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Legislation for a Safer Web

Progress Snapshot
Release 1.6 August 2005

by Michael Pickford *

The Federal Trade Commission has a constitutionally mandated responsibility to protect the American consumer from all types of fraud and deception. Today, the American consumer is increasingly falling prey to a new type of fraud unknown just a few years ago.

- Sen. Gordon Smith

Last Friday, Senator Gordon Smith (R-OR) introduced the "Undertaking Spam, Spyware, and Fraud Enforcement With Enforcers Beyond Borders Act of 2005," or the US SAFE WEB Act. The purpose of this bill is to broaden the FTC's current mandate to protect American consumers from fraud and deception to include those crimes that are perpetrated against American consumers from abroad.

Technological advancements have created a global market place for legitimate and illegitimate businesses. Using the Internet, criminals can mask their whereabouts, hide their identities, and disappear nearly without a trace as they victimize consumers anywhere in the world. By locating outside the U.S. , these criminals can act out of reach of U.S. jurisdiction yet continue to victimize American citizens.

Among the key provisions of the bill are those that broaden reciprocal information sharing, expand investigative cooperation between U.S. and foreign law enforcement agencies, increase information from foreign sources, and enhance the confidentiality of FTC investigations. These provisions would allow the FTC to work with other nations to continue investigations when evidence leads to perpetrators abroad, enhancing the ability of the FTC to obtain consumer redress when cases involve foreign entities

Many of the provisions are similar to existing Securities and Exchange Commission (SEC) and Commodities Futures Trading Commission (CFTC) authority. By using effective models as a basis in the bill, it adds legitimacy to the provisions, as they have been tested.

The US SAFE WEB Act provides the FTC with the authority needed to more successfully fight online abuses and crimes, such as spam, spyware, phishing and other online frauds. As currently constituted, the FTC authority is limited by geographical borders, yet criminals are not. Current FTC regulations do not allow for the agency to work together with foreign agencies, limiting its ability to gather information and to pursue criminals when there is an international component in the case. As seen with CAN-SPAM, legislation applicable only to the U.S. will be ineffective. Rather than decreasing or stopping spam, it served to create a larger offshore spam market. The amount of spam as a percent of all email in the U.S. has increased from 60 percent at the passage of CAN-SPAM to 67 percent as of December 2004. U.S. legislation pertaining to spyware and phishing will be similarly ineffective in stopping the problems. SAFE WEB provides the necessary authority for the FTC to work with other nations to track down fraudsters and obtain redress for American consumers.

The provisions in US SAFE WEB would allow the FTC to better manage several pernicious acts in one bill, which, from a regulatory standpoint, is far superior to several smaller, less effective bills that would target individual crimes, such as spam, spyware or phishing. The cross-border authority granted in SAFE WEB, along with the authority already present in the FTC Act, would allow the agency to monitor these and other Internet-related crimes better than individual legislation would. As these crimes often contain a foreign element, domestic legislation alone is not enough. With one bill allowing for cooperation and information sharing between countries, the U.S. , as well as the global community as a whole, will be better equipped to tackle these new threats to consumers.

As the number of U.S. consumer complaints against foreign entities grows, so to does the need for cross-border authority. This bill will provide the FTC with the means to continue investigations across borders, with the help of other nations, as well as assist other nations in their own investigations. Global problems require global solutions, and US SAFE WEB is the first step in providing the FTC with the ability to reach internationally to protect American consumers from threats from abroad.

* Michael Pickford is a Research Associate at The Progress & Freedom Foundation. The views expressed are his own.



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