The Senate Commerce, Science, & Transportation Committee and the House Energy & Commerce Committee are considering legislation that would renew the ability of the Federal Trade Commission (FTC) to prosecute international fraud, including online spam and spyware. The bills under review would extend the 2006 US SAFE WEB Act—set to expire next year—through 2020. Given the FTC’s claimed enforcement success and ongoing role in policing cross-border fraud, the proposed legislation is expected to advance without objection.
The US SAFE WEB Act empowers the FTC to take actions necessary to protect consumers from such cross-border fraud and deception as pyramid schemes, advance-fee loan scams, bogus foreign lotteries, and sweepstakes schemes. The Act endows the FTC with four general enforcement tools similar to those long available to the Securities and Exchange Commission and the Commodity Futures Trading Commission. First, it allows the FTC to share confidential information in consumer protection matters with foreign law enforcers in order to facilitate reciprocal information sharing. Second, the Act expands the FTC’s ability to conduct investigations and discovery to aid foreign law enforcers’ efforts. Third, it provides the FTC with jurisdictional authority to bring litigation challenges against both frauds from abroad that harm American consumers and frauds involving material conduct in the United States that victimize foreign consumers. Finally, the law permits the FTC to employ foreign law enforcers on a temporary basis in order to strengthen cross-border enforcement relationships.
FTC Deputy Director for International Consumer Protection Hugh Stevenson described the law’s extension as critical at a House Energy & Commerce Subcommittee hearing this month. According to Stevenson, since January 2007 the FTC has investigated over one hundred online global frauds, filed more than fifty actions involving cross-border components, and consequently saved consumers from losing hundreds of millions of dollars to fraudulent schemes. More than 100,000 consumer complaints about online fraud were filed with the FTC in 2011; at least ten percent of those complaints related to foreign business.
The FTC emphasizes the continued importance of its activities, noting that the popularity of credit cards and online transactions has only risen since the US SAFE WEB Act’s passage. Moreover, whereas much of the cross-border fraud in the 1990s involved schemes beginning in Canada, threats today originate in all parts of the world. Representative Mary Bono Mack, sponsor of the House bill, has suggested that the sustained growth of online commerce depends on consumer faith in the government’s ability to offer protection from fraud.
- Debbie Feinstein and Andew Macurdy