Mack, FTC Call for Reauthorization of SAFE WEB Act

"Frankly, I'm concerned that e-commerce will cease to grow and flourish if consumers lose faith in their ability to be protected from online predators, jeopardizing future innovation as well as our nation’s fragile economic recovery,” Mack said. Mack noted that by 2005, an estimated 20 percent of consumer complaints the FTC received involved fraud originating outside of the U.S., with Americans suffering annual losses of nearly $220 million to foreign operators.

"The FTC subsequently identified severe limitations in its authority to combat cross-border fraud, spam and spyware relative to that of other U.S. regulators,” Mack said. “The biggest roadblock to protecting consumers was the commission’s lack of authority to share information with foreign law enforcement agencies."

The hearing had one witness, Hugh Stevenson, deputy director for international consumer protection at the FTC, who said historically the largest number of complaints have been tied to Canada. But now a growing number of complaints are coming from further afield, he said. Stevenson highlighted phantom debt collection fraud cases, “which appear to be based in India, targeting hundreds of thousands of financially vulnerable U.S. consumers to collect debts the consumers did not owe to the defendants or did not owe at all.” A recent robocall case was against a perpetrator in the Philippines and involved more than 6 million pre-recorded “robocalls” sent to U.S. consumers, he said. Stevenson said robocall complaints in general have risen faster than many categories of complaints. The largest number of cases, in order, tie back to Canada, the United Kingdom, Nigeria, Jamaica, India, Spain, China, Mexico and Ghana, he said.

"We see all manner of frauds,” Stevenson said. “The technology these days means that the communications can come from anywhere and the money can go anywhere so we see pretty much the full range of frauds and deceptions.” Stevenson said many of those engaged in fraud operate multiple websites, often under phony names, and move around frequently. “We usually don’t lack for potential targets” for prosecution, he said. “There are usually a lot of different fraud targets."

"It’s a good authority for you to have and we need to accommodate you,” said Rep. Charles Gonzalez, D-Texas. But he asked whether any in the business community had expressed concerns about the FTC’s expanded authority. “We have not had any complaints ... since the act was passed,” Stevenson said. “We did have concerns raised in the several years leading up to the passage of the act about the scope and nature of this provision and accordingly [the legislation] was narrowed."

Mack asked Stevenson why the number of cross-border complaints fell sharply after the act was passed, but appear headed up once again, as part of a general rise in complaints about Internet fraud. “It is ... somewhat challenging to really discern the exact trend versus the data that we have in the system,” Stevenson said. “It depends on the sources. Our sources from the U.S. and Canada are more extensive, obviously, in contributing to the database so that has some effect on what the data looks like.” For the most part, the percentage of international complaints has remained steady at about 13 percent of all complaints, he said.

In a December 2009 report, the FTC reported that over a three-year period from 2006-2008, the agency received 97,287, 86,564, and 76,835 cross-border complaints, respectively, according to the majority report on the legislation (http://xrl.us/bngnyg). The FTC also said it shared or compelled information in response to 38 requests from 14 foreign agencies in six countries resulting in a number of enforcement proceedings.

Stevenson said in response to a question from Mack in some cases the U.S. has declined to cooperate when other countries’ laws differ from U.S. law. He cited as an example European privacy laws “which are not in a number of respects substantially similar” to U.S. laws.