Does the U.s. Safe Web Act Strike the Proper Balance Between Law Enforcement Interests and Privacy Interests?

• Citation: Vol. 5 No. 1
• Publication year: 2008

Shidler Journal of Law, Commerce and Technology Volume 5, Issue 1 Summer 2008

Does the U.S. SAFE WEB Act Strike the Proper Balance Between Law Enforcement Interests and Privacy Interests?

Shaobin Zhu(fn1)

Abstract

The Internet and advances in telecommunications technology present unprecedented opportunities for cross-border fraud and deception directed at U.S. consumers and businesses. However, the Federal Trade Commission's ("FTC") ability to obtain effective relief may face practical impediments in prosecuting these cross-border wrongdoers. To help address the challenges posed by the globalization of fraud, President Bush signed the Undertaking Spam, Spyware and Fraud Enforcement With Enforcers Beyond Borders Act of 2006 ("U.S. SAFE WEB Act" or "Act") into law on December 22, 2006. This Article discusses the FTC's expanded enforcement authority granted by the Act to fight fraud and deception, and particularly to fight illegal spam, spyware, and cross-border fraud and deception. Privacy advocates have voiced concern that the FTC may now have more power to invade the privacy of U.S. citizens. This Article concludes that the Act's grant of power to the FTC is not too broad, and that the Act maintains an appropriate balance between law enforcement interests and privacy interests.

Introduction

Internet and telecommunications technology developments have brought many advantages to consumers. At the same time, they have also provided unprecedented opportunities for those engaged in illegal spam, spyware, fraud and deception to establish operations in one country and victimize a large number of consumers in other countries. Miscreants are now able to use the Internet to victimize consumers in ways not previously imagined. For example, "deceptive spammers can easily hide their identity, forge the electronic path of their email messages, and send messages from anywhere in the world to anyone in the world."(fn2) These businesses "can strike quickly on a global scale, victimize thousands of consumers in a short time, and disappear nearly without a trace - along with their ill-gotten gains."(fn3)

There are no boundaries for the Internet and electronic commerce, and cross-border fraud and deception have been a growing problem for consumers and businesses in the U.S. and abroad.(fn4) The FTC received over 86,000 cross-border fraud complaints in 2005 and over 95,000 in 2006.(fn5) Cross-border fraud complaints comprised 20% of all fraud complaints received in 2005 and 22% in 2006.(fn6) Among cross-border complaints, 85% were from U.S. consumers complaining about foreign businesses in 2005 and 86% in 2006.(fn7) Further, many dangerous online networks, including some peer-to-peer networks, are often located outside the U.S. to avoid U.S. laws.(fn8)

Consequently, cross-border fraud affecting American consumers is becoming an increasingly common problem facing the FTC.(fn9) Specifically, the FTC encounters:[P]ractical impediments when wrongdoers, victims, other witnesses, documents, money and third parties involved in the transaction are widely dispersed in many different jurisdictions. Such circumstances make it difficult for the [FTC] to gather all the information necessary to detect injurious practices, to recover offshore assets for consumer redress, and to reach conduct occurring outside the United States that affects United States consumers.(fn10)

To address these impediments, President Bush signed the Undertaking Spam, Spyware and Fraud Enforcement With Enforcers Beyond Borders Act of 2006 ( "U.S. SAFE WEB Act" or "Act")(fn11) into law on December 22, 2006.(fn12) Designed to help address the challenges posed by the globalization of fraud, the Act helps the FTC protect consumers from fraud and deception, particularly illegal spam, spyware, and cross-border fraud and deception, by "(1) improving the FTC's ability to cooperate with foreign counterparts in specific cases and investigations; (2) improving the FTC's ability to gather information; (3) enhancing the FTC's ability to obtain monetary consumer redress; and (4) strengthening the FTC's enforcement cooperation networks."(fn13)

At the same time, there might be concerns that the U.S. SAFE WEB Act's grant of increased power to the FTC is too broad, permitting the FTC to invade the dealings of legitimate businesses and individuals' privacy. However, because the Act's grant of authority to the FTC is relatively modest in scope, privacy advocates' concerns seem overstated. The Act maintains an appropriate balance between law enforcement interests and privacy, and the FTC is monitored to make sure that privacy rights are not violated.

Summary of the U.S. SAFE WEB Act

The U.S. SAFE WEB Act improves the FTC's ability to protect consumers from cross-border fraud and deception. The Act grants the FTC more power to cooperate with foreign and domestic authorities, obtain information supporting its cross-border investigations, enhance cooperation with the Department of Justice ("DOJ"), and utilize more resources to fight against cross-border fraud and deception.

First, the Act improves the FTC's investigative cooperation with foreign authorities by broadening reciprocal information sharing and reducing restraints on evidence gathering.(fn14) Under the Act, the FTC can share confidential information in consumer protection cases with foreign law enforcers,(fn15) subject to appropriate confidentiality assurances.(fn16) The Act allows the FTC to conduct investigations and obtain evidence on behalf of its foreign counterparts if it determines that such actions are in the public interest.(fn17) The investigatory tools include civil investigative demand ("CID") process(fn18) and evidence gathering pursuant to 28 U.S.C. § 1782,(fn19) which were not available to the FTC in cross-border investigative cooperation.(fn20) The Act also authorizes the FTC to negotiate and conclude international agreements when required as a condition of reciprocal assistance.(fn21) Finally, the Act helps to obtain more confidential information from foreign sources, by exempting information provided by foreign agencies from public disclosure laws.(fn22)

Second, the Act improves the FTC's ability to obtain information supporting cross-border cases(fn23) by protecting the confidentiality of FTC investigations.(fn24) It safeguards FTC investigations by:(1) [G]enerally [exempting] recipients of [FTC] CIDs from possible liability for keeping those CIDs confidential; (2) authorizing the [FTC] to seek a court order in appropriate cases to preclude notice by the CID recipient to the investigative target for a limited time; and (3) tailoring the mechanisms...