[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
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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.
____________________