E-Commerce Law Week, Issue 439

Warrantless Wiretapping Ends With a Whimper, But Serious Questions Remain

On January 17, Attorney General Alberto Gonzales announced that the President will not reauthorize the Terrorist Surveillance Program (TSP), which involves the National Security Agency's warrantless interception of certain international telephone and Internet communications to or from the United States.  In a letter addressed to Senate Judiciary Committee Chairman Patrick Leahy (D-VT) and Ranking Minority Member Arlen Specter (R-PA), the Attorney General stated that "any electronic surveillance that was occurring as part of the [TSP] will now be conducted subject to the approval of the Foreign Intelligence Surveillance Court" (FISC), the special court charged with overseeing requests for surveillance warrants involving suspected foreign terrorists and spies.  The letter came the day before Gonzales was due to testify before the Senate Judiciary Committee, and can be seen as part of an effort to short-circuit both pending court challenges to the TSP and the prospect of serious congressional oversight.  Notably, though, Gonzales stated that the decision to end the TSP was a result of the FISC's issuance of what appear to be broad orders authorizing the same sort of sweeping intercept program, apparently without specifying individual targets.  If that's the case, serious questions remain over whether the Foreign Intelligence Surveillance Act (FISA) actually authorizes such generalized orders.  Moreover, if the Administration's action fails to persuade courts to dismiss pending court challenges to the TSP, telecoms and other entities that cooperated with NSA could still face tough sledding.

Neteller Arrests Suggest Online Payment Processors Are Holding a Losing Hand

On January 16, the U.S. Department of Justice announced that its crackdown on online gambling had raked in two new defendants, Stephen Eric Lawrence and John David Lefebvre, former executives and founding shareholders of Neteller PLC, a leading Internet payment services company.  While DoJ's anti-gambling initiatives in 2006 focused on the online gambling companies themselves, the Department now appears to be casting a wider net.  DoJ claims that Neteller, based in the Isle of Man and traded on the London Stock Exchange's AIM market, "facilitated the transfer of billions of dollars of illegal gambling proceeds from United States citizens to the owners of various internet gambling companies located overseas," in violation of U.S. money-laundering laws.  The Department's decision to go after Neteller should further stifle the U.S.-facing online gambling market, which is still struggling to recover from the recent enactment of a federal law prohibiting any person "engaged in the business of betting or wagering" from "knowingly accept[ing]" payments made by financial institutions on behalf of individuals engaged in "unlawful Internet gambling." And since Lawrence and Lefebvre's only current connection to Neteller is their status as major shareholders -- something highlighted by DoJ, though not the legal basis for its action -- investors in online gambling companies and their payment-services partners should also take note.

Feds Keep Up the Heat on Pretexters

Several months after news of Hewlett Packard's boardroom spying scandal broke, pretexting -- misrepresenting one's identity to obtain confidential records -- remains a hot topic.  On January 12, President Bush signed legislation that prohibits the use of pretexting to obtain phone records.  And on January 10, federal charges were brought against Bryan Wagner, one of the outside investigators involved in the HP affair. Wagner was charged with aggravated identity theft, wire fraud, and violations of the Computer Fraud and Abuse Act and Social Security Act.  Moreover, while Congress and law enforcement have thus far targeted the pretexters, lawmakers and regulators are reportedly considering new measures that would impose additional responsibilities on telecommunications carriers and Voice over Internet Protocol (VoIP) providers to protect records. 

Questions and comments about E-Commerce Law Week are always welcome.  Please send your feedback to Sally Albertazzie.