[Congressional Bills 103th Congress]
[From the U.S. Government Publishing Office]
[H. Res. 488 Engrossed in House (EH)]

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 
Senate 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 Senate, 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 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 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 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 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, 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.
            Attest:






                                                                          Clerk.