[House Report 110-37]
[From the U.S. Government Publishing Office]



110th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 1st Session                                                     110-37

======================================================================



 
 PREVENTING HARASSMENT THROUGH OUTBOUND NUMBER ENFORCEMENT (PHONE) ACT 
                                OF 2007

                                _______
                                

 March 8, 2007.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

    Mr. Conyers, from the Committee on the Judiciary, submitted the 
                               following

                              R E P O R T

                        [To accompany H.R. 740]

      [Including cost estimate of the Congressional Budget Office]

  The Committee on the Judiciary, to whom was referred the bill 
(H.R. 740) to amend title 18, United States Code, to prevent 
caller ID spoofing, and for other purposes, having considered 
the same, reports favorably thereon without amendment and 
recommends that the bill do pass.

                                CONTENTS

                                                                   Page
Purpose and Summary..............................................     1
Background and Need for the Legislation..........................     2
Hearings.........................................................     2
Committee Consideration..........................................     3
Committee Votes..................................................     3
Committee Oversight Findings.....................................     3
New Budget Authority and Tax Expenditures........................     3
Congressional Budget Office Cost Estimate........................     3
Performance Goals and Objectives.................................     4
Constitutional Authority Statement...............................     4
Advisory on Earmarks.............................................     4
Section-by-Section Analysis......................................     5
Changes in Existing Law Made by the Bill, as Reported............     6

                          Purpose and Summary

    The purpose of H.R. 740, the ``Preventing Harassment 
through Outbound Number Enforcement (PHONE) Act of 2007,'' is 
to prevent and mitigate identity theft and to ensure privacy by 
establishing criminal penalties for caller ID ``spoofing.'' The 
bill targets spoofing by prohibiting the use of caller ID 
information to commit fraud or other abusive acts. The bill 
provides for felony penalties of up to five years in prison for 
violations committed for commercial gain. Abusive use of 
another person's caller ID information without commercial 
motives is classified as a misdemeanor under the bill.

                Background and Need for the Legislation

    In recent years, spoofing has become more commonplace, 
leading to increased security vulnerabilities and identity 
theft. Spoofing involves using a false caller ID to hide the 
caller's true identity in order to commit fraud or some other 
abusive act. Recently, spoofing technology has become readily 
available, either through the purchase of Internet telephone 
equipment or through Web sites specifically set up to spoof. 
For example, Voice-Over-Internet-Protocol (VOIP) equipment can 
easily be configured to populate the caller ID field with 
information of the user's choosing.
    Since caller ID spoofing can make a call appear to come 
from any phone number, it has the ability to cause damaged 
credit and financial ruin. Call recipients sometimes divulge 
personal and private information to the spoofer, under the 
mistaken belief that it is a legitimate call. For example, the 
AARP (formerly the American Association of Retired Persons) has 
reported cases in which spoofers called individuals claiming 
that they had missed jury duty.\1\ These individuals were told 
that they would be subject to prosecution if they did not 
provide their Social Security number and other personal 
information. The phone number that appeared on their caller ID 
was from the local courthouse, so the victims assumed that the 
call was legitimate. Such incidences have been reported in at 
least 15 states, including the District of Columbia.\2\
---------------------------------------------------------------------------
    \1\ Sid Kirchheimer, Scam Alert: Courthouse Con, AARP Bulletin, May 
2006, available at http://www.aarp.org/bulletin/consumer/courthouse--
con.html
    \2\ Id.
---------------------------------------------------------------------------
    In addition to identity theft, spoofing invades the privacy 
of those individuals whose caller ID is used to mask fraudulent 
calls, and therefore it can be used as a form of aggressive 
harassment. Additionally, many business functions, from credit 
card verification to automatic call routing, opt to use caller 
ID for security purposes, which spoofing can render useless.
    However, there are instances where caller ID information is 
altered for legitimate reasons. For example, a domestic 
violence shelter may alter caller ID information to ensure the 
safety of domestic violence victims. In addition, in many 
instances where telemarketers are hired by companies, the 
caller ID information transmitted is that of the actual 
company, allowing those receiving the call to have a reliable 
way to call back.

                                Hearings

    The Committee's Subcommittee on Crime, Terrorism, and 
Homeland Security held one day of hearings on H.R. 740 on 
February 6, 2007. Testimony was received from two witnesses: 
Congressman Tim Murphy of Pennsylvania, and Barry M. Sabin, 
Deputy Assistant Attorney General, Criminal Division, United 
States Department of Justice.

                        Committee Consideration

    On February 6, 2007, the Subcommittee on Crime, Terrorism, 
and Homeland Security met in open session and ordered favorably 
reported the bill H.R. 740, by a voice vote, a quorum being 
present. On February 7, 2007, the Committee met in open session 
and ordered favorably reported the bill H.R. 740, without an 
amendment, by a voice vote, a quorum being present.

                            Committee Votes

    In compliance with clause 3(b) of rule XIII of the Rules of 
the House of Representatives, the Committee advises that there 
were no recorded votes during Committee consideration of H.R. 
740.

                      Committee Oversight Findings

    In compliance with clause 3(c)(1) of rule XIII of the Rules 
of the House of Representatives, the Committee reports that the 
findings and recommendations of the Committee, based on 
oversight activities under clause 2(b)(1) of rule X of the 
Rules of the House of Representatives, are incorporated in the 
descriptive portions of this report.

               New Budget Authority and Tax Expenditures

    Clause 3(c)(2) of rule XIII of the Rules of the House of 
Representatives is inapplicable because this legislation does 
not provide new budgetary authority or increased tax 
expenditures.

               Congressional Budget Office Cost Estimate

    In compliance with clause 3(c)(3) of rule XIII of the Rules 
of the House of Representatives, the Committee sets forth, with 
respect to the bill, H.R. 545, the following estimate and 
comparison prepared by the Director of the Congressional Budget 
Office under section 402 of the Congressional Budget Act of 
1974:

                                     U.S. Congress,
                               Congressional Budget Office,
                                 Washington, DC, February 15, 2007.
Hon. John Conyers, Jr., Chairman,
Committee on the Judiciary,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 740, the 
Preventing Harassment through Outbound Number Enforcement 
(PHONE) Act of 2007.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Mark 
Grabowicz, who can be reached at 226-2860.
            Sincerely,
                                           Peter R. Orszag,
                                                  Director.

Enclosure

cc:
        Honorable Lamar S. Smith.
        Ranking Member
H.R. 740--Preventing Harassment through Outbound Number Enforcement 
        (PHONE) Act of 2007.
    CBO estimates that implementing H.R. 740 would have no 
significant cost to the federal government. Enacting the bill 
could affect direct spending and revenues, but CBO estimates 
that any such effects would not be significant. H.R. 740 
contains no intergovernmental or private-sector mandates as 
defined in the Unfunded Mandates Reform Act and would not 
affect the budgets of state, local, or tribal governments.
    H.R. 740 would establish a new federal crime for the 
fraudulent use of caller ID information. Because the bill would 
establish a new offense, the government would be able to pursue 
cases that it otherwise would not be able to prosecute. CBO 
expects that H.R. 740 would apply to a relatively small number 
of offenders, however, so any increase in costs for law 
enforcement, court proceedings, or prison operations would not 
be significant. Any such costs would be subject to the 
availability of appropriated funds.
    Because those prosecuted and convicted under H.R. 740 could 
be subject to criminal fines, the federal government might 
collect additional fines if the legislation is enacted. 
Criminal fines are recorded as revenues, then deposited in the 
Crime Victims Fund and later spent. CBO expects that any 
additional revenues and direct spending would not be 
significant because of the small number of cases likely to be 
affected.
    Persons prosecuted and convicted under the bill also could 
be subject to the seizure of certain assets by the federal 
government. Proceeds from the sale of such assets would be 
deposited into the Assets Forfeiture Fund and spent from that 
fund, mostly in the same year. Thus, enacting H.R. 740 could 
increase both revenues deposited into the fund and direct 
spending from the fund. However, CBO estimates that any 
increased revenues or spending would be negligible.
    The CBO staff contact for this estimate is Mark Grabowicz, 
who can be reached at 226-2860. This estimate was approved by 
Peter H. Fontaine, Deputy Assistant Director for Budget 
Analysis.

                    Performance Goals and Objectives

    The Committee states that pursuant to clause 3(c)(4) of 
rule XIII of the Rules of the House of Representatives, H.R. 
740 will assist in combating caller ID spoofing, particularly 
spoofing perpetrated for commercial gain.

                   Constitutional Authority Statement

    Pursuant to clause 3(d)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee finds the authority for 
this legislation in article I, section 8, clause 3 of the 
Constitution.

                          Advisory on Earmarks

    In accordance with clause 9 of rule XXI of the Rules of the 
House of Representatives, H.R. 740 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.

                      Section-by-Section Analysis

    The following discussion describes the bill as reported by 
the Committee.
Section 1. Short Title.
    This section cites the short title of the bill as the 
``Preventing Harassment through Outbound Number Enforcement 
(PHONE) Act of 2007.''
Section 2. Caller ID Spoofing.
    This section amends the Federal criminal code (Chapter 47 
of title 18, Fraud and False Statements) to prohibit using or 
providing, in interstate or foreign commerce, false caller ID 
information with an intent to defraud. The section also 
prohibits using or providing the caller ID information of an 
actual person, without the person's consent, and with an intent 
to deceive the recipient about the caller's identity. The 
section punishes attempts or conspiracies on equal footing with 
completed acts. It is important to note that it would not be an 
offense under this subsection to cause caller ID information to 
be blocked or withheld.
    The punishment provided in this section is graduated, 
reserving felony penalties for violations committed for 
commercial gain, for which the prescribed punishment is a fine 
and/or imprisonment for not more than 5 years. For violations 
not involving commercial gain, the section provides for 
misdemeanor penalties, for which the prescribed punishment is a 
fine and/or imprisonment for not more than 1 year). For 
example, those playing practical jokes without any commercial 
motive could be subject to the misdemeanor penalties, but not 
the felony penalties.
    Subparagraph (c) of the section exempts from the purview of 
the statute any lawful investigative, protective, or 
intelligence activity of a federal, state, or local law 
enforcement agency or of a U.S. intelligence agency, or any 
activity authorized for the protection of witnesses in criminal 
proceedings.
    Subparagraph (d) provides for forfeiture by a convicted 
party of the proceeds derived from the offense, along with 
equipment used to facilitate the offense. The forfeiture 
provision is modeled on the provision in the CAN-SPAM Act of 
2003. See 18 U.S.C.A. Sec. Sec. 1037(c).
    Subparagraph (e) sets forth definitions for the various 
terms. The definition of ``telephone call'' includes both 
conventional telephone calling and many types of Voice-Over-
Internet Protocol (``VOIP'') services.
Section 3. Other Specified Unlawful Activities for Money Laundering.
    Section 3 adds the bill (section 1040 of Title 18) as well 
as section 1037 of title 18 (fraud and fraud related activity 
in connection with email) to the list of ``specified unlawful 
activities'' in section 1956(c)(7)(D) of title 18 (the money 
laundering statute). This makes certain financial transactions 
involving the proceeds of these violations money laundering 
offenses under 18 U.S.C. Sec. Sec. 1956 and 1957, and provides 
for the civil forfeiture of such proceeds. See 18 U.S.C. 
Sec. Sec. 981(a)(l)(C) (providing for the civil forfeiture of 
proceeds of crimes designated as ``specified unlawful 
activity''). Existing law provides that comparable crimes, 
e.g., violations of 18 U.S.C. Sec. Sec. 1030 (computer fraud 
and abuse) constitute specified unlawful activities.

         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 (new matter is 
printed in italics and existing law in which no change is 
proposed is shown in roman):

TITLE 18, UNITED STATES CODE

           *       *       *       *       *       *       *


PART I--CRIMES

           *       *       *       *       *       *       *


                 CHAPTER 47--FRAUD AND FALSE STATEMENTS

Sec.
1001.    Statements or entries generally.
     * * * * * * *
1040.    Caller ID spoofing.

           *       *       *       *       *       *       *


Sec. 1040. Caller ID spoofing

    (a) Offense.--Whoever, in or affecting interstate or 
foreign commerce, knowingly uses or provides to another--
            (1) false caller ID information with intent to 
        defraud; or
            (2) caller ID information pertaining to an actual 
        person without that person's consent and with intent to 
        deceive the recipient of a call about the identity of 
        the caller;
or attempts or conspires to do so, shall be punished as 
provided in subsection (b).
    (b) Punishment.--Whoever violates subsection (a) shall--
            (1) if the offense is committed for commercial 
        gain, be fined under this title or imprisoned not more 
        than 5 years, or both; and
            (2) be fined under this title or imprisoned not 
        more than one year, or both, in any other case.
    (c) Law Enforcement Exception.--It is a defense to a 
prosecution for an offense under this section that the conduct 
involved was lawfully authorized investigative, protective, or 
intelligence activity of a law enforcement agency of the United 
States, a State, or a political subdivision of a State, or of 
an intelligence agency of the United States, or any activity 
authorized under chapter 224 of this title.
    (d) Forfeiture.--
            (1) In general.--The court, in imposing sentence on 
        a person who is convicted of an offense under this 
        section, shall order that the defendant forfeit to the 
        United States--
                    (A) any property, real or personal, 
                constituting or traceable to gross proceeds 
                obtained from such offense; and
                    (B) any equipment, software or other 
                technology used or intended to be used to 
                commit or to facilitate the commission of such 
                offense.
            (2) Procedures.--The procedures set forth in 
        section 413 of the Controlled Substances Act (21 U.S.C. 
        853), other than subsection (d) of that section, and in 
        Rule 32.2 of the Federal Rules of Criminal Procedure, 
        shall apply to all stages of a criminal forfeiture 
        proceeding under this section.
    (e) Definitions.--In this section--
            (1) the term ``caller ID information'' means 
        information regarding the origination of the telephone 
        call, such as the name or the telephone number of the 
        caller;
            (2) the term ``telephone call'' means a call made 
        using or received on a telecommunications service or 
        VOIP service;
            (3) the term ``VOIP service'' means a service 
        that--
                    (A) provides real-time 2-way voice 
                communications transmitted using Internet 
                Protocol, or a successor protocol;
                    (B) is offered to the public, or such 
                classes of users as to be effectively available 
                to the public (whether part of a bundle of 
                services or separately); and
                    (C) has the capability to originate traffic 
                to, or terminate traffic from, the public 
                switched telephone network or a successor 
                network;
            (4) the term ``State'' includes a State of the 
        United States, the District of Columbia, and any 
        commonwealth, territory, or possession of the United 
        States; and
            (5) a term used in a definition in this subsection 
        has the meaning given that term in section 3 of the 
        Communications Act of 1934 (47 U.S.C. 153).

           *       *       *       *       *       *       *


CHAPTER 95--RACKETEERING

           *       *       *       *       *       *       *


Sec. 1956. Laundering of monetary instruments

    (a)  * * *

           *       *       *       *       *       *       *

    (c) As used in this section--
            (1)  * * *

           *       *       *       *       *       *       *

            (7) the term ``specified unlawful activity'' 
        means--
                    (A)  * * *

           *       *       *       *       *       *       *

                    (D) an offense under section 32 (relating 
                to the destruction of aircraft), section 37 
                (relating to violence at international 
                airports), section 115 (relating to 
                influencing, impeding, or retaliating against a 
                Federal official by threatening or injuring a 
                family member), section 152 (relating to 
                concealment of assets; false oaths and claims; 
                bribery), section 175c (relating to the variola 
                virus), section 215 (relating to commissions or 
                gifts for procuring loans), section 351 
                (relating to congressional or Cabinet officer 
                assassination), any of sections 500 through 503 
                (relating to certain counterfeiting offenses), 
                section 513 (relating to securities of States 
                and private entities), section 541 (relating to 
                goods falsely classified), section 542 relating 
                to entry of goods by means of false 
                statements), section 545 (relating to smuggling 
                goods into the United States), section 549 
                (relating to removing goods from Customs 
                custody), section 554 (relating to smuggling 
                goods from the United States), section 641 
                (relating to public money, property, or 
                records), section 656 (relating to theft, 
                embezzlement, or misapplication by bank officer 
                or employee), section 657 (relating to lending, 
                credit, and insurance institutions), section 
                658 (relating to property mortgaged or pledged 
                to farm credit agencies), section 666 (relating 
                to theft or bribery concerning programs 
                receiving Federal funds), section 793, 794, or 
                798 (relating to espionage), section 831 
                (relating to prohibited transactions involving 
                nuclear materials), section 844 (f) or (i) 
                (relating to destruction by explosives or fire 
                of Government property or property affecting 
                interstate or foreign commerce), section 875 
                (relating to interstate communications), 
                section 922(1) (relating to the unlawful 
                importation of firearms), section 924(n) 
                (relating to firearms trafficking), section 956 
                (relating to conspiracy to kill, kidnap, maim, 
                or injure certain property in a foreign 
                country), section 1005 (relating to fraudulent 
                bank entries), 1006 (relating to fraudulent 
                Federal credit institution entries), 1007 
                (relating to Federal Deposit Insurance 
                transactions), 1014 (relating to fraudulent 
                loan or credit applications), section 1030 
                (relating to computer fraud and abuse), 1032 
                section 1037 (Fraud and related activity in 
                connection with electronic mail), (relating to 
                concealment of assets from conservator, 
                receiver, or liquidating agent of financial 
                institution), section 1040 (Caller ID 
                spoofing), section 1111 (relating to murder), 
                section 1114 (relating to murder of United 
                States law enforcement officials), section 1116 
                (relating to murder of foreign officials, 
                official guests, or internationally protected 
                persons), section 1201 (relating to kidnaping), 
                section 1203 (relating to hostage taking), 
                section 1361 (relating to willful injury of 
                Government property), section 1363 (relating to 
                destruction of property within the special 
                maritime and territorial jurisdiction), section 
                1708 (theft from the mail), section 1751 
                (relating to Presidential assassination), 
                section 2113 or 2114 (relating to bank and 
                postal robbery and theft), section 2280 
                (relating to violence against maritime 
                navigation), section 2281 (relating to violence 
                against maritime fixed platforms), section 2319 
                (relating to copyright infringement), section 
                2320 (relating to trafficking in counterfeit 
                goods and services), section 2332 (relating to 
                terrorist acts abroad against United States 
                nationals), section 2332a (relating to use of 
                weapons of mass destruction), section 2332b 
                (relating to international terrorist acts 
                transcending national boundaries), section 
                2332g (relating to missile systems designed to 
                destroy aircraft), section 2332h (relating to 
                radiological dispersal devices), section 2339A 
                or 2339B (relating to providing material 
                support to terrorists), section 2339C (relating 
                to financing of terrorism), or section 2339D 
                (relating to receiving military-type training 
                from a foreign terrorist organization) of this 
                title, section 46502 of title 49, United States 
                Code, a felony violation of the Chemical 
                Diversion and Trafficking Act of 1988 (relating 
                to precursor and essential chemicals), section 
                590 of the Tariff Act of 1930 (19 U.S.C. 1590) 
                (relating to aviation smuggling), section 422 
                of the Controlled Substances Act (relating to 
                transportation of drug paraphernalia), section 
                38(c) (relating to criminal violations) of the 
                Arms Export Control Act, section 11 (relating 
                to violations) of the Export Administration Act 
                of 1979, section 206 (relating to penalties) of 
                the International Emergency Economic Powers 
                Act, section 16 (relating to offenses and 
                punishment) of the Trading with the Enemy Act, 
                any felony violation of section 15 of the Food 
                Stamp Act of 1977 (relating to food stamp 
                fraud) involving a quantity of coupons having a 
                value of not less than $5,000, any violation of 
                section 543(a)(1) of the Housing Act of 1949 
                (relating to equity skimming), any felony 
                violation of the Foreign Agents Registration 
                Act of 1938, any felony violation of the 
                Foreign Corrupt Practices Act, or section 92 of 
                the Atomic Energy Act of 1954 (42 U.S.C. 2122) 
                (relating to prohibitions governing atomic 
                weapons)

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