H.R.2403 - Telling Everyone the Location of data Leaving the U.S. Act; TELL Act (119th Congress)
Summary
H.R. 2403, the TELL Act, mandates that entities operating websites or mobile applications which collect and store user data in the People's Republic of China (PRC) must explicitly disclose this fact to users. Furthermore, they must disclose whether the Chinese Communist Party (CCP) or any Chinese state-owned entity has access to this data. The bill aims to enhance transparency and inform users about the location and potential accessibility of their data.
The Act stipulates that knowingly providing false information regarding data storage and access constitutes a violation. Enforcement of the Act falls under the purview of the Federal Trade Commission (FTC), which will treat violations as unfair or deceptive practices under the Federal Trade Commission Act.
The bill was introduced in the House of Representatives on March 27, 2025, and referred to the Committee on Energy and Commerce.
Expected Effects
The TELL Act will likely lead to increased awareness among users regarding the storage location and potential accessibility of their data by foreign entities, specifically the CCP. Companies may face increased scrutiny and potential reputational risks if they fail to comply with the disclosure requirements. This could also prompt some users to reconsider using certain websites or applications, impacting the competitive landscape.
Companies will need to implement mechanisms to accurately determine where data is stored and whether the CCP or a Chinese state-owned entity has access. This may require significant investment in compliance and auditing processes. The FTC will be responsible for enforcing the Act, potentially leading to investigations and penalties for non-compliance.
Ultimately, the bill aims to empower users to make more informed decisions about their data privacy and security when using online platforms.
Potential Benefits
- Increased Transparency: Users will be better informed about where their data is stored and who might have access to it.
- Enhanced Data Privacy: The Act encourages companies to be more transparent about their data practices, potentially leading to better data protection measures.
- Informed Decision-Making: Users can make more informed choices about which websites and applications to use based on their data privacy concerns.
- National Security: By highlighting potential access by the CCP, the Act raises awareness of potential national security risks associated with data storage in China.
- Consumer Protection: The FTC's enforcement role ensures that companies are held accountable for providing accurate information about data storage and access.
Potential Disadvantages
- Compliance Costs: Companies may face significant costs in implementing the disclosure requirements and ensuring compliance.
- Potential for Misinformation: The requirement to disclose access by the CCP could be subject to misinterpretation or exaggeration.
- Limited Scope: The Act only addresses data stored in China, potentially overlooking data security risks in other countries.
- Enforcement Challenges: The FTC may face challenges in effectively enforcing the Act, particularly with foreign companies.
- Potential for Retaliation: China could potentially retaliate with similar measures affecting US companies operating in China.
Most Disadvantaged Areas:
Constitutional Alignment
The TELL Act appears to align with the US Constitution, particularly concerning the Commerce Clause (Article I, Section 8), which grants Congress the power to regulate commerce with foreign nations and among the several states. By regulating the disclosure of information related to data storage in China, the Act can be seen as an effort to regulate foreign commerce to protect American consumers.
Additionally, the First Amendment protects freedom of speech, but this protection is not absolute. The government can regulate commercial speech if the regulation serves a substantial government interest, directly advances that interest, and is narrowly tailored. The TELL Act's disclosure requirements could be argued to serve a substantial government interest in protecting consumer data privacy and national security.
However, the Act could potentially raise concerns regarding due process if the enforcement mechanisms are not clearly defined or if they impose undue burdens on businesses. The FTC's role in enforcement should ensure that due process rights are respected.
Impact Assessment: Things You Care About ⓘ
This action has been evaluated across 19 key areas that matter to you. Scores range from 1 (highly disadvantageous) to 5 (highly beneficial).