    [House Report 108-635]
    [From the U.S. Government Publishing Office]

    108th Congress                                            Rept. 108-635
                            HOUSE OF REPRESENTATIVES
     2d Session                                                      Part 1
    ======================================================================

                     INTERNATIONAL CONSUMER PROTECTION ACT
                                    _______

                     July 22, 2004.--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. 3143]

          [Including cost estimate of the Congressional Budget Office]

        The Committee on Energy and Commerce, to whom was referred
    the bill (H.R. 3143) to enhance Federal Trade Commission
    enforcement against cross-border fraud and deception, having
    considered the same, report favorably thereon without amendment
    and recommend that the bill do pass.

                                    CONTENTS

                                                                       Page
    Purpose and Summary..............................................     1
     Background and Need for Legislation.............................     1
     Hearings........................................................     2
     Committee Consideration.........................................     2
     Committee Votes.................................................     3
     Committee Oversight Findings....................................     3
     Statement of General Performance Goals and Objectives...........     3
     New Budget Authority, Entitlement Authority, and Tax
      Expenditures...................................................     3
     Committee Cost Estimate.........................................     3
     Congressional Budget Office Estimate............................     3
     Federal Mandates Statement......................................     5
     Advisory Committee Statement....................................     5
     Constitutional Authority Statement..............................     5
     Applicability to Legislative Branch.............................     5
     Section-by-Section Analysis of the Legislation..................     6
     Changes in Existing Law Made by the Bill, as Reported...........    11

                               Purpose and Summary

        H.R. 3143 empowers the Federal Trade Commission to combat
    transnational fraudulent and deceptive commercial practices.

                      Background and Need for Legislation

         Cross-border fraud is a growing international problem that
    affects American consumers and businesses. The Internet and
    improvements in telecommunications technologies have brought
    significant benefits to consumers. At the same time, they have
    also provided unprecedented opportunities for those engaged in
    fraud and deception to establish operations in one country and
    victimize a large number of consumers in other countries.
        An increasing number of consumer complaints collected in
    the Consumer Sentinel database maintained by the Federal Trade
    Commission (``FTC''), and an increasing number of cases brought
    by the Commission, involve foreign consumers, foreign
    businesses or individuals, or assets or evidence located
    outside the United States. In 2002, 14% of the complaints in
    the Consumer Sentinel database (excluding identity theft
    complaints) were cross-border complaints, up from 11% in 2000.
    The 2002 complaints include over 24,000 complaints by U.S.
    consumers against foreign businesses. Increasingly, the FTC's
    fraud-related cases have some cross-border component. The
    Commission has had foreign targets in over 60 cases, pursued
    assets offshore in more than ten foreign countries, and
    provided redress to thousands of foreign as well as U.S.
    consumers.
        The Commission has legal authority to remedy violations of
    law involving domestic and foreign wrongdoers, pursuant to the
    Federal Trade Commission Act. Yet, the Commission's ability to
    obtain effective relief using this authority faces practical
    impediments when wrongdoers, victims, other witnesses,
    documents, money, and third parties involved in the transaction
    are widely dispersed in many different countries and
    jurisdictions. Such circumstances make it difficult for the
    Commission to gather all the information necessary to detect
    injurious practices, recover offshore assets for consumer
    redress, and reach conduct occurring outside the United States
    that affects U.S. consumers. Improving the ability of the
    Commission and its foreign counterparts to share information
    about cross-border fraud and deception, to conduct joint and
    parallel investigations, and assist each other, is critical to
    achieve more timely and effective enforcement in cross-border
    cases.

                                    Hearings

        The Subcommittee on Commerce, Trade, and Consumer
    Protection held a hearing on September 17, 2003. The
    Subcommittee received testimony from: The Honorable Timothy
    Muris, Chairman, the Federal Trade Commission; Mark MacCarthy,
    Senior Vice President, Public Policy, Visa USA; Marc Rotenberg,
    Executive Director, Electronic Privacy Information Center; and
    Ari Schwartz, Associate Director, Center for Democracy and
    Technology.

                            Committee Consideration

        On September 24, 2003, the Subcommittee on Commerce, Trade,
    and Consumer Protection met in open markup session and approved
    H.R. 3143 for Full Committee consideration, by a voice vote. On
    October 1, 2003, the Full Committee on Energy and Commerce met
    in open markup session and ordered H.R. 3143 favorably reported
    to the House by a voice vote, a quorum being present.
    Subsequent to Committee consideration of H.R. 3143,
    negotiations among agencies including the Federal Trade
    Commission, the Department of Justice, and the Office of the
    Comptroller of the Currency yielded significant change sought
    the information sharing provisions of the bill. Representatives
    Stearns and Schakowsky will introduce a bill reflecting these
    agreed to changes.

                                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.
    There were no record votes taken in connection with ordering
    H.R. 3143 reported. A motion by Mr. Tauzin to order H.R. 3143
    reported to the House, without amendment, was agreed to by a
    voice vote.

                          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

        The goal of H.R. 3143 is to protect consumers from
    fraudulent and deceptive commercial practices perpetrated by
    persons in foreign jurisdictions and/or where the evidence of
    such fraud or illicit gains of such fraud is found overseas.

       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.
    3143, the International Consumer Protection Act of 2003, 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, October 8, 2003.
    Hon. W.J. ``Billy'' Tauzin,
    Chairman, Committee on Energy and Commerce,
    House of Representatives, Washington, DC.
        Dear Mr. Chairman: The Congressional Budget Office has
    prepared the enclosed cost estimate for H.R. 3143, the
    International Consumer Protection Act of 2003.
        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 and local governments), and Selena Caldera (for the
    private-sector impact).
                Sincerely,
                                          Elizabeth M. Robinson
                                   (For Douglas Holtz-Eakin, Director).
        Enclosure.

    H.R. 3143--International Consumer Protection Act of 2003

        H.R. 3143 would expand the authority of the Federal Trade
    Commission (FTC) to work with foreign law enforcement agencies
    to enforce laws prohibiting fraudulent and deceptive commercial
    practices. The bill would allow temporary staff exchanges
    between foreign government agencies and the FTC and would
    authorize the agency to accept payment in-kind or reimbursement
    for costs associated with such exchanges. It also would
    authorize the appropriation of up to $100,000 a year for the
    FTC to support activities of certain international law
    enforcement groups.
        Assuming appropriation of the amounts specified in H.R.
    3143, CBO estimates that implementing the bill would cost less
    than $500,000 over the 2004-2008 period. Enacting the bill
    would not affect direct spending or revenues.
        H.R. 3143 would preempt state and local laws that require
    notice to third parties when certain information relating to
    them is disclosed to the FTC. Such preemptions are mandates as
    defined in the Unfunded Mandates Reform Act (UMRA), but CBO
    estimates that the costs of the mandates would not exceed the
    threshold established in UMRA ($59 million in 2003, adjusted
    for inflation).
        H.R. 3143 would authorize the FTC to request that a judge
    order the recipient of a summons, subpoena, or other compulsory
    process to delay giving notice to anyone that they have been
    required to appear as a witness before, or to produce documents
    in, an FTC proceeding. The order could be issued,
    notwithstanding any state or local laws or regulations, if
    there is reason to believe that notification would cause
    certain identified adverse results. Further, the recipient
    would not be liable under any state or local laws or
    regulations for disclosing information or for failure to
    provide notice. The title also would protect certain entities
    that voluntarily provide specified material to the FTC from
    liability under any state or local law or regulation that
    precludes disclosure of information or requires notification to
    the interested third party.
        To the extent that state and local governments have laws
    that contradict these provisions in the bill, the legislation
    would preempt those laws and thereby impose mandates under
    UMRA. CBO estimates that the cost of these mandates would be
    minimal and would not exceed the threshold established in UMRA
    ($59 million in 2003, adjusted for inflation).
        H.R. 3143 would exempt from liability those entities
    providing certain information on third parties to the FTC. This
    exemption would limit the ability of a third party to sue and,
    thus, impose a private-sector mandate under UMRA. CBO estimates
    that the cost to the private sector would be minimal and would
    fall below the annual threshold for private-sector mandates
    established in UMRA ($117 million in 2003, adjusted annually
    for inflation).
        Section 21B of the Federal Trade Commission Act, as amended
    by H.R. 3143, would protect from liability entities voluntarily
    providing information to the FTC about possible unfair or
    deceptive acts or practices of third parties. By exempting
    these entities from liability, H.R. 3143 would limit the
    ability of third parties to sue for disclosure or failure to
    provide notice of disclosure; such a limit constitutes a
    private-sector mandate under UMRA. The direct cost of the
    mandate would be the amount awarded in settlements and
    judgments (net of costs) to third parties under current law
    that would be precluded under H.R. 3143. Due to the exposure to
    liability under current law, entities do not voluntarily
    provide information on third parties to the FTC. CBO estimates
    that the costs to the private sector would be minimal, since
    few, if any, third-party lawsuits are filed.
        On July 9, 2003, CBO transmitted a cost estimate for S.
    1234, the Federal Trade Commission Reauthorization Act of 2003
    as ordered reported by the Senate Committee on Commerce,
    Science, and Transportation on June 19, 2003. H.R. 3143
    contains similar provisions to those in title II of S. 1234. In
    addition, S. 1234 would authorize funding for all operations of
    the FTC, but H.R. 3143 would authorize funding only for support
    to certain international law enforcement groups. Both bills
    also would preempt state and local law in the same way and
    would impose the same private-sector mandate.
        The CBO staff contacts for this estimate are Melissa E.
    Zimmerman (for federal costs), Sara Puro (for the impact on
    state and local governments), and Selena Caldera (for the
    private-sector impact). This estimate was 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
    ``International Consumer Protection Act of 2003.''

               SECTION 2. FOREIGN LAW ENFORCEMENT AGENCY DEFINED

        Section 2 amends section 4 of the Federal Trade Commission
    Act by adding a definition for ``foreign law enforcement
    agency.'' It is defined as: (1) any agency or judicial
    authority of a foreign government, including a foreign state, a
    political subdivision of a foreign state, or a multinational
    organization constituted by and comprised of foreign states,
    that is vested with law enforcement or investigative authority
    in civil, criminal, or administrative matters; or, (2) any
    multinational multi-agency organization to the extent that it
    is acting on behalf of an entity described in subparagraph (A).

                      SECTION 3. AVAILABILITY OF REMEDIES

        Section 3 amends section 5(a) of the Federal Trade
    Commission Act explicitly affirming that ``unfair and deceptive
    acts or practices'' under the FTC Act include acts or practices
    involving foreign commerce that: (1) cause or are likely to
    cause reasonably foreseeable injury within the United States;
    or (2) involve material conduct occurring within the United
    States. In particular, this section clarifies that the FTC has
    authority to obtain all remedies in cases alleging such unfair
    acts or practices involving foreign commerce, including
    consumer redress.

                      SECTION 4. POWERS OF THE COMMISSION

        Section 4(a) amends section 6(f) of the Federal Trade
    Commission Act authorizing the sharing of material and
    information by the FTC with a foreign law enforcement agency
    under the same requirements and circumstances permitted under
    section 6(a) of the Act.
        Section 4(b) further amends section 6 of the Federal Trade
    Commission Act by inserting a new subsection (j) permitting the
    FTC, upon a written request from a foreign law enforcement
    agency, to provide assistance, and to provide such assistance,
    if the requesting agency states that it is investigating, or
    engaging in enforcement proceedings against, possible
    violations of laws prohibiting fraudulent or deceptive
    commercial practices or other practices, substantially similar
    to practices prohibited by any provision of the laws
    administered by the Commission, other than Federal antitrust
    laws (as defined in section 12(5) of the International
    Antitrust Enforcement Assistance Act of 1994 (15 U.S.C.
    6211(5))), without requiring that the conduct identified in the
    request violate the laws of the United States. However, the FTC
    shall not provide such assistance to the requesting agency
    where the activity the person is engaged in is protected under
    the Constitution of the United States.
        Under section (j)(2), the Commission may, in its
    discretion, conduct such investigations as the Commission deems
    necessary to collect information and evidence pertinent to the
    request for assistance, using all investigative powers
    authorized by the Act. The Commission may also seek and accept
    appointment by a United States district court of Commission
    attorneys to provide assistance to foreign and international
    tribunals, and to litigants before such tribunals on behalf of
    a foreign law enforcement agency, when a foreign agency is
    investigating or enforcing civil laws or when the Attorney
    General refers a request to the Commission from an agency
    investigating or pursuing the enforcement of criminal laws. In
    deciding whether to provide such assistance, the Commission
    shall consider all relevant factors, including: (1) whether the
    requesting agency has agreed to provide or will provide
    reciprocal assistance to the Commission; (2) whether compliance
    with the request would prejudice the interests of consumers in
    the United States; and, (3) whether the requesting agency's
    investigation or enforcement proceeding concerns acts or
    practices that cause or are likely to cause injury to a
    significant number of persons.
        Section (j)(4) states that if a foreign law enforcement
    agency has set forth a legal basis for requiring execution of
    an international agreement as a condition for reciprocal
    assistance, or as a condition for provision of materials or
    information to the Commission, the Commission, after
    consultation with the Secretary of State, may negotiate and
    conclude an international agreement, in the name of either the
    United States or the Commission, and with final approval of the
    agreement by the Secretary of State, for the purpose of
    obtaining such assistance, materials, or information. The
    Commission may undertake in such international agreement to (1)
    provide assistance using the powers set forth in this
    subsection; (2) disclose materials and information in
    accordance with subsection (f) and section 21(b)(6) of the Act;
    and, (3) protect materials and information received from
    disclosure, as authorized by the Act.
        Under a new section (k) amending section 6 of the FTC Act,
    whenever the Commission obtains evidence that any person,
    partnership, or corporation, either domestic or foreign, has
    engaged in conduct that may constitute a violation of Federal
    criminal law, the Commission shall transmit such evidence to
    the Attorney General who may, in his discretion, institute
    criminal proceedings under appropriate statutes. Moreover, this
    section requires that the Commission endeavor to ensure, with
    respect to memoranda of understanding and international
    agreements it may conclude, that material it has obtained from
    foreign law enforcement agencies investigating or pursuing
    enforcement of foreign criminal laws may be used for the
    purpose of investigation, prosecution, or prevention of
    violations of United States criminal laws.
        The Commission is further authorized to expend appropriated
    funds for (1) operating expenses and other costs of bilateral
    and multilateral cooperative law enforcement groups conducting
    activities of interest to the Commission and in which the
    Commission participates and (2) expenses for consultations and
    meetings hosted by the Commission with foreign government
    agency officials to exchange views relating to the Commission's
    mission, development and implementation of cooperation
    agreements, and provision of technical assistance for the
    development of foreign consumer protection or competition
    regimes. Such expenses may include necessary administrative and
    logistic expenses, and the expenses of Commission staff and
    foreign invitees. The Commission is authorized to expend
    appropriated funds not to exceed $100,000 per fiscal year for
    purposes of this section.

                SECTION 5. REPRESENTATION IN FOREIGN LITIGATION

        Section 5 amends section 16 of the Federal Trade Commission
    Act by adding that the Commission may designate Commission
    attorneys to assist the Attorney General in connection with
    litigation in foreign courts in which the Commission has an
    interest, pursuant to the terms of a memorandum of
    understanding to be negotiated by the Commission and the
    Attorney General. Moreover, the Commission is authorized to
    expend appropriated funds for the retention of foreign counsel
    for both consultation and litigation in foreign courts.

      SECTION 6. SHARING INFORMATION WITH FOREIGN LAW ENFORCEMENT AGENCIES

        Section 6(a) amends section 21(b)(6) of the Federal Trade
    Commission Act adding that the Commission may make material
    obtained pursuant to compulsory process available to any
    foreign law enforcement agency upon the prior certification of
    an appropriate official of any such foreign law enforcement
    agency, either by a prior agreement or memorandum of
    understanding with the Commission or by otherwritten
    certification, that such material will be maintained in confidence and
    will be used only for official law enforcement purposes. Moreover, the
    foreign law enforcement agency must also set forth a bona fide legal
    basis for its authority to maintain the material in confidence. The
    materials are to be used for purposes of investigating, or engaging in
    enforcement proceedings related to, possible violations of (1) foreign
    laws prohibiting fraudulent or deceptive commercial practices or other
    practices, substantially similar to practices prohibited by any law
    administered by the Commission; (2) a law administered by the
    Commission, if disclosure of the material would further a Commission
    investigation or enforcement proceeding; or, (3) with the approval of
    the Attorney General, other foreign criminal laws, if such foreign
    criminal laws are offenses defined or covered by a criminal mutual
    legal assistance treaty in force between the United States and the
    foreign law enforcement authority's state. However, the FTC shall not
    make available such material to a foreign law enforcement agency where
    the activity the person is engaged in is protected under the
    Constitution of the United States.
        Section 6(b) exempts from public disclosure under section
    552 of title 5 of the United States Code (Freedom of
    Information Act) materials and information received from a
    foreign government agency and consumer complaint information
    received from non-governmental foreign sources where the agency
    or foreign source requests confidentiality as a condition of
    providing the material or consumer complaint information
    submitted to a reporting mechanism jointly sponsored by the FTC
    and its foreign counterparts. However, this subsection does not
    authorize the Commission to withhold information from the
    Congress or prevent the Commission from complying with an order
    of a court in an action commenced by the Commission or the
    United States.

             SECTION 7. CONFIDENTIALITY, DELAYED NOTICE OF PROCESS

        Section 7 amends the FTC Act by inserting section 21(A)
    making the Right to Financial Privacy Act (``RFPA'') and the
    Electronic Communications Privacy Act (``ECPA'') applicable to
    the Commission. It further amends the Right to Financial
    Privacy Act to remove impediments to sharing appropriate
    information between the FTC and other financial and market
    regulators. In general, the procedures for delay or prohibition
    of notice under the Right to Financial Privacy Act (12 U.S.C.
    3401 et seq.) and the Electronic Communications Privacy Act (18
    U.S.C. 2701 et seq.) are also made available to the Commission.
    In the case of the RFPA, the procedures are available to the
    Commission upon a finding by the presiding judge or magistrate
    judge pursuant to an ex parte application by the Commission
    that there is reason to believe that notification may cause an
    adverse result. Under ECPA, the notification is delayed
    pursuant to section 2705(a)(1)(B) of title 18, upon a finding
    by the Commission that there is reason to believe that
    notification may cause an adverse result.
        If the procedures for delay or prohibition of notice under
    the Right to Financial Privacy Act and the Electronic
    Communications Privacy Act do not apply, under section 21(A)(c)
    the Commission may apply ex parte to a presiding judge or
    magistrate judge for an order commanding the recipient of
    compulsory process issued by the Commission not to notify any
    other person of the existence of the process, notwithstanding
    any other law. The presiding judge or magistrate judge may, in
    turn, enter such an order granting the requested delay for a
    period not to exceed 60 days, if there is reason to believe
    that notification may cause an adverse result. The presiding
    judge or magistrate judge may grant extensions of this delay of
    notice of up to 30 days each in accordance with this
    subsection, provided that in no event the notice shall be
    delayed for more than a total of nine months.
        The recipient of compulsory process issued by the
    Commission under this section 21(A)(d) shall not be liable
    under any law or under any contract or other legally
    enforceable agreement, for failure to provide notice that such
    process has been issued or that the recipient has provided
    information in response to such process. In doing so, the
    recipient is not provided with any exemption from liability for
    (1) the underlying conduct reported; (2) noncompliance with the
    record retention requirements under section 3404 of title 12;
    or, (3) noncompliance with any requirement of a federal
    government agency to disclose information to that agency.
        All judicial proceedings initiated by the Commission under
    the RFPA and ECPA or section 21(A) may be brought in the United
    States District Court for the District of Columbia or any other
    appropriate United States District Court. Moreover, upon
    application by the Commission, all judicial proceedings
    pursuant to this section shall be held in camera and the
    records thereof sealed until expiration of the period of delay
    or such other date as the presiding judge or magistrate judge
    may permit. However, this section shall not apply to an
    investigation or proceeding related to the administration of
    federal antitrust laws or foreign antitrust laws.
        For purposes of this section, the term adverse result is
    defined as (1) the transfer outside the territorial limits of
    the United States of assets or records related to fraudulent or
    deceptive commercial practices or related to persons involved
    to such practices; (2) impeding the ability of the Commission
    to identify persons involved in fraudulent or deceptive
    commercial practices, or to trace the source or disposition of
    funds related to such practices; (3) endangering the life or
    physical safety of an individual; (4) flight from prosecution;
    (5) the destruction of, or tampering with, evidence; (6) the
    intimidation of potential witnesses; (7) the dissipation,
    fraudulent transfer, or concealment of assets subject to
    recovery by the Commission; or, (8) otherwise seriously
    jeopardizing an investigation or proceeding related to
    fraudulent or deceptive commercial practices or persons
    involved in such practices, or unduly delaying a trial related
    to such practices or persons involved in such practices.

          SECTION 8. PROTECTION FOR VOLUNTARY PROVISION OF INFORMATION

        Section 8 amends the FTC Act protecting a limited category
    of entities from liability under law for the voluntary
    provision of material or for any failure to provide notice of
    such provision of material to the FTC, if the entity reasonably
    believes that such disclosures are relevant to possible unfair
    or deceptive practices, or assets subject to recovery by the
    Commission, including assets located in overseas. The section
    does not provide any exemption from liability for the
    underlying conduct.
        This section applies to the following entities, whether
    foreign or domestic: (1) a financial institution as defined in
    section 5312 of title 31, United States Code; (2) to the extent
    not included in paragraph (1), bank or thrift institution, a
    commercial bank or trust company, an investment company, a
    credit card issuer, an operator of a credit card system, and an
    issuer, redeemer, or cashier of travelers' checks, money
    orders, or similar instruments; (3) a courier service, a
    commercial mail receiving agency, an industry membership
    organization, a payment system provider, a consumer reporting
    agency, a domain name registrar or registry, and a provider of
    alternative dispute resolution services; and, (4) an Internet
    service provider or provider of telephone services.

                           SECTION 9. STAFF EXCHANGES

        Section 9 provides for foreign staff exchange arrangements
    between the FTC and foreign government authorities, and permits
    the FTC to make and accept full or partial reimbursements in
    such circumstances. The provision gives the FTC explicit
    authority to accept reimbursement for providing investigation,
    litigation, or other program assistance to its counterparts
    abroad. The Commission is given a general reimbursement
    provision to permit the Commission to accept reimbursement from
    domestic or foreign law enforcement authorities for expenses
    incurred by the FTC in carrying out any activity pursuant to a
    statute administered by the Commission.

           SECTION 10. INFORMATION SHARING WITH FINANCIAL REGULATORS

        Section 10 amends section 1112(e) of the Right to Financial
    Privacy Act (12 U.S.C. 3412(e)) by adding the Federal Trade
    Commission after the Securities and Exchange Commission. This
    includes the FTC in an exemption that allows Federal financial
    and market regulators, including the SEC, to share financial
    records, examination reports, or other appropriate information.

                               SECTION 11. REPORT

        Section 11 requires the FTC to provide a report to Congress
    within three years after the enactment of any legislation
    describing the FTC's use of its new authority and reporting on
    (1) the number and types of requests for information-sharing
    and investigative assistance; (2) the disposition of such
    requests; (3) the foreign law enforcement agencies involved;
    and, (4) the nature of the information provided and received.
    This section provides for the report to include recommendations
    for additional legislation in the cross-border area as
    appropriate. Notwithstanding this report requirement, the
    Committee may exercise its oversight authority with respect to
    the implementation of this Act at any time after enactment.

             Changes in Existing Law Made by the Bill, as Reported

      In compliance with clause 3(e) of rule XIII of the Rules of
    the House of Representatives, changes in existing law made by
    the bill, as reported, are shown as follows (existing law
    proposed to be omitted is enclosed in black brackets, new
    matter is printed in italic, existing law in which no change is
    proposed is shown in roman):

                          FEDERAL TRADE COMMISSION ACT

      Sec. 4. The words defined in this section shall have the
    following meaning when found in this Act, to wit:
      ``Commerce'' means commerce among the several States or with
    foreign nations, or in any Territory of the United States or in
    the District of Columbia, or between any such Territory and
    another, or between any such Territory and any State or foreign
    nation, or between the District of Columbia and any State or
    Territory or foreign nation.

               *       *       *       *       *       *       *

      ``Foreign law enforcement agency'' means--
              (A) any agency or judicial authority of a foreign
            government, including a foreign state, a political
            subdivision of a foreign state, or a multinational
            organization constituted by and comprised of foreign
            states, that is vested with law enforcement or
            investigative authority in civil, criminal, or
            administrative matters; or
              (B) any multinational or multiagency organization to
            the extent that it is acting on behalf of an entity
            described in subparagraph (A).

      Sec. 5. (a)(1)  * * *

               *       *       *       *       *       *       *

      (4)(A) Unfair or deceptive acts or practices for purposes of
    this subsection shall include such acts or practices involving
    foreign commerce that--
              (i) cause or are likely to cause reasonably
            foreseeable injury within the United States; or
              (ii) involve material conduct occurring within the
            United States.
      (B) All remedies available to the Commission with respect to
    unfair and deceptive acts or practices shall be available for
    acts and practices described in this paragraph, including
    restitution to domestic or foreign victims.

               *       *       *       *       *       *       *

      Sec. 6. That the commission shall also have power--
      (a)  * * *

               *       *       *       *       *       *       *

      (f) To make public from time to time such portions of the
    information obtained by it hereunder as are in the public
    interest; and to make annual and special reports to the
    Congress and to submit therewith recommendations for additional
    legislation; and to provide for the publication of its reports
    and decisions in such form and manner as may be best adapted
    for public information and use: Provided, That the Commission
    shall not have any authority to make public any trade secret or
    any commercial or financial information which is obtained from
    any person and which is privileged or confidential, except that
    the Commission may disclose such information (1) to officers
    and employees of appropriate Federal law enforcement agencies
    or to any officer or employee of any State law enforcement
    agency upon the prior certification of an officer of any such
    Federal or State law enforcement agency that such information
    will be maintained in confidence and will be used only for
    official law enforcement [purposes.] purposes, and (2) to any
    officer or employee of any foreign law enforcement agency under
    the same circumstances that making material available to
    foreign law enforcement agencies is permitted under section
    21(b)(6).

               *       *       *       *       *       *       *

      (j) Investigative Assistance for Foreign Law Enforcement
    Agencies.--
              (1) In general.--Upon a written request from a
            foreign law enforcement agency to provide assistance in
            accordance with this subsection, if the requesting
            agency states that it is investigating, or engaging in
            enforcement proceedings against, possible violations of
            laws prohibiting fraudulent or deceptive commercial
            practices or other practices, substantially similar to
            practices prohibited by any provision of the laws
            administered by the Commission, other than Federal
            antitrust laws (as defined in section 12(5) of the
            International Antitrust Enforcement Assistance Act of
            1994 (15 U.S.C. 6211(5))), the Commission may provide
            the assistance described in paragraph (2) without
            requiring that the conduct identified in the request
            constitute a violation of the laws of the United
            States.
              (2) Type of assistance.--In providing assistance to a
            foreign law enforcement agency under this subsection,
            the Commission may--
                      (A) conduct such investigation as the
                    Commission deems necessary to collect
                    information and evidence pertinent to the
                    request for assistance, using all investigative
                    powers authorized by this Act; and
                      (B) when the request is from an agency acting
                    to investigate or pursue the enforcement of
                    civil laws, or when the Attorney General refers
                    a request to the Commission from an agency
                    acting to investigate or pursue the enforcement
                    of criminal laws, seek and accept appointment
                    by a United States district court of Commission
                    attorneys to provide assistance to foreign and
                    international tribunals and to litigants before
                    such tribunals on behalf of a foreign law
                    enforcement agency pursuant to section 1782 of
                    title 28, United States Code.
              (3) Criteria for determination.--In deciding whether
            to provide such assistance, the Commission shall
            consider all relevant factors, including--
                      (A) whether the requesting agency has agreed
                    to provide or will provide reciprocal
                    assistance to the Commission;
                      (B) whether compliance with the request would
                    prejudice the interest of consumers in the
                    United States; and
                      (C) whether the requesting agency's
                    investigation or enforcement proceeding
                    concerns acts or practices that cause or are
                    likely to cause injury to a significant number
                    of persons.
              (4) International agreements.--If a foreign law
            enforcement agency has set forth a legal basis for
            requiring execution of an international agreement as a
            condition for reciprocal assistance, or as a condition
            for provision of materials or information to the
            Commission, the Commission, after consultation with the
            Secretary of State, may negotiate and conclude an
            international agreement, in the name of either the
            United States or the Commission, and with final
            approval of the agreement by the Secretary of State,
            for the purpose of obtaining such assistance,
            materials, or information. The Commission may undertake
            in such an international agreement to--
                      (A) provide assistance using the powers set
                    forth in this subsection;
                      (B) disclose materials and information in
                    accordance with subsection (f) and section
                    21(b)(6); and
                      (C) engage in further cooperation, and
                    protect materials and information received from
                    disclosure, as authorized by this Act.
              (5) The authority in this subsection is in addition
            to, and not in lieu of, any other authority vested in
            the Commission or any other officer of the United
            States.
      (k) Referral of Evidence for Criminal Proceedings.--
              (1) In general.--Whenever the Commission obtains
            evidence that any person, partnership, or corporation,
            either domestic or foreign, has engaged in conduct that
            may constitute a violation of Federal criminal law, the
            Commission may transmit such evidence to the Attorney
            General, who may institute criminal proceedings under
            appropriate statutes. Nothing in this paragraph affects
            any other authority of the Commission to disclose
            information.
              (2) International information.--The Commission shall
            endeavor to ensure, with respect to memoranda of
            understanding and international agreements it may
            conclude, that material it has obtained from foreign
            law enforcement agencies acting to investigate or
            pursue the enforcement of foreign criminal laws may be
            used for the purpose of investigation, prosecution, or
            prevention of violations of United States criminal
            laws.
      (l) Expenditures for Cooperative Arrangements.--The
    Commission may expend appropriated funds for--
              (1) operating expenses and other costs of bilateral
            and multilateral cooperative law enforcement groups
            conducting activities of interest to the Commission and
            in which the Commission participates; and
              (2) expenses for consultations and meetings hosted by
            the Commission with foreign government agency
            officials, members of their delegations, appropriate
            representatives and staff to exchange views concerning
            developments relating to the Commission's mission,
            development and implementation of cooperation
            agreements, and provision of technical assistance for
            the development of foreign consumer protection or
            competition regimes, such expenses to include necessary
            administrative and logistic expenses and the expenses
            of Commission staff and foreign invitees in attendance
            at such consultations and meetings including--
                      (A) such incidental expenses as meals taken
                    in the course of such attendance;
                      (B) any travel and transportation to or from
                    such meetings; and
                      (C) any other related lodging or subsistence.

               *       *       *       *       *       *       *

      Sec. 16. (a)(1)  * * *

               *       *       *       *       *       *       *

      (2) Except as otherwise provided in paragraph (3), in any
    civil action--
              (A)  * * *

               *       *       *       *       *       *       *

              (C) to obtain judicial review of a rule prescribed by
            the Commission, or a cease and desist order issued
            under section 5 of this Act[; or];
              (D) under the second paragraph of section 9 of this
            Act (relating to enforcement of a subpena) and under
            the fourth paragraph of such section (relating to
            compliance with section 6 of this Act); and
              (E) under section 21A of this Act;

               *       *       *       *       *       *       *

      (c) Foreign Litigation.--
              (1) Commission attorneys.--The Commission may
            designate Commission attorneys to assist the Attorney
            General in connection with litigation in foreign courts
            in which the Commission has an interest, pursuant to
            the terms of a memorandum of understanding to be
            negotiated by the Commission and the Attorney General.
            The preceding sentence is in addition to, and not in
            lieu of any other authority vested in the Commission.
              (2) Foreign counsel.--The Commission is authorized to
            expend appropriated funds for the retention of foreign
            counsel for consultation and for litigation in foreign
            courts, and for expenses related to consultation and
            litigation in foreign courts in which the Commission
            has an interest.
              (3) Payment of claims.--Nothing in this section
            authorizes the payment of claims or judgments from any
            source other than the permanent and indefinite
            appropriation authorized by section 1304 of title 31,
            United States Code.

               *       *       *       *       *       *       *

      Sec. 21. (a)  * * *

               *       *       *       *       *       *       *

      (b)(1)  * * *

               *       *       *       *       *       *       *

      (6) The custodian of any documentary material, written
    reports or answers to questions, and transcripts of oral
    testimony may deliver to any officers or employees of
    appropriate Federal law enforcement agencies, in response to a
    written request, copies of such material for use in connection
    with an investigation or proceeding under the jurisdiction of
    any such agency. The custodian of any tangible things may make
    such things available for inspection to such persons on the
    same basis. Such materials shall not be made available to any
    such agency until the custodian receives certification of any
    officer of such agency that such information will be maintained
    in confidence and will be used only for official law
    enforcement purposes. Such documentary material, results of
    inspections of tangible things, written reports or answers to
    questions, and transcripts of oral testimony may be used by any
    officer or employee of such agency only in such manner and
    subject to such conditions as apply to the Commission under
    this section. The custodian may make such materials available
    to any State law enforcement agency upon the prior
    certification of any officer of such agency that such
    information will be maintained in confidence and will be used
    only for official law enforcement purposes. The custodian may
    make such material available to any foreign law enforcement
    agency upon the prior certification of an appropriate official
    of any such foreign law enforcement agency, either by a prior
    agreement or memorandum of understanding with the Commission or
    by other written certification, that such material will be
    maintained in confidence and will be used only for official law
    enforcement purposes, if--
              (A) the foreign law enforcement agency has set forth
            a bona fide legal basis for its authority to maintain
            the material in confidence; and
              (B) the materials are to be used for purposes of
            investigating, or engaging in enforcement proceedings
            related to, possible violations of--
                      (i) foreign laws prohibiting fraudulent or
                    deceptive commercial practices or other
                    practices substantially similar to practices
                    prohibited by any law administered by the
                    Commission;
                      (ii) a law administered by the Commission, if
                    disclosure of the material would further a
                    Commission investigation or enforcement
                    proceeding; or
                      (iii) with the approval of the Attorney
                    General, other foreign criminal laws, if such
                    foreign criminal laws are offenses defined in
                    or covered by a criminal mutual legal
                    assistance treaty in force between the
                    government of the United States and the foreign
                    law enforcement authority's government.
            Nothing in the preceding sentence authorizes the
            disclosure of material obtained in connection with the
            administration of the Federal antitrust laws or foreign
            antitrust laws (as defined in paragraphs (5) and (7),
            respectively, of section 12 of the International
            Antitrust Enforcement Assistance Act of 1994 (15 U.S.C.
            6211)) to any officer or employee of a foreign law
            enforcement agency.

               *       *       *       *       *       *       *

      [(f) Any material which is received by the Commission in any
    investigation, a purpose of which is to determine whether any
    person may have violated any provision of the laws administered
    by the Commission, and which is provided pursuant to any
    compulsory process under this Act or which is provided
    voluntarily in place of such compulsory process shall be exempt
    from disclosure under section 552 of title 5, United States
    Code.]
      (f) Exemption From Disclosure.--
              (1) In general.--Any material which is received by
            the Commission in any investigation, a purpose of which
            is to determine whether any person may have violated
            any provision of the laws administered by the
            Commission, and which is provided pursuant to any
            compulsory process under this Act or which is provided
            voluntarily in place of such compulsory process shall
            be exempt from disclosure under section 552 of title 5,
            United States Code.
              (2) Material obtained from a foreign source.--
                      (A) Except as provided in subparagraph (C) of
                    this paragraph, the Commission shall not be
                    compelled to disclose--
                              (i) material obtained from a foreign
                            law enforcement agency or other foreign
                            government agency, if the foreign law
                            enforcement agency or other foreign
                            government agency has requested
                            confidential treatment, or has
                            precluded such disclosure under other
                            use limitations, as a condition of
                            providing the material;
                              (ii) material reflecting consumer
                            complaints obtained from any other
                            foreign source, if that foreign source
                            supplying the material has requested
                            confidential treatment as a condition
                            of providing the material; or
                              (iii) material reflecting a consumer
                            complaint submitted to a Commission
                            reporting mechanism sponsored in part
                            by foreign law enforcement agencies or
                            other foreign government agencies.
              (B) For purposes of section 552 of title 5, United
            States Code, this subsection shall be considered a
            statute described in subsection (b)(3)(B) of such
            section.
              (C) Nothing in this subsection shall authorize the
            Commission to withhold information from the Congress or
            prevent the Commission from complying with an order of
            a court of the United States in an action commenced by
            the United States or the Commission.

    SEC. 21A. CONFIDENTIALITY AND DELAYED NOTICE OF COMPULSORY PROCESS FOR
                        CERTAIN THIRD PARTIES.

      (a) Intersection With Other Statutes.--The Right to Financial
    Privacy Act (12 U.S.C. 3401 et seq.) and the Electronic
    Communications Privacy Act (18 U.S.C. 2701 et seq.) shall apply
    with respect to the Commission, except as otherwise provided in
    this section.
      (b) In General.--The procedures for delay or prohibition of
    notice under the Right to Financial Privacy Act (12 U.S.C. 3401
    et seq.) and the Electronic Communications Privacy Act (18
    U.S.C. 2701 et seq.) shall be available to the Commission--
              (1) where notification is delayed pursuant to section
            1109(a) of the Right to Financial Privacy Act (12
            U.S.C. 3409(a)) pursuant to an ex parte application by
            the Commission that there is reason to believe that
            notification may cause an adverse result; or
              (2) where notification is delayed pursuant to section
            2705(a)(1)(B) of title 18, upon a finding by the
            Commission that there is reason to believe that
            notification may cause an adverse result.
      (c) Ex Parte Application by Commission.--If the procedures
    for delay or prohibition of notice described in subsection (b)
    do not apply, the Commission may apply ex parte to a presiding
    judge or magistrate judge for an order commanding the recipient
    of compulsory process issued by the Commission not to notify
    any other person of the existence of the process,
    notwithstanding any law or regulation of the United States, or
    under the constitution, or any law or regulation, of any State,
    political subdivision of a State, territory of the United
    States, or the District of Columbia. The presiding judge or
    magistrate judge may enter such an order granting the requested
    delay for a period not to exceed 60 days if there is reason to
    believe that notification may cause an adverse result. The
    presiding judge or magistrate judge may grant extensions of
    this delay of notice of up to 30 days each in accordance with
    this subsection, provided that in no event shall notice be
    delayed for more than a total of 9 months.
      (d) No Liability for Failure to Notify.--The recipient of
    compulsory process issued by the Commission under this Act
    shall not be liable under any law or regulation of the United
    States, or under the constitution, or any law or regulation, of
    any State, political subdivision of a State, territory of the
    United States, or the District of Columbia, or under any
    contract or other legally enforceable agreement, for failure to
    provide notice that such process has been issued or that the
    recipient has provided information in response to such process.
    The preceding sentence does not provide any exemption from
    liability for--
              (1) the underlying conduct reported;
              (2) noncompliance with the record retention
            requirements under section 1104(c) of the Right to
            Financial Privacy Act (12 U.S.C. 3404), where
            applicable; or
              (3) noncompliance with any requirement of a Federal
            agency to disclose information to that agency.
      (e) Venue and Procedure.--
              (1) In general.--All judicial proceedings initiated
            by the Commission under the Right to Financial Privacy
            Act (12 U.S.C. 3401 et seq.), the Electronic
            Communications Privacy Act (18 U.S.C. 2701 et seq.), or
            this section may be brought in the United States
            District Court for the District of Columbia or any
            other appropriate United States District Court. All ex
            parte applications by the Commission under this section
            related to a single investigation may be brought in a
            single proceeding.
              (2) In camera proceedings.--Upon application by the
            Commission, all judicial proceedings pursuant to this
            section shall be held in camera and the records thereof
            sealed until expiration of the period of delay or such
            other date as the presiding judge or magistrate judge
            may permit.
      (f) Section not to Apply to Antitrust Investigations or
    Proceedings.--This section shall not apply to an investigation
    or proceeding related to the administration of Federal
    antitrust laws or foreign antitrust laws (within the meaning of
    section 6211 of this title).
      (g) Adverse Result Defined.--For purposes of this section the
    term ``adverse result'' means--
              (1) the transfer outside the territorial limits of
            the United States of assets or records related to
            fraudulent or deceptive commercial practices or related
            to persons involved in such practices;
              (2) impeding the ability of the Commission to
            identify persons involved in fraudulent or deceptive
            commercial practices, or to trace the source or
            disposition of funds related to such practices;
              (3) endangering the life or physical safety of an
            individual;
              (4) flight from prosecution;
              (5) the destruction of, or tampering with, evidence;
              (6) the intimidation of potential witnesses;
              (7) the dissipation, fraudulent transfer, or
            concealment of assets subject to recovery by the
            Commission; or
              (8) otherwise seriously jeopardizing an investigation
            or proceeding related to fraudulent or deceptive
            commercial practices or persons involved in such
            practices, or unduly delaying a trial related to such
            practices or persons involved in such practices.

    SEC. 21B. PROTECTION FOR VOLUNTARY PROVISION OF INFORMATION.

      (a) In General.--An entity described in paragraphs (2) or (3)
    of subsection (d) that voluntarily provides material to the
    Commission that such entity reasonably believes is relevant
    to--
              (1) a possible unfair or deceptive act or practice,
            as defined in section 5(a) of this Act; or
              (2) assets subject to recovery by the Commission,
            including assets located in foreign jurisdictions;
    shall not be liable to any person under any law or regulation
    of the United States, or under the Constitution, or any law or
    regulation of any State, political subdivision of a State,
    territory of the United States, or the District of Columbia,
    for such provision of material or for any failure to provide
    notice of such provision of material. Nothing in this
    subsection shall be construed to provide any exemption from
    liability for the underlying conduct reported.
      (b) Certain Financial Institutions.--An entity described in
    subsection (d)(1) that voluntarily provides to the Commission
    material relevant to the subjects described in paragraphs (1)
    or (2) of subsection (a) shall be exempt from liability in
    accordance with the provisions of section 5318(g)(3) of title
    31, United States Code.
      (c) Consumer Complaints.--Any entity described in subsection
    (d) that voluntarily provides consumer complaints sent to it,
    or information contained therein, to the Commission shall not
    be liable to any person under any law or regulation of the
    United States, or under the constitution, or any law or
    regulation, of any State, political subdivision of a State,
    territory of the United States, or the District of Columbia,
    for such provision of material or for any failure to provide
    notice of such provision of material. The preceding sentence
    does not provide any exemption from liability for the
    underlying conduct.
      (d) Application.--This section applies to the following
    entities, whether foreign or domestic:
              (1) A financial institution as defined in section
            5312 of title 31, United States Code.
              (2) To the extent no included in paragraph (1) a bank
            or thrift institution, a commercial bank or trust
            company, an investment company, a credit card issuer,
            an operator of a credit card system, and an issuer,
            redeemer, or cashier of travelers' checks, money
            orders, or similar instruments.
              (3) A courier service, a commercial mail receiving
            agency, an industry membership organization, a payment
            system provider, a consumer reporting agency, a domain
            name registrar or registry, and a provider of
            alternative dispute resolution services.
              (4) An Internet service provider or provider of
            telephone services.

               *       *       *       *       *       *       *

    SEC. 25A. STAFF EXCHANGES.

      (a) In General.--The Commission may--
              (1) retain or employ officers or employees of foreign
            government agencies on a temporary basis pursuant to
            section 2 of this Act, section 3109 of title 5, or
            section 202 of title 18, United States Code; and
              (2) detail officers or employees of the Commission to
            work on a temporary basis for appropriate foreign
            government agencies.
      (b) Reciprocity and Reimbursement.--The staff arrangements
    described in subsections (a) need not be reciprocal. The
    Commission may accept payment or reimbursement, in cash or in
    kind, from a foreign government agency to which this section is
    applicable, or payment or reimbursement made on behalf of such
    agency, for expenses incurred by the Commission, its members,
    and employees in carrying out such arrangements.

               *       *       *       *       *       *       *

                                  ----------

           SECTION 1112 OF THE RIGHT TO FINANCIAL PRIVACY ACT OF 1978

                               USE OF INFORMATION

          Sec. 1112. (a)  * * *

               *       *       *       *       *       *       *

          (e) Notwithstanding section 1101(6) or any other
    provision of law, the exchange of financial records,
    examination reports or other information with respect to a
    financial institution, holding company, or a subsidiary of a
    depository institution or holding company, among and between
    the five member supervisory agencies of the Federal Financial
    Institutions Examination Council, the Securities and Exchange
    Commission, the Federal Trade Commission, and the Commodity
    Futures Trading Commission is permitted.

               *       *       *       *       *       *       *