Chances are you have never heard of the “Undertaking Spam, Spyware, And Fraud Enforcement With Enforcers Beyond Borders Act of 2006,” an addition to the Federal Trade Commission’s (FTC) enforcement statute known as the “SAFE WEB Act.” If you’re selling to consumers abroad via the Internet, however, or own foreign companies that are selling in the U.S., or have assets overseas that were derived from U.S. sales, then it’s time you and the SAFE WEB Act got acquainted.

The FTC, of course, is first and foremost an American consumer protection agency, with the vast majority of its cases involving U.S. companies marketing to U.S. consumers. “Cross-Border” enforcement, however, is nothing new, having been utilized successfully, for instance, in several FTC crackdowns against fraudulent Canadian telemarketing schemes selling in the U.S. What is new, however, is the borderless world of the Internet, which presents boundless opportunities for sellers to reach buyers all over the globe. This presents the FTC and its foreign counterparts with a whole new set of challenges in regulating international commerce.

Enter the SAFE WEB Act, which Congress passed at the FTC’s behest to give it and its foreign analogues tools that are more adequate to the task of policing consumer deception on a global scale. These tools enable greater information-sharing and investigative cooperation between the FTC and foreign regulators to aid enforcement efforts in their respective countries. Mouse

Two provisions of the law should be of particular interest to U.S. Internet marketers selling internationally and holding assets abroad. One enables the FTC to tap resources of the Department of Justice (DOJ) in foreign litigation to reach offshore assets and enforce U.S. court judgments abroad against FTC defendants. The other confirms that the FTC has jurisdiction not only over foreigners selling to consumers in the U.S., but also over U.S. companies selling to consumers in other nations.

The FTC already has used these provisions effectively. In FTC v. Data Business Solutions Inc., for example, which involved purportedly bogus domain name registration invoices sent to consumers and allegedly ill-gotten gains deposited in Canadian bank accounts, the FTC and DOJ, working together, retained foreign counsel to take legal steps to preserve those funds and gain evidence for the FTC’s case. In another, FTC v. Balls of Kryptonite, the FTC obtained a settlement with a U.S. Internet marketer that sold electronic goods in the United Kingdom using foreign websites ending in “.co.uk” that allegedly tricked British consumers into believing it was a U.K. company. This misled them to think their purchases would be protected by warranties that were valid there.

With the FTC making full use of the SAFE WEB Act, U.S. Internet marketers should have no illusion that they are safe from its grip just because their sales or assets are on foreign shores. They need to be as compliance-conscious about the business they do in the U.K., the European Union and elsewhere around the world as they need to be about the business they do at home.

By WilliamRothbard

William Rothbard was an attorney with the Federal Trade Commission, holding positions as an advertising enforcement attorney, Deputy Assistant Director of the Bureau of Consumer Protection, and Attorney-Advisor to FTC Chairman Michael Pertschuk. Bill has practiced law continuously since 1984, except for a two-year appointment as Counsel to the United States Senate Judiciary Committee, Subcommittee on Antitrust, Monopolies and Business Rights, in 1987-88. Bill writes a excellent blog with the latest news here.

15 thoughts on “FTC becoming more aggressive on misleading advertising practices”
  1. How is that I have never heard of this before?!? It is amazing just how much crap gets swept under the rug or pushed aside. Stuff is still there just ‘out of sight out of mind’.

  2. Greater information sharing? Yea, that’s just what we need with all this NSA crap going on. Now not only does the US get to know everything but we’re also sharing information with foreigners about our shopping habits. Screw that.

  3. I’m glad that things like this exist, they seem to be there to really protect consumers and the sellers can just deal with it as they’re the ones profiting from it all at the end of the day.

  4. Hey Jeremy, Thanks for sharing your insights into international e-commerce and how the roles of the FTC and SAFE WEB Act work with regards to international companies and transactions completed within the USA. It’s the scam artists and low life business people who ruin internet marketing and foreign trade for the rest of us. I look forward to reading more of your posts. I hope that you are having a great start to your week. Keep smiling and have fun amigo 🙂

  5. I had no idea that warranties changed depending on the origination of the item sold. Fancy that. I learned something today!

  6. So how effective has this actually been? As much as the United States likes to think that it rules over the world, we (SURPRISE) don’t always get things our way.

  7. I have to wonder really what good this does for anyone. I’m all for regulation for the benefit of the consumers but this all sounds rather shady.

  8. great post. thanks for sharing insights on FTC and safe web act. there are lots of spamming to mislead consumers. Some survey sites are example of this.

  9. The theory part is nice and welcome move, but practically I still think it would be a tough job for nailing companies with offshore proxy companies.

  10. Boy the FTC is finally getting some balls. (I just could not resist the pun.) But really, I have never been too impressed with the FTC and always thought they had no real power. However, it looks like things are changing for them and for the better for all of us.

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