Calendar No. 187

103D CONGRESS

1ST SESSION S. 1179

[Report No. 103–130]

A BILL

To amend the Federal Trade Commission Act to

other purposes.provide authorization of appropriations, and for

AUGUST 24, 1993

Reported without amendment
II

Calendar No. 187

103D CONGRESS

1ST SESSION S. 1179

[Report No. 103–130]

To amend the Federal Trade Commission Act to provide authorization of

appropriations, and for other purposes.

IN THE SENATE OF THE UNITED STATES

JUNE 29 (legislative day, JUNE 22), 1993

Mr. BRYAN (for himself, Mr. GORTON, and Mr. DANFORTH) introduced the

following bill; which was read twice and referred to the Committee on

Commerce, Science, and Transportation

AUGUST 24, 1993

Reported, under authority of the order of the Senate of August 2 (legislative

day, June 30), 1993, by Mr. HOLLINGS with amendments

[Omit the part struck through and insert the part printed in italic]

A BILL

To amend the Federal Trade Commission Act to provide

authorization of appropriations, 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 ‘‘Federal Trade Com5 mission Act Amendments of 1993’’.
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1 SEC. 2. UNFAIR METHODS OF COMPETITION.

2 Section 5 of the Federal Trade Commission Act (15

3 U.S.C. 45) is amended by adding at the end the following

4 new subsection:

5 ‘‘(n) The Commission shall not have any authority

6 to find a method of competition to be an unfair method

7 of competition under subsection (a)(1) if, in any action

8 under the Sherman Act (15 U.S.C. 1 et seq.), such method

9 of competition would be held to constitute State action.’’.

10 SEC. 3. AGRICULTURAL COOPERATIVES.

11 The Federal Trade Commission Act (15 U.S.C. 41

12 et seq.) is amended by redesignating sections 24 and 25

13 as sections 26 and 27, respectively, and by inserting imme14 diately after section 23 the following new section:

15 ‘‘SEC. 24. (a) The Commission shall not have any au16 thority to conduct any study, investigation, or prosecution

17 of any agricultural cooperative for any conduct which, be18 cause of the provisions of the Act entitled ‘An Act to au19 thorize association of producers of agricultural products’,

20 approved February 18, 1922 (7 U.S.C. 291 et seq., com21 monly known as the Capper-Volstead Act), is not a viola22 tion of any of the antitrust Acts or this Act.

23 ‘‘(b) The Commission shall not have any authority

24 to conduct any study or investigation of any agricultural

25 marketing orders.’’.
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1 SEC. 4. COMPENSATION IN PROCEEDINGS.

2 (a) REPEAL.—Section 18(h) of the Federal Trade

3 Commission Act (15 U.S.C. 57a(h)) is repealed, and sub4 sections (i), (j), and (k) of section 18 are redesignated as

5 subsections (h), (i), and (j), respectively.

6 (b) CONFORMING AMENDMENT.—Section 18(a)(1) of

7 the Federal Trade Commission Act (15 U.S.C. 57a(a)(1))

8 is amended by striking ‘’subsection (i)’’ and inserting in

9 lieu thereof ‘‘subsection (h)’’.

10 SEC. 5. KNOWING VIOLATIONS OF ORDERS.

11 (a) EXCEPTION FOR CONSENT ORDERS.—Section

12 5(m)(1)(B) of the Federal Trade Commission Act (15

13 U.S.C. 45(m)(1)(B)) is amended by inserting ‘‘, other

14 than a consent order,’’ immediately after ‘‘order’’ the first

15 time it appears.

16 (b) REVIEW OF DETERMINATIONS OF LAW.—Section

17 5(m)(2) of the Federal Trade Commission Act (15 U.S.C.

18 45(m)(2)) is amended by adding at the end of the follow19 ing: ‘‘Upon request of any party to such an action against

20 such defendant, the court shall also review the determina21 tion of law made by the Commission in the proceeding

22 under subsection (b) that the act or practice which was

23 the subject of such proceeding constituted an unfair or

24 deceptive act or practice in violation of subsection (a).’’.
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1 SEC. 6. PREVALENCE OF UNLAWFUL ACTS OR PRACTICES.

2 Section 18(b) of the Federal Trade Commission Act

3 (15 U.S.C. 57a(b)) is amended by adding at the end the

4 following new paragraph:

5 ‘‘(3) The Commission shall issue a notice of proposed

6 rulemaking pursuant to paragraph (1)(A) only where it

7 has reason to believe that the unfair or deceptive acts or

8 practices which are the subject of the proposed rulemaking

9 are prevalent. The Commission shall make a determina10 tion that unfair or deceptive acts or practices are prevalent

11 under this paragraph only if it has issued cease and desist

12 orders regarding such acts or practices, or any other infor13 mation available to the Commission indicates a pattern of

14 unfair or deceptive acts or practices.’’.

15 SEC. 7. EFFECTIVE DATE OF ORDERS.

16 (a) ORDERS SUBJECT TO PETITION FOR REVIEW.—

17 Section 5(g)(2) of the Federal Trade Commission Act (15

18 U.S.C. 45(g)(2)) is amended to read as follows:

19 ‘‘(2) Except as to any order provision subject to

20 paragraph (4), upon the sixtieth day after such

21 order is served, if a petition for review has been duly

22 filed; except that any such order may be stayed, in

23 whole or in part and subject to such conditions as

24 may be appropriate, by—

25 ‘‘(A) the Commission;
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1 ‘‘(B) an appropriate court of appeals of

2 the United States, if (i) a petition for review of

3 such order is pending in such court, and (ii) an

4 application for such a stay was previously sub5 mitted to the Commission and the Commission,

6 within the thirty-day period beginning on the

7 date the application was received by the Com8 mission, either denied the application or did not

9 grant or deny the application; or

10 ‘‘(C) the Supreme Court, if an applicable

11 petition for certiorari is pending; or’’.

12 (b) ORDERS SUBJECT TO SECTIONS 5(m)(1)(B) AND

13 19(a)(2) OF FTCA.—Section 5(g)(3) of the Federal

14 Trade Commission Act (15 U.S.C. 45(g)(3)) is amended

15 to read as follows:

16 ‘‘(3) For purposes of subsection (m)(1)(B) and

17 of section 19 (a)(2), if a petition for review of the

18 order of the Commission has been filed—

19 ‘‘(A) upon the expiration of the time al20 lowed for filing a petition for certiorari, if the

21 order of the Commission has been affirmed or

22 the petition for review has been dismissed by

23 the court of appeals and no petition for certio24 rari has been duly filed;
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1 ‘‘(B) upon the denial of a petition for cer2 tiorari, if the order of the Commission has been

3 affirmed or the petition for review has been dis4 missed by the court of appeals; or

5 ‘‘(C) upon the expiration of thirty days

6 from the date of issuance of a mandate of the

7 Supreme Court directing that the order of the

8 Commission be affirmed or the petition for re9 view be dismissed; or’’.

10 (c) DIVESTITURE ORDERS.—Section 5(g)(4) of the

11 Federal Trade Commission Act (15 U.S.C. 45(g)(4)) is

12 amended to read as follows:

13 ‘‘(4) In the case of an order provision requiring

14 a person, partnership, or corporation to divest itself

15 of stock, other share capital, or assets, if a petition

16 for review of such order of the Commission has been

17 filed—

18 ‘‘(A) upon the expiration of the time al19 lowed for filing a petition for certiorari, if the

20 order of the Commission has been affirmed or

21 the petition for review has been dismissed by

22 the court of appeals and no petition for certio23 rari has been duly filed;

24 ‘‘(B) upon the denial of a petition for cer25 tiorari, if the order of the Commission has been
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1 affirmed or the petition for review has been dis2 missed by the court of appeals; or

3 ‘‘(C) upon the expiration of thirty days

4 from the date of issuance of a mandate of the

5 Supreme Court directing that the order of the

6 Commission be affirmed or the petition for re7 view be dismissed.’’.

8 SEC. 8. CIVIL INVESTIGATIVE DEMANDS.

9 (a) DEFINITIONS.—Section 20(a) of the Federal

10 Trade Commission Act (15 U.S.C. 57b–1(a)) is amend11 ed—

12 (1) in paragraph (2), by inserting ‘‘, or in any

13 antitrust violations’’ immediately after ‘‘section

14 5(a)(1))’’;

15 (2) in paragraph (3), by inserting ‘‘or any pro16 visions relating to antitrust violations’’ immediately

17 after ‘‘section 5(a)(1))’’;

18 (3) in paragraph (7), by inserting ‘‘, or any

19 antitrust violation’’ immediately after ‘‘section

20 5(a)(1))’’; and

21 (4) by adding at the end the following new

22 paragraph:

23 ‘‘(8) The term ‘antitrust violation’ means any

24 unfair method of competition (within the meaning of

25 section 5(a)(1)); any violation of the Clayton Act;
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1 any violation of any other Federal statute that pro2 hibits, or makes available to the Commission a civil

3 remedy with respect to, any restraint upon or mo4 nopolization of interstate or foreign trade or com5 merce; or any activity in preparation for a merger,

6 acquisition, joint venture, or similar transaction,

7 which if consummated, may result in such an unfair

8 method of competition or violation.’’.

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

10 the Federal Trade Commission Act (15 U.S.C. 57b–1

11 (c)(1)) is amended—

12 (A) by inserting ‘‘or tangible things’’ imme13 diately after ‘‘documentary material’’ the first place

14 it appears;

15 (B) by inserting ‘‘or to antitrust violations,’’

16 immediately after ‘‘section 5 (a)(1)) ,’’; and

17 (C) by inserting ‘‘to submit such tangible

18 things,’’ immediately after ‘‘copying or reproduc19 tion,’’.

20 (2) Section 20(c) of the Federal Trade Commission

21 Act (15 U.S.C. 57b–1 (c)) is amended—

22 (A) by redesignating paragraphs (4), (5), (6),

23 (7), (8), (9), (10), (11), and (12) as paragraphs (5),

24 (6), (7), (8), (9), (10), (11), (13), and (14), respec25 tively;
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1 (B) by inserting immediately after paragraph

2 (3) the following new paragraph:

3 ‘‘(4) Each civil investigative demand for the submis4 sion of tangible things shall—

5 ‘‘(A) describe each class of tangible things to be

6 submitted under the demand with such definiteness

7 and certainty as to permit such things to be fairly

8 identified;

9 ‘‘(B) prescribe a return date or dates which will

10 provide a reasonable period of time within which the

11 things so demanded may be assembled and submit12 ted; and

13 ‘‘(C) identify the custodian to whom such

14 things shall be submitted,’’, submitted.’’; and

15 (C) by inserting immediately after paragraph

16 (11), as so redesignated, the following new para17 graph:

18 ‘‘(12) The submission of tangible things in response

19 to a civil investigative demand shall be made under a

20 sworn certificate, in such form as the demand designates,

21 by the person to whom the demand is directed or, if not

22 a natural person, by any person having knowledge of the

23 facts and circumstances relating to such production, to the

24 effect that all of the physical evidence required by the de25 mand and in the possession, custody, or control of the per-
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1 son to whom the demand is directed has been submitted

2 to the custodian.’’.

3 (c) APPLICABILITY OF SECTION 20 OF FTCA.—Sec4 tion 20(j)(1) of the Federal Trade Commission Act (15

5 U.S.C. 57b–1(j)(1)) is amended by inserting immediately

6 before the semicolon the following: ‘‘, any proceeding

7 under section 11(b) of the Clayton Act (15 U.S.C. 21(b)),

8 or any adjudicative proceeding under any other provision

9 of law’’.

10 SEC. 9. COMMISSION CUSTODY OF TANGIBLE THINGS.

11 Section 21 of the Federal Trade Commission Act (15

12 U.S.C. 57b–2) is amended—

13 (1) in subsection (a)(1), by inserting ‘‘tangible

14 things,’’ immediately after ‘‘documentary material,’’;

15 (2) in subsection (b)(1), by inserting ‘‘, tangible

16 thing,’’ immediately after ‘‘document’’;

17 (3) in subsection (b)(2)(A), by inserting ‘‘tan18 gible things,’’ immediately after ‘‘material,’’;

19 (4) in subsection (b)(3)—

20 (A) in subparagraph (A), by inserting

21 ‘‘tangible things,’’ immediately after ‘‘documen22 tary material,’’;

23 (B) in subparagraph (B), by inserting ‘‘,

24 and may make tangible things available,’’ im25 mediately after ‘‘oral testimony’’; and by insert-
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1 ing ‘‘things,’’ , things, immediately after ‘‘such

2 material,’’, material’’;

3 (C) in subparagraph (C), by inserting

4 ‘‘tangible things,’’ immediately after ‘‘documen5 tary material,’’; and

6 (D) in subparagraph (D), by inserting ‘‘,

7 tangible things,’’ immediately after ‘‘documen8 tary material’’;

9 (5) in subsection (b)(4), by inserting ‘‘tangible

10 things,’’ immediately after ‘‘documentary material,’’;

11 (6) in subsection (b)(5), by inserting ‘‘tangible

12 things,’’ immediately after ‘‘documentary material,’’;

13 (7) in subsection (b)(6)—

14 (A) by inserting immediately after the first

15 sentence the following new sentence: ‘‘The cus16 todian of any tangible things may make such

17 things available for inspection to such persons

18 on the same basis.’’; and

19 (B) by inserting ‘‘results of inspections of

20 tangible things,’’ immediately after ‘‘such ‘‘Such

21 documentary material,’’; and

22 (8) in subsection (b)(7), by inserting ‘‘tangible

23 things,’’ immediately after ‘‘documentary material,’’.
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1 SEC. 10. DEFINITION OF UNFAIR ACTS OR PRACTICES.

2 Section 5 of the Federal Trade Commission Act (15

3 U.S.C. 45), as amended by section 2 of this Act, is further

4 amended by adding at the end the following new sub5 section:

6 ‘‘(o) The Commission shall have no authority under

7 this section or section 18 to declare unlawful an act or

8 practice on the grounds that such act or practice is unfair

9 unless the act or practice causes or is likely to cause sub10 stantial injury to consumers which is not reasonably avoid11 able by consumers themselves and not outweighed by

12 countervailing benefits to consumers or to competition.’’.

13 SEC. 11. COMMERCIAL ADVERTISING.

14 Section 18(h) of the Federal Trade Commission Act

15 (15 U.S.C. 57a(h)), as so redesignated in section 4(a) of

16 this Act, is amended by adding at the end the following:

17 ‘‘The Commission shall have no authority under this sec18 tion to initiate any new rulemaking proceeding which is

19 intended to or may result in the promulgation of any rule

20 by the Commission which prohibits or otherwise regulates

21 any commercial advertising on the basis of a determina22 tion by the Commission that such commercial advertising

23 constitutes an unfair act or practice in or affecting

24 commerce.’’.
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1 SEC. 12. VENUE AND SERVICE OF PROCESS.

2 (a) AUTHORITY TO SERVE CERTAIN PERSONS.—(1)

3 Section 13(a) of the Federal Trade Commission Act (15

4 U.S.C. 53(a)) is amended by striking the last sentence and

5 inserting in lieu thereof the following: ‘‘Any suit may be

6 brought where such person, partnership, or corporation re7 sides or transacts business, or wherever venue is proper

8 under section 1391 of title 28, United States Code. In

9 such a suit, the court may, if the court determines that

10 the interests of justice require that any other person, part11 nership, or corporation should be a party in such suit,

12 cause such other person, partnership, or corporation to be

13 summoned without regard to whether it resides or trans14 acts business in the district in which the suit is brought.

15 In any suit under this section, process may be served on

16 any person, partnership, or corporation wherever it may

17 be found.’’.

18 (2) Section 13(b) of the Federal Trade Commission

19 Act (15 U.S.C. 53(b)) is amended by striking the last sen20 tence and inserting in lieu thereof the following: ‘‘Any suit

21 may be brought where such person, partnership, or cor22 poration resides or transacts business, or wherever venue

23 is proper under section 1391 of title 28, United States

24 Code. In such a suit, the court may, if the court deter25 mines that the interests of justice require that any other

26 person, partnership, or corporation should be a party in
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1 such suit, cause such other person, partnership, or cor2 poration to be summoned without regard to whether it re3 sides or transacts business in the district in which the suit

4 is brought. In any suit under this section, process may

5 be served on any person, partnership, or corporation wher6 ever it may be found.’’.

7 (b) PROCEDURES FOR SERVING PROCESS.—Section

8 13 of the Federal Trade Commission Act (15 U.S.C. 53)

9 is amended—

10 (1) by redesignating subsection (c) as sub11 section (d); and

12 (2) by inserting immediately after subsection

13 (b) the following new subsection:

14 ‘‘(c) Any process of the Commission under this sec15 tion may by be served by any person duly authorized by

16 the Commission—

17 ‘‘(1) by delivering a copy of such process to the

18 person to be served, to a member of the partnership

19 to be served, or to the president, secretary, or other

20 executive officer or a director of the corporation to

21 be served;

22 ‘‘(2) by leaving a copy of such process at the

23 residence or the principal office or place of business

24 of such person, partnership, or corporation; or
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1 ‘‘(3) by mailing a copy of such process by reg2 istered mail or certified mail addressed to such per3 son, partnership, or corporation at his, or her, or its

4 residence, principal office, or principal place or busi5 ness.

6 The verified return by the person serving such process set7 ting forth the manner of such service shall be proof of

8 the same.’’.

9 SEC. 13. REPORT ON RESALE PRICE MAINTENANCE.

10 (a) REPORT TO CONGRESS.—The Federal Trade

11 Commission shall submit to the Committee on Commerce,

12 Science, and Transportation of the Senate and to the

13 Committee on Energy and Commerce of the House of

14 Representatives the information specified in subsection (b)

15 every six months during each of the fiscal years 1994,

16 1995, and 1996. Each such report shall contain such in17 formation for the period since the last submission under

18 this section.

19 (b) CONTENTS OF REPORT.—Each such report shall

20 list and described, describe, with respect to instances in

21 which resale price maintenance has been suspected or al22 leged—

23 (1) each complaint made, orally or in writing,

24 to the offices of the Commission;
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1 (2) each preliminary investigation opened or

2 closed at the Commission;

3 (3) each formal investigation opened or closed

4 at the Commission;

5 (4) each recommendation for the issuance of a

6 compliant complaint forwarded by the staff to the

7 Commission;

8 (5) each complaint issued by the Commission

9 pursuant to section 5 of the Federal Trade Commis10 sion Act (15 U.S.C. 45);

11 (6) each opinion and order entered by the Com12 mission;

13 (7) each consent agreement accepted provision14 ally or finally by the Commission;

15 (8) each request for modification of an out16 standing Commission order filed with the Commis17 sion;

18 (9) each recommendation by staff pertaining to

19 a request for modification of an outstanding Com20 mission order; and

21 (10) each disposition by the Commission of a

22 request for modification of an outstanding Commis23 sion order.

24 Such report shall include the sum total of matters in each

25 category specified in paragraphs (1) through (10), and
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1 copies of all such consent agreements and complaints exe2 cuted by the Commission. Where a matter has been closed

3 or terminated, the report shall include a statement of the

4 reasons for that disposition. The description required

5 under this subsection shall be as complete as possible but

6 shall not reveal the identity of persons or companies mak7 ing the complaint or those complained about or those sub8 ject to investigation that have not otherwise been made

9 public.

10 SEC. 14. REPORT ON PREDATORY PRICING PRACTICES.

11 (a) REPORT TO CONGRESS.—The Federal Trade

12 Commission shall submit to the Committee on Commerce,

13 Science, and Transportation of the Senate and to the

14 Committee on Energy and Commerce of the House of

15 Representatives the information specified in subsection (b)

16 every six months during each of the fiscal years 1994,

17 1995, and 1996. Each such report shall contain such in18 formation for the period since the last submission under

19 this section.

20 (b) CONTENTS OF REPORT.—Each such report shall

21 list and describe, with respect to instances in which preda22 tory pricing practices have been suspected or alleged—

23 (1) each complaint made, orally or in writing,

24 to the offices of the Commission;
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1 (2) each preliminary investigation opened or

2 closed at the Commission;

3 (3) each formal investigation opened or closed

4 at the Commission;

5 (4) each recommendation for the issuance of a

6 complaint forwarded by the staff to the Commission;

7 (5) each complaint issued by the Commission;

8 (6) each opinion and other order entered by the

9 Commission;

10 (7) each consent agreement accepted provision11 ally or finally by the Commission;

12 (8) each request for modification of an out13 standing Commission order filed with the Commis14 sion;

15 (9) each recommendation by staff pertaining to

16 a request for modification of an outstanding Com17 mission order; and

18 (10) each disposition by the Commission of a

19 request for modification of an outstanding Commis20 sion order.

21 Such report shall include copies of all such consent agree22 ments and complaints executed by the Commission re23 ferred to in such report. Where a matter has been closed

24 or terminated, the report shall include a statement of the

25 reasons for that disposition. The descriptions required
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1 under this subsection shall be as complete as possible but

2 shall not reveal the identity of persons or companies mak3 ing the complaint or those complained about or those sub4 ject to investigation that have not otherwise been made

5 public. The report shall include any evaluation by the

6 Commission of the potential impacts of predatory pricing

7 upon businesses (including small businesses).

8 SEC. 15. INTERVENTION BY COMMISSION IN CERTAIN PRO9 CEEDINGS.

10 (a) LIMITATION ON USE OF AUTHORIZED FUNDS.—

11 The Federal Trade Commission shall not have any author12 ity to use any funds which are authorized to be appro13 priated to carry out the Federal Trade Commission Act

14 (15 U.S.C. 41 et seq.) for fiscal years 1994, 1995, and

15 1996, for the purpose of submitting statements to, appear16 ing before, or intervening in the proceedings of, any Fed17 eral or State agency or State legislative body concerning

18 proposed rules or legislation that the agency or legislative

19 body is considering unless the Commission advises the

20 Committee on Commerce, Science, and Transportation of

21 the Senate and the Committee on Energy and Commerce

22 of the House of Representatives regarding such action as

23 soon as possible.

24 (b) CONTENTS OF NOTICE TO CONGRESS.—The no25 tice required in subsection (a) shall include the name of
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1 the agency or legislator involved, the date of such action,

2 and a concise statement regarding the nature and purpose

3 of such action.

4 SEC. 16. RESOURCE ALLOCATION STUDY.

5 The Federal Trade Commission shall conduct an

6 evaluation of the level of its personnel resources and the

7 manner in which such resources are allocated. The Com8 mission shall study—

9 (1) whether overall resources at the Commission

10 are adequate to fulfill the Commission’s responsibil11 ities in the areas of competition and consumer pro12 tection;

13 (2) the distribution of personnel to individual

14 offices of commissioners, departments, bureaus, and

15 other units within the Commission, and whether the

16 current allocation of personnel most efficiently en17 ables the Commission to fulfill its statutory man18 date;

19 (3) the number of personnel in supervisory posi20 tions, contrasted with those personnel in non21 supervisory positions; and

22 (4) whether the amount of workyears devoted to

23 research activities should be increased, and what re24 sults (if any) such an increase would produce.
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1 The Commission shall transmit the results of such study,

2 together with any recommendations that the Commission

3 determines appropriate, to the Committee on Commerce,

4 Science, and Transportation of the Senate and the Com5 mittee on Energy and Commerce of the House of Rep6 resentatives not later than six months after the date of

7 enactment of this Act.

8 SEC. 17. FEDERAL-STATE COOPERATION.

9 The Federal Trade Commission shall review its statu10 tory responsibilities to identify those matters within its ju11 risdiction where Federal enforcement is particularly nec12 essary or desirable, and those areas that might more effec13 tively be enforced at the State or local level. In identifying

14 such areas, the Commission shall—

15 (1) consider the resources available to the Com16 mission and the States, as well as particular rules

17 that have been promulgated by the Commission;

18 (2) consult with the attorneys general of the

19 States, representatives of consumers and industry,

20 and other interested parties; and

21 (3) consider such other issues as will result in

22 more efficient implementation of the statutory re23 sponsibilities of the Commission.

24 Not later than six months after the date of enactment of

25 this Act, the Federal Trade Commission shall transmit to
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1 the Committee on Commerce, Science, and Transportation

2 of the Senate and the Committee on Energy and Com3 merce of the House of Representatives the information

4 identified in paragraphs (1) through (3), together with

5 specific recommendations for methods of achieving greater

6 cooperation between the Commission and the States.

7 SEC. 18. CREDIT REPAIR ORGANIZATIONS AND LOAN BRO8 KERS.

9 (a) DEFINITIONS.—In this section, the following

10 terms apply:

11 (1)(A) The term ‘‘advance fee’’ means any fee

12 (including any advance payment of interest or other

13 fees for any extension of consumer credit) which is

14 assessed or collected by a loan broker from any per15 son seeking the consumer credit before the extension

16 of such credit.

17 (B) The term ‘‘advance fee’’ does not include—

18 (i) any amount that the loan broker can

19 demonstrate is collected solely for the purpose

20 of payment to unaffiliated, third party vendors

21 for actual expenses incurred and payable before

22 the extension of any consumer credit; or

23 (ii) any application fee or other charge as24 sessed or collected—
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1 (I) by a retail seller of property that

2 is primarily for personal, family, or house3 hold purposes or automobiles; and

4 (II) in connection with a consumer

5 credit transaction in which a purchase

6 money security interest arising under an

7 installment sales contract (or any equiva8 lent consensual security interest) is created

9 or retained against any such property or

10 automobile being sold by the retail seller to

11 the person seeking the extension of credit.

12 (2) The terms ‘‘consumer’’ and ‘‘credit’’ have

13 the meanings given to such terms in section 103 of

14 the Truth in Lending Act (15 U.S.C. 1602).

15 (3)(A) The term ‘‘credit repair organization’’

16 means any person who sells, provides, or performs,

17 or represents that such person can or will sell, pro18 vide, or perform, in return for the payment of money

19 or other valuable consideration, a service for the ex20 press or implied purpose of—

21 (i) improving a consumer’s credit record,

22 history, or rating; or

23 (ii) providing advice or assistance to a

24 consumer with regard to the consumer’s credit

25 record, history, or rating.
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1 (B) The term ‘‘credit repair organization’’ does

2 not include—

3 (i) a depository institution whose deposits

4 are insured by the Federal Deposit Insurance

5 Corporation, the Federal Savings and Loan In6 surance Corporation, or the National Credit

7 Union Administration Board, or a depository

8 institution chartered by a State;

9 (ii) any nonprofit organization exempt

10 from taxation under section 501(c)(3) of the In11 ternal Revenue Code;

12 (iii) a licensed real estate broker acting

13 within the course and scope of that license;

14 (iv) a licensed attorney at law rendering

15 services within the course and scope of that li16 cense;

17 (v) any broker-dealer registered with the

18 Securities and Exchange Commission or the

19 Commodity Futures Trading Commission act20 ing within the scope of the Securities and Ex21 change Commission or the Commodity Futures

22 Trading Commission regulations;

23 (vi) any consumer reporting agency acting

24 within the course and scope of this title; or
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1 (vii) any debt collector as defined in sec2 tion 803 of the Fair Debt Collection Practices

3 Act (15 U.S.C. 1692a), acting within the course

4 and scope of that Act.

5 (4)(A) The term ‘‘loan broker’’ means any per6 son who—

7 (i) for, or in expectation of, a consider8 ation, arranges or attempts to arrange or offers

9 to find for any individual, consumer credit;

10 (ii) for, or in expectation of, a consider11 ation, assists or advises an individual on obtain12 ing, or attempting to obtain, consumer credit;

13 or

14 (iii) acts or purports to act for, or on be15 half of, a loan broker for the purpose of solicit16 ing individuals interested in obtaining consumer

17 credit.

18 (B) The term ‘‘loan broker’’ does not include—

19 (i) any insured depository institution (as

20 defined in section 3(c)(2) of the Federal De21 posit Insurance Act; 12 U.S.C. 1813(c)(2)), any

22 insured credit union (as defined in section

23 101(7) of the Federal Credit Union Act; 12

24 U.S.C. 1752(7)), or any depository institution

25 which is eligible for deposit insurance under the
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1 Federal Deposit Insurance Act or the Federal

2 Credit Union Act and has deposit insurance

3 coverage provided by any State;

4 (ii) any lender approved by the Federal

5 Housing Administration, Farmers Home Ad6 ministration, or Department of Veterans Af7 fairs;

8 (iii) any seller or servicer of mortgages ap9 proved by the Federal National Mortgage Asso10 ciation or the Federal Home Loan Mortgage

11 Corporation; or

12 (iv) any consumer finance company, retail

13 installment sales company, securities broker or

14 dealer, real estate broker or real estate sales15 person, attorney, credit card company, install16 ment loan licensee, mortgage broker or lender,

17 or insurance company if such person is—

18 (I) licensed by and subject to regula19 tion or supervision by any agency of the

20 United States or by the State in which the

21 person seeking to utilize the services of the

22 loan broker resides; and

23 (II) is acting within the scope of that

24 license or regulation.
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1 (b) PROHIBITED PRACTICES OF CREDIT REPAIR OR2 GANIZATIONS.—A credit repair organization shall not

3 charge or receive any money or other valuable consider4 ation prior to completion of the services that the credit

5 repair organization has agreed to perform for the

6 consumer and that are described in subsection (a)(1).

7 (c) PROHIBITED PRACTICES OF LOAN BROKERS.—

8 (1) No loan broker may receive an advance fee in connec9 tion with—

10 (A) arranging or attempting to arrange

11 consumer credit;

12 (B) offering to find for any individual consumer

13 credit; or

14 (C) advising any individual as to how to obtain

15 consumer credit.

16 (2) No loan broker may—

17 (A) make or use any false or misleading rep18 resentations or omit any material fact in the offer

19 or sale of the service of a loan broker; or

20 (B) engage, directly or indirectly, in any act

21 that operates or would operate as fraud or deception

22 upon any person in connection with the offer or sale

23 of the services of a loan broker, notwithstanding the

24 absence of reliance by the person to whom the loan

25 broker’s services are offered or sold.
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1 (d) ENFORCEMENT BY FEDERAL TRADE COMMIS2 SION.—Any violation of this section shall—

3 (1) be treated as a violation of a rule of the

4 Federal Trade Commission issued pursuant to sec5 tion 18(a)(1)(B) of the Federal Trade Commission

6 Act (15 U.S.C. 57a(a)(1)(B)); and

7 (2) be subject to enforcement by the Federal

8 Trade Commission under the enforcement and pen9 alty provisions applicable to violations of such rules.

10 (e) CRIMINAL PENALTY.—(1) Whoever knowingly

11 violates subsection (b) or (c) shall be fined under title 18,

12 United States Code, imprisoned for not more than five

13 years, or both.

14 (2) Section 981(a)(1)(C) of title 18, United States

15 Code, is amended—

16 (A) by striking ‘‘title or a violation’’ and insert17 ing in lieu thereof ‘‘title, a violation’’; and

18 (B) by inserting ‘‘, or a violation of section 18

19 (b) or (c) of the Federal Trade Commission Act

20 Amendments of 1993’’ immediately before the pe21 riod.

22 (3) For purposes of section 3005(a) of title 39, Unit23 ed States Code, a violation of subsection (b) or (c) of this

24 section by any person shall constitute prima facie evidence

25 that such person is engaged in conducting a scheme or
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1 device for obtaining money or property through the mail

2 by means of false representations.

3 SEC. 19. AUTHORIZATION OF APPROPRIATIONS.

4 Section 25 of the Federal Trade Commission Act, as

5 so redesignated by section 3 of this Act, is amended—

6 (1) by striking ‘‘and’’ after ‘‘1981;’’; and

7 (2) by inserting immediately before the period

8 at the end the following: ‘‘; not to exceed

9 $88,000,000 for the fiscal year ending September

10 30, 1994; not to exceed $92,000,000 for the fiscal

11 year ending September 30, 1995; and not to exceed

12 $95,000,000 for the fiscal year ending September

13 30, 1996, and such additional sums for the fiscal

14 years ending September 30, 1994, and September

15 30, 1995, as may be necessary for increases in sal16 ary, pay, and other employee benefits as authorized

17 by law’’.

18 SEC. 20. EFFECTIVE DATE; APPLICABILITY.

19 (a) IN GENERAL.—Except as provided in subsections

20 (b), (c), (d), (e), and (f), the provisions of this Act shall

21 take effect on the date of enactment of this Act.

22 (b) APPLICABILITY OF SECTION 2.—The amendment

23 made by section 2 of this Act shall apply only with respect

24 to proceedings under section 5 of the Federal Trade Com25 mission Act (15 U.S.C. 45) after the date of enactment
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1 of this Act. This amendment shall not be construed to af2 fect in any manner a cease and desist order which was

3 issued, or a rule which was promulgated, before the date

4 of enactment of this Act. This amendment shall not be

5 construed to affect in any manner a cease and desist order

6 issued after the date of enactment of this Act, if such

7 order was issued pursuant to remand from a court of ap8 peals or the Supreme Court of an order issued by the Fed9 eral Trade Commission before the date of enactment of

10 this Act.

11 (c) APPLICABILITY OF SECTIONS 6 AND 11.—The

12 amendments made by sections 6 and 11 of this Act shall

13 apply only to rulemaking proceedings initiated after the

14 date of enactment of this Act. These amendments shall

15 not be construed to affect in any manner a rulemaking

16 proceeding which was initiated before the date of enact17 ment of this Act.

18 (d) APPLICABILITY OF SECTION 7.—The amend19 ments made by section 7 of this Act shall apply only with

20 respect to cease and desist orders issued under section 5

21 of the Federal Trade Commission Act (15 U.S.C. 45) after

22 the date of enactment of this Act. These amendments shall

23 not be construed to affect in any manner a cease and de24 sist order which was issued before the date of enactment

25 of this Act.
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1 (e) APPLICABILITY OF SECTIONS 8 AND 9.—The

2 amendments made by sections 8 and 9 of this Act shall

3 apply only with respect to compulsory process issued after

4 the date of enactment of this Act.

5 (f) APPLICABILITY OF SECTION 10.—The amend6 ments made by section 10 of this Act shall apply only with

7 respect to cease and desist orders issued under section 5

8 of the Federal Trade Commission Act (15 U.S.C. 45), or

9 to rules promulgated under section 18 of the Federal

10 Trade Commission Act (15 U.S.C. 57a), after the date

11 of enactment of this Act. These amendments shall not be

12 construed to affect in any manner a cease and desist order

13 which was issued, or a rule which was promulgated, before

14 the date of enactment of this Act. These amendments shall

15 not be construed to affect in any manner a cease and de16 sist order issued after the date of enactment of this Act,

17 if such order was issued pursuant to remand from a court

18 of appeals or the Supreme Court of an order issued by

19 the Federal Trade Commission before the date of enact20 ment of this Act.

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