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Public Workshop: Public/Private Partnerships To Combat Cross-Border Fraud

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AGENCY:

Federal Trade Commission.

ACTION:

Notice of public workshop and opportunity for comment.

SUMMARY:

The Federal Trade Commission (“FTC” or “Commission”) will hold a public workshop on how to build public/private partnerships to combat cross-border fraud against consumers. The workshop will explore how the private and public sectors can work together to identify, stop, and bring effective enforcement actions against cross-border fraud operators; any legal constraints on cooperation; and recommendations for partnerships and legislative and other measures to assist the FTC in combating cross-border fraud.

DATES:

The workshop will be held on February 19 and 20, 2003, from 9 a.m. to 5 p.m., at FTC headquarters, 600 Pennsylvania Avenue, NW., Washington, DC, in Commission Meeting Room 432 and Room 332 (overflow). The workshop is open to the public and there is no fee for attendance. Pre-registration is not required.

Request to Participate as a Panelist: A written request to participate as a panelist in the workshop must be filed by January 24, 2003. If you are selected, you will be notified on or before January 31, 2003. For further instructions, please see the “Requests to Participate as a Panelist in the Workshop” section below.

Written Comments: Whether or not selected to participate as a panelist, you may submit written comments on the general subject of the workshop and in response to any discussion questions that are posed below. Such comments must be filed on or before February 14, 2003. For further instructions on submitting comments, please see the “Form and Availability of Comments” section below. To read our policy on how we handle the information that you submit, please visit http://www.ftc.gov/​ftc/​privacy.htm

ADDRESSES:

Written comments and any request to participate as a panelist in the workshop should be submitted to: Secretary, Federal Trade Commission, Room 159, 600 Pennsylvania Avenue, NW., Washington, DC 20580. Alternatively, they may be sent by e-mail to crossborderfraud@ftc.gov.

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FOR FURTHER INFORMATION CONTACT:

Stacy Feuer, (202) 326-3072, Start Printed Page 79932 sfeuer@ftc.gov, or Maureen Cooney, (202) 326-3485, mcooney@ftc.gov, International Division of Consumer Protection, Federal Trade Commission, 600 Pennsylvania Avenue, NW., Washington, DC 20580. A detailed agenda and additional information on the workshop will be posted on the FTC's Web site, http://www.ftc.gov, by February 5, 2003.

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SUPPLEMENTARY INFORMATION:

Background Information and Workshop Goals

The globalization of the marketplace poses new and difficult challenges for consumer protection law enforcement. Developments in trade and technology have given consumers and businesses wide and unprecedented access to new products, information, and markets. These innovations have provided consumers and businesses with considerable benefits. But fraud operators also have exploited these developments to deceive large numbers of consumers in numerous jurisdictions. Pyramid and lottery schemes, travel and credit-related ploys, and high-tech scams such as modem and page hijacking are examples of the types of frauds perpetrated across national borders that victimize consumers, harm legitimate businesses, and reduce consumer confidence in the global marketplace.

It is often more difficult to combat cross-border fraud than to combat domestic scams. Cross-border fraud operators strike quickly using easily accessible mechanisms (including telephone, e-mail, and the world wide web); victimize thousands of consumers in a short period of time; and disappear (along with the proceeds of their frauds). They face a relatively low threat of civil or criminal prosecution because law enforcement agencies have only a limited ability to pursue fraud operators outside their jurisdiction and may be constrained in sharing evidence with their foreign counterparts. Moreover, court-ordered remedies prohibiting fraud operators from engaging in certain conduct generally are ineffective across borders.

The FTC has been developing new strategies to deal with the challenges posed by cross-border fraud.[1] It has built relationships with its law enforcement counterparts abroad to enforce laws prohibiting unfair or deceptive practices and also has worked with private sector entities including businesses, industry associations, and consumer groups. Now, the FTC seeks to expand its ability to combat cross-border fraud by increasing cooperation between the Commission and such private sector entities.

As a first step, the Commission will convene a workshop to examine the public and private sectors' mutual interests in combating cross-border fraud. Business and industry representatives, state and federal consumer protection and financial regulators, and consumer groups that have encountered problems with cross-border fraud are especially encouraged to participate. We also invite foreign businesses and foreign government officials that have engaged in successful public/private partnerships to attend the workshop.

Workshop participants will discuss existing private sector initiatives to combat cross border fraud as well as existing barriers to increased cooperation. Participants also will explore when and how the private sector can share information about fraud with law enforcement authorities, including financial and asset information about investigative targets and defendants. Panelist also will discuss how, in appropriate circumstances, legitimate private sector businesses can fight fraud by suspending domain names, telephone services, mailing services, or payments and credit processing services to fraud operators located aboard who are often difficult to reach through court orders. Participants also will address the feasibility of using practical and technological solutions from the private sector to address cross-border fraud perpetrated over the Internet. Participants are also invited to discuss business-to-business initiatives that might be instructive in developing new ways to combat cross-border consumer fraud.

We encourage interested parties to submit ideas for ways to increase public/private cooperation to combat cross-border fraud. We also invite interested parties to highlight any obstacles to private sector cooperation in combating cross-border fraud; to submit ideas for legislative and other changes to address these obstacles; and to discuss potential disincentives to increased cooperation and ways to overcome those disincentives.

Following the workshop, the Commission plans to prepare a report to the U.S. Congress discussing certain constraints on international law enforcement cooperation facing both the FTC and the private sector, and suggesting ways to improve cross-border law enforcement. We hope to include appropriate proposals that emerge from the workshop.

Below is a non-exhaustive list of issues to be addressed at the workshop. Written comments need not address all of these issues.

1. General Issues

To set the framework for the workshop, the FTC requests comments on the general issues raised by the workshop:

a. What cross-border fraud issues is the private sector facing or expecting? How do businesses, industry associations, and consumer groups define and identify cross-border fraud in the consumer context?

b. How can the private sector assist the FTC in fighting cross-border fraud?

c. What mechanisms does the private sector currently use to detect, stop, and deter cross-border fraud? Are there existing business-to-business initiatives that could serve as models for partnerships between the FTC and the private sector? How can these mechanisms and initiatives be adapted, improved or expanded?

d. What are the key obstacles to expanded public/private cooperation in fighting cross-border fraud?

e. What are the potential downsides for the private sector in cooperating with the FTC in fighting cross-border fraud? What, if anything, can the FTC do to mitigate any potential negative effects?

f. What information about the extent of cross-border fraud, and about costs to legitimate businesses, including statistical informaiton, can the private sector provide to the FTC? What information can the private sector provide about costs related to cooperation with law enforcement?

2. Infornmation Sharing

Different panels of the workshop will address the ability of the private sector to share information with the FTC—both to prevent and detect fraud and to assist the FTC in providing redress to the victims of fraud. The FTC requests comments on the following general information sharing issues:

a. What types of information can private entities share with the FTC about investigative targets and defendants in civil fraud matters?

b. Are there mechanisms for sharing information among private sector entities that could assist the FTC in fighting cross-border fraud?Start Printed Page 79933

c. Are there legal, structural, technological or other limits on the private sector's ability to share information about investigative targets and defendants with the FTC in civil fraud investigations and lawsuits?

d. Are there ways that legitimate businesses can share consumer complaints they receive with the FTC for inclusion in the FTC's Consumer Sentinel database? [2]

e. What role does consumer consent play in relation to information sharing?

f. Is there information that the FTC could share with the private sector that would facilitate private sector assistance to the FTC in civil fraud investigations and lawsuits?

g. Are there legal or other limits on the FTC's ability to share information with private entities that inhibit the private sector from providing information about investigative targets and defendants to the FTC in civil fraud investigations and lawsuits?

h. Are there legal or other limits on other public sector agencies sharing information with the FTC, including information obtained through partnerships with the private sector, in civil fraud investigations and lawsuits?

i. What legislative or other changes could relieve constraints on information sharing with the FTC in civil fraud investigations and lawsuits?

3. The Financial Sector

The financial sector has had much experience with cross border consumer transactions. We recognize that cross-border fraud harms consumer confidence in the global marketplace and presents challenges to participants in the financial system. The FTC seeks comment on the extent and costs of cross-border consumer fraud to the private sector, and on methods that financial sector entities can employ to stop fraud and reduce the profitability and proliferation of cross-border schemes:

a. What are the costs of cross-border consumer fraud to legitimate businesses, including businesses in the financial sector such as financial institutions and other financial services providers, credit-card issuers, electronic payment systems operators, and money transmitters (collectively, “financial sector entities”)? How are these costs measured?

b. What are some mechanisms for practical cooperation between the FTC and financial sector entities in fighting cross-border telemarketing fraud, identity theft, pretexting, and the variety of scams that misuse financial and payment systems?

c. Are there ways in which financial sector entities can assist in combating cross-border fraud by providing information to the FTC about suspicious transactions or other questionable financial practices of concern in FTC civil fraud investigations and lawsuits?

d. Are there circumstances in which financial sector entities can assist the FTC by cutting off fraud operators' access to their services or by interrupting or suspending financial transaction processing and settlement through various payment systems?

e. Are there ways in which financial sector entities can assist the FTC in civil fraud investigations and lawsuits by providing the FTC with information about investigative targets or defendants that have transferred funds to unrelated offshore entities and/or by providing the FTC with information from their offshore subsidiaries or affiliates?

f. Are there legal or other limits on financial sector entities assisting the FTC in civil fraud investigations and lawsuits? If so, are there any legislative or other changes that would relieve these constraints?

g. What are the costs of cross-border consumer fraud to financial sector participants and financial markets through fraudulent activities by FTC investigative targets and defendants as a result of misuse of legitimate payment systems, asset dissipation, and other financial frauds used by FTC investigative targets and defendants?

h. What are the possibilities for increased information sharing with the FTC, particularly concerning targets and defendants that have transferred the proceeds of consumer fraud schemes offshore in circumvent FTC civil consumer redress judgments?

4. Internet

The FTC seeks comment on how Internet service providers, domain registrars, and other Internet-related businesses can assist in preventing fraud operator from using the Internet to perpetrate fraudulent schemes?

a. Are there ways in which the private sector can provide assistance to the FTC in civil fraud investigations and lawsuits to identify, locate, and track cross-border fraud operators who use the Internet (including email) to perpetrate fraudulent schemes?

b. Can the private sector provide practical or technological solutions for combating fraudulent schemes perpetrated over the Internet (including by email) to the FTC in civil fraud investigations and lawsuits?

c. Are there ways in which electronic communications providers can improve or modify their policies and practices regarding data retention and disclosure of investigative requests for information, subject to existing law, to facilitate information sharing in civil fraud investigations and lawsuits?

d. Are there any legal or other limits to providing such assistance to the FTC in civil fraud investigations and lawsuits? If so, are there any legislative or other changes that would relieve such constraints?

5. Other Third-Party Service Providers

Cross-border fraud operators often use a variety of other commercial services to perpetrate frauds and dissipate assets. Some of these businesses engage in legitimate business activities while others are participants in the fraud. The FTC seeks comment on how legitimate commercial third-party service providers can assist the FTC:

a. What role can service providers, such as telephone and wireless carriers, commercial mailbox facilities, private courier services, telephone call centers, list brokers, and mail-order fulfillment houses, play in helping to combat cross-border fraud?

b. Are there ways in which service providers can share information with the FTC about suspicious transactions or questionable business practices by investigative targets or defendants in civil fraud investigations and lawsuits?

c. Are there ways in which service providers can suspend services to FTC investigative targets or defendants? What are the appropriate circumstances for doing so?

d. Are there ways in which service providers can improve or modify their policies and practices regarding data retention and disclosure of investigative requests for information, subject to existing law, to facilitate information sharing in civil fraud investigations and lawsuits?

6. Public/Private Models for Cooperation

The FTC recognizes that, around the world, there are a variety of government and non-governmental entities that participate in prosecuting consumer fraud. The FTC also recognizes that law enforcement authorities in the U.S. and in other countries have formed successful public/private partnerships to combat other types of crime and civil fraud. The FTC seeks to learn from these experiences:

a. What existing public/private partnership models with federal or state civil or criminal law enforcement authorities in the U.S. and foreign law Start Printed Page 79934enforcement authorities can be adapted to assist the FTC in combating cross-border fraud?

7. Consumer and Business Education Partnerships

The FTC frequently works with businesses and industry to provide education on consumer issues. The FTC seeks comment on ways it can engage with the private sector to provide education about cross-border fraud:

How can the FTC, other public entities, and the private sector partner to better educate consumers and businesses about ways to thwart cross-border fraud?

Request To Participate as a Panelist in the Workshop

If you wish to participate as a panelist in the workshop, you must notify the FTC in writing by January 24, 2003. Such requests should be made either by mail to the Secretary of the FTC or by e-mail to crossborderfraud@ftc.gov. A request to participate as a panelist should be captioned “Public Workshop: Public/Private Partnerships to Combat Cross-Border Fraud—Request to Participate, P035302.” Each person is asked to include in the request the topic area for participation, a statement of expertise in or knowledge of the issues relevant to that topic, and contact information, including a telephone number, and email address. Unless submitting by email, an original and two copies of each document should be submitted. Panelists will be notified of their selection by January 31, 2003.

Using the following criteria, FTC staff will select a limited number of panelists to participate in the workshop:

1. The party has expertise in or knowledge of the issues that are the focus of the workshop.

2. The party's participation would promote a balance of interests being represented at the workshop.

3. The party has been designated by one or more interested parties who timely file requests to participate as a party who shares group interests with the designator(s).

In addition, there will be time during the workshop for those not serving as panelists to ask questions.

Form and Availability of Comments

To facilitate the discussion, the FTC requests that interested persons submit written comments on the general subject of the workshop and in response to any questions posed on issues that could be addressed. Comments should be captioned “Public Workshop: Public/Private Partnerships to Combat Cross-Border Fraud—Comment, P035302.”

Persons sending written comments should submit an original and two copies of each document. To enable prompt review and public access, paper submissions should include a version on diskette in PDF, ASCII, WordPerfect, or Microsoft Word format. Diskettes should be labeled with the name of the person, and the name and version of the word processing software used to create the document. Alternatively, comments may be emailed to crossborderfraud@ftc. gov.

Written comments will be available for public inspection in accordance with the Freedom of Information Act, 5 U.S.C. 552, and FTC regulations, 16 CFR part 4.9, Monday through Friday between the hours of 8:30 a.m. and 5 p.m. at the Public Reference Room 130, Federal Trade Commission, 600 Pennsylvania Avenue, NW., Washington, DC 20580. This notice and, to the extent technologically possible, all comments will also be posted on the FTC Web site, http://www.ftc.gov.

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By direction the Commission.

Donald S. Clark,

Secretary.

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Footnotes

1.  For a discussion of specific challenges and approaches to cross-border fraud, see The Interface of Competition and Consumer Protection, Prepared Remarks of Timothy J. Muris, Chairman, Federal Trade Commission, at the Fordham Corporate Law Institute's Twenty-Ninth Annual Conference on International Antitrust Law and Policy, New York City, October 31, 2002. A copy of the text can be found at http://www.ftc.gov/​speeches/​muris/​021031fordham.pdf.

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[FR Doc. 02-32991 Filed 12-30-02; 8:45 am]

BILLING CODE 6750-01-M