In February more hearings were conducted to gain consensus for the Combating Online Infringement and Counterfeits Act (COICA) legislation that has been introduced in the US Senate.  A Senate panel heard comments from a number of companies involved in Internet commerce that included Go Daddy, Rosetta Stone (language software), the Author’s Guild, Verizon and VISA.  Invited but not present were representatives of Google and Yahoo.

The US government estimates the total impact of counterfeit and pirated goods on US companies is around $650 million. It wasn’t disclosed if this number was for all such unlawful activity or specifically online, but in any case no one disputes illegal and unauthorized online activity amount to a significantly large portion of the losses.  The discussions pointed out the complex ecosystem and the legitimate enterprises that don’t participate in fraud but do derive a benefit from it:
- Advertisers (search engines) that make revenue from (fraudulent) ads and PPC campaigns
- Registrars that sell domain names to illegal website operators
- ISPs that get revenue from access fees
- Payment platforms that receive transaction revenue
- Web hosting companies that host the rogue sites

The challenge, for this and just about any legislator, is identifying where the responsibility lies and equitably assigning accountability for protecting against fraud. Further compounding the effectiveness of any legislation may be the obvious fact that the Internet, unlike countries, doesn’t have borders. Malicious actors operating from outside the country being targeted make it difficult to address illegal activity.  Scott Turow of the Author’s Guild referred to dealing with this as “whack a mole” in his comments to the US Senate Judiciary committee in February, in reference to the arcade game where a simulated rodent pops its head out of various holes in the game board and disappears only to pop up elsewhere.  Likewise, counterfeiters commonly switch between various web servers, recovering from site shut-down in a short period of time.

A concern echoed by a number of participants is to avoid legislation that places additional restriction on legitimate Internet and e-commerce service providers and would result in higher costs but do little to reduce the incentive for fraudulent activity.