H. Res. 488
In the House of Representatives, U. S.,
July 25, 1994.
Resolved, That, upon adoption of this resolution, the bill
(H.R. 868) to strengthen the authority of the Federal Trade
Commission to protect consumers in connection with sales
made with a telephone, and for other purposes, with the Sen-
ate amendment thereto, shall be considered to have been
taken from the Speaker’s table, and the same are hereby
agreed to with an amendment as follows:
In lieu of the matter proposed to be inserted by the Sen-
ate, insert the following:
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
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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 prohibit-
ing deceptive telemarketing acts or practices and other
abusive telemarketing acts or practices.
(2) The Commission shall include in such rules re-
specting deceptive telemarketing acts or practices a defi-
nition of deceptive telemarketing acts or practices which
may include acts or practices of entities or individuals
that assist or facilitate deceptive telemarketing, includ-
ing credit card laundering.
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a rule under section 18 of the Federal Trade Commission Act
(15 U.S.C. 57a) regarding unfair or deceptive acts or prac-
tices.
(d) SECURITIES AND EXCHANGE COMMISSION RULES.—
(1) PROMULGATION.—
(A) IN GENERAL.—Except as provided in sub-
paragraph (B), not later than 6 months after the
effective date of rules promulgated by the Federal
Trade Commission under subsection (a), the Securi-
ties and Exchange Commission shall promulgate, or
require any national securities exchange or reg-
istered securities association to promulgate, rules
substantially similar to such rules to prohibit decep-
tive and other abusive telemarketing acts or prac-
tices by persons described in paragraph (2).
(B) EXCEPTION.—The Securities and Ex-
change Commission is not required to promulgate a
rule under subparagraph (A) if it determines that—
(i) Federal securities laws or rules adopt-
ed by the Securities and Exchange Commission
thereunder provide protection from deceptive
and other abusive telemarketing by persons de-
scribed in paragraph (2) substantially similar
to that provided by rules promulgated by the
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Federal Trade Commission under subsection
(a); or
(ii) such a rule promulgated by the Secu-
rities and Exchange Commission is not nec-
essary or appropriate in the public interest, or
for the protection of investors, or would be in-
consistent with the maintenance of fair and or-
derly markets.
If the Securities and Exchange Commission deter-
mines that an exception described in clause (i) or
(ii) applies, the Securities and Exchange Commis-
sion shall publish in the Federal Register its deter-
mination with the reasons for it.
(2) APPLICATION.—
(A) IN GENERAL.—The rules promulgated by
the Securities and Exchange Commission under
paragraph (1)(A) shall apply to a broker, dealer,
transfer agent, municipal securities dealer, munici-
pal securities broker, government securities broker,
government securities dealer, investment adviser or
investment company, or any individual associated
with a broker, dealer, transfer agent, municipal se-
curities dealer, municipal securities broker, govern-
ment securities broker, government securities deal-
er, investment adviser or investment company. The
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rules promulgated by the Federal Trade Commis-
sion under subsection (a) shall not apply to persons
described in the preceding sentence.
(B) DEFINITIONS.—For purposes of subpara-
graph (A)—
(i) the terms ‘‘broker’’, ‘‘dealer’’, ‘‘trans-
fer agent’’, ‘‘municipal securities dealer’’, ‘‘mu-
nicipal securities broker’’, ‘‘government securi-
ties broker’’, and ‘‘government securities deal-
er’’ have the meanings given such terms by
paragraphs (4), (5), (25), (30), (31), (43), and
(44) of section 3(a) of the Securities and Ex-
change 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 meaning 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.—
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(1) APPLICATION.—The rules promulgated by the
Federal Trade Commission under subsection (a) shall
not apply to persons 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 reg-
istered 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, in-
troducing broker, commodity trading advisor, commodity 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 provide protection from deceptive and abusive
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telemarketing by persons described under paragraph (1)
substantially similar to that provided by rules promul-
gated 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 protection of customers in the futures and options
markets, or would be inconsistent with the maintenance
of fair and orderly markets.
If the Commission determines that an exception described in
subparagraph (A) or (B) applies, the Commission shall pub-
lish in the Federal Register its determination with the rea-
sons 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 compliance with such rule of
the Commission, to obtain damages, restitution, or other
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compensation on behalf of residents of such State, or to ob-
tain such further and other relief as the court may deem ap-
propriate.
(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 peti-
tions 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 general by the laws of such State to conduct in-
vestigations or to administer oaths or affirmations or to com-
pel the attendance of witnesses or the production of documen-
tary 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 Commission, institute a civil action under sub-
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section (a) or (f)(2) against any defendant named in the com-
plaint 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 de-
fendant 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 au-
thorized by the State to bring actions in such State on
behalf of its residents.
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 Commission under section 3, or an authorized person
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acting on such person’s behalf, may, within 3 years after dis-
covery 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 ad-
versely affected by such telemarketing. Such an action may
be brought to enjoin such telemarketing, to enforce compli-
ance with any rule of the Commission under section 3, to ob-
tain damages, or to obtain such further and other relief as
the court may deem appropriate.
(b) NOTICE.—The plaintiff shall serve prior written no-
tice of the action upon the Commission and provide the Com-
mission with a copy of its complaint, except in any case
where such prior notice is not feasible, in which case the per-
son 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 ac-
tion 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
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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 wit-
nesses to the prevailing party.
(e) CONSTRUCTION.—Nothing in this section shall re-
strict 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 de-
fendant may be found.
SEC. 6. ADMINISTRATION AND APPLICABILITY OF ACT.
(a) IN GENERAL.—Except as otherwise provided in sec-
tions 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.). Consequently, no activity which is outside
the jurisdiction of that Act shall be affected by this Act.
(b) ACTIONS BY THE COMMISSION.—The Commission
shall prevent any person from violating a rule of the Commis-
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sion 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 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 Com-
mission 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 pos-
session of the United States.
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(4) The term ‘‘telemarketing’’ means a plan, pro-
gram, or campaign which is conducted to induce pur-
chases of goods or services by use of one or more tele-
phones and which involves more than one interstate tele-
phone call. The term does not include the solicitation of
sales through the mailing of a catalog which—
(A) contains a written description, or illustra-
tion of the goods or services offered for sale,
(B) includes the business address of the seller,
(C) includes multiple pages of written material
or illustrations, and
(D) has been issued not less frequently than
once a year,
where the person making the solicitation does not solicit
customers by telephone but only receives calls initiated
by customers 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,’’ imme-
diately 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
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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 pursuant to, the appointment by the Attorney Gen-
eral 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 ap-
pointed under subsection (b) upon the request of the
Federal Trade Commission or the court which has en-
tered 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 subsection (a) expires 2 years after the date of
the first promulgation of rules under section 3. The expira-
tion of such authority shall have no effect on an action
brought before the expiration date.
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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 re-
sults of the review to the Congress.
Attest:
Clerk.