1. The U.S. Approach to Consumer Protection in the Online World U.S. Presentation FTAA Joint Government Private Sector Committee on Electronic Commerce 13th Meeting February 2002 Public FTAA.ecom/inf/122 February 13, 2002 Original: English

2. 2 Consumer Concerns About Internet Shopping Consumers share 3 broad concerns when they go online: –Security of the transaction –Privacy of their personal information –Trustworthiness of the merchant

3. 3 U.S. Approach to Protecting Consumers Online The U.S. approach to protecting consumers online relies on a combination of: –Government enforcement of laws prohibiting fraudulent or misleading conduct –Private sector initiatives –Consumer and business education –International cooperation

4. 4 Results of U.S. Approach Cooperative approach to building consumer confidence online has contributed to growth of B2C in the U.S.

5. Government Enforcement & Cooperation Pablo Zylberglait Legal Advisor for International Consumer Protection U.S. Federal Trade Commission

6. 6 Sources of Consumer Protection Rules Federal laws and rules State laws and Rules Self-regulation Government Enforcement & Cooperation

7. 7 Federal Trade Commission Act Section 5 of the FTC Act prohibits: –Unfair methods of competition –Unfair or deceptive acts or practices Deceptive practices –Likely to mislead consumers –acting reasonably under the circumstances Substantiation –Reasonable basis –objective claims Unfair Practices –Substantial Injury –Not outweighed by benefits –Not reasonably avoidable Government Enforcement & Cooperation

8. 8 Law Applied to E-Commerce General FTC Act Other federal statutes –Credit –Banking –Food and Drug –Product Safety Federal Rules –Mail Order Rule –Magnusom-Moss –Franchise Rule State laws and rules Specific Children’s Online Privacy Protection Act of 1998 –Notice –Parental consent for data collection, use or disclosure –Parental access to information –Security of data –Safe harbors Government Enforcement & Cooperation

9. 9 FTC’s Role in Consumer Protection Coordinated law enforcement Self-Regulation Consumer and Business Education Government Enforcement & Cooperation

10. 10 Remedies Administrative Actions –Cease and desist –Corrective advertising –Consumer redress –Civil penalties Federal Court Actions –Injunction –Immediate Discovery –Asset Freeze –Receivership –Consumer Redress –Contempt (jail, fines, etc.) Government Enforcement & Cooperation

11. 11 Sharing Information Consumer Complaints FTC (Web, phone, mail) FBI Postal Inspection Service State Attorneys General County and City Authorities Canada Phone-busters Better Business Bureaus National Consumers League Restricted-access law enforcement site National and international scope (U.S., Canada, Australia) Law enforcers can search for complaints and alert each other of ongoing issues Public site (www.consumer.gov/sentinel) Latest fraud trend information Consumer education materials Links to consumer protection sites (public and private) Government Enforcement & Cooperation

12. 12 E-Commerce Cases Modem hijacking Page-jacking Mouse-trapping Diversion Web “cramming” Pyramid schemes Auction fraud Health fraud Junk email or “spam” Spam’s “Dirty Dozen” Business opportunity scams Bulk email solicitations Chain letters Work-at-home schemes Health and diet scams Easy money Get something free Investment opportunities Cable descrambler kits Guaranteed loans or credits Credit repair scams Vacation prize promotions Government Enforcement & Cooperation

13. 13 International Enforcement Cooperation Bilateral Agreements Canada Australia United Kingdom Discusses information- sharing and cross-border law enforcement Makes recommendations to policymakers Active in surf days Government Enforcement & Cooperation

14. 14 International Enforcement Cooperation www.econsumer.gov – where consumers all over the world can: –File e-commerce complaints about companies in other countries –Get tips about shopping safely online –Get information about consumer protection in other countries –Learn how to contact consumer protection authorities in other countries Consumer Planet Sentinel allows law enforcement agencies from participating countries to: –Search and review cross- border Internet complaints filed with econsumer.gov –Access trend data and top violator reports –Use an international law enforcement library with the newest investigative tools Government Enforcement & Cooperation

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16. 16 Self-Regulation More prompt and flexible than government regulation Benefits from industry/consumers’ experience Enforcement backstop provides strong incentive FTC Feedback on codes of conduct Publicizes self-regulatory efforts Feedback in rulemakings Refers consumer complaints Industry Government Enforcement & Cooperation

17. 17 Consumer and Business Education Government Enforcement & Cooperation