IV

103D CONGRESS

2D SESSION H. RES. 488

Providing for the concurrence by the House, with an amendment, in the

amendment by the Senate to the bill H.R. 868.

IN THE HOUSE OF REPRESENTATIVES

JULY 25, 1994

Mr. SWIFT submitted the following resolution; which was considered under

suspension of the rules and agreed to

RESOLUTION

Providing for the concurrence by the House, with an amendment, in the amendment by the Senate to the bill H.R.

868.

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

2 bill (H.R. 868) to strengthen the authority of the Federal

3 Trade Commission to protect consumers in connection

4 with sales made with a telephone, and for other purposes,

5 with the Senate amendment thereto, shall be considered

6 to have been taken from the Speaker’s table, and the same

7 are hereby agreed to with an amendment as follows:

8 In lieu of the matter proposed to be inserted by the

9 Senate, insert the following:
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1 SECTION 1. SHORT TITLE.

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

3 Consumer Fraud and Abuse Prevention Act’’.

4 SEC. 2. FINDINGS.

5 The Congress makes the following findings:

6 (1) Telemarketing differs from other sales ac7 tivities in that it can be carried out by sellers across

8 State lines without direct contact with the consumer.

9 Telemarketers also can be very mobile, easily moving

10 from State to State.

11 (2) Interstate telemarketing fraud has become a

12 problem of such magnitude that the resources of the

13 Federal Trade Commission are not sufficient to en14 sure adequate consumer protection from such fraud.

15 (3) Consumers and others are estimated to lose

16 $40 billion a year in telemarketing fraud.

17 (4) Consumers are victimized by other forms of

18 telemarketing deception and abuse.

19 (5) Consequently, Congress should enact legis20 lation that will offer consumers necessary protection

21 from telemarketing deception and abuse.

22 SEC. 3. TELEMARKETING RULES.

23 (a) IN GENERAL.—

24 (1) The Commission shall prescribe rules pro25 hibiting deceptive telemarketing acts or practices

26 and other abusive telemarketing acts or practices.
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1 (2) The Commission shall include in such rules

2 respecting deceptive telemarketing acts or practices

3 a definition of deceptive telemarketing acts or prac4 tices which may include acts or practices of entities

5 or individuals that assist or facilitate deceptive

6 telemarketing, including credit card laundering.

7 (3) The Commission shall include in such rules

8 respecting other abusive telemarketing acts or prac9 tices—

10 (A) a requirement that telemarketers may

11 not undertake a pattern of unsolicited telephone

12 calls which the reasonable consumer would con13 sider coercive or abusive of such consumer’s

14 right to privacy,

15 (B) restrictions on the hours of the day

16 and night when unsolicited telephone calls can

17 be made to consumers, and

18 (C) a requirement that any person engaged

19 in telemarketing for the sale of goods or serv20 ices shall promptly and clearly disclose to the

21 person receiving the call that the purpose of the

22 call is to sell goods or services and make such

23 other disclosures as the Commission deems ap24 propriate, including the nature and price of the

25 goods and services.
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1 In prescribing the rules described in this paragraph,

2 the Commission shall also consider recordkeeping re3 quirements.

4 (b) RULEMAKING.—The Commission shall prescribe

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

6 date of enactment of this Act. Such rules shall be pre7 scribed in accordance with section 553 of title 5, United

8 States Code.

9 (c) ENFORCEMENT.—Any violation of any rule pre10 scribed under subsection (a) shall be treated as a violation

11 of a rule under section 18 of the Federal Trade Commis12 sion Act (15 U.S.C. 57a) regarding unfair or deceptive

13 acts or practices.

14 (d) SECURITIES AND EXCHANGE COMMISSION

15 RULES.—

16 (1) PROMULGATION.—

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

18 subparagraph (B), not later than 6 months

19 after the effective date of rules promulgated by

20 the Federal Trade Commission under sub21 section (a), the Securities and Exchange Com22 mission shall promulgate, or require any na23 tional securities exchange or registered securi24 ties association to promulgate, rules substan25 tially similar to such rules to prohibit deceptive
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1 and other abusive telemarketing acts or prac2 tices by persons described in paragraph (2).

3 (B) EXCEPTION.—The Securities and Ex4 change Commission is not required to promul5 gate a rule under subparagraph (A) if it deter6 mines that—

7 (i) Federal securities laws or rules

8 adopted by the Securities and Exchange

9 Commission thereunder provide protection

10 from deceptive and other abusive

11 telemarketing by persons described in

12 paragraph (2) substantially similar to that

13 provided by rules promulgated by the Fed14 eral Trade Commission under subsection

15 (a); or

16 (ii) such a rule promulgated by the

17 Securities and Exchange Commission is

18 not necessary or appropriate in the public

19 interest, or for the protection of investors,

20 or would be inconsistent with the mainte21 nance of fair and orderly markets.

22 If the Securities and Exchange Commission de23 termines that an exception described in clause

24 (i) or (ii) applies, the Securities and Exchange
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1 Commission shall publish in the Federal Reg2 ister its determination with the reasons for it.

3 (2) APPLICATION.—

4 (A) IN GENERAL.—The rules promulgated

5 by the Securities and Exchange Commission

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

7 dealer, transfer agent, municipal securities deal8 er, municipal securities broker, government se9 curities broker, government securities dealer,

10 investment adviser or investment company, or

11 any individual associated with a broker, dealer,

12 transfer agent, municipal securities dealer, mu13 nicipal securities broker, government securities

14 broker, government securities dealer, invest15 ment adviser or investment company. The rules

16 promulgated by the Federal Trade Commission

17 under subsection (a) shall not apply to persons

18 described in the preceding sentence.

19 (B) DEFINITIONS.—For purposes of sub20 paragraph (A)—

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

22 ‘‘transfer agent’’, ‘‘municipal securities

23 dealer’’, ‘‘municipal securities broker’’,

24 ‘‘government securities broker’’, and ‘‘gov25 ernment securities dealer’’ have the mean-
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1 ings given such terms by paragraphs (4),

2 (5), (25), (30), (31), (43), and (44) of sec3 tion 3(a) of the Securities and Exchange

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

5 (25), (30), (31), (43), and (44));

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

7 the meaning given such term by section

8 202(a)(11) of the Investment Advisers Act

9 of 1940 (15 U.S.C. 80b–2(a)(11)); and

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

11 has the meaning given such term by sec12 tion 3(a) of the Investment Company Act

13 of 1940 (15 U.S.C. 80a–3(a)).

14 (e) COMMODITY FUTURES TRADING COMMISSION

15 RULES.—

16 (1) APPLICATION.—The rules promulgated by

17 the Federal Trade Commission under subsection (a)

18 shall not apply to persons described in subsection

19 (f)(1) of section 6 of the Commodity Exchange Act

20 (7 U.S.C. 8, 9, 15, 13b, 9a).

21 (2) PROMULGATION.—Section 6 of the Com22 modity Exchange Act (7 U.S.C. 8, 9, 15, 13b, 9a)

23 is amended by adding at the end the following new

24 subsection:
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1 ‘‘(f)(1) Except as provided in paragraph (2), not later

2 than six months after the effective date of rules promul3 gated by the Federal Trade Commission under section

4 3(a) of the Telemarketing and Consumer Fraud and

5 Abuse Prevention Act, the Commission shall promulgate,

6 or require each registered futures association to promul7 gate, rules substantially similar to such rules to prohibit

8 deceptive and other abusive telemarketing acts or prac9 tices by any person registered or exempt from registration

10 under this Act in connection with such person’s business

11 as a futures commission merchant, introducing broker,

12 commodity trading advisor, commodity pool operator, le13 verage transaction merchant, floor broker, or floor trader,

14 or a person associated with any such person.

15 ‘‘(2) The Commission is not required to promulgate

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

17 ‘‘(A) rules adopted by the Commission under

18 this Act provide protection from deceptive and abu19 sive telemarketing by persons described under para20 graph (1) substantially similar to that provided by

21 rules promulgated by the Federal Trade Commission

22 under section 3(a) of the Telemarketing and

23 Consumer Fraud and Abuse Prevention Act; or

24 ‘‘(B) such a rule promulgated by the Commis25 sion is not necessary or appropriate in the public in-
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1 terest, or for the protection of customers in the fu2 tures and options markets, or would be inconsistent

3 with the maintenance of fair and orderly markets.

4 If the Commission determines that an exception described

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

6 publish in the Federal Register its determination with the

7 reasons for it.’’.

8 SEC. 4. ACTIONS BY STATES.

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

10 any State has reason to believe that the interests of the

11 residents of that State have been or are being threatened

12 or adversely affected because any person has engaged or

13 is engaging in a pattern or practice of telemarketing which

14 violates any rule of the Commission under section 3, the

15 State, as parens patriae, may bring a civil action on behalf

16 of its residents in an appropriate district court of the

17 United States to enjoin such telemarketing, to enforce

18 compliance with such rule of the Commission, to obtain

19 damages, restitution, or other compensation on behalf of

20 residents of such State, or to obtain such further and

21 other relief as the court may deem appropriate.

22 (b) NOTICE.—The State shall serve prior written no23 tice of any civil action under subsection (a) or (f)(2) upon

24 the Commission and provide the Commission with a copy

25 of its complaint, except that if it is not feasible for the
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1 State to provide such prior notice, the State shall serve

2 such notice immediately upon instituting such action.

3 Upon receiving a notice respecting a civil action, the Com4 mission shall have the right (1) to intervene in such action,

5 (2) upon so intervening, to be heard on all matters arising

6 therein, and (3) to file petitions for appeal.

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

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

9 prevent an attorney general from exercising the powers

10 conferred on the attorney general by the laws of such

11 State to conduct investigations or to administer oaths or

12 affirmations or to compel the attendance of witnesses or

13 the production of documentary and other evidence.

14 (d) ACTIONS BY THE COMMISSION.—Whenever a civil

15 action has been instituted by or on behalf of the Commis16 sion for violation of any rule prescribed under section 3,

17 no State may, during the pendency of such action insti18 tuted by or on behalf of the Commission, institute a civil

19 action under subsection (a) or (f)(2) against any defend20 ant named in the complaint in such action for violation

21 of any rule as alleged in such complaint.

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

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

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

25 defendant is found, is an inhabitant, or transacts business
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1 or wherever venue is proper under section 1391 of title

2 28, United States Code. Process in such an action may

3 be served in any district in which the defendant is an in4 habitant or in which the defendant may be found.

5 (f) ACTIONS BY OTHER STATE OFFICIALS.—

6 (1) Nothing contained in this section shall pro7 hibit an authorized State official from proceeding in

8 State court on the basis of an alleged violation of

9 any civil or criminal statute of such State.

10 (2) In addition to actions brought by an attor11 ney general of a State under subsection (a), such an

12 action may be brought by officers of such State who

13 are authorized by the State to bring actions in such

14 State on behalf of its residents.

15 SEC. 5. ACTIONS BY PRIVATE PERSONS.

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

17 any pattern or practice of telemarketing which violates any

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

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

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

21 appropriate district court of the United States against a

22 person who has engaged or is engaging in such pattern

23 or practice of telemarketing if the amount in controversy

24 exceeds the sum or value of $50,000 in actual damages

25 for each person adversely affected by such telemarketing.
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1 Such an action may be brought to enjoin such

2 telemarketing, to enforce compliance with any rule of the

3 Commission under section 3, to obtain damages, or to ob4 tain such further and other relief as the court may deem

5 appropriate.

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

7 notice of the action upon the Commission and provide the

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

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

10 the person shall serve such notice immediately upon insti11 tuting such action. The Commission shall have the right

12 (A) to intervene in the action, (B) upon so intervening,

13 to be heard on all matters arising therein, and (C) to file

14 petitions for appeal.

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

16 action has been instituted by or on behalf of the Commis17 sion for violation of any rule prescribed under section 3,

18 no person may, during the pendency of such action insti19 tuted by or on behalf of the Commission, institute a civil

20 action against any defendant named in the complaint in

21 such action for violation of any rule as alleged in such

22 complaint.

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

24 order in any action brought under subsection (a), may
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1 award costs of suit and reasonable fees for attorneys and

2 expert witnesses to the prevailing party.

3 (e) CONSTRUCTION.—Nothing in this section shall re4 strict any right which any person may have under any

5 statute or common law.

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

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

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

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

10 or wherever venue is proper under section 1391 of title

11 28, United States Code. Process in such an action may

12 be served in any district in which the defendant is an in13 habitant or in which the defendant may be found.

14 SEC. 6. ADMINISTRATION AND APPLICABILITY OF ACT.

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

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

17 by the Commission under the Federal Trade Commission

18 Act (15 U.S.C. 41 et seq.). Consequently, no activity

19 which is outside the jurisdiction of that Act shall be af20 fected by this Act.

21 (b) ACTIONS BY THE COMMISSION.—The Commis22 sion shall prevent any person from violating a rule of the

23 Commission under section 3 in the same manner, by the

24 same means, and with the same jurisdiction, powers, and

25 duties as though all applicable terms and provisions of the
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1 Federal Trade Commission Act (15 U.S.C. 41 et seq.)

2 were incorporated into and made a part of this Act. Any

3 person who violates such rule shall be subject to the pen4 alties and entitled to the privileges and immunities pro5 vided in the Federal Trade Commission Act in the same

6 manner, by the same means, and with the same jurisdic7 tion, power, and duties as though all applicable terms and

8 provisions of the Federal Trade Commission Act were in9 corporated into and made a part of this Act.

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

11 this Act shall be construed to limit the authority of the

12 Commission under any other provision of law.

13 SEC. 7. DEFINITIONS.

14 For purposes of this Act:

15 (1) The term ‘‘attorney general’’ means the

16 chief legal officer of a State.

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

18 Trade Commission.

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

20 United States, the District of Columbia, Puerto

21 Rico, the Northern Mariana Islands, and any terri22 tory or possession of the United States.

23 (4) The term ‘‘telemarketing’’ means a plan,

24 program, or campaign which is conducted to induce

25 purchases of goods or services by use of one or more
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1 telephones and which involves more than one inter2 state telephone call. The term does not include the

3 solicitation of sales through the mailing of a catalog

4 which—

5 (A) contains a written description, or illus6 tration of the goods or services offered for sale,

7 (B) includes the business address of the

8 seller,

9 (C) includes multiple pages of written ma10 terial or illustrations, and

11 (D) has been issued not less frequently

12 than once a year,

13 where the person making the solicitation does not

14 solicit customers by telephone but only receives calls

15 initiated by customers in response to the catalog and

16 during those calls takes orders only without further

17 solicitation.

18 SEC. 8. FALSE ADVERTISEMENTS CONCERNING SERVICES.

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

20 (15 U.S.C. 52(a)) is amended by inserting ‘‘services,’’ im21 mediately after ‘‘devices,’’ each place it appears.

22 SEC. 9. ENFORCEMENT OF ORDERS.

23 (a) GENERAL AUTHORITY.—Subject to subsections

24 (b) and (c), the Federal Trade Commission may bring a

25 criminal contempt action for violations of orders of the
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1 Commission obtained in cases brought under section 13(b)

2 of the Federal Trade Commission Act (15 U.S.C. 53(b)).

3 (b) APPOINTMENT.—An action authorized by sub4 section (a) may be brought by the Federal Trade Commis5 sion only after, and pursuant to, the appointment by the

6 Attorney General of an attorney employed by the Commis7 sion, as a special assistant United States Attorney.

8 (c) REQUEST FOR APPOINTMENT.—

9 (1) APPOINTMENT UPON REQUEST OR MO10 TION.—A special assistant United States Attorney

11 may be appointed under subsection (b) upon the re12 quest of the Federal Trade Commission or the court

13 which has entered the order for which contempt is

14 sought or upon the Attorney General’s own motion.

15 (2) TIMING.—The Attorney General shall act

16 upon any request made under paragraph (1) within

17 45 days of the receipt of the request.

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

19 the Federal Trade Commission to bring a criminal con20 tempt action under subsection (a) expires 2 years after

21 the date of the first promulgation of rules under section

22 3. The expiration of such authority shall have no effect

23 on an action brought before the expiration date.
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1 SEC. 10. REVIEW.

2 Upon the expiration of 5 years following the date of

3 the first promulgation of rules under section 3, the Com4 mission shall review the implementation of this Act and

5 its effect on deceptive telemarketing acts or practices and

6 report the results of the review to the Congress.

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