[House Report 112-653]
[From the U.S. Government Publishing Office]
112th Congress Report
HOUSE OF REPRESENTATIVES
2d Session 112-653
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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\
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\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.
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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.
* * * * * * *