
pass'' during these transactions, in which the first seller shares a 
consumer's credit card number with the third-party seller without the 
knowledge or consent of the consumer. The legislation returns to 
consumers the power to control when and with whom their sensitive 
financial information is shared.
  The Restore Online Shoppers' Confidence Act, as passed by the Senate, 
serves to protect the consumer in the online marketplace.
  I want to say thank you to Senator Rockefeller, the chief sponsor of 
the measure in the other body, and to his staff for their determined 
work, as well as to Congressman Space, on our Energy and Commerce 
Committee, for his sponsorship of this measure in the House.
  Through this legislation, consumers will be empowered to make smart 
decisions online and protect their bank accounts. I urge strong support 
for the passage of the bill.
  Madam Speaker, I reserve the balance of my time.
  Mr. TERRY. Madam Speaker, unfortunately, I rise today in opposition 
to S. 3386, the Restore Online Shoppers' Confidence Act. This bill 
would regulate e-commerce, specifically, negative option marketing and 
third-party billing.
  The Committee on Energy and Commerce has not held a single hearing or 
markup on this legislation or any legislation similar in concept. 
Furthermore, it has been less than 2 weeks since the majority first 
raised the issue with minority staff and informed us of their 
intentions to place this bill on the suspension calendar.
  We have not held a single stakeholders meeting regarding this 
legislation, nor have we spoken with the Federal Trade Commission about 
how they would implement this legislation or if they feel it is 
necessary. In fact, we had not one single stakeholder call, email, or 
letter or one single call, email, or letter from the regulator on this 
issue until Monday. Since then, we have received a number of 
stakeholder calls voicing concerns with the legislation. However, 
without holding any hearings or meetings, we can't properly evaluate 
these concerns.
  As has been aptly demonstrated by the majority's health care bill and 
the CPSIA, the consumer protection bill that we've had to make several 
changes to, the heavy hand of Federal regulation is prone to producing 
unforeseen and unacceptable consequences on the Nation's economy.
  On its face, this may not be something we'd oppose if we had a record 
to prove it's necessity and to inform us as to the proper way to 
address the potential problems that this bill is meant to solve, but we 
have absolutely no record on this matter; and the House, therefore, 
cannot responsibly pass this bill to the President's desk to become 
law.
  House Republicans are more than willing to work with our counterparts 
on the other side of the aisle and with our colleagues in the Senate 
next Congress to build a record and address if this issue is proven 
necessary. Based solely on a complete lack of process, not necessarily 
the merits, but on the process, I urge opposition to this legislation.

                              {time}  1210

  Madam Speaker, in closing, I want to commend Mr. Boucher, the telecom 
chair. He has been an awesome chair for telecom, in fact, I would have 
to say in the United States House of Representatives, and I am even 
going to throw in the Senate. He is by far the most informed and 
educated on telecom Internet issues. So when Rick Boucher stands up to 
discuss an issue that affects e-commerce and the Internet, we listen.
  It is unfortunate that we are having a debate on this bill on process 
and not on the merits, because on the merits we are going to listen to 
Rick Boucher. And I just want to thank him for his service to Congress, 
his tutelage towards me on telecom issues in Congress. I for one, and I 
can say all of us on the Energy and Commerce Committee, are going to 
miss Rick Boucher next term.
  I yield back the balance of my time.
  Mr. BOUCHER. Madam Speaker, I yield myself the balance of my time.
  Madam Speaker, I want to express appreciation for the gentleman from 
Nebraska for those very kind comments, and I want to also say what a 
privilege it has been working with him. He and I together have 
structured a number of items of legislation.
  For example, we advanced to the Energy and Commerce Committee a 
measure that comprehensively reforms the Federal Universal Service Fund 
and has obtained the endorsement of virtually all of the stakeholders 
who have expressed interest in that very complex subject. It has been a 
pleasure working with the gentleman as that work has been undertaken.
  His comments are really humbling to me, and I want to thank him for 
saying those things and just express what a privilege it has been for 
me to work with the gentleman and with all members of the Energy and 
Commerce Committee during these 28 years. It has been a service that 
will certainly be the high point of my career, and I thank all members 
for their many courtesies.
  Madam Speaker, I strongly encourage the passage of this legislation.
  I yield back the balance of my time.
  Mr. TERRY. Madam Speaker, I ask unanimous consent to reclaim my time.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Nebraska?
  There was no objection.
  Mr. TERRY. At this time, I will yield such time as he may consume to 
the ranking member of the Energy and Commerce Committee from Texas, Joe 
Barton.
  Mr. BARTON of Texas. Thank you.
  Madam Speaker, I apologize. I was in my office and listening to the 
debate. I heard my distinguished senior Republican rise in reluctant 
opposition to the bill. I had had a conversation which Mr. Terry was 
not aware of with the chairman of the committee, Mr. Waxman, in which I 
expressed the same concerns that Mr. Terry expressed, but because of 
the policy implications of the bill, agreed that it should be 
supported. I told him that I would encourage the Republicans on the 
committee and in the full House to support it. Mr. Terry did not know 
that, and he was doing what we had decided before I talked to Mr. 
Waxman.
  I would not normally rush to the floor; but given that I had given my 
word to Chairman Waxman, I felt the necessity to express to the 
subcommittee chairman, Mr. Boucher, that while we agree with all the 
process arguments that Mr. Terry enunciated and think they are very 
valid, the policy in the bill is good policy, and I would ask that it 
be supported for that reason.
  I thank the gentleman from Nebraska for yielding.
  Mr. TERRY. Madam Speaker, I yield back the balance of my time.
  The SPEAKER pro tempore. The question is on the motion offered by the 
gentleman from Virginia (Mr. Boucher) that the House suspend the rules 
and pass the bill, S. 3386.
  The question was taken; and (two-thirds being in the affirmative) the 
rules were suspended and the bill was passed.
  A motion to reconsider was laid on the table.

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