Online Consumer Protection Act

I 117TH CONGRESS 1ST SESSION H. R. 3067 To clarify that a violation of certain terms of service and related materials is an unfair or deceptive act or practice and subject to enforcement by the Federal Trade Commission. IN THE HOUSE OF REPRESENTATIVES MAY 7, 2021 Ms. SCHAKOWSKY (for herself and Ms. CASTOR of Florida) introduced the following bill; which was referred to the Committee on Energy and Commerce A BILL To clarify that a violation of certain terms of service and related materials is an unfair or deceptive act or practice and subject to enforcement by the Federal Trade Com- mission. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Online Consumer Pro- 4 tection Act’’. 5 VerDate Sep 11 2014 06:21 Jun 22, 2021 Jkt 019200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H3067.IH H3067 pbinns on DSKJLVW7X2PROD with BILLS 2 •HR 3067 IH SEC. 2. TERMS OF SERVICE REQUIRED FOR SOCIAL MEDIA 1 PLATFORMS AND ONLINE MARKETPLACES. 2 (a) IN GENERAL.—Each social media platform or on- 3 line marketplace shall establish, maintain, and make pub- 4 licly available at all times and in a machine-readable for- 5 mat, terms of service in a manner that is clear, easily un- 6 derstood, and written in plain and concise language. The 7 terms of service shall meet the following requirements: 8 (1) The terms of service shall include— 9 (A) any terms or conditions of use of any 10 service provided by such person to a consumer; 11 (B) any policies of such person with regard 12 to such service or use of such service by a con- 13 sumer; and 14 (C) the consumer protection policy con- 15 sistent with subsection (b). 16 (2) The terms of service shall cover issues re- 17 lated to the behavior of a service or a user of such 18 service, and shall at a minimum include terms of use 19 related to— 20 (A) payment methods; 21 (B) content ownership, including content 22 generated by a user; 23 (C) policies related to sharing user content 24 with third parties; 25 VerDate Sep 11 2014 06:21 Jun 22, 2021 Jkt 019200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H3067.IH H3067 pbinns on DSKJLVW7X2PROD with BILLS 3 •HR 3067 IH (D) any disclaimers, limitations, notices of 1 nonliability, or the consequences of not agreeing 2 to or complying with the terms of service; and 3 (E) any other topic the Commission deems 4 appropriate. 5 (b) REQUIRED CONSUMER PROTECTION POLICY.— 6 (1) FOR SOCIAL MEDIA PLATFORMS.—For so- 7 cial media platforms, the consumer protection policy 8 required by subsection (a) shall include— 9 (A) a description of the content and behav- 10 ior permitted or prohibited on its service both 11 by the platform and by users; 12 (B) whether content may be blocked, re- 13 moved, or modified, or if service to users may 14 be terminated and the grounds upon which such 15 actions will be taken; 16 (C) whether a person can request that con- 17 tent be blocked, removed, or modified, or that 18 a user’s service be terminated, and how to make 19 such a request; 20 (D) a description of how a user will be no- 21 tified of and can respond to a request that his 22 or her content be blocked, removed, or modified, 23 or service be terminated, if such actions are 24 taken; 25 VerDate Sep 11 2014 06:21 Jun 22, 2021 Jkt 019200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H3067.IH H3067 pbinns on DSKJLVW7X2PROD with BILLS 4 •HR 3067 IH (E) how a person can appeal a decision to 1 block, remove, or modify content, allow content 2 to remain, or terminate or not terminate service 3 to a user, if such actions are taken; and 4 (F) any other topic the Commission deems 5 appropriate. 6 (2) FOR ONLINE MARKETPLACES.—For online 7 marketplaces, the consumer protection policy re- 8 quired by subsection (a) shall include— 9 (A) a description of the products, product 10 descriptions, and marketing material, allowed or 11 disallowed on the marketplace; 12 (B) whether a product, product descrip- 13 tions, and marketing material may be blocked, 14 removed, or modified, or if service to a user 15 may be terminated and the grounds upon which 16 such actions will be taken; 17 (C) whether users will be notified of prod- 18 ucts that have been recalled or are dangerous, 19 and how they will be notified; 20 (D) for users— 21 (i) whether a user can report sus- 22 pected fraud, deception, dangerous prod- 23 ucts, or violations of the online market- 24 VerDate Sep 11 2014 06:21 Jun 22, 2021 Jkt 019200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H3067.IH H3067 pbinns on DSKJLVW7X2PROD with BILLS 5 •HR 3067 IH place’s terms of service, and how to make 1 such report; 2 (ii) whether a user who submitted a 3 report will be notified of whether action 4 was taken as a result of the report, the ac- 5 tion that was taken and the reason why ac- 6 tion was taken or not taken, and how the 7 user will be notified; 8 (iii) how to appeal the result of a re- 9 port; and 10 (iv) under what circumstances a user 11 is entitled to refund, repair, or other rem- 12 edy and the remedy to which the user may 13 be entitled, how the user will be notified of 14 such entitlement, and how the user may 15 claim such remedy; and 16 (E) for sellers— 17 (i) how sellers are notified of a report 18 by a user or a violation of the terms of 19 service or consumer protection policy; 20 (ii) how to contest a report by a user; 21 (iii) how a seller who is the subject of 22 a report will be notified of what action will 23 be or must be taken as a result of the re- 24 port and the justification for such action; 25 VerDate Sep 11 2014 06:21 Jun 22, 2021 Jkt 019200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H3067.IH H3067 pbinns on DSKJLVW7X2PROD with BILLS 6 •HR 3067 IH (iv) how to appeal a decision of the 1 online marketplace to take an action in re- 2 sponse to a user report or for a violation 3 of the terms of service or consumer protec- 4 tion policy; and 5 (v) the policy regarding refunds, re- 6 pairs, replacements, or other remedies as a 7 result of a user report or a violation of the 8 terms of service or consumer protection 9 policy. 10 (c) STANDARD SHORT-FORM STATEMENTS AND 11 GRAPHIC ICONS FOR CONSUMER PROTECTION PRAC- 12 TICES.— 13 (1) STUDY AND REPORT.—Not later than 180 14 days after the date of the enactment of this Act, the 15 Commission shall conduct a study to determine the 16 most effective method of communicating common 17 consumer protection practices in short-form con- 18 sumer disclosure statements or graphic icons that 19 disclose the consumer protection and content mod- 20 eration practices of social media platforms and on- 21 line marketplaces. The Commission shall submit a 22 report to the Committee on Energy and Commerce 23 of the House of Representatives and the Committee 24 on Commerce, Science, and Transportation of the 25 VerDate Sep 11 2014 06:21 Jun 22, 2021 Jkt 019200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H3067.IH H3067 pbinns on DSKJLVW7X2PROD with BILLS 7 •HR 3067 IH Senate with the results of the study. The report 1 shall also be made publicly available on the website 2 of the Commission. 3 (2) REGULATIONS.—Except as provided in 4 paragraph (3), after completion of the study and not 5 later than 1 year after the date of the enactment of 6 this Act, the Commission shall finalize regulations 7 based on the results of such study that require social 8 media platforms and online marketplaces to commu- 9 nicate their consumer protection and content mod- 10 eration practices, and any other information as the 11 Commission may determine, in a clear and con- 12 spicuous manner. 13 (3) EXCEPTION.—If the Commission deter- 14 mines, by a majority vote of the Commissioners, that 15 short-form consumer disclosure statements or graph- 16 ic icons will not advance consumer understanding of 17 consumer protection and content moderation prac- 18 tices of social media platforms and online market- 19 places, the Commission shall include its reasoning 20 for making that determination in the report to Con- 21 gress required by paragraph (1) and shall not final- 22 ize the rulemaking until it determines such rules 23 would advance consumer understanding of consumer 24 VerDate Sep 11 2014 06:21 Jun 22, 2021 Jkt 019200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H3067.IH H3067 pbinns on DSKJLVW7X2PROD with BILLS 8 •HR 3067 IH protection and content moderation practices of social 1 media platforms and online marketplaces. 2 SEC. 3. CONSUMER PROTECTION PROGRAM. 3 (a) IN GENERAL.—Each social media platform and 4 online marketplace shall establish and implement a con- 5 sumer protection program that includes policies, practices, 6 and procedures regarding consumer protection and con- 7 tent moderation— 8 (1) to— 9 (A) ensure compliance with applicable Fed- 10 eral, State, and local consumer protection laws; 11 (B) develop, implement, and ensure com- 12 pliance with the terms of service required by 13 section 2; 14 (C) develop and implement policies regard- 15 ing the content and behavior permitted on its 16 service both by the platform and users, and en- 17 sure compliance with such policies, practices 18 and procedures; 19 (D) mitigate risks that could be harmful to 20 consumer’s safety, well-being, and reasonable 21 expectations of users of the social media plat- 22 form or online marketplace; 23 (E) implement reasonable safeguards with- 24 in, and training and education of employees and 25 VerDate Sep 11 2014 06:21 Jun 22, 2021 Jkt 019200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H3067.IH H3067 pbinns on DSKJLVW7X2PROD with BILLS 9 •HR 3067 IH contractors of, the social media platform or on- 1 line marketplace to promote compliance with all 2 consumer protection laws and the consumer 3 protection program; and 4 (F) disclose any other requirement the 5 Commission deems appropriate; and 6 (2) taking into consideration— 7 (A) the size of, and the nature, scope, and 8 complexity of the activities engaged in by the 9 social media platform and online marketplace; 10 (B) the activities engaged in by users on 11 the social media platform or online market- 12 place; and 13 (C) the cost of implementing the program. 14 (b) ADDITIONAL REQUIREMENTS.—As part of the 15 consumer protection program, a social media platform or 16 online marketplace shall— 17 (1) establish processes to monitor, manage, and 18 enforce the social media platform’s or online market- 19 place’s consumer protection program, and dem- 20 onstrate the covered entity’s compliance with Fed- 21 eral, State, and local consumer protection laws; 22 (2) establish processes to assess and mitigate 23 the risks to individuals resulting from the social 24 media platform’s or online marketplace’s amplifi- 25 VerDate Sep 11 2014 06:21 Jun 22, 2021 Jkt 019200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H3067.IH H3067 pbinns on DSKJLVW7X2PROD with BILLS 10 •HR 3067 IH cation of content or products not in compliance with 1 its terms of service; 2 (3) establish a process to periodically review 3 and update the consumer protection program; 4 (4) appoint a consumer protection officer, who 5 reports directly to the chief executive officer; and 6 (5) establish and implement controls to monitor 7 and mitigate known or reasonably foreseeable risks 8 to consumers resulting from hosting content or prod- 9 ucts. 10 (c) ANNUAL FILINGS TO THE FTC.— 11 (1) FILING REQUIREMENTS.—Each social 12 media platform or online marketplace that either has 13 annual revenue in excess of $250,000 in the prior 14 year or that has more than 10,000 monthly active 15 users on average in the prior year, shall be required 16 to submit to the Commission, on an annual basis, a 17 filing that includes— 18 (A) a detailed and granular description of 19 each of the requirements in section 2 and this 20 section; 21 (B) the name and contact information of 22 the consumer protection officer required under 23 subsection (b)(4); and 24 VerDate Sep 11 2014 06:21 Jun 22, 2021 Jkt 019200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H3067.IH H3067 pbinns on DSKJLVW7X2PROD with BILLS 11 •HR 3067 IH (C) a description of any material changes 1 in the consumer protection program or the 2 terms of service since the most recent prior dis- 3 closure to the Commission. 4 (2) OFFICER CERTIFICATION.—For each entity 5 that submits an annual filing under paragraph (1), 6 the entity’s principal executive officer and the con- 7 sumer protection officer required under subsection 8 (b)(4), shall be required to certify in each such an- 9 nual filing that— 10 (A) the signing officer has reviewed the fil- 11 ing; 12 (B) based on such officer’s knowledge, the 13 filing does not contain any untrue statement of 14 a material fact or omit to state a material fact 15 necessary to make the statements, in light of 16 the circumstances under which such statements 17 were made, not misleading; 18 (C) based on such officer’s knowledge, the 19 filing fairly presents in all material respects the 20 consumer protection practices of the social 21 media platform or online marketplace; and 22 (D) the signing consumer protection offi- 23 cer— 24 VerDate Sep 11 2014 06:21 Jun 22, 2021 Jkt 019200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\H3067.IH H3067 pbinns on DSKJLVW7X2PROD with BILLS 12 •HR 3067 IH (i) is responsible for establishing and 1 maintaining safeguards and controls to 2 protect consumers and administer the con- 3 sumer protection program; and 4 (ii) has provided all material conclu- 5 sions about the effectiveness of such safe- 6 guards and controls. 7 (3) PUBLIC AVAILABILITY.—The Commission 8 shall make publicly available on the website of the 9 Commission the filings submitted under paragraph 10 (1). The Commission may withhold information in- 11 cluded in such a filing if the Commission determines 12 such information should not be public. If the Com- 13 mission withholds any information, the Commission 14 shall make publicly available on the website the cat- 15 egory of information withheld and the reasons for 16 withholding it. 17 SEC. 4. ENFORCEMENT. 18 (a) ENFORCEMENT BY FEDERAL TRADE COMMIS- 19 SION.— 20 (1) UNFAIR OR DECEPTIVE ACTS OR PRAC- 21 TICES.—Any violation of this Act shall be treated as 22 a violation of a regulation under section 18(a)(1)(B) 23 of the Federal Trade Commission Act (15 U.S.C. 24 VerDate Sep 11 2014 06:21 Jun 22, 2021 Jkt 019200 PO 00000 Frm 00012 Fmt 6652 Sfmt 6201 E:\BILLS\H3067.IH H3067 pbinns on DSKJLVW7X2PROD with BILLS 13 •HR 3067 IH 57a(a)(1)(B)) regarding unfair or deceptive acts or 1 practices. 2 (2) POWERS OF COMMISSION.—The Commis- 3 sion shall enforce this Act in the same manner, by 4 the same means, and [Text truncated for display. 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