`[Congressional Bills 103th Congress]
[From the U.S. Government Publishing Office]
[H.R. 868 Enrolled Bill (ENR)]

        H.R.868

                       One Hundred Third Congress

                                 of the

                        United States of America


                          AT THE SECOND SESSION

          Begun and held at the City of Washington on Tuesday,
 the twenty-fifth day of January, one thousand nine hundred and ninety-
                                  four


                                 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.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Telemarketing and Consumer Fraud and 
Abuse Prevention Act''.

SEC. 2. FINDINGS.

    The Congress makes the following findings:
        (1) Telemarketing differs from other sales activities in that 
    it can be carried out by sellers across State lines without direct 
    contact with the consumer. Telemarketers also can be very mobile, 
    easily moving from State to State.
        (2) Interstate telemarketing fraud has become a problem of such 
    magnitude that the resources of the Federal Trade Commission are 
    not sufficient to ensure adequate consumer protection from such 
    fraud.
        (3) Consumers and others are estimated to lose $40 billion a 
    year in telemarketing fraud.
        (4) Consumers are victimized by other forms of telemarketing 
    deception and abuse.
        (5) Consequently, Congress should enact legislation that will 
    offer consumers necessary protection from telemarketing deception 
    and abuse.

SEC. 3. TELEMARKETING RULES.

    (a) In General.--
        (1) The Commission shall prescribe rules prohibiting deceptive 
    telemarketing acts or practices and other abusive telemarketing 
    acts or practices.
        (2) The Commission shall include in such rules respecting 
    deceptive telemarketing acts or practices a definition of deceptive 
    telemarketing acts or practices which may include acts or practices 
    of entities or individuals that assist or facilitate deceptive 
    telemarketing, including credit card laundering.
        (3) The Commission shall include in such rules respecting other 
    abusive telemarketing acts or practices--
            (A) a requirement that telemarketers may not undertake a 
        pattern of unsolicited telephone calls which the reasonable 
        consumer would consider coercive or abusive of such consumer's 
        right to privacy,
            (B) restrictions on the hours of the day and night when 
        unsolicited telephone calls can be made to consumers, and
            (C) a requirement that any person engaged in telemarketing 
        for the sale of goods or services shall promptly and clearly 
        disclose to the person receiving the call that the purpose of 
        the call is to sell goods or services and make such other 
        disclosures as the Commission deems appropriate, including the 
        nature and price of the goods and services.
    In prescribing the rules described in this paragraph, the 
    Commission shall also consider recordkeeping requirements.
    (b) Rulemaking.--The Commission shall prescribe the rules under 
subsection (a) within 365 days after the date of enactment of this Act. 
Such rules shall be prescribed in accordance with section 553 of title 
5, United States Code.
    (c) Enforcement.--Any violation of any rule prescribed under 
subsection (a) shall be treated as a violation of a rule under section 
18 of the Federal Trade Commission Act (15 U.S.C. 57a) regarding unfair 
or deceptive acts or practices.
    (d) Securities and Exchange Commission Rules.--
        (1) Promulgation.--
            (A) In general.--Except as provided in subparagraph (B), 
        not later than 6 months after the effective date of rules 
        promulgated by the Federal Trade Commission under subsection 
        (a), the Securities and Exchange Commission shall promulgate, 
        or require any national securities exchange or registered 
        securities association to promulgate, rules substantially 
        similar to such rules to prohibit deceptive and other abusive 
        telemarketing acts or practices by persons described in 
        paragraph (2).
            (B) Exception.--The Securities and Exchange Commission is 
        not required to promulgate a rule under subparagraph (A) if it 
        determines that--
                (i) Federal securities laws or rules adopted by the 
            Securities and Exchange Commission thereunder provide 
            protection from deceptive and other abusive telemarketing 
            by persons described in paragraph (2) substantially similar 
            to that provided by rules promulgated by the Federal Trade 
            Commission under subsection (a); or
                (ii) such a rule promulgated by the Securities and 
            Exchange Commission is not necessary or appropriate in the 
            public interest, or for the protection of investors, or 
            would be inconsistent with the maintenance of fair and 
            orderly markets.
        If the Securities and Exchange Commission determines that an 
        exception described in clause (i) or (ii) applies, the 
        Securities and Exchange Commission shall publish in the Federal 
        Register its determination with the reasons for it.
        (2) Application.--
            (A) In general.--The rules promulgated by the Securities 
        and Exchange Commission under paragraph (1)(A) shall apply to a 
        broker, dealer, transfer agent, municipal securities dealer, 
        municipal securities broker, government securities broker, 
        government securities dealer, investment adviser or investment 
        company, or any individual asso- ciated with a broker, dealer, 
        transfer agent, municipal securities dealer, municipal 
        securities broker, government securities broker, government 
        securities dealer, investment adviser or investment company. 
        The rules promulgated by the Federal Trade Commission under 
        subsection (a) shall not apply to persons described in the 
        preceding sentence.
            (B) Definitions.--For purposes of subparagraph (A)--
                (i) the terms ``broker'', ``dealer'', ``transfer 
            agent'', ``municipal securities dealer'', ``municipal 
            securities broker'', ``government securities broker'', and 
            ``government securities dealer'' have the meanings given 
            such terms by paragraphs (4), (5), (25), (30), (31), (43), 
            and (44) of section 3(a) of the Securities and Exchange Act 
            of 1934 (15 U.S.C. 78c(a)(4), (5), (25), (30), (31), (43), 
            and (44));
                (ii) the term ``investment adviser'' has the meaning 
            given such term by section 202(a)(11) of the Investment 
            Advisers Act of 1940 (15 U.S.C. 80b-2(a)(11)); and
                (iii) the term ``investment company'' has the meaning 
            given such term by section 3(a) of the Investment Company 
            Act of 1940 (15 U.S.C. 80a-3(a)).
    (e) Commodity Futures Trading Commission Rules.--
        (1) Application.--The rules promulgated by the Federal Trade 
    Commission under subsection (a) shall not apply to persons 
    described in subsection (f)(1) of section 6 of the Commodity 
    Exchange Act (7 U.S.C. 8, 9, 15, 13b, 9a).
        (2) Promulgation.--Section 6 of the Commodity Exchange Act (7 
    U.S.C. 8, 9, 15, 13b, 9a) is amended by adding at the end the 
    following new subsection:
    ``(f)(1) Except as provided in paragraph (2), not later than six 
months after the effective date of rules promulgated by the Federal 
Trade Commission under section 3(a) of the Telemarketing and Consumer 
Fraud and Abuse Prevention Act, the Commission shall promulgate, or 
require each registered futures association to promulgate, rules 
substantially similar to such rules to prohibit deceptive and other 
abusive telemarketing acts or practices by any person registered or 
exempt from registration under this Act in connection with such 
person's business as a futures commission merchant, introducing broker, 
commodity trading advisor, commodity pool operator, leverage 
transaction merchant, floor broker, or floor trader, or a person 
associated with any such person.
    ``(2) The Commission is not required to promulgate rules under 
paragraph (1) if it determines that--
        ``(A) rules adopted by the Commission under this Act provide 
    protection from deceptive and abusive telemarketing by persons 
    described under paragraph (1) substantially similar to that 
    provided by rules promulgated by the Federal Trade Commission under 
    section 3(a) of the Telemarketing and Consumer Fraud and Abuse 
    Prevention Act; or
        ``(B) such a rule promulgated by the Commission is not 
    necessary or appropriate in the public interest, or for the pro- 
    tection of customers in the futures and options markets, or would 
    be inconsistent with the maintenance of fair and orderly markets.
If the Commission determines that an exception described in 
subparagraph (A) or (B) applies, the Commission shall publish in the 
Federal Register its determination with the reasons for it.''.

SEC. 4. ACTIONS BY STATES.

    (a) In General.--Whenever an attorney general of any State has 
reason to believe that the interests of the residents of that State 
have been or are being threatened or adversely affected because any 
person has engaged or is engaging in a pattern or practice of 
telemarketing which violates any rule of the Commission under section 
3, the State, as parens patriae, may bring a civil action on behalf of 
its residents in an appropriate district court of the United States to 
enjoin such telemarketing, to enforce compliance with such rule of the 
Commission, to obtain damages, restitution, or other compensation on 
behalf of residents of such State, or to obtain such further and other 
relief as the court may deem appropriate.
    (b) Notice.--The State shall serve prior written notice of any 
civil action under subsection (a) or (f)(2) upon the Commission and 
provide the Commission with a copy of its complaint, except that if it 
is not feasible for the State to provide such prior notice, the State 
shall serve such notice immediately upon instituting such action. Upon 
receiving a notice respecting a civil action, the Commission shall have 
the right (1) to intervene in such action, (2) upon so intervening, to 
be heard on all matters arising therein, and (3) to file petitions for 
appeal.
    (c) Construction.--For purposes of bringing any civil action under 
subsection (a), nothing in this Act shall prevent an attorney general 
from exercising the powers conferred on the attorney general by the 
laws of such State to conduct investigations or to administer oaths or 
affirmations or to compel the attendance of witnesses or the production 
of documentary and other evidence.
    (d) Actions by the Commission.--Whenever a civil action has been 
instituted by or on behalf of the Commission for violation of any rule 
prescribed under section 3, no State may, during the pendency of such 
action instituted by or on behalf of the Commission, institute a civil 
action under subsection (a) or (f)(2) against any defendant named in 
the complaint in such action for violation of any rule as alleged in 
such complaint.
    (e) Venue; Service of Process.--Any civil action brought under 
subsection (a) in a district court of the United States may be brought 
in the district in which the defendant is found, is an inhabitant, or 
transacts business or wherever venue is proper under section 1391 of 
title 28, United States Code. Process in such an action may be served 
in any district in which the defendant is an inhabitant or in which the 
defendant may be found.
    (f) Actions by Other State Officials.--
        (1) Nothing contained in this section shall prohibit an 
    authorized State official from proceeding in State court on the 
    basis of an alleged violation of any civil or criminal statute of 
    such State.
        (2) In addition to actions brought by an attorney general of a 
    State under subsection (a), such an action may be brought by 
    officers of such State who are authorized by the State to bring 
    actions in such State on behalf of its residents.

SEC. 5. ACTIONS BY PRIVATE PERSONS.

    (a) In General.--Any person adversely affected by any pattern or 
practice of telemarketing which violates any rule of the Commission 
under section 3, or an authorized person acting on such person's 
behalf, may, within 3 years after discovery of the violation, bring a 
civil action in an appropriate district court of the United States 
against a person who has engaged or is engaging in such pattern or 
practice of telemarketing if the amount in controversy exceeds the sum 
or value of $50,000 in actual damages for each person adversely 
affected by such telemarketing. Such an action may be brought to enjoin 
such telemarketing, to enforce compliance with any rule of the 
Commission under section 3, to obtain damages, or to obtain such 
further and other relief as the court may deem appropriate.
    (b) Notice.--The plaintiff shall serve prior written notice of the 
action upon the Commission and provide the Commission with a copy of 
its complaint, except in any case where such prior notice is not 
feasible, in which case the person shall serve such notice immediately 
upon instituting such action. The Commission shall have the right (A) 
to intervene in the action, (B) upon so intervening, to be heard on all 
matters arising therein, and (C) to file petitions for appeal.
    (c) Action by the Commission.--Whenever a civil action has been 
instituted by or on behalf of the Commission for violation of any rule 
prescribed under section 3, no person may, during the pendency of such 
action instituted by or on behalf of the Commission, institute a civil 
action against any defendant named in the complaint in such action for 
violation of any rule as alleged in such complaint.
    (d) Cost and Fees.--The court, in issuing any final order in any 
action brought under subsection (a), may award costs of suit and 
reasonable fees for attorneys and expert witnesses to the prevailing 
party.
    (e) Construction.--Nothing in this section shall restrict any right 
which any person may have under any statute or common law.
    (f) Venue; Service of Process.--Any civil action brought under 
subsection (a) in a district court of the United States may be brought 
in the district in which the defendant is found, is an inhabitant, or 
transacts business or wherever venue is proper under section 1391 of 
title 28, United States Code. Process in such an action may be served 
in any district in which the defendant is an inhabitant or in which the 
defendant may be found.

SEC. 6. ADMINISTRATION AND APPLICABILITY OF ACT.

    (a) In General.--Except as otherwise provided in sections 3(d), 
3(e), 4, and 5, this Act shall be enforced by the Commission under the 
Federal Trade Commission Act (15 U.S.C. 41 et seq.). Consequently, no 
activity which is outside the jurisdiction of that Act shall be 
affected by this Act.
    (b) Actions by the Commission.--The Commission shall prevent any 
person from violating a rule of the Commission under section 3 in the 
same manner, by the same means, and with the same jurisdiction, powers, 
and duties as though all applicable terms and provisions of the Federal 
Trade Commission Act (15 U.S.C. 41 et seq.) were incorporated into and 
made a part of this Act. Any person who violates such rule shall be 
subject to the penalties and entitled to the privileges and immunities 
provided in the Federal Trade Commission Act in the same manner, by the 
same means, and with the same jurisdiction, power, and duties as though 
all applicable terms and provisions of the Federal Trade Commission Act 
were incorporated into and made a part of this Act.
    (c) Effect on Other Laws.--Nothing contained in this Act shall be 
construed to limit the authority of the Commission under any other 
provision of law.

SEC. 7. DEFINITIONS.

    For purposes of this Act:
        (1) The term ``attorney general'' means the chief legal officer 
    of a State.
        (2) The term ``Commission'' means the Federal Trade Commission.
        (3) The term ``State'' means any State of the United States, 
    the District of Columbia, Puerto Rico, the Northern Mariana 
    Islands, and any territory or possession of the United States.
        (4) The term ``telemarketing'' means a plan, program, or 
    campaign which is conducted to induce purchases of goods or 
    services by use of one or more telephones and which involves more 
    than one interstate telephone call. The term does not include the 
    solicitation of sales through the mailing of a catalog which--
            (A) contains a written description, or illustration of the 
        goods or services offered for sale,
            (B) includes the business address of the seller,
            (C) includes multiple pages of written material or 
        illustrations, and
            (D) has been issued not less frequently than once a year,
    where the person making the solicitation does not solicit customers 
    by telephone but only receives calls initiated by customers in 
    response to the catalog and during those calls takes orders only 
    without further solicitation.

SEC. 8. FALSE ADVERTISEMENTS CONCERNING SERVICES.

    Section 12(a) of the Federal Trade Commission Act (15 U.S.C. 52(a)) 
is amended by inserting ``services,'' immediately after ``devices,'' 
each place it appears.

SEC. 9. ENFORCEMENT OF ORDERS.

    (a) General Authority.--Subject to subsections (b) and (c), the 
Federal Trade Commission may bring a criminal contempt action for 
violations of orders of the Commission obtained in cases brought under 
section 13(b) of the Federal Trade Commission Act (15 U.S.C. 53(b)).
    (b) Appointment.--An action authorized by subsection (a) may be 
brought by the Federal Trade Commission only after, and pursuant to, 
the appointment by the Attorney General of an attorney employed by the 
Commission, as a special assistant United States Attorney.
    (c) Request for Appointment.--
        (1) Appointment upon request or motion.--A special assistant 
    United States Attorney may be appointed under subsection (b) upon 
    the request of the Federal Trade Commission or the court which has 
    entered the order for which contempt is sought or upon the Attorney 
    General's own motion.
        (2) Timing.--The Attorney General shall act upon any request 
    made under paragraph (1) within 45 days of the receipt of the 
    request.
    (d) Termination of Authority.--The authority of the Federal Trade 
Commission to bring a criminal contempt action under subsection (a) 
expires 2 years after the date of the first promulgation of rules under 
section 3. The expiration of such authority shall have no effect on an 
action brought before the expiration date.

SEC. 10. REVIEW.

    Upon the expiration of 5 years following the date of the first 
promulgation of rules under section 3, the Commission shall review the 
implementation of this Act and its effect on deceptive telemarketing 
acts or practices and report the results of the review to the Congress.







                               Speaker of the House of Representatives.







                            Vice President of the United States and    
                                               President of the Senate.`