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Privacy
Phone Spying Should Focus On Frauds, Firms Say
by Andrew Noyes
Wireless telephone company executives said Friday that legislative efforts to curtail "pretexting" should focus on those who try to illegally obtain customer call records, not telephone carriers that also are victims of such fraudulent tactics.
Witnesses at the second day of hearings into a spying scandal involving Hewlett-Packard unanimously backed legislative efforts to criminalize pretexting. But they expressed concerns with language in a measure, H.R. 4943, that would make their firms more accountable for questionable information disclosures. The bill would instruct the FCC to implement more stringent security standards for handling proprietary network information.
The measure, approved by the House Energy and Commerce Committee in March, awaits a vote by the full chamber. The bill would require periodic FCC compliance audits of phone carriers and would require companies to maintain records of each time customers' call logs are requested, accessed or disclosed to impersonators.
The legislation proposes rules for companies to encrypt call logs and require deletion of customer records after a "reasonable" time if it is no longer necessary for the purpose collected. Companies would be slapped with tripled penalties for violating various provisions of the bill.
The measure's disappearance from the floor schedule in the spring annoyed subcommittee members. Texas Republican Joe Barton, who chairs the full committee, said it stands a "reasonable chance" of being voted on Friday, but a spokesman for House Majority Leader John Boehner, R-Ohio, said that is not the case.
Wireless executives touted efforts they have undertaken to fight pretexting. Thomas Meiss, Cingular Wireless's associate general counsel, said his company has revamped training procedures for employees to specifically address pretexting and has filed six lawsuits against defendants he called "thieves, plain and simple."
Verizon Wireless Litigation Counsel Michael Holden stressed that lawsuits "target the bad guys" and let his company obtain details that boost defenses against future attacks. Alltel, Sprint Nextel, T-Mobile and U.S Cellular also have taken steps to thwart frauds, their representatives said.
Regulators are involved, too. The FTC has filed five lawsuits against brokers who sold phone records without consumers' knowledge, said Joel Winston of the Bureau of Consumer Protection. A settlement in one case is due next week, he said.
The FCC initiated a proceeding to determine what additional rules are needed to further protect call data, said Enforcement Bureau Chief Kris Anne Monteith. Chairman Kevin Martin intends to ask commissioners to vote on the proposal this fall.
Also at the hearing, New York Post writer Christopher Byron recounted his experience as a victim of pretexting. After countless calls to AT&T, an unnamed imitator found "someone dumb enough" to release logs for calls Byron made in connection with an article he was writing. He said the practice could render assurances of source confidentiality meaningless.
Private investigator Doug Atkin refused to talk, citing his Fifth Amendment rights against self-incrimination. According to subcommittee research, Atkin was a major purchaser of call lists maintained by P.D.J. Services, which operates a data broker site named phonebust.com.
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Lobbying
HP Fought Against 'Pretexting' While Engaging In It
by Andrew Noyes
Hewlett-Packard spends hundreds of thousands of dollars a year on a battalion of lobbyists who try to influence lawmakers on a host of high-tech topics, according to data at OpenSecrets.org. This year's issues included lobbying on bills to curb the fraudulent accessing and selling of telephone records, sources said.
The practice, called "pretexting" is at the heart of a corporate scandal currently faced by the company, whose former executives, attorneys and third-party investigators appeared before a House oversight panel Thursday. HP admitted to spying on board members, employees and reporters to find the source of an internal media leak.
The Palo Alto, Calif.-based firm used pretexting and other tactics, including tracking e-mails, physical surveillance and searching through dumpsters, in its investigation. At the same time in Washington, HP lobbyists were cheering legislation to boost consumer data security and privacy.
One such bill, H.R. 4943, originated in the House Energy and Commerce Committee, whose Oversight and Investigations Subcommittee grilled HP executives at the hearing. The measure is awaiting a House floor vote. The House unanimously passed a similar bill, H.R. 4709, in May.
The Senate has its own measures pending: S.2389, which was approved by the Commerce Committee in March; and S. 2178, which is before the Judiciary Committee.
"While I was introducing this bill ... what was HP telling Congress about whether we should have these tools? What were your lobbyists telling us?" Rep. Jay Inslee, D-Wash., wondered aloud Thursday. Ousted Chairwoman Patricia Dunn could not say.
Dunn herself said she backs H.R. 4943 but was not privy to the day-to-day work of her company's government affairs team. "I think the privacy of individuals needs to be protected with crystal-clear laws," she said.
The company's Washington office pledged support for H.R. 4709 and S. 2178 in a Sept. 18 letter to key lawmakers.
"HP has long been an industry leader on privacy, pushing for comprehensive, pre-emptive federal privacy legislation," HP Vice President of Government Affairs Gary Fazzino said in the letter. "Responsible companies have an obligation to advance consumer and employee rights to have personal information safeguarded."
The bill also would consolidate the legal framework, setting constant expectations for businesses and consumers, the letter stated.
An HP lobbyist said Friday the company had not thoroughly reviewed the other pretexting bills but has "no problem" with pre-emption of state laws. That provision has been identified by Senate sources as the main hurdle in merging the Senate bills.
CEO Mark Hurd, who replaced Dunn as board chairman, spoke plainly at the hearing: "We support making pretexting illegal. You have our support." Hurd also served as HP's chief apologist, offering his regrets that "the investigative team lost sight of the values of this company."
HP soon will provide the victims of the spying with the details obtained about them, the means by which the information was obtained, and when it was collected, Hurd told lawmakers. "Clearly, changes are in order. We will regain our pride," he said.
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Net Governance
New Pact Moves Internet Body Toward Independence
by Winter Casey
The U.S. government will play a lesser role in its oversight role of the no-profit corporation that manages multiple functions of the Internet under an agreement announced Friday.
Commerce Department oversight of the Internet Corporation for Assigned Names and Numbers dates back to a 1998 agreement that was set to expire Sept. 30. On Friday, ICANN signed a new agreement that includes what it calls "major gains" in its move towards independence.
Under the deal, "ICANN will no longer have its work prescribed for it," and "how it works and what it works on is up to ICANN and its community to devise," according to an ICANN statement. The Internet-addressing body said it no longer will be required to report its activities every six months but will provide one annual report to the entire Internet community.
"There is no requirement to report regularly to [Commerce]," the statement said. "The [department] will simply meet with senior ICANN staff from time to time." However, the pact said "the department will hold regular meetings with ICANN senior management and leadership to assess progress" and will conduct a mid-term review of progress.
"Commerce has clearly signaled that multi-stakeholder management of the Internet's system of unique identifiers is the way ahead and ICANN is the obvious organization to take that responsibility," Paul Twomey, president and CEO of ICANN, said in a statement. The agreement "means ICANN is more autonomous," he said.
The department "reaffirms its policy goal of transitioning the technical coordination of the [domain-name system] to the private sector in a manner that promotes stability and security, competition, bottom-up coordination, and representation," the agreement said.
Under the accord, the U.S. government will continue to provide expertise and advice on measures that support greater transparency and accountability of ICANN. The government plans to continue consulting with managers of Internet root-name servers it operates. Commerce also plans to participate in ICANN's Governmental Advisory Committee.
Some in the international community have pushed for a greater role in the underlying decisions of the Internet and called for the creation of a global Internet governance body.
Commerce has not yet issued a decision on a proposed agreement between VeriSign and ICANN that has been the subject of congressional hearings. As part of a February settlement, VeriSign's contract to operate Web addresses ending in .com would be extended to 2012, when the firm would retain a presumptive renewal right as the .com registry.
Both VeriSign and its rival, Network Solutions, applauded Friday's ICANN decision by Commerce.
VeriSign said it supports Commerce's decision because the "the public-private partnership model embodied in the agreement is the best way to ensure the continued growth and safety and security of the Internet." Network Solutions commended "this next step toward the transition of the management of the [domain-name system] to the private sector."
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E-Commerce
Online Payment Service Strikes Deal With Prosecutors
By Kimberly Reeves, for Technology Daily
PayPal has agreed to streamline its user agreements and boost customer-service response under a pre-litigation settlement with 28 states announced Thursday.
PayPal, the electronic payment arm of the eBay online auction site, completed $27.5 billion in transactions last year, making it comparable to many of the nation's largest banks.
Despite the size, though, regulating electronic transactions within the e-commerce industry is not always clear cut. In 33 states, PayPal is regulated under state law as a money transmitter, not unlike a wire-transfer service. When states pursue restitution on behalf of consumers, they often must do so under the auspices of state laws against deceptive trade practices.
Jeff Feldman, an assistant attorney general in Illinois, said states began to discuss the issues surrounding PayPal about three years ago. Feldman had concerns about: conspicuous disclosure of PayPal's terms and protections on its Web pages; the conciseness and functionality of the user agreement; the obviousness of whether bank accounts or credit cards are used during transactions; and the ability of consumers to reach someone by telephone if problems occur.
"The perception was that you were doing business online with a company that says that it's providing the same kind of protections as you have with your credit cards. That's what they said they were doing," Feldman said. "Although the protections looked similar, they were not identical, and that needed to be made clear to consumers."
The PayPal settlement -- which involves no restitution to consumers but does begin set ground rules for the industry -- is one of the largest multi-state actions of its kind, said Paco Felici
, a spokesman for the Texas attorney general's office. With so many consumers in so many states completing online transactions, it was important that states speak with a unified voice on expectations for the industry, Felici said.
"This is a cornerstone agreement with one of the giants in the industry, a company that does business with 100 million users worldwide," Felici said. "With a business of that magnitude, states believed that PayPal needed to do substantially more in terms of disclosure."
Those expectations do not just apply to PayPal, Feldman said. Amazon.com, Google and Yahoo all have expressed interest in creating electronic-transaction companies. PayPal is a significant player but not the end to the industry, Feldman said.
PayPal spokeswoman Sara Bettencourt noted that PayPal already has moved to address concerns cited in the settlement agreement, including prominent display of buyer protection coverage, a shortened user agreement that eliminates hyperlinks and clear confirmations about what accounts are used to complete transactions.
The agreement also requires PayPal to place a "Contact Us" hyperlink at the bottom of each Web page, including a customer-service telephone number. Under the agreement, those phone lines must be staffed 18 hours on weekdays and 14 hours on weekends, with the stipulation that customer wait times be no more than 5 minutes.
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Intellectual Property
Attorney General, Experts Note The Costs Of Piracy
by Winter Casey
Public welfare is threatened by counterfeit goods, U.S. Attorney General Alberto Gonzales said during the second day of a U.S. Chamber of Commerce anti-piracy summit.
"The safety of our people can be threatened" by the lack of intellectual property protections, Gonzales said, citing fraudulent appliances and fake medications as examples. He added that the U.S. "competitive advantage is threatened by piracy."
Gonzales said cooperation government agencies, companies and the victims of crime is the key to protecting intellectual property.
It also "requires the cooperation of Congress," he said. "We are seeking legislation that would, among other things, seek penalties for intellectual property crimes" and increase the tools investigators have at their disposal to fight crime, Gonzales said.
But Mark Weisbrot, the co-director of the Center for Economic and Policy Research, does not advocate legislation as the right approach. "Some smart companies are trying to find ways to make it worthwhile for consumers to buy their products as opposed to buying unauthorized copies rather than simply lobbying the government for more repressive legislation," he said.
"If the government is going to put money into something, they should put money into alternative ways of financing creative and research activity that doesn't create patent or copyright monopolies," he said.
Bob Wright, the chairman of NBC Universal, said at the summit that China is adopting strict intellectual property law. "The growth of China itself will ensure it has its own brands and services," and intellectual property protections will improve, he said.
The argument that technology has outgrown copyright law is wrong, Wright added. "Too many in law enforcement view piracy as minor compared to terrorism and violent crime," he said.
Wright said that in order to improve intellectual property protections, the United States needs to recognize the extent of the problem and collect hard data on its cost to all industries. The private and public sectors need to work together, he said, adding that "industry needs to support wider public policy efforts."
Better technology also can flag counterfeited goods at the border, he said. "We are embracing new digital possibilities" and "doing a lot with digital tagging and watermarking." More technology solutions should be developed and implemented, he said.
Wright said the United States needs to be seen as a leader. "We need to call upon both political parties with elections coming up."
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On The Hill
Election Day Spurs Call For Removal Of E-Voting
by Brittany R. Ballenstedt
Voters go to the polls in a little more than five weeks, and because every vote counts, some lawmakers want to make sure every vote is counted. That explains the bills introduced this week that are aimed at correcting the problems posed by e-voting machines.
"We cannot allow the American people to lose faith in the most fundamental aspect of our democratic system -- the right to vote," said Sen. Russ Feingold, D-Wis. He co-sponsored a bill, S. 3943, with Sen. Barbara Boxer, D-Calif., that aims to reimburse states for printing paper ballots to serve as backup should e-voting machines fail on Election Day.
The measure is a response from grassroots organizations and state and local officials who have expressed increasing concern over touch-screen machines. An estimated 40 percent of voters will use the machines Nov. 7.
"It's a disgrace that a Congress and an administration [that talk] about exporting democracy around the world ignore the challenges of our own democracy right here at home," said Sen. John Kerry, D-Mass. "We have seen American citizens disenfranchised in our elections for the simple reason that no effective backup system was in place."
Kerry and Feingold introduced a resolution, S. Res. 588, on the issue. The resolution notes the difficulties that many states, such as Florida, Maryland and Ohio, have experienced with new voting technology and urges them to ensure that no citizen is denied their right to vote.
And Rep. Dennis Kucinich, D-Ohio, filed a bill, H.R. 6200, that would require states to conduct presidential elections through the use of paper ballots.
On the competitiveness front, Senate Majority Leader Bill Frist, R-Tenn., introduced a measure, S. 3936, that combines some of the education components of earlier competitiveness legislation, incorporates energy initiatives and urges a council on innovation. "This legislation helps keep the United States competitive in technology development by investing both in future innovations and in future innovators," said co-sponsor John Ensign, R-Nev.
Another bill, H.R. 6195, would authorize the National Science Foundation to award grants to education institutions for training programs in information technology.
In response to increasing concerns over data security, Rep. Tom Davis introduced a measure, H.R. 6163, that would require federal agencies to better protect the sensitive information of Americans. The bill, which also could strengthen a separate measure to improve data security at the Veterans Affairs Department, would require that the White House Office of Management and Budget establish criteria for agencies to follow in the event of data breaches.
Other tech-related measures introduced this week were:
-- H.R. 6204, which would establish a small-business information security task force;
-- H.R. 6183, which would enable employers to share data with the Homeland Security Department regarding employees with mismatched Social Security numbers;
-- S. 3935, which would require videogame ratings organizations to include more complete information on the ratings process;
-- And H.R. 6120, which would prohibit deceptive practices in the rating of videogames.
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Today's Feature:
Executive Summary
The chairmen of two powerful Senate committees have been seeking a consensus on a bill to curtail "pretexting," a practice whereby online brokers fraudulently obtain and sell telephone records for a fee.
Every Friday, read the Executive Summary by K. Daniel Glover
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E-briefs
On The Hill: The sponsor of a House bill to target operators of child pornography Web sites said he would resign Friday after questions arose about e-mails that he sent to a former male congressional page. Florida Republican Mark Foley also is a co-chairman of the Congressional Missing and Exploited Children's Caucus. He introduced the bill, H.R. 5749, in July. AP reports that Foley asked in the e-mail to the page how old the boy was and what he wanted for his birthday. Citizens for Responsibility and Ethics in Washington posted the e-mails on its site after ABC News disclosed their existence. Foley's election opponent, Democrat Tim Mahoney, called for an investigation. Foley has said there was nothing inapppropriate about the exchange.
Courts: The House voted late Thursday to test a program in some U.S. district courts for encouraging enhancement of expertise in patent cases among federal judges. The bill, H.R. 5418, was passed by voice vote. The bill would "raise the level of expertise in patent litigation, improve the reliability of patents, and allow businesses to spend more time inventing and less time litigating," said co-sponsor Adam Schiff, D-Calif. Under the measure, a judge would opt in to the program and patent cases would be randomly assigned. When cases are given to judges who did not ask to hear patent cases, they could keep the cases or refer them to judges who are part of the program. The test would last no longer than 10 years, and periodic studies would gauge the project's success. A Senate companion bill, S. 3923, was introduced last week.
On The Hill: At deadline, the re-nomination of Republican FCC Chairman Kevin Martin to a second five-year term was still being blocked by a GOP senator, multiple observers said. They cited Sen. John Sununu, R-N.H., as the culprit, but for the second week in a row, his office did not respond to inquiries. It was unclear whether the hold would be lifted before the Senate adjourns so lawmakers can campaign. Lawmakers return in mid-November for a lame-duck session, leading some to predict it might be lifted then. Martin's first term officially expired in June, but he can remain until the end of next year's congressional session pending reconfirmation. Meanwhile, sources said the Senate Commerce Committee is still haggling over the report language to accompany its telecommunications bill. Sen. Daniel Inouye of Hawaii, the panel's top Democrat, is including commentary critical of the legislation, sources said.
Telecom: California Gov. Arnold Schwarzenegger on Friday signed into law a measure to allow new video service providers in his state to bypass localities and obtain statewide franchises. The bill, A.B. 2987, also would let current video providers opt out of their existing franchises with localities and apply for statewide contracts. Similar measures have been enacted recently in Indiana, Kansas, New Jersey, South Carolina, Texas and Virginia. The proponents of the California bill claim that it will help boost competition in the video market there and lower prices for consumers. "Increased competition will translate into better service and lower prices for everyone," Schwarzenegger said in a statement. "This bill will add another significant player into the cable television marketplace and help speed the spread of new and innovative technologies across the state."
Cyber Security: Several people have received phony e-mail message reportedly from the Congressional Budget Office but that appear to have been sent from outside the United States. "We are not sure how many people received the message or how the address list was obtained," read a CBO notification sent to all subscribers on its e-mail roster. In an e-mail response to a reporter's question, CBO Associate Director for Communications Melissa Merson added that "any breach of a federal computer is a crime so we have reported this limited breach to the appropriate law authorities for there investigation." "It is obvious if you get the e-mail it is not from us," she said, noting that "the breach has been patched." Because the incident could involve a potential crime, Merson would not comment further.
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