H. Res. 488

In the House of Representatives, U. S.,

July 25, 1994.

Resolved, That, upon adoption of this resolution, the bill

(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, with the Senate amendment thereto, shall be considered to have been

taken from the Speaker’s table, and the same are hereby

agreed to with an amendment as follows:

In lieu of the matter proposed to be inserted by the Senate, insert the following:

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
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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.
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(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
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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
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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 associated

with a broker, dealer, transfer agent, municipal securities dealer, municipal securities broker, government securities broker, government securities dealer, investment adviser or investment company. The
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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.—
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(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
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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 protection 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
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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 sub-
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section (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
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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
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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 Commis-
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sion 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.
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(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
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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.
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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.

Attest:

Clerk.