House Commerce Committee to Consider Extension of Sunset on US SAFE WEB Act

July 3, 2012. The US SAFE WEB Act is scheduled to sunset next year. The House Commerce Committee (HCC) announced that its Subcommittee on Commerce, Manufacturing and Trade will hold a hearing on July 12 on a yet to be introduced bill that would extend this sunset. See, HCC notice.

This Act increased the investigatory and information sharing powers of the Federal Trade Commission (FTC). For example, the Act gave the FTC new powers to compel third party service providers to disclose the contents of stored wire and electronic communications, without notice to the owner of the communications, and with a gag order imposed upon the service provider.

The Act also contains a seven year sunset provision. It provides that it "shall cease to have effect on the date that is 7 years after the date of enactment of this Act". President Bush signed it into law on December 22, 2006.

The bill was S 1608 [109th Congress], the "Undertaking Spam, Spyware, And Fraud Enforcement With Enforcers beyond Borders Act". This title renders the near acronym of US SAFE WEB Act. It is now Public Law No. 109-455.

See, stories titled "Congress Expands Powers of FTC" in TLJ Daily E-Mail Alert No. 1,504, December 13, 2006, and "Senate Commerce Committee Approves Bill to Expand FTC Powers to Pursue Online Fraud" in TLJ Daily E-Mail Alert No. 1,274, December 16, 2006. See also, FTC summary [3 pages in PDF] of the Act.

This Act gave the FTC new powers that enhanced its ability to fight internet based fraud that crosses international borders. However, this Act also affected a wide range of other civil fraud and criminal law enforcement investigations and proceedings.

Section 5 of the FTC Act, which is codified at 15 U.S.C. 45, provides, in part, that "Unfair methods of competition in or affecting commerce, and unfair or deceptive acts or practices in or affecting commerce, are hereby declared unlawful"

The 2006 Act expanded the definition of "unfair or deceptive acts or practices" to include "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."

The 2006 Act also added a new subsection to 15 U.S.C. 46, which pertains to "Additional powers of Commission". The new subsection 46(j) is titled "Investigative Assistance for Foreign Law Enforcement Agencies". It enumerates numerous powers to assist foreign agencies, including the conducting of investigations in the US. However, these new powers do not apply to common carrier activities, or to foreign governments that assist terrorists.

The 2006 Act also added a new subsection 46(k) that authorizes the sharing of information with domestic and foreign criminal enforcement agencies when the FTC has "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 2006 Act also amended 15 U.S.C. 57b-2, which pertains to "Confidentiality". It amended subsection 57b-2(b)(6) to provide broader sharing of information with foreign agencies investigating such things as "fraudulent or deceptive commercial practices" and "foreign criminal laws".

The 2006 Act also expanded the subsection 57b-2 Freedom of Information Act (FOIA) exemption for FTC investigation information. It expanded the exemption to include information acquired from foreign sources, including "any 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".

The 2006 Act also created a new section of the FTC Act titled "Confidentiality and Delayed Notice of Compulsory Process for Certain Third Parties".

The 2006 Act provided that "The procedures for delay of notification or prohibition of disclosure under the Right to Financial Privacy Act (12 U.S.C. 3401 et seq.) and chapter 121 of title 18, United States Code, including procedures for extensions of such delays or prohibitions, shall be available to the Commission ..." (Parentheses in original.)

Chapter 121 of Title 18 is the Stored Communications Act (SCA).

The SCA provides, at 18 U.S.C. 2705, that the government can get from a court "an order delaying the notification required under section 2703(b) of this title for a period not to exceed ninety days". 18 U.S.C. 2703(b) provides, in part, that "A governmental entity may require a provider of remote computing service to disclose the contents of any wire or electronic communication ..."

The 2006 Act provided that the FTC can obtain from the court "an order delaying notification or prohibiting disclosure" if the court "finds that there is reason to believe that such notification or disclosure may cause an adverse result". In addition, the service provider is immune from liability for failure to notify its customers, even liability under "contract or other legally enforceable agreement, for failure to provide notice to any person that such process has been issued".

The 2006 Act also provided that "All judicial proceedings initiated by the Commission under the Right to Financial Privacy Act (12 U.S.C. 3401 et seq.), chapter 121 of title 18, United States Code, 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." (Parentheses in original.)

That is, the FTC is free to seek orders compelling disclosure of information from service providers and financial institutions in fora that are distant and inconvenient to the service providers and financial institutions.

Also, the 2006 Act provided that upon application of the FTC "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".