    [House Hearing, 111 Congress]
    [From the U.S. Government Publishing Office]

     H.R. 4501, GUARANTEE OF A LEGITIMATE DEAL ACT, AND H.R. 2480, TRUTH IN
                                FUR LABELING ACT

    =======================================================================

                                    HEARING

                                   BEFORE THE

                        SUBCOMMITTEE ON COMMERCE, TRADE,
                            AND CONSUMER PROTECTION

                                     OF THE

                        COMMITTEE ON ENERGY AND COMMERCE
                            HOUSE OF REPRESENTATIVES

                         ONE HUNDRED ELEVENTH CONGRESS

                                 SECOND SESSION

                                   __________

                                  MAY 13, 2010

                                   __________

                               Serial No. 111-123

          Printed for the use of the Committee on Energy and Commerce

                            energycommerce.house.gov

                                   ----------
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                        COMMITTEE ON ENERGY AND COMMERCE

                     HENRY A. WAXMAN, California, Chairman
    JOHN D. DINGELL, Michigan            JOE BARTON, Texas
      Chairman Emeritus                    Ranking Member
    EDWARD J. MARKEY, Massachusetts      RALPH M. HALL, Texas
    RICK BOUCHER, Virginia               FRED UPTON, Michigan
    FRANK PALLONE, Jr., New Jersey       CLIFF STEARNS, Florida
    BART GORDON, Tennessee               NATHAN DEAL, Georgia
    BOBBY L. RUSH, Illinois              ED WHITFIELD, Kentucky
    ANNA G. ESHOO, California            JOHN SHIMKUS, Illinois
    BART STUPAK, Michigan                JOHN B. SHADEGG, Arizona
    ELIOT L. ENGEL, New York             ROY BLUNT, Missouri
    GENE GREEN, Texas                    STEVE BUYER, Indiana
    DIANA DeGETTE, Colorado              GEORGE RADANOVICH, California
      Vice Chairman                      JOSEPH R. PITTS, Pennsylvania
    LOIS CAPPS, California               MARY BONO MACK, California
    MICHAEL F. DOYLE, Pennsylvania       GREG WALDEN, Oregon
    JANE HARMAN, California              LEE TERRY, Nebraska
    TOM ALLEN, Maine                     MIKE ROGERS, Michigan
    JANICE D. SCHAKOWSKY, Illinois       SUE WILKINS MYRICK, North Carolina
    CHARLES A. GONZALEZ, Texas           JOHN SULLIVAN, Oklahoma
    JAY INSLEE, Washington               TIM MURPHY, Pennsylvania
    TAMMY BALDWIN, Wisconsin             MICHAEL C. BURGESS, Texas
    MIKE ROSS, Arkansas                  MARSHA BLACKBURN, Tennessee
    ANTHONY D. WEINER, New York          PHIL GINGREY, Georgia
    JIM MATHESON, Utah                   STEVE SCALISE, Louisiana
    G.K. BUTTERFIELD, North Carolina
    CHARLIE MELANCON, Louisiana
    JOHN BARROW, Georgia
    BARON P. HILL, Indiana
    DORIS O. MATSUI, California
    DONNA M. CHRISTENSEN, Virgin
        Islands
    KATHY CASTOR, Florida
    JOHN P. SARBANES, Maryland
    CHRISTOPHER S. MURPHY, Connecticut
    ZACHARY T. SPACE, Ohio
    JERRY McNERNEY, California
    BETTY SUTTON, Ohio
    BRUCE L. BRALEY, Iowa
    PETER WELCH, Vermont
            Subcommittee on Commerce, Trade, and Consumer Protection

                            BOBBY L. RUSH, Illinois
                                      Chairman
    JANICE D. SCHAKOWSKY, Illinois       CLIFF STEARNS, Florida
        Vice Chair                            Ranking Member
    JOHN P. SARBANES, Maryland           RALPH M. HALL, Texas
    BETTY SUTTON, Ohio                   ED WHITFIELD, Kentucky
    FRANK PALLONE, Jr., New Jersey       GEORGE RADANOVICH, California
    BART GORDON, Tennessee               JOSEPH R. PITTS, Pennsylvania
    BART STUPAK, Michigan                MARY BONO MACK, California
    GENE GREEN, Texas                    LEE TERRY, Nebraska
    CHARLES A. GONZALEZ, Texas           MIKE ROGERS, Michigan
    ANTHONY D. WEINER, New York          SUE WILKINS MYRICK, North Carolina
    JIM MATHESON, Utah                   MICHAEL C. BURGESS, Texas
    G.K. BUTTERFIELD, North Carolina
    JOHN BARROW, Georgia
    DORIS O. MATSUI, California
    KATHY CASTOR, Florida
    ZACHARY T. SPACE, Ohio
    BRUCE L. BRALEY, Iowa
    DIANA DeGETTE, Colorado
    JOHN D. DINGELL, Michigan (ex
        officio)

                                 C O N T E N T S

                                  ----------
                                                                       Page
    Hon. John Barrow, a Representative in Congress from the State of
      Georgia, opening statement.....................................     1
    Hon. Ed Whitfield, a Representative in Congress from the
      Commonwealth of Kentucky, opening statement....................     2
        Prepared statement...........................................     3
    Hon. Anthony D. Weiner, a Representative in Congress from the
      State of New York, opening statement...........................     4
    Hon. Robert E. Latta, a Representative in Congress from the State
      of Ohio, opening statement.....................................     5
    Hon. Steve Scalise, a Representative in Congress from the State
      of Louisiana, opening statement................................     5
    Hon. Kathy Castor, a Representative in Congress from the State of
      Florida, prepared statement....................................    89
    Hon. Joe Barton, a Representative in Congress from the State of
      Texas, prepared statement......................................    92

                                   Witnesses

    James A. Kohm, Associate Director, Division of Enforcement,
      Bureau of Consumer Protection, Federal Trade Commission........     9
        Prepared statement...........................................    11
    Charles Bell, Programs Director, Consumers Union.................    20
        Prepared statement...........................................    22
    Cecilia L. Gardner, Esq., President and CEO, Jewelers Vigilance
      Committee......................................................    35
        Prepared statement...........................................    37
    Michael Markarian, Chief Operating Officer, The Humane Society of
      the United States..............................................    46
        Prepared statement...........................................    49
        Answers to submitted questions...............................    96
    Keith Kaplan, Executive Director, Fur Information Council of
      America........................................................    75
        Prepared statement...........................................    77

                       Submitted Materials for the Record

    Letter of May 3, 2010, from Green Bullion Financial Services, LLC
      (Cash4Gold) to the Subcommittee................................    94
    Statement of the National Trappers Association...................    95

    H.R. 4501, GUARANTEE OF A LEGITIMATE DEAL ACT, AND H.R. 2480, TRUTH IN
                                FUR LABELING ACT

                                  ----------

                             THURSDAY, MAY 13, 2010

                  House of Representatives,
               Subcommittee on Commerce, Trade,
                               and Consumer Protection,
                              Committee on Energy and Commerce,
                                                        Washington, DC.
        The subcommittee met, pursuant to call, at 1:27 p.m., in
    Room 2322, Rayburn House Office Building, Hon. John Barrow
    [member of the subcommittee] presiding.
        Present: Representatives Weiner, Barrow, Whitfield,
    Scalise, and Latta.
        Also Present: Representative Moran of Virginia.
        Staff Present: Michelle Ash, Chief Counsel; Timothy
    Robinson, Counsel; Will Cusey, Special Assistant; Peter
    Ketcham-Colwill, Special Assistant; Sarah Fisher, Special
    Assistant; Daniel Hekier, Intern; Brian McCullough, Minority
    Senior Professional Staff; Shannon Weinberg, Minority Counsel;
    Sam Costello, Minority Legislative Assistant; and Robert
    Frisby, Minority FTC Detailee.

      OPENING STATEMENT OF HON. JOHN BARROW, A REPRESENTATIVE IN
                   CONGRESS FROM THE STATE OF GEORGIA

        Mr. Barrow [presiding]. The subcommittee on Commerce,
    Trade, and Consumer Protection will now come to order.
        Today the subcommittee will consider two bills, H.R. 4501,
    the Guarantee of a Legitimate Deal Act, introduced by
    Representative Weiner; and H.R. 2480, the Truth in Fur Labeling
    Act, introduced by Representatives Moran and Bono Mack.
        Before I move forward with the hearing, I would like to ask
    unanimous consent that the record be left open for 10
    legislative days so that members may be able to revise and
    extend their remarks. Without objection, Mr. Moran will sit in
    as a member of the subcommittee for purposes of this hearing.
        Today the subcommittee will hear testimony on two important
    bills to protect and inform consumers. The first bill we will
    consider is H.R. 4501, the Guarantee of a Legitimate Deal Act
    of 2010, introduced by Representative Weiner on January 21,
    2009, to acquire certain policies from businesses that purchase
    precious metals from consumers and solicit such transactions
    through an Internet Web site.
        The bill would require online purchasers of precious metals
    to wait until receiving an affirmative acceptance of the amount
    offered before melting down a consumer's jewelry. Online
    purchasers of precious metals will be required to promptly
    return jewelry to the consumer if the consumer declines the
    amount offered.
        In addition, the bill will set a standard for the amount of
    insurance provided by online purchasers of precious metals on
    shipments of jewelry or precious metals.
        With our second panel, we will consider H.R. 2480, the
    Truth in Fur Labeling Act, introduced by Representatives Moran
    and Bono Mack, on May 18, 2000. The bill would amend the Fur
    Products Labeling Act to require all fur apparel to have
    labels, not just those products valued at over $150. It would
    also instruct the Federal Trade Commission to update its fur
    products' name guide. H.R. 2480 is a bipartisan bill and
    currently has 165 cosponsors. A companion bill, S. 1076, had
    been introduced in the Senate.
        At this time I will recognize the ranking member, Mr.
    Whitfield, for 5 minutes to make an opening statement.

      OPENING STATEMENT OF HON. ED WHITFIELD, A REPRESENTATIVE IN
               CONGRESS FROM THE COMMONWEALTH OF KENTUCKY

        Mr. Whitfield. Mr. Chairman, thank you very much. And I
    want to thank the witnesses for being with us today.
        As has been said, this is a hearing on H.R. 2480, the Truth
    in Fur Labeling Act. I am one of the cosponsors of that
    legislation--and I believe there are 165 cosponsors as of
    today--introduced by Mr. Moran and Mrs. Bono Mack. This
    legislation would amend the Fur Products Labeling Act to
    provide the elimination of a current examination; also would
    call for a review by the Federal Trade Commission of its fur
    guidelines book and authority to revise such guidelines as
    appropriate. It also provides authority for the States to enact
    their own labeling requirements.
        I do have some concerns about the effectiveness of a
    Federal law if the States can require different labeling
    requirements because of the problems in interstate commerce
    that that sometimes causes, but I do look forward to the
    testimony from all the interested parties today.
        H.R. 4501, the Guarantee of a Legitimate Deal Act. The
    intent of this legislation is to protect consumers who sell
    precious metals to Internet-based purchasers. The most common
    complaints are usually regarding the amount of cash value the
    consumer receives and whether or not they have the ability to
    reject the offer and get their items back if they decide to
    cancel the transaction, and how easily is that accomplished?
        I also have a few questions about whether or not this
    legislation is broad enough and should it apply only to
    Internet-based precious metal purchasers or should it go beyond
    that?
        So I look forward to the testimony today on this
    legislation, and I yield back the balance of my time.
        Mr. Barrow. I thank the gentleman from Kentucky for
    yielding.
        [The prepared statement of Mr. Whitfield follows:]

        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Mr. Barrow. And the chair at this time recognizes Mr.
    Weiner of New York for the purpose of making an opening
    statement.

     OPENING STATEMENT OF HON. ANTHONY D. WEINER, A REPRESENTATIVE
                 IN CONGRESS FROM THE STATE OF NEW YORK

        Mr. Weiner. Thank you, Mr. Chairman. I appreciate the
    witnesses and I appreciate my colleagues for being here.
        Today we're going to have a hearing that was prompted by
    the toxic combination of two things; that is, the downturn in
    the economy and the ignorance of consumers about what their
    rights are and what they can expect reasonably when they are
    trying to sell their gold. It was prompted by complaints and
    concerns about the largest company in the industry, Cash4Gold.
        Cash4Gold pays about between 11 and 29 percent of the
    market price for gold, effectively ripping off consumers. Their
    return policies are deceptive and put all of the cards in the
    hands of the business and none in the hands of consumers.
        For example, if you don't accept an offer within 12 days,
    it is considered accepted, the gold is melted down and you lose
    your right. Obviously, consumers have no way to know when that
    12 days begins or ends.
        We also know that, for example, their return policies are
    also stacked against consumers in a way that can only be called
    fraudulent. A consumer that ensures their gold when it is
    mailed finds that it is not insured when it is returned. And
    the United States Postal Service recently conducted an
    investigation that found over 1,300 losses associated with
    Cash4Gold, and when they looked at each and every one of them,
    they concluded that there were no irregularities on the part of
    the Postal Service, leading them and me and the regular
    consumer to conclude that losing their customers' gold is part
    of their business model.
        Now, we invited the CEO of the company to come here, and he
    was told that he could not, because he was speaking at a
    conference in San Diego. In fact, a brief look at the Internet,
    which we do have access to here at the Energy and Commerce
    Committee, showed that he did not speak today; he spoke
    yesterday. A grand total of 76 different flight options were
    available to him to be able to get here for as little as $169.
        When asked if they would offer anyone else that would
    explain some of these policies that led to investigations in so
    many States and so many disgruntled consumers, they said no.
    There apparently is no one that can speak for that company,
    even though they have a public relations director who, until
    recently, was a federally registered lobbyist.
        Now, this is not just a random problem that we have. This
    is an orchestrated effort by some businesses to take advantage,
    as I said, of consumers. When asked about these complaints--and
    there have been many of them--the Better Business Bureau gives
    them a C-minus, which is not very good, Mr. Chairman. They
    explained that, Oh, these are just our competitors trying to
    cause problems.
        We're going to find out today that, in fact, it's Cash4Gold
    causing many problems for consumers.
        Thank you, Mr. Chairman.
        Mr. Barrow. I thank the gentleman.
        And at this time the chair would recognize the gentleman
    from Ohio for purposes of making an opening statement for 3
    minutes, Mr. Latta.

    OPENING STATEMENT OF HON. ROBERT E. LATTA, A REPRESENTATIVE IN
                    CONGRESS FROM THE STATE OF OHIO

        Mr. Latta. Thank you very much, Mr. Chairman and Ranking
    Member Whitfield. Thanks very much for holding this hearing
    today to discuss the issues surrounding the fraud with
    Internet-based companies that appraise and purchase jewelry
    directly from consumers through the mail.
        I also look forward to hearing from our witnesses regarding
    H.R. 2480, the Truth in Fur Labeling Act.
        As with any bills that pass Congress we need to make sure
    that our small businesses and consumers are protected, but we
    must also look at the unintended consequences and make the
    necessary corrections that might occur. The Federal Government
    cannot continue to force more bureaucratic mandates on
    businesses and consumers, further hindering economic growth and
    job creation.
        In regards to H.R. 2480, I have spoken with citizens from
    Ohio who have very great concerns about the fur labeling bill
    and the intentions behind it. You know, we all have to make
    sure that we're truthful in our labeling, but we also have to
    be careful about the consequences that may occur.
        Being from Ohio, we've recently passed what was called
    Issue 2 in 2009, which created the Ohio Livestock Care
    Standards Board, because agriculture is the number one
    contributor to Ohio's economy and Ohio farmers have cared for
    flocks and herds for generations and provided people across
    this country with safe quality and affordable food.
        If Issue 2 had not been passed in the State of Ohio, and
    again looking at what could happen as we look at these pieces
    of legislation, what could happen is the amendments that could
    have come up, if they had been adopted, someone--the State of
    California would have put great burden on the hardworking
    farmers across the State of Ohio and would have driven up costs
    for eggs, meat, and dairy products.
        So there are very many unintended consequences that can
    happen, and we have to take these into consideration when
    passing this legislation.
        With that, I look forward to hearing from both panels this
    afternoon, Mr. Chairman, and I yield back. Thank you very much.
        Mr. Barrow. The chair thanks the gentleman for yielding.
        At this time the chair will recognize, for purposes of
    making an opening statement for not more than 3 minutes, the
    gentleman from Louisiana, Mr. Scalise.

     OPENING STATEMENT OF HON. STEVE SCALISE, A REPRESENTATIVE IN
                  CONGRESS FROM THE STATE OF LOUISIANA

        Mr. Scalise. Thank you, Mr. Chairman. I appreciate your
    holding this hearing.
        Today we're examining two bills, H.R. 4501, the Guarantee
    of a Legitimate Deal Act; and H.R. 2480, the Truth in Fur
    Labeling Act.
        First, I would like to discuss the GOLD Act. I am sure
    we've all seen the advertisements and commercials for the mail-
    in-gold industry, which include assurances that consumers will
    get fairly compensated and will encounter a smooth transaction.
    Unfortunately, reports have shown that this is not always the
    case. Some consumers have been taken advantage of and have been
    outright deceived.
        The GOLD Act seeks to address these issues by regulating
    Internet-based companies that appraise and purchase jewelry
    directly from consumers through the mail. There are a few
    issues with the bill that I think need to be discussed today,
    such as the fact that this bill is only limited to online
    companies. I hope this and other issues can be sorted out
    through today's hearing.
        The next bill, the Truth in Fur Labeling Act, seeks to
    improve the accuracy of fur labeling. Current law requires that
    fur product labels include certain information such as the name
    of the animal that produced the fur, whether the product is
    real fur, and the country of origin of any imported fur used in
    the product.
        Unfortunately, we've seen a few bad actors in the industry
    that have not abided by these rules. I believe that consumers
    are entitled to accurate and meaningful information regarding
    the fur products they purchase, and our subcommittee must
    ensure that transparency and accuracy exist in the marketplace.
        Mr. Chairman, I look forward to hearing from our witnesses
    on these bills, particularly on whether these bills are needed
    for the goals both to be achieved, or whether the FTC has the
    necessary authority to implement their provisions.
        This subcommittee must continue to ensure that consumers
    are protected, which means that we must debate and pass quality
    legislation. But I believe that we must also place our focus on
    the greater issues at hand. As our unemployment rate hovers
    near 10 percent and our national debt continues to grow, I
    think most Americans would much rather us focus this
    committee's efforts on trying to find ways to improve the job
    outlook in the private sector; and, instead, all they see is
    more bad policies that focus on growing the Federal workforce
    at the expense of our small businesses.
        While government jobs and government spending continue to
    grow exponentially, families and small businesses in our
    districts are cutting back. While this Congress refuses to pass
    a balanced budget or, for that matter, any budget, American
    families are having to tighten their belts and make tough
    decisions on how to keep their household budgets fiscally
    responsible and manageable. I hope we finally start focusing on
    those problems.
        Thank you and I yield back.
        Mr. Barrow. I thank the gentleman for yielding.
        Mr. Barrow. We now move on to the introduction of the
    witnesses for our first panel, but before I make the
    introductions I would like to thank all of the witnesses for
    taking time out of their busy schedules to appear before us
    today.
        First on my left is seated Mr. James Kohm, the Associate
    Director of the Division of Enforcement with the Bureau of
    Consumer Protection at the Federal Trade Commission. Next is
    Mr. Charles Bell, who is Programs Director at the Consumers
    Union. And on my right is Ms. Cecilia Gardner, who is the
    President and CEO of the Jewelers Vigilance Committee.
        It's the practice of this subcommittee to swear in all
    witnesses. So I'd ask you to please stand and raise your right
    hand.
        [Witnesses sworn.]
        Mr. Barrow. Please let the record reflect that the
    witnesses have each answered in the affirmative.

     STATEMENTS OF JAMES A. KOHM, ASSOCIATE DIRECTOR, DIVISION OF
       ENFORCEMENT, BUREAU OF CONSUMER PROTECTION, FEDERAL TRADE
     COMMISSION; CHARLES BELL, PROGRAMS DIRECTOR, CONSUMERS UNION;
    CECILIA L. GARDNER, ESQ., PRESIDENT AND CEO, JEWELERS VIGILANCE
                               COMMITTEE

        Mr. Barrow. Mr. Kohm, you're now recognized for 5 minutes
    for the purposes of making an opening statement.

                       STATEMENT OF JAMES A. KOHM

        Mr. Kohm. Thank you very much. Chairman Barrow, Ranking
    Member Whitfield, and members of the committee, my names is
    James Kohm. I am the Director of the Division----
        Mr. Barrow. Mr. Kohm, there's a microphone in front of you
    and what I'd ask you to do is bring it close to you. You can
    move it around, manipulate it so it comes closer. It's a
    directional mike. And make sure it's turned on.
        Mr. Kohm. OK. It's on. Thank you. I apologize.
        Chairman Barrow, Ranking Member Whitfield, and members of
    the committee, my name is James Kohm. I am the Associate
    Director of the Division of Enforcement in the Federal Federal
    Trade Commission's Bureau of Consumer Protection. Let me begin
    by noting that the views expressed in my written testimony
    represent those of the Commission, while my oral testimony and
    responses to your questions reflect only my own views and not
    necessarily those of the Commission or any particular
    commissioner.
        Unfortunately, an increasing number of fraudulent operators
    have recently sought to take advantage of the economic downturn
    by preying on consumers in economic distress. The Commission is
    meeting this challenge by spearheading multiple law enforcement
    sweeps against operations that prey on financially strapped
    consumers.
        Most recently, the Federal Trade Commission announced
    Operation Bottom Dollar, a multiagency crackdown on
    organizations that fleeced unemployed consumers by taking their
    money in exchange for jobs or job placement opportunities that
    simply did not exist.
        Additionally, since October of 2008, the Commission has led
    four other law enforcement sweeps focused on protecting
    consumers from foreclosure rescue scams, job opportunity scams,
    deceptive get-rich-quick schemes, bogus government grant
    schemes, phony debt reduction service schemes, and credit
    repair scams.
        Today I appreciate the opportunity to discuss H.R. 4501,
    the Guarantee of a Legitimate Deal Act, a bill that also would
    protect consumers from unscrupulous marketers during this
    economic downturn. Most of the Commission's complaints about
    ``cash for gold'' companies relate to violations of the do-not-
    call rule. However, the Commission has received a growing
    number of complaints from consumers who send their gold jewelry
    or other items to companies and then were dissatisfied with the
    payments they received in exchange. When the consumers called
    to get their gold back, the companies told them that they'd
    already melted the gold and there was nothing they could do for
    them.
        The Commission has also received several complaints about
    lost jewelry that was returned without adequate insurance.
        The legislation before the committee would address both
    these concerns. Specifically, the bill would require online
    purchasers to afford consumers a right to consider and reject a
    specific monetary offer before a merchant melts or otherwise
    liquidates their precious metals, and would require purchasers
    to adequately insure items they ship to consumers who decline
    their offers.
        Additionally, the legislation gives the Commission civil
    penalty authority to ensure that the FTC can effectively
    enforce the law.
        The Commission, however, has three suggested corrections
    that should help effectuate the purpose of the legislation:
        First, the bill is currently limited to Internet sales. The
    same practice that led to the legislation, however, could be
    accomplished through telemarketing, direct mail, or television
    or radio ads. The committee therefore may want to consider not
    limiting the coverage to a single marketing avenue.
        Second, if the committee decides to limit the bill's
    coverage to Internet sales, we would suggest a slight amendment
    to ensure that all such sales are actually covered.
    Specifically, the bill covers those who maintain an Internet
    Web site. An unscrupulous marketer may argue that it's not
    covered because a third-party Web hosting company maintains
    their site. The committee can resolve this issue by changing
    the ``maintain'' language in the manner outlined in the
    Commission's written testimony.
        Finally, the Commission recommends that the committee
    modify the bill to clarify that purchasers of precious metals
    must make a firm offer to purchase the items for a specific
    price. Otherwise an unscrupulous marketer could claim that its
    vague offer to pay a good price or the best price is accepted
    when consumers ship their items, thereby avoiding the intent of
    the law altogether.
        Thank you for providing the Commission an opportunity to
    appear before the committee today to address this important
    issue. I will be happy to answer any of your questions.
        Mr. Barrow. Thank you Mr. Kohm.
        [The prepared statement of Mr. Kohm follows:]

        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Mr. Barrow Mr. Bell, you're now recognized for purposes of
    making an opening statement.

                       STATEMENT OF CHARLES BELL

        Mr. Bell. Chairman Barrow, Ranking Member Whitfield and
    members of the committee, my name is Charles Bell. I am
    Programs Director for Consumers Union, based in Yonkers, New
    York. Thank you so much for the opportunity to testify today on
    ways to protect consumers who respond to Internet and TV offers
    to exchange precious metals for cash payments through the mail.
    We commend you for holding this hearing to focus attention on
    ways to protect consumers and encourage a safer marketplace.
        Consumers Union is the independent nonprofit publisher of
    Consumer Reports, ConsumerReports.org, and the Consumerist.com
    blog, which empower consumers by informing and entertaining
    them about the top consumer issues of the day. And as part of
    our work, we regularly research and report on deceptive
    practices and misleading practices that affect consumers. We
    report on scams and frauds, both to alert consumers so they can
    protect themselves, and to alert law enforcement agencies and
    policymakers so they take action to directly curtail and stop
    these unethical, deceptive, or fraudulent practices.
        Over the last several years, Consumer Reports has
    researched and reported about consumer problems related to cash
    for precious metals services which we think are worthy of your
    attention by your subcommittee.
        Beginning in 2008, the Consumerist.com blog published a
    series of articles and blog posts regarding cash for precious
    metals services, including an in-depth investigative article
    entitled ``The Article that Cash4Gold Doesn't Want You to
    Read,'' on September 2, 2009, which is attached to our
    testimony. And through research and investigative reporting,
    the Consumerist uncovered a range of questionable practices
    that raised concerns that consumers are being misled or
    shortchanged by such services, many of which are heavily
    promoted through TV ads and Internet.
        Our overriding concern is that when financial circumstances
    lead consumers to make the difficult decision to part with
    their gold, silver, or other precious metals, items that may
    have both economic and sentimental value, they should be
    guaranteed a fair process.
        A 2009 study by Consumer Reports, which we discuss in our
    testimony, found that cash for precious metals services paid
    between 11 percent and 29 percent of the day's market price for
    gold, while local jewelers and pawn shops offered significantly
    higher amounts. Based upon our research and the negative
    experiences of a significant number of consumers, we believe
    that additional consumer protections are very much needed to
    create fair rules of the road for online cash-for-metal
    services.
        We generally do not recommend that consumers use such
    heavily advertised services because the high expenses that
    these companies spend for marketing make it unlikely that
    consumers will receive fair economic value for their jewelry or
    other items, and in general we think consumers would be better
    off to take their jewelry or other items to several local
    jewelers or pawn shops for appraisal and to solicit competing
    offers from reputable companies or third-party buyers.
        At the same time, however, we believe that consumers who do
    decide to use online services need to have a fair chance to
    negotiate a better offer and to promptly obtain the safe return
    of their gold or precious metal, with appropriate insurance if
    they decline that offer.
        And so we would emphasize that consumers who choose to use
    heavily advertised services will still be at risk of receiving
    lower prices, but at least they will have a fair chance to
    protect their interests and obtain a favorable offer within a
    prescribed period after submitting the items for appraisal.
        H.R. 4501, introduced by Representative Anthony Weiner,
    contains strong pro-consumer provisions that would strengthen
    consumer rights IN online cash-for-metals transactions and
    create fair rules of the road to prevent understandings and
    complaints. The bill would make it a crime to melt or
    permanently destroy any proffered items of jewelry or precious
    metal before the purchaser has received an affirmative
    acceptance of the offer from the consumer.
        H.R. 4501 would also require a fair return period for
    consumers who submit precious metals for sale through the mail
    or other delivery services. If consumers decide to reject the
    offered price, they should be guaranteed the swift return of
    their jewelry and proper insurance during shipment.
        And as discussed, H.R. 4501 would also give the FTC strong
    enforcement powers to ensure that these companies act favorably
    and do not engage in deceptive marketing and sales practices.
    These commonsense protections are consistent with both common
    sense and what customers have a right to expect from this
    relatively unique type of business.
        As mentioned above, the remote, relatively anonymous nature
    of the online mail-in cash-for-metals transaction introduces
    new types of risks or uncertainty for the consumer. H.R. 4501
    creates fair rules of the road to help address and minimize
    these risks and clarify the channels of communication so both
    the consumer and the purchaser have appropriate rules and
    protocols to follow to minimize bad outcomes.
        For these reasons Consumers Union strongly supports H.R.
    4501 and urges its swift passage by the Congress.
        Thank you very much for the opportunity to testify here
    today about this critically important issue, and we thank you
    for your efforts to protect consumers in these tough economic
    times and look forward to working with you as you move forward
    in addressing these issues.
        Mr. Barrow. Thank you, Mr. Bell.
        [The prepared statement of Mr. Bell follows:]

        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Mr. Barrow. The chair now recognizes Ms. Gardner for up to
    5 minutes for purposes of making an opening statement.

                    STATEMENT OF CECILIA L. GARDNER

        Ms. Gardner. Thank you, Mr. Chairman, and thank you to both
    yourself and to Ranking Member Whitfield for inviting me here
    today. It's a pleasure to be here with you.
        My name is Cecilia Gardner and I am the President, CEO and
    General Counsel of the Jewelers Vigilance Committee, known as
    the JVC, not the electronics company. I am here today
    representing the organization and its members. It is a not-for-
    profit trade association in the national jewelry industry.
        We were formed in 1912 to provide self-regulation within
    the industry and to facilitate compliance with the laws that
    affect the jewelry trade through supplying information on our
    Web site, presenting seminars, publications, newsletters,
    articles and trade publications; and we also serve the industry
    by receiving complaints regarding jewelry transactions and
    mediating disputes between consumers and jewelers that arise
    and--or between businesses.
        Our members include retailers, suppliers, manufacturers,
    wholesalers and gold-buying companies. I raise this because I
    want to remind the committee--the subcommittee--that this is an
    industry of small business. These are family--for the most
    part, family-owned small businesses who of late have been
    struggling with the economic downturn.
        You can imagine how it has impacted the economic life of a
    retail jewelry store. Jewelers at all levels of the industry
    have been hurt by the economic crisis of the last years, and
    that same crisis has driven up the cost of precious metals,
    creating a consumer interest in selling gold primarily in the
    form of unwanted jewelry.
        Many companies have weathered the drop in jewelry demand
    and managed to stay in business by buying gold from their
    customers and then selling it to refiners. New companies and
    business models have arisen, including gold-buying parties in
    homes and Web sites, that invite consumers to mail in their
    gold in exchange for money. For the most part, the purchase and
    sale of gold has been a benefit both to the industry and to
    consumers alike.
        We have had in our organization since 2008 a special
    category of membership for gold buyers, and we advise the
    industry on the laws and regulations that govern the practice
    of buying gold from consumers. This includes anti-money
    laundering requirements pursuant to the USA PATRIOT Act, as
    well as State and local laws regarding permits for second-hand
    dealers, and, finally, regulations that address antifencing
    laws which vary from jurisdiction to jurisdiction, but
    generally require that gold buyers obtain identification from
    sellers, keep purchased gold on their premises for a specific
    length of time, and maintain accurate records.
        We have received various complaints regarding the function
    of gold, the activity of gold buying. And the most frequent
    complaint that we get is that the amount of money paid for the
    gold is insufficient. It's too low. Since these prices and the
    offer is not regulated, it's a free, open market, there is
    really very little we can do if the complaint just centers
    around the price that was paid for the gold.
        Another complaint that we often receive, frankly, is that
    consumers mail in the gold to a company that they found online,
    and then the company simply disappears. This is an outright
    theft, a fraud, and we very often turn those complaints over to
    law enforcement for action.
        The JVC supports the goal of appropriate consumer
    protection in all aspects of the jewelry industry, and our
    interests are completely aligned with any effort to maintain a
    fair marketplace and to prevent consumer exploitation.
        To that end, we have reviewed the Guarantee of a Legitimate
    Deal Act of 2009, and our members fully support it. I also
    heard here today some suggested broadening of the coverage of
    the bill and we would agree--we would support the broadening in
    the sense that it would apply to purchasers who receive mailed-
    in gold.
        I also should note for the committee that there are places
    in the United States where there is simply no alternative to--
    to mailing in the gold. There are places in the United States
    where there just is no easily accessible bricks-and-mortar pawn
    shop or jewelry store or refiner that is willing to purchase
    the gold from a consumer. So the mail-in function is something
    that probably will still find a market in the United States.
        Consumers should be presented with a good-faith offer and
    not a fait accompli in the nature of a check for jewelry that
    has already been destroyed. All of the provisions of the bill
    that we read, the legislation that we see in this bill, seems
    equally fair and sensible. Consumers should be ensured that
    they are not going to be delayed in their efforts to further
    shop their jewelry or harmed by inadequate insurance on a lost
    return, and this legislation requires that care be taken in the
    online purchase of gold, without creating an undue burden on
    the buyer. One of our main----
        Mr. Barrow. Ms. Gardner, in the interest of the time of the
    other witnesses and the committee, can you please bring your
    statement to a close so we can move on to the examination of--
    --
        Ms. Gardner. I will. I just want to mention that many of
    our members who buy gold online or in the mail often wait until
    their check is negotiated before they melt the gold, therefore
    protecting the consumer in that way.
        So thank you for the opportunity and I am sorry to have
    gone over my time.
        Mr. Barrow. Not at all. Thank you, Ms. Gardner.
        [The prepared statement of Ms. Gardner follows:]

        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Mr. Barrow. The committee now proceeds to an examination of
    the witnesses by members of the committee. The chair recognizes
    himself for 5 minutes for purposes of questioning the
    witnesses. In the interest of a more thorough and sifting
    examination of all of the issues raised by the legislation, the
    chair is happy to yield his 5 minutes to the sponsor and the
    author of this legislation, Mr. Weiner. Mr. Weiner, you're
    recognized for 5 minutes.
        Mr. Weiner. Thank you, Mr. Chairman. I thank all the
    witnesses for their testimony, particularly Ms. Gardner, with
    whom I have some history. We got to know each other some years
    ago as our paths crossed in political life, and I am a big fan
    of her husband as well, and I thank her for her service to the
    citizens of New York.
        Let me understand a little bit about the role that you're
    here in, Ms. Gardner. The Jewelers Vigilant Committee, does it
    include as a member--does it have as a member Green Bullion,
    the company Green Bullion, or Cash4Gold, the business--the
    active name of Cash4Gold, which is Green Bullion? Is that a
    member organization of yours?
        Ms. Gardner. Cash4Gold is in fact a member of the JVC, yes.
        Mr. Weiner. What does it take to be kicked out? Is there a
    standard--are there standards of conduct that are insisted
    upon? I mean, I see some of your members are Movado Group and
    GE Money and Patek Phillipe and Rolex, and in there is
    Cash4Gold, a company that the post office says is stealing
    people's stuff; that a review of the witnesses to your right
    say is giving people as little as 11 percent of the market
    price for gold. Is there a code of conduct that members of JVC
    agree to comply with?
        Ms. Gardner. Yes, there is. There is a 4-page document of
    due process procedural steps in order to institute and succeed
    to remove a member from the rolls of membership at the JVC.
        Mr. Weiner. If you would provide the committee with that
    document----
        Ms. Gardner. Certainly.
        Mr. Weiner [continuing]. It would be very helpful to us.
        Can I ask, in your experience in representing the
    organization as its general counsel, has there been another--is
    there another entity that has 300-some-odd complaints against
    it from the Better Business Bureau?
        Ms. Gardner. Yes.
        Mr. Weiner. Could you tell me which ones?
        Ms. Gardner. No.
        Mr. Weiner. For the purpose of future hearings, please
    provide that for me.
        Are there other members of your organization that have lost
    their accreditation of the Better Business Bureau and told they
    can't use their indicia in their advertising anymore?
        Ms. Gardner. I am not aware of that.
        Mr. Weiner. Are there any other organizations, to your
    knowledge, that are members of your organization that have
    behaved in the general way that Cash4Gold has, melting down
    gold or with an arbitrary amount of time--you said in your
    testimony, most of your members don't do that. Do you know of
    others that do? Is that a common practice in your industry to
    melt down gold before there has been an affirmative acceptance
    of an offer by a customer?
        Ms. Gardner. In the industry we have not received very many
    complaints of that nature. In fact, we haven't received any.
        Mr. Weiner. So Cash4Gold would be the only one?
        Ms. Gardner. To be honest, Congressman, we haven't received
    any complaints about Cash4Gold on that basis.
        Mr. Weiner. On what basis have you received the most
    complaints about Cash4Gold?
        Ms. Gardner. That they don't pay very much for the gold.
        Mr. Weiner. And do your other members who are--many of whom
    I see don't engage in mail order. They are actual physical
    places where you can go and take your gold. If you were going
    to give advice to consumers on where they can get the best
    service, where they can get the most accurate reflection, would
    you recommend--would your organization recommend that it's
    either/or; that you get an equal value if you mail it in than
    if you bring it into a pawn shop or bring it into a jeweler?
        Ms. Gardner. We don't recommend to consumers anything other
    than go to a reputable jeweler. We--we recognize that, given
    the complex marketplace for gold in the United States, that
    there are outlets where a consumer can get better prices than
    if they mail it into a mail-in buyer of gold. But not everybody
    has access to those better outlets. Certainly a refiner, a
    direct refiner, would give you a better deal.
        Mr. Weiner. When you have access to a deal or not, when you
    have access to alternatives or not, sometimes, Ms. Gardner, a
    bad deal and a rip-off is just a rip-off? Like sometimes if
    it's the only place you choose or you have five other options
    and you choose that one, a rip-off is a rip-off.
        When someone is getting 11 percent, which is what Consumer
    Reports found in its research, it's hard to interpret that
    absence of choice being a justification for a rip-off like
    that, wouldn't you agree?
        Ms. Gardner. I don't know how you're defining ``rip-off.''
    I mean----
        Mr. Weiner. Well, let's start with 11 percent. Is that a
    rip-off, 11 percent----
        Ms. Gardner. It's a lousy deal.
        Mr. Weiner [continuing]. Eleven percent of the day's market
    price for gold, a lousy deal----
        Ms. Gardner. That is a lousy offer.
        Mr. Weiner [continuing]. Or as we might say in Brooklyn, a
    rip-off. So the question is----
        Ms. Gardner. I am not from Brooklyn.
        Mr. Weiner. We can't have everything, Ms. Gardner. But the
    point is----
        Ms. Gardner. I lived there for a while.
        Mr. Weiner. But the point is the same; is that whether or
    not there are many choices, no choices, one choice, a rip-off
    is a rip-off. And Cash4Gold is engaged in systematic ripping
    off of consumers. And what troubles me is your organization
    seems to be giving them a cloak of legitimacy. And I am going
    to take a look at the document that you suggested that you
    have, to see if they--if they don't qualify for being kicked
    out, I don't know who does.
        Thank you, Mr. Chairman.
        Mr. Barrow. I thank the gentleman for yielding.
        I am pleased to recognize the gentleman from Kentucky for
    purposes of questioning for up to 5 minutes. Mr. Whitfield.
        Mr. Whitfield. Thank you, Mr. Chairman.
        Thank you all for your testimony. It's my understanding
    that all of you support the concept of this legislation; is
    that correct?
        Mr. Kohm. That's correct.
        Mr. Bell. Yes, that's correct.
        Ms. Gardner. Yes, that's correct.
        Mr. Whitfield. OK. And all of you would agree that it could
    be improved by, one, making it a little bit more broad than
    just an entity that hosts a Web site in order to take care of
    direct mail and marketing and so forth; is that correct?
        Mr. Kohm. That's correct for the FTC, Congressman.
        Mr. Bell. Yes. We would support the measures discussed by
    Mr. Kohm as well. We think that would be a good enlargement of
    the scope of the legislation.
        Ms. Gardner. I have not discussed this particular concept
    of broadening, since I've only heard it here today in this
    room. You know, obviously I speak for the board of the JVC and
    its members. I would have to go back, but I don't see why that
    wouldn't make sense.
        Mr. Whitfield. Well, I think all of us agree that this is
    good legislation, and working with Mr. Weiner to make it even
    more effective, I am sure he would be supportive of that as
    well.
        And all of you also want to require a step that the seller
    would have to affirm the offer from the purchaser before the
    meltdown; is that correct?
        Mr. Kohm. That's correct. We think that there should be an
    offer for a specific price that's accepted before there's any
    meltdown.
        Mr. Whitfield. And all of you agree with that?
        Mr. Bell. Yes.
        Mr. Whitfield. And then all of you do believe that the
    insurance issue is something that needs to be addressed; if the
    material is mailed back that there must be adequate insurance
    in case it's lost?
        Mr. Kohm. That's correct.
        Mr. Bell. Yes.
        Mr. Whitfield. Now, do we--I am sorry, Ms. Gardner.
        Ms. Gardner. Yes.
        Mr. Whitfield. OK. Do we need to be concerned about the
    definition of ``precious metals,'' or does that need to be
    addressed?
        Mr. Kohm. Congressman, that doesn't seem to us to need to
    be addressed. We'd have to see how that played out in the
    marketplace.
        Mr. Whitfield. Well, I want to thank you. You all have
    given us some very good suggestions and I think it's a good
    piece of legislation.
        I yield back the balance of my time.
        Mr. Barrow. I thank the gentleman for yielding.
        The chair now recognizes Mr. Weiner of New York for
    purposes of asking his allotted 5 minutes of questioning.
        Mr. Weiner. Thank you, Mr. Chairman. I don't think I'll use
    the full 5 minutes. The fact is most of the questions that
    remain to be addressed should be addressed to Cash4Gold
    directly. They've made a decision not to attend this hearing.
    They've made a decision not to attend this hearing under the
    pretense of something better to do. And I probably, if I were
    they, would choose to avoid this hearing as well, because I
    think it's further attention being called to the fact that the
    way they function is truly exploitive of consumers.
        I think that we are in a circular kind of situation that
    consumers can find themselves caught up in. First, you've got
    many advertisements tied to many news reports that now this is
    the moment to buy gold, gold is going up. They then--those news
    reports get mated with TV commercials very often, right after
    those same news reports that say, find your gold, send it to
    us, and we will give you a good price. Once they do that, the
    experience of the consumer goes downhill from there.
        Imagine that. They are finding that in large numbers, the
    gold is being--they're getting paltry offers, and then if they
    have the wherewithal to ask for that gold back, they're
    finding, lo and behold, that it's already been melted down
    because the 12-day limit that they had started ticking the
    moment that their gold arrived, or the time it was mailed. No
    one really knows. It's not very clear from the literature.
        Then if they're lucky enough to have reached someone and
    they said, OK, we will send it back to you, shockingly we're
    finding that the Postal Service is getting all kinds of
    complaints about lost gold coming from Cash4Gold, 1,300 loss
    claims, so many so that the Postal Service does an
    investigation and finds that--they draw the conclusion that
    Cash4Gold didn't send it back. It didn't get lost. They just
    chose not to. They find if they insure it sending it to
    Cash4Gold, they happen to not insure it coming back, so then
    suddenly the consumer is out.
        When asked about these things, their defenders, and Ms.
    Gardner is among them, say, Look, there's lots of different
    ways to deal with gold. We provide something that others don't.
    What they provide is a rip-off.
        That is why I hope that we have an opportunity to have
    Cash4Gold come back and answer some of these questions. I have
    a feeling that barring a subpoena, which is probably something
    they are going to see visited upon them in Florida and other
    States around the country that are beginning these
    investigations, they probably will choose not to.
        They operate in that dark shadow, that corner of our
    economy where people prey upon the most vulnerable. And I think
    that after this hearing, I believe that some of the legitimate
    members of the Jewelers Vigilance Committee will say, You know
    what? We're tired of mopping up for these guys. These guys are
    an embarrassment. These guys are not doing a service for
    consumers. They're using our organization to help cleanse their
    good name, and our skillful, talented witness, who has a
    history of consumer protection, to help defend what essentially
    is indefensible.
        So we're going to pass this. We're going to try to take the
    counsel of Mr. Whitfield and others and some of the witnesses
    and broaden it further, and we're going to continue the
    investigation. But we're not going to allow a bad economy,
    people desperate for a few extra dollars, to think that if they
    put their jewelry in an envelope, it's not effectively the same
    as putting money in the envelope and just mailing it away.
        I want to thank the chairman. I want to thank this
    committee for holding this hearing. I have received assurances
    from the chairman of the full committee and the chairman of the
    subcommittee that we don't take kindly to the idea of witnesses
    pretending to be hiding somewhere rather than testifying before
    this committee, and so I am sure we will be revisiting it.
    Thank you.
        Mr. Barrow. I thank the gentleman for yielding. There being
    no other members of the committee present for purposes of
    questioning the members of the first panel, the chair will
    excuse the members of the first panel with the thanks of the
    chair.
        Now I would like to call up the witnesses for our second
    panel.
        All right, I think we're ready to proceed with the
    witnesses for the second panel.
        Since Mr. Kohm has been kind enough to stay with us, I will
    move on to introduce the rest of the members of this panel.
    Seated to Mr. Kohm's left is Mr. Michael Markarian, the Chief
    Operating Officer of the Humane Society of the United States.
    On Mr. Markarian's left is Mr. Keith Kaplan, who is Executive
    Director of the Fur Information Council of America.
        As stated earlier, it's the practice of this subcommittee
    to swear all witnesses. Since Mr. Kohm was sworn in on the
    first panel, he's still under oath and there's no need for him
    to be sworn again. So I will ask Mr. Markarian and Mr. Kaplan
    to please rise and raise your right hand.
        [Witnesses sworn.]
        Mr. Barrow. The record will reflect that each of the
    witnesses has answered in the affirmative.

     STATEMENTS OF JAMES A. KOHM, ASSOCIATE DIRECTOR, DIVISION OF
       ENFORCEMENT, BUREAU OF CONSUMER PROTECTION, FEDERAL TRADE
      COMMISSION; MICHAEL MARKARIAN, CHIEF OPERATING OFFICER, THE
        HUMANE SOCIETY OF THE UNITED STATES; AND KEITH KAPLAN,
         EXECUTIVE DIRECTOR, FUR INFORMATION COUNCIL OF AMERICA

        Mr. Barrow. Mr. Kohm, you're now recognized for 5 minutes
    for purposes of making an opening statement.
        Mr. Kohm. Thank you, Chairman Barrow, Ranking Member
    Whitfield, and members of the committee. For the record, my
    name is----
        Mr. Barrow. Mr. Kohm, if you'll excuse me, as a courtesy to
    a member who is sitting by unanimous consent today, I would
    like to give Mr. Moran the opportunity to make an opening
    statement, and then I will recognize you for the purposes of
    making your opening statement and the other witnesses, if
    that's OK with you.
        Mr. Kohm. Absolutely.
        Mr. Barrow. Thank you. The gentleman from Virginia is
    recognized for purposes of making an opening statement not
    longer than 5 minutes. Mr. Moran.
        Mr. Moran of Virginia. Thank you, Mr. Chairman. I thank Mr.
    Whitfield as well, the ranking member on this subcommittee. I
    appreciate the opportunity to make an opening statement on a
    bill that I think is well deserving of action by this
    subcommittee.
        The Fur Products Labeling Act, enacted in 1951, required
    labels of fur products that indicated the name of the animal
    whose fur was being used and the country of origin. The law,
    however, allowed for the exemption of products containing a de
    minimis amount of fur. Since 1998 the definition of ``de
    minimis'' has been set by the Federal Trade Commission at $150.
        In today's marketplace, with fur trim products rivaling
    full-length fur garments in total sales, this exemption--in
    fact, this interpretation exempts a significant percentage of
    fur products. More than one out of every eight fur products
    that are purchased create a situation where the consumer must
    rely exclusively on information provided by sales staff or
    product displays, neither of which may necessarily be reliable
    so as to guide the consumer's purchasing decision.
        This lack of clear and consistent information poses serious
    problems for consumers who may have allergies to fur,
    particularly to fur collars, which is oftentimes where that fur
    is located on a garment. They may have ethical objections to
    fur, or they may have concern about the animals, such as dogs
    and cats that supply that fur.
        The Truth in Fur Labeling Act that we are bringing up
    before the subcommittee today would correct this problem by
    removing the de minimis exemption and requiring labels on all
    fur products, regardless of value, Mr. Chairman.
        Now, let me head off any anticipated criticism. This is not
    a solution in search of a problem. That's oftentimes a
    criticism that is labeled at--that is thrown at much
    legislation. This is not the case. The Humane Society of the
    United States, as we know, a very credible national
    organization, as well as a number of other national
    organizations and media outlets, have conducted investigations
    documenting the confusion that has been created by retail
    personnel and consumers who buy fur products that lack labels.
        The Humane Society, in fact, have found that in a number of
    stores, 100 percent of supposedly faux fur was actually animal
    fur. Too often retailers don't know what they're selling and
    consumers don't know what they're buying, and that's what needs
    to change.
        I am pleased that there is a representative of the Fur
    Manufacturers and Retailers here to testify today. I have read
    your testimony and I appreciate the fact that the Fur
    Information Council of America supports the underlying purpose
    of this bill: to ensure consumers have the requisite knowledge
    to make informed choices consistent with their medical beliefs
    and their ethical beliefs as well. I should say, their medical
    needs and their ethical beliefs.
        I understand that FICA does have some concerns about
    section 4 that simply restates current policy that currently
    allows States to enact fur-labeling requirements in addition to
    the FTC standards. I think those concerns are, in fact,
    legitimate; and I'd be glad to work with FICA and the committee
    to address this provision in order to ensure that the larger
    public interest is served, because it is not intrinsic to the
    purpose of the legislation. In fact, it simply restates current
    policy, as I say.
        More than anything else, this is a consumer protection
    issue. I think the testimony will show that the right policy
    for consumers is to remove the small-value exemption and
    require all products containing fur to carry an accurate label.
        Again I want to thank you, Mr. Chairman, and the entire
    subcommittee for deciding to hold this hearing, and I look
    forward to working with all of you to advance what I know you
    will find to be commonsense legislation that I hope we can
    advance as expeditiously as possible. And I thank you very much
    for your indulgence, Mr. Chairman. Thank you.
        Mr. Barrow. On the contrary, I thank the gentleman from
    Virginia for his opening statement and I thank him for his
    leadership on this issue.
        Mr. Kohm, it is again your turn to make an opening
    statement, this time on the Truth in Fur Labeling Act.

                       STATEMENT OF JAMES A. KOHM

        Mr. Kohm. Thank you, Chairman Barrow, Ranking Member
    Whitfield, and members of the committee. For the record again,
    my name is James Kohm. I am the Associate Director of the
    Division of Enforcement in the Federal Trade Commission's
    Bureau of Consumer Protection.
        Let me again note that the views expressed in my written
    testimony represent those of the Commission, while my oral
    testimony and responses to your questions reflect only my own
    views and are not necessarily those of the Commission or any
    particular commissioner.
        I appreciate the opportunity today to discuss H.R. 2480,
    which would effectively require the Commission to rescind the
    fur rules exemption for garments with relatively small fur
    value. Without this de minimis exemption, manufacturers will be
    required to label all fur products, regardless of the fur's
    value, with the animal name, country of origin, fur treatment,
    a registered identification number, as well as other
    information that is material to consumers' purchasing
    decisions.
        The Commission supports this legislation based on changes
    in the marketplace. In 1952 the Commission exercised its
    authority under the Fur Products Labeling Act to exempt
    products containing a relatively small value of fur. At that
    time, fur garments generally represented a large investment,
    and consumers were primarily concerned that they received the
    value that they were paying for; in other words, that they
    actually received the type and quality of fur they purchased.
        However, when the value--when the value of the fur was
    small, for example, low-cost fur used in small quantities for
    trim, consumers' need for this information was greatly reduced.
    The Commission periodically reviews all its rules and guides to
    ensure that they remain relevant and appropriate in a changing
    marketplace.
        The fur rules last underwent such a review in 1998. At that
    time, the Fur Information Council of America submitted the only
    comment regarding the de minimis exemption, seeking to increase
    the amount of the exemption based on inflation. No other
    commenters suggested--no commenters suggested repealing the
    exemption at that time.
        The marketplace, however, now appears to have changed
    significantly. Many consumers remain concerned about the
    quality of the fur products they purchase, but there appears to
    be an increasing number of consumers who, for a variety of
    reasons, would prefer not to purchase real fur, or who object
    to certain types of fur even in small amounts.
        Accurate labeling of all garments containing fur,
    regardless of the fur's value, would help these consumers make
    informed purchasing decisions. Given this change, the
    Commission plans to explore rescinding its de minimis exemption
    for fur labeling during its currently scheduled 2011 fur rule
    review.
        However, the FTC could only effectuate such a change after
    establishing such a record and weighing the cost and benefits
    of eliminating the exemption. If enacted, H.R. 2480 would
    remove the Commission's authority to promulgate a de minimis
    exemption, thereby providing the most efficient and expeditious
    means of helping those consumers who wish to avoid fur products
    or certain types of fur, while maintaining the labeling
    framework for those consumers concerned about the type and
    value of their fur purchases.
        It goes without saying that if this legislation is enacted,
    the Commission would move quickly to revise the fur rules to
    comport with the new legal framework.
        Thank you for providing the Commission an opportunity to
    appear before the committee today to discuss the Truth in Fur
    Labeling Act. I will be happy to answer any of your questions.
        Mr. Barrow. Thank you, Mr. Kohm.
        Mr. Markarian, you're now recognized for 5 minutes for
    purposes of making an opening statement.

                     STATEMENT OF MICHAEL MARKARIAN

        Mr. Markarian. Thank you, Mr. Chairman and Mr. Ranking
    Member, and members of the subcommittee for holding this
    hearing on this important issue and for inviting the Humane
    Society of the United States here to testify. I want to thank
    Congressman Moran for his tremendous leadership on this issue,
    as well as Congresswoman Bono Mack and other members of the
    subcommittee who are cosponsors of H.R. 2480.
        We at the Humane Society of the United States strongly
    support this legislation, which we essentially view as a much-
    needed upgrading or updating of the Fur Products Labeling Act,
    which was passed nearly 60 years ago and needs to be updated to
    reflect the present market realities.
        As we heard, when the Fur Products Labeling Act was passed
    in the early 1950s, there was an exemption in the law for a
    small quantity or value of fur, and in the last six decades the
    industry has really changed quite remarkably in a number of
    ways. There has been an increased use in fur trim where people
    are no longer just seeking full-length fur coats or other
    garments, but they're seeking parka jackets and sweaters and
    vests and hats and gloves that are trimmed with small amounts
    of fur.
        We've also seen an increase in the quality of the synthetic
    furs which are closer resembling real fur, and it makes it more
    difficult for people to distinguish between real fur and fake
    fur.
        We have also seen manufacturing techniques where real
    animal fur is dyed or sheared. If people see the fur trim on a
    jacket that is pink or blue or orange, they may not associate
    it with an animal, and they may not understand whether it's
    real animal fur or faux fur.
        And as the exemption is currently set at $150, which
    applies to the value of the fur material on the jacket, it
    allows for massive quantities of animal fur to be used without
    being labeled. And based on approximate pelt prices after
    tanning and dressing, the fur from 30 rabbits could be used at
    $5 each per pelt, without requiring labeling; 25 ermines at $6
    each; 15 muskrats at $10 each. The list goes on and on and on.
    And many animals--the pelts from many animals could be used and
    fall under that $150 threshold.
        So we believe that this is creating major confusion in the
    marketplace because people simply don't know what they are
    getting. And the Humane Society of the United States has tested
    dozens of jackets, many of which were advertised as fake fur,
    and we found that they contained real animal fur.
        We brought two posters to show the committee just two of
    these examples. I wanted to point them out to you. The one on
    the left is a Rocawear jacket, which was purchased at a store
    called Demo. You can see the blowup of the label. It says that
    it's polyester material; it says that it was made in China, but
    it does not say anything about the fur trim. We had that fur
    tested in a laboratory and concluded that it was fur from a
    raccoon dog species.
        The second example is a Burberry jacket which was purchased
    online from the saks.com Web site. It was advertised online as
    faux fur. And you can see when the consumer receives the jacket
    in the mail, they look at the label. It talks about cotton, it
    talks about polyester, it talks about some of the other
    materials, but it does not say anything about the fur material.
    We had that jacket tested and concluded that the fur trim was
    rabbit fur. And when we disassembled the trim, it looked like
    it was two individual rabbit pelts--and you can see a little
    bit how they're sewn together in the middle of the garment.
        But if those rabbit pelts were valued at $5 each and
    there's $10 worth of fur trim on that jacket--a jacket which
    costs hundreds of dollars--it fell below the exemption and did
    not require labeling.
        So we believe that if you don't have a label on the
    individual garment, there is so much room for consumers to be
    confused, and even for sales clerks in department stores to be
    confused, because they're not furriers, they're not experts in
    the material. But these are folks who work at department
    stores, they have inventory cycling through, they have
    customers trying on jackets and returning them to the wrong
    racks, and it's very easy for people not to know what the
    garments are made of unless there is a label attached to the
    individual garment.
        And we've, frankly, found sales clerks guessing in
    department stores. When they don't have a label on the jacket
    and consumers ask, What do you think this is made of, they say,
    It's not real fur, it's fake. If it's real fur, they would say
    real fur. Another clerk said I really don't think it's real
    fur. Another said it's goose down, so it's warm; it would say
    raccoon or rabbit, whatever. It doesn't say, I believe it's
    acrylic, fake fur; I believe it's fake.
        There is too much room for confusion, Mr. Chairman. We
    believe this is a limited bill which gives consumers the
    opportunity to make informed choices. It doesn't restrict the
    trade in any fur, it doesn't restrict the methods of producing
    fur, it gives consumers the information that they need.
        We thank you for your time and look forward to working with
    the committee on this bill.
        Mr. Barrow. Thank you, Mr. Markarian.
        [The prepared statement of Mr. Markarian follows:]

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        Mr. Barrow. Mr. Kaplan, you are now recognized for 5
    minutes for the purpose of making an opening statement.

                       STATEMENT OF KEITH KAPLAN

        Mr. Kaplan. Thank you, Chairman Barrow, Ranking Member
    Whitfield, and members of the subcommittee. Thank you for
    inviting me to testify before you today.
        My name is Keith Kaplan, and I am the Executive Director of
    the Fur Information Council of America. We represent the
    interests of over 1,100 fur retailers, fur manufacturers, fur
    wholesalers, and fur designers, most of whom are in fact small
    businesses.
        I am pleased to be here today to present our views on H.R.
    2480, the Truth in Fur Labeling Act.
        As has been stated, the fur industry is already covered by
    stringent labeling requirements under the Fur Products Labeling
    Act. Enacted in 1951, this act and the regulations implemented
    by the FTC require that fur product labeling provide a depth of
    information about the product, including the correct name of
    the fur type, whether the fur is bleached, dyed, or naturally
    colored, and the country of origin, as well as other relevant
    information. Similar information must be provided in connection
    with any and all advertising and marketing of fur products.
    This information provides consumers the detail they need to
    make educated decisions regarding their purchase of a fur
    product.
        Our industry has supported and continues to support the
    principles of transparency and dissemination of accurate
    information that underlie this law, and FICA's members are
    committed to compliance with the detailed requirements of this
    regulation. As evidence, I would like to submit labels from
    both single-unit and multi-unit retailers operating in a number
    of States, and ask that they be submitted for the record.
        Throughout the fur industry, our members understand the
    consequences of a failure to comply, and have exhibited this
    through nearly 60 years of practice. In the event of any
    infraction, the FTC's enforcement authority in this area is
    far-reaching and the legal tools available to it are
    significant. Historically, the agency has never shied away from
    using these tools to protect the consumer, and such has been
    the case within our industry.
        Consistent with our support for the principle of consumer
    transparency, we support the removal of the small value
    exemption of the Fur Products Labeling Act, with the result
    that all fur products would now carry the same comprehensive
    labeling.
        However, Mr. Chairman, we do have significant concerns with
    section 4 of the bill that's been presented which confers on
    States, or, for that matter, any political subdivision such as
    counties or towns, the right to adopt or enforce their own
    labeling requirements for fur products that would likely differ
    from or be more restrictive than existing Federal law.
        This provision, which would impact the sale of all fur
    products, would undermine the purpose of the current Federal
    statutory regime which has protected consumers for almost 60
    years. Indeed, the additional information that may result from
    local requirements opens the door to extensive consumer
    confusion and the potential for labeling to become a vehicle of
    harassment in its own right.
        Imagine in your own backyard that you visited Macy's in
    downtown Washington, D.C., where you find or your wife finds a
    fur garment you would like to purchase. Not having your size,
    the salesperson locates the same garment in the correct size at
    the Towson, Maryland store and they send it over to the
    Washington, D.C. store. When you arrive to pick up your coat,
    it looks identical, but the descriptive label now reads quite
    differently. This is the kind of confusion that would be
    created by section 4.
        We're also concerned that the FTC's jurisdiction and
    expertise will be undermined by local jurisdictions acting at
    the behest of anti-fur advocates whose only interest is to
    confuse consumers by disseminating false and misleading
    information, thereby denying customers the opportunity to
    really make informed choices.
        We have already seen examples of this in recent efforts by
    the HSUS, to link the use of Asiatic raccoon--a legitimately
    traded fur product for over a century--to domestic dog in an
    attempt to destroy the marketability of this product. In New
    York last year, legislators passed a bill removing the small-
    value exemption and requiring that all product carrier labels
    specify it as real or faux fur.
        Amidst confusion over the exact requirements and
    specifications of this label on real fur products, our
    representatives approached the New York State Attorney
    General's Office. In the end, the Office informed us they could
    provide no further direction on this issue. Without further
    direction, our retailers were forced to create and affix their
    own real-fur labels, at considerable time and expense without
    any perceived benefit to the consumer. In fact, consumers are
    asking retailers today why this real fur designation now
    appears on an item they already understand as mink.
        Allowing States and local jurisdictions to enact their own
    fur-labeling regulations will likely lead to a significant
    increase in similar activities across all 50 States by well-
    funded, anti-fur advocates.
        The primary purpose of the Fur Products Labeling Act was to
    facilitate consumer comparisons among similar products,
    providing consumers with all the relevant detail they would
    require to make educated, informed, and confident decisions
    before purchasing: apples-to-apples across all 50 States.
    Divergent State requirements might seriously undermine this and
    could lead to significant confusion among both consumers and
    retailers.
        Mr. Chairman and members of the committee, in your
    consideration of this bill, I reinforce our support for the
    removal of the small-value exemption, consistent with our
    belief that consumers are entitled to complete, accurate, and
    meaningful information to guide their purchase decisions. But I
    urge you to please strike section 4 from this bill to ensure
    that consumers remain protected from misleading, inaccurate, or
    confusing labeling that may adversely affect their purchasing
    decision process.
        Thank you for your attention. I welcome any questions you
    might have.
        Mr. Barrow. Thank you, Mr. Kaplan.
        [The prepared statement of Mr. Kaplan follows:]

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        Mr. Barrow. We now proceed to an examination of the
    witnesses by the members of the committee. The chair recognizes
    himself for the purpose of questioning for up to 5 minutes.
        Mr. Markarian, let's begin with you. I want to get some
    idea of the scope and size of the universe of items that are
    covered by this proposed legislation. I want to talk about the
    significance of this.
        With regard to all of the items that would be covered,
    either those that just have a little fur in them or those that
    consist entirely of fur, are there any major categories of
    items that you can think of that would be covered by this
    proposed change? For example, are they mostly gloves with fur
    lining, or fur-trim hooded jackets? What are we talking about
    here?
        Mr. Markarian. Mr. Chairman, thank you for the question.
        The Fur Products Labeling Act applies to wearing apparel,
    so any clothing item that's made of fur. According to data that
    was in the Federal Register last February, the FTC estimated
    that 1,019,054 fur garments and fur-trimmed garments and fur
    accessories were sold in the United States. About 87 percent of
    those already require the labeling standard. Only 13 percent
    fell below the $150 threshold, so they had fur material that
    was below a $150 value. Thirteen percent of all fur garments
    sold in the U.S. did not require the labeling.
        So, essentially seven out of eight fur garments that are
    sold in this country already require the labeling standard, the
    standard that's been in place for almost 60 years. And this
    legislation would bring the other one out of eight garments
    into that same system, so there would be a consistent standard
    across the board.
        And with this one example I showed, the Burberry jacket,
    the jacket itself cost about $800, but the value of the fur
    trim we estimate was well below the $150 threshold, so that
    type of jacket would not require labeling at this current time.
        Mr. Barrow. Thank you.
        As was the chair's practice in the case of the former
    panel, I am pleased to yield the balance of my time to the
    author and sponsor of this legislation, Mr. Moran.
        Mr. Moran of Virginia. Chairman Barrow, I cannot thank you
    enough. I appreciate your giving me this opportunity.
        I understand that of the 13 percent we're talking about of
    fur products that are either unlabeled or inaccurately labeled,
    virtually all of them either come from China or Russia; a few,
    perhaps, from Finland.
        What I would like to do, perhaps I could ask the gentleman
    representing the Fur Information Council, are you aware of any
    American manufacturers who are attaching this unlabeled or
    mislabeled fur as trimming on any garments, or is this
    primarily foreign manufacturers who are shipping them here from
    China or whatever?
        Mr. Kaplan. I am not aware, sir. The labeling is attached
    to the garment at the retail level, not at the manufacturing
    level.
        Mr. Moran of Virginia. I understand that; except that, of
    those garments, my information is that none of the fur that
    isn't labeled or inaccurately labeled, none of that is coming
    from the United States. It doesn't affect any domestic
    producers of fur.
        Mr. Kaplan. I can't comment on that with certainty.
        Mr. Moran of Virginia. Do any of the witnesses know that,
    whether we would be affecting any American manufacturer?
        Mr. Kohm. I do not, Congressman.
        Mr. Moran of Virginia. Mr. Markarian.
        Mr. Markarian. Congressman, any garment that had fur
    material that was valued at less than $150 would require a
    label. So whether it's made in the United States or abroad, it
    would have to meet that same standard.
        Our concern is that it's more difficult for consumers to
    tell what the product might be, especially if it's coming from
    China, where dogs and cats were killed for their fur. We did an
    investigation on that in the 1990s, and Congress banned dog and
    cat fur in 2000. But without a label on the garment, it may be
    easier for those garments to slip into the country undetected.
    And with an accurate and consistent label on the garment
    itself, consumers will have more confidence that they know what
    they're buying.
        Mr. Moran of Virginia. Well, that's only partially what I
    was getting at. I appreciate the answer. I know we have mink
    farms here and we have other fur products that are grown
    locally, but I'm not aware that any of the fur that is being
    used for this purpose is actually being supplied by any
    American suppliers.
        I have a couple other questions with regard to section 4,
    but I don't need to take the subcommittee's time now. I know
    that the chair and Mr. Whitfield would like to ask questions,
    too. Thank you very much, Mr. Chairman.
        Mr. Barrow. I thank the gentleman. He will have another
    opportunity to raise questions with the witnesses before the
    end of the hearing.
        The chair is now pleased to recognize the gentleman from
    Kentucky, the ranking member, for the purpose of questioning
    the witnesses for up to 5 minutes. Mr. Whitfield.
        Mr. Whitfield. Thank you all for your testimony.
        My understanding, it sounds like from your testimony, is
    that everyone supports this legislation in concept, right, Mr.
    Kohm? Right, Mr. Markarian? Right, Mr. Kaplan?
        Mr. Kohm. Correct.
        Mr. Whitfield. And the only area of potential for Mr.
    Kaplan relates to the preemption issue, correct?
        Mr. Kaplan. Yes, section 4.
        Mr. Whitfield. OK. Now, Mr. Moran and Ms. Bono Mack are the
    primary authors of this legislation. And so from my
    perspective, I think it would be good to have Federal
    preemption myself, because when you're involved in interstate
    commerce, it is very difficult to try to meet the different
    standards from different States. But that's something that we
    can all explore and go from there on that.
        It is sort of disturbing to me--I was looking at some of
    this material that some of the major companies in the U.S.,
    retailers, are selling things like domestic dog fur as faux fur
    and wolf as faux fur and raccoon dog as faux fur, and so forth.
    And of course, we do have a Federal law now that prohibits the
    use of domestic dogs and cats for fur purposes, it's my
    understanding. But to help me better understand this, the Fur
    Products Labeling Act, is it the responsibility of the retailer
    to put this label in, or is it the manufacturer? And if the fur
    is coming from China, how do you verify what that fur really
    is? Could someone help me understand that better?
        Mr. Kohm. Well, it is the retailers' responsibility to have
    an accurate label on their fur products.
        Mr. Whitfield. OK. So under the Fur Products Labeling Act,
    it is the retailer's responsibility. OK.
        So when the manufacturer purchases this fur from China,
    then what kind of verification do they receive from China as to
    precisely what it is?
        Mr. Markarian. Well, essentially, if it's the 13 percent
    that do not require labeling under the current law, they're
    trusting whatever the manufacturer tells them, or they're
    making their own guesses about what the product might be.
        We think it would better protect retailers if there is a
    labeling requirement, because then they would have more
    information on the garment itself about what type of fur was
    used in that jacket.
        Mr. Whitfield. But if it's the other 87 percent, Mr.
    Markarian, how do you verify that the fur is what it's supposed
    to be?
        Mr. Markarian. My understanding is the retailers are
    operating in good faith that the label that's on the garment is
    accurate. And if they have reason to believe that it's
    inaccurate, if they get a complaint from a customer they
    suspect that something that says it is faux fur is really
    animal fur, then they may look into it further and make
    corrections. Many of the retailers did make corrections in
    their stores when we brought these issues to their attention,
    and they wanted to make sure that they were getting it right.
        Mr. Whitfield. But the manufacturers would be importing
    these furs into the country; is that right, Mr. Kaplan?
        Mr. Kaplan. Yes. And I have to make clear, I speak for the
    1,100 retailers and manufacturers and designers who primarily
    are a bit of a different universe. You will find, if you go
    into our retailer stores, that virtually all the product is
    labeled. Virtually all of the product is of a value, although
    some is not. But they have incurred this practice for over 60
    years; they're used to the practice, it's not burdensome to
    them.
        Mr. Whitfield. And I just want to make sure that you
    support this legislation, except this preemption is a problem.
        Mr. Kaplan. With the exception of section 4, correct.
        Mr. Whitfield. And just another question out of curiosity,
    because I don't know a lot about this. But is there a
    difference between an Asiatic raccoon and a raccoon dog, or are
    they one and the same?
        Mr. Markarian. It's different terms for the same species.
    This is a species of animal that's native to Asia. It's a
    member of the canine family. The Fur Products Name Guide lists
    the species as Asiatic raccoon. We believe that that name may
    be out of date. There is more scientific literature that uses
    the term ``raccoon dog,'' and we hope that that that is
    something the agency will take a look at.
        Mr. Whitfield. That is why this legislation asks the agency
    to revisit this whole issue.
        Mr. Kohm. That's correct, Congressman. And this is an issue
    that the agency would revisit anyway in its 2011 rule review.
        Mr. Whitfield. Thank you, Mr. Chairman.
        Mr. Barrow. I thank the gentleman for yielding.
        As an acting member of this subcommittee, under a unanimous
    consent agreement, I am pleased to recognize Mr. Moran for 5
    minutes for questioning.
        Mr. Moran of Virginia. Again, thank you so much, Mr.
    Chairman.
        With regard to section 4 that is under contention, it was
    our intent simply to restate what we understood to be existing
    law. If the committee chooses, they may want to consider simply
    leaving it silent and not addressing that because we're not
    trying to change State law, we are simply trying to pass this
    legislation.
        But with regard to other State laws, I don't know how they
    differ. I don't know why the problem--personally, it's probably
    ignorance on my part--but is it that New York and New Jersey
    and Massachusetts, Wisconsin, and Delaware have more
    restrictive labeling requirements?
        And if that's the case, I would like to ask the gentleman
    from the Council, do you comply with that? Is it a problem? I
    would think if you have to comply in New York, then that's the
    biggest market, so you would have to comply everyplace
    consistently.
        Mr. Kaplan. Within the six States that have passed fur-
    labeling laws in the past 2 years, the focus of those laws, the
    sole focus has been the removal of the small-value exemption.
    And once again, as an industry trade association, we were in
    support of and worked with the legislators, in fact, on the
    language of those bills.
        New York is the exception. They also had the additional
    caveat of the real-fur label. And as I indicated in my
    testimony, this had led to some degree of confusion. We've gone
    to the Attorney General's Office to ask them about compliance.
    It's an issue that they can't even respond on. And the net
    effect has been confusion to consumers looking at a product
    they know to be real fur and not understanding why suddenly
    this additional label appeared; and it's burdensome to the
    retailers simply because they don't know really what the label
    is supposed to look like for compliance purposes. And the
    Office of the Attorney General has not been able to tell us.
        Mr. Moran of Virginia. Sounds like a New York problem.
    Maybe Mr. Weiner could clarify that.
        But would the FTC be able to clarify that, perhaps?
        Mr. Kohm. Well, I'm not able to clarify what the rules are
    in New York----
        Mr. Moran of Virginia. No, I understand; but in terms of
    the implementation of this.
        Mr. Kohm. Well, with regard to section 4, you are correct,
    Congressman, that the Fur Labeling Act and the fur rules are
    silent as to preemption. And what that means as a legal matter
    is that States can pass laws as long as they don't conflict
    with the Federal law. So they can pass additional protections.
    If the provision were stricken, that would be consistent with
    the rest of the Fur Labeling Act. As it is, it's consistent as
    well.
        Mr. Moran of Virginia. OK. So we're not necessarily
    imposing anything additional--any additional requirement. It's
    simply restating what we understand to be the law.
        Could you suggest what the Federal Trade Commission has
    done to implement the Fur Products Labeling Act, what actions
    you've taken to identify, correct, or prevent false
    advertising? I have a suspicion that FTC, over the last few
    years, has been less than aggressive, perhaps, particularly
    with regard to the situation we're talking about with the faux
    fur being mislabeled.
        Mr Kohm. Well, Congressman, the FTC, as you know, is a
    small agency with a very large mandate, and we have to deploy
    our resources to get the biggest bang for the buck. In this
    area we've been able to work with retailers, and we've done so
    publicly with a number of retailers--Macy's, Neiman Marcus,
    Saks, and a number of others--and found that they had
    relatively small problems; in other words, there were small
    numbers of coats. They were very willing to work with us and
    improve their supply chain so that they weren't having
    problems. And we've issued public closing letters to make sure
    that the industry knows what the problem is. And we have been
    able to address those concerns in a less resource-intensive way
    in that manner.
        Mr. Moran of Virginia. Well, that was very articulately
    put. I think you're suggesting it's largely a matter of
    prioritization of limited resources, but you've done what you
    could with the major retailers.
        Mr. Kohm. Everything is priority in resources, Congressman.
        Mr. Moran of Virginia. I understand. But just to sum up,
    obviously Mr. Markarian is aggressively in support of this
    because it is consistent with an issue that the Humane Society
    has identified and been working on for some years. The Federal
    Trade Commission does support it, and the Fur Information
    Council does not have a problem with it is what I gather.
        Mr. Kaplan. With the exception of section 4.
        Mr. Moran of Virginia. I understand. Which is a restatement
    of current law.
        Well, Mr. Chairman, thank you very much. Thank you for your
    indulgence, thanks for having the hearing, and thank you for
    your leadership.
        Mr. Barrow. I thank the gentleman.
        This concludes the time allowed for questioning the
    witnesses by members present.
        The chair will note that Mr. Kaplan asked to include a
    letter in the record of these proceedings, and without
    objection, it is so ordered.
        [The information was unavailable at the time of printing.]
        Mr. Barrow. The chair also asks unanimous consent to have a
    letter from Cash4Gold to be inserted into the record.
        Without objection, it is so ordered.
        [The information appears at the conclusion of the hearing.]
        Mr. Barrow. I would like to thank all the witnesses for
    their testimony and for being here with us today.
        There being no further business for the subcommittee, the
    subcommittee stands adjourned.
        [Whereupon, at 2:47 p.m., the subcommittee was adjourned.]
        [Material submitted for inclusion in the record follows:]

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