[Congressional Bills 103th Congress]
[From the U.S. Government Publishing Office]
[H.R. 868 Referred in Senate (RFS)]

103d CONGRESS
  1st Session
                                H. R. 868


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             March 3, 1993

    Received; read twice and referred to the Committee on Commerce, 
                      Science, and Transportation

_______________________________________________________________________

                                 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 ``Consumer Protection Telemarketing 
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. Telemarketers can also 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 insure adequate consumer 
        protection from such fraud.
            (3) Consumers and others are estimated to lose 
        $10,000,000,000 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 (including fraud) and abuse.

SEC. 3. TELEMARKETING RULES.

    (a) In General.--
            (1) The Commission shall prescribe rules prohibiting 
        deceptive (including fraudulent) telemarketing activities and 
        other abusive telemarketing activities.
            (2) The Commission shall include in such rules respecting 
        deceptive telemarketing activities--
                    (A) a definition of deceptive telemarketing 
                activities, and
                    (B) criteria that are symptomatic of deceptive 
                telemarketing as distinguished from ordinary 
                telemarketing business practices.
            (3) The Commission shall include in such rules respecting 
        other abusive telemarketing activities 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. In 
        prescribing the rules described in this paragraph, the 
        Commission shall consider--
                    (A) including a requirement that goods or services 
                offered by telemarketing be shipped or provided within 
                a specified period and that if the goods or services 
                are not shipped or provided within such period, a 
                refund be required, and
                    (B) including, where practicable, authority for a 
                person who orders a good or service through 
                telemarketing to cancel the order within a specified 
                period.
    (b) Rulemaking.--
            (1) The Commission shall prescribe the rules under 
        subsection (a) within 270 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.
            (2) A rule issued under subsection (a) shall be considered 
        a rule issued under section 18(a)(1)(B) of the Federal Trade 
        Commission Act.
    (c) Enforcement.--Any violation of any rule prescribed under 
subsection (a) shall be treated as a violation of a rule under section 
5 of the Federal Trade Commission Act (15 U.S.C. 45) 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 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 activities 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 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 associated 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 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 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 6 
months after the effective date of rules promulgated by the Federal 
Trade Commission under section 3(a) of the Consumer Protection 
Telemarketing 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 activities 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 
advisory, 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 Consumer Protection 
        Telemarketing 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 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 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) 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 the Commission has 
instituted a civil action for violation of any rule prescribed under 
section 3, no State may, during the pendency of such action instituted 
by the Commission, institute a civil action under subsection (a) 
against any defendant named in the Commission's complaint for acts or 
omissions alleged in the complaint for violation of any rule as alleged 
in the Commission's complaint.
    (e) 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 for protection of consumers and who 
        are designated by the Commission to bring an action under 
        subsection (a) against persons that the Commission has 
        determined have or are engaged in a pattern or practice of 
        telemarketing which violates a rule of the Commission under 
        section 3.

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) Actions by the Commission.--Whenever the Commission has 
instituted a civil action for violation of any rule prescribed under 
section 3, no person may, during the pendency of such action instituted 
by the Commission, subsequently institute a civil action against any 
defendant named in the Commission's complaint for violation of any rule 
as alleged in the Commission's complaint.
    (d) Costs 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.

SEC. 6. CLEARINGHOUSE.

    (a) In General.--The Commission shall establish a clearinghouse for 
inquiries made to Federal agencies concerning telemarketing. The 
clearinghouse will provide information (other than information which 
may not be disclosed under section 552(b) of title 5, United States 
Code, or under regulations prescribed by the Commission to implement 
such section) to anyone making inquiries respecting persons engaged in 
telemarketing or direct such inquiries to the appropriate Federal or 
State agency.
    (b) Liability for Providing Information.--No person who provides 
information to the clearinghouse established under subsection (a) shall 
be liable for damages for the provision of such information unless such 
person provided such information knowing it to be false.

SEC. 7. 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.

SEC. 8. REVIEW.

    Upon the expiration of 5 years following the date of the enactment 
of this Act, the Commission shall review its implementation of this Act 
and its effect on deceptive telemarketing activities and report the 
results of the review to the Congress.

SEC. 9. 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 significant 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.

            Passed the House of Representatives March 2, 1993.

            Attest:

                                           DONNALD K. ANDERSON,

                                                                 Clerk.