[House Report 110-169]
[From the U.S. Government Publishing Office]
110th Congress Report
HOUSE OF REPRESENTATIVES
1st Session 110-169
======================================================================
SECURELY PROTECT YOURSELF AGAINST CYBER TRESPASS ACT (SPY ACT)
_______
May 24, 2007.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
_______
Mr. Dingell, from the Committee on Energy and Commerce, submitted the
following
R E P O R T
[To accompany H.R. 964]
[Including cost estimate of the Congressional Budget Office]
The Committee on Energy and Commerce, to whom was referred
the bill (H.R. 964) to protect users of the Internet from
unknowing transmission of their personally identifiable
information through spyware programs, and for other purposes,
having considered the same, report favorably thereon with an
amendment and recommend that the bill as amended do pass.
CONTENTS
Page
Purpose and Summary.............................................. 10
Background and Need for Legislation.............................. 10
Hearings......................................................... 12
Committee Consideration.......................................... 12
Committee Votes.................................................. 13
Committee Oversight Findings..................................... 13
Statement of General Performance Goals and Objectives............ 13
New Budget Authority, Entitlement Authority, and Tax Expenditures 13
Earmarks and Tax and Tariff Benefits............................. 13
Committee Cost Estimate.......................................... 13
Congressional Budget Office Estimate............................. 13
Federal Mandates Statement....................................... 16
Advisory Committee Statement..................................... 16
Constitutional Authority Statement............................... 16
Applicability to Legislative Branch.............................. 16
Section-by-Section Analysis of the Legislation................... 16
Changes in Existing Law Made by the Bill, as Reported............ 26
The amendment is as follows:
Strike all after the enacting clause and insert the
following:
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Securely Protect Yourself Against
Cyber Trespass Act'' or the ``Spy Act''.
SEC. 2. PROHIBITION OF UNFAIR OR DECEPTIVE ACTS OR PRACTICES RELATING
TO SPYWARE.
(a) Prohibition.--It is unlawful for any person, who is not the owner
or authorized user of a protected computer, to engage in unfair or
deceptive acts or practices that involve any of the following conduct
with respect to the protected computer:
(1) Taking control of the computer by--
(A) utilizing such computer to send unsolicited
information or material from the computer to others;
(B) diverting the Internet browser of the computer,
or similar program of the computer used to access and
navigate the Internet--
(i) without authorization of the owner or
authorized user of the computer; and
(ii) away from the site the user intended to
view, to one or more other Web pages, such that
the user is prevented from viewing the content
at the intended Web page, unless such diverting
is otherwise authorized;
(C) accessing, hijacking, or otherwise using the
modem, or Internet connection or service, for the
computer and thereby causing damage to the computer or
causing the owner or authorized user or a third party
defrauded by such conduct to incur charges or other
costs for a service that is not authorized by such
owner or authorized user;
(D) using the computer as part of an activity
performed by a group of computers that causes damage to
another computer; or
(E) delivering advertisements or a series of
advertisements that a user of the computer cannot close
or terminate without undue effort or knowledge by the
user or without turning off the computer or closing all
sessions of the Internet browser for the computer.
(2) Modifying settings related to use of the computer or to
the computer's access to or use of the Internet by altering--
(A) the Web page that appears when the owner or
authorized user launches an Internet browser or similar
program used to access and navigate the Internet;
(B) the default provider used to access or search the
Internet, or other existing Internet connections
settings;
(C) a list of bookmarks used by the computer to
access Web pages; or
(D) security or other settings of the computer that
protect information about the owner or authorized user
for the purposes of causing damage or harm to the
computer or owner or user.
(3) Collecting personally identifiable information through
the use of a keystroke logging function.
(4) Inducing the owner or authorized user of the computer to
disclose personally identifiable information by means of a Web
page that--
(A) is substantially similar to a Web page
established or provided by another person; and
(B) misleads the owner or authorized user that such
Web page is provided by such other person.
(5) Inducing the owner or authorized user to install a
component of computer software onto the computer, or preventing
reasonable efforts to block the installation or execution of,
or to disable, a component of computer software by--
(A) presenting the owner or authorized user with an
option to decline installation of such a component such
that, when the option is selected by the owner or
authorized user or when the owner or authorized user
reasonably attempts to decline the installation, the
installation nevertheless proceeds; or
(B) causing such a component that the owner or
authorized user has properly removed or disabled to
automatically reinstall or reactivate on the computer.
(6) Misrepresenting that installing a separate component of
computer software or providing log-in and password information
is necessary for security or privacy reasons, or that
installing a separate component of computer software is
necessary to open, view, or play a particular type of content.
(7) Inducing the owner or authorized user to install or
execute computer software by misrepresenting the identity or
authority of the person or entity providing the computer
software to the owner or user.
(8) Inducing the owner or authorized user to provide
personally identifiable, password, or account information to
another person--
(A) by misrepresenting the identity of the person
seeking the information; or
(B) without the authority of the intended recipient
of the information.
(9) Removing, disabling, or rendering inoperative a security,
anti-spyware, or anti-virus technology installed on the
computer.
(10) Installing or executing on the computer one or more
additional components of computer software with the intent of
causing a person to use such components in a way that violates
any other provision of this section.
(b) Guidance.--The Commission shall issue guidance regarding
compliance with and violations of this section. This subsection shall
take effect upon the date of the enactment of this Act.
(c) Effective Date.--Except as provided in subsection (b), this
section shall take effect upon the expiration of the 6-month period
that begins on the date of the enactment of this Act.
SEC. 3. PROHIBITION OF COLLECTION OF CERTAIN INFORMATION WITHOUT NOTICE
AND CONSENT.
(a) Opt-in Requirement.--Except as provided in subsection (e), it is
unlawful for any person--
(1) to transmit to a protected computer, which is not owned
by such person and for which such person is not an authorized
user, any information collection program, unless--
(A) such information collection program provides
notice in accordance with subsection (c) before
downloading or installing any of the information
collection program; and
(B) such information collection program includes the
functions required under subsection (d); or
(2) to execute any information collection program installed
on such a protected computer unless--
(A) before execution of any of the information
collection functions of the program, the owner or an
authorized user of the protected computer has consented
to such execution pursuant to notice in accordance with
subsection (c); and
(B) such information collection program includes the
functions required under subsection (d).
(b) Information Collection Program.--
(1) In general.--For purposes of this section, the term
``information collection program'' means computer software that
performs either of the following functions:
(A) Collection of personally identifiable
information.--The computer software--
(i) collects personally identifiable
information; and
(ii)(I) sends such information to a person
other than the owner or authorized user of the
computer, or
(II) uses such information to deliver
advertising to, or display advertising on, the
computer.
(B) Collection of information regarding internet
activity to deliver advertising.--The computer
software--
(i) collects information regarding the user's
Internet activity using the computer; and
(ii) uses such information to deliver
advertising to, or display advertising on, the
computer.
(2) Exception for software collecting information regarding
internet activity within a particular web site.--Computer
software that otherwise would be considered an information
collection program by reason of paragraph (1)(B) shall not be
considered such a program if--
(A) the only information collected by the software
regarding the user's internet activity, and used to
deliver advertising to, or display advertising on, the
protected computer, is--
(i) information regarding Web pages within a
particular Web site; or
(ii) in the case of any Internet-based search
function, user-supplied search terms necessary
to complete the search and return results to
the user;
(B) such information collected is not sent to a
person other than--
(i) the provider of the Web site accessed or
Internet-based search function; or
(ii) a party authorized to facilitate the
display or functionality of Web pages within
the Web site accessed; and
(C) the only advertising delivered to or displayed on
the computer using such information is advertising on
Web pages within that particular Web site.
(c) Notice and Consent.--
(1) In general.--Notice in accordance with this subsection
with respect to an information collection program is clear and
conspicuous notice in plain language, set forth as the
Commission shall provide, that meets all of the following
requirements:
(A) The notice clearly distinguishes a statement
required under subparagraph (B) from any other
information visually presented contemporaneously on the
computer.
(B) The notice contains one of the following
statements, as applicable, or a substantially similar
statement:
(i) With respect to an information collection
program described in subsection (b)(1)(A):
``This program will collect and transmit
information about you. Do you accept?''.
(ii) With respect to an information
collection program described in subsection
(b)(1)(B): ``This program will collect
information about Web pages you access and will
use that information to display advertising on
your computer. Do you accept?''.
(iii) With respect to an information
collection program that performs the actions
described in both subparagraphs (A) and (B) of
subsection (b)(1): ``This program will collect
and transmit information about you and will
collect information about Web pages you access
and use that information to display advertising
on your computer. Do you accept?''.
(C) The notice provides for the user--
(i) to grant or deny consent referred to in
subsection (a) by selecting an option to grant
or deny such consent; and
(ii) to abandon or cancel the transmission or
execution referred to in subsection (a) without
granting or denying such consent.
(D) The notice provides an option for the user to
select to display on the computer, before granting or
denying consent using the option required under
subparagraph (C), a clear description of--
(i) the types of information to be collected
and sent (if any) by the information collection
program;
(ii) the purpose for which such information
is to be collected and sent; and
(iii) in the case of an information
collection program that first executes any of
the information collection functions of the
program together with the first execution of
other computer software, the identity of any
such software that is an information collection
program.
(E) The notice provides for concurrent display of the
information required under subparagraphs (B) and (C)
and the option required under subparagraph (D) until
the user--
(i) grants or denies consent using the option
required under subparagraph (C)(i);
(ii) abandons or cancels the transmission or
execution pursuant to subparagraph (C)(ii); or
(iii) selects the option required under
subparagraph (D).
(2) Single notice.--The Commission shall provide that, in the
case in which multiple information collection programs are
provided to the protected computer together, or as part of a
suite of functionally related software, the notice requirements
of paragraphs (1)(A) and (2)(A) of subsection (a) may be met by
providing, before execution of any of the information
collection functions of the programs, clear and conspicuous
notice in plain language in accordance with paragraph (1) of
this subsection by means of a single notice that applies to all
such information collection programs, except that such notice
shall provide the option under subparagraph (D) of paragraph
(1) of this subsection with respect to each such information
collection program.
(3) Change in information collection.--If an owner or
authorized user has granted consent to execution of an
information collection program pursuant to a notice in
accordance with this subsection:
(A) In general.--No subsequent such notice is
required, except as provided in subparagraph (B).
(B) Subsequent notice.--The person who transmitted
the program shall provide another notice in accordance
with this subsection and obtain consent before such
program may be used to collect or send information of a
type or for a purpose that is materially different
from, and outside the scope of, the type or purpose set
forth in the initial or any previous notice.
(4) Regulations.--The Commission shall issue regulations to
carry out this subsection.
(d) Required Functions.--The functions required under this subsection
to be included in an information collection program that executes any
information collection functions with respect to a protected computer
are as follows:
(1) Disabling function.--With respect to any information
collection program, a function of the program that allows a
user of the program to remove the program or disable operation
of the program with respect to such protected computer by a
function that--
(A) is easily identifiable to a user of the computer;
and
(B) can be performed without undue effort or
knowledge by the user of the protected computer.
(2) Identity function.--
(A) In general.--With respect only to an information
collection program that uses information collected in
the manner described in subparagraph (A)(ii)(II) or
(B)(ii) of subsection (b)(1) and subject to
subparagraph (B) of this paragraph, a function of the
program that provides that each display of an
advertisement directed or displayed using such
information, when the owner or authorized user is
accessing a Web page or online location other than of
the provider of the computer software, is accompanied
by the name of the information collection program, a
logogram or trademark used for the exclusive purpose of
identifying the program, or a statement or other
information sufficient to clearly identify the program.
(B) Exemption for embedded advertisements.--The
Commission shall, by regulation, exempt from the
applicability of subparagraph (A) the embedded display
of any advertisement on a Web page that
contemporaneously displays other information.
(3) Rulemaking.--The Commission may issue regulations to
carry out this subsection.
(e) Limitation on Liability.--A telecommunications carrier, a
provider of information service or interactive computer service, a
cable operator, or a provider of transmission capability shall not be
liable under this section to the extent that the carrier, operator, or
provider--
(1) transmits, routes, hosts, stores, or provides connections
for an information collection program through a system or
network controlled or operated by or for the carrier, operator,
or provider; or
(2) provides an information location tool, such as a
directory, index, reference, pointer, or hypertext link,
through which the owner or user of a protected computer locates
an information collection program.
(f) Study and Additional Exemption.--
(1) Study and report.--The Commission shall conduct a study
to determine the applicability of the information collection
prohibitions of this section to information that is input
directly by users in a field provided on a website. The study
shall examine--
(A) the nature of such fields for user input;
(B) the use of a user's information once input and
whether such information is sent to a person other than
the provider of the Web site;
(C) whether such information is used to deliver
advertisements to the user's computer; and
(D) the extent of any notice provided to the user
prior to such input.
(2) Report.--The Commission shall transmit a report on such
study to the Committee on Energy and Commerce of the House of
Representatives and the Committee on Commerce, Science, and
Transportation of the Senate not later than the expiration of
the 6-month period that begins on the date on which final
regulations are issued under section 9. The requirements of
subchapter I of chapter 35 of title 44, United States Code,
shall not apply to the report required under this subsection.
(3) Regulation.--If the Commission finds that users have
adequate notice regarding the uses of any information input
directly by the user in a field provided on a website, such
that an exemption from the requirements of this section, or a
modification of the notice required by this section is
appropriate for such information, and that such an exemption or
modification is consistent with the public interest, the
protection of consumers, and the purposes of this Act, the
Commission may prescribe such an exemption or modification by
regulation.
SEC. 4. ENFORCEMENT.
(a) Unfair or Deceptive Act or Practice.--This Act shall be enforced
by the Commission under the Federal Trade Commission Act (15 U.S.C. 41
et seq.). A violation of any provision of this Act or of a regulation
issued under this Act shall be treated as an unfair or deceptive act or
practice violating a rule promulgated under section 18 of the Federal
Trade Commission Act (15 U.S.C. 57a).
(b) Penalty for Pattern or Practice Violations.--
(1) In general.--Notwithstanding subsection (a) and the
Federal Trade Commission Act, in the case of a person who
engages in a pattern or practice that violates section 2 or 3,
the Commission may, in its discretion, seek a civil penalty for
such pattern or practice of violations in an amount, as
determined by the Commission, of not more than--
(A) $3,000,000 for each violation of section 2; and
(B) $1,000,000 for each violation of section 3.
(2) Treatment of single action or conduct.--In applying
paragraph (1)--
(A) any single action or conduct that violates
section 2 or 3 with respect to multiple protected
computers shall be treated as a single violation; and
(B) any single action or conduct that violates more
than one paragraph of section 2(a) shall be considered
multiple violations, based on the number of such
paragraphs violated.
(c) Required Scienter.--Civil penalties sought under this section for
any action may not be granted by the Commission or any court unless the
Commission or court, respectively, establishes that the action was
committed with actual knowledge or knowledge fairly implied on the
basis of objective circumstances that such act is unfair or deceptive
or violates this Act.
(d) Factors in Amount of Penalty.--In determining the amount of any
penalty pursuant to subsection (a) or (b), the court shall take into
account the degree of culpability, any history of prior such conduct,
ability to pay, effect on ability to continue to do business, and such
other matters as justice may require.
(e) Exclusiveness of Remedies.--The remedies in this section (and
other remedies available to the Commission in an enforcement action
against unfair and deceptive acts and practices) are the exclusive
remedies for violations of this Act.
(f) Effective Date.--To the extent only that this section applies to
violations of section 2(a), this section shall take effect upon the
expiration of the 6-month period that begins on the date of the
enactment of this Act.
SEC. 5. LIMITATIONS.
(a) Law Enforcement Authority.--Sections 2 and 3 shall not apply to--
(1) any act taken by a law enforcement agent in the
performance of official duties; or
(2) the transmission or execution of an information
collection program in compliance with a law enforcement,
investigatory, national security, or regulatory agency or
department of the United States or any State in response to a
request or demand made under authority granted to that agency
or department, including a warrant issued under the Federal
Rules of Criminal Procedure, an equivalent State warrant, a
court order, or other lawful process.
(b) Exception Relating to Security.--Nothing in this Act shall apply
to--
(1) any monitoring of, or interaction with, a protected
computer--
(A) in connection with the provision of a network
access service or other service or product with respect
to which the user of the protected computer is an
actual or prospective customer, subscriber, registered
user, or account holder;
(B) by the provider of that service or product or
with such provider's authorization; and
(C) that involves or enables the collection of
information about the user's activities only with
respect to the user's relationship with or use of such
service or product,
to the extent that such monitoring or interaction is for the
purpose of network security, computer security, diagnostics,
technical support or repair, network management, authorized
updates of software, or for the detection or prevention of
fraudulent activities; or
(2) a discrete interaction with a protected computer by a
provider of computer software solely to determine whether the
user of the computer is authorized to use such software, that
occurs upon--
(A) initialization of the software; or
(B) an affirmative request by the owner or authorized
user for an update of, addition to, or technical
service for, the software.
(c) Good Samaritan Protection.--
(1) In general.--No provider of computer software or of
interactive computer service may be held liable under this Act
on account of any action voluntarily taken, or service
provided, in good faith to remove or disable a program used to
violate section 2 or 3 that is installed on a computer of a
customer of such provider, if such provider notifies the
customer and obtains the consent of the customer before
undertaking such action or providing such service.
(2) Construction.--Nothing in this subsection shall be
construed to limit the liability of a provider of computer
software or of an interactive computer service for any anti-
competitive act otherwise prohibited by law.
(d) Limitation on Liability.--A manufacturer or retailer of computer
equipment shall not be liable under this Act to the extent that the
manufacturer or retailer is providing third party branded computer
software that is installed on the equipment the manufacturer or
retailer is manufacturing or selling.
(e) Services Provided by Cable Operators and Satellite Carriers.--It
shall not be a violation of section 3 for a satellite carrier (as such
term is defined in section 338(k) of the Communications Act of 1934 (47
U.S.C. 338(k)) or cable operator (as such term is defined in section
631(a)(2) of such Act (47 U.S.C. 551(a)(2))) to--
(1) utilize a navigation device (as such term is defined in
the rules of the Federal Communications Commission);
(2) interact with such a navigation device; or
(3) transmit software to or execute software installed on
such a navigation device to provide service or collect or
disclose subscriber information,
if the provision of such service, the utilization of or the interaction
with such device, or the collection of or disclosure of such
information, is subject to section 338(i) or section 631 of the
Communications Act of 1934.
SEC. 6. EFFECT ON OTHER LAWS.
(a) Preemption of State Law.--
(1) Preemption of spyware laws.--This Act supersedes any
provision of a statute, regulation, or rule of a State or
political subdivision of a State that expressly regulates--
(A) unfair or deceptive conduct with respect to
computers similar to that described in section 2(a);
(B) the transmission or execution of a computer
program similar to that described in section 3; or
(C) the use of computer software that displays
advertising content based on the Web pages accessed
using a computer.
(2) Additional preemption.--
(A) In general.--No person other than the Attorney
General of a State may bring a civil action under the
law of any State if such action is premised in whole or
in part upon the defendant violating any provision of
this Act.
(B) Protection of consumer protection laws.--This
paragraph shall not be construed to limit the
enforcement of any State consumer protection law by an
Attorney General of a State.
(3) Protection of certain state laws.--This Act shall not be
construed to preempt the applicability of--
(A) State trespass, contract, or tort law; or
(B) other State laws to the extent that those laws
relate to acts of fraud.
(4) Effective date.--The preemption provided for under this
subsection shall take effect, with respect to specific
provisions of this Act, on the effective date for such
provisions.
(b) Preservation of FTC Authority.--Nothing in this Act may be
construed in any way to limit or affect the Commission's authority
under any other provision of law, including the authority to issue
advisory opinions (under part 1 of volume 16 of the Code of Federal
Regulations), policy statements, or guidance regarding this Act.
SEC. 7. FTC REPORT ON COOKIES.
(a) In General.--Not later than the expiration of the 6-month period
that begins on the date on which final regulations are issued under
section 9, the Commission shall submit a report to the Congress
regarding the use of cookies in the delivery or display of advertising
to the owners and users of computers. The report shall examine the
extent to which cookies are or may be used to transmit to a third party
personally identifiable information of a computer owner or user,
information regarding Web pages accessed by the owner or user, or
information regarding advertisements previously delivered to a
computer, for the purpose of--
(1) delivering or displaying advertising to the owner or
user; or
(2) assisting the intended recipient to deliver or display
advertising to the owner, user, or others.
The report shall examine and describe the methods by which cookies and
the Web sites that place them on computers function separately and
together, and shall compare the use of cookies with the use of
information collection programs (as such term is defined in section 3)
to determine the extent to which such uses are similar or different.
The report may include such recommendations as the Commission considers
necessary and appropriate, including treatment of cookies under this
Act or other laws.
(b) Effective Date.--This section shall take effect on the date of
the enactment of this Act.
(c) Paperwork Reduction Requirements.--The requirements of subchapter
I of chapter 35 of title 44, United States Code, shall not apply to the
report required under this section.
SEC. 8. FTC REPORT ON INFORMATION COLLECTION PROGRAMS INSTALLED BEFORE
EFFECTIVE DATE.
Not later than the expiration of the 6-month period that begins on
the date on which final regulations are issued under section 9, the
Commission shall submit a report to the Congress on the extent to which
there are installed on protected computers information collection
programs that, but for installation prior to the effective date under
section 11(a), would be subject to the requirements of section 3. The
report shall include recommendations regarding the means of affording
computer users affected by such information collection programs the
protections of section 3, including recommendations regarding requiring
a one-time notice and consent by the owner or authorized user of a
computer to the continued collection of information by such a program
so installed on the computer. The requirements of subchapter I of
chapter 35 of title 44, United States Code, shall not apply to the
report required under this section.
SEC. 9. REGULATIONS.
(a) In General.--The Commission shall issue the regulations required
by this Act not later than the expiration of the 9-month period
beginning on the date of the enactment of this Act. In exercising its
authority to issue any regulation under this Act, the Commission shall
determine that the regulation is consistent with the public interest
and the purposes of this Act. Any regulations issued pursuant to this
Act shall be issued in accordance with section 553 of title 5, United
States Code.
(b) Effective Date.--This section shall take effect on the date of
the enactment of this Act.
SEC. 10. DEFINITIONS.
For purposes of this Act:
(1) Cable operator.--The term ``cable operator'' has the
meaning given such term in section 602 of the Communications
Act of 1934 (47 U.S.C. 522).
(2) Collect.--The term ``collect'', when used with respect to
information and for purposes only of section 3(b)(1)(A), does
not include obtaining of the information by a party who is
intended by the owner or authorized user of a protected
computer to receive the information or by a third party
authorized by such intended recipient to receive the
information, pursuant to the owner or authorized user--
(A) transferring the information to such intended
recipient using the protected computer; or
(B) storing the information on the protected computer
in a manner so that it is accessible by such intended
recipient.
(3) Computer; protected computer.--The terms ``computer'' and
``protected computer'' have the meanings given such terms in
section 1030(e) of title 18, United States Code.
(4) Computer software.--
(A) In general.--Except as provided in subparagraph
(B), the term ``computer software'' means a set of
statements or instructions that can be installed and
executed on a computer for the purpose of bringing
about a certain result.
(B) Exceptions.--Such term does not include--
(i) computer software that is placed on the
computer system of a user by an Internet
service provider, interactive computer service,
or Internet Web site solely to enable the user
subsequently to use such provider or service or
to access such Web site; or
(ii) a text or data file known as a cookie,
to the extent that the text or data file--
(I) is used, written to, or placed on
the computer of a user by an Internet
service provider, interactive computer
service, or Internet website, or any
entity acting with the authorization of
and on behalf of such Internet service
provider, interactive computer service,
or Internet website; and
(II) can be read or recognized solely
to return information to such Internet
service provider, interactive computer
service, or Internet website, or any
entity acting with the authorization of
and on behalf of such Internet service
provider, interactive computer service,
or Internet website.
(5) Commission.--The term ``Commission'' means the Federal
Trade Commission.
(6) Damage.--The term ``damage'' has the meaning given such
term in section 1030(e) of title 18, United States Code.
(7) Unfair or deceptive acts or practices.--The term ``unfair
or deceptive acts or practices'' has the meaning applicable to
such term for purposes of section 5 of the Federal Trade
Commission Act (15 U.S.C. 45).
(8) Disable.--The term ``disable'' means, with respect to an
information collection program, to permanently prevent such
program from executing any of the functions described in
section 3(b)(1) that such program is otherwise capable of
executing (including by removing, deleting, or disabling the
program), unless the owner or operator of a protected computer
takes a subsequent affirmative action to enable the execution
of such functions.
(9) Information collection functions.--The term ``information
collection functions'' means, with respect to an information
collection program, the functions of the program described in
subsection (b)(1) of section 3.
(10) Information service.--The term ``information service''
has the meaning given such term in section 3 of the
Communications Act of 1934 (47 U.S.C. 153).
(11) Interactive computer service.--The term ``interactive
computer service'' has the meaning given such term in section
230(f) of the Communications Act of 1934 (47 U.S.C. 230(f)).
(12) Internet.--The term ``Internet'' means collectively the
myriad of computer and telecommunications facilities, including
equipment and operating software, which comprise the
interconnected world-wide network of networks that employ the
Transmission Control Protocol/Internet Protocol, or any
predecessor or successor protocols to such protocol, to
communicate information of all kinds by wire or radio.
(13) Personally identifiable information.--
(A) In general.--The term ``personally identifiable
information'' means the following information, to the
extent only that such information allows a living
individual to be identified from that information:
(i) First and last name of an individual.
(ii) A home or other physical address of an
individual, including street name, name of a
city or town, and zip code.
(iii) An electronic mail address.
(iv) A telephone number.
(v) A social security number, tax
identification number, passport number,
driver's license number, or any other
government-issued identification number.
(vi) A credit card number.
(vii) Any access code, password, or account
number, other than an access code or password
transmitted by an owner or authorized user of a
protected computer to the intended recipient to
register for, or log onto, a Web page or other
Internet service or a network connection or
service of a subscriber that is protected by an
access code or password.
(viii) Date of birth, birth certificate
number, or place of birth of an individual,
except in the case of a date of birth
transmitted or collected for the purpose of
compliance with the law.
(B) Rulemaking.--The Commission may, by regulation,
add to the types of information described in
subparagraph (A) that shall be considered personally
identifiable information for purposes of this Act,
except that such additional types of information shall
be considered personally identifiable information only
to the extent that such information allows living
individuals, particular computers, particular users of
computers, or particular email addresses or other
locations of computers to be identified from that
information.
(14) Suite of functionally related software.--The term suite
of ``functionally related software'' means a group of computer
software programs distributed to an end user by a single
provider, which programs enable features or functionalities of
an integrated service offered by the provider.
(15) Telecommunications carrier.--The term
``telecommunications carrier'' has the meaning given such term
in section 3 of the Communications Act of 1934 (47 U.S.C. 153).
(16) Transmit.--The term ``transmit'' means, with respect to
an information collection program, transmission by any means.
(17) Web page.--The term ``Web page'' means a location, with
respect to the World Wide Web, that has a single Uniform
Resource Locator or another single location with respect to the
Internet, as the Federal Trade Commission may prescribe.
(18) Web site.--The term ``Web site'' means a collection of
Web pages that are presented and made available by means of the
World Wide Web as a single Web site (or a single Web page so
presented and made available), which Web pages have any of the
following characteristics:
(A) A common domain name.
(B) Common ownership, management, or registration.
SEC. 11. APPLICABILITY AND SUNSET.
(a) Effective Date.--Except as specifically provided otherwise in
this Act, this Act shall take effect upon the expiration of the 12-
month period that begins on the date of the enactment of this Act.
(b) Applicability.--Section 3 shall not apply to an information
collection program installed on a protected computer before the
effective date under subsection (a) of this section.
(c) Sunset.--This Act shall not apply after December 31, 2013.
PURPOSE AND SUMMARY
H.R. 964, the Securely Protect Yourself Against Cyber
Trespass Act, prohibits unfair or deceptive acts or practices
related to spyware or adware programs, and requires notice and
consent for the execution of information collection programs.
BACKGROUND AND NEED FOR LEGISLATION
The release of the Mosaic browser in January 1993, which
provided the first graphical interface for navigating the
Internet, is credited with bringing the Internet into the
mainstream of public usage. In the intervening time, Internet
usage has been transformed from an academic tool into a
commercial, educational, and communications portal accessed by
more than 70 percent of Americans.
It comes as no surprise that the market has responded with
new technologies tailored to consumer Internet usage. Many of
these technologies are designed to improve the efficiency and
speed of data transfer. For example, some maximize server
efficiency and thereby reduce time requirements for a Web page
to load on a user's computer. Other technologies allow Web
sites to use persistent identifiers to recognize a return
visitor, and thereby enhance the online experience through
personalization. The unique nature of the Internet has also
facilitated other beneficial technologies, such as peer-to-peer
file sharing software, instant messaging, and voice-over
Internet, that capitalize on the distributed network structure.
At the same time, the Committee is aware that these
technologies are capable of visiting great harm on consumers
and commerce when misapplied by scam artists, criminals, and
others with unsavory motives. The Committee is particularly
concerned about the growing use of what is commonly referred to
as ``spyware.'' Spyware presents privacy, security, and
functionality concerns for consumers. The Federal Trade
Commission (FTC) has described spyware as software ``that aids
in gathering information about a person or organization without
their knowledge and which may send such information to another
entity without the consumer's consent, or asserts control over
a computer without the consumer's knowledge.'' The Committee
received testimony that spyware represents a range of software
programs on a broad continuum from the most pernicious criminal
activities on one end to the less threatening but still
intrusive on the opposite end.
The most serious privacy and security concerns pertain to
those programs that are intended to capture a user's personal
information without knowledge and consent. The Committee
received testimony demonstrating the software technology and
tactics of some of these programs. They include keystroke
logging software that captures a user's information (passwords,
Social Security numbers, account numbers, etc.) and can lead to
identity theft, and monitoring software that tracks a user's
online activity, such as Web sites visited. This information
could be used for profiling. Other monitoring software can
include audio or video capturing programs that use one's own
computer video camera or microphone to watch or listen to
whatever is happening around the Internet-connected computer.
Furthermore, security experts and law enforcement officers
report growing cooperation among spammers, virus writers, and
con artists in schemes to steal financial assets from consumers
through a practice known as ``phishing'' by which bad actors
fraudulently convince users to disclose passwords and other
private financial data. Software can also affect the
functioning of a computer by redirecting the user to Web sites
that the user does not intend to visit, preventing a user from
altering settings on the computer, or using the computer to
send unsolicited commercial electronic mail. The Committee is
concerned that such attacks could erode the trust that makes
electronic commerce and online financial transactions possible.
Techniques for deceiving consumers into downloading spyware
vary. Deceptive tactics include using pop-under windows that
disguise the identity of the program distributer, offering
misleading or deceptive end user licensing agreements, and
failing to disclose the functionality of a program. Some
spyware programs masquerade as anti-spyware technology. More
nefarious tactics include exploitation of security patches in a
computer's operating system. Additionally, consumers who leave
browser security settings on ``low'' open their systems to
automatic ``drive-by'' downloads in which spyware programs are
automatically downloaded when visiting certain sites.
The Committee also is concerned with the growth of abusive
``adware.'' Adware is advertising software that can monitor
online behavior and Web sites visited. Adware is often bundled,
many times as a consideration, with other software that a
consumer voluntarily downloads. Adware usually directs targeted
advertisements to the user based on his or her online activity.
The Committee does not find adware per se objectionable, so
long as a consumer has given informed consent to the software
installation or execution.
On the other hand, the Committee has received testimony and
other information indicating that some adware has been used to
push directed advertisements of material unrelated to a user's
online activity and that the user finds objectionable. Adware
also has been used to barrage consumers with pop-up ads that
disrupt Internet usage. Many consumers have lost important data
because this malware crashed their computers, or were forced to
junk perfectly good computers that were so burdened with
unwanted adware that they were useless. Increasingly, adware is
being coupled with spyware or other deceptive or malicious
software programs. See, for example, the FTC case In Re Direct
Revenue LLC, et al., File No. 052 313 (February 2007).
DirectRevenue LLC, a large distributer of adware, installs its
adware on consumer's computers directly and through a large
network of affiliates and sub-affiliates. According to the FTC
complaint detailing charges that DirectRevenue settled, the
company and its affiliates frequently offered consumers free
content and software, such as screen savers, games, and
utilities without disclosing adequately that downloading them
would result in installation of the adware. In other instances,
according to the FTC's complaint, some of DirectRevenue's
affiliates exploited security vulnerabilities in Web browsers
to install the adware. In addition, the FTC charged that
DirectRevenue deliberately made it difficult to identify,
locate, and remove the adware once it was installed. For
example, DirectRevenue allegedly failed to label its pop-up ads
to identify their source, stored the adware files in rarely
accessed locations on consumers' hard drives, failed to list
the adware in the Windows Add/Remove utility or named the
adware files to resemble core systems software or applications,
and installed technology on consumers' computers to secretly
reinstall the adware when consumers attempted to remove it or
when the adware was deleted by consumers' anti-spyware
programs. In addition, when DirectRevenue provided an uninstall
tool at separate Web sites, it allegedly required consumers to
follow a 10-step procedure involving the download of additional
software and deactivation of all third-party firewalls, thus
exposing consumers' computers to security risks. The Committee
supports honest online advertising but intends for the FTC to
use its existing authorities and the tools in this Act to take
vigorous enforcement action against unfair or deceptive acts or
practices. See also, ``The Plot To Hijack Your Computer,''
Business Week cover story (July 17, 2006).
The increasing popularity and convenience of e-commerce and
the benefits that it brings to our national economy make it
critical for the Committee and the Congress to act
expeditiously to preserve the integrity of the system and thus
consumer confidence. The Committee's bipartisan legislation
accomplishes that goal by striking a careful balance between
cracking down on abuse while preserving beneficial uses of
software applications. Similar legislation passed the House by
overwhelming votes in the 108th and 109th Congresses.
HEARINGS
The Committee on Energy and Commerce held a hearing on the
legislation on March 15, 2007. The Committee received testimony
from the following: Mr. Jerry Cerasale, Senior Vice President,
Direct Marketing Association, Inc.; Ms. Fran Maier, Executive
Director, TRUSTe; Mr. Dave Morgan, Founder and Chairman,
TACODA, Inc.; Mr. Ari Schwartz, Deputy Director, Center for
Democracy and Technology; and Ms. Christine A. Varney, Esquire,
Hogan & Hartson LLP, on behalf of Zango.
COMMITTEE CONSIDERATION
On Thursday, April 19, 2007, the Subcommittee on Commerce,
Trade, and Consumer Protection met in open markup session and
approved H.R. 964 for full Committee consideration, amended, by
voice vote. On Thursday, May 10, 2007, the full Committee met
in open markup session and ordered H.R. 964 favorably reported
to the House, amended, by voice vote.
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 on amendments or in connection
with ordering H.R. 964 reported. A motion by Mr. Dingell to
order H.R. 964 favorably reported to the House was agreed to by
voice vote.
COMMITTEE OVERSIGHT FINDINGS
Regarding 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. 964 is to protect consumers by prohibiting
deceptive practices related to spyware and adware programs and
by requiring notice and consent for the execution of
information collection programs.
NEW BUDGET AUTHORITY, ENTITLEMENT AUTHORITY, AND TAX EXPENDITURES
Regarding compliance with clause 3(c)(2) of rule XIII of
the Rules of the House of Representatives, the Committee finds
that H.R. 964 would result in no new or increased budget
authority, entitlement authority, or tax expenditures or
revenues.
EARMARKS AND TAX AND TARIFF BENEFITS
Regarding compliance with clause 9 of rule XXI of the Rules
of the House of Representatives, H.R. 964 does not contain any
congressional earmarks, limited tax benefits, or limited tariff
benefits as defined in clause 9(d), 9(e), or 9(f) of rule XXI.
COMMITTEE COST ESTIMATE
The Committee adopts as its own the cost estimate provided
by 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:
May 24, 2007.
Hon. John D. Dingell, 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. 964, the Securely
Protect Yourself Against Cyber Trespass Act.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Susan Willie.
Sincerely,
Peter R. Orszag.
Enclosure.
H.R. 964--Securely Protect Yourself Against Cyber Trespass Act
Summary: H.R. 964 would prohibit the use of computer
software (known as spyware) to collect personal information and
to monitor the behavior of computer users without a user's
consent. The bill would direct the Federal Trade Commission
(FTC) to enforce the bill's provisions relating to spyware,
including assessing and collecting civil penalties for unfair
or deceptive business practices. Based on information provided
by the FTC, CBO estimates that implementing the bill would
increase spending by $1 million in 2008 and $7 million over the
2008-2012 period, assuming appropriation of the necessary
amounts.
Enacting H.R. 964 could increase civil penalties and thus
could affect Federal revenues, but CBO estimates that such
effects would not be significant in any year. Enacting H.R. 964
would not affect direct spending.
H.R. 964 contains an intergovernmental mandate as defined
in the Unfunded Mandates Reform Act (UMRA), but CBO estimates
that the resulting costs to states would fall significantly
below the threshold established in UNRA ($66 million in 2007,
adjusted annually for inflation).
H.R. 964 would impose private-sector mandates, as defined
in UMRA, on persons who use computer programs to collect
certain information from another person's computer. In
addition, by preempting certain State laws, the bill would
impose a mandate on private entities by eliminating any private
right of action under those laws. CBO estimates that the direct
cost of complying with most of those mandates would be small
and fall below the annual threshold for private-sector mandates
established by UMRA ($131 million in 2007, adjusted annually
for inflation). However, due to a lack of information about the
number of claims that would be filed by private entities under
state laws in the absence of this legislation and the value of
awards in such cases, CBO has no basis to determine the loss of
compensation from awards or settlements, if any. Consequently,
CBO cannot determine whether the aggregate direct cost of all
the mandates in the bill would exceed the annual threshold.
Estimated cost to the Federal Government: The estimated
budgetary impact of H.R. 964 is shown in the following table.
The costs of this legislation fall within budget function 370
(commerce and housing credit).
----------------------------------------------------------------------------------------------------------------
By fiscal year, in millions of dollars--
-------------------------------------------------
2008 2009 2010 2011 2012
----------------------------------------------------------------------------------------------------------------
CHANGES IN SPENDING SUBJECT TO APPROPRIATION
Estimated Authorization Level................................. 1 1 1 2 2
Estimated Outlays............................................. 1 1 1 2 2
----------------------------------------------------------------------------------------------------------------
Basis of estimate: For this estimate, CBO assumes that the
bill will be enacted during fiscal year 2007, that the
necessary amounts will be provided for each year, and that
spending will follow historical patterns for similar programs.
Implementing H.R. 964 would increase spending by the FTC to
enforce regulations prohibiting the unlawful use of spyware,
subject to the availability of appropriated funds. Based on
information from the agency, CBO estimates that such activities
would cost about $1 million in 2008 and about $7 million over
the 2008-2012 period.
Enacting H.R. 964 could increase federal revenues from
civil penalties assessed for committing unfair or deceptive
acts or practices in commerce; however, based on information
provided by the FTC, CBO estimates that any new collections
would be less than $500,000 a year.
Estimated impact on state, local, and tribal governments:
H.R. 964 would preempt state laws that specifically regulate
the use of spyware. This preemption constitutes a mandate as
defined in UMRA. Some states may incur costs in the form of
lost court settlements, however, because the bill would
preserve the rights of states to enforce their own consumer
protection, trespass, contract, and/or laws, CBO estimates that
any such costs would fall significantly below the threshold
established in UMRA ($66 million in 2007, adjusted annually for
inflation).
Estimated impact on the private sector: H.R. 964 would
impose private-sector mandates, as defined in UMRA, on persons
who use computer programs to collect certain information from
another person's computer. The bill would require a person who
transmits or executes an information collection program on
someone's computer to receive prior consent from the owner or
authorized user of that computer. An information collection
program is defined in the legislation as computer software that
(1) collects personally identifiable information and sends the
information to someone else or uses such information for
advertising purposes, or (2) collects information regarding the
user's Internet activity and uses such information for
advertising purposes, except for software collecting
information within particular Web sites. The bill would require
the Federal Trade Commission to provide the manner and form of
the notice to obtain consent. In addition, the bill would
require an information collection program installed on
someone's computer to be easily identifiable and removable.
Based on information provided by industry sources and the FTC,
CBO expects that the direct costs of complying with those
mandates would fall below the annual threshold established by
UMRA for private-sector mandates ($131 million in 2007,
adjusted annually for inflation).
Also, by preempting state laws that expressly regulate the
same activities covered by the bill, H.R. 964 would impose a
mandate on private entities by eliminating any private right of
action under those laws. The direct cost of the mandate would
be the net loss of compensation from awards and settlements in
cases where the private entity could recover full compensation
for its injuries only through a private right of action that
would be eliminated by H.R. 964. Because of uncertainty about
the number of claims that would be filed in the absence of this
legislation and the value of awards in such cases, CBO cannot
estimate the cost of the mandate. Consequently, CBO cannot
determine whether the cost of the mandate would exceed the
annual threshold established by UMRA.
Previous CBO estimate: On May 7, 2007, CBO transmitted an
estimate for H.R. 1525, the Internet Spyware Prevention Act of
2007, as ordered reported by the House Committee on the
Judiciary on May 2, 2007. That bill would establish a new
federal crime for the use of certain computer software
(spyware) to collect personal information or to commit a
federal criminal offense, and would authorize the appropriation
of $40 million over the 2008-2012 period to prosecute
violations of the new law.
Estimate prepared by: Federal costs: Susan Willie; Impact
on state, local, and tribal governments: Theresa Gullo; Impact
on the private sector: Amy Petz.
Estimate approved by: Peter H. Fontaine, Deputy Assistant
Director for Budget Analysis.
FEDERAL MANDATES STATEMENT
The Committee adopts as its own the estimate of Federal
mandates prepared by the Director of the Congressional Budget
Office pursuant to section 423 of the Unfunded Mandates Reform
Act.
ADVISORY COMMITTEE STATEMENT
No advisory committees within the meaning of section 5(b)
of the Federal Advisory Committee Act were created by this
legislation.
CONSTITUTIONAL AUTHORITY STATEMENT
Pursuant to clause 3(d)(1) of rule XIII of the Rules of the
House of Representatives, the Committee finds that the
Constitutional authority for this legislation is provided in
Article I, section 8, clause 3, which grants Congress the power
to regulate commerce with foreign nations, among the several
States, and with the Indian Tribes.
APPLICABILITY TO LEGISLATIVE BRANCH
The Committee finds that the legislation does not relate to
the terms and conditions of employment or access to public
services or accommodations within the meaning of section
102(b)(3) of the Congressional Accountability Act.
SECTION-BY-SECTION ANALYSIS OF THE LEGISLATION
Section 1. Short title
Section 1 establishes the short title of the Act as the
``Securely Protect Yourself Against Cyber Trespass Act,'' or
the ``Spy Act.''
Section 2. Prohibition of unfair or deceptive acts or practices
relating to spyware
Section 2(a) prohibits any person who is not an owner or
authorized user of a protected computer to engage in deceptive
acts or practices in connection with spyware. Specifically, it
prohibits the following conduct: (1) taking control of a
protected computer; (2) modifying settings related to the use
of a computer or to the computer's access to or use of the
Internet by altering certain information; (3) collecting
personally identifiable information through the use of a
keystroke logging function; (4) inducing the owner or
authorized user to disclose personally identifiable information
using a fraudulent Web page; (5) inducing the owner or
authorized user to install a component of computer software
onto the computer or preventing reasonable efforts to block the
installation or execution of, or to disable, a component of
computer software; (6) misrepresenting that installing a
separate component of computer software or providing log-in and
password information is necessary for security or privacy
reasons, or that installing a separate component of computer
software is necessary to open, view, or play a particular type
of content; (7) inducing the owner or authorized user to
install or execute computer software by misrepresenting the
identity or authority of the person or entity providing the
computer software; (8) inducing the owner or authorized user to
provide personally identifiable information to another person
by misrepresenting the identity of the person seeking the
information, or without the authority of the intended recipient
of the information; or (9) removing, disabling, or rendering
inoperative a security, anti-spyware, or anti-virus technology
installed on the computer, or (10) installing or executing on
the computer software with the intent of causing a person to
use such components in a way that violates any other provision
of section 2.
This bill addresses software practices that affect end user
computers, whether those of individual consumers or of
businesses, connected to the Internet or similar public
networks. Routers and other computers on the Internet interact
with one another and give each other instructions regularly as
part of the routine operation of the Internet. The Committee
does not intend that these and other activities that occur in
the network itself, rather than on the edge of the network, be
covered by the bill's definitions of ``computer'' or
``protected computer,'' within the meaning of section 10(3), or
that they be considered ``taking control'' of a computer within
the meaning of section 2(a)(1).
Section 2(a)(4) provides the FTC with enforcement authority
against ``evil-twin attacks'' and Web-based phishing. It is not
intended to apply in instances of legitimate trademark dispute.
Many software installations of updated security, anti-
spyware, or anti-virus technologies requested by a computer
user will disable or render inoperable a prior version of that
software upon installation of the updated version. Section
2(a)(9) is not intended to apply to these circumstances.
Section 2(b) directs the FTC to use its authority to issue
advisory opinions, policy statements, and guidance to advise
companies on the parameters of this section. For example, the
FTC should issue guidance on required disclosures or material
omissions that would trigger liability under section 2. Section
2(b) also provides that this subsection will take effect upon
the date of enactment of the Act.
Section 2(c) provides that, except as provided in
subsection (b), section 2 shall take effect upon the expiration
of the 6-month period that begins on the date of enactment of
the Act.
Section 3. Prohibition of collection of certain information without
notice and consent
Section 3(a) prohibits the transmission of an information
collection program to a protected computer unless the program
provides for notice and consent, as set forth in section 3(c),
before the first execution of the information collection
program and contains the functions set forth in section 3(d).
It also prohibits the execution of any information collection
program on a protected computer without meeting the
requirements in subsections (c) and (d).
This section contemplates a single notice at the first
execution of the software. If the same information collection
program executes more than one time on the same protected
computer, notice is required only at the initial execution.
Subsequent notice is only required if the information
collection program will collect or send information that is
materially different from, and outside the scope of, the type
or purpose set forth in the initial or, in the case of prior
subsequent notice, previous notice.
Section 3(b)(1) provides a definition for ``information
collection program.'' An information collection program is
computer software that (a) collects personally identifiable
information and either (1) sends such information to a person
other than the owner or authorized user of the computer or (2)
uses such information to deliver advertising to or display
advertising on the computer; or (b) collects information
regarding Web pages accessed using the computer and uses the
information to deliver advertising to or display advertising on
the computer. The reference to ``a person other than the owner
or authorized user of the computer'' in section
3(b)(1)(A)(ii)(I) is intended to include the entity that
transmitted or executed the information collection program.
Section 3(b)(2) provides an exception to the definition of
information collection program for software collecting
information regarding Internet activity within a particular Web
site. Computer software that otherwise would be considered an
information collection program under section 3(b)(1)(B) shall
not be considered such a program if: (1) the only information
collected regarding the user's Internet activity, and used to
deliver advertising to or display advertising on the protected
computer, is either (A) information regarding Web pages within
a particular Web site, or (B) in the case of any Internet-based
search function, user-supplied search terms necessary to
complete the search and return results to the user; (2) such
information is not sent to anyone other than the provider of
the Web site accessed or Internet-based search function, or a
party authorized to facilitate the display or functionality of
Web pages within the Web site accessed; and (3) the only
advertising delivered to or displayed on the computer using
such information is advertising on the Web pages within the Web
site. This section exempts this narrow activity. It does not
create a blanket exemption for Internet search functions from
the notice and consent requirements of section 3. It does not
exempt the collection of other Internet activity by toolbars if
it is used to deliver or display ads, nor does it exempt
toolbars that are downloaded onto consumers' computers
surreptitiously as figured in the FTC's cases in the matter of
Enternet Media and ERG Ventures.
This section also is intended to exempt from the
requirements of section 3 HTML, Java, Java Script, Web beacons,
and other similar tools used in the everyday functioning of the
Internet to the extent that they facilitate the ordinary
construction of Web pages and do not collect personally
identifiable information. The Committee does not intend to
interfere with the benign functioning of the Internet. This
exception also allows Web site providers, or their agents, to
monitor activity on their Web site, and to direct advertising
on their Web site based on that monitoring, without being
subject to the requirements of section 3. The Committee
understands that Web site owners often use internal navigation
tracking for rights management, security, site management, and
similar purposes not associated with malicious spyware and
adware, in order to facilitate positive interactions with
consumers.
Section 3(c) sets out the requirements for notice and
consent with respect to information collection programs. The
notice must be clear and conspicuous in plain language and
clearly distinguished from any other information
contemporaneously displayed. The Committee expects the notice
to be simple and clear so that consumers can easily understand
that software collects information about them. Section
3(c)(1)(A) is not intended to impose specific design mandates
on hardware manufacturers or software developers. The intent of
the provision is to require a clearly distinct notice to the
extent practicable in light of the technical and functional
limitations of the information collection program or the device
on which it is installed and executed. The notice must also
contain a statement identifying whether the information
collection program collects personally identifiable information
or Web pages accessed, or both. The provider of the information
collection program may use the provided language or a
substantially similar statement. The language ``substantially
similar statement'' has been added to section 3(c)(1)(B) to
ensure that vendors of information collection programs have
adequate flexibility to tailor section 3 notices to the user
experience and in light of evolving technologies and consumer
expectations. The notice must provide for the user to grant or
deny consent, or to simply abandon or cancel the transaction
without granting or denying consent. The notice must also
provide for the user to access, before granting or denying
consent, a clear description of the types of information being
collected, the purpose for which the information is being
collected and sent, and in the case of bundled software, the
identity of the programs that qualify as information collection
programs under the Act. The software provider may provide
access to the information required under section 3(c)(1)(D) by
a link or some other Web-based mechanism. A single notice is
sufficient for bundled software programs so long as it meets
the requirements under section 3(c)(1)(D)(iii). Section
3(c)(1)(E) requires concurrent display of the specified
information in sections 3(c)(1)(B), (C), and (D) to the extent
reasonably practicable. Section 3(c)(4) grants the FTC
authority to issue regulations to carry out the subsection.
Section 3(d) provides that an information collection
program must contain a disable function and, if applicable, an
identity function. The disable function must allow a user of
the program to remove or disable operation of the program by a
mechanism that is easily identifiable to the user and can be
performed without undue effort or knowledge by the user of the
protected computer. The Committee has included this provision
because of evidence that purveyors of spyware have infected
consumers' computers with software that cannot be removed or
disabled absent destruction of the computer hard drive. The
Committee expects that the FTC will take ongoing action to
educate consumers on the dangers of uninstallable software that
may already be residing on consumers' computers without their
knowledge. Section 3(d)(1) does not require information
collection programs to provide users with both a remove and a
disable function. Developers of information collection programs
will satisfy the requirements of section 3(d)(1) so long as the
program includes at least one of these options. The identity
function must provide that display of an advertisement
generated by information collected through the program must be
accompanied by the name of the information collection program,
a logogram or trademark used for the exclusive purpose of
identifying the program, or a statement or other information
sufficient to clearly identify the program. Section 3(d)(2)(B)
directs the FTC to promulgate rules exempting from this
required function the embedded display of any advertisement on
a Web page that contemporaneously displays other information.
Section 3(d)(3) gives the FTC authority to carry out the
subsection.
Section 3(e) provides that a telecommunications carrier,
provider of information or interactive computer service, cable
operator, or a provider of transmission capability shall not be
liable under section 3 to the extent that it transmits, routes,
hosts, stores, or provides connections for an information
collection program or provides an information location tool
through which the owner or authorized user of a protected
computer locates an information collection program.
For purposes of commercial computing networks, the
``authorized user'' of computer software will be the corporate
licensee of the software. As a practical matter, for purposes
of sections 2 and 3, the Committee understands in many
instances that system administrators are the ``authorized
users'' in the context of commercial computing networks.
Section 3(f) directs the FTC to conduct a study to
determine the applicability of the information collection
prohibitions of section 3 to personally identifiable
information that is input directly by users in a field provided
on a Web site. The FTC is directed to examine: (1) the nature
of the fields for user input; (2) how the user's information is
used once input and whether it is sent to a person other than
the provider of the Web site; (3) whether such information is
used to deliver advertisements to the user's computer; and (4)
the extent of any notice provided to the user prior to such
input. The FTC is required to transmit a report, including its
findings and recommendations, to the House and Senate Commerce
Committees not later than six months after final regulations
are issued under section 9. The FTC is authorized to adopt
rules granting an exemption from the requirements of this
section or modifying the notice requirements of this section
with respect to such information input directly by the user, if
the agency finds that users have adequate notice regarding the
uses of this information, and that the exemption or
modification is consistent with the public interest, the
protection of consumers, and the purposes of this Act. The
Committee does not intend to deny consumers the important
protections provided by this Act, but is willing to have the
FTC take a serious look at this issue. While the Committee
understands that responsible online marketers and retailers
have readily available privacy policies, the Committee has
received information about abuses and enforcement actions that
militate against providing an exemption without such a study
and assurances that such an exemption or modification is
appropriate and not contrary to the public interest, the
protection of consumers, and the purposes of this Act.
Section 4. Enforcement
Section 4(a) provides that the Act shall be enforced by the
FTC under the Federal Trade Commission Act and that a violation
of the Act shall be treated as an unfair or deceptive act or
practice violating a rule promulgated under section 18 of the
Federal Trade Commission Act. Section 4 gives the FTC the
discretion to seek civil penalties for violations of the Act in
one of two ways: (1) seeking civil penalties of up to $11,000
per violation under section 5(m)(1)(A) of the FTC Act; or (2)
seeking civil penalties under section 4(b) of this Act. Section
4(b) establishes an alternative enforcement mechanism for
pattern or practice violations of the Act. It provides for
significantly higher penalties for those whom the FTC has
determined engaged in a pattern or practice of violating the
Act, but also directs the FTC to treat as a single violation a
single action that violates the Act but affects multiple
computers. It also directs that any single action or conduct
that violates more than one section of 2(a) shall be considered
multiple violations. The higher damages for a pattern or
practice of violation may be up to $3,000,000 for each
violation of section 2 and $1,000,000 for each violation of
section 3.
Furthermore, section 4(c) provides that civil penalties
sought under the Act may not be granted by the FTC or any court
unless the FTC or the court, respectively, establishes that the
conduct was committed with actual knowledge or knowledge fairly
implied on the basis of objective circumstances that such
conduct is unfair or deceptive and is prohibited by this Act.
This is the existing scienter requirement under the FTC Act.
Section 4(d) directs the FTC and the court, in determining the
amount of any such civil penalty, to take into account the
degree of culpability, any prior history of such conduct,
ability to pay, effect on ability to continue to do business,
and such other matters as justice may require. The Committee
expects the FTC to enforce the law to protect consumers from
unfair or deceptive acts or practices involving spyware
vigorously. The Committee also expects the agency to act
reasonably to avoid seeking damages out of proportion to the
harm caused by the offending conduct.
Section 4(e) provides that remedies available under this
section and remedies available under the FTC Act are the
exclusive remedies for violation of the Act.
Section 4(f) provides that the section shall take effect
upon the expiration of the 6-month period that begins on the
date of enactment of the Act to the extent that the section
applies to violations of section 2(a).
Section 5. Limitations
Section 5(a) provides that sections 2 and 3 of the Act
shall not apply to (1) any act taken by a law enforcement agent
in the performance of official duties, or (2) the transmission
or execution of an information collection program in compliance
with a law enforcement, investigatory, national security,
regulatory, agency or department of the United States, or any
State in response to a request or demand made under authority
granted to that agency or department. The Committee intends
that this section shall be interpreted to exclude from sections
2 and 3 of the Act intelligence agencies and bona fide
intelligence gathering. The Committee further intends that the
activities covered by this exemption shall be carried out in
accordance with all other applicable laws.
Section 5(b) provides an exception for monitoring or
interaction with a protected computer for legitimate security,
fraud prevention, and technical support purposes. This
important exemption provides that nothing in this Act shall
apply to any monitoring of, or interaction with, a protected
computer (1) in connection with the provision of a network
access service or other service or product with respect to
which the user of the protected computer is an actual or
prospective customer, subscriber, registered user, or account
holder, (2) by the provider of that service or product or with
such provider's authorization, and (3) that involves or enables
the collection of information about the user's activities only
with respect to the user's relationship with or use of such
service or product, to the extent that such monitoring or
interaction is for the purpose of network security, computer
security, diagnostics, technical support or repair, network
management, authorized updates of software, or for the
detection or prevention of fraudulent activities. The primary
goal of this legislation is to combat fraudulent and abusive
Internet practices resulting from spyware and related nefarious
technologies. The Committee intends to exempt technologies that
combat practices that result in fraudulent transactions. For
example, companies like Experian partner with financial
institutions and online retailers in providing fraud prevention
software where consumers apply for credit online. It is
important to ensure that these fraud detection tools are not
undermined.
Section 5(b) also provides that the Act shall not apply to
a discrete interaction with a protected computer by a provider
of computer software solely to determine whether the user of
the computer is authorized to use such software, that occurs
upon initialization of the software or an affirmative request
by that user for an update of, addition to, or technical
service for, the software. The intent of this provision is to
allow software providers to verify that requests for technical
support are coming from licensed users of software.
Section 5(c), the so-called ``Good Samaritan'' provision,
provides protection from the threat of Federal Trade Commission
enforcement to the developers of anti-spyware software and
services under specified circumstances. The section thus
provides that no provider of an interactive computer service
may be held liable ``under this Act'' on account of any action
voluntarily taken, or service provided, in good faith to remove
or disable a program used to violate section 2 or 3 that is
installed on a customer's computer, if the provider notifies
the customer and obtains consent before undertaking such
action. This protection would not apply to litigation between
private parties or to enforcement of State law by State
attorneys general. The section also provides that nothing in
subsection (c) shall be construed to limit the liability of a
provider of computer software or of an interactive computer
service for any anti-competitive act otherwise prohibited by
law.
Section 5(d) provides that a manufacturer or retailer of
computer equipment shall not be liable under this Act to the
extent that the manufacturer or retailer is providing third
party branded computer software that is installed on the
equipment that the manufacturer or retailer is manufacturing or
selling. This provision does not excuse from liability a
manufacturer that includes its own software on computers that
it manufactures.
Section 5(e) provides a limited exemption for certain
services provided by cable operators or satellite carriers. The
section provides that it shall not be a violation of section 3
for a satellite carrier or cable operator to (1) utilize a
navigation device, (2) interact with such a navigation device,
or (3) transmit software to or execute software installed on
such a navigation device to provide service or to collect or
disclose subscriber information, if such actions with respect
to such information are subject to section 338 or section 631
of the Communications Act of 1934. The Committee intends to
avoid duplicative regulation, not to deny consumers the
protections afforded by this Act. Accordingly, if there is a
provision in Section 3 of this Act that does not have a
corollary in Section 631 of the Communications Act, then the
scope of this exemption would be limited to what the Federal
Communications Commission actually has required of cable
operators. The Committee expects the FTC to consult with the
Federal Communications Commission in connection with
interpretation and enforcement of this provision.
Section 6. Effect on other laws
Section 6(a) provides that the Act supercedes any provision
of a statute, regulation, or rule of a State or political
subdivision that expressly regulates deceptive conduct with
respect to computers similar to that of section 2(a), the
transmission or execution of a computer similar to that in
section 3, and the use of computer software that displays
advertising content based on the Web pages accessed using a
computer. The section also prohibits any person other than the
Attorney General of a State to bring a civil action under the
law of any State if such action is premised in whole or in part
upon the defendant violating any provision of this Act, but
makes clear that this prohibition shall not be construed to
limit the enforcement of any State consumer protection law by
an Attorney General of a State. The section specifically
preserves State trespass, contract, and tort law, and other
State laws to the extent that those acts relate to acts of
general consumer fraud. The Committee intends to preserve the
ability of State Attorneys General to enforce these law as an
important backstop to FTC enforcement. However, the Committee
intends to preempt State legislation that makes illegal an
information collection program or other computer software that
displays advertising in a way that complies with this Act by
simply calling it a trespass, tort, or other statute in an
effort to avoid preemption. The Committee specifically intends
to preempt the Utah Spyware Control Act, section 13-39-101,
Utah Code Annotated 1953.
Section 6(b) preserves the FTC's authority under any other
provision of law, including the authority to issue advisory
opinions, policy statements, or guidance regarding the Act.
Section 7. FTC report on cookies
Section 7(a) requires that, no later than the expiration of
the 6-month period that begins on the date on which final
regulations are issued under section 9, the FTC submit a report
to the Congress regarding the use of cookies in the delivery or
display of advertising to the owners and users of computers.
The report shall examine the extent to which cookies are or may
be used to transmit to a third party personally identifiable
information of a computer owner or user, information regarding
Web pages accessed by the owner or user, or information
regarding advertisements previously delivered to a computer,
for the purpose of (1) delivering or displaying advertising to
the owner or user, or (2) assisting the intended recipient to
deliver or display advertising to the owner, user, or others.
The report shall compare the use of cookies with the use of
information collection programs, as such programs are defined
in section 3, to determine the extent to which such uses are
similar or different. Section 10(4)(B)(ii) contains an
exception clarifying when cookies are not ``computer software''
subject to the requirements of section 3. The Committee
understands that traditional cookies are innocuous and a part
of the basic functioning of most Web sites. On the other hand,
the Committee has received information about so-called
``tracking'' or ``persistent'' cookies that collect identifying
information and increasingly act as spyware and adware. The
Committee intends for the FTC to look into these and other
functionally similar information collection programs to
determine whether and, if so, how they use and transmit
consumer information. The Committee also intends for the FTC to
examine privacy safeguards that currently exist regarding the
management of cookies by online entities.
Section 7(b) provides that the section shall take effect on
the date of enactment of this Act.
Section 7(c) provides an exemption from the Paperwork
Reduction Act for any such report in order to facilitate its
completion within the statutory time frame.
Section 8. FTC report on information collection programs installed
before effective date
Section 8 requires that, no later than the expiration of
the 6-month period that begins on the date on which final
regulations are issued under section 9, the FTC submit a report
to the Congress on the extent to which there are installed on
protected computers information collection programs that are
not covered by the notice and consent requirements of section 3
because such programs were installed prior to the effective
date under section 11(a) of the Act. The report shall include
recommendations regarding the means of affording computer users
affected by such programs the protections of section 3,
including recommendations regarding requiring a one-time notice
and consent by the owner or authorized user of a computer to
the continued collection of information by such a program.
Section 8 also provides an exemption from the Paperwork
Reduction Act for any such report in order to facilitate its
completion within the statutory time frame.
Section 9. Regulations
Section 9(a) provides that any regulations issued under the
Act shall be issued not later than the expiration of the 9-
month period beginning on the date of enactment of this Act,
and in accordance with section 553 of title 5, United States
Code. The subsection also provides a standard to guide FTC
rulemaking under the Act, requiring a determination that such
regulations are consistent with the public interest and the
purposes of this Act.
Section 9(b) provides that the section shall take effect on
the date of enactment of the Act.
Section 10. Definitions
Section 10 provides definitions for terms in the Act
including ``collect,'' ``computer software,'' ``disable,''
``personally identifiable information,'' ``transmit,'' ``unfair
or deceptive acts or practices,'' ``Web page,'' and ``Web
site.''
The definition of ``collect'' makes clear that personally
identifiable information that is input by the user of a
protected computer and transferred to the recipient, or stored
on the protected computer in a manner such that it is
accessible by such intended recipient, is outside the scope of
section 3 of the Act. This is intended to facilitate ease of
use for consumers and providers of Internet services or Web
sites. The Committee intends the exclusion from ``collect'' to
be based on active conduct on the part of the computer user.
The mere acceptance of an end user license agreement by a
computer user would not be sufficient to meet this test of
active conduct.
The definition of ``computer software'' makes clear that
such term does not include software placed on the computer
system of a user by an Internet service provider, interactive
computer service, or Internet Web site solely to enable the
user subsequently to use such provider or service or to access
such Web site. The term also does not include text or data
files known as cookies to the extent that such text or data
file: (1) is used, written to, or placed on the computer of a
user by such provider, service, or Web site, or any entity
acting with the authorization of and on behalf of such
provider, service, or Web site, and (2) can be read or
recognized solely to return information to such provider,
service, or Web site, or any entity action with the
authorization of and on behalf of such provider, service, or
Web site. The Committee intends to offer an amendment during
Floor consideration to clarify that computer software does not
include a cookie or any other type of text or data file that
solely may be read or transferred by a computer.
Section 11. Applicability and sunset
Section 11 provides that, except as otherwise provided in
the Act, the Act shall take effect 12 months after the date of
enactment, and further that it will sunset on December 31,
2013. Section 10 also provides that the notice and consent
requirements of section 3 shall not apply to an information
collection program installed on a protected computer before the
effective date of the Act.
CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED
H.R. 964 does not amend any existing Federal statute.