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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 deceptive
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 deceptive
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 undertake a
pattern of unsolicited telephone calls which the reasonable
consumer would consider coercive or abusive of such consumer's
right to privacy,
(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 deceptive 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 provide
protection from deceptive and other abusive telemarketing
by persons described in paragraph (2) substantially similar
to that provided by rules promulgated by the Federal Trade
Commission under subsection (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 Securities
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 adviser or investment
company, or any individual asso- ciated with a broker, dealer,
transfer agent, municipal securities 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
''government 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 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.--
(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 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, 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 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.
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 compliance with such rule of the
Commission, to obtain damages, restitution, 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 general 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 Commission, 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.

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 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.). 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 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 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
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,'' 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 pursuant 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 subsection (b) upon
the request of the Federal Trade Commission 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 subsection (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.
Telemarketing and Consumer Fraud and Abuse Prevention Act - Directs the Federal Trade Commission to prescribe rules prohibiting deceptive telemarketing acts or practices and other abusive telemarketing acts or practices. Requires such rules to include: (1) a requirement that telemarketers not make unsolicited calls in a pattern which a reasonable customer would consider coercive or abusive of the customer's right to privacy; (2) restrictions on the times of day and night when unsolicited calls can be made to consumers; and (3) a requirement that any telephone solicitor shall promptly and clearly disclose the purpose of the call. Directs the Securities and Exchange Commission and the Commodity Futures Trading Commission to promulgate similar rules regarding telemarketing by brokers and dealers, unless Federal laws or rules adopted by such Commissions provide protection or such rules are not necessary or appropriate in the public interest.
Requires such Commissions to publish reasons for allowing any exception.
(Sec. 4) Permits the attorney general of any State, whenever there is reason to believe that the interests of a State's residents are adversely affected because of a telemarketing practice which violates rules promulgated pursuant to this Act, to bring a civil action to enjoin such telemarketing and to obtain damages and other appropriate relief.
(Sec. 5) Permits similar actions by any person adversely affected by violations of the rules promulgated pursuant to this Act, if the amount in controversy exceeds the sum or value of $50,000 in actual damages for each person adversely affected.
(Sec. 8) Amends the Federal Trade Commission Act to make it unlawful to disseminate by U.S. mails or by any means false advertisements concerning services.
(Sec. 9) Permits the Federal Trade Commission, until two years following the promulgation of rules under this Act, to bring a criminal contempt action for violations of orders of the Commission obtained in false advertising cases.
(Sec. 10) Provides for the review of the implementation of this Act, five years following the promulgation of rules, and for a report to the Congress.