H. R. 868
One Hundred Third Congress
of the
United States of America
AT THE SECOND SESSION
Begun and held at the City of Washington on Tuesday,
the twenty-fifth day of January, one thousand nine hundred and ninety-four
An Act
To strengthen the authority of the Federal Trade Commission to protect consumers
in connection with sales made with a telephone, and for other purposes.
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Telemarketing and Consumer
Fraud and Abuse Prevention Act’’.
SEC. 2. FINDINGS.
The Congress makes the following findings:
(1) Telemarketing differs from other sales activities in that
it can be carried out by sellers across State lines without
direct contact with the consumer. Telemarketers also can be
very mobile, easily moving from State to State.
(2) Interstate telemarketing fraud has become a problem
of such magnitude that the resources of the Federal Trade
Commission are not sufficient to ensure adequate consumer
protection from such fraud.
(3) Consumers and others are estimated to lose $40 billion
a year in telemarketing fraud.
(4) 
Consumers 
are 
victimized 
by 
other 
forms 
of
telemarketing deception and abuse.
(5) Consequently, Congress should enact legislation that
will offer consumers necessary protection from telemarketing
deception and abuse.
SEC. 3. TELEMARKETING RULES.
(a) IN GENERAL.—
(1) The Commission shall prescribe rules prohibiting decep-
tive telemarketing acts or practices and other abusive
telemarketing acts or practices.
(2) The Commission shall include in such rules respecting
deceptive telemarketing acts or practices a definition of decep-
tive telemarketing acts or practices which may include acts
or practices of entities or individuals that assist or facilitate
deceptive telemarketing, including credit card laundering.
(3) The Commission shall include in such rules respecting
other abusive telemarketing acts or practices—
(A) a requirement that telemarketers may not under-
take a pattern of unsolicited telephone calls which the
reasonable consumer would consider coercive or abusive
of such consumer’s right to privacy,
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(B) restrictions on the hours of the day and night
when unsolicited telephone calls can be made to consumers,
and
(C) a requirement that any person engaged in
telemarketing for the sale of goods or services shall
promptly and clearly disclose to the person receiving the
call that the purpose of the call is to sell goods or services
and make such other disclosures as the Commission deems
appropriate, including the nature and price of the goods
and services.
In prescribing the rules described in this paragraph, the
Commission shall also consider recordkeeping requirements.
(b) RULEMAKING.—The Commission shall prescribe the rules
under subsection (a) within 365 days after the date of enactment
of this Act. Such rules shall be prescribed in accordance with
section 553 of title 5, United States Code.
(c) ENFORCEMENT.—Any violation of any rule prescribed under
subsection (a) shall be treated as a violation of a rule under section
18 of the Federal Trade Commission Act (15 U.S.C. 57a) regarding
unfair or deceptive acts or practices.
(d) SECURITIES AND EXCHANGE COMMISSION RULES.—
(1) PROMULGATION.—
(A) IN GENERAL.—Except as provided in subparagraph
(B), not later than 6 months after the effective date of
rules promulgated by the Federal Trade Commission under
subsection (a), the Securities and Exchange Commission
shall promulgate, or require any national securities
exchange or registered securities association to promulgate,
rules substantially similar to such rules to prohibit decep-
tive and other abusive telemarketing acts or practices by
persons described in paragraph (2).
(B) 
EXCEPTION.—The 
Securities 
and 
Exchange
Commission is not required to promulgate a rule under
subparagraph (A) if it determines that—
(i) Federal securities laws or rules adopted by the
Securities and Exchange Commission thereunder pro-
vide protection from deceptive and other abusive
telemarketing by persons described in paragraph (2)
substantially similar to that provided by rules promul-
gated by the Federal Trade Commission under sub-
section (a); or
(ii) such a rule promulgated by the Securities and
Exchange Commission is not necessary or appropriate
in the public interest, or for the protection of investors,
or would be inconsistent with the maintenance of fair
and orderly markets.
If the Securities and Exchange Commission determines
that an exception described in clause (i) or (ii) applies,
the Securities and Exchange Commission shall publish in
the Federal Register its determination with the reasons
for it.
(2) APPLICATION.—
(A) IN GENERAL.—The rules promulgated by the Securi-
ties and Exchange Commission under paragraph (1)(A)
shall apply to a broker, dealer, transfer agent, municipal
securities dealer, municipal securities broker, government
securities broker, government securities dealer, investment
H. R. 868—3
adviser or investment company, or any individual asso-
ciated with a broker, dealer, transfer agent, municipal se-
curities dealer, municipal securities broker, government
securities broker, government securities dealer, investment
adviser or investment company. The rules promulgated
by the Federal Trade Commission under subsection (a)
shall not apply to persons described in the preceding
sentence.
(B) DEFINITIONS.—For purposes of subparagraph (A)—
(i) the terms ‘‘broker’’, ‘‘dealer’’, ‘‘transfer agent’’,
‘‘municipal securities dealer’’, ‘‘municipal securities
broker’’, ‘‘government securities broker’’, and ‘‘govern-
ment securities dealer’’ have the meanings given such
terms by paragraphs (4), (5), (25), (30), (31), (43), and
(44) of section 3(a) of the Securities and Exchange
Act of 1934 (15 U.S.C. 78c(a)(4), (5), (25), (30), (31),
(43), and (44));
(ii) the term ‘‘investment adviser’’ has the meaning
given such term by section 202(a)(11) of the Investment
Advisers Act of 1940 (15 U.S.C. 80b–2(a)(11)); and
(iii) the term ‘‘investment company’’ has the mean-
ing given such term by section 3(a) of the Investment
Company Act of 1940 (15 U.S.C. 80a–3(a)).
(e) COMMODITY FUTURES TRADING COMMISSION RULES.—
(1) APPLICATION.—The rules promulgated by the Federal
Trade Commission under subsection (a) shall not apply to per-
sons described in subsection (f)(1) of section 6 of the Commodity
Exchange Act (7 U.S.C. 8, 9, 15, 13b, 9a).
(2) PROMULGATION.—Section 6 of the Commodity Exchange
Act (7 U.S.C. 8, 9, 15, 13b, 9a) is amended by adding at
the end the following new subsection:
‘‘(f)(1) Except as provided in paragraph (2), not later than
six months after the effective date of rules promulgated by the
Federal Trade Commission under section 3(a) of the Telemarketing
and Consumer Fraud and Abuse Prevention Act, the Commission
shall promulgate, or require each registered futures association
to promulgate, rules substantially similar to such rules to prohibit
deceptive and other abusive telemarketing acts or practices by
any person registered or exempt from registration under this Act
in connection with such person’s business as a futures commission
merchant, introducing broker, commodity trading advisor, commod-
ity pool operator, leverage transaction merchant, floor broker, or
floor trader, or a person associated with any such person.
‘‘(2) The Commission is not required to promulgate rules under
paragraph (1) if it determines that—
‘‘(A) rules adopted by the Commission under this Act pro-
vide protection from deceptive and abusive telemarketing by
persons described under paragraph (1) substantially similar
to that provided by rules promulgated by the Federal Trade
Commission under section 3(a) of the Telemarketing and
Consumer Fraud and Abuse Prevention Act; or
‘‘(B) such a rule promulgated by the Commission is not
necessary or appropriate in the public interest, or for the pro-
tection of customers in the futures and options markets, or
would be inconsistent with the maintenance of fair and orderly
markets.
H. R. 868—4
If the Commission determines that an exception described in
subparagraph (A) or (B) applies, the Commission shall publish
in the Federal Register its determination with the reasons for
it.’’.
SEC. 4. ACTIONS BY STATES.
(a) IN GENERAL.—Whenever an attorney general of any State
has reason to believe that the interests of the residents of that
State have been or are being threatened or adversely affected
because any person has engaged or is engaging in a pattern or
practice of telemarketing which violates any rule of the Commission
under section 3, the State, as parens patriae, may bring a civil
action on behalf of its residents in an appropriate district court
of the United States to enjoin such telemarketing, to enforce compli-
ance with such rule of the Commission, to obtain damages, restitu-
tion, or other compensation on behalf of residents of such State,
or to obtain such further and other relief as the court may deem
appropriate.
(b) NOTICE.—The State shall serve prior written notice of any
civil action under subsection (a) or (f)(2) upon the Commission
and provide the Commission with a copy of its complaint, except
that if it is not feasible for the State to provide such prior notice,
the State shall serve such notice immediately upon instituting
such action. Upon receiving a notice respecting a civil action, the
Commission shall have the right (1) to intervene in such action,
(2) upon so intervening, to be heard on all matters arising therein,
and (3) to file petitions for appeal.
(c) CONSTRUCTION.—For purposes of bringing any civil action
under subsection (a), nothing in this Act shall prevent an attorney
general from exercising the powers conferred on the attorney gen-
eral by the laws of such State to conduct investigations or to
administer oaths or affirmations or to compel the attendance of
witnesses or the production of documentary and other evidence.
(d) ACTIONS BY THE COMMISSION.—Whenever a civil action has
been instituted by or on behalf of the Commission for violation
of any rule prescribed under section 3, no State may, during the
pendency of such action instituted by or on behalf of the Commis-
sion, institute a civil action under subsection (a) or (f)(2) against
any defendant named in the complaint in such action for violation
of any rule as alleged in such complaint.
(e) VENUE; SERVICE
OF PROCESS.—Any civil action brought
under subsection (a) in a district court of the United States may
be brought in the district in which the defendant is found, is
an inhabitant, or transacts business or wherever venue is proper
under section 1391 of title 28, United States Code. Process in
such an action may be served in any district in which the defendant
is an inhabitant or in which the defendant may be found.
(f) ACTIONS BY OTHER STATE OFFICIALS.—
(1) Nothing contained in this section shall prohibit an
authorized State official from proceeding in State court on
the basis of an alleged violation of any civil or criminal statute
of such State.
(2) In addition to actions brought by an attorney general
of a State under subsection (a), such an action may be brought
by officers of such State who are authorized by the State
to bring actions in such State on behalf of its residents.
H. R. 868—5
SEC. 5. ACTIONS BY PRIVATE PERSONS.
(a) IN GENERAL.—Any person adversely affected by any pattern
or practice of telemarketing which violates any rule of the Commis-
sion under section 3, or an authorized person acting on such person’s
behalf, may, within 3 years after discovery of the violation, bring
a civil action in an appropriate district court of the United States
against a person who has engaged or is engaging in such pattern
or practice of telemarketing if the amount in controversy exceeds
the sum or value of $50,000 in actual damages for each person
adversely affected by such telemarketing. Such an action may be
brought to enjoin such telemarketing, to enforce compliance with
any rule of the Commission under section 3, to obtain damages,
or to obtain such further and other relief as the court may deem
appropriate.
(b) NOTICE.—The plaintiff shall serve prior written notice of
the action upon the Commission and provide the Commission with
a copy of its complaint, except in any case where such prior notice
is not feasible, in which case the person shall serve such notice
immediately upon instituting such action. The Commission shall
have the right (A) to intervene in the action, (B) upon so intervening,
to be heard on all matters arising therein, and (C) to file petitions
for appeal.
(c) ACTION BY THE COMMISSION.—Whenever a civil action has
been instituted by or on behalf of the Commission for violation
of any rule prescribed under section 3, no person may, during
the pendency of such action instituted by or on behalf of the
Commission, institute a civil action against any defendant named
in the complaint in such action for violation of any rule as alleged
in such complaint.
(d) COST
AND FEES.—The court, in issuing any final order
in any action brought under subsection (a), may award costs of
suit and reasonable fees for attorneys and expert witnesses to
the prevailing party.
(e) CONSTRUCTION.—Nothing in this section shall restrict any
right which any person may have under any statute or common
law.
(f) VENUE; SERVICE
OF PROCESS.—Any civil action brought
under subsection (a) in a district court of the United States may
be brought in the district in which the defendant is found, is
an inhabitant, or transacts business or wherever venue is proper
under section 1391 of title 28, United States Code. Process in
such an action may be served in any district in which the defendant
is an inhabitant or in which the defendant may be found.
SEC. 6. ADMINISTRATION AND APPLICABILITY OF ACT.
(a) IN GENERAL.—Except as otherwise provided in sections 3(d),
3(e), 4, and 5, this Act shall be enforced by the Commission under
the Federal Trade Commission Act (15 U.S.C. 41 et seq.). Con-
sequently, no activity which is outside the jurisdiction of that Act
shall be affected by this Act.
(b) ACTIONS BY THE COMMISSION.—The Commission shall pre-
vent any person from violating a rule of the Commission under
section 3 in the same manner, by the same means, and with
the same jurisdiction, powers, and duties as though all applicable
terms and provisions of the Federal Trade Commission Act (15
U.S.C. 41 et seq.) were incorporated into and made a part of
this Act. Any person who violates such rule shall be subject to
H. R. 868—6
the penalties and entitled to the privileges and immunities provided
in the Federal Trade Commission Act in the same manner, by
the same means, and with the same jurisdiction, power, and duties
as though all applicable terms and provisions of the Federal Trade
Commission Act were incorporated into and made a part of this
Act.
(c) EFFECT ON OTHER LAWS.—Nothing contained in this Act
shall be construed to limit the authority of the Commission under
any other provision of law.
SEC. 7. DEFINITIONS.
For purposes of this Act:
(1) The term ‘‘attorney general’’ means the chief legal officer
of a State.
(2) The term ‘‘Commission’’ means the Federal Trade
Commission.
(3) The term ‘‘State’’ means any State of the United States,
the District of Columbia, Puerto Rico, the Northern Mariana
Islands, and any territory or possession of the United States.
(4) The term ‘‘telemarketing’’ means a plan, program, or
campaign which is conducted to induce purchases of goods
or services by use of one or more telephones and which involves
more than one interstate telephone call. The term does not
include the solicitation of sales through the mailing of a catalog
which—
(A) contains a written description, or illustration of
the goods or services offered for sale,
(B) includes the business address of the seller,
(C) includes multiple pages of written material or illus-
trations, and
(D) has been issued not less frequently than once a
year,
where the person making the solicitation does not solicit cus-
tomers by telephone but only receives calls initiated by cus-
tomers in response to the catalog and during those calls takes
orders only without further solicitation.
SEC. 8. FALSE ADVERTISEMENTS CONCERNING SERVICES.
Section 12(a) of the Federal Trade Commission Act (15 U.S.C.
52(a)) is amended by inserting ‘‘services,’’ immediately after
‘‘devices,’’ each place it appears.
SEC. 9. ENFORCEMENT OF ORDERS.
(a) GENERAL AUTHORITY.—Subject to subsections (b) and (c),
the Federal Trade Commission may bring a criminal contempt
action for violations of orders of the Commission obtained in cases
brought under section 13(b) of the Federal Trade Commission Act
(15 U.S.C. 53(b)).
(b) APPOINTMENT.—An action authorized by subsection (a) may
be brought by the Federal Trade Commission only after, and pursu-
ant to, the appointment by the Attorney General of an attorney
employed by the Commission, as a special assistant United States
Attorney.
(c) REQUEST FOR APPOINTMENT.—
(1) APPOINTMENT
UPON
REQUEST
OR
MOTION.—A special
assistant United States Attorney may be appointed under sub-
section (b) upon the request of the Federal Trade Commission
H. R. 868—7
or the court which has entered the order for which contempt
is sought or upon the Attorney General’s own motion.
(2) TIMING.—The Attorney General shall act upon any
request made under paragraph (1) within 45 days of the receipt
of the request.
(d) TERMINATION OF AUTHORITY.—The authority of the Federal
Trade Commission to bring a criminal contempt action under sub-
section (a) expires 2 years after the date of the first promulgation
of rules under section 3. The expiration of such authority shall
have no effect on an action brought before the expiration date.
SEC. 10. REVIEW.
Upon the expiration of 5 years following the date of the first
promulgation of rules under section 3, the Commission shall review
the implementation of this Act and its effect on deceptive
telemarketing acts or practices and report the results of the review
to the Congress.
Speaker of the House of Representatives.
Vice President of the United States and
President of the Senate.