II

103D CONGRESS

1ST SESSION S. 1179

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

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’’.

6 SEC. 2. UNFAIR METHODS OF COMPETITION.

7 Section 5 of the Federal Trade Commission Act (15

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

9 new subsection:
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1 ‘‘(n) The Commission shall not have any authority

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

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

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

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

6 SEC. 3. AGRICULTURAL COOPERATIVES.

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

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

9 as sections 26 and 27, respectively, and by inserting imme10 diately after section 23 the following new section:

11 ‘‘SEC. 24. (a) The Commission shall not have any au12 thority to conduct any study, investigation, or prosecution

13 of any agricultural cooperative for any conduct which, be14 cause of the provisions of the Act entitled ‘An Act to au15 thorize association of producers of agricultural products’,

16 approved February 18, 1922 (7 U.S.C. 291 et seq., com17 monly known as the Capper-Volstead Act), is not a viola18 tion of any of the antitrust Acts or this Act.

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

20 to conduct any study or investigation of any agricultural

21 marketing orders.’’.

22 SEC. 4. COMPENSATION IN PROCEEDINGS.

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

24 Commission Act (15 U.S.C. 57a(h)) is repealed, and sub-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

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

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

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

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

6 lieu thereof ‘‘subsection (h)’’.

7 SEC. 5. KNOWING VIOLATIONS OF ORDERS.

8 (a) EXCEPTION FOR CONSENT ORDERS.—Section

9 5(m)(1)(B) of the Federal Trade Commission Act (15

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

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

12 time it appears.

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

14 5(m)(2) of the Federal Trade Commission Act (15 U.S.C.

15 45(m)(2)) is amended by adding at the end of the follow16 ing: ‘‘Upon request of any party to such an action against

17 such defendant, the court shall also review the determina18 tion of law made by the Commission in the proceeding

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

20 the subject of such proceeding constituted an unfair or

21 deceptive act or practice in violation of subsection (a).’’.

22 SEC. 6. PREVALENCE OF UNLAWFUL ACTS OR PRACTICES.

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

24 (15 U.S.C. 57a(b)) is amended by adding at the end the

25 following new paragraph:
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1 ‘‘(3) The Commission shall issue a notice of proposed

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

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

4 practices which are the subject of the proposed rulemaking

5 are prevalent. The Commission shall make a determina6 tion that unfair or deceptive acts or practices are prevalent

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

8 orders regarding such acts or practices, or any other infor9 mation available to the Commission indicates a pattern of

10 unfair or deceptive acts or practices.’’.

11 SEC. 7. EFFECTIVE DATE OF ORDERS.

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

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

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

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

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

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

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

19 whole or in part and subject to such conditions as

20 may be appropriate, by—

21 ‘‘(A) the Commission;

22 ‘‘(B) an appropriate court of appeals of

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

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

25 application for such a stay was previously sub-
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1 mitted to the Commission and the Commission,

2 within the thirty-day period beginning on the

3 date the application was received by the Com4 mission, either denied the application or did not

5 grant or deny the application; or

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

7 petition for certiorari is pending; or’’.

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

9 19(a)(2) OF FTCA.—Section 5(g)(3) of the Federal

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

11 to read as follows:

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

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

14 order of the Commission has been filed—

15 ‘‘(A) upon the expiration of the time al16 lowed for filing a petition for certiorari, if the

17 order of the Commission has been affirmed or

18 the petition for review has been dismissed by

19 the court of appeals and no petition for certio20 rari has been duly filed;

21 ‘‘(B) upon the denial of a petition for cer22 tiorari, if the order of the Commission has been

23 affirmed or the petition for review has been dis24 missed by the court of appeals; or
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1 ‘‘(C) upon the expiration of thirty days

2 from the date of issuance of a mandate of the

3 Supreme Court directing that the order of the

4 Commission be affirmed or the petition for re5 view be dismissed; or’’.

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

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

8 amended to read as follows:

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

10 a person, partnership, or corporation to divest itself

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

12 for review of such order of the Commission has been

13 filed—

14 ‘‘(A) upon the expiration of the time al15 lowed for filing a petition for certiorari, if the

16 order of the Commission has been affirmed or

17 the petition for review has been dismissed by

18 the court of appeals and no petition for certio19 rari has been duly filed;

20 ‘‘(B) upon the denial of a petition for cer21 tiorari, if the order of the Commission has been

22 affirmed or the petition for review has been dis23 missed by the court of appeals; or

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

25 from the date of issuance of a mandate of the
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1 Supreme Court directing that the order of the

2 Commission be affirmed or the petition for re3 view be dismissed.’’.

4 SEC. 8. CIVIL INVESTIGATIVE DEMANDS.

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

6 Trade Commission Act (15 U.S.C. 57b–1(a)) is amend7 ed—

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

9 antitrust violations’’ immediately after ‘‘section

10 5(a)(1))’’;

11 (2) in paragraph (3), by inserting ‘‘or any pro12 visions relating to antitrust violations’’ immediately

13 after ‘‘section 5(a)(1))’’;

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

15 antitrust violation’’ immediately after ‘‘section

16 5(a)(1))’’; and

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

18 paragraph:

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

20 unfair method of competition (within the meaning of

21 section 5(a)(1)); any violation of the Clayton Act;

22 any violation of any other Federal statute that pro23 hibits, or makes available to the Commission a civil

24 remedy with respect to, any restraint upon or mo25 nopolization of interstate or foreign trade or com-
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1 merce; or any activity in preparation for a merger,

2 acquisition, joint venture, or similar transaction,

3 which if consummated, may result in such an unfair

4 method of competition or violation.’’.

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

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

7 (c)(1)) is amended—

8 (A) by inserting ‘‘or tangible things’’ imme9 diately after ‘‘documentary material’’ the first place

10 it appears;

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

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

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

14 things,’’ immediately after ‘‘copying or reproduc15 tion,’’.

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

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

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

19 (7), (8), (9), (10), (11), and (12) as paragraphs (5),

20 (6), (7), (8), (9), (10), (11), (13), and (14), respec21 tively;

22 (B) by inserting immediately after paragraph

23 (3) the following new paragraph:

24 ‘‘(4) Each civil investigative demand for the submis25 sion of tangible things shall—
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1 ‘‘(A) describe each class of tangible things to be

2 submitted under the demand with such definiteness

3 and certainty as to permit such things to be fairly

4 identified;

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

6 provide a reasonable period of time within which the

7 things so demanded may be assembled and submit8 ted; and

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

10 things shall be submitted,’’; and

11 (C) by inserting immediately after paragraph

12 (11), as so redesignated, the following new para13 graph:

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

15 to a civil investigative demand shall be made under a

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

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

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

19 facts and circumstances relating to such production, to the

20 effect that all of the physical evidence required by the de21 mand and in the possession, custody, or control of the per22 son to whom the demand is directed has been submitted

23 to the custodian.’’.

24 (c) APPLICABILITY OF SECTION 20 OF FTCA.—Sec25 tion 20(j)(1) of the Federal Trade Commission Act (15
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1 U.S.C. 57b–1(j)(1)) is amended by inserting immediately

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

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

4 or any adjudicative proceeding under any other provision

5 of law’’.

6 SEC. 9. COMMISSION CUSTODY OF TANGIBLE THINGS.

7 Section 21 of the Federal Trade Commission Act (15

8 U.S.C. 57b–2) is amended—

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

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

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

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

13 (3) in subsection (b)(2)(A), by inserting ‘‘tan14 gible things,’’ immediately after ‘‘material,’’;

15 (4) in subsection (b)(3)—

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

17 ‘‘tangible things,’’ immediately after ‘‘documen18 tary material,’’;

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

20 and may make tangible things available,’’ im21 mediately after ‘‘oral testimony’’; and by insert22 ing ‘‘things,’’ immediately after ‘‘such mate23 rial,’’;
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1 (C) in subparagraph (C), by inserting

2 ‘‘tangible things,’’ immediately after ‘‘documen3 tary material,’’; and

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

5 tangible things,’’ immediately after ‘‘documen6 tary material’’;

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

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

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

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

11 (7) in subsection (b)(6)—

12 (A) by inserting immediately after the first

13 sentence the following new sentence: ‘‘The cus14 todian of any tangible things may make such

15 things available for inspection to such persons

16 on the same basis.’’; and

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

18 tangible things,’’ immediately after ‘‘such docu19 mentary material,’’; and

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

21 things,’’ immediately after ‘‘documentary material,’’.

22 SEC. 10. DEFINITION OF UNFAIR ACTS OR PRACTICES.

23 Section 5 of the Federal Trade Commission Act (15

24 U.S.C. 45), as amended by section 2 of this Act, is further
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1 amended by adding at the end the following new sub2 section:

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

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

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

6 unless the act or practice causes or is likely to cause sub7 stantial injury to consumers which is not reasonably avoid8 able by consumers themselves and not outweighed by

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

10 SEC. 11. COMMERCIAL ADVERTISING.

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

12 (15 U.S.C. 57a(h)), as so redesignated in section 4(a) of

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

14 ‘‘The Commission shall have no authority under this sec15 tion to initiate any new rulemaking proceeding which is

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

17 by the Commission which prohibits or otherwise regulates

18 any commercial advertising on the basis of a determina19 tion by the Commission that such commercial advertising

20 constitutes an unfair act or practice in or affecting

21 commerce.’’.

22 SEC. 12. VENUE AND SERVICE OF PROCESS.

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

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

25 U.S.C. 53(a)) is amended by striking the last sentence and
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1 inserting in lieu thereof the following: ‘‘Any suit may be

2 brought where such person, partnership, or corporation re3 sides or transacts business, or wherever venue is proper

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

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

6 the interests of justice require that any other person, part7 nership, or corporation should be a party in such suit,

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

9 summoned without regard to whether it resides or trans10 acts business in the district in which the suit is brought.

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

12 any person, partnership, or corporation wherever it may

13 be found.’’.

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

15 Act (15 U.S.C. 53(b)) is amended by striking the last sen16 tence and inserting in lieu thereof the following: ‘‘Any suit

17 may be brought where such person, partnership, or cor18 poration resides or transacts business, or wherever venue

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

20 Code. In such a suit, the court may, if the court deter21 mines that the interests of justice require that any other

22 person, partnership, or corporation should be a party in

23 such suit, cause such other person, partnership, or cor24 poration to be summoned without regard to whether it re25 sides or transacts business in the district in which the suit
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1 is brought. In any suit under this section, process may

2 be served on any person, partnership, or corporation wher3 ever it may be found.’’.

4 (b) PROCEDURES FOR SERVING PROCESS.—Section

5 13 of the Federal Trade Commission Act (15 U.S.C. 53)

6 is amended—

7 (1) by redesignating subsection (c) as sub8 section (d); and

9 (2) by inserting immediately after subsection

10 (b) the following new subsection:

11 ‘‘(c) Any process of the Commission under this sec12 tion may by served by any person duly authorized by the

13 Commission—

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

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

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

17 executive officer or a director of the corporation to

18 be served;

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

20 residence or the principal office or place of business

21 of such person, partnership, or corporation; or

22 ‘‘(3) by mailing a copy of such process by reg23 istered mail or certified mail addressed to such per24 son, partnership, or corporation at his, or her, or its
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1 residence, principal office, or principal place or busi2 ness.

3 The verified return by the person serving such process set4 ting forth the manner of such service shall be proof of

5 the same.’’.

6 SEC. 13. REPORT ON RESALE PRICE MAINTENANCE.

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

8 Commission shall submit to the Committee on Commerce,

9 Science, and Transportation of the Senate and to the

10 Committee on Energy and Commerce of the House of

11 Representatives the information specified in subsection (b)

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

13 1995, and 1996. Each such report shall contain such in14 formation for the period since the last submission under

15 this section.

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

17 list and described, with respect to instances in which re18 sale price maintenance has been suspected or alleged—

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

20 to the offices of the Commission;

21 (2) each preliminary investigation opened or

22 closed at the Commission;

23 (3) each formal investigation opened or closed

24 at the Commission;
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1 (4) each recommendation for the issuance of a

2 compliant forwarded by the staff to the Commission;

3 (5) each complaint issued by the Commission

4 pursuant to section 5 of the Federal Trade Commis5 sion Act (15 U.S.C. 45);

6 (6) each opinion and order entered by the Com7 mission;

8 (7) each consent agreement accepted provision9 ally or finally by the Commission;

10 (8) each request for modification of an out11 standing Commission order filed with the Commis12 sion;

13 (9) each recommendation by staff pertaining to

14 a request for modification of an outstanding Com15 mission order; and

16 (10) each disposition by the Commission of a

17 request for modification of an outstanding Commis18 sion order.

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

20 category specified in paragraphs (1) through (10), and

21 copies of all such consent agreements and complaints exe22 cuted by the Commission. Where a matter has been closed

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

24 reasons for that disposition. The description required

25 under this subsection shall be as complete as possible but
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1 shall not reveal the identity of persons or companies mak2 ing the complaint or those complained about or those sub3 ject to investigation that have not otherwise been made

4 public.

5 SEC. 14. REPORT ON PREDATORY PRICING PRACTICES.

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

7 Commission shall submit to the Committee on Commerce,

8 Science, and Transportation of the Senate and to the

9 Committee on Energy and Commerce of the House of

10 Representatives the information specified in subsection (b)

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

12 1995, and 1996. Each such report shall contain such in13 formation for the period since the last submission under

14 this section.

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

16 list and describe, with respect to instances in which preda17 tory pricing practices have been suspected or alleged—

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

19 to the offices of the Commission;

20 (2) each preliminary investigation opened or

21 closed at the Commission;

22 (3) each formal investigation opened or closed

23 at the Commission;

24 (4) each recommendation for the issuance of a

25 complaint forwarded by the staff to the Commission;
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1 (5) each complaint issued by the Commission;

2 (6) each opinion and other entered by the Com3 mission;

4 (7) each consent agreement accepted provision5 ally or finally by the Commission;

6 (8) each request for modification of an out7 standing Commission order filed with the Commis8 sion;

9 (9) each recommendation by staff pertaining to

10 a request for modification of an outstanding Com11 mission order; and

12 (10) each disposition by the Commission of a

13 request for modification of an outstanding Commis14 sion order.

15 Such report shall include copies of all such consent agree16 ments and complaints executed by the Commission re17 ferred to in such report. Where a matter has been closed

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

19 reasons for that disposition. The descriptions required

20 under this subsection shall be as complete as possible but

21 shall not reveal the identity of persons or companies mak22 ing the complaint or those complained about or those sub23 ject to investigation that have not otherwise been made

24 public. The report shall include any evaluation by the
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1 Commission of the potential impacts of predatory pricing

2 upon businesses (including small businesses).

3 SEC. 15. INTERVENTION BY COMMISSION IN CERTAIN PRO4 CEEDINGS.

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

6 The Federal Trade Commission shall not have any author7 ity to use any funds which are authorized to be appro8 priated to carry out the Federal Trade Commission Act

9 (15 U.S.C. 41 et seq.) for fiscal years 1994, 1995, and

10 1996, for the purpose of submitting statements to, appear11 ing before, or intervening in the proceedings of, any Fed12 eral or State agency or State legislative body concerning

13 proposed rules or legislation that the agency or legislative

14 body is considering unless the Commission advises the

15 Committee on Commerce, Science, and Transportation of

16 the Senate and the Committee on Energy and Commerce

17 of the House of Representatives regarding such action as

18 soon as possible.

19 (b) CONTENTS OF NOTICE TO CONGRESS.—The no20 tice required in subsection (a) shall include the name of

21 the agency or legislator involved, the date of such action,

22 and a concise statement regarding the nature and purpose

23 of such action.
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1 SEC. 16. RESOURCE ALLOCATION STUDY.

2 The Federal Trade Commission shall conduct an

3 evaluation of the level of its personnel resources and the

4 manner in which such resources are allocated. The Com5 mission shall study—

6 (1) whether overall resources at the Commission

7 are adequate to fulfill the Commission’s responsibil8 ities in the areas of competition and consumer pro9 tection;

10 (2) the distribution of personnel to individual

11 offices of commissioners, departments, bureaus, and

12 other units within the Commission, and whether the

13 current allocation of personnel most efficiently en14 ables the Commission to fulfill its statutory man15 date;

16 (3) the number of personnel in supervisory posi17 tions, contrasted with those personnel in non18 supervisory positions; and

19 (4) whether the amount of workyears devoted to

20 research activities should be increased, and what re21 sults (if any) such an increase would produce.

22 The Commission shall transmit the results of such study,

23 together with any recommendations that the Commission

24 determines appropriate, to the Committee on Commerce,

25 Science, and Transportation of the Senate and the Com26 mittee on Energy and Commerce of the House of Rep-
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1 resentatives not later than six months after the date of

2 enactment of this Act.

3 SEC. 17. FEDERAL-STATE COOPERATION.

4 The Federal Trade Commission shall review its statu5 tory responsibilities to identify those matters within its ju6 risdiction where Federal enforcement is particularly nec7 essary or desirable, and those areas that might more effec8 tively be enforced at the State or local level. In identifying

9 such areas, the Commission shall—

10 (1) consider the resources available to the Com11 mission and the States, as well as particular rules

12 that have been promulgated by the Commission;

13 (2) consult with the attorneys general of the

14 States, representatives of consumers and industry,

15 and other interested parties; and

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

17 more efficient implementation of the statutory re18 sponsibilities of the Commission.

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

20 this Act, the Federal Trade Commission shall transmit to

21 the Committee on Commerce, Science, and Transportation

22 of the Senate and the Committee on Energy and Com23 merce of the House of Representatives the information

24 identified in paragraphs (1) through (3), together with
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1 specific recommendations for methods of achieving greater

2 cooperation between the Commission and the States.

3 SEC. 18. CREDIT REPAIR ORGANIZATIONS AND LOAN BRO4 KERS.

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

6 terms apply:

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

8 (including any advance payment of interest or other

9 fees for any extension of consumer credit) which is

10 assessed or collected by a loan broker from any per11 son seeking the consumer credit before the extension

12 of such credit.

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

14 (i) any amount that the loan broker can

15 demonstrate is collected solely for the purpose

16 of payment to unaffiliated, third party vendors

17 for actual expenses incurred and payable before

18 the extension of any consumer credit; or

19 (ii) any application fee or other charge as20 sessed or collected—

21 (I) by a retail seller of property that

22 is primarily for personal, family, or house23 hold purposes or automobiles; and

24 (II) in connection with a consumer

25 credit transaction in which a purchase
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1 money security interest arising under an

2 installment sales contract (or any equiva3 lent consensual security interest) is created

4 or retained against any such property or

5 automobile being sold by the retail seller to

6 the person seeking the extension of credit.

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

8 the meanings given to such terms in section 103 of

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

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

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

12 or represents that such person can or will sell, pro13 vide, or perform, in return for the payment of money

14 or other valuable consideration, a service for the ex15 press or implied purpose of—

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

17 history, or rating; or

18 (ii) providing advice or assistance to a

19 consumer with regard to the consumer’s credit

20 record, history, or rating.

21 (B) The term ‘‘credit repair organization’’ does

22 not include—

23 (i) a depository institution whose deposits

24 are insured by the Federal Deposit Insurance

25 Corporation, the Federal Savings and Loan In-
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1 surance Corporation, or the National Credit

2 Union Administration Board, or a depository

3 institution chartered by a State;

4 (ii) any nonprofit organization exempt

5 from taxation under section 501(c)(3) of the In6 ternal Revenue Code;

7 (iii) a licensed real estate broker acting

8 within the course and scope of that license;

9 (iv) a licensed attorney at law rendering

10 services within the course and scope of that li11 cense;

12 (v) any broker-dealer registered with the

13 Securities and Exchange Commission or the

14 Commodity Futures Trading Commission act15 ing within the scope of the Securities and Ex16 change Commission or the Commodity Futures

17 Trading Commission regulations;

18 (vi) any consumer reporting agency acting

19 within the course and scope of this title; or

20 (vii) any debt collector as defined in sec21 tion 803 of the Fair Debt Collection Practices

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

23 and scope of that Act.

24 (4)(A) The term ‘‘loan broker’’ means any per25 son who—
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1 (i) for, or in expectation of, a consider2 ation, arranges or attempts to arrange or offers

3 to find for any individual, consumer credit;

4 (ii) for, or in expectation of, a consider5 ation, assists or advises an individual on obtain6 ing, or attempting to obtain, consumer credit;

7 or

8 (iii) acts or purports to act for, or on be9 half of, a loan broker for the purpose of solicit10 ing individuals interested in obtaining consumer

11 credit.

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

13 (i) any insured depository institution (as

14 defined in section 3(c)(2) of the Federal De15 posit Insurance Act; 12 U.S.C. 1813(c)(2)), any

16 insured credit union (as defined in section

17 101(7) of the Federal Credit Union Act; 12

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

19 which is eligible for deposit insurance under the

20 Federal Deposit Insurance Act or the Federal

21 Credit Union Act and has deposit insurance

22 coverage provided by any State;

23 (ii) any lender approved by the Federal

24 Housing Administration, Farmers Home Ad-
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1 ministration, or Department of Veterans Af2 fairs;

3 (iii) any seller or servicer of mortgages ap4 proved by the Federal National Mortgage Asso5 ciation or the Federal Home Loan Mortgage

6 Corporation; or

7 (iv) any consumer finance company, retail

8 installment sales company, securities broker or

9 dealer, real estate broker or real estate sales10 person, attorney, credit card company, install11 ment loan licensee, mortgage broker or lender,

12 or insurance company if such person is—

13 (I) licensed by and subject to regula14 tion or supervision by any agency of the

15 United States or by the State in which the

16 person seeking to utilize the services of the

17 loan broker resides; and

18 (II) is acting within the scope of that

19 license or regulation.

20 (b) PROHIBITED PRACTICES OF CREDIT REPAIR OR21 GANIZATIONS.—A credit repair organization shall not

22 charge or receive any money or other valuable consider23 ation prior to completion of the services that the credit

24 repair organization has agreed to perform for the

25 consumer and that are described in subsection (a)(1).
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1 (c) PROHIBITED PRACTICES OF LOAN BROKERS.—

2 (1) No loan broker may receive an advance fee in connec3 tion with—

4 (A) arranging or attempting to arrange

5 consumer credit;

6 (B) offering to find for any individual consumer

7 credit; or

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

9 consumer credit.

10 (2) No loan broker may—

11 (A) make or use any false or misleading rep12 resentations or omit any material fact in the offer

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

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

15 that operates or would operate as fraud or deception

16 upon any person in connection with the offer or sale

17 of the services of a loan broker, notwithstanding the

18 absence of reliance by the person to whom the loan

19 broker’s services are offered or sold.

20 (d) ENFORCEMENT BY FEDERAL TRADE COMMIS21 SION.—Any violation of this section shall—

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

23 Federal Trade Commission issued pursuant to sec24 tion 18(a)(1)(B) of the Federal Trade Commission

25 Act (15 U.S.C. 57a(a)(1)(B)); and
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1 (2) be subject to enforcement by the Federal

2 Trade Commission under the enforcement and pen3 alty provisions applicable to violations of such rules.

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

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

6 United States Code, imprisoned for not more than five

7 years, or both.

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

9 Code, is amended—

10 (A) by striking ‘‘title or a violation’’ and insert11 ing in lieu thereof ‘‘title, a violation’’; and

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

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

14 Amendments of 1993’’ immediately before the pe15 riod.

16 (3) For purposes of section 3005(a) of title 39, Unit17 ed States Code, a violation of subsection (b) or (c) of this

18 section by any person shall constitute prima facie evidence

19 that such person is engaged in conducting a scheme or

20 device for obtaining money or property through the mail

21 by means of false representations.

22 SEC. 19. AUTHORIZATION OF APPROPRIATIONS.

23 Section 25 of the Federal Trade Commission Act, as

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

25 (1) by striking ‘‘and’’ after ‘‘1981;’’; and
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1 (2) by inserting immediately before the period

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

3 $88,000,000 for the fiscal year ending September

4 30, 1994; not to exceed $92,000,000 for the fiscal

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

6 $95,000,000 for the fiscal year ending September

7 30, 1996, and such additional sums for the fiscal

8 years ending September 30, 1994, and September

9 30, 1995, as may be necessary for increases in sal10 ary, pay, and other employee benefits as authorized

11 by law’’.

12 SEC. 20. EFFECTIVE DATE; APPLICABILITY.

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

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

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

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

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

18 to proceedings under section 5 of the Federal Trade Com19 mission Act (15 U.S.C. 45) after the date of enactment

20 of this Act. This amendment shall not be construed to af21 fect in any manner a cease and desist order which was

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

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

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

25 issued after the date of enactment of this Act, if such
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1 order was issued pursuant to remand from a court of ap2 peals or the Supreme Court of an order issued by the Fed3 eral Trade Commission before the date of enactment of

4 this Act.

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

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

7 apply only to rulemaking proceedings initiated after the

8 date of enactment of this Act. These amendments shall

9 not be construed to affect in any manner a rulemaking

10 proceeding which was initiated before the date of enact11 ment of this Act.

12 (d) APPLICABILITY OF SECTION 7.—The amend13 ments made by section 7 of this Act shall apply only with

14 respect to cease and desist orders issued under section 5

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

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

17 not be construed to affect in any manner a cease and de18 sist order which was issued before the date of enactment

19 of this Act.

20 (e) APPLICABILITY OF SECTIONS 8 AND 9.—The

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

22 apply only with respect to compulsory process issued after

23 the date of enactment of this Act.

24 (f) APPLICABILITY OF SECTION 10.—The amend25 ments made by section 10 of this Act shall apply only with
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1 respect to cease and desist orders issued under section 5

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

3 to rules promulgated under section 18 of the Federal

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

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

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

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

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

9 not be construed to affect in any manner a cease and de10 sist order issued after the date of enactment of this Act,

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

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

13 the Federal Trade Commission before the date of enact14 ment of this Act.

Æ

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