ACLU Letter to Members Urging Opposition to HR 3143, the International Consumer Protection Act
Re: HR 3143, The International Consumer Protection Act
Dear Congressman:
We are writing to urge you to oppose placing HR 3143, the International Consumer Protection Act, on the suspension calendar, and to oppose the bill if a vote is taken. While, largely through the efforts of Representative Schakowsky, the bill has improved significantly from its introduction, there are still several areas that cause concern that could be addressed through amendments that would be prohibited if the bill is considered under suspension of the rules.
The purpose of the bill is to allow the Federal Trade Commission (FTC) to investigate and prosecute cross-border fraud. The bill, however, goes beyond that to allow the FTC to investigate acts that are not criminal in the United States upon the request of a foreign law enforcement agency.
1. No ""dual criminality"" requirement. ""Dual criminality"" relates to the fact that the acts being investigated should be crimes in both countries. The provision in the bill related to this issue has narrowed somewhat, thanks to Rep. Schakowsky, but it is still problematic. It now provides that the acts being investigated be ""substantially similar"" to acts the Commission would normally investigate. The determination of whether the acts are ""substantially similar"" is left to the discretion of the FTC.
An example of our concern comes from a real-world situation: France has a law that says one may not discuss or sell or buy Nazi memorabilia. Yahoo! France is a French subsidiary of Yahoo! that abides by all French laws, including that restriction. Yahoo! US, however, is a U.S. company, protected by the First Amendment, which ensures that such conduct is protected in the U.S. Yahoo! US has Nazi memorabilia for sale on its web site. Because it was on the web, it was ""available"" in France as well. A French group sued Yahoo! US, and won. Additionally, there is a criminal conviction for the President of Yahoo! US in France -- if he ever shows up there, he may be arrested and jailed. Under this bill, France could claim the law was a ""consumer protection"" provision, and the FTC may decide to investigate Yahoo! US for activity that is protected under the First Amendment.
Similarly, some countries prohibit ""comparative advertising."" If a US company engages in comparative advertising on its web site, it may run afoul of the laws in those countries prohibiting it, and be subject to investigation by the FTC. Once again, the U.S. Company has done nothing wrong under U.S. law, but would nonetheless be investigated by a U.S. agency. The FTC assures us that it would use its discretion to NOT investigate such things, but it nonetheless resists placing any protective language in the bill that says it may NOT investigate activities protected under the First Amendment.
2. Delayed Notice provisions are too broad and too long. The normal rule is that notice should be given upon execution of a warrant or subpoena. However, this provision allows notice to be delayed for up to 60 days, with extensions granted up to 9 months. We suggest limiting delays to seven days, with possible extensions upon application to a judge.
Delayed notice is possible if there ""is reason to believe"" an adverse result might happen. ""Adverse result"" is defined so broadly that it could swallow the rule. Courts have generally allowed delayed notice where evidence may be destroyed or witnesses harmed or intimidated. However, the bill contains a provision to allow delayed notice where an investigation may be jeopardized or unduly delay a trial, which opens a huge loophole. An argument can always be made that the investigation may be jeopardized if notice is given. Thus, the normal rule requiring notice is essentially turned on its head.
The definition also includes two provisions designed to assist the FTC rather than prevent danger to witnesses or other serious harm. [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 and the dissipation, fraudulent transfer, or concealment of assets subject to recovery by the Commission]. The provision thus goes further than courts would normally allow.
3. The definition of ""foreign law enforcement agency"" is too broad. For instance, the former KGB would probably qualify as a ""foreign law enforcement"" agency, although it generally did little to protect consumers. The only limitation on the exercise of the FTC's power to investigate in the U.S. is that the act be ""substantially similar"" to one the FTC would normally investigate, even though the acts need not necessarily be a crime in the U.S. Thus, if some foreign law enforcement agency wishes to cause trouble for a U.S. company, all they need to do is find some plausible ""crime"" in their country that relates to FTC jurisdiction, and have the FTC then investigate the company. That could well be for political or other purposes, despite the representations made in the request.
For example, suppose a U.S. company is encroaching on a foreign market. The foreign country could use the excuse that the U.S. company is engaging in comparative advertising on its web site to have its ""law enforcement agency"" instigate an investigation by the FTC against the U.S. company. This could disrupt the U.S. company, and assist the foreign country in maintaining its market share.
4. The criteria for exercise of the FTC's discretion is too lax. The bill attempts to set out the criteria by which the FTC should exercise its discretion in providing assistance to a foreign law enforcement agency. If one examines the ""criteria for determination,"" there is little to restrain the exercise of the FTC's discretion. There is nothing prohibiting investigations based on First Amendment (or any other constitutionally protected) activity.
5. ""Referral of evidence for criminal prosecutions"" could be abused. This provision allows the FTC to refer for prosecution any evidence it finds while investigating. This could lead to fishing expeditions into lawful conduct through coordination with foreign governments. For example, assume the U.S. government decides to target Yahoo! US. It could then work with France to ""request"" an investigation based on activity that is not a crime in the U.S. Nonetheless, while ""investigating"" Yahoo! US, the FTC uncovers evidence of a crime, and refers it for prosecution. An investigation was thus conducted with no indication that Yahoo! US did anything wrong.
6. ""Exemption from Disclosure"" provisions are too broad. This provision protects from disclosure information obtained by the FTC from others where ""a purpose"" of providing the information is to determine whether any violation occurred. To the extent such a provision is necessary, it would be stronger to make it ""the"" purpose, rather than ""a"" purpose.
While the purpose of the bill is supposedly to protect consumers, its broad provisions that allow U.S. residents and businesses to be investigated by the FTC where no crime was actually committed in the United States is troubling, and provides a greater risk to consumers. For these reasons, we ask you to oppose letting the bill go forward on the suspension calendar, and have more debate about these provisions.
Sincerely,
Laura W. Murphy
Director
Marvin J. Johnson
Legislative Counsel