I

103D CONGRESS

1ST SESSION H. R. 868

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

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,

3 SECTION 1. SHORT TITLE.

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

5 Telemarketing Act’’.

6 SEC. 2. FINDINGS.

7 The Congress makes the following findings:

8 (1) Telemarketing differs from other sales ac9 tivities in that it can be carried out by sellers across
2

•HR 868 IH

1 State lines without direct contact. Telemarketers can

2 also be very mobile, easily moving from State to

3 State.

4 (2) Interstate telemarketing fraud has become a

5 problem of such magnitude that the resources of the

6 Federal Trade Commission are not sufficient to in7 sure adequate consumer protection from such fraud.

8 (3) Consumers and others are estimated to lose

9 $10 billion a year in telemarketing fraud.

10 (4) Consumers are victimized by other forms of

11 telemarketing deception and abuse.

12 (5) Consequently, Congress should enact legis13 lation that will offer consumers necessary protection

14 from telemarketing deception (including fraud) and

15 abuse.

16 SEC. 3. TELEMARKETING RULES.

17 (a) IN GENERAL.—

18 (1) The Commission shall prescribe rules pro19 hibiting deceptive (including fraudulent)

20 telemarketing activities and other abusive

21 telemarketing activities.

22 (2) The Commission shall include in such rules

23 respecting deceptive telemarketing activities—

24 (A) a definition of deceptive telemarketing

25 activities, and
3

•HR 868 IH

1 (B) criteria that are symptomatic of decep2 tive telemarketing as distinguished from ordi3 nary telemarketing business practices.

4 (3) The Commission shall include in such rules

5 respecting other abusive telemarketing activities a

6 requirement that telemarketers may not undertake a

7 pattern of unsolicited telephone calls which the rea8 sonable consumer would consider coercive or abusive

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

10 the rules described in this paragraph, the Commis11 sion shall consider—

12 (A) including a requirement that goods or

13 services offered by telemarketing be shipped or

14 provided within a specified period and that if

15 the goods or services are not shipped or pro16 vided within such period, a refund be required,

17 and

18 (B) including, where practicable, authority

19 for a person who orders a good or service

20 through telemarketing to cancel the order with21 in a specified period.

22 (b) RULEMAKING.—

23 (1) The Commission shall prescribe the rules

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

25 of enactment of this Act. Such rules shall be pre-
4

•HR 868 IH

1 scribed in accordance with section 553 of title 5,

2 United States Code.

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

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

5 of the Federal Trade Commission Act.

6 (c) ENFORCEMENT.—Any violation of any rule pre7 scribed under subsection (a) shall be treated as a violation

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

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

10 practices.

11 SEC. 4. ACTIONS BY STATES.

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

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

14 residents of that State have been or are being threatened

15 or adversely affected because any person has engaged or

16 is engaging in a pattern or practice of telemarketing which

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

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

19 in an appropriate district court of the United States to

20 enjoin such telemarketing, to enforce compliance with such

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

22 other compensation on behalf of residents of such State,

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

24 deem appropriate.
5

•HR 868 IH

1 (b) NOTICE.—The State shall serve prior written no2 tice of any civil action under subsection (a) upon the Com3 mission and provide the Commission with a copy of its

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

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

6 notice immediately upon instituting such action. Upon re7 ceiving a notice respecting a civil action, the Commission

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

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

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

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

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

13 prevent an attorney general from exercising the powers

14 conferred on the attorney general by the laws of such

15 State to conduct investigations or to administer oaths or

16 affirmations or to compel the attendance of witnesses or

17 the production of documentary and other evidence.

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

19 Commission has instituted a civil action for violation of

20 any rule prescribed under section 3, no State may, during

21 the pendency of such action instituted by the Commission,

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

23 defendant named in the Commission’s complaint for acts

24 or omissions alleged in the complaint for violation of any

25 rule as alleged in the Commission’s complaint.
6

•HR 868 IH

1 (e) ACTIONS BY OTHER STATE OFFICIALS.—

2 (1) Nothing contained in this section shall pro3 hibit an authorized State official from proceeding in

4 State court on the basis of an alleged violation of

5 any civil or criminal statute of such State.

6 (2) In addition to actions brought by an attor7 ney general of a State under subsection (a), such an

8 action may be brought by officers of such State who

9 are authorized by the State to bring actions in such

10 State for protection of consumers and who are des11 ignated by the Commission to bring an action under

12 subsection (a) against persons that the Commission

13 has determined have or are engaged in a pattern or

14 practice of telemarketing which violates a rule of the

15 Commission under section 3.

16 SEC. 5. ACTIONS BY PRIVATE PERSONS.

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

18 any pattern or practice of telemarketing which violates any

19 rule of the Commission under section 3 or an authorized

20 person acting on such person’s behalf may, within 3 years

21 after discovery of the violation, bring a civil action in an

22 appropriate district court of the United States against a

23 person who has engaged or is engaging in such pattern

24 or practice of telemarketing if the amount in controversy

25 exceeds the sum or value of $50,000 in actual damages
7

•HR 868 IH

1 for each person adversely affected by such telemarketing.

2 Such an action may be brought to enjoin such

3 telemarketing, to enforce compliance with any rule of the

4 Commission under section 3, to obtain damages, or to ob5 tain such further and other relief as the court may deem

6 appropriate.

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

8 notice of the action upon the Commission and provide the

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

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

11 the person shall serve such notice immediately upon insti12 tuting such action. The Commission shall have the right

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

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

15 petitions for appeal.

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

17 Commission has instituted a civil action for violation of

18 any rule prescribed under section 3, no person may, dur19 ing the pendency of such action instituted by the Commis20 sion, subsequently institute a civil action against any de21 fendant named in the Commission’s complaint for viola22 tion of any rule as alleged in the Commission’s complaint.

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

24 final order in any action brought under subsection (a),
8

•HR 868 IH

1 may award costs of suit and reasonable fees for attorneys

2 and expert witnesses to the prevailing party.

3 (e) CONSTRUCTION.—Nothing in this section shall re4 strict any right which any person may have under any

5 statute or common law.

6 SEC. 6. CLEARINGHOUSE.

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

8 clearinghouse for inquiries made to Federal agencies con9 cerning telemarketing. The clearinghouse will provide in10 formation (other than information which may not be dis11 closed under section 552(b) of title 5, United States Code,

12 or under regulations prescribed by the Commission to im13 plement such section) to anyone making inquiries respect14 ing persons engaged in telemarketing or direct such in15 quiries to the appropriate Federal or State agency.

16 (b) LIABILITY FOR PROVIDING INFORMATION.—No

17 person who provides information to the clearinghouse es18 tablished under subsection (a) shall be liable for damages

19 for the provision of such information unless such person

20 provided such information knowing it to be false.

21 SEC. 7. ADMINISTRATION AND APPLICABILITY OF ACT.

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

23 sections 4 and 5, this Act shall be enforced by the Com24 mission under the Federal Trade Commission Act (15

25 U.S.C. 41 et seq.). Consequently, no activity which is out-
9

•HR 868 IH

1 side the jurisdiction of that Act shall be affected by this

2 Act.

3 (b) ACTIONS BY THE COMMISSION.—The Commis4 sion shall prevent any person from violating a rule of the

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

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

7 duties as though all applicable terms and provisions of the

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

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

10 person who violates such rule shall be subject to the pen11 alties and entitled to the privileges and immunities pro12 vided in the Federal Trade Commission Act in the same

13 manner, by the same means, and with the same jurisdic14 tion, power, and duties as though all applicable terms and

15 provisions of the Federal Trade Commission Act were in16 corporated into and made a part of this Act.

17 SEC. 8. DEFINITIONS.

18 For purposes of this Act:

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

20 chief legal officer of a State.

21 (2) The term ‘‘Commission’’ means the Federal

22 Trade Commission.

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

24 United States, the District of Columbia, Puerto
10

•HR 868 IH

1 Rico, the Northern Mariana Islands, and any terri2 tory or possession of the United States.

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

4 program, or campaign which is conducted to induce

5 purchases of goods or services by significant use of

6 one or more telephones and which involves more

7 than one interstate telephone call. The term does not

8 include the solicitation of sales through the mailing

9 of a catalog which—

10 (A) contains a written description or illus11 tration of the goods or services offered for sale,

12 (B) includes the business address of the

13 seller,

14 (C) includes multiple pages of written ma15 terial or illustrations, and

16 (D) has been issued not less frequently

17 than once a year,

18 where the person making the solicitation does not

19 solicit customers by telephone but only receives calls

20 initiated by customers in response to the catalog and

21 during those calls takes orders only without further

22 solicitation.

23 SEC. 9. REVIEW.

24 Upon the expiration of 5 years following the date of

25 the enactment of this Act, the Federal Trade Commission
11

•HR 868 IH

1 shall review the implementation of this Act and its effect

2 on deceptive telemarketing activities and report the results

3 of the review to the Congress.

Æ