[House Report 117-509]
[From the U.S. Government Publishing Office]


117th Congress    }                                      {     Report
                        HOUSE OF REPRESENTATIVES
 2d Session       }                                      {    117-509

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



 
              INFORMING CONSUMERS ABOUT SMART DEVICES ACT

                                _______
                                

 September 28, 2022.--Committed to the Committee of the Whole House on 
            the State of the Union and ordered to be printed

                                _______
                                

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

                              R E P O R T

                        [To accompany H.R. 4081]

    The Committee on Energy and Commerce, to whom was referred 
the bill (H.R. 4081) to require the disclosure of a camera or 
recording capability in certain internet-connected devices, 
having considered the same, reports favorably thereon without 
amendment and recommends that the bill do pass.

                                CONTENTS

                                                                    Page
  I. Purpose and Summary.............................................. 1
 II. Background and Need for the Legislation.......................... 2
III. Committee Hearings............................................... 2
 IV. Committee Consideration.......................................... 3
  V. Committee Votes.................................................. 4
 VI. Oversight Findings............................................... 7
VII. New Budget Authority, Entitlement Authority, and Tax Expenditures 7
VIII.Federal Mandates Statement....................................... 7

 IX. Statement of General Performance Goals and Objectives............ 7
  X. Duplication of Federal Programs.................................. 7
 XI. Committee Cost Estimate.......................................... 7
XII. Earmarks, Limited Tax Benefits, and Limited Tariff Benefits...... 7
XIII.Advisory Committee Statement..................................... 8

XIV. Applicability to Legislative Branch.............................. 8
 XV. Section-by-Section Analysis of the Legislation................... 8
XVI. Changes in Existing Law Made by the Bill, as Reported............ 9

                         I. PURPOSE AND SUMMARY

    H.R. 4081, the ``Informing Consumers about Smart Devices 
Act,'' requires manufacturers of internet-connected devices 
(e.g., smart appliances) that are equipped with a camera or 
microphone to disclose to consumers that a camera or microphone 
is part of the device. The legislation does not apply to mobile 
phones, laptops, or other devices that a consumer would 
reasonably expect to include a camera or microphone. The 
legislation also requires the Federal Trade Commission (FTC) to 
issue guidance to assist entities that manufacture covered 
devices with compliance and provides authority for the FTC to 
enforce violations, including the authority to seek civil 
penalties for violations.

                II. BACKGROUND AND NEED FOR LEGISLATION

    Consumer devices capable of connecting to the internet, 
including Internet of Things (IoT) devices, are increasingly 
common in American homes. According to one survey, the average 
American home has 11 IoT devices, 28 percent of consumers have 
at least one home automation device connected to the internet, 
and 11 percent of consumers claim to use at least three 
connected home automation devices.\1\ Moreover, leading 
researchers have found that some IoT devices, such as Amazon's 
Alexa, Apple's Siri, Google Assistant, and Microsoft's Cortana, 
can be tricked into recording when they hear certain words that 
may not have come directly from the end user or with their 
consent, and these errors could happen at least once an 
hour.\2\ These problems are particularly acute in the context 
of IoT and other internet-connected devices due to their 
ability to transmit such information, including possibly to the 
People's Republic of China (PRC).
---------------------------------------------------------------------------
    \1\Deloitte Insights, Build It and They Will Embrace It (2019).
    \2\Consumer Reports, Yes, Your Smart Speaker Is Listening When It 
Shouldn't (July 9, 2021) (https://www.consumerreports.org/smart-
speakers/yes-your-smart-speaker-is-listening-when-it-should-not/).
---------------------------------------------------------------------------
    It appears that over the last few years the PRC has 
explored new avenues for collecting American's information. In 
2020, former Acting Department of Homeland Security Secretary 
Chad Wolf warned Americans that China may be using TCL 
Technology, a Chinese based television manufacturer, as a way 
to collect information from their users through backchannels 
incorporated in all of their televisions. Such backdoors 
exposed users to cyber breaches and data exfiltration.\3\ As 
technology continues to advance in devices and consumer goods, 
it is imperative that consumers have full transparency over the 
features and functionality of such devices, including whether 
they are operating in the background when not in use by 
consumers and whether or not information is collected in ways 
not apparent to consumers. Consumers should not be forced to 
choose between enjoying the modern benefits and conveniences of 
IoT devices and the comfort of knowing they are not being 
monitored by cameras or microphones without their knowledge or 
consent.

                        III. COMMITTEE HEARINGS

    For the purposes of section 3(c) of rule XIII of the Rules 
of the House of Representatives, the following hearing was used 
to develop or consider H.R. 4081:
    The Subcommittee on Digital Commerce and Consumer 
Protection held a hearing on June 13, 2017, entitled, 
``Disruptor Series: Update on IoT Opportunities and 
Challenges.'' The Subcommittee received testimony from the 
following witnesses:
           William S. Marras, Ph.D., Executive Director 
        and Scientific Director of the Spine Research 
        Institute, The Ohio State University;
           Gary D. Butler, Ph.D., Founder, Chairman and 
        CEO, Camgian Microsystems Corporation;
           Mark Bachman, Ph.D., CTO and Co-Founder, 
        Integra Devices;
           Peter B. Kosak, Executive Director, Urban 
        Active Solutions, General Motors North America;
           Cameron Javdani, Director of Sales and 
        Marketing, Louroe Electronics; and
           Bill Kuhns, President, Vermont Energy 
        Control Systems LLC.
    The Subcommittee on Digital Commerce and Consumer 
Protection held a hearing on January 18, 2018, entitled, 
``Disruptor Series: The Internet of Things, Manufacturing and 
Innovation.'' The Subcommittee received testimony from the 
following witnesses:
           Rodney Masney, Vice President, Technology 
        Service Delivery, Information Technology, Owens-
        Illinois;
           Sanjay Poonen, Chief Operating Officer, 
        VMWare;
           Thomas D. Bianculli, Chief Technology 
        Officer, Zebra Technology; and
           Thomas R. Kurfess, Ph.D., P.E., Professor 
        and HUSCO/Ramirez Distinguished Chair in Fluid Power 
        and Motion Control, George W. Woodruff School of 
        Mechanical Engineering, Georgia Institute of 
        Technology.
    The Subcommittee on Consumer Protection and Commerce held a 
legislative hearing on May 26, 2022, entitled, ``Legislative 
Hearing to Protect Consumers and Strengthen the Economy.'' The 
Subcommittee received testimony from the following witnesses:
           Katlin Kraska, Director of Federal 
        Legislation, Government Relations, American Society for 
        the Prevention of Cruelty to Animals;
           Julie Menin, Former Commissioner, New York 
        City Department of Consumer Affairs;
           Hadley Heath Manning, Vice President for 
        Policy, Independent Women's Forum; Partner, Wiley Rein 
        LLP;
           Michael O'Neal, Vice President--Corporate 
        Underwriting, First American Title Insurance Company;
           Trista Hamsmith, Founder and Reese's Mom, 
        Reese's Purpose;
           Eric D. Hagopian, CEO and President, Pilot 
        Precision Products; and
           Tori Barnes, Executive Vice President, 
        Public Affairs and Policy, U.S. Travel Association.

                      IV. COMMITTEE CONSIDERATION

    H.R. 4081, the ``Informing Consumers About Smart Devices 
Act'', was introduced on June 23, 2021, by Representatives 
Curtis (R-UT) and Moulton (D-MA) and was referred to the 
Committee on Energy and Commerce. Subsequently, on June 24, 
2021, the bill was referred to the Subcommittee on Consumer 
Protection and Commerce. A legislative hearing was held on May 
26, 2022.
    On June 23, 2022, the Subcommittee on Consumer Protection 
and Commerce met in open markup session, pursuant to notice, to 
consider H.R. 4081 and seven other bills. No amendments were 
offered during consideration of the bill. Upon conclusion of 
consideration of the bill, the Subcommittee on Consumer 
Protection and Commerce agreed to report the bill favorably to 
the full Committee, without amendment, by a roll call vote of 
21 yeas to zero nays.
    On July 20, 2022, the full Committee met in open markup 
session, pursuant to notice, to consider H.R. 4081 and five 
other bills. During consideration of the bill, no amendments 
were offered. Upon conclusion of consideration of the bill, the 
full Committee agreed to a motion on final passage offered by 
Representative Pallone, Chairman of the Committee, to order 
H.R. 4081 reported favorably to the House, without amendment, 
by a roll call vote of 53 yeas to zero nays.

                           V. COMMITTEE VOTES

    Clause 3(b) of rule XIII of the Rules of the House of 
Representatives requires the Committee to list each record vote 
on the motion to report legislation and amendments thereto. The 
Committee advises that there were two record votes taken on 
H.R. 4081, including a motion by Mr. Pallone ordering H.R. 4081 
favorably reported to the House, as amended. The motion on 
final passage of the bill was approved by a record vote of 53 
yeas to zero nays. The following are the record votes taken 
during Committee consideration, including the names of those 
members voting for and against:

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                         VI. OVERSIGHT FINDINGS

    Pursuant to clause 3(c)(1) of rule XIII and clause 2(b)(1) 
of rule X of the Rules of the House of Representatives, the 
oversight findings and recommendations of the Committee are 
reflected in the descriptive portion of the report.

 VII. NEW BUDGET AUTHORITY, ENTITLEMENT AUTHORITY, AND TAX EXPENDITURES

    Pursuant to 3(c)(2) of rule XIII of the Rules of the House 
of Representatives, the Committee adopts as its own the 
estimate of new budget authority, entitlement authority, or tax 
expenditures or revenues contained in the cost estimate 
prepared by the Director of the Congressional Budget Office 
pursuant to section 402 of the Congressional Budget Act of 
1974.
    The Committee has requested but not received from the 
Director of the Congressional Budget Office a statement as to 
whether this bill contains any new budget authority, spending 
authority, credit authority, or an increase or decrease in 
revenues or tax expenditures.

                    VIII. 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.

       IX. STATEMENT OF GENERAL PERFORMANCE GOALS AND OBJECTIVES

    Pursuant to clause 3(c)(4) of rule XIII, the general 
performance goal or objective of this legislation is to require 
manufacturers of certain internet-connected devices that are 
equipped with a camera or microphone to disclose to consumers 
that a camera or microphone is part of the device and to 
require the FTC to issue guidance and enforce compliance, 
including through seeking civil penalties for violations.

                   X. DUPLICATION OF FEDERAL PROGRAMS

    Pursuant to clause 3(c)(5) of rule XIII, no provision of 
H.R. 4081 is known to be duplicative of another Federal 
program, including any program that was included in a report to 
Congress pursuant to section 21 of Public Law 111-139 or the 
most recent Catalog of Federal Domestic Assistance.

                      XI. COMMITTEE COST ESTIMATE

    Pursuant to clause 3(d)(1) of rule XIII, 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.

    XII. EARMARKS, LIMITED TAX BENEFITS, AND LIMITED TARIFF BENEFITS

    Pursuant to clause 9(e), 9(f), and 9(g) of rule XXI, the 
Committee finds that H.R. 4081 contains no earmarks, limited 
tax benefits, or limited tariff benefits.

                   XIII. ADVISORY COMMITTEE STATEMENT

    No advisory committee within the meaning of section 5(b) of 
the Federal Advisory Committee Act was created by this 
legislation.

                XIV. 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.

           XV. SECTION-BY-SECTION ANALYSIS OF THE LEGISLATION

Section 1. Short title

    Section 1 designates that the short title may be cited as 
the ``Informing Consumers about Smart Devices Act.''

Sec. 2. Required disclosure of a camera or recording capability in 
        certain internet-connected devices

    Section 2 requires that each manufacturer of a covered 
device shall disclose whether a covered device they manufacture 
contains a camera or microphone as a component of the device.

Sec. 3. Enforcement by the Federal Trade Commission

    Subsection (a) establishes that violations of section 2 of 
the legislation shall be treated as a violation of a rule 
defining an unfair or deceptive act or practice under 15 U.S.C. 
57a(a)(1)(B).
    Subsection (b) establishes that the FTC shall have the same 
means to enforce the legislation and violators of the 
legislation will be subject to the same penalties and 
privileges as provided in the Federal Trade Commission Act.
    Subsection (c) requires the FTC to issue guidance within 
180 days of enactment to assist manufacturers with compliance 
and providing best practices for making the disclosures 
required by section 2 of the legislation.
    Subsection (d) allows manufacturers of covered devices to 
petition the FTC for tailored guidance on how to meet the 
requirements of section 2.
    Subsection (e) states that FTC guidance under this section 
does not confer any rights on nor bind any person or the FTC in 
any way. The FTC may only base enforcement actions and execute 
consent orders under the legislation on practices alleged to 
specifically violate section 2.

Sec. 4. Definition of covered device

    Section 4 defines a covered device to mean any consumer 
product defined by 15 U.S.C. 2052(a) that is capable of 
connecting to the internet, a component of which is a camera or 
microphone, and is not (i) a telephone (including mobile 
phone), laptop, tablet, or other device a consumer would 
reasonably expect to have a microphone or camera; (ii) any 
device specifically marketed as a camera, telecommunications 
device, or microphone; or (iii) any device or apparatus 
described in 47 U.S.C. 255, 617, 619, 303(aa), 303(bb) or 
regulations promulgated thereunder.

Sec. 5. Effective date

    Section 5 states the legislation applies to all devices 
manufactured 180 days after the FTC issues guidance under 
section 3(c) and shall not apply to devices manufactured or 
sold before that date.

       XVI. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

    There are no changes to existing law made by the bill H.R. 
4081.

                                  [all]