[Congressional Record Volume 140, Number 98 (Monday, July 25, 1994)]
[House]
[Page H]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]


[Congressional Record: July 25, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
                             GENERAL LEAVE

  Mr. SWIFT. I ask unanimous consent that all Members have 5 
legislative days within which to revise and extend their remarks, and 
to include extraneous material, on the resolution presently under 
consideration.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Washington?
  There was no objection.
  Mr. DINGELL. Mr. Speaker, I rise in strong support of this 
legislation and urge my colleagues to support it.
  I commend the gentleman from the State of Washington, the 
distinguished chairman of the Subcommittee on Transportation and 
Hazardous Materials, for his strong and able leadership in bringing 
this legislation to the floor of the House today. As the author of the 
bill, Chairman Swift has taken an active interest in protecting the 
rights of consumers from unscrupulous telemarketing fraud artists. I 
also commend the ranking Republican of our full committee, Mr. 
Moorhead, and the ranking Republican of the Subcommittee on 
Transportation and Hazardous Materials, Mr. Oxley, for their 
significant contributions to this needed legislation.
  This bill is the product of many years of bipartisan efforts. 
Numerous hearings in our committee, a multitude of analyses and reports 
from Federal and State investigators, enforcement agencies, and 
consumer protection bureaus, as well as scores of media investigations 
and reports, have underscored the need for this overdue legislation.
  The problem quite simply, is the greed of scam artists who use the 
telephone to peddle phony and deceptive schemes to unwary and 
vulnerable consumers. According to the 1991 report of the National 
Consumers League, 9 out of 10 Americans have been approached by 
telephone scam artists, and 3 out of 10 have responded at some time to 
these fraudulent and deceptive offers. These schemes range from phone 
calls that promise consumers they already have won a big prize to 
telephone calls that promise help for parents to recover child support 
payments from deadbeat ex-spouses to solicitations for dirt-cheap land 
where bogus deeds are provided to the unfortunate consumer. These 
fraudulent schemes prey on the vulnerable and the unsuspecting 
including the elderly, the poor, children, and those with a poor 
command of the English language, and provide direct access at all times 
of the day and night to anyone who has a telephone.
  The costs of the problem are enormous. The Alliance Against Fraud in 
Telemarketing--a coalition of more than 80 industry associations and 
law enforcement agencies--reports that annual losses due to 
telemarketing fraud exceed $15 billion. The Federal Trade Commission 
[FTC] has estimated that actual consumer losses may run as high as $40 
billion per year. Other estimates put the figure at 70 to 80 billion 
dollars per year. Because of the embarrassment of admitting that one 
has been bilked, it is likely that most estimates of telemarketing 
fraud are understated. It is also clear, from the committee's numerous 
investigations and hearings, that the problem continues to proliferate.
  In general, there are three classes of victims of telemarketing 
fraud: first, actual consumers and purchasers; second, credit card 
companies, that often must absorb the credit charge when the purchaser 
discovers the fraud and refuses to pay the charge; and third, 
legitimate telemarketing companies, that not only lose sales to 
fraudulent firms but also suffer generally from the disrepute that such 
fraudulent firms bring to legitimate telemarketing practices. The 
legislation seeks to address unfair and deceptive telemarketing 
practices to help all three classes of victims.
  The FTC has taken the lead in attempting to combat telemarketing 
fraud. It has successfully resolved numerous telemarketing fraud cases 
in Federal district court, halting fraud by companies with sales of 
well over $1 billion. These actions were brought under current FTC 
authority that prohibits unfair and deceptive commercial acts or 
practices. But these actions may involve expensive and time-consuming 
court battles as to whether a firm's telemarketing practices in fact 
should be deemed unfair or deceptive and require the Commission to only 
pursue such actions in Federal district court. H.R. 3203 will give the 
FTC additional authority it needs to protect the interests of consumers 
and others who are affected by telemarketing fraud, as well as creating 
a partnership of enforcement efforts with the States. The bill directs 
the Commission to promulgate rules prohibiting deceptive and other 
abusive telemarketing practices. In developing these rules, the 
Commission is directed to include requirements to prohibit unsolicited 
telephone calls that a reasonable consumer would consider to be 
coercive or abusive of privacy rights. The bill gives State attorneys 
general authority to enforce the Commission's rules and to obtain 
damages, restitution, and other appropriate relief, as well as allowing 
private parties to bring cases in Federal district court in certain 
situations.
  I also wish to express my deep appreciation to Chairman de la Garza 
and the members of the Committee on Agriculture for their cooperation 
in ensuring that persons involved in commodities and futures trading re 
covered by substantially similar requirements developed by the FTC 
under the terms of the legislation. The bill includes provisions 
developed by the Agriculture Committee that are the functional 
equivalent of provisions that cover the securities industry. The bill 
requires the Securities and Exchange Commission [SEC] to promulgate 
substantially similar rules to those promulgated by the FTC. This means 
that the SEC rules must offer investors and consumers a comparable 
level of protection to that provided by the FTC rules, taking into 
account the specific circumstances of the securities industry.
  The bill also strengthens the ability of State attorneys general to 
bring actions to halt telemarketing scams. The FTC and attorneys 
general have worked closely with us in developing this legislation and 
we greatly appreciate their advice and expertise in crafting this 
consensus measure.
  This bill represents the best of the House bill passed early in this 
Congress and its Senate counterpart. I commend our colleagues from the 
other body who have worked diligently with us in bringing this final 
consensus package to the floor and I look forward to seeing the other 
body adopt this legislation expeditiously so that the President can 
sign it into law in the very near future.
  This bill is supported by a wide range of interests, including the 
National Association of Attorneys General, the National Consumers 
League and other consumer associations, the American Association of 
Retired Persons, and MasterCard and VISA.
  In summary, Mr. Speaker, this legislation will ensure that the full 
range of enforcement and regulatory tools will be available to Federal, 
State, and private parties in fighting telemarketing fraud and abuse. I 
strongly urge my colleagues to support this needed legislation.
  I yield back the balance of my time.
  Mr. LaFALCE. Mr. Speaker, I rise today to support the enactment of 
legislation dealing with telemarketing fraud. I am pleased that a 
compromise version of this bill passed the House today and should 
shortly become law. It fills the need to strengthen our Nation's 
ability to prohibit and prosecute fraudulent telemarketing practices.
  The schemes used by those who engaged in telemarketing fraud are 
particularly virulent and dangerous. They prey on innocent victims--
principally the elderly--to the tune of almost $1 billion each year. 
This is unacceptable.
  An award-winning series of articles in the Buffalo News last year 
highlighted the scope of this problem. Reporters Michael Beebe and Dan 
Herbeck showed in graphic detail how telemarketing firms use 
sophisticated computer systems and mailing lists to target the most 
vulnerable among us.
  According to the News series, Buffalo has become a haven for these 
fraudulent telemarketers. What an ignominious turn for a community 
rightly known as the City of Good Neighbors. Nearly 60 such firms 
operated in Buffalo last year, according to Beebe and Herbeck. They set 
up ``boiler rooms,'' filled with phones and with sales personnel who 
average $600 in commission per sale. The scams, which operate across 
State lines to thwart law enforcement efforts, can generate up to 
$40,000 per week. Individual telemarketers can make as much as a 
quarter of a million dollars in annual income through such schemes.
  Buffalo needs jobs and entrepreneurs as much as any other community, 
Mr. Speaker, but these are businesses and jobs that we can well do 
without.
  Telemarketing fraud grows worse day by day. According to the News, 
Buffalo's Better Business Bureau received more than 110 complaints 
about telemarketing practices in 1992, but only 4 complaints the 
previous year. Further, and more insidious, there are strong 
indications that organized crime families are becoming heavily involved 
in these illicit operations.
  The bill we passed earlier today will boost the efforts of law 
enforcement officials in their fight against telemarketing fraud in 
several ways. First, it requires that the Federal Trade Commission 
issue rules prohibiting deceptive and fraudulent telemarketing 
practices. Second, a national information clearinghouse on 
telemarketing fraud will be established. State attorneys general will 
be authorized to bring actions against fraudulent schemes in Federal 
courts--something that is very important for States, such as New York, 
which do not have their own telemarketing regulatory procedures. And 
finally, the bill gives citizens the right to institute private 
lawsuits against fraudulent telemarketers who prey upon them.
  Mr. Speaker, the efforts of the Buffalo News in helping to expose the 
scope of this problem are to be commended. I am pleased that the House 
of Representatives has acted, and I look forward to completion of the 
legislative process and final enactment of the bill into law very soon.
  Mr. OXLEY. Mr. Speaker, I rise in strong support of this amended 
version of H.R. 868, which reflects an agreement between the Energy and 
Commerce Committee and the Senate Commerce Committee. This legislation 
has been passed in essentially the same form by the House in this 
Congress and in the 102d Congress, when it narrowly missed enactment at 
the end of the session.
  The key feature of this bill is a directive to the Federal Trade 
Commission to adopt rules specifically targeting deceptive 
telemarketing practices. Once those rules are in place, the bill 
authorizes State attorneys general to enforce the rules. This kind of 
constructive State-Federal partnership is a very effective technique 
for making limited enforcement resources go as far as possible. It will 
also vastly reduce the ability of fly-by-night telemarketing scam 
operators to use State lines as a basis for potential legal sanctuary.
  I am particularly conscious of the need for a redoubled effort 
against deceptive telemarketing, because I know how important 
telemarketing is as a retail tool to bring many goods and services to 
consumers who reside in rural areas, including those who reside in my 
district. Unfortunately, a few bad actors can undermine the credibility 
of the thousands of legitimate businesses who use telemarketting as a 
key part of their retail strategy. It is therefore doubly important 
that we crack down on deception and fraud--not only to prevent injury 
to consumers, but also to avoid further harm to legitimate businesses. 
And by the way, in many cases, businesses themselves are the targets of 
fraudulent or deceptive techniques by fast-buck artists who employ the 
telephone as their preferred instrument of attack.
  I also want to note that in fashioning this bill, the committee was 
especially careful to avoid interfering with the existing antifraud 
jurisdiction of the Securities and Exchange Commission and the 
Commodities Futures Trading Commission. Through the cooperative efforts 
of the affected industries, as well as the Agriculture Committee, this 
bill coordinates the efforts of the SEC and the CFTC with those of the 
Federal Trade Commission, and avoids any conflict or overlap in their 
authority to combat deceptive telemarketing.
  The bill also makes it easier for credit card organizations and other 
business victims who are left with unreimbursed losses from fraudulent 
transactions to seek out and collect redress from the perpetrators of 
the deception.
  I strongly support H.R. 868 as amended, and urge its prompt approval. 
Thank you, Mr. Speaker.
  Ms. LAMBERT. Mr. Speaker, I rise today in strong support of H.R. 868 
which will help us disconnect the lines of those committing 
telemarketing fraud. This legislation will help eliminate the pervasive 
abuse of phone lines by giving State attorney generals the tools 
necessary to shut down fraudulent midnight bandit telemarketers.
  In Arkansas, our attorney general, Winston Bryant, has called this 
issue the biggest consumer protection issue. In 1992, through the 
Consumer Complaints Division in Arkansas, over 3,000 complaints and 25 
lawsuits were filed. While impressive, these actions did not come close 
to solving the problem.
  These crimes have touched most of our constituents. Most often 
though, older citizens are targeted. The scam usually involves a high-
pressure sales technique where a salesman is pitching anything from 
pens to worthless medical devices. Often, even if the person refuses, 
they are repeatedly peppered with calls at all hours of the night until 
the person finally caves in.
  Mr. Speaker, telemarketing, when done appropriately by the legitimate 
telemarketing industry, provides consumers with valuable services 
especially to such rural areas as the First District of Arkansas. These 
legitimate businesses have been very helpful in finding solutions to 
telemarketing fraud.
  I believe this legislation is a necessary first step in the 
cooperative efforts between State and Federal officials to solve wide-
spread problems. Hopefully, this will provide a model for future State 
and Federal coordination.
  Mr. Speaker, it is my pleasure to assist my constituents and the 
legitimate telemarketing industry in providing relief for the current 
or potential victims of this endless crime. I look forward to voting in 
favor of this bill.
  Mr. MOORHEAD. Mr. Speaker, I have no further requests for time, and I 
yield back the balance of my time.
  Mr. SWIFT. Mr. Speaker, I have no further requests for time, and I 
yield back the balance of my time.
  The SPEAKER pro tempore. The question is on the motion offered by the 
gentleman from Washington [Mr. Swift] that the House suspend the rules 
and agree to the resolution, House Resolution 488.
  The question was taken; and (two-thirds having voted in favor 
thereof) the rules were suspended and the resolution was agreed to.
  A motion to reconsider was laid on the table.

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