During its final week in session, the 109th Congress passed a measure designed to allow the Federal Trade Commission ("FTC") to be more effective in protecting consumers from spam, spyware and Internet fraud on a global scale. The Undertaking Spam, Spyware, And Fraud Enforcement With Enforcers Beyond Borders Act of 2006 (the "US SAFE WEB Act") empowers the FTC to share confidential information and investigational assistance with counterpart agencies in foreign countries. Just before the end of 2006, the President signed the measure into law. The key provisions of the law are summarized below:
Expansion of Information Sharing and Investigation. The law will allow the FTC to share confidential information regarding consumer protection matters with foreign law enforcers, subject to the receipt of adequate confidentiality assurances. This new FTC authority is similar to the authority presently held by other U.S. agencies and authorities, and, arguably, is needed to allow the FTC to share information with foreign agencies to help them halt fraud, deception, spam, spyware and other consumer protection law violations targeting consumers in the United States.
Expanding Investigative Cooperation. The law allows the FTC to conduct and participate in investigations and discovery designed to assist foreign law enforcers in appropriate cases.
Obtaining More Information from Foreign Sources. The law also allows the FTC to protect information provided by foreign enforcement agencies from public disclosure, where confidentiality protection was imposed as a condition of disclosure of such information by the applicable foreign agency.
Protecting the Confidentiality of FTC Investigations. The law contains provisions that safeguard FTC investigations in a defined range of cases. More specifically, it (i) generally protects recipients of an FTC Civil Investigation Demand (each, a "CID") from possible liability for keeping those CIDs confidential; (ii) authorizes the FTC to seek a court order in appropriate cases to preclude notice by the CID recipient to the investigative target for a limited time; and (iii) tailors the mechanisms available to the FTC to seek delay of notification currently required by the Right to Financial Privacy Act ("RFPA") and/or the Electronic Communications Privacy Act ("ECPA"), to better fit FTC cases.
Protecting Certain Entities Reporting Suspected Violations of Law. One provision of the law 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. The law 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. The law expressly confirms (i) the FTC’s authority to redress harm in the United States caused by foreign wrongdoers and harm abroad caused by U.S. wrongdoers and (ii) 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. The measure permits the FTC to cooperate with the DOJ in connection with foreign litigation of FTC matters.
Clarification of FTC Authority to Make Criminal Referrals. The law expressly authorizes the FTC to make criminal referrals for prosecution when violations of FTC law also violate U.S. criminal laws.
Providing for Foreign Staff Exchange Programs. The law authorizes foreign staff exchange arrangements between the FTC and associated foreign government authorities. It also permits the FTC to accept reimbursement for its costs associated with these arrangements.
Authorizing Expenditure on Joint Projects. The law 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.
Gift Acceptance. Interestingly, the law authorizes the FTC to accept reimbursement for providing assistance to law enforcement agencies in the United States or abroad, and to accept gifts and voluntary services in aid of the agency’s mission and consistent with ethical constraints.
Addressing Expressed Concerns
A previous bill, the International Consumer Protection Act of 2003 (S.1234), was also designed to expand the powers of the FTC so it could share information about crossborder fraud, but the bill was criticized by privacy advocates. Critics contended that provisions in the bill reduced privacy safeguards, limited government oversight and diminished legal safeguards.
The US SAFE WEB Act appears to have addressed some of these concerns. In the area of governmental oversight, the law requires a detailed report be submitted to Congress within three years of its passage. Additionally, unlike the previous S.1234 bill, the US SAFE WEB Act exempts information or material voluntarily provided relevant to possible unfair or deceptive acts or practices from the disclosure requirements of the Freedom of Information Act.
Additional Legislation with Anti-Fraud Provisions
The same day that President Bush signed the US SAFE WEB Act into law, he also signed the Veterans Benefits, Health Care and Information Technology Act of 2006. This law is a comprehensive measure, which among other key provisions, directs the Veterans Affairs Department to notify veterans promptly in the case of a data breach and to provide fraud alerts, data breach analysis, reports to Congress, credit monitoring and identity theft insurance.
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