Union Calendar No. 9

103D CONGRESS

1ST SESSION H. R. 868

[Report No. 103–20]

A BILL

To strengthen the authority of the Federal Trade

purposes.with sales made with a telephone, and for otherCommission to protect consumers in connection

FEBRUARY 24, 1993

Committed to the Committee of the Whole House on the

State of the Union and ordered to be printed
IB

Union Calendar No. 9

103D CONGRESS

1ST SESSION H. R. 868

[Report No. 103–20]

To strengthen the authority of the Federal Trade Commission to protect

consumers in connection with sales made with a telephone, and for

other purposes.

IN THE HOUSE OF REPRESENTATIVES

FEBRUARY 4, 1993

Mr. SWIFT (for himself, Mr. OXLEY, Ms. LAMBERT, and Mr. GILLMOR) introduced the following bill; which was referred to the Committee on Energy

and Commerce

FEBRUARY 24, 1993

Committed to the Committee of the Whole House on the State of the Union

and ordered to be printed

A BILL

To strengthen the authority of the Federal Trade Commission to protect consumers in connection with sales made

with a telephone, and for other purposes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,
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1 SECTION 1. SHORT TITLE.

2 This Act may be cited as the ‘‘Consumer Protection

3 Telemarketing Act’’.

4 SEC. 2. FINDINGS.

5 The Congress makes the following findings:

6 (1) Telemarketing differs from other sales ac7 tivities in that it can be carried out by sellers across

8 State lines without direct contact. Telemarketers can

9 also be very mobile, easily moving from State to

10 State.

11 (2) Interstate telemarketing fraud has become a

12 problem of such magnitude that the resources of the

13 Federal Trade Commission are not sufficient to in14 sure adequate consumer protection from such fraud.

15 (3) Consumers and others are estimated to lose

16 $10 billion a year in telemarketing fraud.

17 (4) Consumers are victimized by other forms of

18 telemarketing deception and abuse.

19 (5) Consequently, Congress should enact legis20 lation that will offer consumers necessary protection

21 from telemarketing deception (including fraud) and

22 abuse.

23 SEC. 3. TELEMARKETING RULES.

24 (a) IN GENERAL.—

25 (1) The Commission shall prescribe rules pro26 hibiting deceptive (including fraudulent)
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1 telemarketing activities and other abusive

2 telemarketing activities.

3 (2) The Commission shall include in such rules

4 respecting deceptive telemarketing activities—

5 (A) a definition of deceptive telemarketing

6 activities, and

7 (B) criteria that are symptomatic of decep8 tive telemarketing as distinguished from ordi9 nary telemarketing business practices.

10 (3) The Commission shall include in such rules

11 respecting other abusive telemarketing activities a

12 requirement that telemarketers may not undertake a

13 pattern of unsolicited telephone calls which the rea14 sonable consumer would consider coercive or abusive

15 of such consumer’s right to privacy. In prescribing

16 the rules described in this paragraph, the Commis17 sion shall consider—

18 (A) including a requirement that goods or

19 services offered by telemarketing be shipped or

20 provided within a specified period and that if

21 the goods or services are not shipped or pro22 vided within such period, a refund be required,

23 and

24 (B) including, where practicable, authority

25 for a person who orders a good or service
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1 through telemarketing to cancel the order with2 in a specified period.

3 (b) RULEMAKING.—

4 (1) The Commission shall prescribe the rules

5 under subsection (a) within 270 days after the date

6 of enactment of this Act. Such rules shall be pre7 scribed in accordance with section 553 of title 5,

8 United States Code.

9 (2) A rule issued under subsection (a) shall be

10 considered a rule issued under section 18(a)(1)(B)

11 of the Federal Trade Commission Act.

12 (c) ENFORCEMENT.—Any violation of any rule pre13 scribed under subsection (a) shall be treated as a violation

14 of a rule under section 5 of the Federal Trade Commission

15 Act (15 U.S.C. 45) regarding unfair or deceptive acts or

16 practices.

17 SEC. 4. ACTIONS BY STATES.

18 (a) IN GENERAL.—Whenever an attorney general of

19 any State has reason to believe that the interests of the

20 residents of that State have been or are being threatened

21 or adversely affected because any person has engaged or

22 is engaging in a pattern or practice of telemarketing which

23 violates any rule of the Commission under section 3, the

24 State may bring a civil action on behalf of its residents

25 in an appropriate district court of the United States to
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1 enjoin such telemarketing, to enforce compliance with such

2 rule of the Commission, to obtain damages, restitution, or

3 other compensation on behalf of residents of such State,

4 or to obtain such further and other relief as the court may

5 deem appropriate.

6 (b) NOTICE.—The State shall serve prior written no7 tice of any civil action under subsection (a) upon the Com8 mission and provide the Commission with a copy of its

9 complaint, except that if it is not feasible for the State

10 to provide such prior notice, the State shall serve such

11 notice immediately upon instituting such action. Upon re12 ceiving a notice respecting a civil action, the Commission

13 shall have the right (1) to intervene in such action, (2)

14 upon so intervening, to be heard on all matters arising

15 therein, and (3) to file petitions for appeal.

16 (c) CONSTRUCTION.—For purposes of bringing any

17 civil action under subsection (a), nothing in this Act shall

18 prevent an attorney general from exercising the powers

19 conferred on the attorney general by the laws of such

20 State to conduct investigations or to administer oaths or

21 affirmations or to compel the attendance of witnesses or

22 the production of documentary and other evidence.

23 (d) ACTIONS BY THE COMMISSION.—Whenever the

24 Commission has instituted a civil action for violation of

25 any rule prescribed under section 3, no State may, during
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1 the pendency of such action instituted by the Commission,

2 institute a civil action under subsection (a) against any

3 defendant named in the Commission’s complaint for acts

4 or omissions alleged in the complaint for violation of any

5 rule as alleged in the Commission’s complaint.

6 (e) ACTIONS BY OTHER STATE OFFICIALS.—

7 (1) Nothing contained in this section shall pro8 hibit an authorized State official from proceeding in

9 State court on the basis of an alleged violation of

10 any civil or criminal statute of such State.

11 (2) In addition to actions brought by an attor12 ney general of a State under subsection (a), such an

13 action may be brought by officers of such State who

14 are authorized by the State to bring actions in such

15 State for protection of consumers and who are des16 ignated by the Commission to bring an action under

17 subsection (a) against persons that the Commission

18 has determined have or are engaged in a pattern or

19 practice of telemarketing which violates a rule of the

20 Commission under section 3.

21 SEC. 5. ACTIONS BY PRIVATE PERSONS.

22 (a) IN GENERAL.—Any person adversely affected by

23 any pattern or practice of telemarketing which violates any

24 rule of the Commission under section 3 or an authorized

25 person acting on such person’s behalf may, within 3 years
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1 after discovery of the violation, bring a civil action in an

2 appropriate district court of the United States against a

3 person who has engaged or is engaging in such pattern

4 or practice of telemarketing if the amount in controversy

5 exceeds the sum or value of $50,000 in actual damages

6 for each person adversely affected by such telemarketing.

7 Such an action may be brought to enjoin such

8 telemarketing, to enforce compliance with any rule of the

9 Commission under section 3, to obtain damages, or to ob10 tain such further and other relief as the court may deem

11 appropriate.

12 (b) NOTICE.—The plaintiff shall serve prior written

13 notice of the action upon the Commission and provide the

14 Commission with a copy of its complaint, except in any

15 case where such prior notice is not feasible, in which case

16 the person shall serve such notice immediately upon insti17 tuting such action. The Commission shall have the right

18 (A) to intervene in the action, (B) upon so intervening,

19 to be heard on all matters arising therein, and (C) to file

20 petitions for appeal.

21 (c) ACTIONS BY THE COMMISSION.—Whenever the

22 Commission has instituted a civil action for violation of

23 any rule prescribed under section 3, no person may, dur24 ing the pendency of such action instituted by the Commis25 sion, subsequently institute a civil action against any de-
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1 fendant named in the Commission’s complaint for viola2 tion of any rule as alleged in the Commission’s complaint.

3 (d) COSTS AND FEES.—The court, in issuing any

4 final order in any action brought under subsection (a),

5 may award costs of suit and reasonable fees for attorneys

6 and expert witnesses to the prevailing party.

7 (e) CONSTRUCTION.—Nothing in this section shall re8 strict any right which any person may have under any

9 statute or common law.

10 SEC. 6. CLEARINGHOUSE.

11 (a) IN GENERAL.—The Commission shall establish a

12 clearinghouse for inquiries made to Federal agencies con13 cerning telemarketing. The clearinghouse will provide in14 formation (other than information which may not be dis15 closed under section 552(b) of title 5, United States Code,

16 or under regulations prescribed by the Commission to im17 plement such section) to anyone making inquiries respect18 ing persons engaged in telemarketing or direct such in19 quiries to the appropriate Federal or State agency.

20 (b) LIABILITY FOR PROVIDING INFORMATION.—No

21 person who provides information to the clearinghouse es22 tablished under subsection (a) shall be liable for damages

23 for the provision of such information unless such person

24 provided such information knowing it to be false.
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1 SEC. 7. ADMINISTRATION AND APPLICABILITY OF ACT.

2 (a) IN GENERAL.—Except as otherwise provided in

3 sections 4 and 5, this Act shall be enforced by the Com4 mission under the Federal Trade Commission Act (15

5 U.S.C. 41 et seq.). Consequently, no activity which is out6 side the jurisdiction of that Act shall be affected by this

7 Act.

8 (b) ACTIONS BY THE COMMISSION.—The Commis9 sion shall prevent any person from violating a rule of the

10 Commission under section 3 in the same manner, by the

11 same means, and with the same jurisdiction, powers, and

12 duties as though all applicable terms and provisions of the

13 Federal Trade Commission Act (15 U.S.C. 41 et seq.)

14 were incorporated into and made a part of this Act. Any

15 person who violates such rule shall be subject to the pen16 alties and entitled to the privileges and immunities pro17 vided in the Federal Trade Commission Act in the same

18 manner, by the same means, and with the same jurisdic19 tion, power, and duties as though all applicable terms and

20 provisions of the Federal Trade Commission Act were in21 corporated into and made a part of this Act.

22 SEC. 8. DEFINITIONS.

23 For purposes of this Act:

24 (1) The term ‘‘attorney general’’ means the

25 chief legal officer of a State.
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1 (2) The term ‘‘Commission’’ means the Federal

2 Trade Commission.

3 (3) The term ‘‘State’’ means any State of the

4 United States, the District of Columbia, Puerto

5 Rico, the Northern Mariana Islands, and any terri6 tory or possession of the United States.

7 (4) The term ‘‘telemarketing’’ means a plan,

8 program, or campaign which is conducted to induce

9 purchases of goods or services by significant use of

10 one or more telephones and which involves more

11 than one interstate telephone call. The term does not

12 include the solicitation of sales through the mailing

13 of a catalog which—

14 (A) contains a written description or illus15 tration of the goods or services offered for sale,

16 (B) includes the business address of the

17 seller,

18 (C) includes multiple pages of written ma19 terial or illustrations, and

20 (D) has been issued not less frequently

21 than once a year,

22 where the person making the solicitation does not

23 solicit customers by telephone but only receives calls

24 initiated by customers in response to the catalog and
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1 during those calls takes orders only without further

2 solicitation.

3 SEC. 9. REVIEW.

4 Upon the expiration of 5 years following the date of

5 the enactment of this Act, the Federal Trade Commission

6 shall review the implementation of this Act and its effect

7 on deceptive telemarketing activities and report the results

8 of the review to the Congress.