[Senate Report 118-114]
[From the U.S. Government Publishing Office]


                                                  Calendar No. 252

118th Congress}                                           { Report
                                 SENATE
 1st Session  }                                           { 118-114

======================================================================
                    INFORMING CONSUMERS ABOUT SMART 
                             DEVICES ACT

                               __________

                              R E P O R T

                                OF THE

           COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION

                                   on

                                 S. 90

[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]


               November 28, 2023.--Ordered to be printed
               
                               __________
                                
                    U.S. GOVERNMENT PUBLISHING OFFICE                    
                           WASHINGTON : 2023                    
          
-----------------------------------------------------------------------------------                  
       SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION
                    one hundred eighteenth congress
                             first session

                   MARIA CANTWELL, Washington, Chair
AMY KLOBUCHAR, Minnesota             TED CRUZ, Texas
BRIAN SCHATZ, Hawaii                 JOHN THUNE, South Dakota
EDWARD J. MARKEY, Massachusetts      ROGER WICKER, Mississippi
GARY C. PETERS, Michigan             DEB FISCHER, Nebraska
TAMMY BALDWIN, Wisconsin             JERRY MORAN, Kansas
TAMMY DUCKWORTH, Illinois            DAN SULLIVAN, Alaska
JON TESTER, Montana                  MARSHA BLACKBURN, Tennessee
KYRSTEN SINEMA, Arizona              TODD C. YOUNG, Indiana
JACKY ROSEN, Nevada                  TED BUDD, North Carolina
BEN RAY LUJAN, New Mexico            ERIC SCHMITT, Missouri
JOHN HICKENLOOPER, Colorado          SHELLEY MOORE CAPITO, West Virginia

RAPHAEL WARNOCK, Georgia             CYNTHIA LUMMIS, Wyoming
PETER WELCH, Vermont                 J.D. VANCE, Ohio

                       Lila Helms, Staff Director
                  Brad Grantz, Minority Staff Director
                  
                  
                                                  Calendar No. 252

118th Congress}                                           { Report
                                 SENATE
 1st Session  }                                           { 118-114

======================================================================
 
                    INFORMING CONSUMERS ABOUT SMART 
                             DEVICES ACT

                                _______
                                

               November 28, 2023.--Ordered to be printed

                                _______
                                

      Ms. Cantwell, from the Committee on Commerce, Science, and 
                Transportation, submitted the following

                              R E P O R T

                          [To accompany S. 90]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Commerce, Science, and Transportation, to 
which was referred the bill (S. 90) to require the disclosure 
of a camera or recording capability in certain internet-
connected devices, having considered the same, reports 
favorably thereon with an amendment and recommends that the 
bill, as amended, do pass.

                          PURPOSE OF THE BILL

    The purpose of S. 90 is to require the disclosure of a 
camera or recording capability in certain internet-connected 
devices.

                          BACKGROUND AND NEEDS

    Internet-connected smart devices are becoming increasingly 
common in U.S. households. Sixty-nine percent of U.S. 
households have at least one smart home product; 83 million 
households have more than one such product.\1\ The U.S. smart 
home market is expected to reach $78.7 billion by 2027, up from 
$32.7 billion in 2021.\2\ While internet-connected devices can 
provide enhanced capabilities for household products and 
increase consumer convenience, consumers may not expect their 
refrigerators, thermostats, and other products to contain a 
camera or microphone that could surveil, record, and transmit 
to others their private home activity. Consumers have a strong 
privacy interest in knowing whether a household product has 
audio or video recording and transmission capabilities before 
they purchase the product.
---------------------------------------------------------------------------
    \1\``United States Smart Home Market Analysis & Forecasts 2020-2026 
by Application, Products, Active Household Numbers, Penetration Rate, 
Company Analysis,'' PR Newswire, May 10, 2021 (https://
www.prnewswire.com/news-releases/united-states-smart-home-market-
analysis--forecasts-2020-2026-by-application-products-active-household-
numbers-penetration-rate-company
-analysis-301287760.html).
    \2\``United States Smart Home Market, Size, Forecast 2022-2027, 
Industry Trends, Growth, Share, Impact of COVID-19, Company Analysis,'' 
Research and Markets, January 2022 (https://www.researchandmarkets.com/
reports/5521676/united-states-smart-home-market-size-forecast?
utm_source=CI&utm_medium=PressRelease&utm_code=zscjjb&utm_campaign=15332
32+-+
United+States+Smart+Home+Market+Analysis+%26+Forecasts+2020-
2026+by+Application%2c+
Products%2c+Active+Household+Numbers%2c+Penetration+Rate%2c+Company+Anal
ysis&utm_
exec=chdo54prd#product--adaptive).
---------------------------------------------------------------------------

                          LEGISLATIVE HISTORY

    S. 90 was introduced on January 25, 2023, by Senator Cruz 
(for himself and Senator Cantwell) and was referred to the 
Committee on Commerce, Science, and Transportation of the 
Senate. Senator Warnock is an additional cosponsor. On March 
22, 2023, the Committee met in open Executive Session and, by 
voice vote, ordered S. 90 reported favorably with amendments.
    S. 90 is substantially similar to H.R. 538, which was 
introduced on January 26, 2023, by Representative John Curtis 
(for himself and Representative Seth Moulton), and was referred 
to the Committee on Energy and Commerce of the House of 
Representatives. That bill passed the House on February 28, 
2023, by a vote of 406-12.

                            ESTIMATED COSTS

    In accordance with paragraph 11(a) of rule XXVI of the 
Standing Rules of the Senate and section 403 of the 
Congressional Budget Act of 1974, the Committee provides the 
following cost estimate, prepared by the Congressional Budget 
Office:

[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]


    S. 90 would require manufacturers of Internet-connected 
devices to disclose to consumers whether such devices have 
microphones or cameras. The bill would direct the Federal Trade 
Commission (FTC) to establish guidance for manufacturers to 
follow when notifying consumers and to enforce any violations 
of the bill's requirements.
    Using information from the FTC and the cost of similar 
requirements, CBO expects that the FTC would need three 
employees to issue guidance in 2024 and four employees in each 
year from 2025 through 2028 to enforce the bill's requirements. 
CBO estimates that the average cost for salaries and benefits 
for an FTC employee would be $240,000 in 2024. After accounting 
for anticipated inflation, CBO estimates that implementing S. 
90 would cost $4 million over the 2023-2028 period; any 
spending would be subject to the availability of appropriated 
funds.
    The bill would authorize the FTC to collect civil monetary 
penalties from businesses found in violation of the act, along 
with pursuing other remedies. Civil monetary penalties are 
generally remitted to the Treasury and recorded as revenues. 
However, CBO estimates that the additional revenues collected 
over the next decade would be insignificant. The extent to 
which businesses would violate the new rules after they go into 
effect is uncertain.
    Furthermore, if a business does violate the new rules and 
the FTC chooses to proceed with an enforcement action, the 
extent to which the agency pursues civil penalties versus other 
remedies is also uncertain, as is the amount of time it would 
take to resolve a case.
    S. 90 would impose a private-sector mandate as defined in 
the Unfunded Mandates Reform Act (UMRA) by requiring 
manufacturers of Internet-connected devices to disclose to the 
consumer if a component of the device includes a microphone or 
camera. According to industry sources, most manufacturers 
already disclose such information on the device's exterior 
packaging or other forms of advertising. Therefore, CBO 
estimates that the cost for manufacturers to comply with the 
bill would not exceed the annual threshold established in UMRA 
($198 million in 2023, adjusted annually for inflation).
    S. 90 contains no intergovernmental mandates as defined in 
UMRA.
    The CBO staff contacts for this estimate are David Hughes 
(for federal costs) and Rachel Austin (for mandates). The 
estimate was reviewed by H. Samuel Papenfuss, Deputy Director 
of Budget Analysis.
                                         Phillip L. Swagel,
                             Director, Congressional Budget Office.

                      REGULATORY IMPACT STATEMENT

    In accordance with paragraph 11(b) of rule XXVI of the 
Standing Rules of the Senate, the Committee provides the 
following evaluation of the regulatory impact of the 
legislation, as reported:

Number of Persons Covered

    S. 90 would require manufacturers of certain consumer 
products that are capable of connecting to the internet to 
disclose to consumers whether such products contain a camera or 
microphone. As such, the number of persons covered would be 
approximately equivalent to the number of manufacturers of such 
products.

Economic Impact

    S. 90 would not have a significant economic impact. It may 
require some increased expenditures by manufacturers of covered 
products in order to add clear and conspicuous labeling to such 
products as required under the Act.

Privacy

    S. 90 would have a positive impact on individual privacy 
because it would provide transparency to consumers about 
whether devices capable of connecting to the internet have 
cameras or microphones.

Paperwork

    S. 90 would not create additional paperwork.

                   CONGRESSIONALLY DIRECTED SPENDING

    In compliance with paragraph 4(b) of rule XLIV of the 
Standing Rules of the Senate, the Committee provides that no 
provisions contained in the bill, as reported, meet the 
definition of congressionally directed spending items under the 
rule.

                      SECTION-BY-SECTION ANALYSIS

Section 1. Short title

    This section provides that the Act may be cited as the 
``Informing Consumers about Smart Devices Act''.

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

    This section requires manufacturers of covered devices to 
clearly and conspicuously disclose prior to purchase whether a 
covered device contains a camera or microphone.

Section 3. Enforcement by the Federal Trade Commission

    This section provides that a violation of the Act shall be 
treated as a violation of a rule defining an unfair or 
deceptive practice prescribed under section 18(a)(1)(B) of the 
Federal Trade Commission Act,\3\ and authorizes the Federal 
Trade Commission (FTC) to enforce the Act in the same manner, 
by the same means, and with the same jurisdiction, powers, and 
duties as applicable under the Federal Trade Commission Act.\4\
---------------------------------------------------------------------------
    \3\15 U.S.C. 57a(a)(1)(B).
    \4\15 U.S.C. 41 et seq.
---------------------------------------------------------------------------
    This section also directs the FTC, within 180 days of the 
Act's enactment, to issue guidance to help manufacturers comply 
with the Act's requirements, including guidance about best 
practices for making required disclosures as clear and 
conspicuous and age appropriate as practicable, and best 
practices for using a pictorial visual representation of the 
information to be disclosed. Manufacturers may petition the FTC 
for tailored guidance on how to meet the disclosure 
requirements consistent with existing rules of practice or any 
successor rules. The FTC's guidance shall not confer rights on 
any person or entity, and shall not operate to bind the FTC or 
any person to the approach recommended in the guidance. The FTC 
shall not base an enforcement decision on practices that are 
alleged to be inconsistent with such guidance unless the 
practices allegedly violate section 2.

Section 4. Definition of covered device

    This section defines the term ``covered device'' to: (1) 
mean a consumer product, as defined by section 3(a) of the 
Consumer Product Safety Act\5\ that is capable of connecting to 
the internet, a component of which is a camera or microphone; 
and (2) not include: (A) a telephone (including a mobile 
phone), a laptop, tablet, or any device that a consumer would 
reasonably expect to have a microphone or camera; (B) any 
device that is specifically marketed as a camera, 
telecommunications device, or microphone; or (C) any device or 
apparatus described in sections 255, 716, and 718, and 
subsections (aa) and (bb) of section 303 of the Communications 
Act of 1934,\6\ and any regulations promulgated thereunder.
---------------------------------------------------------------------------
    \5\15 U.S.C. 2052(a).
    \6\47 U.S.C. 255; 617; 619; and 303(aa) and (bb).
---------------------------------------------------------------------------

Section 5. Effective date

    This section provides that the Act would apply to all 
covered devices manufactured after the date that is 180 days 
after the date the FTC issues the guidance required by section 
3. The Act would not apply to covered devices manufactured, 
sold, or otherwise introduced into interstate commerce before 
that date.

                        CHANGES IN EXISTING LAW

    In compliance with paragraph 12 of rule XXVI of the 
Standing Rules of the Senate, the Committee states that the 
bill as reported would make no change to existing law.

                                  [all]