[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.

           *       *       *       *       *       *       *


                                  
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