In the House of Representatives, U. S.,

July 25, 1994.

Resolved, That the House agree to the amendment of

the Senate to the bill (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’’, with the following

AMENDMENT:

In lieu of the matter inserted by said amendment, insert:

1 SECTION 1. SHORT TITLE.

2 This Act may be cited as the ‘‘Telemarketing and

3 Consumer Fraud and Abuse Prevention Act’’.

4 SEC. 2. FINDINGS.

5 The Congress makes the following findings:

6 (1) Telemarketing differs from other sales activi7 ties in that it can be carried out by sellers across

8 State lines without direct contact with the consumer.

9 Telemarketers also can be very mobile, easily moving

10 from State to 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 en14 sure adequate consumer protection from such fraud.
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1 (3) Consumers and others are estimated to lose

2 $40 billion a year in telemarketing fraud.

3 (4) Consumers are victimized by other forms of

4 telemarketing deception and abuse.

5 (5) Consequently, Congress should enact legisla6 tion that will offer consumers necessary protection

7 from telemarketing deception and abuse.

8 SEC. 3. TELEMARKETING RULES.

9 (a) IN GENERAL.—

10 (1) The Commission shall prescribe rules prohib11 iting deceptive telemarketing acts or practices and

12 other abusive telemarketing acts or practices.

13 (2) The Commission shall include in such rules

14 respecting deceptive telemarketing acts or practices a

15 definition of deceptive telemarketing acts or practices

16 which may include acts or practices of entities or in17 dividuals that assist or facilitate deceptive

18 telemarketing, including credit card laundering.

19 (3) The Commission shall include in such rules

20 respecting other abusive telemarketing acts or prac21 tices—

22 (A) a requirement that telemarketers may

23 not undertake a pattern of unsolicited telephone

24 calls which the reasonable consumer would con-
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1 sider coercive or abusive of such consumer’s right

2 to privacy,

3 (B) restrictions on the hours of the day and

4 night when unsolicited telephone calls can be

5 made to consumers, and

6 (C) a requirement that any person engaged

7 in telemarketing for the sale of goods or services

8 shall promptly and clearly disclose to the person

9 receiving the call that the purpose of the call is

10 to sell goods or services and make such other dis11 closures as the Commission deems appropriate,

12 including the nature and price of the goods and

13 services.

14 In prescribing the rules described in this paragraph,

15 the Commission shall also consider recordkeeping re16 quirements.

17 (b) RULEMAKING.—The Commission shall prescribe

18 the rules under subsection (a) within 365 days after the

19 date of enactment of this Act. Such rules shall be prescribed

20 in accordance with section 553 of title 5, United States

21 Code.

22 (c) ENFORCEMENT.—Any violation of any rule pre23 scribed under subsection (a) shall be treated as a violation

24 of a rule under section 18 of the Federal Trade Commission
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1 Act (15 U.S.C. 57a) regarding unfair or deceptive acts or

2 practices.

3 (d) SECURITIES AND EXCHANGE COMMISSION

4 RULES.—

5 (1) PROMULGATION.—

6 (A) IN GENERAL.—Except as provided in

7 subparagraph (B), not later than 6 months after

8 the effective date of rules promulgated by the

9 Federal Trade Commission under subsection (a),

10 the Securities and Exchange Commission shall

11 promulgate, or require any national securities

12 exchange or registered securities association to

13 promulgate, rules substantially similar to such

14 rules to prohibit deceptive and other abusive

15 telemarketing acts or practices by persons de16 scribed in paragraph (2).

17 (B) EXCEPTION.—The Securities and Ex18 change Commission is not required to promul19 gate a rule under subparagraph (A) if it deter20 mines that—

21 (i) Federal securities laws or rules

22 adopted by the Securities and Exchange

23 Commission thereunder provide protection

24 from deceptive and other abusive

25 telemarketing by persons described in para-
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1 graph (2) substantially similar to that pro2 vided by rules promulgated by the Federal

3 Trade Commission under subsection (a); or

4 (ii) such a rule promulgated by the Se5 curities and Exchange Commission is not

6 necessary or appropriate in the public in7 terest, or for the protection of investors, or

8 would be inconsistent with the maintenance

9 of fair and orderly markets.

10 If the Securities and Exchange Commission de11 termines that an exception described in clause (i)

12 or (ii) applies, the Securities and Exchange

13 Commission shall publish in the Federal Register

14 its determination with the reasons for it.

15 (2) APPLICATION.—

16 (A) IN GENERAL.—The rules promulgated

17 by the Securities and Exchange Commission

18 under paragraph (1)(A) shall apply to a broker,

19 dealer, transfer agent, municipal securities deal20 er, municipal securities broker, government secu21 rities broker, government securities dealer, in22 vestment adviser or investment company, or any

23 individual associated with a broker, dealer,

24 transfer agent, municipal securities dealer, mu25 nicipal securities broker, government securities
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1 broker, government securities dealer, investment

2 adviser or investment company. The rules pro3 mulgated by the Federal Trade Commission

4 under subsection (a) shall not apply to persons

5 described in the preceding sentence.

6 (B) DEFINITIONS.—For purposes of sub7 paragraph (A)—

8 (i) the terms ‘‘broker’’, ‘‘dealer’’,

9 ‘‘transfer agent’’, ‘‘municipal securities

10 dealer’’, ‘‘municipal securities broker’’,

11 ‘‘government securities broker’’, and ‘‘gov12 ernment securities dealer’’ have the mean13 ings given such terms by paragraphs (4),

14 (5), (25), (30), (31), (43), and (44) of sec15 tion 3(a) of the Securities and Exchange

16 Act of 1934 (15 U.S.C. 78c(a)(4), (5), (25),

17 (30), (31), (43), and (44));

18 (ii) the term ‘‘investment adviser’’ has

19 the meaning given such term by section

20 202(a)(11) of the Investment Advisers Act of

21 1940 (15 U.S.C. 80b–2(a)(11)); and

22 (iii) the term ‘‘investment company’’

23 has the meaning given such term by section

24 3(a) of the Investment Company Act of

25 1940 (15 U.S.C. 80a–3(a)).
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1 (e) COMMODITY FUTURES TRADING COMMISSION

2 RULES.—

3 (1) APPLICATION.—The rules promulgated by the

4 Federal Trade Commission under subsection (a) shall

5 not apply to persons described in subsection (f)(1) of

6 section 6 of the Commodity Exchange Act (7 U.S.C.

7 8, 9, 15, 13b, 9a).

8 (2) PROMULGATION.—Section 6 of the Commod9 ity Exchange Act (7 U.S.C. 8, 9, 15, 13b, 9a) is

10 amended by adding at the end the following new sub11 section:

12 ‘‘(f)(1) Except as provided in paragraph (2), not later

13 than six months after the effective date of rules promulgated

14 by the Federal Trade Commission under section 3(a) of the

15 Telemarketing and Consumer Fraud and Abuse Prevention

16 Act, the Commission shall promulgate, or require each reg17 istered futures association to promulgate, rules substan18 tially similar to such rules to prohibit deceptive and other

19 abusive telemarketing acts or practices by any person reg20 istered or exempt from registration under this Act in con21 nection with such person’s business as a futures commission

22 merchant, introducing broker, commodity trading advisor,

23 commodity pool operator, leverage transaction merchant,

24 floor broker, or floor trader, or a person associated with any

25 such person.
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1 ‘‘(2) The Commission is not required to promulgate

2 rules under paragraph (1) if it determines that—

3 ‘‘(A) rules adopted by the Commission under this

4 Act provide protection from deceptive and abusive

5 telemarketing by persons described under paragraph

6 (1) substantially similar to that provided by rules

7 promulgated by the Federal Trade Commission under

8 section 3(a) of the Telemarketing and Consumer

9 Fraud and Abuse Prevention Act; or

10 ‘‘(B) such a rule promulgated by the Commission

11 is not necessary or appropriate in the public interest,

12 or for the protection of customers in the futures and

13 options markets, or would be inconsistent with the

14 maintenance of fair and orderly markets.

15 If the Commission determines that an exception described

16 in subparagraph (A) or (B) applies, the Commission shall

17 publish in the Federal Register its determination with the

18 reasons for it.’’.

19 SEC. 4. ACTIONS BY STATES.

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

21 any State has reason to believe that the interests of the resi22 dents of that State have been or are being threatened or

23 adversely affected because any person has engaged or is en24 gaging in a pattern or practice of telemarketing which vio25 lates any rule of the Commission under section 3, the State,
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1 as parens patriae, may bring a civil action on behalf of

2 its residents in an appropriate district court of the United

3 States to enjoin such telemarketing, to enforce compliance

4 with such rule of the Commission, to obtain damages, res5 titution, or other compensation on behalf of residents of such

6 State, or to obtain such further and other relief as the court

7 may deem appropriate.

8 (b) NOTICE.—The State shall serve prior written no9 tice of any civil action under subsection (a) or (f)(2) upon

10 the Commission and provide the Commission with a copy

11 of its complaint, except that if it is not feasible for the State

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

13 immediately upon instituting such action. Upon receiving

14 a notice respecting a civil action, the Commission shall have

15 the right (1) to intervene in such action, (2) upon so inter16 vening, to be heard on all matters arising therein, and (3)

17 to file petitions for appeal.

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

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

20 prevent an attorney general from exercising the powers con21 ferred on the attorney general by the laws of such State

22 to conduct investigations or to administer oaths or affirma23 tions or to compel the attendance of witnesses or the produc24 tion of documentary and other evidence.
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1 (d) ACTIONS BY THE COMMISSION.—Whenever a civil

2 action has been instituted by or on behalf of the Commission

3 for violation of any rule prescribed under section 3, no

4 State may, during the pendency of such action instituted

5 by or on behalf of the Commission, institute a civil action

6 under subsection (a) or (f)(2) against any defendant named

7 in the complaint in such action for violation of any rule

8 as alleged in such complaint.

9 (e) VENUE; SERVICE OF PROCESS.—Any civil action

10 brought under subsection (a) in a district court of the Unit11 ed States may be brought in the district in which the de12 fendant is found, is an inhabitant, or transacts business

13 or wherever venue is proper under section 1391 of title 28,

14 United States Code. Process in such an action may be

15 served in any district in which the defendant is an inhab16 itant or in which the defendant may be found.

17 (f) ACTIONS BY OTHER STATE OFFICIALS.—

18 (1) Nothing contained in this section shall pro19 hibit an authorized State official from proceeding in

20 State court on the basis of an alleged violation of any

21 civil or criminal statute of such State.

22 (2) In addition to actions brought by an attor23 ney general of a State under subsection (a), such an

24 action may be brought by officers of such State who
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1 are authorized by the State to bring actions in such

2 State on behalf of its residents.

3 SEC. 5. ACTIONS BY PRIVATE PERSONS.

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

5 any pattern or practice of telemarketing which violates any

6 rule of the Commission under section 3, or an authorized

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

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

9 appropriate district court of the United States against a

10 person who has engaged or is engaging in such pattern or

11 practice of telemarketing if the amount in controversy ex12 ceeds the sum or value of $50,000 in actual damages for

13 each person adversely affected by such telemarketing. Such

14 an action may be brought to enjoin such telemarketing, to

15 enforce compliance with any rule of the Commission under

16 section 3, to obtain damages, or to obtain such further and

17 other relief as the court may deem appropriate.

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

19 notice of the action upon the Commission and provide the

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

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

22 the person shall serve such notice immediately upon insti23 tuting such action. The Commission shall have the right

24 (A) to intervene in the action, (B) upon so intervening, to
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1 be heard on all matters arising therein, and (C) to file peti2 tions for appeal.

3 (c) ACTION BY THE COMMISSION.—Whenever a civil

4 action has been instituted by or on behalf of the Commission

5 for violation of any rule prescribed under section 3, no per6 son may, during the pendency of such action instituted by

7 or on behalf of the Commission, institute a civil action

8 against any defendant named in the complaint in such ac9 tion for violation of any rule as alleged in such complaint.

10 (d) COST AND FEES.—The court, in issuing any final

11 order in any action brought under subsection (a), may

12 award costs of suit and reasonable fees for attorneys and

13 expert witnesses to the prevailing party.

14 (e) CONSTRUCTION.—Nothing in this section shall re15 strict any right which any person may have under any stat16 ute or common law.

17 (f) VENUE; SERVICE OF PROCESS.—Any civil action

18 brought under subsection (a) in a district court of the

19 United States may be brought in the district in which the

20 defendant is found, is an inhabitant, or transacts business

21 or wherever venue is proper under section 1391 of title 28,

22 United States Code. Process in such an action may be

23 served in any district in which the defendant is an inhab24 itant or in which the defendant may be found.
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1 SEC. 6. ADMINISTRATION AND APPLICABILITY OF ACT.

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

3 sections 3(d), 3(e), 4, and 5, this Act shall be enforced by

4 the Commission under the Federal Trade Commission Act

5 (15 U.S.C. 41 et seq.). Consequently, no activity which is

6 outside the jurisdiction of that Act shall be affected by this

7 Act.

8 (b) ACTIONS BY THE COMMISSION.—The Commission

9 shall prevent any person from violating a rule of the Com10 mission under section 3 in the same manner, by the same

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

12 as though all applicable terms and provisions of the Federal

13 Trade Commission Act (15 U.S.C. 41 et seq.) were incor14 porated into and made a part of this Act. Any person who

15 violates such rule shall be subject to the penalties and enti16 tled to the privileges and immunities provided in the Fed17 eral Trade Commission Act in the same manner, by the

18 same means, and with the same jurisdiction, power, and

19 duties as though all applicable terms and provisions of the

20 Federal Trade Commission Act were incorporated into and

21 made a part of this Act.

22 (c) EFFECT ON OTHER LAWS.—Nothing contained in

23 this Act shall be construed to limit the authority of the Com24 mission under any other provision of law.

25 SEC. 7. DEFINITIONS.

26 For purposes of this Act:
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1 (1) The term ‘‘attorney general’’ means the chief

2 legal officer of a State.

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

4 Trade Commission.

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

6 United States, the District of Columbia, Puerto Rico,

7 the Northern Mariana Islands, and any territory or

8 possession of the United States.

9 (4) The term ‘‘telemarketing’’ means a plan, pro10 gram, or campaign which is conducted to induce pur11 chases of goods or services by use of one or more tele12 phones and which involves more than one interstate

13 telephone call. The term does not include the solicita14 tion of 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, and

21 (D) has been issued not less frequently than

22 once a year,

23 where the person making the solicitation does not so24 licit customers by telephone but only receives calls

25 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. 8. FALSE ADVERTISEMENTS CONCERNING SERVICES.

4 Section 12(a) of the Federal Trade Commission Act

5 (15 U.S.C. 52(a)) is amended by inserting ‘‘services,’’ im6 mediately after ‘‘devices,’’ each place it appears.

7 SEC. 9. ENFORCEMENT OF ORDERS.

8 (a) GENERAL AUTHORITY.—Subject to subsections (b)

9 and (c), the Federal Trade Commission may bring a crimi10 nal contempt action for violations of orders of the Commis11 sion obtained in cases brought under section 13(b) of the

12 Federal Trade Commission Act (15 U.S.C. 53(b)).

13 (b) APPOINTMENT.—An action authorized by sub14 section (a) may be brought by the Federal Trade Commis15 sion only after, and pursuant to, the appointment by the

16 Attorney General of an attorney employed by the Commis17 sion, as a special assistant United States Attorney.

18 (c) REQUEST FOR APPOINTMENT.—

19 (1) APPOINTMENT UPON REQUEST OR MOTION.—

20 A special assistant United States Attorney may be

21 appointed under subsection (b) upon the request of the

22 Federal Trade Commission or the court which has en23 tered the order for which contempt is sought or upon

24 the Attorney General’s own motion.
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1 (2) TIMING.—The Attorney General shall act

2 upon any request made under paragraph (1) within

3 45 days of the receipt of the request.

4 (d) TERMINATION OF AUTHORITY.—The authority of

5 the Federal Trade Commission to bring a criminal con6 tempt action under subsection (a) expires 2 years after the

7 date of the first promulgation of rules under section 3. The

8 expiration of such authority shall have no effect on an ac9 tion brought before the expiration date.

10 SEC. 10. REVIEW.

11 Upon the expiration of 5 years following the date of

12 the first promulgation of rules under section 3, the Commis13 sion shall review the implementation of this Act and its

14 effect on deceptive telemarketing acts or practices and re15 port the results of the review to the Congress.

Attest:

Clerk.

103D CONGRESS

2D SESSION H. R. 868

AMENDMENT

TO

SENATE AMENDMENT