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[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[S. 335 Reported in Senate (RS)]

                                                       Calendar No. 191
106th CONGRESS
  1st Session
                                 S. 335

                          [Report No. 106-102]

To amend chapter 30 of title 39, United States Code, to provide for the 
nonmailability of certain deceptive matter relating to games of chance, 
administrative procedures, orders, and civil penalties relating to such 
                    matter, and for other purposes.

_______________________________________________________________________

                   IN THE SENATE OF THE UNITED STATES

                            February 3, 1999

  Ms. Collins (for herself, Mr. Cochran, Mr. Levin, Mr. Durbin,  Mr. 
Burns, Mr. Akaka, Mr. Campbell, Mr. Stevens, Mr. Jeffords, Mr. Edwards, 
   Mr. Biden, Ms. Mikulski, Mrs. Lincoln, Mr. Enzi, Mrs. Murray, Mr. 
    Cleland, Mr. Lieberman, Mr. Kohl, Mr. Chafee, Mr. Sessions, Mr. 
 Johnson, Mr. Thurmond, Mr. Helms, Mr. Robb, Mr. Specter, Mr. Graham, 
    Mr. Dodd, Mr. Rockefeller, Mr. Bryan, Mr. Hatch, Mr. Roth, Mr. 
 Thompson, Mr. Reid, and Mr. Sarbanes) introduced the following bill; 
  which was read twice and referred to the Committee on Governmental 
                                Affairs

                              July 1, 1999

  Reported by Mr. Thompson, with an amendment and an amendment to the 
                                 title
 [Strike out all after the enacting clause and insert the part printed 
                               in italic]

_______________________________________________________________________

                                 A BILL

 
To amend chapter 30 of title 39, United States Code, to provide for the 
nonmailability of certain deceptive matter relating to games of chance, 
administrative procedures, orders, and civil penalties relating to such 
                    matter, and for other purposes.

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

<DELETED>SECTION 1. SHORT TITLE.</DELETED>

<DELETED>    This Act may be cited as the ``Deceptive Mail Prevention 
and Enforcement Act''.</DELETED>

<DELETED>SEC. 2. RESTRICTIONS ON MAILINGS USING INFERENCES TO THE 
              UNITED STATES GOVERNMENT.</DELETED>

<DELETED>    Section 3001 of title 39, United States Code, is amended--
</DELETED>
        <DELETED>    (1) in subsection (h) in the first sentence--
        </DELETED>
                <DELETED>    (A) by inserting after ``service; and 
                contains'' the following: ``any reference to the 
                Postmaster General of the United States or a citation 
                to Federal statute,'';</DELETED>
                <DELETED>    (B) by striking ``connection, approval or 
                endorsement'' and inserting ``connection, approval, or 
                endorsement, or that such matter is afforded any 
                special protections or status by the Federal 
                Government'';</DELETED>
                <DELETED>    (C) in paragraph (2)--</DELETED>
                        <DELETED>    (i) in subparagraph (A) by 
                        striking ``and'' at the end;</DELETED>
                        <DELETED>    (ii) in subparagraph (B) by 
                        striking ``or'' at the end and inserting 
                        ``and''; and</DELETED>
                        <DELETED>    (iii) by inserting after 
                        subparagraph (B) the following:</DELETED>
                <DELETED>    ``(C) does not contain any statement that 
                implies that Federal Government benefits or services 
                will be affected by any purchase, non-purchase, 
                response, or non-response to such matter; 
                or'';</DELETED>
        <DELETED>    (2) in subsection (i) in the first sentence--
        </DELETED>
                <DELETED>    (A) by inserting after ``service; and 
                contains'' the following: ``any reference to the 
                Postmaster General of the United States or a citation 
                to Federal statute,'';</DELETED>
                <DELETED>    (B) by striking ``connection, approval or 
                endorsement'' and inserting ``connection, approval, or 
                endorsement, or that such matter is afforded any 
                special protections or status by the Federal 
                Government''; and</DELETED>
                <DELETED>    (C) in paragraph (2)--</DELETED>
                        <DELETED>    (i) in subparagraph (A) by 
                        striking ``and'' at the end;</DELETED>
                        <DELETED>    (ii) in subparagraph (B) by 
                        striking ``or'' at the end and inserting 
                        ``and''; and</DELETED>
                        <DELETED>    (iii) by inserting after 
                        subparagraph (B) the following:</DELETED>
                <DELETED>    ``(C) does not contain any statement that 
                implies that Federal Government benefits or services 
                will be affected by any purchase, non-purchase, 
                response, or non-response to such matter; 
                or'';</DELETED>
        <DELETED>    (3) by redesignating subsections (j) and (k) as 
        subsections (m) and (n), respectively; and</DELETED>
        <DELETED>    (4) by inserting after subsection (i) the 
        following:</DELETED>
<DELETED>    ``(j)(1) Matter otherwise legally acceptable in the mails 
described under paragraph (2)--</DELETED>
        <DELETED>    ``(A) is nonmailable matter;</DELETED>
        <DELETED>    ``(B) shall not be carried or delivered by mail; 
        and</DELETED>
        <DELETED>    ``(C) shall be disposed of as the Postal Service 
        directs.</DELETED>
<DELETED>    ``(2) Matter that is nonmailable matter referred to under 
paragraph (1) is any matter that--</DELETED>
        <DELETED>    ``(A) constitutes a solicitation for the purchase 
        of any product that--</DELETED>
                <DELETED>    ``(i) is produced by the United States 
                Government; and</DELETED>
                <DELETED>    ``(ii) may be obtained without cost from 
                the United States Government; and</DELETED>
        <DELETED>    ``(B) does not contain a statement giving notice 
        of the information under subparagraph (A) (i) and 
        (ii).</DELETED>
<DELETED>    ``(3) The statement under paragraph (2)(B) shall be 
clearly and prominently displayed in conspicuous and legible type in 
such size and manner as the Postal Service shall prescribe by 
regulation.''.</DELETED>

<DELETED>SEC. 3. RESTRICTIONS ON SWEEPSTAKES AND DECEPTIVE 
              MAILINGS.</DELETED>

<DELETED>    Section 3001 of title 39, United States Code, is amended 
by inserting after subsection (j) (as added by section 2(4) of this 
Act) the following:</DELETED>
<DELETED>    ``(k)(1) Matter otherwise legally acceptable in the mails 
that is nonmailable matter described under paragraph (2) shall not be 
carried or delivered by mail and may be disposed of as the Postal 
Service directs.</DELETED>
<DELETED>    ``(2) Matter that is nonmailable matter referred to under 
paragraph (2) is any matter that--</DELETED>
        <DELETED>    ``(A) relates to a sweepstakes, prize promotion, 
        or award; and</DELETED>
        <DELETED>    ``(B)(i) does not contain a statement in the 
        mailing, including any rules or order form, that no purchase is 
        necessary to enter such sweepstakes, prize promotion, or 
        award;</DELETED>
        <DELETED>    ``(ii) indicates that individuals not purchasing 
        products may be disqualified from receiving future 
        mailings;</DELETED>
        <DELETED>    ``(iii) requires that an entry be accompanied by a 
        payment for a product ordered;</DELETED>
        <DELETED>    ``(iv) suggests that the odds of winning will be 
        increased by making a purchase;</DELETED>
        <DELETED>    ``(v) represents that an individual is a winner 
        unless that individual has won a prize;</DELETED>
        <DELETED>    ``(vi) does not state all terms and conditions of 
        a sweepstakes promotion, including the rules and entry 
        procedures for the sweepstakes, in language that is easy to 
        find, read, and understand;</DELETED>
        <DELETED>    ``(vii) does not clearly and conspicuously 
        disclose the name of the person mailing such matter and the 
        principal place of business of such person;</DELETED>
        <DELETED>    ``(viii) contains any statement that contradicts 
        or is inconsistent with contest rules, including any statement 
        qualifying, limiting, or explaining such rules in a manner 
        inconsistent with such rules;</DELETED>
        <DELETED>    ``(ix) does not contain contest rules that clearly 
        state the odds of winning all prizes, the quantity, estimated 
        retail value, and nature of all prizes, and the schedule of any 
        payments made over time;</DELETED>
        <DELETED>    ``(x) suggests or requires that the purchase of a 
        product will allow an entry to receive priority, or to be 
        eligible to receive additional prizes or special treatment for 
        future contests;</DELETED>
        <DELETED>    ``(xi) does not clearly and completely disclose 
        any fees, charges, and conditions to be met to receive the 
        prize in any promotional mailing awarding free prizes or 
        awards;</DELETED>
        <DELETED>    ``(xii) if any facsimile check is included, does 
        not contain a statement that such checks are not negotiable 
        instruments and have no cash value; or</DELETED>
        <DELETED>    ``(xiii) does not meet any other requirement the 
        Postal Service shall prescribe by regulation.</DELETED>
<DELETED>    ``(3) Any statement, notice, or disclaimer referred to 
under paragraph (2) shall be clearly and prominently displayed in 
conspicuous and legible type in such size and manner as the Postal 
Service shall prescribe by regulations.</DELETED>
<DELETED>    ``(4) In the enforcement of paragraph (2), the Postal 
Service shall consider the materials included in the mailing and on the 
material and language visible through the envelope.</DELETED>
<DELETED>    ``(5)(A) Any person who uses the mails for any matter that 
contains sweepstakes entry materials shall adopt reasonable practices 
and procedures to prevent the mailing of such materials to any person 
at any address who submits a written request to the mailer of such 
materials that such materials should not be mailed to such person at 
such address.</DELETED>
<DELETED>    ``(B) Any person who mails such solicitation materials 
shall maintain or cause to be maintained a record of all such requests. 
The records shall be maintained in a form to permit the suppression of 
such name at such address for a 5-year period beginning on the date the 
written request under subparagraph (A) is submitted.''.</DELETED>

<DELETED>SEC. 4. POSTAL SERVICE ORDERS TO PROHIBIT DECEPTIVE 
              MAILINGS.</DELETED>

<DELETED>    Section 3005(a) of title 39, United States Code, is 
amended--</DELETED>
        <DELETED>    (1) by striking ``or'' after ``(h),'' both places 
        it appears; and</DELETED>
        <DELETED>    (2) by inserting ``, (j), (k), or (l)'' after 
        ``(i)'' in both such places.</DELETED>

<DELETED>SEC. 5. TEMPORARY RESTRAINING ORDER FOR DECEPTIVE 
              MAILINGS.</DELETED>

<DELETED>    Section 3007 of title 39, United States Code, is amended--
</DELETED>
        <DELETED>    (1) by redesignating subsection (b) as subsection 
        (c); and</DELETED>
        <DELETED>    (2) by striking subsection (a) and inserting the 
        following:</DELETED>
<DELETED>    ``(a)(1) In preparation for or during the pendency of 
proceedings under sections 3005 and 3006, the Postal Service, in 
accordance with section 409(d), may apply to the district court in any 
district in which mail is sent or received as part of the alleged 
scheme, device, lottery, or gift enterprise or in any district in which 
the defendant is found, for a temporary restraining order and 
preliminary injunction under rule 65 of the Federal Rules of Civil 
Procedure.</DELETED>
<DELETED>    ``(2) Upon a showing of probable cause and without any 
further showing, the court shall enter an order which shall--</DELETED>
        <DELETED>    ``(A) remain in effect during pendency of the 
        statutory proceedings, any judicial review of such proceedings, 
        or any action to enforce orders issued under the proceedings; 
        and</DELETED>
        <DELETED>    ``(B) direct the detention by the postmaster, in 
        any and all districts, of the defendant's incoming mail and 
        outgoing mail, in furtherance of the scheme which is in the 
        postmaster's custody for dispatch or delivery.</DELETED>
<DELETED>    ``(3) Mail detained under paragraph (2) shall--</DELETED>
        <DELETED>    ``(A) be made available at the post office of 
        mailing or delivery for examination by the defendant in the 
        presence of a postal employee; and</DELETED>
        <DELETED>    ``(B) be delivered as addressed if such mail is 
        clearly not connected with the alleged unlawful 
        activity.</DELETED>
<DELETED>    ``(4) No finding of the defendant's intent to make a false 
representation or to conduct a lottery is required to support the 
issuance of an order under this section.</DELETED>
<DELETED>    ``(b) If any order is issued under subsection (a) and the 
proceedings under section 3005 or 3006 are concluded with the issuance 
of an order under that section, any judicial review of the matter shall 
be in the district in which the order under subsection (a) was 
issued.''.</DELETED>

<DELETED>SEC. 6. CIVIL PENALTIES.</DELETED>

<DELETED>    Section 3012 of title 39, United States Code, is amended--
</DELETED>
        <DELETED>    (1) in subsection (a) by striking ``$10,000 for 
        each day that such person engages in conduct described by 
        paragraph (1), (2), or (3) of this subsection.'' and inserting 
        ``twice the amount of the civil penalty under subsection (b)(2) 
        for the applicable pieces mailed.'';</DELETED>
        <DELETED>    (2) by redesignating subsections (b), (c), and 
        (d), as subsections (c), (d), and (e), respectively; 
        and</DELETED>
        <DELETED>    (3) by inserting after subsection (a) the 
        following:</DELETED>
<DELETED>    ``(b)(1) Any person who, through use of the mail, sends 
any matter which is nonmailable under sections 3001 (a) through (l), 
3005(a), 3014, or 3015 of this title, shall be liable to the United 
States for a civil penalty in accordance with regulations the Postal 
Service shall prescribe.</DELETED>
<DELETED>    ``(2) The civil penalty under this subsection shall not 
exceed $50,000 for each mailing of less than 50,000 pieces; $100,000 
for each mailing of 50,000 to 100,000 pieces; with an additional 
$10,000 for each additional 10,000 pieces above 100,000, not to exceed 
$2,000,000.'';</DELETED>
        <DELETED>    (4) in subsection (c)(1) and (2), as redesignated, 
        by inserting after ``of subsection (a)'' the following: ``or 
        (b),''; and</DELETED>
        <DELETED>    (5) in subsection (d), as redesignated, by 
        striking ``Treasury of the United States'' and inserting 
        ``Postal Service Fund established by section 2003''.</DELETED>

<DELETED>SEC. 7. ADDITIONAL AUTHORITY FOR THE POSTAL INSPECTION 
              SERVICE.</DELETED>

<DELETED>    (a) In General.--Chapter 30 of title 39, United States 
Code, is amended by adding at the end the following:</DELETED>
<DELETED>``Sec. 3016. Administrative subpoenas</DELETED>
<DELETED>    ``(a) Authorization of Use of Subpoenas by Postmaster 
General.--In any investigation conducted under this chapter, the 
Postmaster General may require by subpoena the production of any 
records (including books, papers, documents, and other tangible things 
which constitute or contain evidence) which the Postmaster General 
finds relevant or material to the investigation.</DELETED>
<DELETED>    ``(b) Service.--</DELETED>
        <DELETED>    ``(1) Service within the united states.--A 
        subpoena issued under this section may be served by a person 
        designated under section 3061 of title 18 at any place within 
        the territorial jurisdiction of any court of the United 
        States.</DELETED>
        <DELETED>    ``(2) Foreign service.--Any such subpoena may be 
        served upon any person who is not to be found within the 
        territorial jurisdiction of any court of the United States, in 
        such manner as the Federal Rules of Civil Procedure prescribe 
        for service in a foreign country. To the extent that the courts 
        of the United States may assert jurisdiction over such 
person consistent with due process, the United States District Court 
for the District of Columbia shall have the same jurisdiction to take 
any action respecting compliance with this section by such person that 
such court would have if such person were personally within the 
jurisdiction of such court.</DELETED>
        <DELETED>    ``(3) Service on business persons.--Service of any 
        such subpoena may be made by a Postal Inspector upon a 
        partnership, corporation, association, or other legal entity 
        by--</DELETED>
                <DELETED>    ``(A) delivering a duly executed copy 
                thereof to any partner, executive officer, managing 
                agent, or general agent thereof, or to any 
agent thereof authorized by appointment or by law to receive service of 
process on behalf of such partnership, corporation, association, or 
entity;</DELETED>
                <DELETED>    ``(B) delivering a duly executed copy 
                thereof to the principal office or place of business of 
                the partnership, corporation, association, or entity; 
                or</DELETED>
                <DELETED>    ``(C) depositing such copy in the United 
                States mails, by registered or certified mail, return 
                receipt requested, duly addressed to such partnership, 
                corporation, association, or entity at its principal 
                office or place of business.</DELETED>
        <DELETED>    ``(4) Service on natural persons.--Service of any 
        subpoena may be made upon any natural person by--</DELETED>
                <DELETED>    ``(A) delivering a duly executed copy to 
                the person to be served; or</DELETED>
                <DELETED>    ``(B) depositing such copy in the United 
                States mails by registered or certified mail, return 
                receipt requested, duly addressed to such person at his 
                residence or principal office or place of 
                business.</DELETED>
        <DELETED>    ``(5) Verified return.--A verified return by the 
        individual serving any such subpoena setting forth the matter 
        of such service shall be proof of such service. In the case of 
        service by registered or certified mail, such return shall be 
        accompanied by the return post office receipt of delivery of 
        such subpoena.</DELETED>
<DELETED>    ``(c) Enforcement.--</DELETED>
        <DELETED>    ``(1) In general.--Whenever any person, 
        partnership, corporation, association, or entity fails to 
        comply with any subpoena duly served upon him, the Postmaster 
        General may request that the Attorney General seek enforcement 
        of the subpoena in the district court of the United States for 
        any judicial district in which such person resides, is found, 
        or transacts business, and serve upon such person a petition 
        for an order of such court for the enforcement of this 
        section.</DELETED>
        <DELETED>    ``(2) Jurisdiction.--Whenever any petition is 
        filed in any district court of the United States under this 
        section, such court shall have jurisdiction to hear and 
        determine the matter so presented, and to enter such order or 
        orders as may be required to carry into effect the provisions 
        of this section. Any final order entered shall be subject to 
        appeal under section 1291 of title 28. Any disobedience of any 
        final order entered under this section by any court shall be 
        punished as contempt.</DELETED>
<DELETED>    ``(d) Disclosure.--Any documentary material provided 
pursuant to any subpoena issued under this section shall be exempt from 
disclosure under section 552 of title 5.''.</DELETED>
<DELETED>    (b) Regulations.--Not later than 180 days after the date 
of enactment of this section, the Postal Service shall promulgate 
regulations setting out the procedures the Postal Service will use to 
implement this subsection.</DELETED>
<DELETED>    (c) Technical and Conforming Amendment.--The table of 
sections for chapter 30 of title 39, United States Code, is amended by 
adding at the end the following:</DELETED>

<DELETED>``3016. Administrative subpoenas.''.

<DELETED>SEC. 8. STATE LAW NOT PREEMPTED.</DELETED>

<DELETED>    Nothing in this Act shall be construed to preempt any 
provision of State or local law.</DELETED>

<DELETED>SEC. 9. EFFECTIVE DATE.</DELETED>

<DELETED>    This Act shall take effect 60 days after the date of 
enactment of this Act.</DELETED>

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Deceptive Mail Prevention and 
Enforcement Act''.

SEC. 2. RESTRICTIONS ON MAILINGS USING MISLEADING REFERENCES TO THE 
              UNITED STATES GOVERNMENT.

    Section 3001 of title 39, United States Code, is amended--
            (1) in subsection (h)--
                    (A) in the first sentence by striking ``contains a 
                seal, insignia, trade or brand name, or any other term 
                or symbol that reasonably could be interpreted or 
                construed as implying any Federal Government 
                connection, approval or endorsement'' and inserting the 
                following: ``which reasonably could be interpreted or 
                construed as implying any Federal Government 
                connection, approval, or endorsement through the use of 
                a seal, insignia, reference to the Postmaster General, 
                citation to a Federal statute, name of a Federal 
                agency, department, commission, or program, trade or 
                brand name, or any other term or symbol; or contains 
                any reference to the Postmaster General or a citation 
                to a Federal statute that misrepresents either the 
                identity of the mailer or the protection or status 
                afforded such matter by the Federal Government''; and
                    (B) in paragraph (2)--
                            (i) in subparagraph (A) by striking ``and'' 
                        at the end;
                            (ii) in subparagraph (B) by striking ``or'' 
                        at the end and inserting ``and''; and
                            (iii) by inserting after subparagraph (B) 
                        the following:
                    ``(C) does not contain a false representation 
                implying that Federal Government benefits or services 
                will be affected by any purchase or nonpurchase; or'';
            (2) in subsection (i) in the first sentence--
                    (A) in the first sentence by striking ``contains a 
                seal, insignia, trade or brand name, or any other term 
                or symbol that reasonably could be interpreted or 
                construed as implying any Federal Government 
                connection, approval or endorsement'' and inserting the 
                following: ``which reasonably could be interpreted or 
                construed as implying any Federal Government 
                connection, approval, or endorsement through the use of 
                a seal, insignia, reference to the Postmaster General, 
                citation to a Federal statute, name of a Federal 
                agency, department, commission, or program, trade or 
                brand name, or any other term or symbol; or contains 
                any reference to the Postmaster General or a citation 
                to a Federal statute that misrepresents either the 
                identity of the mailer or the protection or status 
                afforded such matter by the Federal Government''; and
                    (B) in paragraph (2)--
                            (i) in subparagraph (A) by striking ``and'' 
                        at the end;
                            (ii) in subparagraph (B) by striking ``or'' 
                        at the end and inserting ``and''; and
                            (iii) by inserting after subparagraph (B) 
                        the following:
                    ``(C) does not contain a false representation 
                implying that Federal Government benefits or services 
                will be affected by any purchase or nonpurchase; or'';
            (3) by redesignating subsections (j) and (k) as subsections 
        (m) and (o), respectively; and
            (4) by inserting after subsection (i) the following:
    ``(j)(1) Matter otherwise legally acceptable in the mails described 
under paragraph (2)--
            ``(A) is nonmailable matter;
            ``(B) shall not be carried or delivered by mail; and
            ``(C) shall be disposed of as the Postal Service directs.
    ``(2) Matter that is nonmailable matter referred to under paragraph 
(1) is any matter that--
            ``(A) constitutes a solicitation for the purchase of any 
        product or service that--
                    ``(i) is provided by the Federal Government; and
                    ``(ii) may be obtained without cost from the 
                Federal Government; and
            ``(B) does not contain a clear and conspicuous statement 
        giving notice of the information under subparagraph (A) (i) and 
        (ii).''.

SEC. 3. RESTRICTIONS ON SWEEPSTAKES AND DECEPTIVE MAILINGS.

    Section 3001 of title 39, United States Code, is amended by 
inserting after subsection (j) (as added by section 2(4) of this Act) 
the following:
    ``(k)(1) In this subsection, the term--
            ``(A) `facsimile check' means any matter designed to 
        resemble a check or other negotiable instrument that is not 
        negotiable;
            ``(B) `skill contest' means a puzzle, game, competition, or 
        other contest in which--
                    ``(i) a prize is awarded or offered;
                    ``(ii) the outcome depends predominately on the 
                skill of the contestant; and
                    ``(iii) a purchase, payment, or donation is 
                required or implied to be required to enter the 
                contest; and
            ``(C) `sweepstakes' means a game of chance for which no 
        consideration is required to enter.
    ``(2) Matter otherwise legally acceptable in the mails that is 
nonmailable matter described under paragraph (3) shall not be carried 
or delivered by mail and may be disposed of as the Postal Service 
directs.
    ``(3) Matter that is nonmailable matter referred to under paragraph 
(2) is any matter (except matter as provided under paragraph (4)) 
that--
            ``(A)(i) includes entry materials for a sweepstakes or a 
        promotion that purports to be a sweepstakes; and
            ``(ii)(I) does not contain a statement that discloses in 
        the mailing, in the rules, and on the order or entry form, that 
        no purchase is necessary to enter such sweepstakes;
            ``(II) does not contain a statement that discloses in the 
        mailing, in the rules, and on the order or entry form, that a 
        purchase will not improve an individual's chances of winning 
        with an entry from such materials;
            ``(III) does not state all terms and conditions of the 
        sweepstakes promotion, including the rules and entry procedures 
        for the sweepstakes, in language that is easy to find, read, 
        and understand;
            ``(IV) does not disclose the sponsor or mailer of such 
        matter and the principal place of business or an address at 
        which the sponsor or mailer may be contacted;
            ``(V) does not contain sweepstakes rules that clearly 
        state--
                    ``(aa) the estimated odds of winning each prize;
                    ``(bb) the quantity, estimated retail value, and 
                nature of each prize; and
                    ``(cc) the schedule of any payments made over time;
            ``(VI) represents that individuals not purchasing products 
        may be disqualified from receiving future sweepstakes mailings;
            ``(VII) requires that a sweepstakes entry be accompanied by 
        an order or payment for a product previously ordered;
            ``(VIII) represents that an individual is a winner of a 
        prize unless that individual has won a prize;
            ``(IX) contains a representation that contradicts, or is 
        inconsistent with sweepstakes rules or any other disclosure 
        required to be made under this subsection, including any 
        statement qualifying, limiting, or explaining the rules or 
        disclosures in a manner inconsistent with such rules or 
        disclosures; or
            ``(X) represents that the purchase of a product will allow 
        a sweepstakes entry to receive an advantage in the winner 
        selection process, to be eligible for additional prizes in that 
        sweepstakes, or for an entry submitted in a future sweepstakes 
        to have a better chance of winning;
            ``(B)(i) includes entry materials for a skill contest or a 
        promotion that purports to be a skill contest; and
            ``(ii)(I) does not state all terms and conditions of the 
        skill contest, including the rules and entry procedures for the 
        skill contest, in language that is easy to find, read and 
        understand;
            ``(II) does not clearly and conspicuously disclose the 
        sponsor or mailer of the skill contest and the principal place 
        of business or an address at which the sponsor or mailer may be 
        contacted; or
            ``(III) does not contain skill contest rules that clearly 
        state, as applicable--
                    ``(aa) the number of rounds or levels of the 
                contest and the cost to enter each round or level;
                    ``(bb) that subsequent rounds or levels will be 
                more difficult to solve;
                    ``(cc) the maximum cost to enter all rounds or 
                levels;
                    ``(dd) the estimated number or percentage of 
                entrants who may correctly solve the skill contest or 
                the approximate number or percentage of entrants 
                correctly solving the past 3 skill contests conducted 
                by the sponsor;
                    ``(ee) the identity or description of the 
                qualifications of the judges if the contest is judged 
                by other than the sponsor;
                    ``(ff) the method used in judging;
                    ``(gg) the date by which the winner or winners will 
                be determined and the date or process by which prizes 
                will be awarded;
                    ``(hh) the quantity, estimated retail value, and 
                nature of each prize; and
                    ``(ii) the schedule of any payments made over time; 
                or
            ``(C) includes any facsimile check that does not contain a 
        statement on the check itself that such check is not a 
        negotiable instrument and has no cash value.
    ``(4) Matter that appears in a magazine, newspaper, or other 
periodical and contains materials that are a facsimile check, skill 
contest, or sweepstakes is exempt from paragraph (3), if the matter--
            ``(A) is not directed to a named individual; or
            ``(B) does not include an opportunity to make a payment or 
        order a product or service.
    ``(5) Any statement, notice, or disclaimer required under paragraph 
(3) shall be clearly and conspicuously displayed.
    ``(6) In the enforcement of paragraph (3), the Postal Service shall 
consider all of the materials included in the mailing and the material 
and language on and visible through the envelope.
    ``(l)(1) Any person who uses the mails for any matter to which 
subsection (h), (i), (j), or (k) applies shall adopt reasonable 
practices and procedures to prevent the mailing of such matter to any 
person who, personally or through a conservator, guardian, individual 
with power of attorney--
            ``(A) submits to the mailer of such matter a written 
        request that such matter should not be mailed to such person; 
        or
            ``(B)(i) submits such a written request to the attorney 
        general of the appropriate State (or any State government 
        officer who transmits the request to that attorney general); 
        and
            ``(ii) that attorney general transmits such request to the 
        mailer.
    ``(2) Any person who mails matter to which subsection (h), (i), 
(j), or (k) applies shall maintain or cause to be maintained a record 
of all requests made under paragraph (1). The records shall be 
maintained in a form to permit the suppression of an applicable name at 
the applicable address for a 5-year period beginning on the date the 
written request under paragraph (1) is submitted to the mailer.''.

SEC. 4. POSTAL SERVICE ORDERS TO PROHIBIT DECEPTIVE MAILINGS.

    Section 3005(a) of title 39, United States Code, is amended--
            (1) by striking ``or'' after ``(h),'' both places it 
        appears; and
            (2) by inserting ``, (j), or (k)'' after ``(i)'' in both 
        such places.

SEC. 5. TEMPORARY RESTRAINING ORDER FOR DECEPTIVE MAILINGS.

    Section 3007 of title 39, United States Code, is amended--
            (1) by redesignating subsection (b) as subsection (c); and
            (2) by striking subsection (a) and inserting the following:
    ``(a)(1) In preparation for or during the pendency of proceedings 
under sections 3005 and 3006, the Postal Service, in accordance with 
section 409(d), may apply to the district court in any district in 
which mail is sent or received as part of the alleged scheme, device, 
lottery, gift enterprise, sweepstakes, skill contest, or facsimile 
check or in any district in which the defendant is found, for a 
temporary restraining order and preliminary injunction under the 
procedural requirements of rule 65 of the Federal Rules of Civil 
Procedure.
    ``(2)(A) Upon a proper showing, the court shall enter an order 
which shall--
            ``(i) remain in effect during pendency of the statutory 
        proceedings, any judicial review of such proceedings, or any 
        action to enforce orders issued under the proceedings; and
            ``(ii) direct the detention by the postmaster, in any and 
        all districts, of the defendant's incoming mail and outgoing 
        mail, which is the subject of the proceedings under sections 
        3005 and 3006.
    ``(B) A proper showing under this paragraph shall require proof of 
a likelihood of success on the merits of the proceedings under section 
3005 or 3006.
    ``(3) Mail detained under paragraph (2) shall--
            ``(A) be made available at the post office of mailing or 
        delivery for examination by the defendant in the presence of a 
        postal employee; and
            ``(B) be delivered as addressed if such mail is clearly 
        shown not to be the subject of proceedings under sections 3005 
        and 3006.
    ``(4) No finding of the defendant's intent to make a false 
representation or to conduct a lottery is required to support the 
issuance of an order under this section.
    ``(b) If any order is issued under subsection (a) and the 
proceedings under section 3005 or 3006 are concluded with the issuance 
of an order under that section, any judicial review of the matter shall 
be in the district in which the order under subsection (a) was 
issued.''.

SEC. 6. CIVIL PENALTIES AND COSTS.

    Section 3012 of title 39, United States Code, is amended--
            (1) in subsection (a) by striking ``$10,000 for each day 
        that such person engages in conduct described by paragraph (1), 
        (2), or (3) of this subsection.'' and inserting ``$50,000 for 
        each mailing of less than 50,000 pieces; $100,000 for each 
        mailing of 50,000 to 100,000 pieces; with an additional $10,000 
        for each additional 10,000 pieces above 100,000, not to exceed 
        $2,000,000.'';
            (2) in subsection (b) (1) and (2) by inserting after ``of 
        subsection (a)'' the following: ``, (c), or (d)'';
            (3) by redesignating subsections (c) and (d), as 
        subsections (e) and (f), respectively;
            (4) by inserting after subsection (b) the following:
    ``(c)(1) In any proceeding in which the Postal Service may issue an 
order under section 3005(a), the Postal Service may in lieu of that 
order or as part of that order assess civil penalties in an amount not 
to exceed $25,000 for each mailing of less than 50,000 pieces; $50,000 
for each mailing of 50,000 to 100,000 pieces; with an additional $5,000 
for each additional 10,000 pieces above 100,000, not to exceed 
$1,000,000.
    ``(2) In any proceeding in which the Postal Service assesses 
penalties under this subsection the Postal Service shall determine the 
civil penalty taking into account the nature, circumstances, extent, 
and gravity of the violation or violations of section 3005(a), and with 
respect to the violator, the ability to pay the penalty, the effect of 
the penalty on the ability of the violator to conduct lawful business, 
any history of prior violations of such section, the degree of 
culpability and other such matters as justice may require.
    ``(d) Any person who violates section 3001(l) shall be liable to 
the United States for a civil penalty not to exceed $10,000 for each 
mailing to an individual.''; and
            (5) by amending subsection (e) (as redesignated by 
        paragraph (3) of this section) to read as follows:
    ``(e)(1) From all civil penalties collected in the administrative 
and judicial enforcement of this chapter, an amount equal to the 
administrative and judicial costs incurred by the Postal Service in 
such enforcement, not to equal or exceed $500,000 in each year, shall 
be--
            ``(A) deposited in the Postal Service Fund established 
        under section 2003; and
            ``(B) available for payment of such costs.
    ``(2) Except for amounts deposited in the Postal Service Fund under 
paragraph (1), all civil penalties collected in the administrative and 
judicial enforcement of this chapter shall be deposited in the General 
Fund of the Treasury.''.

SEC. 7. ADDITIONAL AUTHORITY FOR THE POSTAL INSPECTION SERVICE.

    (a) In General.--Chapter 30 of title 39, United States Code, is 
amended by adding at the end the following:
``Sec. 3016. Administrative subpoenas
    ``(a) Authorization of Use of Subpoenas by Postmaster General.--In 
any investigation conducted under this chapter, the Postmaster General 
may require by subpoena the production of any records (including books, 
papers, documents, and other tangible things which constitute or 
contain evidence) which the Postmaster General finds relevant or 
material to the investigation.
    ``(b) Service.--
            ``(1) Service within the united states.--A subpoena issued 
        under this section may be served by a person designated under 
        section 3061 of title 18 at any place within the territorial 
        jurisdiction of any court of the United States.
            ``(2) Foreign service.--Any such subpoena may be served 
        upon any person who is not to be found within the territorial 
        jurisdiction of any court of the United States, in such manner 
        as the Federal Rules of Civil Procedure prescribe for service 
        in a foreign country. To the extent that the courts of the 
        United States may assert jurisdiction over such person 
        consistent with due process, the United States District Court 
        for the District of Columbia shall have the same jurisdiction 
        to take any action respecting compliance with this section by 
        such person that such court would have if such person were 
        personally within the jurisdiction of such court.
            ``(3) Service on business persons.--Service of any such 
        subpoena may be made by a Postal Inspector upon a partnership, 
        corporation, association, or other legal entity by--
                    ``(A) delivering a duly executed copy thereof to 
                any partner, executive officer, managing agent, or 
                general agent thereof, or to any agent thereof 
                authorized by appointment or by law to receive service 
                of process on behalf of such partnership, corporation, 
                association, or entity;
                    ``(B) delivering a duly executed copy thereof to 
                the principal office or place of business of the 
                partnership, corporation, association, or entity; or
                    ``(C) depositing such copy in the United States 
                mails, by registered or certified mail, return receipt 
                requested, duly addressed to such partnership, 
                corporation, association, or entity at its principal 
                office or place of business.
            ``(4) Service on natural persons.--Service of any subpoena 
        may be made upon any natural person by--
                    ``(A) delivering a duly executed copy to the person 
                to be served; or
                    ``(B) depositing such copy in the United States 
                mails, by registered or certified mail, return receipt 
                requested, duly addressed to such person at his 
                residence or principal office or place of business.
            ``(5) Verified return.--A verified return by the individual 
        serving any such subpoena setting forth the manner of such 
        service shall be proof of such service. In the case of service 
        by registered or certified mail, such return shall be 
        accompanied by the return post office receipt of delivery of 
        such subpoena.
    ``(c) Enforcement.--
            ``(1) In general.--Whenever any person, partnership, 
        corporation, association, or entity fails to comply with any 
        subpoena duly served upon him, the Postmaster General may 
        request that the Attorney General seek enforcement of the 
        subpoena in the district court of the United States for any 
        judicial district in which such person resides, is found, or 
        transacts business, and serve upon such person a petition for 
        an order of such court for the enforcement of this section.
            ``(2) Jurisdiction.--Whenever any petition is filed in any 
        district court of the United States under this section, such 
        court shall have jurisdiction to hear and determine the matter 
        so presented, and to enter such order or orders as may be 
        required to carry into effect the provisions of this section. 
        Any final order entered shall be subject to appeal under 
        section 1291 of title 28. Any disobedience of any final order 
        entered under this section by any court may be punished as 
        contempt.
    ``(d) Disclosure.--Any documentary material provided pursuant to 
any subpoena issued under this section shall be exempt from disclosure 
under section 552 of title 5.''.
    (b) Regulations.--Not later than 120 days after the date of 
enactment of this section, the Postal Service shall promulgate 
regulations setting out the procedures the Postal Service will use to 
implement this section.
    (c) Technical and Conforming Amendment.--The table of sections for 
chapter 30 of title 39, United States Code, is amended by adding at the 
end the following:

``3016. Administrative subpoenas.''.

SEC. 8. REQUIREMENTS OF PROMOTERS OF SKILL CONTESTS OR SWEEPSTAKES 
              MAILINGS.

    (a) In General.--Chapter 30 of title 39, United States Code (as 
amended by section 7 of this Act) is amended by adding after section 
3016 the following:
``Sec. 3017. Nonmailable skill contests or sweepstakes matter; 
              notification to prohibit mailings
    ``(a) Definitions.--In this section, the term--
            ``(1) `promoter' means any person who originates and causes 
        to be mailed more than 500,000 mailings in any calendar year of 
        any skill contest or sweepstakes, except for mailings that do 
        not include an opportunity to make a payment or order a product 
        or service;
            ``(2) `removal request' means a written request stating 
        that an individual elects to have the name and address of such 
        individual excluded from any list used by a promoter for 
        mailing skill contests or sweepstakes;
            ``(3) `skill contest' means a puzzle, game, competition, or 
        other contest in which--
                    ``(A) a prize is awarded or offered;
                    ``(B the outcome depends predominately on the skill 
                of the contestant; and
                    ``(C) a purchase, payment, or donation is required 
                or implied to be required to enter the contest; and
            ``(4) `sweepstakes' means a game of chance for which no 
        consideration is required to enter.
    ``(b) Nonmailable Matter.--
            ``(1) In general.--Matter otherwise legally acceptable in 
        the mails described under paragraph (2)--
                    ``(A) is nonmailable matter;
                    ``(B) shall not be carried or delivered by mail; 
                and
                    ``(C) shall be disposed of as the Postal Service 
                directs.
            ``(2) Nonmailable matter described.--Matter that is 
        nonmailable matter referred to under paragraph (1) is any 
        matter that--
                    ``(A) is a skill contest or sweepstakes; and
                    ``(B)(i) is addressed to an individual who made an 
                election to be excluded from lists under subsection 
                (e); or
                    ``(ii) does not comply with subsection (c)(1).
    ``(c) Requirements of Promoters.--
            ``(1) Notice to individuals.--Any promoter who mails a 
        skill contest or sweepstakes shall provide with each mailing a 
        clear and conspicuous statement that--
                    ``(A) includes the address and toll-free telephone 
                number of the notification system established under 
                paragraph (2); and
                    ``(B) states how the notification system may be 
                used to prohibit the mailing of any skill contest or 
                sweepstakes to such individual.
            ``(2) Notification system.--Any promoter that mails a skill 
        contest or sweepstakes shall participate in the establishment 
        and maintenance of a single notification system that provides 
        for any individual (or other duly authorized person) to notify 
        the system of the individual's election to have the name and 
        address of the individual excluded from all lists of names and 
        addresses used by all promoters to mail any skill contest or 
        sweepstakes.
    ``(d) Notification System.--If an individual contacts the 
notification system through use of the toll-free telephone number 
provided under subsection (c)(1)(A), the system shall--
            ``(1) inform the individual of the information described 
        under subsection (c)(1)(B); and
            ``(2) inform the individual that the election to prohibit 
        mailings of skill contests or sweepstakes to that individual 
        shall take effect 45 business days after receipt by the system 
        of the signed removal request by the individual.
    ``(e) Election To Be Excluded From Lists.--
            ``(1) In general.--An individual may elect to exclude the 
        name and address of such individual from all mailing lists used 
        by promoters of skill contests or sweepstakes by mailing a 
        removal request to the notification system established under 
        subsection (c).
            ``(2) Response after mailing removal request to the 
        notification system.--Not later than 45 business days after 
        receipt of a removal request, all promoters who maintain lists 
        containing the individual's name or address for purposes of 
        mailing skill contests or sweepstakes shall exclude such 
        individual's name and address from all such lists.
            ``(3) Effectiveness of election.--An election under 
        paragraph (1) shall--
                    ``(A) be effective with respect to every promoter; 
                and
                    ``(B) remain in effect, unless an individual 
                notifies the system in writing that such individual--
                            ``(i) has changed the election; and
                            ``(ii) elects to receive skill contest or 
                        sweepstakes mailings.
    ``(f) Promoter Nonliability.--A promoter, or any other person 
maintaining the notification system established under this section, 
shall not be subject to civil liability for the exclusion of an 
individual's name or address from any mailing list maintained by a 
promoter for mailing skill contests or sweepstakes, if--
            ``(1) a removal request is received by the notification 
        system; and
            ``(2) the promoter or person maintaining the system has a 
        good faith belief that the request is from--
                    ``(A) the individual whose name and address is to 
                be excluded; or
                    ``(B) another duly authorized person.
    ``(g) Prohibition on Commercial Use of Lists.--
            ``(1) In general.--
                    ``(A) Prohibition.--No person may provide any 
                information (including the sale or rental of any name 
                or address) in a list described under subparagraph (B) 
                to another person for commercial use.
                    ``(B) Lists.--A list referred to under subparagraph 
                (A) is any list of names and addresses (or other 
                related information) used, maintained, or created by 
                the system established under this section.
            ``(2) Civil penalty.--Any person who violates paragraph (1) 
        shall be assessed a civil penalty by the Postal Service not to 
        exceed $2,000,000 per violation.
    ``(h) Civil Penalties.--
            ``(1) In general.--Any promoter--
                    ``(A) who recklessly mails nonmailable matter in 
                violation of subsection (b) shall be liable to the 
                United States in an amount of $10,000 per violation for 
                each mailing of nonmailable matter; or
                    ``(B) who fails to substantially comply with the 
                requirements of subsection (c)(2) shall be liable to 
                the United States.
            ``(2) Enforcement.--The Postal Service shall assess civil 
        penalties under this section.''.
    (b) Technical and Conforming Amendments.--The table of sections for 
chapter 30 of title 39, United States Code, is amended by adding after 
the item relating to section 3016 the following:

``3017. Nonmailable skill contests or sweepstakes matter; notification 
                            to prohibit mailings.''.
    (c) Effective Date.--This section shall take effect 1 year after 
the date of enactment of this Act.

SEC. 9. STATE LAW NOT PREEMPTED.

    (a) In General.--Nothing in the provisions of this Act (including 
the amendments made by this Act) or in the regulations promulgated 
under such provisions shall be construed to preempt any provision of 
State or local law that imposes more restrictive requirements, 
regulations, damages, costs, or penalties. No determination by the 
Postal Service that any particular piece of mail or class of mail is in 
compliance with such provisions of this Act shall be construed to 
preempt any provision of State or local law.
    (b) Effect on State Court Proceedings.--Nothing contained in this 
section shall be construed to prohibit an authorized State official 
from proceeding in State court on the basis of an alleged violation of 
any general civil or criminal statute of such State or any specific 
civil or criminal statute of such State.

SEC. 10. EFFECTIVE DATE.

    Except as provided in section 8, this Act shall take effect 120 
days after the date of enactment of this Act.
            Amend the title so as to read: ``A bill to amend chapter 30 
        of title 39, United States Code, to provide for the 
        nonmailability of certain deceptive matter relating to 
        sweepstakes, skill contests, facsimile checks, administrative 
        procedures, orders, and civil penalties relating to such 
        matter, and for other purposes.''.

                                                       Calendar No. 191

106th CONGRESS

  1st Session

                                 S. 335

                          [Report No. 106-102]

_______________________________________________________________________

                                 A BILL

To amend chapter 30 of title 39, United States Code, to provide for the 
nonmailability of certain deceptive matter relating to games of chance, 
administrative procedures, orders, and civil penalties relating to such 
                    matter, and for other purposes.

_______________________________________________________________________

                              July 1, 1999

        Reported with an amendment and an amendment to the title
```