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Computer Crime and
Intellectual Property Section (CCIPS) 

Electronic Commerce:  Legal Issues

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  1. Electronic Commerce Working Group (ECWG) of the Department of Justice
  2. Guide for Federal Agencies on Implementing Electronic Processes
  3. Y2K Issues
  4. Consumer Protection in the Global Electronic Marketplace
  5. The Government Paperwork Elimination Act
  6. Internet Gambling
  7. Sale of Prescription Drugs Over the Internet
  8. Congressional Activity on E-Signatures
  9. Executive Order on Unlawful Conduct Using the Internet
  10. Internet Health Care Fraud
  11. Jurisdiction in Lawsuits
  12. Electronic Case Filing at the Federal Courts
  13. The National Infrastructure Protection Center Advisory
     
A.  Electronic Commerce Working Group (ECWG) of the Justice Department
 
The Electronic Commerce Working Group (ECWG) of the Department of Justice consists of lawyers from throughout the Department who are in regular contact to discuss legal issues related to electronic commerce.  The ECWG provides a convenient vehicle for Justice Department attorneys to disseminate information quickly regarding electronic commerce developments.

The ECWG has studied complex and novel legal issues, and helps to coordinate Justice Department positions on emerging legal issues.  For example, the ECWG has a sub-group that meets regularly to study legal issues related to electronic filing and electronic transactions; representatives of this subgroup have met with representatives of other federal agencies to discuss these issues in the context of a particular agency’s processes.

For more information about the Department of Justice’s Electronic Commerce Working Group, please call the Department of Justice’s Computer Crime and Intellectual Property Section, at 202-514-1026.
 

B. Guide for Federal Agencies on Implementing Electronic Processes
 
This guide addresses legal issues that agencies are likely to face in converting to electronic processes and provides suggestions on how to address these issues.  The rise of electronic commerce offers departments and agencies exciting opportunities to convert or redesign existing processes.  At the same time, creating a more accessible and efficient government requires us to maintain public confidence in the security and reliability of the Government’s electronic transactions, processes, and systems.  Thus, in designing electronic systems, departments and agencies should ensure that essential data are available when need and that the data and the underlying processes are legally sufficient, reliable and in compliance with all applicable legal requirements.
  •  Attorney General Reno’s Cover Memorandum to the Guide (November 22, 2000)


    • C.   Y2K Issues

    In an effort to combat efforts by con-artists attempting to use fears of the "Y2K bug" to defraud people, the Justice Department has created a webpage resource designed to help the public avoid Y2K scams.  On November 18, 1999, Deputy Attorney General Eric H. Holder unveiled this new tool, which describes a number of illegal schemes that exploit fears of the Y2K bug, and proposes ways for the public to respond to Y2K fraud.
  • Deputy Attorney General Holder Warns of "Y2K" Fraud, Unveils New Online Resource (November 18, 1999)
    • Eleanor D. Acheson, Assistant Attorney General, Department of Justice, has provided both testimony and a statement to the Judiciary Committees of the Senate and the House of Representatives on the Justice Department’s preliminary views regarding various proposed "Y2K liability" legislation.  She testified before the Senate Judiciary Committee on March 1, 1999 and gave a statement to before the House Judiciary Committee on April 13, 1999.   Her statement and testimony are available via the links below:
    D.   Consumer Protection in the Global Electronic Marketplace
    The Justice Department submitted comments to the Federal Trade Commission on the subject of "Consumer Protection in the Global Electronic Marketplace."  The Justice Department submitted these comments on March 29, 1999.  The full text of the Justice Department comments is available via the link below:
    E.   The Government Paperwork Elimination Act
    The Justice Department submitted comments to the Office of Management and Budget on the Proposed Procedures and Guidance on Implementing the Government Paperwork Elimination Act.  The OMB's proposal was published at 64 Fed. Reg. 10.896 (March 5, 1999).  The Justice Department filed these comments on June 25, 1999.  The full text of the Justice Department comments, including the cover letter from Associate Attorney General Raymond Fisher is available via the link below:
    F. Internet Gambling

    1.   Online Gambling Issues

    On March 18, 2003, Deputy Assistant Attorney General John G. Malcolm testified before the U.S. Senate Committee on Banking, Housing and Urban Affairs. In his testimony, Mr. Malcolm offered the views of the Department of Justice about Internet gambling, including the potential for gambling by minors and compulsive gambling, the potential for fraud and money laundering, the potential for the organized crime, the proliferation of advertising, and recent state actions.

    On November 20, 2002, John G. Malcolm, Deputy Assistant Attorney General, gave a speech before the conference on Money Laundering and Payment Systems in Online Gambling sponsored by World Online Gambling Law Report in London, England. His statement addressed many issues that have developed with on-line gambling that are of great concern to the United States Department of Justice.

    2.    Federal Legislation Related to Internet Gambling

    On April 29, 2003, Deputy Assistant Attorney General John G. Malcolm testified before the U.S. House of Representatives Subcommittee on Crime, Terrorism, and Homeland Security Committee on the Judiciary. In his testimony, Mr. Malcolm offered the views of the Department of Justice about Internet gambling, including the potential for gambling by minors and compulsive gamblers, the potential for fraud and money laundering, and the potential for infiltration by organized crime. Mr. Malcom's testimony addressed the Department's concerns, with respect to H.R. 1223, about the feasibility and desirability of regulating Internet gambling. He expressed several of the Department's concerns with respect to H.R. 21, including the concern that this bill should be drafted to apply to all unlawful Internet gambling regardless of the communications medium used to place bets.

    Kevin V. Di Gregory, Deputy Assistant Attorney General, testified before the House of Representatives Committee on Banking and Financial Services on June 20, 2000 on Gambling on the Internet.  As with earlier testimony, this statement addressed the Department of Justice's concerns with proposed Internet gambling legislation and the problems inherent in creating a solution that is not technology-neutral.

    Kevin V. Di Gregory, Deputy Assistant Attorney General, testified before the Subcommittee on Crime, of the House Committee on the Judiciary on March 9, 2000 on Internet Gambling.  His testimony addressed the Department of Justice’s concerns with proposed Internet gambling legislation that would effectively expand legal gambling.  He also expressed the Department’s concern with creating an inconsistent regulatory scheme that would result in the same conduct being treated differently over the telephone, the Internet, and other technologies. Kevin V. Di Gregory, Deputy Assistant Attorney General, Department of Justice, testified before the Senate Committee on Indian Affairs on June 9, 1999 regarding Internet Gambling and Indian Gaming.  His testimony addressed two issues: (1) the Department of Justice's support of efforts to amend federal gambling statutes to ensure that these gambling activities made possible by the Internet are prohibited; and (2) the Department's belief that any law prohibiting Internet gambling should not conflict with the rights or privileges of Indian tribes, both as sovereigns and under the Indian Gaming Regulatory Act (IGRA). Also linked below is a letter from the Department of Justice to Senator Patrick J. Leahy, Ranking Minority Member, Senate Judiciary Committee, regarding the Internet Gambling Prohibition Act of 1999. Kevin V. Di Gregory, Deputy Assistant Attorney General, Department of Justice, testified regarding Gambling on the Internet before the Subcommittee on Crime, of the House Committee on the Judiciary, on June 24, 1998.  His testimony addressed law enforcement concerns as they relate to development of the Nation’s policy toward gambling and, more particularly, the effectiveness of existing state and federal laws for prosecuting various forms of Internet gambling.  It also identifies important characteristics that legislation pertaining to the transmission of information over the Internet should have.  His testimony is available via the link below, along with questions and answers regarding prosecution of gambing and the Internet:       Questions and answers:
     3.    Prosecution of Internet Gambling

    On February 28, 2000, Jay Cohen was convicted in Manhattan federal court of operating a sports betting business that illegally accepted bets and wagers on sporting events from Americans over the Internet and telephones.  Cohen is the first defendant to stand trial in a series of  Internet offshore sports gambling cases that were the first prosecutions brought under the federal Wire Wager Act.  Sentencing is scheduled for May 23, 2000.

    In New York, twenty-one owners, managers and employees of Internet sports betting companies have been charged in Manhattan federal court with conspiracy to transmit bets and wagers on sporting events via the Internet and telephones. Information about the filing of these charges is available below.
    G.   Sale of Prescription Drugs Over the Internet
    On October 25, 2000, a New Jersey man pleaded guilty to one count of fraud.  The man, Stanley Lapides, admitted to selling via the Internet home HIV test kits.  However, Lapides neglected to tell his customers that these kits had not yet been approved for use by the FDA.
    New Jersey Man Pleads Guilty to Selling Non-FDA Approved HIV Test Kits over the Internet (October 25, 2000)


    On May 25, 2000, Deputy Associate Attorney General Ethan M. Posner testified before the Subcommittee on Oversight and Investigations of the House Committee on Commerce on the subject of Online Pharmaceutical Drug Sales. His testimony detailed the role of the Department of Justice in Internet drug sales, including current specific efforts by the Department and information on the Internet Prescription Drug Sales Act of 2000.


              H.   Congressional Activity on E-Signatures

    I.  Executive Order on Unlawful Conduct Using the Internet
    On March 9, 2000, Attorney General Janet Reno announced the release of "The Electronic Frontier: the Challenge of Unlawful Conduct Involving the Use of the Internet."
    In August 1999, President Clinton established an interagency Working Group on Unlawful Conduct on the Internet.  Executive Order 13,133 directed the Working Group, under the leadership of the Attorney General, to prepare a report with recommendations on:
        --The extent to which existing federal laws provide a sufficient basis for effective investigation and prosecution of unlawful conduct that involves the use of the Internet;
        --The extent to which new technology tools, capabilities, or legal authorities may be required for effective investigation and prosecution of unlawful conduct that involves the use of the Internet;  and
        --The potential for new or existing tools and capabilities to educate and empower parents, teachers, and others to prevent or to minimize the risks from unlawful conduct that involves the use of the Internet.
    The report and its appendices can be found via the links below: On August 5, 1999, President Clinton issued Executive Order 13133, which established a Working Group to analyze the existence of unlawful conduct on the Internet and to prepare and report recommendations based on its findings within 120 days. The specific topics that the group will be addressing include the extent to which existing Federal laws provide a sufficient basis for effective investigation and prosecution of unlawful conduct that involves the Internet; the extent to which new tools, capabilities, or authorities may be required for effective investigation and prosecution of Internet crime; and the potential for educating and empowering parents, teachers and others to prevent or minimize risks from such unlawful conduct. The Executive Order and related documents are available below:
    J.  Internet Health Care Fraud
    On March 27, 2000, John T. Bentivoglio, Special Counsel for Health Care Fraud and Chief Privacy Officer at the U.S. Department of Justice, gave remarks on the prosecution of health care fraud and the protection of health care privacy on the Internet.  His speech focused on the  Federal government’s fraud, consumer protection, and privacy protection efforts as they relate to the Internet healthcare industry.
    K.  Jurisdiction in Law Suits
    On June 29, 2000 D. Jean Veta, Deputy Associate Attorney General, testified before the House Subcommitte on the Courts and Intellectual Property, Committee on the Judiciary, about on how the Internet is changing the way in which federal and state courts and regulatory agencies conceive of their jurisdiction in civil lawsuits involving private litigants.

    L. Electronic Case Filing at the Federal Courts

    On February 9, 2001, the Department of Justice submitted comments to the Administrative Office of the U.S. Courts in response to the federal judiciary's request for comments regarding the privacy and security implications of public access to electronic case files. The issue of privacy and public access to electronic case files is very important to the Department of Justice. The comments themselves, as well as the cover letter, are accessible via the links below:

    M. The National Infrastructure Protection Center Advisory

    On March 8, 2001, the National Infrastructure Protection Center (NIPC) issued the NIPC Advisory 01-003, an update to the NIPC Advisory 00-060, "E-Commerce Vulnerabilities," dated December 1, 2000. Below are links to the advisory and press release.

     

     

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