Hearing of House Committee on Energy and Commerce - Combating Spyware: H.R. 29, the Spy Act

HEARING OF HOUSE COMMITTEE ON ENERGY AND COMMERCE - COMBATING SPYWARE: H.R. 29, THE SPY ACT

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Ms. Baldwin. Thank you, Mr. Chairman.

Mr. Stearns. And I would just also welcome you to the committee, and we are delighted to have you.

Ms. Baldwin. Well, it has been a delight, actually, to have this as our first hearing of the session, and I will take advantage of being a newcomer and ask some questions that perhaps I wouldn't get away with as a senior member of the committee.

In this discussion, we do not have a representative of the Federal Trade Commission testifying today, and there has been some discussion, I think, Mr. Schwartz, in your testimony, you were talking about the fact that we have to dramatically increase investigations enforcement if law enforcement is going to serve as a deterrent. You discussed, also, in your testimony, the specific case that you brought before the FTC and pleasure that it was taken seriously and investigated and will lead to others. But the legislation before us will give the FTC more specific power. I would like to hear about the resources that go along with that. Are you seeing an increase in the investigations, the enforcement efforts that are going on at the FTC?

Also, let me throw a second question out, and any of the panelists who feel comfortable answering it, can. We are talking about the State level. Have you seen promising investigations of enforcement at the State level at this point that can add to the dramatic increase that is going to be necessary for a sufficient deterrent?

Mr. Schwartz. To follow-up on the FTC question, we--they don't tell us about ongoing investigations. They--it is against their rules to do that. So we don't know how many they have. They have told us that they are investigating cases, and certainly, when we have gone to brief them on certain things that we have been seeing, there have been more people in the room now than there were a year ago. So that--it seems as though that is a positive sign toward doing more--toward doing better enforcement.

The issue, I think, of the complexity, though, of these kinds of cases really does go to your point in terms of needing more resources to be able to do something like this. Taking this on on our own, and when we did the Seismic case, it took us a great deal of time just to map out the different players and the--that were involved, and still of them we still don't know, to this day. It takes the FTC the ability to do the same kind of mapping and then go in and get discovery and find out all of the players involved and then go through all of their files and find out all of those players involved. It is quite an extensive process to do one of these--the forensics for one of these cases together. And I don't want that to be lost, because certainly raising the penalties does give them more power, but it doesn't serve as a deterrent if you can't use it.

Mr. Schmidt. I would like to make two quick comments on that. For the FTC, particularly Commissioner Swindle has been a leader in this area, from FTC working, not only with the Congress as well as private sector, but also the OECD. But it is tantamount to drinking from a fire hose is what it boils down to, which is why a lot of the efforts we are doing, and we are hoping this bill helps, is become an incentive not to do these sort of behaviors so we can get it down to something that is manageable.

The other thing relative to FTC, like any other law enforcement agency or any investigator or regulatory body, they just don't--will never have the resources, which is why they are oftentimes augmented by their counterparts in private sector. You know, the provisions of Title 182703, which gives us the ability to protect our networks, we can collect a lot of information and turn that over to FTC or turn it over to law enforcement, which they may have the challenges in doing so with the lack of resources. So we can actually become very good partners, and we have seen that happen on a regular basis.

Mr. Rubinstein. I would just add, Congresswoman, that Microsoft, EarthLink, AOL all now have a long history of bringing hundreds of lawsuits in the spam arena, and I think we are all starting to gear up additional legal and investigatory resources to devote to some of these new threats, such as spyware and phishing. So we hope to bring more cases and to cooperate both at the Federal and the State level.

Ms. Baldwin. Any comment about the State level enforcements or investigations that have been helpful in this?

Mr. Schwartz. Well, there haven't really been that many State level enforcements. We have been contacted by a few attorney generals and a few State district attorneys as well on certain cases, but again, it is--cases are extremely complex, and we haven't been able to really map out those cases in the same way that we could in the Seismic case. I know that they have resources that they are putting toward it, but we haven't seen the fruits of the labor yet.

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