[House Report 112-653]
[From the U.S. Government Publishing Office]


112th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 2d Session                                                     112-653

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

 
  TO EXTEND THE UNDERTAKING SPAM, SPYWARE, AND FRAUD ENFORCEMENT WITH 
      ENFORCERS BEYOND BORDERS ACT OF 2006, AND FOR OTHER PURPOSES

                                _______
                                

 September 10, 2012.--Committed to the Committee of the Whole House on 
            the State of the Union and ordered to be printed

                                _______
                                

  Mr. Upton, from the Committee on Energy and Commerce, submitted the 
                               following

                              R E P O R T

                        [To accompany H.R. 6131]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Energy and Commerce, to whom was referred 
the bill (H.R. 6131) to extend the Undertaking Spam, Spyware, 
And Fraud Enforcement With Enforcers beyond Borders Act of 
2006, and for other purposes, having considered the same, 
report favorably thereon without amendment and recommend that 
the bill do pass.

                          Purpose and Summary

    H.R. 6131 is bipartisan legislation to renew the Federal 
Trade Commission's (FTC) authority to combat cross-border spam, 
spyware, and fraud through reauthorization of the Undertaking 
Spam, Spyware, And Fraud Enforcement With Enforcers beyond 
Borders Act (U.S. SAFE WEB Act) of 2006 (P.L. 109-455). The Act 
and the authorities it grants the FTC will expire on December 
22, 2013. H.R. 6131 extends the expiration date an additional 
seven years to September 30, 2020.

                  Background and Need for Legislation

    Beginning in the early 2000s, the FTC encountered 
increasing difficulties in effectively combatting Internet 
scams and fraud perpetrated against U.S. citizens by foreign 
operators. In 2005, an estimated 20 percent of the consumer 
complaints the FTC received involved fraud originating outside 
of the United States. Additionally, according to the FTC's 
analysis of consumer complaints in the Consumer Sentinel 
Network database, consumers suffered losses to foreign 
companies of almost $219 million in 2006.
    The FTC identified limitations in its authority relative to 
that of other U.S. regulators. Among the most important 
limitations identified was the Commission's lack of authority 
to share information with and provide investigative assistance 
to foreign law enforcers. The FTC sent Congress legislative 
recommendations in 2005 seeking additional administrative 
authorities to fill this gap. Congress passed the U.S. SAFE WEB 
Act on December 6, 2006, and President Bush signed the Act into 
law on December 22, 2006.
    Among other things, U.S. SAFE WEB amended the FTC Act to 
authorize the Commission to share information involving cross 
border fraud with foreign consumer protection agencies; secure 
confidential information from those foreign consumer protection 
agencies by protecting such information from public disclosure; 
take fraud-based legal action by specifying that the term 
``unfair or deceptive acts or practices'' in Section 5 of the 
FTC Act includes practices involving foreign commerce with 
reasonably foreseeable injury in the U.S. or material 
misconduct occurring within the U.S.; seek redress on behalf of 
U.S. and foreign consumers victimized by cross-border scams; 
and make referrals to the U.S. Attorney General for criminal 
prosecution when the FTC obtains evidence of conduct that also 
violates U.S. criminal law.
    Pursuant to the Act, the FTC issued a report, ``The U.S. 
SAFE WEB Act: The First Three Years,'' in December 2009 
detailing its use of and experience with the authority granted 
by the Act. The FTC reported that, over the three year period 
of 2006-2008, it received more than 260,000 cross-border 
complaints.\1\ The FTC also reported it shared compelled or 
confidential information in response to 38 requests from 14 
foreign agencies in six countries resulting in several 
enforcement proceedings.\2\
---------------------------------------------------------------------------
    \1\Federal Trade Commission, The U.S. SAFE WEB Act: The First Three 
Years, A Report to Congress, (Washington, DC, December, 2009) p. ii, 
(available at http://www.ftc.gov/os/2009/12/P035303safewebact2009.pdf), 
accessed July 5, 2012.
    \2\Ibid.
---------------------------------------------------------------------------
    The U.S. SAFE WEB Act and its grant of authorities to the 
FTC will expire on December 22, 2013, without reauthorization. 
H.R. 6131 extends the authorization of the Act from 2013 to 
2020, and specifies that the provisions of the Act will cease 
to be effective after the date of expiration absent further 
reauthorization.

                                Hearings

    The Subcommittee on Commerce, Manufacturing, and Trade 
convened a legislative hearing on Thursday, July 12, 2012, 
entitled ``H.R. __, a bill to renew the Federal Trade 
Commission's authority to combat cross-border spam, spyware and 
fraud through reauthorization of the U.S. SAFE WEB Act of 
2006.'' Mr. Hugh Stevenson, Deputy Director for International 
Consumer Protection of the FTC's Office of International 
Affairs, testified.

                        Committee Consideration

    On Tuesday, July 31, 2012, the full Committee met in open 
markup session and favorably reported H.R. 6131 to the House by 
a voice vote.

                            Committee Votes

    Clause 3(b) of rule XIII of the Rules of the House of 
Representatives requires the Committee to list the recorded 
votes on the motion to report legislation and amendments 
thereto. No recorded votes were requested.

                      Committee Oversight Findings

    Regarding clause 3(c)(1) of rule XIII of the Rules of the 
House of Representatives, the oversight findings of the 
Committee regarding H.R. 6131 are reflected in this report.

         Statement of General Performance Goals and Objectives

    The purpose of H.R. 6131 is to reauthorize the Undertaking 
Spam, Spyware, And Fraud Enforcement With Enforcers beyond 
Borders Act of 2006 for an additional 7 years, the period of 
initial authorization.

   New Budget Authority, Entitlement Authority, and Tax Expenditures

    In compliance with clause 3(c)(2) of rule XIII of the Rules 
of the House of Representatives, the Committee adopts as its 
own the estimate of budget authority and revenues prepared by 
the Director of the Congressional Budget Office pursuant to 
section 308(a) of the Congressional Budget Act of 1974. The 
Committee finds that H.R. 6131 would result in no new or 
increased entitlement authority or tax expenditures.

                  Earmarks and Tax and Tariff Benefits

    Regarding compliance with clause 9 of rule XXI of the Rules 
of the House of Representatives, H.R. 6131 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 prepared 
by the Director of the Congressional Budget Office pursuant to 
section 402 of the Congressional Budget Act of 1974.

                  Congressional Budget Office Estimate

    Pursuant to clause 3(c)(3) of rule XIII of the Rules of the 
House of Representatives, the following is the cost estimate 
provided by the Congressional Budget Office pursuant to section 
402 of the Congressional Budget Act of 1974:

                                                   August 16, 2012.
Hon. Fred Upton,
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. 6131, a bill to 
extend the Undertaking Spam, Spyware, and Fraud Enforcement 
with Enforcers beyond Borders Act of 2006, and for other 
purposes.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Susan Willie.
            Sincerely,
                                              Douglas W. Elmendorf.
    Enclosure.

H.R. 6131--A bill to extend the Undertaking Spam, Spyware, and Fraud 
        Enforcement with Enforcers beyond Borders Act of 2006, and for 
        other purposes

    CBO estimates that implementing H.R. 6131 would have no 
significant effect on discretionary spending over the 2013-2017 
period. Enacting H.R. 6131 could result in collections of 
additional civil and criminal penalties, which would affect 
both revenues and direct spending; therefore, pay-as-you-go 
procedures apply. However, CBO estimates that those effects 
also would be insignificant.
    H.R. 6131 would reauthorize the Undertaking Spam, Spyware, 
and Fraud Enforcement with Enforcers beyond Borders Act, which 
will expire on December 22, 2013. The act provides 
administrative tools to the Federal Trade Commission (FTC) that 
augment its authority to enforce federal laws related to unfair 
and deceptive trade practices, such as sharing information with 
foreign agencies and investigating fraud that originates 
outside of the United States. The bill also would extend an 
authorization to appropriate $100,000 each year for the FTC to 
collaborate with foreign governments and to participate in 
multinational organizations related to law enforcement. Based 
on information from the FTC, CBO expects that enacting H.R. 
6131 could change the types of fraud cases the agency 
investigates but would not change the agency's workload. 
Therefore, CBO estimates that implementing H.R. 6131 would not 
have a significant effect on discretionary costs over the 2013-
2017 period.
    Enacting H.R. 6131 could increase federal revenues and 
direct spending as a result of additional criminal and civil 
penalties assessed for violations of laws related to unfair and 
deceptive trade practices. Collections of civil penalties are 
recorded in the budget as revenues. Collections of criminal 
penalties are recorded in the budget as revenues, deposited in 
the Crime Victims Fund, and later spent. CBO estimates that the 
net effects of those transactions would be insignificant for 
each year because of the relatively small number of cases 
likely to be involved.
    H.R. 6131 would impose intergovernmental mandates, as 
defined in the Unfunded Mandates Reform Act (UMRA), by 
extending preemptions of state and local laws that prohibit 
individuals from disclosing information to the FTC and that 
require individuals to notify third parties if they disclose 
information to the FTC. Under current law, the preemptions 
would expire at the end of 2013; the bill would extend them 
until September 30, 2020. While the preemptions would limit the 
application of state and local law, CBO estimates that they 
would impose no duty on state, local, or tribal governments 
that would result in additional spending.
    H.R. 6131 also would extend an existing mandate that 
exempts from liability private entities that voluntarily 
provide certain information about third parties to the FTC. The 
extension of such protections constitutes a mandate on those 
third-party entities because it limits their ability to file a 
claim for the disclosure or failure to provide notice of 
disclosure. The cost of the mandate would be the forgone net 
value of settlements and damages that would have been awarded. 
Based on information from the FTC, few such lawsuits would 
probably be filed. Therefore, CBO expects that the cost of the 
mandate would fall below the annual threshold for private-
sector mandates established in UMRA ($146 million, adjusted 
annually for inflation).
    The CBO staff contacts for this estimate are Susan Willie 
(for federal costs), Elizabeth Cove Delisle (for the impact on 
state and local governments), and Marin Randall (for the impact 
on the private sector). The estimate was approved by Theresa 
Gullo, Deputy Assistant Director for Budget Analysis.

                       Federal Mandates Statement

    The Committee adopts as its own the estimate of Federal 
mandates regarding H.R. 6131 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 would be created by H.R. 
6131.

                  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 of 1995.

             Section-by-Section Analysis of the Legislation


Section 1. Extension of the U.S. SAFE WEB Act of 2006

    Section 1 amends section 13 of the U.S. SAFE WEB Act of 
2006 by striking existing language and replacing with a sunset 
date of September 30, 2020, and clarifying that after such date 
the changes made by the Act are repealed.

         Changes in Existing Law Made by the Bill, as Reported

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

U.S. SAFE WEB ACT OF 2006

           *       *       *       *       *       *       *



[SEC. 13. SUNSET.

  [This Act, and the amendments made by this Act, shall cease 
to have effect on the date that is 7 years after the date of 
enactment of this Act.]

SEC. 13. SUNSET.

  Effective September 30, 2020, this Act, and the amendments 
made by this Act, are repealed, and any provision of law 
amended by this Act shall be amended to read as if this Act had 
not been enacted into law.

           *       *       *       *       *       *       *


                                  
