[House Report 108-619]
[From the U.S. Government Publishing Office]
108th Congress Report
HOUSE OF REPRESENTATIVES
2d Session 108-619
======================================================================
SECURELY PROTECT YOURSELF AGAINST CYBER TRESPASS ACT
_______
July 20, 2004.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
_______
Mr. Barton of Texas, from the Committee on Energy and Commerce,
submitted the following
R E P O R T
[To accompany H.R. 2929]
[Including cost estimate of the Congressional Budget Office]
The Committee on Energy and Commerce, to whom was referred
the bill (H.R. 2929) to protect users of the Internet from
unknowing transmission of their personally identifiable
information through spyware programs, and for other purposes,
having considered the same, report favorably thereon with an
amendment and recommend that the bill as amended do pass.
CONTENTS
Page
Amendment........................................................ 2
Purpose and Summary.............................................. 7
Background and Need for Legislation.............................. 7
Hearings......................................................... 9
Committee Consideration.......................................... 9
Committee Votes.................................................. 9
Committee Oversight Findings..................................... 11
Statement of General Performance Goals and Objectives............ 11
New Budget Authority, Entitlement Authority, and Tax Expenditures 11
Committee Cost Estimate.......................................... 11
Congressional Budget Office Estimate............................. 11
Federal Mandates Statement....................................... 13
Advisory Committee Statement..................................... 13
Constitutional Authority Statement............................... 13
Applicability to Legislative Branch.............................. 13
Section-by-Section Analysis of the Legislation................... 13
Changes in Existing Law Made by the Bill, as Reported............ 18
Exchange of Committee Correspondence............................. 18
AMENDMENT
The amendment is as follows:
Strike all after the enacting clause and insert the
following:
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Securely Protect Yourself Against
Cyber Trespass Act'' or the ``SPY ACT''.
SEC. 2. PROHIBITION OF DECEPTIVE ACTS OR PRACTICES RELATING TO SPYWARE.
(a) Prohibition.--It is unlawful for any person, who is not the owner
or authorized user of a protected computer, to engage in deceptive acts
or practices in connection with any of the following conduct with
respect to the protected computer:
(1) Taking control of the computer by--
(A) utilizing such computer to send unsolicited
information or material from the protected computer to
others;
(B) diverting the Internet browser of the computer,
or similar program of the computer used to access and
navigate the Internet, away from the site the user
intended to view, to one or more other Web pages, such
that the user is prevented from viewing the content at
the intended Web page;
(C) accessing or using the modem, or Internet
connection or service, for the computer and thereby
causing damage to the computer or causing the owner or
authorized user to incur unauthorized financial
charges;
(D) using the computer as part of an activity
performed by a group of computers that causes damage to
another computer; or
(E) delivering advertisements that a user of the
computer cannot close without turning off the computer
or closing all sessions of the Internet browser for the
computer.
(2) Modifying settings related to use of the computer or to
the computer's access to or use of the Internet by altering--
(A) the Web page that appears when the owner or
authorized user launches an Internet browser or similar
program used to access and navigate the Internet;
(B) the default provider used to access or search the
Internet, or other existing Internet connections
settings;
(C) a list of bookmarks used by the computer to
access Web pages; or
(D) security or other settings of the computer that
protect information about the owner or authorized user.
(3) Collecting personally identifiable information through
the use of a keystroke logging function or similar function.
(4) Inducing the owner or authorized user to install a
computer software component onto the computer, or preventing
reasonable efforts to block the installation or execution of,
or to disable, a computer software component by--
(A) presenting the owner or authorized user with an
option to decline installation of a software component
such that, when the option is selected by the owner or
authorized user, the installation nevertheless
proceeds; or
(B) causing a computer software component that the
owner or authorized user has properly removed or
disabled to automatically reinstall or reactivate on
the computer.
(5) Misrepresenting that installing a separate software
component or providing log-in and password information is
necessary for security or privacy reasons, or that installing a
separate software component is necessary to open, view, or play
a particular type of content.
(6) Inducing the owner or authorized user to install or
execute computer software by misrepresenting the identity or
authority of the person or entity providing the computer
software to the owner or user.
(7) Inducing the owner or authorized user to provide
personally identifiable information to another person by
misrepresenting the identity or authority of the person seeking
the information.
(8) Removing, disabling, or rendering inoperative a security,
anti-spyware, or anti-virus technology installed on the
computer.
(9) Installing or executing on the computer one or more
additional computer software components with the intent of
causing a person to use such components in a way that violates
any other provision of this section.
(b) Effective Date.--This section shall take effect on the date of
the enactment of this Act.
SEC. 3. PROHIBITION OF COLLECTION OF CERTAIN INFORMATION WITHOUT NOTICE
AND CONSENT.
(a) Opt-In Requirement.--Except as provided in subsection (e), it is
unlawful for any person--
(1) to transmit to a protected computer, which is not owned
by such person and for which such person is not an authorized
user, any information collection program, or
(2) to execute any information collection program installed
on such a protected computer,
unless, before the first execution of any of the information collection
functions of the program, the owner or an authorized user of the
protected computer has consented to such execution pursuant to notice
in accordance with subsection (c) and such information collection
program includes the functions required under subsection (d).
(b) Information Collection Program.--For purposes of this section,
the term ``information collection program'' means computer software
that--
(1)(A) collects personally identifiable information; and
(B)(i) sends such information to a person other than the
owner or authorized user of the computer, or (ii) uses such
information to deliver advertising to, or display advertising,
on the computer; or
(2)(A) collects information regarding the Web pages accessed
using the computer; and
(B) uses such information to deliver advertising to, or
display advertising on, the computer.
(c) Notice and Consent.--
(1) In general.--Notice in accordance with this subsection
with respect to an information collection program is clear and
conspicuous notice in plain language, set forth in a form and
manner as the Commission shall provide, that meets all of the
following requirements:
(A) The notice clearly distinguishes such notice from
any other information visually presented
contemporaneously on the protected computer.
(B) The notice contains one of the following
statements, as applicable, or substantially similar
language:
(i) With respect to an information collection
program described in subsection (b)(1): ``This
program will collect and transmit information
about you. Do you accept?''.
(ii) With respect to an information
collection program described in subsection
(b)(2): ``This program will collect information
about Web pages you access and will use that
information to display advertising on your
computer. Do you accept?''.
(iii) With respect to an information
collection program that performs the actions
described in both paragraphs (1) and (2) of
subsection (b): ``This program will collect and
transmit information about you and your
computer use and will collect information about
Web pages you access and use that information
to display advertising on your computer. Do you
accept?''.
(C) The notice provides for the user to grant or deny
consent referred to in subsection (a) by selecting an
option to grant or deny such consent.
(D) The notice provides an option for the user to
select to display on the computer, before granting or
denying consent using the option required under
subparagraph (C), a clear description of--
(i) the types of information to be collected
and sent (if any) by the information collection
program;
(ii) the purpose for which such information
is to be collected and sent; and
(iii) in the case of an information
collection program that first executes any of
the information collection functions of the
program together with the first execution of
other computer software, the identity of any
such software that is an information collection
program.
(E) The notice provides for concurrent display of the
information required under subparagraphs (B) and (C)
and the option required under subparagraph (D) until
the user grants or denies consent using the option
required under subparagraph (C) (or selects the option
required under subparagraph (D)).
(2) Single notice.--The Commission shall provide that, in the
case in which multiple information collection programs first
execute any of the information collection functions of the
programs together, notice in accordance with paragraph (1) may
be provided through a single notice that applies to all such
information collection programs, except that such notice shall
provide the option under subparagraph (D) of paragraph (1) with
respect to each such information collection program.
(3) Change in information collected.--After an owner or
authorized user has granted consent to execution of an
information collection program pursuant to a notice in
accordance with this subsection, the person who transmitted the
program shall provide another notice in accordance with this
subsection and obtain consent before such program may be used
to collect or send information of any type or for any purpose
that is materially different from, and outside the scope of,
the type or purpose set forth in the initial or any previous
notice.
(4) Regulations.--The Commission shall issue regulations to
carry out this subsection.
(d) Required Functions.--The functions required under this subsection
to be included in an information collection program that first executes
any information collection functions with respect to a protected
computer are as follows:
(1) Disabling function.--With respect to any information
collection program, a function of the program that allows a
user of the program to remove the program or disable operation
of the program with respect to such protected computer by a
function that--
(A) is easily identifiable to a user of the computer;
and
(B) can be performed without undue effort or
knowledge by the user of the protected computer.
The Commission may issue regulations to carry out this
paragraph.
(2) Identity function.--With respect only to an information
collection program that uses information collected in the
manner described in paragraph (1)(B)(ii) or (2)(B) of
subsection (b), a function of the program that provides that
each display of an advertisement directed or displayed using
such information is accompanied by a statement that clearly
identifies the information collection program.
(e) Limitation on Liability.--A telecommunications carrier, a
provider of information service or interactive computer service, a
cable operator, or a provider of transmission capability shall not be
liable under this section to the extent that the carrier, operator, or
provider--
(1) transmits, routes, hosts, stores, or provides connections
for an information collection program through a system or
network controlled or operated by or for the carrier, operator,
or provider; or
(2) provides an information location tool, such as a
directory, index, reference, pointer, or hypertext link,
through which the owner or user of a protected computer locates
an information collection program.
SEC. 4. ENFORCEMENT.
(a) Unfair or Deceptive Act or Practice.--This Act shall be enforced
by the Commission under the Federal Trade Commission Act (15 U.S.C. 41
et seq.). A violation of any provision of this Act or of a regulation
issued under this Act shall be treated as an unfair or deceptive act or
practice violating a rule promulgated under section 18 of the Federal
Trade Commission Act (15 U.S.C. 57a), except that the maximum civil
penalty for a violation of this Act shall be one of the following
amounts, as the Commission, in its discretion, seeks for such a
violation:
(1) Treatment of conduct affecting multiple computers as
separate violations.--$33,000 for each violation of section 2,
and $11,000 for each violation of section 3, except that in
applying this paragraph each separate protected computer with
respect to which a violation of such section occurs as a result
of a single action or conduct that violates section 2 or 3
shall be treated as a separate violation.
(2) Treatment of conduct affecting multiple computers as a
single violation.--$3,000,000 for each violation of section 2,
and $1,000,000 for each violation of section 3, except that in
applying this paragraph--
(A) any single action or conduct that violates such
section with respect to multiple protected computers
shall be treated as a single violation; and
(B) any single action or conduct that violates more
than one paragraph of section 2(a) shall be considered
multiple violations, based on the number of such
paragraphs violated.
(b) Exclusiveness of Remedies.--The remedies in this section
(including remedies available under the Federal Trade Commission Act)
are the exclusive remedies for violations of this Act.
(c) Effective Date.--This section shall take effect on the date of
the enactment of this Act, but only to the extent that this section
applies to violations of section 2(a).
SEC. 5. LIMITATIONS.
(a) Law Enforcement Authority.--Sections 2 and 3 of this Act shall
not apply to--
(1) any act taken by a law enforcement agent in the
performance of official duties; or
(2) the transmission or execution of an information
collection program in compliance with a law enforcement,
investigatory, national security, or regulatory agency or
department of the United States in response to a request or
demand made under authority granted to that agency or
department, including a warrant issued under the Federal Rules
of Criminal Procedure, an equivalent State warrant, a court
order, or other lawful process.
(b) Exception Relating to Network Security.--Nothing in this Act
shall apply to any monitoring of, or interaction with, a subscriber's
Internet or other network connection or service by a telecommunications
carrier, cable operator, or provider of information service or
interactive computer service for network security purposes, diagnostics
or repair in connection with a network or service, or detection or
prevention of fraudulent activities in connection with a service or
user agreement.
(c) Good Samaritan Protection.--No provider of computer software or
of interactive computer service may be held liable under this Act on
account of any action voluntarily taken, or service provided, in good
faith to remove or disable a program used to violate section 2 or 3
that is installed on a computer of a customer of such provider, if such
provider notifies the customer and obtains the consent of the customer
before undertaking such action or providing such service.
SEC. 6. EFFECT ON OTHER LAWS.
(a) Preemption of State Law.--
(1) Preemption.--This Act supersedes any provision of a
statute, regulation, or rule of a State or political
subdivision of a State that expressly regulates--
(A) deceptive conduct with respect to computers
similar to that described in section 2(a);
(B) the transmission or execution of a computer
program similar to that described in section 3; or
(C) the use of context-based triggering mechanisms or
similar means to display an advertisement that
partially or wholly covers or obscures content on a Web
page in a way that interferes with the ability of the
user of a computer to view the Web page.
(2) Protection of certain state laws.--This Act shall not be
construed to preempt the applicability of--
(A) State trespass, contract, or tort law; or
(B) other State laws to the extent that those laws
relate to acts of fraud.
(b) Preservation of FTC Authority.--Nothing in this Act may be
construed in any way to limit or affect the Commission's authority
under any other provision of law, including the authority to issue
advisory opinions (under Part 1 of Volume 16 of the Code of Federal
Regulations), policy statements, or guidance regarding this Act.
SEC. 7. ANNUAL FTC REPORT.
For the 12-month period that begins upon the effective date under
section 10(a) and for each 12-month period thereafter, the Commission
shall submit a report to the Congress that--
(1) specifies the number and types of actions taken during
such period to enforce sections 2(a) and 3, the disposition of
each such action, any penalties levied in connection with such
actions, and any penalties collected in connection with such
actions; and
(2) describes the administrative structure and personnel and
other resources committed by the Commission for enforcement of
this Act during such period.
Each report under this subsection for a 12-month period shall be
submitted not later than 90 days after the expiration of such period.
SEC. 8. REGULATIONS.
The Commission shall issue the regulations required by this Act not
later than the expiration of the 6-month period beginning on the date
of the enactment of this Act. Any regulations issued pursuant to this
Act shall be issued in accordance with section 553 of title 5, United
States Code.
SEC. 9. DEFINITIONS.
For purposes of this Act:
(1) Cable operator.--The term ``cable operator'' has the
meaning given such term in section 602 of the Communications
Act of 1934 (47 U.S.C. 522).
(2) Collect.--The term ``collect'' means, with respect to
information and for purposes only of section 3, to obtain in a
manner other than by transfer by an owner or authorized user of
a protected computer to the party intended as recipient of the
transferred information.
(3) Computer; protected computer.--The terms ``computer'' and
``protected computer'' have the meanings given such terms in
section 1030(e) of title 18, United States Code.
(4) Computer software.--
(A) In general.--Except as provided in subparagraph
(B), the term ``computer software'' means a set of
statements or instructions that can be installed and
executed on a computer for the purpose of bringing
about a certain result.
(B) Exception for cookies.--Such term does not
include a cookie or other text file, data, or computer
software, that is placed on the computer system of a
user by an Internet service provider, interactive
computer service, or Internet website to return
information to such provider, service, or website
solely to enable the user subsequently to use such
provider or service or to access such website.
(5) Commission.--The term ``Commission'' means the Federal
Trade Commission.
(6) Damage.--The term ``damage'' has the meaning given such
term in section 1030(e) of title 18, United States Code.
(7) Deceptive acts or practices.--The term ``deceptive acts
or practices'' has the meaning applicable to such term for
purposes of section 5 of the Federal Trade Commission Act (15
U.S.C. 45).
(8) Disable.--The term ``disable'' means, with respect to an
information collection program, to permanently prevent such
program from executing any of the functions described in
section 3(b) that such program is otherwise capable of
executing (including by removing, deleting, or disabling the
program), unless the owner or operator of a protected computer
takes a subsequent affirmative action to enable the execution
of such functions.
(9) Information collection functions.--The term ``information
collection functions'' means, with respect to an information
collection program, the functions of the program described in
subsection (b) of section 3.
(10) Information service.--The term ``information service''
has the meaning given such term in section 3 of the
Communications Act of 1934 (47 U.S.C. 153).
(11) Interactive computer service.--The term ``interactive
computer service '' has the meaning given such term in section
230(f) of the Communications Act of 1934 (47 U.S.C. 230(f)).
(12) Internet.--The term ``Internet'' means collectively the
myriad of computer and telecommunications facilities, including
equipment and operating software, which comprise the
interconnected world-wide network of networks that employ the
Transmission Control Protocol/Internet Protocol, or any
predecessor or successor protocols to such protocol, to
communicate information of all kinds by wire or radio.
(13) Personally identifiable information.--
(A) In general.--The term ``personally identifiable
information'' means the following information, to the
extent only that such information allows a living
individual to be identified from that information:
(i) First and last name of an individual.
(ii) A home or other physical address of an
individual, including street name, name of a
city or town, and zip code.
(iii) An electronic mail address.
(iv) A telephone number.
(v) A social security number, tax
identification number, passport number,
driver's license number, or any other
government-issued identification number.
(vi) A credit card number.
(vii) An account number.
(viii) Any access code or password, other
than an access code or password transmitted by
an owner or authorized user of a protected
computer to register for, or log onto, a Web
page or other Internet service that is
protected by an access code or password.
(ix) Date of birth, birth certificate number,
or place of birth of an individual, except in
the case of a date of birth required by law to
be transmitted or collected.
(B) Rulemaking.--The Commission may, by regulation,
add to the types of information specified under
paragraph (1) that shall be considered personally
identifiable information for purposes of this Act,
except that such information may not include any record
of aggregate data that does not identify particular
persons, particular computers, particular users of
computers, or particular email addresses or other
locations of computers with respect to the Internet.
(14) Telecommunications carrier.--The term
``telecommunications carrier'' has the meaning given such term
in section 3 of the Communications Act of 1934 (47 U.S.C. 153).
(15) Transmit.--The term ``transmit'' means, with respect to
an information collection program, transmission by any means.
(16) Web page.--The term ``Web page'' means a location, with
respect to the World Wide Web, that has a single Uniform
Resource Locator or another single location with respect to the
Internet, as the Federal Trade Commission may prescribe.
SEC. 10. APPLICABILITY AND SUNSET.
(a) Effective Date.--Except as specifically provided otherwise in
this Act, this Act shall take effect upon the expiration of the 12-
month period that begins on the date of the enactment of this Act.
(b) Applicability.--Section 3 shall not apply to an information
collection program installed on a protected computer before the
effective date under subsection (a) of this section.
(c) Sunset.--This Act shall not apply after December 31, 2009.
PURPOSE AND SUMMARY
H.R. 2929, the ``Securely Protect Yourself Against Cyber
Trespass Act,'' prohibits deceptive practices related to
spyware programs and requires notice and consent for the
execution of information collection programs.
BACKGROUND AND NEED FOR LEGISLATION
The release of the Mosaic browser to the public in January
1993, which provided the first graphical interface for
navigating the Internet, is credited with bringing the Internet
into the mainstream of public usage. In less than one decade,
Internet usage was transformed from an academic tool into a
commercial, educational, and communications portal accessed by
more than 70% of Americans. To accommodate the enormous growth
in Internet use and to meet the needs of online consumers, the
market has continually responded with new technologies tailored
to consumer Internet usage.
Many of the technologies that have emerged are designed to
improve the efficiency and speed of data transfer. Websites may
use browsers to run program-like functions on the user's
computer, such as scripting and applets, to maximize server
efficiency and thereby reduce time requirements for a web page
to load on a user's computer. Technology has also allowed
websites to use persistent identifiers to recognize a return
visitor, and thereby enhance the online experience through
personalization. The unique nature of the Internet has also
facilitated other beneficial technologies that capitalize on
the distributed network structure. Peer-to-peer file sharing
software, instant messaging, and voice-over Internet are but a
few examples of the developments that benefit millions of
users.
Accompanying the growth in available technologies are
emerging concerns regarding harmful uses of these same
technologies. The Committee is aware that the same beneficial
technologies that provide benefits to millions of users can be
applied in ways that present serious problems for consumers
when misused by those with unsavory motives. The Committee is
particularly concerned about the growing use of what is
commonly referred to as spyware. Computer software known as
``spyware'' can allow the unscrupulous to prey on unwitting
consumers by stealing personal and financial information or
exposing them to unsolicited offensive material. In many
instances, spyware software downloads from the Internet are
occurring without the computer user's knowledge and consent.
The covert nature of the software installation makes it very
difficult for a user to detect the presence of the software. In
fact, when the software begins to degrade the function of the
computer, consumers often confuse the true source of the
spyware with the browser they are using or the particular
application they are running. Many of the same programs prevent
a user from properly or completely uninstalling or disabling
the software program.
Spyware presents privacy, security, and functionality
concerns for consumers. The Federal Trade Commission loosely
defines ``spyware'' as software ``that aids in gathering
information about a person or organization without their
knowledge and which may send such information to another entity
without the consumer's consent, or asserts control over a
computer without the consumer's knowledge.'' The Committee
received testimony that spyware represents a range of software
programs on a broad continuum from the most pernicious criminal
activities on one end to the less threatening but still
intrusive on the opposite end of the spectrum.
The most serious privacy and security concerns pertain to
those programs that are intended to capture a user's personal
information without knowledge and consent. The Committee
received testimony demonstrating the software technology and
tactics of some of these programs. They include keystroke
logging software that captures a user's information (passwords,
social security numbers, account numbers, etc.) and can lead to
identity theft, and monitoring software that tracks a user's
online activity, such as websites visited. Such information
could be used for profiling. In a related development, security
experts and law enforcement officers report growing cooperation
among spammers, virus writers, and con artists to steal
millions of dollars from consumers through a device called
``phishing'' which captures passwords and other private
financial data from consumers. Software can also impact the
functioning of a computer by redirecting the user to websites
the user does not intend to visit, preventing a user from
altering settings on the computer, or using the computer to
send unsolicited commercial electronic mail. The Committee is
concerned that such attacks could erode the trust that makes
electronic commerce and online banking possible.
Techniques for deceiving consumers into downloading spyware
vary. Deceptive tactics include using pop-under windows that
disguise the identity of the program distributor, offering
misleading or deceptive end user licensing agreements, and
failing to disclose the functionality of a program. More
nefarious tactics include exploitation of security patches in a
computer's operating system. Additionally, consumers who leave
browser security settings on ``low'' open their systems to
automatic ``drive-by'' downloads in which spyware programs are
automatically downloaded when visiting certain websites.
Other software, known as adware, may not have the security
risks associated with spyware but may raise significant privacy
concerns. Adware is advertising software that can monitor
online behavior and websites visited. Adware is often bundled
with other software a consumer voluntarily downloads. Often,
the adware is consideration for otherwise free software a
consumer chooses to download. This is known as freeware. The
adware usually directs targeted advertisements to the user's
computer based on information gathered about the user's online
activity. However, some adware has been used to push directed
advertisements of material unrelated to online activity that a
user may find objectionable. The Committee does not find adware
per se objectionable so long as a consumer has given informed
consent to the software installation or execution.
The Committee recognizes that many of the technologies that
are used for malicious and deceptive practices can also be used
for beneficial and legitimate purposes. For example, parents
utilizing software to monitor the online behavior of their
children may find it to be an appropriate tool to protect their
children. Similarly, software companies, Internet Service
Providers, and other intermediaries may have legitimate
business reasons to monitor and track activity. Examples
include system performance, network efficiency, and automatic
updates of anti-virus software. The Committee does not view the
technology employed by spyware and adware as the source of the
problem and therefore, does not seek to regulate the software.
Rather, it is the misuse of this technology that has created
significant policy concerns the Committee intends to address
through this legislation and ongoing oversight.
HEARINGS
The Subcommittee on Commerce, Trade, and Consumer
Protection held a hearing on spyware legislation on April 29,
2004. The Subcommittee received testimony from: The Honorable
Mozelle W. Thompson, Commissioner, Federal Trade Commission;
Mr. Howard Beales, Director, Bureau of Consumer Protection,
Federal Trade Commission; Mr. Ari Schwartz, Associate Director,
Center for Democracy and Technology; Mr. Dave Baker, Vice
President for Law and Public Policy, EarthLink; and Mr. Jeffrey
Friedberg, Director of Windows Privacy, Microsoft.
COMMITTEE CONSIDERATION
On Thursday, June 17, 2004, the Subcommittee on Commerce,
Trade, and Consumer Protection met in open markup session and
approved H.R. 2929 for Full Committee consideration, as
amended, by a voice vote. On Thursday, June 24, 2004, the
Committee on Energy and Commerce met in open markup session and
ordered H.R. 2929 reported to the House, as amended, by a
recorded vote of 45 yeas to 4 nays, a quorum being present.
COMMITTEE VOTES
Clause 3(b) of rule XIII of the Rules of the House of
Representatives requires the Committee to list the record votes
on the motion to report legislation and amendments thereto. The
following is the recorded vote taken on the motion by Mr.
Pickering to order H.R. 2929 reported to the House, as amended,
which was agreed to by a recorded vote of 45 yeas to 4 nays.
COMMITTEE OVERSIGHT FINDINGS
Pursuant to clause 3(c)(1) of rule XIII of the Rules of the
House of Representatives, the Committee held a legislative
hearing and made findings that are reflected in this report.
STATEMENT OF GENERAL PERFORMANCE GOALS AND OBJECTIVES
H.R. 2929 prohibits deceptive practices related to spyware
programs and requires notice and consent for the execution of
information collection programs.
NEW BUDGET AUTHORITY, ENTITLEMENT AUTHORITY, AND TAX EXPENDITURES
In compliance with clause 3(c)(2) of rule XIII of the Rules
of the House of Representatives, the Committee finds that H.R.
2929, the Securely Protect Yourself Against Cyber Trespass Act,
would result in no new or increased budget authority,
entitlement authority, or tax expenditures or revenues.
COMMITTEE COST ESTIMATE
The Committee adopts as its own the cost estimate prepared
by the Director of the Congressional Budget Office pursuant to
section 402 of the Congressional Budget Act of 1974.
CONGRESSIONAL BUDGET OFFICE ESTIMATE
Pursuant to clause 3(c)(3) of rule XIII of the Rules of the
House of Representatives, the following is the cost estimate
provided by the Congressional Budget Office pursuant to section
402 of the Congressional Budget Act of 1974:
U.S. Congress,
Congressional Budget Office,
Washington, DC, July 8, 2004.
Hon. Joe Barton,
Chairman, Committee on Energy and Commerce, U.S. House of
Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 2929, the Securely
Protect Yourself Against Cyber Trespass Act.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contacts are Melissa E.
Zimmerman (for federal costs), Sarah Puro (for the impact on
state, local, and tribal governments), and Paige Piper/Bach
(for the private-sector impact).
Sincerely,
Elizabeth M. Robinson
(For Douglas Holtz-Eakin, Director).
Enclosure.
H.R. 2929--Securely Protect Yourself Against Cyber Trespass Act
Summary: H.R. 2929 would prohibit the use of computer
software (known as spyware) to collect personal information and
to monitor the behavior of computer users without a user's
consent. The Federal Trade Commission (FTC) would be directed
to enforce this bill's provisions relating to spyware,
including assessing and collecting civil penalties for unfair
or deceptive business practices. (Civil penalties are recorded
in the federal budget as revenues.) Based on information
provided by the FTC, CBO estimates that implementing H.R. 2929
would not have a significant effect on revenues or spending
subject to appropriation. Enacting the bill would not affect
direct spending.
H.R. 2929 contains both an intergovernmental mandates and
private-sector mandates, as defined in the Unfunded Mandates
Reform Act (UMRA). CBO estimates that the cost of the mandates
would fall below the annual thresholds established by UMRA: $60
million in 2004 for intergovernmental mandates, and $120
million in 2004 for private-sector mandates. (Both thresholds
are adjusted annually for inflation.)
Estimated cost to the Federal Government: Enacting H.R.
2929 could increase federal revenues from civil penalties
assessed for committing unfair or deceptive acts or practices
in commerce, but CBO estimates that any new collections would
be less than $500,000 a year.
Implementing the bill also could increase spending by the
FTC for law enforcement, subject to the availability of
appropriated funds. Based on information from the agency, CBO
expects than any such increase would be insignificant.
Estimated impact on state, local, and tribal governments:
Section 6 would preempt state laws that prohibit the use of
certain types of computer software and establish penalties for
violators. This preemption constitutes a mandate as defined in
UMRA. Utah has already passed legislation that this bill would
preempt, and California, Iowa, and New York have bills pending
before their state legislatures. However, the preemption is
narrow and the bill would specifically preserve state authority
to pursue fraud, trespass, contract, and tort cases under state
law. CBO estimates that any costs to state, local, or tribal
governments would be minimal and would fall significantly below
the threshold established in UMRA ($60 million in 2004,
adjusted annually for inflation).
Estimated impact on the private sector: H.R. 2929 would
impose private-sector mandates, as defined in UMRA, on persons
who use computer programs to collect certain information from
another person's computer. Based on information provided by
industry and government sources, CBO expects that the direct
costs of complying with those mandates would fall below the
annual threshold established by UMRA for private-sector
mandates ($120 million in 2004, adjusted annually for
inflation).
The bill would require a person who transmits or executes
an information collection program on someone's computer to
receive prior consent from the owner or authorized user of that
computer. An information collection program is defined in the
legislation as computer software that collects personally
identifiable information and sends the information to someone
else or collects Web tracking information and uses such
information for advertising purposes. The bill would require
the Federal Trade Commission to provide the manner and form of
the notice to obtain consent. In addition, the bill would
require an information collection program installed on
someone's computer to be easily identifiable and removable.
Estimate prepared by: Federal Costs: Melissa E. Zimmerman.
Impact on State, Local, and Tribal Governments: Sarah Puro.
Impact on the Private Sector: Paige Piper/Bach.
Estimate approved by: Peter H. Fontaine, Deputy Assistant
Director for Budget Analysis.
FEDERAL MANDATES STATEMENT
The Committee adopts as its own the estimate of Federal
mandates prepared by the Director of the Congressional Budget
Office pursuant to section 423 of the Unfunded Mandates Reform
Act.
ADVISORY COMMITTEE STATEMENT
No advisory committees within the meaning of section 5(b)
of the Federal Advisory Committee Act were created by this
legislation.
CONSTITUTIONAL AUTHORITY STATEMENT
Pursuant to clause 3(d)(1) of rule XIII of the Rules of the
House of Representatives, the Committee finds that the
Constitutional authority for this legislation is provided in
Article I, section 8, clause 3, which grants Congress the power
to regulate commerce with foreign nations, among the several
states, and with the Indian tribes.
APPLICABILITY TO LEGISLATIVE BRANCH
The Committee finds that the legislation does not relate to
the terms and conditions of employment or access to public
services or accommodations within the meaning of section
102(b)(3) of the Congressional Accountability Act.
SECTION-BY-SECTION ANALYSIS OF THE LEGISLATION
Section 1. Short title
Section 1 establishes the short title of the Act as the
``Securely Protect Yourself Against Cyber Trespass Act,'' or
the ``SPY ACT.''
Section 2. Prohibition of deceptive acts or practices relating to
spyware
Section 2(a) prohibits any person who is not an owner or
authorized user of a protected computer to engage in deceptive
acts or practices in connection with spyware. Specifically it
prohibits deceptively: taking control of a protected computer;
modifying settings related to the use of a computer or to the
computer's access to or use of the Internet by altering certain
information; collecting personally identifiable information
through the use of a keystroke logging function or similar
function; inducing the owner or authorized user to install a
computer software component onto the computer or preventing
reasonable efforts to block the installation or execution of,
or to disable, a computer software component; misrepresenting
that installing a separate software component or providing log-
in and password information is necessary for security or
privacy reasons, or that installing a separate software
component is necessary to open, view, or play a particular type
of content; inducing the owner or authorized user to install or
execute computer software by misrepresenting the identity or
authority of the person or entity providing the computer
software; inducing the owner or authorized user to provide
personally identifiable information to another person by
misrepresenting the identity or authority of the person seeking
the information; removing, disabling, or rendering inoperative
a security, anti-spyware, or anti-virus technology installed on
the computer, or installing or executing on the computer one or
more additional computer software components with the intent of
causing a person to use such components in a way that violates
any other provision of section 2.
The Committee notes that it has preserved and expects that
the Federal Trade Commission (FTC) will use its authority to
issue advisory opinions, policy statements, and guidance to
advise companies on the parameters of this section. For example
the FTC should issue guidance on required disclosures or
material omissions that would trigger liability under section
2.
Many software installations of updated security, anti-
spyware, or anti-virus technologies requested by a computer
user will disable or render inoperable a prior version of that
software upon installation of the updated version. Section
2(a)(8) is not intended to apply to these circumstances.
Section 2(b) provides that the section shall take effect on
the date of enactment of the Act.
Section 3. Prohibition of collection of certain information without
notice and consent
Section 3(a) prohibits the transmission of an information
collection program to a protected computer unless the program
provides for notice and consent before the first execution of
the information collection program and contains the functions
set forth in section 3(d). It also prohibits the execution of
any information collection program on a protected computer
without the consent of the owner or authorized user.
This section contemplates a single notice at the first
execution of the software. If the same information collection
program executes more than one time on the same protected
computer, notice is required only at the initial execution.
Subsequent notice is only required if the information
collection program will collect or send information that is
materially different from, and outside the scope of, the type
or purpose set forth in the initial or, in the case of prior
subsequent notice, previous notice.
Section 3(b) provides a definition for information
collection program. An information collection program is
computer software that (a): collects personally identifiable
information and either (1) sends such information to a person
other than the owner or authorized user of the computer or (2)
uses such information to deliver advertising to or display
advertising on the computer; or (b) collects information
regarding web pages accessed using the computer and uses the
information to deliver advertising to or display advertising on
the computer. The reference to ``a person other than the owner
or authorized user of the computer'' in Section 3(b)(1)(B)(i)
is intended to include the entity that transmitted or executed
the information collection program.
Section 3(c) sets out the requirements for notice and
consent with respect to information collection programs. The
notice must be clear and conspicuous in plain language and
clearly distinguished from any other information
contemporaneously displayed. Section 3(c)(1)(A) is not intended
to impose design mandates on hardware manufacturers or software
developers. The intent of the provision is to require a clearly
distinct notice to the extent practicable in light of the
technical and functional limitations of the information
collection program or the device on which it is installed and
executed. The notice must also contain a statement identifying
whether the information collection program collects personally
identifiable information or web pages accessed or both. The
provider of the information collection program may use the
provided language or substantially similar language. The
language ``or substantially similar language'' has been added
to section 3(c)(1)(B) to ensure that vendors of information
collection programs have adequate flexibility to tailor section
3 notices to the user experience and in light of evolving
technologies and consumer expectations. The notice must provide
for the user to grant or deny consent. The notice must also
provide for the user to access, before granting or denying
consent, a clear description of the types of information being
collected, the purpose for which the information is being
collected and sent, and in the case of bundled software, the
identity of the programs that qualify as information collection
programs under the Act. The software provider may provide
access to the information required under section 3(c)(1)((D) by
a link or some other web-based mechanism. A single notice is
sufficient for bundled software programs so long as it meets
the requirements under section 3(c)(1)(D)(iii). Section
3(c)(1)(E) requires concurrent display of the specified
information in sections 3(c)(1)(B), (C), and (D) to the extent
reasonably practicable. Section 3(c) grants the FTC authority
to issue regulations to carry out the subsection.
Section 3(d) provides that an information collection
program must contain a disable function and, if applicable, an
identity function. The disable function must allow a user of
the program to remove or disable operation of the program by a
mechanism that is easily identifiable to the user and can be
performed without undue effort or knowledge by the user of the
protected computer. Section 3(d)(1) does not require
information collection programs to provide users with both a
remove and a disable option. Developers of information
collection programs will satisfy the requirements of Section
3(d)(1) so long as the program includes at least one of these
options. The identity function must be included in any
information collection program that delivers advertising to or
displays advertising on a protected computer. The function must
provide that display of an advertisement generated by
information collected through the program must be accompanied
by a statement that identifies the information collection
program. Section 3(d) gives the FTC authority to issue
regulations to carry out the subsection.
Section 3(e) provides that a telecommunications carrier,
provider of information or interactive computer service, cable
operator, or a provider of transmission capability shall not be
liable under section 3 to the extent that it transmits, routes,
hosts, stores, or provides connections for an information
collection program or provides an information location tool
through which the owner or authorized user of a protected
computer locates an information collection program.
Section 4. Enforcement
Section 4(a) provides that the Act shall be enforced by the
FTC under the Federal Trade Commission Act and that a violation
of the Act shall be treated as an unfair or deceptive act or
practice violating a rule promulgated under section 18 of the
Federal Trade Commission Act except that the civil penalties
for a violation of the Act are as set forth in this section.
Accordingly, the Committee intends that the standard for FTC
enforcement of a civil action to recover a civil monetary
penalty in a district court of the United States in a case of a
violation of this Act shall be, as provided in section
5(m)(1)(A) of the Federal Trade Commission Act, ``actual
knowledge or knowledge fairly implied on the basis of objective
circumstances'' that the conduct is unfair and deceptive and is
prohibited by this Act. Similarly, the Committee intends that
section 5(m)(1)(B) of the Federal Trade Commission Act will
apply in such circumstances to require the court, in
determining the amount of any such civil penalty for violation
of this Act, to take into account ``the degree of culpability,
any history of prior such conduct, ability to pay, effect on
ability to continue to do business, and such other matters as
justice may require.'' The Committee expects the FTC, before it
seeks any damages under this Act, to formulate and make public
guidance on the standards it intends to apply in determining
the amount of civil penalties it will seek.
The section gives the FTC the discretion to seek civil
penalties for violations of the Act in one of two ways: (1) by
treating conduct affecting multiple computers as separate
violations, with damages up to $33,000 for each violation of
section 2 and $11,000 for each violation of section 3; or (2)
by treating conduct affecting multiple computers as a single
violation with damages up to $3,000,000 for each violation of
section 2 and $1,000,000 for each violation of section 3. Any
single action or conduct that violates more than one provision
of section 2(a) shall be considered multiple violations based
on the number of paragraphs violated. The Committee expects the
FTC to vigorously enforce the law to protect consumers from
unfair or deceptive acts or practices involving spyware. It
also expects the agency to act reasonably to avoid seeking
damages out of proportion to the harm caused by the offending
conduct.
Section 4(b) provides that remedies available under this
section and remedies available under the Federal Trade
Commission Act are the exclusive remedies for violation of the
Act.
Section 4(c) provides that the section shall take effect on
the date of enactment of the Act to the extent that the section
applies to violations of section 2(a).
Section 5. Limitations
Section 5(a) provides that sections 2 and 3 of the Act
shall not apply to any act taken by a law enforcement agent in
performance of official duties or the transmission or execution
of an information collectionprogram in compliance with a law
enforcement, investigatory, national security, or regulatory agency or
department of the United States in response to a request or demand made
under authority granted to that agency or department.
Section 5(b) provides that nothing in the Act shall apply
to any monitoring of, or interaction with, a subscriber's
Internet or other network connection or service by a
telecommunications carrier, cable operator, or provider of
information service or interactive computer service for network
security purposes, diagnostics or repair in connection with a
network or service, or detection or prevention of fraudulent
activities in connection with a service or a user agreement.
Section 5(c) provides that no provider of an interactive
computer service may be held liable under the Act on account of
any action voluntarily taken, or service provided, in good
faith to remove or disable a program used to violate section 2
or 3 and installed on a customer's computer, if the provider
notifies the customer and obtains consent before undertaking
such action.
Section 6. Effect on other laws
Section 6(a) provides that the Act supercedes any provision
of a statute, regulation, or rule of a state or political
subdivision that expressly regulates deceptive conduct with
respect to computers similar to that of section 2(a), the
transmission or execution of a computer program similar to that
in section 3, and the use of context based triggering
mechanisms to display advertisement that partially or wholly
cover or obscure content on a web page. The section
specifically preserves state trespass, contract and tort law,
and other state laws to the extent those acts relate to acts of
consumer fraud and deceptive practices generally. The Committee
intends to preserve the ability of State Attorneys General to
enforce these laws as an important backstop to FTC enforcement
of this Act and the Federal Trade Commission Act. However, the
Committee intends to preempt state legislation that makes
illegal an information collection program or other context
based triggering mechanism that complies with this Act by
simply calling it a trespass, tort or other statute in an
effort to avoid preemption. The Committee specifically intends
to preempt the Utah Spyware Control Act, Section 13-39-101,
Utah Code Annotated 1953.
Section 6(b) preserves the Federal Trade Commission's
authority to issue advisory opinions, policy statements, or
guidance regarding the Act.
Section 7. Annual FTC report
Section 7 requires the Federal Trade Commission to submit
annual reports to Congress. The report must detail the actions
taken to enforce sections 2(a) and 3 and describe
administrative structure and personnel and other resources
committed to enforcement of the Act.
Section 8. Regulations
Section 8 provides that any regulations issued under the
Act shall be issued in accordance with section 553 of title 5,
United States Code. Initial regulations shall be issued no
later than six months from date of enactment of the Act.
Section 9. Definitions
Section 9 provides definitions for terms in the Act
including ``computer software,'' ``deceptive acts or
practices,'' ``disable,'' ``personally identifiable
information,'' and ``transmit.''
The definition of ``collect'' makes clear that personally
identifiable information that is input by the user of a
protected computer and transferred to the intended recipient is
outside the scope of section 3 of the Act. This is intended to
facilitate ease of use for consumers and providers of Internet
services or websites.
Section 10. Applicability and sunset
Section 10 provides that, except as otherwise provided in
the Act, the Act shall take effect 12 months after the date of
enactment. Section 10 also provides for a sunset of the bill on
December 31, 2009.
CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED
This legislation does not amend any existing Federal
statute.
EXCHANGE OF COMMITTEE CORRESPONDENCE
House of Representatives,
Committee on the Judiciary,
Washington, DC, July 13, 2004.
Hon. Joe Barton,
Chairman, Committee on Energy and Commerce,
House of Representatives, Washington, DC.
Dear Chairman Barton: On June 25, 2004, I wrote to Speaker
Hastert to request a sequential referral of H.R. 2929, the
``Safeguard Against Privacy Invasions Act.''
My request was based on two provisions, one of which was in
the introduced bill and one of which was in an amendment
adopted at committee. I understand that neither of these two
provisions will be included in the bill that will be reported
to the House. I further understand that the Speaker's policy is
not to grant sequential referrals when the provisions on which
the sequential referral request is based have been removed from
the bill that will be reported to the House. Given that policy,
I will not pursue the sequential referral further.
I appreciate your cooperation in this matter.
Sincerely,
F. James Sensenbrenner, Jr.,
Chairman.
------
House of Representatives,
Committee on Energy and Commerce,
Washington, DC, July 13, 2004.
Hon. F. James Sensenbrenner Jr.,
Chairman, Committee on the Judiciary, House of Representatives, Rayburn
House Office Building, Washington, DC.
Dear Chairman Sensenbrenner: I am writing to confirm that
the two provisions you made reference to in your June 25, 2004
letter to Speaker Hastert on H.R. 2929, the Safeguard Against
Privacy Invasions Act, will not be included in the bill to be
reported by the Committee on Energy and Commerce.
I appreciate your cooperation in these matters as we work
to bring this bill to the House floor.
Sincerely,
Joe Barton,
Chairman.