[House Report 108-635]
[From the U.S. Government Publishing Office]
108th Congress Rept. 108-635
HOUSE OF REPRESENTATIVES
2d Session Part 1
======================================================================
INTERNATIONAL CONSUMER PROTECTION ACT
_______
July 22, 2004.--Ordered to be printed
_______
Mr. Barton of Texas, from the Committee on Energy and Commerce,
submitted the following
R E P O R T
[To accompany H.R. 3143]
[Including cost estimate of the Congressional Budget Office]
The Committee on Energy and Commerce, to whom was referred
the bill (H.R. 3143) to enhance Federal Trade Commission
enforcement against cross-border fraud and deception, having
considered the same, report favorably thereon without amendment
and recommend that the bill do pass.
CONTENTS
Page
Purpose and Summary.............................................. 1
Background and Need for Legislation............................. 1
Hearings........................................................ 2
Committee Consideration......................................... 2
Committee Votes................................................. 3
Committee Oversight Findings.................................... 3
Statement of General Performance Goals and Objectives........... 3
New Budget Authority, Entitlement Authority, and Tax
Expenditures................................................... 3
Committee Cost Estimate......................................... 3
Congressional Budget Office Estimate............................ 3
Federal Mandates Statement...................................... 5
Advisory Committee Statement.................................... 5
Constitutional Authority Statement.............................. 5
Applicability to Legislative Branch............................. 5
Section-by-Section Analysis of the Legislation.................. 6
Changes in Existing Law Made by the Bill, as Reported........... 11
Purpose and Summary
H.R. 3143 empowers the Federal Trade Commission to combat
transnational fraudulent and deceptive commercial practices.
Background and Need for Legislation
Cross-border fraud is a growing international problem that
affects American consumers and businesses. The Internet and
improvements in telecommunications technologies have brought
significant benefits to consumers. At the same time, they have
also provided unprecedented opportunities for those engaged in
fraud and deception to establish operations in one country and
victimize a large number of consumers in other countries.
An increasing number of consumer complaints collected in
the Consumer Sentinel database maintained by the Federal Trade
Commission (``FTC''), and an increasing number of cases brought
by the Commission, involve foreign consumers, foreign
businesses or individuals, or assets or evidence located
outside the United States. In 2002, 14% of the complaints in
the Consumer Sentinel database (excluding identity theft
complaints) were cross-border complaints, up from 11% in 2000.
The 2002 complaints include over 24,000 complaints by U.S.
consumers against foreign businesses. Increasingly, the FTC's
fraud-related cases have some cross-border component. The
Commission has had foreign targets in over 60 cases, pursued
assets offshore in more than ten foreign countries, and
provided redress to thousands of foreign as well as U.S.
consumers.
The Commission has legal authority to remedy violations of
law involving domestic and foreign wrongdoers, pursuant to the
Federal Trade Commission Act. Yet, the Commission's ability to
obtain effective relief using this authority faces practical
impediments when wrongdoers, victims, other witnesses,
documents, money, and third parties involved in the transaction
are widely dispersed in many different countries and
jurisdictions. Such circumstances make it difficult for the
Commission to gather all the information necessary to detect
injurious practices, recover offshore assets for consumer
redress, and reach conduct occurring outside the United States
that affects U.S. consumers. Improving the ability of the
Commission and its foreign counterparts to share information
about cross-border fraud and deception, to conduct joint and
parallel investigations, and assist each other, is critical to
achieve more timely and effective enforcement in cross-border
cases.
Hearings
The Subcommittee on Commerce, Trade, and Consumer
Protection held a hearing on September 17, 2003. The
Subcommittee received testimony from: The Honorable Timothy
Muris, Chairman, the Federal Trade Commission; Mark MacCarthy,
Senior Vice President, Public Policy, Visa USA; Marc Rotenberg,
Executive Director, Electronic Privacy Information Center; and
Ari Schwartz, Associate Director, Center for Democracy and
Technology.
Committee Consideration
On September 24, 2003, the Subcommittee on Commerce, Trade,
and Consumer Protection met in open markup session and approved
H.R. 3143 for Full Committee consideration, by a voice vote. On
October 1, 2003, the Full Committee on Energy and Commerce met
in open markup session and ordered H.R. 3143 favorably reported
to the House by a voice vote, a quorum being present.
Subsequent to Committee consideration of H.R. 3143,
negotiations among agencies including the Federal Trade
Commission, the Department of Justice, and the Office of the
Comptroller of the Currency yielded significant change sought
the information sharing provisions of the bill. Representatives
Stearns and Schakowsky will introduce a bill reflecting these
agreed to changes.
Committee Votes
Clause 3(b) of rule XIII of the Rules of the House of
Representatives requires the Committee to list the record votes
on the motion to report legislation and amendments thereto.
There were no record votes taken in connection with ordering
H.R. 3143 reported. A motion by Mr. Tauzin to order H.R. 3143
reported to the House, without amendment, was agreed to by a
voice vote.
Committee Oversight Findings
Pursuant to clause 3(c)(1) of rule XIII of the Rules of the
House of Representatives, the Committee held a legislative
hearing and made findings that are reflected in this report.
Statement of General Performance Goals and Objectives
The goal of H.R. 3143 is to protect consumers from
fraudulent and deceptive commercial practices perpetrated by
persons in foreign jurisdictions and/or where the evidence of
such fraud or illicit gains of such fraud is found overseas.
New Budget Authority, Entitlement Authority, and Tax Expenditures
In compliance with clause 3(c)(2) of rule XIII of the Rules
of the House of Representatives, the Committee finds that H.R.
3143, the International Consumer Protection Act of 2003, would
result in no new or increased budget authority, entitlement
authority, or tax expenditures or revenues.
Committee Cost Estimate
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.
Congressional Budget Office Estimate
Pursuant to clause 3(c)(3) of rule XIII of the Rules of the
House of Representatives, the following is the cost estimate
provided by the Congressional Budget Office pursuant to section
402 of the Congressional Budget Act of 1974:
U.S. Congress,
Congressional Budget Office,
Washington, DC, October 8, 2003.
Hon. W.J. ``Billy'' Tauzin,
Chairman, Committee on Energy and Commerce,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 3143, the
International Consumer Protection Act of 2003.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contacts are Melissa E.
Zimmerman (for federal costs), Sarah Puro (for the impact on
state and local governments), and Selena Caldera (for the
private-sector impact).
Sincerely,
Elizabeth M. Robinson
(For Douglas Holtz-Eakin, Director).
Enclosure.
H.R. 3143--International Consumer Protection Act of 2003
H.R. 3143 would expand the authority of the Federal Trade
Commission (FTC) to work with foreign law enforcement agencies
to enforce laws prohibiting fraudulent and deceptive commercial
practices. The bill would allow temporary staff exchanges
between foreign government agencies and the FTC and would
authorize the agency to accept payment in-kind or reimbursement
for costs associated with such exchanges. It also would
authorize the appropriation of up to $100,000 a year for the
FTC to support activities of certain international law
enforcement groups.
Assuming appropriation of the amounts specified in H.R.
3143, CBO estimates that implementing the bill would cost less
than $500,000 over the 2004-2008 period. Enacting the bill
would not affect direct spending or revenues.
H.R. 3143 would preempt state and local laws that require
notice to third parties when certain information relating to
them is disclosed to the FTC. Such preemptions are mandates as
defined in the Unfunded Mandates Reform Act (UMRA), but CBO
estimates that the costs of the mandates would not exceed the
threshold established in UMRA ($59 million in 2003, adjusted
for inflation).
H.R. 3143 would authorize the FTC to request that a judge
order the recipient of a summons, subpoena, or other compulsory
process to delay giving notice to anyone that they have been
required to appear as a witness before, or to produce documents
in, an FTC proceeding. The order could be issued,
notwithstanding any state or local laws or regulations, if
there is reason to believe that notification would cause
certain identified adverse results. Further, the recipient
would not be liable under any state or local laws or
regulations for disclosing information or for failure to
provide notice. The title also would protect certain entities
that voluntarily provide specified material to the FTC from
liability under any state or local law or regulation that
precludes disclosure of information or requires notification to
the interested third party.
To the extent that state and local governments have laws
that contradict these provisions in the bill, the legislation
would preempt those laws and thereby impose mandates under
UMRA. CBO estimates that the cost of these mandates would be
minimal and would not exceed the threshold established in UMRA
($59 million in 2003, adjusted for inflation).
H.R. 3143 would exempt from liability those entities
providing certain information on third parties to the FTC. This
exemption would limit the ability of a third party to sue and,
thus, impose a private-sector mandate under UMRA. CBO estimates
that the cost to the private sector would be minimal and would
fall below the annual threshold for private-sector mandates
established in UMRA ($117 million in 2003, adjusted annually
for inflation).
Section 21B of the Federal Trade Commission Act, as amended
by H.R. 3143, would protect from liability entities voluntarily
providing information to the FTC about possible unfair or
deceptive acts or practices of third parties. By exempting
these entities from liability, H.R. 3143 would limit the
ability of third parties to sue for disclosure or failure to
provide notice of disclosure; such a limit constitutes a
private-sector mandate under UMRA. The direct cost of the
mandate would be the amount awarded in settlements and
judgments (net of costs) to third parties under current law
that would be precluded under H.R. 3143. Due to the exposure to
liability under current law, entities do not voluntarily
provide information on third parties to the FTC. CBO estimates
that the costs to the private sector would be minimal, since
few, if any, third-party lawsuits are filed.
On July 9, 2003, CBO transmitted a cost estimate for S.
1234, the Federal Trade Commission Reauthorization Act of 2003
as ordered reported by the Senate Committee on Commerce,
Science, and Transportation on June 19, 2003. H.R. 3143
contains similar provisions to those in title II of S. 1234. In
addition, S. 1234 would authorize funding for all operations of
the FTC, but H.R. 3143 would authorize funding only for support
to certain international law enforcement groups. Both bills
also would preempt state and local law in the same way and
would impose the same private-sector mandate.
The CBO staff contacts for this estimate are Melissa E.
Zimmerman (for federal costs), Sara Puro (for the impact on
state and local governments), and Selena Caldera (for the
private-sector impact). This estimate was approved by Peter H.
Fontaine, Deputy Assistant Director for Budget Analysis.
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.
Advisory Committee Statement
No advisory committees within the meaning of section 5(b)
of the Federal Advisory Committee Act were created by this
legislation.
Constitutional Authority Statement
Pursuant to clause 3(d)(1) of rule XIII of the Rules of the
House of Representatives, the Committee finds that the
Constitutional authority for this legislation is provided in
Article I, section 8, clause 3, which grants Congress the power
to regulate commerce with foreign nations, among the several
States, and with the Indian tribes.
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.
Section-by-Section Analysis of the Legislation
SECTION 1. SHORT TITLE
Section 1 establishes the short title of the Act as the
``International Consumer Protection Act of 2003.''
SECTION 2. FOREIGN LAW ENFORCEMENT AGENCY DEFINED
Section 2 amends section 4 of the Federal Trade Commission
Act by adding a definition for ``foreign law enforcement
agency.'' It is defined as: (1) any agency or judicial
authority of a foreign government, including a foreign state, a
political subdivision of a foreign state, or a multinational
organization constituted by and comprised of foreign states,
that is vested with law enforcement or investigative authority
in civil, criminal, or administrative matters; or, (2) any
multinational multi-agency organization to the extent that it
is acting on behalf of an entity described in subparagraph (A).
SECTION 3. AVAILABILITY OF REMEDIES
Section 3 amends section 5(a) of the Federal Trade
Commission Act explicitly affirming that ``unfair and deceptive
acts or practices'' under the FTC Act include acts or practices
involving foreign commerce that: (1) cause or are likely to
cause reasonably foreseeable injury within the United States;
or (2) involve material conduct occurring within the United
States. In particular, this section clarifies that the FTC has
authority to obtain all remedies in cases alleging such unfair
acts or practices involving foreign commerce, including
consumer redress.
SECTION 4. POWERS OF THE COMMISSION
Section 4(a) amends section 6(f) of the Federal Trade
Commission Act authorizing the sharing of material and
information by the FTC with a foreign law enforcement agency
under the same requirements and circumstances permitted under
section 6(a) of the Act.
Section 4(b) further amends section 6 of the Federal Trade
Commission Act by inserting a new subsection (j) permitting the
FTC, upon a written request from a foreign law enforcement
agency, to provide assistance, and to provide such assistance,
if the requesting agency states that it is investigating, or
engaging in enforcement proceedings against, possible
violations of laws prohibiting fraudulent or deceptive
commercial practices or other practices, substantially similar
to practices prohibited by any provision of the laws
administered by the Commission, other than Federal antitrust
laws (as defined in section 12(5) of the International
Antitrust Enforcement Assistance Act of 1994 (15 U.S.C.
6211(5))), without requiring that the conduct identified in the
request violate the laws of the United States. However, the FTC
shall not provide such assistance to the requesting agency
where the activity the person is engaged in is protected under
the Constitution of the United States.
Under section (j)(2), the Commission may, in its
discretion, conduct such investigations as the Commission deems
necessary to collect information and evidence pertinent to the
request for assistance, using all investigative powers
authorized by the Act. The Commission may also seek and accept
appointment by a United States district court of Commission
attorneys to provide assistance to foreign and international
tribunals, and to litigants before such tribunals on behalf of
a foreign law enforcement agency, when a foreign agency is
investigating or enforcing civil laws or when the Attorney
General refers a request to the Commission from an agency
investigating or pursuing the enforcement of criminal laws. In
deciding whether to provide such assistance, the Commission
shall consider all relevant factors, including: (1) whether the
requesting agency has agreed to provide or will provide
reciprocal assistance to the Commission; (2) whether compliance
with the request would prejudice the interests of consumers in
the United States; and, (3) whether the requesting agency's
investigation or enforcement proceeding concerns acts or
practices that cause or are likely to cause injury to a
significant number of persons.
Section (j)(4) states that if a foreign law enforcement
agency has set forth a legal basis for requiring execution of
an international agreement as a condition for reciprocal
assistance, or as a condition for provision of materials or
information to the Commission, the Commission, after
consultation with the Secretary of State, may negotiate and
conclude an international agreement, in the name of either the
United States or the Commission, and with final approval of the
agreement by the Secretary of State, for the purpose of
obtaining such assistance, materials, or information. The
Commission may undertake in such international agreement to (1)
provide assistance using the powers set forth in this
subsection; (2) disclose materials and information in
accordance with subsection (f) and section 21(b)(6) of the Act;
and, (3) protect materials and information received from
disclosure, as authorized by the Act.
Under a new section (k) amending section 6 of the FTC Act,
whenever the Commission obtains evidence that any person,
partnership, or corporation, either domestic or foreign, has
engaged in conduct that may constitute a violation of Federal
criminal law, the Commission shall transmit such evidence to
the Attorney General who may, in his discretion, institute
criminal proceedings under appropriate statutes. Moreover, this
section requires that the Commission endeavor to ensure, with
respect to memoranda of understanding and international
agreements it may conclude, that material it has obtained from
foreign law enforcement agencies investigating or pursuing
enforcement of foreign criminal laws may be used for the
purpose of investigation, prosecution, or prevention of
violations of United States criminal laws.
The Commission is further authorized to expend appropriated
funds for (1) operating expenses and other costs of bilateral
and multilateral cooperative law enforcement groups conducting
activities of interest to the Commission and in which the
Commission participates and (2) expenses for consultations and
meetings hosted by the Commission with foreign government
agency officials to exchange views relating to the Commission's
mission, development and implementation of cooperation
agreements, and provision of technical assistance for the
development of foreign consumer protection or competition
regimes. Such expenses may include necessary administrative and
logistic expenses, and the expenses of Commission staff and
foreign invitees. The Commission is authorized to expend
appropriated funds not to exceed $100,000 per fiscal year for
purposes of this section.
SECTION 5. REPRESENTATION IN FOREIGN LITIGATION
Section 5 amends section 16 of the Federal Trade Commission
Act by adding that the Commission may designate Commission
attorneys to assist the Attorney General in connection with
litigation in foreign courts in which the Commission has an
interest, pursuant to the terms of a memorandum of
understanding to be negotiated by the Commission and the
Attorney General. Moreover, the Commission is authorized to
expend appropriated funds for the retention of foreign counsel
for both consultation and litigation in foreign courts.
SECTION 6. SHARING INFORMATION WITH FOREIGN LAW ENFORCEMENT AGENCIES
Section 6(a) amends section 21(b)(6) of the Federal Trade
Commission Act adding that the Commission may make material
obtained pursuant to compulsory process available to any
foreign law enforcement agency upon the prior certification of
an appropriate official of any such foreign law enforcement
agency, either by a prior agreement or memorandum of
understanding with the Commission or by otherwritten
certification, that such material will be maintained in confidence and
will be used only for official law enforcement purposes. Moreover, the
foreign law enforcement agency must also set forth a bona fide legal
basis for its authority to maintain the material in confidence. The
materials are to be used for purposes of investigating, or engaging in
enforcement proceedings related to, possible violations of (1) foreign
laws prohibiting fraudulent or deceptive commercial practices or other
practices, substantially similar to practices prohibited by any law
administered by the Commission; (2) a law administered by the
Commission, if disclosure of the material would further a Commission
investigation or enforcement proceeding; or, (3) with the approval of
the Attorney General, other foreign criminal laws, if such foreign
criminal laws are offenses defined or covered by a criminal mutual
legal assistance treaty in force between the United States and the
foreign law enforcement authority's state. However, the FTC shall not
make available such material to a foreign law enforcement agency where
the activity the person is engaged in is protected under the
Constitution of the United States.
Section 6(b) exempts from public disclosure under section
552 of title 5 of the United States Code (Freedom of
Information Act) materials and information received from a
foreign government agency and consumer complaint information
received from non-governmental foreign sources where the agency
or foreign source requests confidentiality as a condition of
providing the material or consumer complaint information
submitted to a reporting mechanism jointly sponsored by the FTC
and its foreign counterparts. However, this subsection does not
authorize the Commission to withhold information from the
Congress or prevent the Commission from complying with an order
of a court in an action commenced by the Commission or the
United States.
SECTION 7. CONFIDENTIALITY, DELAYED NOTICE OF PROCESS
Section 7 amends the FTC Act by inserting section 21(A)
making the Right to Financial Privacy Act (``RFPA'') and the
Electronic Communications Privacy Act (``ECPA'') applicable to
the Commission. It further amends the Right to Financial
Privacy Act to remove impediments to sharing appropriate
information between the FTC and other financial and market
regulators. In general, the procedures for delay or prohibition
of notice under the Right to Financial Privacy Act (12 U.S.C.
3401 et seq.) and the Electronic Communications Privacy Act (18
U.S.C. 2701 et seq.) are also made available to the Commission.
In the case of the RFPA, the procedures are available to the
Commission upon a finding by the presiding judge or magistrate
judge pursuant to an ex parte application by the Commission
that there is reason to believe that notification may cause an
adverse result. Under ECPA, the notification is delayed
pursuant to section 2705(a)(1)(B) of title 18, upon a finding
by the Commission that there is reason to believe that
notification may cause an adverse result.
If the procedures for delay or prohibition of notice under
the Right to Financial Privacy Act and the Electronic
Communications Privacy Act do not apply, under section 21(A)(c)
the Commission may apply ex parte to a presiding judge or
magistrate judge for an order commanding the recipient of
compulsory process issued by the Commission not to notify any
other person of the existence of the process, notwithstanding
any other law. The presiding judge or magistrate judge may, in
turn, enter such an order granting the requested delay for a
period not to exceed 60 days, if there is reason to believe
that notification may cause an adverse result. The presiding
judge or magistrate judge may grant extensions of this delay of
notice of up to 30 days each in accordance with this
subsection, provided that in no event the notice shall be
delayed for more than a total of nine months.
The recipient of compulsory process issued by the
Commission under this section 21(A)(d) shall not be liable
under any law or under any contract or other legally
enforceable agreement, for failure to provide notice that such
process has been issued or that the recipient has provided
information in response to such process. In doing so, the
recipient is not provided with any exemption from liability for
(1) the underlying conduct reported; (2) noncompliance with the
record retention requirements under section 3404 of title 12;
or, (3) noncompliance with any requirement of a federal
government agency to disclose information to that agency.
All judicial proceedings initiated by the Commission under
the RFPA and ECPA or section 21(A) may be brought in the United
States District Court for the District of Columbia or any other
appropriate United States District Court. Moreover, upon
application by the Commission, all judicial proceedings
pursuant to this section shall be held in camera and the
records thereof sealed until expiration of the period of delay
or such other date as the presiding judge or magistrate judge
may permit. However, this section shall not apply to an
investigation or proceeding related to the administration of
federal antitrust laws or foreign antitrust laws.
For purposes of this section, the term adverse result is
defined as (1) the transfer outside the territorial limits of
the United States of assets or records related to fraudulent or
deceptive commercial practices or related to persons involved
to such practices; (2) impeding the ability of the Commission
to identify persons involved in fraudulent or deceptive
commercial practices, or to trace the source or disposition of
funds related to such practices; (3) endangering the life or
physical safety of an individual; (4) flight from prosecution;
(5) the destruction of, or tampering with, evidence; (6) the
intimidation of potential witnesses; (7) the dissipation,
fraudulent transfer, or concealment of assets subject to
recovery by the Commission; or, (8) otherwise seriously
jeopardizing an investigation or proceeding related to
fraudulent or deceptive commercial practices or persons
involved in such practices, or unduly delaying a trial related
to such practices or persons involved in such practices.
SECTION 8. PROTECTION FOR VOLUNTARY PROVISION OF INFORMATION
Section 8 amends the FTC Act protecting a limited category
of entities from liability under law for the voluntary
provision of material or for any failure to provide notice of
such provision of material to the FTC, if the entity reasonably
believes that such disclosures are relevant to possible unfair
or deceptive practices, or assets subject to recovery by the
Commission, including assets located in overseas. The section
does not provide any exemption from liability for the
underlying conduct.
This section applies to the following entities, whether
foreign or domestic: (1) a financial institution as defined in
section 5312 of title 31, United States Code; (2) to the extent
not included in paragraph (1), bank or thrift institution, a
commercial bank or trust company, an investment company, a
credit card issuer, an operator of a credit card system, and an
issuer, redeemer, or cashier of travelers' checks, money
orders, or similar instruments; (3) a courier service, a
commercial mail receiving agency, an industry membership
organization, a payment system provider, a consumer reporting
agency, a domain name registrar or registry, and a provider of
alternative dispute resolution services; and, (4) an Internet
service provider or provider of telephone services.
SECTION 9. STAFF EXCHANGES
Section 9 provides for foreign staff exchange arrangements
between the FTC and foreign government authorities, and permits
the FTC to make and accept full or partial reimbursements in
such circumstances. The provision gives the FTC explicit
authority to accept reimbursement for providing investigation,
litigation, or other program assistance to its counterparts
abroad. The Commission is given a general reimbursement
provision to permit the Commission to accept reimbursement from
domestic or foreign law enforcement authorities for expenses
incurred by the FTC in carrying out any activity pursuant to a
statute administered by the Commission.
SECTION 10. INFORMATION SHARING WITH FINANCIAL REGULATORS
Section 10 amends section 1112(e) of the Right to Financial
Privacy Act (12 U.S.C. 3412(e)) by adding the Federal Trade
Commission after the Securities and Exchange Commission. This
includes the FTC in an exemption that allows Federal financial
and market regulators, including the SEC, to share financial
records, examination reports, or other appropriate information.
SECTION 11. REPORT
Section 11 requires the FTC to provide a report to Congress
within three years after the enactment of any legislation
describing the FTC's use of its new authority and reporting on
(1) the number and types of requests for information-sharing
and investigative assistance; (2) the disposition of such
requests; (3) the foreign law enforcement agencies involved;
and, (4) the nature of the information provided and received.
This section provides for the report to include recommendations
for additional legislation in the cross-border area as
appropriate. Notwithstanding this report requirement, the
Committee may exercise its oversight authority with respect to
the implementation of this Act at any time after enactment.
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (existing law
proposed to be omitted is enclosed in black brackets, new
matter is printed in italic, existing law in which no change is
proposed is shown in roman):
FEDERAL TRADE COMMISSION ACT
Sec. 4. The words defined in this section shall have the
following meaning when found in this Act, to wit:
``Commerce'' means commerce among the several States or with
foreign nations, or in any Territory of the United States or in
the District of Columbia, or between any such Territory and
another, or between any such Territory and any State or foreign
nation, or between the District of Columbia and any State or
Territory or foreign nation.
* * * * * * *
``Foreign law enforcement agency'' means--
(A) any agency or judicial authority of a foreign
government, including a foreign state, a political
subdivision of a foreign state, or a multinational
organization constituted by and comprised of foreign
states, that is vested with law enforcement or
investigative authority in civil, criminal, or
administrative matters; or
(B) any multinational or multiagency organization to
the extent that it is acting on behalf of an entity
described in subparagraph (A).
Sec. 5. (a)(1) * * *
* * * * * * *
(4)(A) Unfair or deceptive acts or practices for purposes of
this subsection shall include such acts or practices involving
foreign commerce that--
(i) cause or are likely to cause reasonably
foreseeable injury within the United States; or
(ii) involve material conduct occurring within the
United States.
(B) All remedies available to the Commission with respect to
unfair and deceptive acts or practices shall be available for
acts and practices described in this paragraph, including
restitution to domestic or foreign victims.
* * * * * * *
Sec. 6. That the commission shall also have power--
(a) * * *
* * * * * * *
(f) To make public from time to time such portions of the
information obtained by it hereunder as are in the public
interest; and to make annual and special reports to the
Congress and to submit therewith recommendations for additional
legislation; and to provide for the publication of its reports
and decisions in such form and manner as may be best adapted
for public information and use: Provided, That the Commission
shall not have any authority to make public any trade secret or
any commercial or financial information which is obtained from
any person and which is privileged or confidential, except that
the Commission may disclose such information (1) to officers
and employees of appropriate Federal law enforcement agencies
or to any officer or employee of any State law enforcement
agency upon the prior certification of an officer of any such
Federal or State law enforcement agency that such information
will be maintained in confidence and will be used only for
official law enforcement [purposes.] purposes, and (2) to any
officer or employee of any foreign law enforcement agency under
the same circumstances that making material available to
foreign law enforcement agencies is permitted under section
21(b)(6).
* * * * * * *
(j) Investigative Assistance for Foreign Law Enforcement
Agencies.--
(1) In general.--Upon a written request from a
foreign law enforcement agency to provide assistance in
accordance with this subsection, if the requesting
agency states that it is investigating, or engaging in
enforcement proceedings against, possible violations of
laws prohibiting fraudulent or deceptive commercial
practices or other practices, substantially similar to
practices prohibited by any provision of the laws
administered by the Commission, other than Federal
antitrust laws (as defined in section 12(5) of the
International Antitrust Enforcement Assistance Act of
1994 (15 U.S.C. 6211(5))), the Commission may provide
the assistance described in paragraph (2) without
requiring that the conduct identified in the request
constitute a violation of the laws of the United
States.
(2) Type of assistance.--In providing assistance to a
foreign law enforcement agency under this subsection,
the Commission may--
(A) conduct such investigation as the
Commission deems necessary to collect
information and evidence pertinent to the
request for assistance, using all investigative
powers authorized by this Act; and
(B) when the request is from an agency acting
to investigate or pursue the enforcement of
civil laws, or when the Attorney General refers
a request to the Commission from an agency
acting to investigate or pursue the enforcement
of criminal laws, seek and accept appointment
by a United States district court of Commission
attorneys to provide assistance to foreign and
international tribunals and to litigants before
such tribunals on behalf of a foreign law
enforcement agency pursuant to section 1782 of
title 28, United States Code.
(3) Criteria for determination.--In deciding whether
to provide such assistance, the Commission shall
consider all relevant factors, including--
(A) whether the requesting agency has agreed
to provide or will provide reciprocal
assistance to the Commission;
(B) whether compliance with the request would
prejudice the interest of consumers in the
United States; and
(C) whether the requesting agency's
investigation or enforcement proceeding
concerns acts or practices that cause or are
likely to cause injury to a significant number
of persons.
(4) International agreements.--If a foreign law
enforcement agency has set forth a legal basis for
requiring execution of an international agreement as a
condition for reciprocal assistance, or as a condition
for provision of materials or information to the
Commission, the Commission, after consultation with the
Secretary of State, may negotiate and conclude an
international agreement, in the name of either the
United States or the Commission, and with final
approval of the agreement by the Secretary of State,
for the purpose of obtaining such assistance,
materials, or information. The Commission may undertake
in such an international agreement to--
(A) provide assistance using the powers set
forth in this subsection;
(B) disclose materials and information in
accordance with subsection (f) and section
21(b)(6); and
(C) engage in further cooperation, and
protect materials and information received from
disclosure, as authorized by this Act.
(5) The authority in this subsection is in addition
to, and not in lieu of, any other authority vested in
the Commission or any other officer of the United
States.
(k) Referral of Evidence for Criminal Proceedings.--
(1) In general.--Whenever the Commission obtains
evidence that any person, partnership, or corporation,
either domestic or foreign, has engaged in conduct that
may constitute a violation of Federal criminal law, the
Commission may transmit such evidence to the Attorney
General, who may institute criminal proceedings under
appropriate statutes. Nothing in this paragraph affects
any other authority of the Commission to disclose
information.
(2) International information.--The Commission shall
endeavor to ensure, with respect to memoranda of
understanding and international agreements it may
conclude, that material it has obtained from foreign
law enforcement agencies acting to investigate or
pursue the enforcement of foreign criminal laws may be
used for the purpose of investigation, prosecution, or
prevention of violations of United States criminal
laws.
(l) Expenditures for Cooperative Arrangements.--The
Commission may expend appropriated funds for--
(1) operating expenses and other costs of bilateral
and multilateral cooperative law enforcement groups
conducting activities of interest to the Commission and
in which the Commission participates; and
(2) expenses for consultations and meetings hosted by
the Commission with foreign government agency
officials, members of their delegations, appropriate
representatives and staff to exchange views concerning
developments relating to the Commission's mission,
development and implementation of cooperation
agreements, and provision of technical assistance for
the development of foreign consumer protection or
competition regimes, such expenses to include necessary
administrative and logistic expenses and the expenses
of Commission staff and foreign invitees in attendance
at such consultations and meetings including--
(A) such incidental expenses as meals taken
in the course of such attendance;
(B) any travel and transportation to or from
such meetings; and
(C) any other related lodging or subsistence.
* * * * * * *
Sec. 16. (a)(1) * * *
* * * * * * *
(2) Except as otherwise provided in paragraph (3), in any
civil action--
(A) * * *
* * * * * * *
(C) to obtain judicial review of a rule prescribed by
the Commission, or a cease and desist order issued
under section 5 of this Act[; or];
(D) under the second paragraph of section 9 of this
Act (relating to enforcement of a subpena) and under
the fourth paragraph of such section (relating to
compliance with section 6 of this Act); and
(E) under section 21A of this Act;
* * * * * * *
(c) Foreign Litigation.--
(1) Commission attorneys.--The Commission may
designate Commission attorneys to assist the Attorney
General in connection with litigation in foreign courts
in which the Commission has an interest, pursuant to
the terms of a memorandum of understanding to be
negotiated by the Commission and the Attorney General.
The preceding sentence is in addition to, and not in
lieu of any other authority vested in the Commission.
(2) Foreign counsel.--The Commission is authorized to
expend appropriated funds for the retention of foreign
counsel for consultation and for litigation in foreign
courts, and for expenses related to consultation and
litigation in foreign courts in which the Commission
has an interest.
(3) Payment of claims.--Nothing in this section
authorizes the payment of claims or judgments from any
source other than the permanent and indefinite
appropriation authorized by section 1304 of title 31,
United States Code.
* * * * * * *
Sec. 21. (a) * * *
* * * * * * *
(b)(1) * * *
* * * * * * *
(6) The custodian of any documentary material, written
reports or answers to questions, and transcripts of oral
testimony may deliver to any officers or employees of
appropriate Federal law enforcement agencies, in response to a
written request, copies of such material for use in connection
with an investigation or proceeding under the jurisdiction of
any such agency. The custodian of any tangible things may make
such things available for inspection to such persons on the
same basis. Such materials shall not be made available to any
such agency until the custodian receives certification of any
officer of such agency that such information will be maintained
in confidence and will be used only for official law
enforcement purposes. Such documentary material, results of
inspections of tangible things, written reports or answers to
questions, and transcripts of oral testimony may be used by any
officer or employee of such agency only in such manner and
subject to such conditions as apply to the Commission under
this section. The custodian may make such materials available
to any State law enforcement agency upon the prior
certification of any officer of such agency that such
information will be maintained in confidence and will be used
only for official law enforcement purposes. The custodian may
make such material available to any foreign law enforcement
agency upon the prior certification of an appropriate official
of any such foreign law enforcement agency, either by a prior
agreement or memorandum of understanding with the Commission or
by other written certification, that such material will be
maintained in confidence and will be used only for official law
enforcement purposes, if--
(A) the foreign law enforcement agency has set forth
a bona fide legal basis for its authority to maintain
the material in confidence; and
(B) the materials are to be used for purposes of
investigating, or engaging in enforcement proceedings
related to, possible violations of--
(i) foreign laws prohibiting fraudulent or
deceptive commercial practices or other
practices substantially similar to practices
prohibited by any law administered by the
Commission;
(ii) a law administered by the Commission, if
disclosure of the material would further a
Commission investigation or enforcement
proceeding; or
(iii) with the approval of the Attorney
General, other foreign criminal laws, if such
foreign criminal laws are offenses defined in
or covered by a criminal mutual legal
assistance treaty in force between the
government of the United States and the foreign
law enforcement authority's government.
Nothing in the preceding sentence authorizes the
disclosure of material obtained in connection with the
administration of the Federal antitrust laws or foreign
antitrust laws (as defined in paragraphs (5) and (7),
respectively, of section 12 of the International
Antitrust Enforcement Assistance Act of 1994 (15 U.S.C.
6211)) to any officer or employee of a foreign law
enforcement agency.
* * * * * * *
[(f) Any material which is received by the Commission in any
investigation, a purpose of which is to determine whether any
person may have violated any provision of the laws administered
by the Commission, and which is provided pursuant to any
compulsory process under this Act or which is provided
voluntarily in place of such compulsory process shall be exempt
from disclosure under section 552 of title 5, United States
Code.]
(f) Exemption From Disclosure.--
(1) In general.--Any material which is received by
the Commission in any investigation, a purpose of which
is to determine whether any person may have violated
any provision of the laws administered by the
Commission, and which is provided pursuant to any
compulsory process under this Act or which is provided
voluntarily in place of such compulsory process shall
be exempt from disclosure under section 552 of title 5,
United States Code.
(2) Material obtained from a foreign source.--
(A) Except as provided in subparagraph (C) of
this paragraph, the Commission shall not be
compelled to disclose--
(i) material obtained from a foreign
law enforcement agency or other foreign
government agency, if the foreign law
enforcement agency or other foreign
government agency has requested
confidential treatment, or has
precluded such disclosure under other
use limitations, as a condition of
providing the material;
(ii) material reflecting consumer
complaints obtained from any other
foreign source, if that foreign source
supplying the material has requested
confidential treatment as a condition
of providing the material; or
(iii) material reflecting a consumer
complaint submitted to a Commission
reporting mechanism sponsored in part
by foreign law enforcement agencies or
other foreign government agencies.
(B) For purposes of section 552 of title 5, United
States Code, this subsection shall be considered a
statute described in subsection (b)(3)(B) of such
section.
(C) Nothing in this subsection shall authorize the
Commission to withhold information from the Congress or
prevent the Commission from complying with an order of
a court of the United States in an action commenced by
the United States or the Commission.
SEC. 21A. CONFIDENTIALITY AND DELAYED NOTICE OF COMPULSORY PROCESS FOR
CERTAIN THIRD PARTIES.
(a) Intersection With Other Statutes.--The Right to Financial
Privacy Act (12 U.S.C. 3401 et seq.) and the Electronic
Communications Privacy Act (18 U.S.C. 2701 et seq.) shall apply
with respect to the Commission, except as otherwise provided in
this section.
(b) In General.--The procedures for delay or prohibition of
notice under the Right to Financial Privacy Act (12 U.S.C. 3401
et seq.) and the Electronic Communications Privacy Act (18
U.S.C. 2701 et seq.) shall be available to the Commission--
(1) where notification is delayed pursuant to section
1109(a) of the Right to Financial Privacy Act (12
U.S.C. 3409(a)) pursuant to an ex parte application by
the Commission that there is reason to believe that
notification may cause an adverse result; or
(2) where notification is delayed pursuant to section
2705(a)(1)(B) of title 18, upon a finding by the
Commission that there is reason to believe that
notification may cause an adverse result.
(c) Ex Parte Application by Commission.--If the procedures
for delay or prohibition of notice described in subsection (b)
do not apply, the Commission may apply ex parte to a presiding
judge or magistrate judge for an order commanding the recipient
of compulsory process issued by the Commission not to notify
any other person of the existence of the process,
notwithstanding any law or regulation of the United States, or
under the constitution, or any law or regulation, of any State,
political subdivision of a State, territory of the United
States, or the District of Columbia. The presiding judge or
magistrate judge may enter such an order granting the requested
delay for a period not to exceed 60 days if there is reason to
believe that notification may cause an adverse result. The
presiding judge or magistrate judge may grant extensions of
this delay of notice of up to 30 days each in accordance with
this subsection, provided that in no event shall notice be
delayed for more than a total of 9 months.
(d) No Liability for Failure to Notify.--The recipient of
compulsory process issued by the Commission under this Act
shall not be liable under any law or regulation of the United
States, or under the constitution, or any law or regulation, of
any State, political subdivision of a State, territory of the
United States, or the District of Columbia, or under any
contract or other legally enforceable agreement, for failure to
provide notice that such process has been issued or that the
recipient has provided information in response to such process.
The preceding sentence does not provide any exemption from
liability for--
(1) the underlying conduct reported;
(2) noncompliance with the record retention
requirements under section 1104(c) of the Right to
Financial Privacy Act (12 U.S.C. 3404), where
applicable; or
(3) noncompliance with any requirement of a Federal
agency to disclose information to that agency.
(e) Venue and Procedure.--
(1) In general.--All judicial proceedings initiated
by the Commission under the Right to Financial Privacy
Act (12 U.S.C. 3401 et seq.), the Electronic
Communications Privacy Act (18 U.S.C. 2701 et seq.), or
this section may be brought in the United States
District Court for the District of Columbia or any
other appropriate United States District Court. All ex
parte applications by the Commission under this section
related to a single investigation may be brought in a
single proceeding.
(2) In camera proceedings.--Upon application by the
Commission, all judicial proceedings pursuant to this
section shall be held in camera and the records thereof
sealed until expiration of the period of delay or such
other date as the presiding judge or magistrate judge
may permit.
(f) Section not to Apply to Antitrust Investigations or
Proceedings.--This section shall not apply to an investigation
or proceeding related to the administration of Federal
antitrust laws or foreign antitrust laws (within the meaning of
section 6211 of this title).
(g) Adverse Result Defined.--For purposes of this section the
term ``adverse result'' means--
(1) the transfer outside the territorial limits of
the United States of assets or records related to
fraudulent or deceptive commercial practices or related
to persons involved in such practices;
(2) impeding the ability of the Commission to
identify persons involved in fraudulent or deceptive
commercial practices, or to trace the source or
disposition of funds related to such practices;
(3) endangering the life or physical safety of an
individual;
(4) flight from prosecution;
(5) the destruction of, or tampering with, evidence;
(6) the intimidation of potential witnesses;
(7) the dissipation, fraudulent transfer, or
concealment of assets subject to recovery by the
Commission; or
(8) otherwise seriously jeopardizing an investigation
or proceeding related to fraudulent or deceptive
commercial practices or persons involved in such
practices, or unduly delaying a trial related to such
practices or persons involved in such practices.
SEC. 21B. PROTECTION FOR VOLUNTARY PROVISION OF INFORMATION.
(a) In General.--An entity described in paragraphs (2) or (3)
of subsection (d) that voluntarily provides material to the
Commission that such entity reasonably believes is relevant
to--
(1) a possible unfair or deceptive act or practice,
as defined in section 5(a) of this Act; or
(2) assets subject to recovery by the Commission,
including assets located in foreign jurisdictions;
shall not be liable to any person under any law or regulation
of the United States, or under the Constitution, or any law or
regulation of any State, political subdivision of a State,
territory of the United States, or the District of Columbia,
for such provision of material or for any failure to provide
notice of such provision of material. Nothing in this
subsection shall be construed to provide any exemption from
liability for the underlying conduct reported.
(b) Certain Financial Institutions.--An entity described in
subsection (d)(1) that voluntarily provides to the Commission
material relevant to the subjects described in paragraphs (1)
or (2) of subsection (a) shall be exempt from liability in
accordance with the provisions of section 5318(g)(3) of title
31, United States Code.
(c) Consumer Complaints.--Any entity described in subsection
(d) that voluntarily provides consumer complaints sent to it,
or information contained therein, to the Commission shall not
be liable to any person under any law or regulation of the
United States, or under the constitution, or any law or
regulation, of any State, political subdivision of a State,
territory of the United States, or the District of Columbia,
for such provision of material or for any failure to provide
notice of such provision of material. The preceding sentence
does not provide any exemption from liability for the
underlying conduct.
(d) Application.--This section applies to the following
entities, whether foreign or domestic:
(1) A financial institution as defined in section
5312 of title 31, United States Code.
(2) To the extent no included in paragraph (1) a bank
or thrift institution, a commercial bank or trust
company, an investment company, a credit card issuer,
an operator of a credit card system, and an issuer,
redeemer, or cashier of travelers' checks, money
orders, or similar instruments.
(3) A courier service, a commercial mail receiving
agency, an industry membership organization, a payment
system provider, a consumer reporting agency, a domain
name registrar or registry, and a provider of
alternative dispute resolution services.
(4) An Internet service provider or provider of
telephone services.
* * * * * * *
SEC. 25A. STAFF EXCHANGES.
(a) In General.--The Commission may--
(1) retain or employ officers or employees of foreign
government agencies on a temporary basis pursuant to
section 2 of this Act, section 3109 of title 5, or
section 202 of title 18, United States Code; and
(2) detail officers or employees of the Commission to
work on a temporary basis for appropriate foreign
government agencies.
(b) Reciprocity and Reimbursement.--The staff arrangements
described in subsections (a) need not be reciprocal. The
Commission may accept payment or reimbursement, in cash or in
kind, from a foreign government agency to which this section is
applicable, or payment or reimbursement made on behalf of such
agency, for expenses incurred by the Commission, its members,
and employees in carrying out such arrangements.
* * * * * * *
----------
SECTION 1112 OF THE RIGHT TO FINANCIAL PRIVACY ACT OF 1978
USE OF INFORMATION
Sec. 1112. (a) * * *
* * * * * * *
(e) Notwithstanding section 1101(6) or any other
provision of law, the exchange of financial records,
examination reports or other information with respect to a
financial institution, holding company, or a subsidiary of a
depository institution or holding company, among and between
the five member supervisory agencies of the Federal Financial
Institutions Examination Council, the Securities and Exchange
Commission, the Federal Trade Commission, and the Commodity
Futures Trading Commission is permitted.
* * * * * * *