Obama Signs Safe Web Act Extension

On Dec. 4, 2012, President Obama signed into law H.R. 6131, a bill to reauthorize the U.S. Safe Web Act of 2006. Introduced by House Commerce, Manufacturing, and Trade Subcommittee Chairman Mary Bono Mack (R-CA) and Ranking Member G.K. Butterfield (D-NC), H.R. 6131 extends the Safe Web Act, a key consumer protection law, until 2020. The Safe Web Act authorizes the Federal Trade Commission's (FTC) authority to clamp down on Internet fraud and online scammers based abroad by expanding the FTC's powers so it can share information about cross-border online fraud with foreign law enforcement authorities.

The Act

The Safe Web Act was originally passed by Congress in 2006 and was set to expire on Jan. 3. The Act defines its purpose as: “To enhance Federal Trade Commission enforcement against illegal spam, spyware, and cross-border fraud and deception, and for other purposes.” (The full text of the Act can be found at http://1.usa.gov/T3PC7M.)

Bono Mack, who lost her reelection race to Democrat Raul Ruiz in November after serving for 14 years in the House, said the bill was needed to ensure consumers felt protected from online scammers, which would keep the e-commerce market thriving. In October, she said that the Act's “reauthorization [is] critically important for consumer protection.” She continued: “By any measure, the Safe Web Act has been extremely effective, allowing the FTC to better protect U.S. consumers from fraud, deception, spam, and spyware in cross-border cases involving threats originating domestically and abroad. Most importantly, the Safe Web Act enhances the FTC's investigative and enforcement functions by authorizing information sharing with foreign enforcement agencies, something the Commission may not do without clear authorization.”

To appease critics who are wary of the U.S. sharing potentially sensitive information with foreign countries who might have less stringent data protection policies, Bono pointed out that “[t]he Act only allows information sharing with countries whose law on data-sharing is substantially similar to that governing the FTC. And the FTC may share data only under conditions where the information will be treated confidentially, and the country will reciprocate information sharing with the FTC.”

The FTC urged Obama to sign an extension to the Act last summer, telling the House Energy & Commerce Subcommittee that it has “enhanced the FTC's ability to protect American consumers from cross-border fraud.” (Prepared Statement of the Federal Trade Commission on Reauthorizing the U.S. Safe Web Act of 2006, http://1.usa.gov/Tr67JM.)

In its testimony, the FTC said it “has conducted more than 100 investigations with international components, such as foreign targets, evidence, or assets, and has filed more than 50 cases involving cross-border components since the Act's passage. ' In cases relying on the SAFE WEB Act, the FTC has to date collected more than $10 million in restitution for injured consumers ' and has stopped frauds costing American consumers hundreds of millions of dollars.”

“To continue to protect American consumers in a global economy, the FTC believes it is critical that Congress reauthorize the law enforcement tools provided by the Safe Web Act,” the testimony states.

The FTC's Powers under the Act

The Safe Web Act, also known as the “Undertaking Spam, Spyware, and Fraud Enforcement with Enforcers Beyond Borders Act of 2006,” provides the FTC with cross-border enforcement tools in four key areas: information sharing, investigative assistance, cross-border jurisdictional authority and enforcement relationships, the testimony states. Congress included a seven-year sunset provision when it was enacted.

The FTC says that the Act gives the Commission the following powers:

• Broadening Reciprocal Information Sharing. (Safe Web Act ”4(a), 6(a)). Allows the FTC to share confidential information in its files in consumer protection matters with foreign law enforcers, subject to appropriate confidentiality assurances.
• Expanding Investigative Cooperation. (Safe Web Act ' 4(b) (adding FTC Act '6(j))). Allows the FTC to conduct investigations and discovery to help foreign law enforcers in appropriate cases.
• Obtaining More Information from Foreign Sources. (Safe Web Act '6(b)). Protects information provided by foreign enforcers from public disclosure if confidentiality is a condition of providing it.
• Protecting the Confidentiality of FTC Investigations. (Safe Web Act '7). Safeguards FTC investigations in a defined range of cases.
• Protecting Certain Entities Reporting Suspected Violations of Law. (Safe Web Act '8). Protects a limited category of appropriate entities from liability for voluntary disclosures to the FTC about suspected fraud or deception, or about recovery of assets for consumer redress.
• Allowing Information Sharing with Federal Financial and Market Regulators. (Safe Web Act '10). Adds the FTC to RFPA's list of financial and market regulators allowed to readily share appropriate information.
• Confirming the FTC's Remedial Authority in Cross-Border Cases. (Safe Web Act '3). Expressly confirms: 1) the FTC's authority to redress harm in the United States caused by foreign wrongdoers and harm abroad caused by U.S. wrongdoers; and 2) the availability in cross-border cases of all remedies available to the FTC, including restitution.
• Enhancing Cooperation between the FTC and DOJ in Foreign Litigation. (Safe Web Act '5). Permits the FTC to cooperate with DOJ in using additional staff and financial resources for foreign litigation of FTC matters.
• Clarifying FTC Authority to Make Criminal Referrals. (Safe Web Act '4(b) (adding FTC Act '6(k))). Expressly authorizes the FTC to make criminal referrals for prosecution when violations of FTC law also violate U.S. criminal laws.
• Authorizing Expenditure of Funds on Joint Projects. (Safe Web Act '4(b) (adding FTC Act ”6(l)), 4(c)). Authorizes the FTC to expend appropriated funds, not to exceed $100,000 annually, toward operating expenses and other costs of cooperative cross-border law enforcement projects and bilateral and multilateral meetings.
• Leveraging FTC's Resources through Reimbursement, Gift Acceptance, and Voluntary and Uncompensated Services. (Safe Web Act '11). Authorizes the FTC to accept reimbursement for providing assistance to law enforcement agencies in the U.S. or abroad.
• Requiring Report to Congress. (Safe Web Act '13). Requires the FTC to report to Congress within three years after the enactment of this Act.

“Summary of the US SAFE WEB Act,” FTC.gov, http://1.usa.gov/VPNgqj.

According to the FTC's testimony, under the Safe Web Act, the Commission also has provided evidence in response to 63 information-sharing requests to 17 foreign law enforcement agencies in nine countries in response to requests for information, as of mid-2012. It has issued 52 civil investigative demands ' similar to subpoenas ' on behalf of nine agencies in five countries, relying on the Act.

Statistics from Consumer Sentinel, the consumer complaint database maintained by the FTC, suggest the seriousness of the cross-border fraud problem, the testimony states. For example:

• Between 2006 and 2011, almost half a million U.S. consumers (471,014) complained about tran-sactions involving over $1.4 billion paid to businesses in other countries.
• The number of U.S. consumer complaints against foreign businesses exceeded 100,000 in 2011 alone.
• Cross-border complaints have accounted for more than 10% of all Consumer Sentinel fraud complaints every year since 2000, with a high of 22% in 2006 and 13% for each of the last three years. These numbers likely understate the scope of the problem, as this complaint count includes only those instances where consumers report a foreign address.
• U.S. consumers complain about foreign businesses from an increasingly broad range of countries. In 2002, over 55% of such complaints were about Canadian businesses; in 2011 over 85% were about businesses in other foreign countries.

A 'Win-Win'

After the President authorized the Act's extension, Bono said in a statement: “[I]n just over 25 years, the Internet has not only changed our lives, it has become 'part' of our lives. Today, with nearly 1.5 billion credit cards in use in the United States, nearly everyone in America has a stake in making certain that the Federal Trade Commission has the powers it needs to fight online fraud.”

Butterfield echoed Bono Mack's sentiments: “I am a strong supporter of granting the FTC the powers it needs to effectively protect consumers against fraud, whether originating here or abroad '.” The reauthorization of the Safe Web Act gives the FTC expanded authority to combat cross-border fraud, spyware and spam attacks. It also helps to protect against phony Internet rip-offs and telemarketing scams.

“The enhanced authority ' has empowered the FTC to better protect e-commerce and consumers from fraud through cross-border information sharing and coalition building with our foreign partners,” Butterfield added.

Bono concluded: “Reauthorizing this law is a win-win. It's good for American consumers. It's good for the future of e-commerce.”

On Dec. 4, 2012, President Obama signed into law H.R. 6131, a bill to reauthorize the U.S. Safe Web Act of 2006. Introduced by House Commerce, Manufacturing, and Trade Subcommittee Chairman Mary Bono Mack (R-CA) and Ranking Member G.K. Butterfield (D-NC), H.R. 6131 extends the Safe Web Act, a key consumer protection law, until 2020. The Safe Web Act authorizes the Federal Trade Commission's (FTC) authority to clamp down on Internet fraud and online scammers based abroad by expanding the FTC's powers so it can share information about cross-border online fraud with foreign law enforcement authorities.

The Act

The Safe Web Act was originally passed by Congress in 2006 and was set to expire on Jan. 3. The Act defines its purpose as: “To enhance Federal Trade Commission enforcement against illegal spam, spyware, and cross-border fraud and deception, and for other purposes.” (The full text of the Act can be found at http://1.usa.gov/T3PC7M.)

Bono Mack, who lost her reelection race to Democrat Raul Ruiz in November after serving for 14 years in the House, said the bill was needed to ensure consumers felt protected from online scammers, which would keep the e-commerce market thriving. In October, she said that the Act's “reauthorization [is] critically important for consumer protection.” She continued: “By any measure, the Safe Web Act has been extremely effective, allowing the FTC to better protect U.S. consumers from fraud, deception, spam, and spyware in cross-border cases involving threats originating domestically and abroad. Most importantly, the Safe Web Act enhances the FTC's investigative and enforcement functions by authorizing information sharing with foreign enforcement agencies, something the Commission may not do without clear authorization.”

To appease critics who are wary of the U.S. sharing potentially sensitive information with foreign countries who might have less stringent data protection policies, Bono pointed out that “[t]he Act only allows information sharing with countries whose law on data-sharing is substantially similar to that governing the FTC. And the FTC may share data only under conditions where the information will be treated confidentially, and the country will reciprocate information sharing with the FTC.”

The FTC urged Obama to sign an extension to the Act last summer, telling the House Energy & Commerce Subcommittee that it has “enhanced the FTC's ability to protect American consumers from cross-border fraud.” (Prepared Statement of the Federal Trade Commission on Reauthorizing the U.S. Safe Web Act of 2006, http://1.usa.gov/Tr67JM.)

In its testimony, the FTC said it “has conducted more than 100 investigations with international components, such as foreign targets, evidence, or assets, and has filed more than 50 cases involving cross-border components since the Act's passage. ' In cases relying on the SAFE WEB Act, the FTC has to date collected more than $10 million in restitution for injured consumers ' and has stopped frauds costing American consumers hundreds of millions of dollars.”

“To continue to protect American consumers in a global economy, the FTC believes it is critical that Congress reauthorize the law enforcement tools provided by the Safe Web Act,” the testimony states.

The FTC's Powers under the Act

The Safe Web Act, also known as the “Undertaking Spam, Spyware, and Fraud Enforcement with Enforcers Beyond Borders Act of 2006,” provides the FTC with cross-border enforcement tools in four key areas: information sharing, investigative assistance, cross-border jurisdictional authority and enforcement relationships, the testimony states. Congress included a seven-year sunset provision when it was enacted.

The FTC says that the Act gives the Commission the following powers:

• Broadening Reciprocal Information Sharing. (Safe Web Act ”4(a), 6(a)). Allows the FTC to share confidential information in its files in consumer protection matters with foreign law enforcers, subject to appropriate confidentiality assurances.
• Expanding Investigative Cooperation. (Safe Web Act ' 4(b) (adding FTC Act '6(j))). Allows the FTC to conduct investigations and discovery to help foreign law enforcers in appropriate cases.
• Obtaining More Information from Foreign Sources. (Safe Web Act '6(b)). Protects information provided by foreign enforcers from public disclosure if confidentiality is a condition of providing it.
• Protecting the Confidentiality of FTC Investigations. (Safe Web Act '7). Safeguards FTC investigations in a defined range of cases.
• Protecting Certain Entities Reporting Suspected Violations of Law. (Safe Web Act '8). Protects a limited category of appropriate entities from liability for voluntary disclosures to the FTC about suspected fraud or deception, or about recovery of assets for consumer redress.
• Allowing Information Sharing with Federal Financial and Market Regulators. (Safe Web Act '10). Adds the FTC to RFPA's list of financial and market regulators allowed to readily share appropriate information.
• Confirming the FTC's Remedial Authority in Cross-Border Cases. (Safe Web Act '3). Expressly confirms: 1) the FTC's authority to redress harm in the United States caused by foreign wrongdoers and harm abroad caused by U.S. wrongdoers; and 2) the availability in cross-border cases of all remedies available to the FTC, including restitution.
• Enhancing Cooperation between the FTC and DOJ in Foreign Litigation. (Safe Web Act '5). Permits the FTC to cooperate with DOJ in using additional staff and financial resources for foreign litigation of FTC matters.
• Clarifying FTC Authority to Make Criminal Referrals. (Safe Web Act '4(b) (adding FTC Act '6(k))). Expressly authorizes the FTC to make criminal referrals for prosecution when violations of FTC law also violate U.S. criminal laws.
• Authorizing Expenditure of Funds on Joint Projects. (Safe Web Act '4(b) (adding FTC Act ”6(l)), 4(c)). Authorizes the FTC to expend appropriated funds, not to exceed $100,000 annually, toward operating expenses and other costs of cooperative cross-border law enforcement projects and bilateral and multilateral meetings.
• Leveraging FTC's Resources through Reimbursement, Gift Acceptance, and Voluntary and Uncompensated Services. (Safe Web Act '11). Authorizes the FTC to accept reimbursement for providing assistance to law enforcement agencies in the U.S. or abroad.
• Requiring Report to Congress. (Safe Web Act '13). Requires the FTC to report to Congress within three years after the enactment of this Act.

“Summary of the US SAFE WEB Act,” FTC.gov, http://1.usa.gov/VPNgqj.

According to the FTC's testimony, under the Safe Web Act, the Commission also has provided evidence in response to 63 information-sharing requests to 17 foreign law enforcement agencies in nine countries in response to requests for information, as of mid-2012. It has issued 52 civil investigative demands ' similar to subpoenas ' on behalf of nine agencies in five countries, relying on the Act.

Statistics from Consumer Sentinel, the consumer complaint database maintained by the FTC, suggest the seriousness of the cross-border fraud problem, the testimony states. For example:

• Between 2006 and 2011, almost half a million U.S. consumers (471,014) complained about tran-sactions involving over $1.4 billion paid to businesses in other countries.
• The number of U.S. consumer complaints against foreign businesses exceeded 100,000 in 2011 alone.
• Cross-border complaints have accounted for more than 10% of all Consumer Sentinel fraud complaints every year since 2000, with a high of 22% in 2006 and 13% for each of the last three years. These numbers likely understate the scope of the problem, as this complaint count includes only those instances where consumers report a foreign address.
• U.S. consumers complain about foreign businesses from an increasingly broad range of countries. In 2002, over 55% of such complaints were about Canadian businesses; in 2011 over 85% were about businesses in other foreign countries.

A 'Win-Win'

After the President authorized the Act's extension, Bono said in a statement: “[I]n just over 25 years, the Internet has not only changed our lives, it has become 'part' of our lives. Today, with nearly 1.5 billion credit cards in use in the United States, nearly everyone in America has a stake in making certain that the Federal Trade Commission has the powers it needs to fight online fraud.”

Butterfield echoed Bono Mack's sentiments: “I am a strong supporter of granting the FTC the powers it needs to effectively protect consumers against fraud, whether originating here or abroad '.” The reauthorization of the Safe Web Act gives the FTC expanded authority to combat cross-border fraud, spyware and spam attacks. It also helps to protect against phony Internet rip-offs and telemarketing scams.

“The enhanced authority ' has empowered the FTC to better protect e-commerce and consumers from fraud through cross-border information sharing and coalition building with our foreign partners,” Butterfield added.

Bono concluded: “Reauthorizing this law is a win-win. It's good for American consumers. It's good for the future of e-commerce.”