103D CONGRESS

1ST SESSION H. R. 868

AMENDMENT
In the Senate of the United States,

June 30 1993.

Resolved, That the bill from the House of Representatives (H.R. 868) entitled ‘‘An Act to strengthen the authority

of the Federal Trade Commission to protect consumers in

connection with sales made with a telephone, and for other

purposes’’, do pass with the following

AMENDMENT:

Strike out all after the enacting clause and insert:

1 SHORT TITLE

2 SECTION 1. This Act may be cited as the

3 ‘‘Telemarketing and Consumer Fraud and Abuse Preven4 tion Act’’.

5 DEFINITIONS

6 SEC. 2. As used in this Act, the term—

7 (1) ‘‘attorney general’’ means the chief legal offi8 cer of a State;
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1 (2) ‘‘Commission’’ means the Federal Trade

2 Commission;

3 (3) ‘‘State’’ means any State of the United

4 States, the District of Columbia, Puerto Rico, the

5 Northern Mariana Islands, and any territory or pos6 session of the United States;

7 (4) ‘‘telemarketing’’ means a plan, program, or

8 campaign which is conducted to induce purchases of

9 goods or services by significant use of one or more

10 telephones and which has involved interstate telephone

11 calls; the term does not include other use of a tele12 phone in connection with business or personal trans13 actions, nor does the term include the solicitation of

14 sales through the mailing of a catalog which—

15 (A) contains a written description or illus16 tration of the goods or services offered for sale;

17 (B) includes the business address of the sell18 er;

19 (C) includes multiple pages of written mate20 rial or illustrations;

21 (D) is issued not less frequently than once

22 a year; and

23 (E) is at least the third catalog satisfying

24 the requirements of subparagraphs (A) through
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1 (D) that has been issued by the seller within the

2 last 5 years,

3 where the seller does not place calls to customers but

4 only receives calls initiated by customers in response

5 to the catalog and during those calls takes orders only

6 without further solicitation; and

7 (5) ‘‘credit card laundering’’ means—

8 (A) the act or practice by a person engaged

9 in telemarketing (other than an act or practice

10 permitted in a valid agreement with a member

11 of a credit card system or the member’s agent)

12 of transferring to another person to be presented

13 to a member of a credit card system or the mem14 ber’s agent, for payment, one or more evidences

15 or records of transactions involving goods or

16 services offered by telemarketing and paid for by

17 credit card;

18 (B) the act or practice by a person acting

19 on behalf of a person engaged in telemarketing

20 (other than an act or practice permitted in a

21 valid agreement with a member of a credit card

22 system or the member’s agent) of causing or ar23 ranging for a third person to present to a mem24 ber of a credit card system or the member’s

25 agent, for payment, one or more evidences or
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1 records of transactions involving goods or serv2 ices offered by telemarketing and paid for by

3 credit card;

4 (C) the act or practice by a person (other

5 than an act or practice permitted in a valid

6 agreement with a member of a credit card system

7 or the member’s agent) of knowingly presenting

8 to a member of a credit card system or the mem9 ber’s agent, for payment, one or more evidences

10 or records received from another person of trans11 actions involving goods or services offered by

12 telemarketing and paid for by credit card; or

13 (D) such other acts or practices defined in

14 the rules of the Commission as credit card laun15 dering.

16 TELEMARKETING RULES

17 SEC. 3. (a) RULES ON TELEMARKETING ACTIVITIES.—

18 The Commission shall prescribe rules regarding

19 telemarketing activities. In prescribing such rules, the Com20 mission shall consider the inclusion of—

21 (1) a requirement that goods or services offered

22 by telemarketing be shipped or provided within a

23 specified period and that if the goods or services are

24 not shipped or provided within such period a refund

25 be required;
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1 (2) where practicable, authority for a person who

2 orders a good or service through telemarketing to can3 cel the order within a specified period;

4 (3) restrictions on the hours of the day when un5 solicited telephone calls can be made to consumers;

6 (4) a prohibition of telemarketing generated by

7 computers on equipment that does not permit the in8 dividual called to terminate the telephone call; and

9 (5) recordkeeping requirements.

10 (b) PROHIBITION OF FRAUDULENT TELEMARKETING

11 ACTS OR PRACTICES.—The Commission also shall prescribe

12 rules prohibiting fraudulent telemarketing acts or practices

13 and shall include in such rules a definition of the term

14 ‘‘fraudulent telemarketing acts or practices’’, which may in15 clude activities of entities or individuals that assist or fa16 cilitate fraudulent telemarketing. Credit card laundering

17 shall be a fraudulent telemarketing act or practice. Such

18 rules shall also require that, in each telemarketing call, any

19 person engaged in telemarketing shall promptly and clearly

20 disclose to the prospective purchaser that the purpose of the

21 call is to sell goods or services and shall make such other

22 disclosures as the Commission deems appropriate, including

23 the nature and price of the goods and services.

24 (c) DEADLINE; ADMINISTRATIVE PROCEDURE.—The

25 Commission shall prescribe the rules under subsections (a)
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1 and (b) of this section within 180 days after the date of

2 enactment of this Act. Such rules shall be prescribed in ac3 cordance with section 553 of title 5, United States Code.

4 (d) TREATMENT OF RULE VIOLATIONS.—Any viola5 tion of any rule prescribed under subsection (a) or (b) of

6 this section shall be treated as a violation of a trade regula7 tion rule promulgated under section 18 of the Federal Trade

8 Commission Act (15 U.S.C. 57a) regarding unfair or decep9 tive acts or practices (subject to any remedy or penalty ap10 plicable to any violation thereof).

11 (e) EFFECT ON STATE LAW.—The rules promulgated

12 under this section shall not be construed as preempting

13 State law.

14 ACTIONS BY STATE ATTORNEYS GENERAL

15 SEC. 4. (a) AUTHORITY OF STATES.—Whenever the at16 torney general of any State has reason to believe that the

17 interests of the residents of that State have been or are being

18 threatened or adversely affected because any person has en19 gaged or is engaging in a pattern or practice of

20 telemarketing which violates any rule, regulation, or order

21 of the Commission under this Act, the State may bring a

22 civil action on behalf of its residents to enjoin such

23 telemarketing, to enforce compliance with any rule, regula24 tion, or order of the Commission under this Act, to obtain

25 damages on behalf of their residents, or to obtain such fur26 ther and other relief as the court may deem appropriate.
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1 (b) COURT JURISDICTION.—The district courts of the

2 United States, the United States courts of any territory,

3 and the District Court of the United States for the District

4 of Columbia shall have exclusive jurisdiction over all civil

5 actions brought under this section to enforce any liability

6 or duty created by any rule, regulation, or order of the Com7 mission under this Act, or to obtain damages or other relief

8 with respect thereto. Upon proper application, such courts

9 shall also have jurisdiction to issue writs of mandamus, or

10 orders affording like relief, commanding the defendant to

11 comply with the provisions of any rule, regulation, or order

12 of the Commission under this Act, including the require13 ment that the defendant take such action as is necessary

14 to remove the danger of violation of any such rule, regula15 tion, or order. Upon a proper showing, a permanent or tem16 porary injunction or restraining order shall be granted

17 without bond.

18 (c) RIGHTS OF COMMISSION.—The State shall serve

19 prior written notice of any such civil action upon the Com20 mission and provide the Commission with a copy of its

21 complaint, except in any case where such prior notice is

22 not feasible, in which case the State shall serve such notice

23 immediately upon instituting such action. The Commission

24 shall have the right (1) to intervene in the action, (2) upon
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1 so intervening, to be heard on all matters arising therein,

2 and (3) to file petitions for appeal.

3 (d) VENUE; SERVICE OF PROCESS.—Any civil action

4 brought under this section in a district court of the United

5 States may be brought in the district wherein the defendant

6 is found or is an inhabitant or transacts business or wher7 ever venue is proper under section 1391 of title 28, United

8 States Code, and process in such cases may be served in

9 any district in which the defendant is an inhabitant or

10 wherever the defendant may be found.

11 (e) EFFECT ON STATE POWERS OF ATTORNEYS GEN12 ERAL.—For purposes of bringing any civil action under

13 this section, nothing in this Act shall prevent the attorney

14 general from exercising the powers conferred on the attorney

15 general by the laws of such State to conduct investigations

16 or to administer oaths or affirmations or to compel the at17 tendance of witnesses or the production of documentary and

18 other evidence.

19 (f) EFFECT ON ACTIONS UNDER STATE STATUTE.—

20 Nothing contained in this section shall prohibit an author21 ized State official from proceeding in State court on the

22 basis of an alleged violation of any general civil or criminal

23 statute of such State.

24 (g) CIVIL ACTION BY COMMISSION.—Whenever the

25 Commission has instituted a civil action for violation of
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1 any rule prescribed under this Act, no State may, during

2 the pendency of such action instituted by the Commission,

3 subsequently institute a civil action against any defendant

4 named in the Commission’s complaint for violation of any

5 rule as alleged in the Commission’s complaint.

6 ACTIONS BROUGHT BY PRIVATE PERSONS

7 SEC. 5. (a) DEFINITION.—As used in this section, the

8 term ‘‘person adversely affected by telemarketing’’ means—

9 (1) any person who has incurred loss or damage

10 in connection with telemarketing and who actually

11 purchased goods or services through telemarketing, or

12 paid or is obligated to pay for goods or services pur13 chased through telemarketing;

14 (2) any financial institution that has incurred

15 loss or damage in connection with telemarketing; or

16 (3) any member organization comprised of fi17 nancial institution members, or any parent organiza18 tion of such member organization, if one or more of

19 the financial institution members is eligible to bring

20 a civil action under this subsection.

21 Such term does not include a governmental entity.

22 (b) PRIVATE RIGHT OF ACTION.—(1) Any person ad23 versely affected by any pattern or practice of telemarketing

24 which violates any rule, regulation, or order of the Commis25 sion under this Act may, within 3 years after discovery of

26 the violation, bring a civil action against a person who has
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1 engaged or is engaging in such pattern or practice of

2 telemarketing if the amount in controversy exceeds the sum

3 or value of $50,000 in actual damages for each person ad4 versely affected by such telemarketing. Such an action may

5 be brought to enjoin such telemarketing, to enforce compli6 ance with any rule, regulation, or order of the Commission

7 under this Act, to obtain damages, or to obtain such further

8 and other relief as the court may deem appropriate.

9 (2) The district courts of the United States, the United

10 States courts of any territory, and the District Court of the

11 United States for the District of Columbia shall have exclu12 sive jurisdiction over all civil actions brought under this

13 section to enforce any liability or duty created by any rule,

14 regulation, or order of the Commission under this Act, or

15 to obtain damages or other relief with respect thereto. Upon

16 proper application, such courts shall also have jurisdiction

17 to issue writs of mandamus, or orders affording like relief,

18 commanding the defendant to comply with the provisions

19 of any rule, regulation, or order of the Commission under

20 this Act, including the requirement that the defendant take

21 such action as is necessary to remove the danger of violation

22 or of any such rule, regulation, or order. Upon a proper

23 showing, a permanent or temporary injunction or restrain24 ing order shall be granted without bond.
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1 (3) The plaintiff shall serve prior written notice of the

2 action upon the Commission and provide the Commission

3 with a copy of its complaint, except in any case where such

4 prior notice is not feasible, in which case the person shall

5 serve such notice immediately upon instituting such action.

6 The Commission shall have the right (A) to intervene in

7 the action, (B) upon so intervening, to be heard on all mat8 ters arising therein, and (C) to file petitions for appeal.

9 (4) Whenever the Commission has instituted a civil ac10 tion for violation of any rule prescribed under this Act, no

11 person may, during the pendency of such action instituted

12 by the Commission, subsequently institute a civil action

13 against any defendant named in the Commission’s com14 plaint for violation of any rule as alleged in the Commis15 sion’s complaint.

16 (5) Any civil action brought under this section in a

17 district court of the United States may be brought in the

18 district wherein the defendant is found or is an inhabitant

19 or transacts business or wherever venue is proper under sec20 tion 1391 of title 28, United States Code, and process in

21 such cases may be served in any district in which the de22 fendant is an inhabitant or wherever the defendant may

23 be found.

24 (c) AWARD OF COSTS AND FEES.—The court, in issu25 ing any final order in any action brought under subsection
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1 (b), may award costs of suit and reasonable fees for attor2 neys and expert witnesses to the prevailing party.

3 (d) RIGHTS UNDER STATUTE OR COMMON LAW.—

4 Nothing in this section shall restrict any right which any

5 person may have under any statute or common law.

6 VENUE

7 SEC. 6. Any suit brought against a person, partner8 ship, or corporation under section 13(b) of the Federal

9 Trade Commission Act (15 U.S.C. 53(b)) may be brought

10 where the defendant resides or transacts business, or wher11 ever venue is proper under section 1391 of title 28, United

12 States Code. In such a suit, if the court determines that

13 the interests of justice require that any other person, part14 nership, or corporation should be a party in such suit, the

15 court may cause such person, partnership, or corporation

16 to be summoned without regard to whether they reside or

17 transact business in the district in which the suit is

18 brought. In any suit under this section, process may be

19 served on any person, partnership, or corporation, wherever

20 they may be found.

21 SUBPOENA

22 SEC. 7. (a) PHYSICAL EVIDENCE DEFINED.—Section

23 20(a) of the Federal Trade Commission Act (15 U.S.C. 57b–

24 1(a)) is amended—

25 (1) by redesignating paragraph (7) as para26 graph (8); and
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1 (2) by inserting immediately after paragraph (6)

2 the following new paragraph:

3 ‘‘(7) The term ‘physical evidence’ means any ob4 ject or device.’’.

5 (b) ISSUANCE OF DEMAND.—Section 20(c)(1) of the

6 Federal Trade Commission Act (15 U.S.C. 57b–1(c)(1)) is

7 amended—

8 (1) by inserting ‘‘physical evidence or’’ imme9 diately after ‘‘any’’ the second time it appears;

10 (2) by inserting ‘‘to produce such physical evi11 dence for inspection,’’ immediately before ‘‘to

12 produce’’;

13 (3) by inserting ‘‘physical evidence,’’ imme14 diately after ‘‘concerning’’; and

15 (4) by inserting ‘‘evidence,’’ immediately before

16 ‘‘material, answers,’’.

17 (c) CONTENTS OF DEMAND.—Section 20(c)(3)) of the

18 Federal Trade Commission Act (15 U.S.C. 57b–1(c)(3)) is

19 amended—

20 (1) by inserting ‘‘physical evidence or’’ imme21 diately before ‘‘documentary material’’ the first time

22 it appears;

23 (2) in subparagraph (A)—

24 (A) by inserting ‘‘physical evidence or’’ im25 mediately before ‘‘documentary’’; and
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1 (B) by inserting ‘‘evidence or’’ immediately

2 after ‘‘permit such’’;

3 (3) in subparagraph (B), by inserting ‘‘evidence

4 or ’’ immediately before ‘‘material’’; and

5 (4) in subparagraph (C), by inserting ‘‘evidence

6 or’’ immediately before ‘‘material’’.

7 (d) PRODUCTION OF EVIDENCE IN RESPONSE TO DE8 MAND.—Section 20(c)(10) of the Federal Trade Commission

9 Act (15 U.S.C. 57b–1(c)(10)) is amended by inserting

10 ‘‘physical evidence or’’ immediately before ‘‘documentary

11 material’’ each place it appears.

12 FALSE ADVERTISEMENTS CONCERNING SERVICES

13 SEC. 8. Section 12(a) of the Federal Trade Commis14 sion Act (15 U.S.C. 52(a)) is amended by inserting ‘‘serv15 ices,’’ immediately after ‘‘devices,’’ each place it appears.

16 CLEARINGHOUSE

17 SEC. 9. The Commission shall establish a clearinghouse

18 for inquiries made to Federal agencies concerning

19 telemarketing. The clearinghouse will provide information

20 (other than information which may not be disclosed under

21 section 552(b) of title 5, United States Code, or under regu22 lations prescribed by the Commission to implement section

23 552(b) of title 5, United States Code) to anyone making

24 inquiries respecting persons engaged in telemarketing or di25 rect such inquiries to the appropriate Federal or State

26 agency.
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1 FINANCIAL DATA

2 SEC. 10. Section 1109(a)(3) of the Right to Financial

3 Privacy Act of 1978 (12 U.S.C. 3409(a)(3)) is amended—

4 (1) by redesignating subparagraph (E) as sub5 paragraph (F);

6 (2) by striking ‘‘or’’ at the end of subparagraph

7 (D); and

8 (3) by inserting immediately after subparagraph

9 (D) the following new subparagraph:

10 ‘‘(E) dissipation, removal, or destruction of

11 assets that are subject to forfeiture, seizure, re12 dress, or restitution under any law of the United

13 States by reason of having been obtained in vio14 lation of law; or’’.

15 CRIMINAL CONTEMPT AUTHORITY

16 SEC. 11. Section 16(a)(1) of the Federal Trade Com17 mission Act (15 U.S.C. 56(a)(1)) is amended—

18 (1) in subparagraph (A) by striking ‘‘civil’’ the

19 first place it appears and inserting in lieu thereof

20 ‘‘Federal court’’; and

21 (2) by adding at the end the following: ‘‘The

22 Commission may bring a criminal contempt action

23 for violations of orders obtained in cases brought

24 under section 13(b) of this Act in the same manner

25 as civil penalty and other Federal court actions to

26 which this subsection applies. Such cases may be ini-
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1 tiated by the Commission on its own complaint, or

2 pursuant to its acceptance of an appointment by a

3 court to assist it in enforcing such orders pursuant to

4 Rule 42(b) of the Federal Rules of Criminal Proce5 dure.’’.

6 ADMINISTRATION AND APPLICABILITY OF ACT

7 SEC. 12. (a) ENFORCEMENT.—Except as otherwise

8 provided in sections 4 and 5 of this Act, this Act shall be

9 enforced by the Commission under the Federal Trade Com10 mission Act (15 U.S.C. 41 et seq.).

11 (b) APPLICABILITY OF FTCA.—The Commission shall

12 prevent any person from violating a rule, regulation, or

13 order of the Commission under this Act in the same man14 ner, by the same means, and with the same jurisdiction,

15 powers, and duties as though all applicable terms and pro16 visions of the Federal Trade Commission Act (15 U.S.C.

17 41 et seq.) were incorporated into and made a part of this

18 Act. Any person who violates such a rule, regulation, or

19 order shall be subject to the penalties and entitled to the

20 privileges and immunities provided in the Federal Trade

21 Commission Act in the same manner, by the same means,

22 and with the same jurisdiction, powers, and duties as

23 though all applicable terms and provisions of the Federal

24 Trade Commission Act were incorporated into and made

25 a part of this Act.
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1 (c) EXEMPTION.—(1) No provision of this Act shall

2 apply to any person exempt from the jurisdiction of the

3 Commission under section 5(a)(2) of the Federal Trade

4 Commission Act (15 U.S.C. 45(a)(2)), and nothing in this

5 Act shall be construed to vest the Commission, or the attor6 ney general of any State or any person, with jurisdiction

7 or authority over any person not otherwise subject to the

8 jurisdiction or authority of the Commission.

9 (2)(A) No provision of this Act shall apply—

10 (i) to a broker, dealer, municipal securities deal11 er, government securities broker, government securities

12 dealer, or investment company in connection with the

13 offer, sale, or purchase of any security, or to an issuer

14 in connection with the offer, sale, or purchase of any

15 security which that issuer has issued, or to any in16 vestment adviser providing investment advice relating

17 to any security; or

18 (ii) to the solicitation, acceptance, confirmation,

19 or execution of orders for the entry into, purchase of,

20 or sale of any contract, account, agreement, or trans21 action subject to the exclusive jurisdiction of the Com22 modity Futures Trading Commission under the Com23 modity Exchange Act (7 U.S.C. 1 et seq.) by a person

24 registered under the Commodity Exchange Act in

25 order to engage in such activity, including as a fu-
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1 tures commission merchant, introducing broker, com2 modity trading advisor, commodity pool operator, le3 verage transaction merchant, floor broker, or floor

4 trader, or as a person associated with any such

5 person.

6 (B) For purposes of subparagraph (A)(i)—

7 (1) the terms ‘‘broker’’, ‘‘dealer’’, ‘‘municipal se8 curities dealer’’, ‘‘government securities broker’’, and

9 ‘‘government securities dealer’’ have the meanings

10 given them in section 3(a) (4), (5), (30), (43), and

11 (44), respectively, of the Securities Exchange Act of

12 1934 (15 U.S.C. 78c(a) (4), (5), (30), (43), and (44));

13 (2) the term ‘‘investment adviser’’ has the mean14 ing given it in section 202(a)(11) of the Investment

15 Advisers Act of 1940 (15 U.S.C. 80b–2(a)(11));

16 (3) the term ‘‘investment company’’ has the

17 meaning given it in section 3(a) of the Investment

18 Company Act of 1940 (15 U.S.C. 80a–3(a));

19 (4) the term ‘‘issuer’’ has the meaning given it

20 in section 2(4) of the Securities Act of 1933 (15

21 U.S.C. 77b(4)); and

22 (5) the term ‘‘security’’ has the meaning given to

23 it in section 2(1) of the Securities Act of 1933 (15

24 U.S.C. 77b(1)), section 3(a)(10) of the Securities Ex25 change Act of 1934 (15 U.S.C. 78c(a)(10)), and sec-
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1 tion 2(a)(36) of the Investment Company Act of 1940

2 (15 U.S.C. 80a–2(a)(36)).

3 LIFE CARE HOME STUDY

4 SEC. 13. (a) STUDY.—The Federal Trade Commission

5 shall conduct a study of unfair or deceptive acts or practices

6 in the life care home industry, including acts or practices

7 engaged in by life care homes. Within 24 months after the

8 date of enactment of this Act, the Commission shall report

9 the findings and conclusions of the study to Congress. The

10 Commission shall indicate in its report whether it intends

11 to initiate a trade regulation rulemaking under section 18

12 of the Federal Trade Commission Act (15 U.S.C. 57a) re13 specting unfair or deceptive acts or practices in the life care

14 home industry and the reasons for such determination.

15 (b) DEFINITIONS.—For purposes of subsection (a), the

16 term—

17 (1) ‘‘life care home’’ includes the facility or fa18 cilities occupied, or planned to be occupied, by resi19 dents or prospective residents where a provider under20 takes to provide living accommodations and services

21 pursuant to a life care contract, regardless of whether

22 such facilities are operated on a profit or nonprofit

23 basis; and

24 (2) ‘‘life care contract’’ includes a contract be25 tween a resident and a provider to provide the resi26 dent, for the duration of such resident’s life, living ac-
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1 commodations and related services in a life care

2 home, including nursing care services, medical serv3 ices, and other health-related services, which is condi4 tioned upon the transfer of an entrance fee to the pro5 vider and which may be further conditioned upon the

6 payment of periodic service fees.

7 SUNSET

8 SEC. 14. The provisions of sections 3, 4, and 5 shall

9 cease to have force and effect on and after the date that

10 is five years following the date of enactment of this Act.

Attest:

Secretary.
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