[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
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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.
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\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).
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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\
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\3\15 U.S.C. 57a(a)(1)(B).
\4\15 U.S.C. 41 et seq.
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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.
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\5\15 U.S.C. 2052(a).
\6\47 U.S.C. 255; 617; 619; and 303(aa) and (bb).
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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]