[Congressional Record Volume 144, Number 119 (Thursday, September 10, 1998)]
[Senate]
[Pages S10209-S10211]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. LEVIN (for himself and Mr. Durbin):
  S. 2460. A bill to curb deceptive and misleading games of chance 
mailings, to provide Federal agencies with additional investigative 
tools to police such mailings, to establish additional penalties for 
such mailings, and for other purposes; to the Committee on Governmental 
Affairs.


             the deceptive mailing elimination act of 1998

 Mr. LEVIN. Mr. President, today I am introducing a bill that, 
if enacted, will go a long way toward eliminating deceptive practices 
in mailings that use games of chance like sweepstakes to induce 
consumers to purchase a product or waste their money by paying to play 
a game they will not win. The use of gimmicks in these contests, such 
as a large notice declaring the recipient a winner--oftentimes a 
``guaranteed'' winner or one of two final competitors for a large cash 
prize--has proliferated to the point that American consumers are being 
duped into purchasing products they don't want or need because they 
think they have won or will win a big prize if they do so. Complaints 
about these mailings are one of the top ten consumer complaints in the 
nation. I have received numerous complaints from my constituents in 
Michigan asking that something be done to provide relief from these 
mailings.
  Earlier this month we held a hearing in our Governmental Affairs 
Committee federal services subcommittee on the problem of deceptive 
sweepstakes and other mailings involving games of chance. We learned 
from three of our witnesses, the Florida Attorney General, the Michigan 
Assistant Attorney General and the Postal Inspection Service, that 
senior citizens are particular targets of these deceptive 
solicitations, because they are the most vulnerable. State Attorneys 
General have taken action against many of the companies that use 
deceptive mailings. The states have entered into agreements to stop the 
most egregious practices, but the agreements apply only to the states 
that enter into the agreements. This allows companies to continue their 
deceptive practices in other states. That's why federal legislation in 
this area is needed. The bill I'm introducing today will eliminate 
deceptive practices by prohibiting misleading statements, requiring 
more disclosure, imposing a $10,000 civil penalty for each deceptive 
mailing and providing the Postal Service with additional tools to 
pursue deceptive and fraudulent offenders.
  Sweepstakes solicitations are put together by teams of clever 
marketers who package their sweepstakes offers in such a way so as to 
get people to purchase a product by implying that the chances of 
winning are enhanced if the product being offered is purchased. Rules 
and important disclaimers are written in fine print and hidden away in 
obscure sections of the solicitation or on the back of the envelope 
that is frequently tossed away. Even when one reads the rules, it 
frequently takes a law degree to understand them.
  The bill I am introducing will protect consumers from deceptive 
practices by directing the Postal Service to develop and issue 
regulations that restrict the use of language and symbols on direct 
mail game of chance solicitations, including sweepstakes, that mislead 
the receiver into believing they have won, or will win a prize. The 
bill also requires additional disclosure about chances of winning and 
the statement that no purchase is necessary. Any mail that is 
designated by the Postal Service as being deceptive will not be 
delivered. This will significantly reduce if not eliminate the 
deceptive practices being used in the direct mail industry to dupe 
unsuspecting consumers into thinking they are grand prize winners. The 
direct mail industry should benefit as a result. The adverse publicity 
recently aimed at the industry because of ``You Have Won a Prize'' 
campaigns has malign the industry as a whole. Cleaning up deceptive 
advertising will certainly improve the industry's image.

[[Page S10210]]

  For those entities that continue to use deceptive mailings, my bill 
imposes a civil penalty of $10,000 for each offense that violates 
Postal Service regulations. Currently the Postal Service can impose a 
$10,000 daily fine for evading or not complying with a Postal Service 
order. My bill imposes a fine concurrent with issuing an order. This 
has the effect of applying the penalty to the deceptive offense, not 
for noncompliance of the order.
  My bill allows the Postal Service to quickly respond to changes in 
deceptive marketing practices by tasking them to draft regulations and 
language that will be effective against the ``scheme du jour.'' A 
deceptive practice used today, may not be used tomorrow. As soon as 
authorities learn about one scheme, it's changes. If legislation is 
passed that requires a specific notice, it won't be too long before 
another deceptive practice will pop up to by-pass the legislation. The 
Postal Service, who is in the business of knowing what is going on with 
the mails, will be able to evaluate what regulatory changes will be 
required to keep pace with deceptive practices. This will ensure that 
deceptive practices are weeded out in a timely manner by keeping 
regulations current.
  The bill also gives the Postal Service administrative subpoena power 
to respond more quickly to deceptive and fraudulent mail schemes. 
Currently the Postal Service must go through a lengthy administrative 
procedure before it can get evidence to shut down illegal operations. 
By the time they get through all the administrative hoops, the crook 
has folded up operations and disappeared, or has destroyed all the 
evidence. By granting the Postal Service limited subpoena authority to 
obtain relevant or material records for an investigation, the Postal 
Service will be able to act more efficiently against illegal 
activities. Subpoena authority will make the Postal Service more 
effective and efficient in its pursuit of justice.
  The Deceptive Sweepstakes Mailings Elimination Act of 1998 takes a 
tough approach to dealing with sweepstakes solicitations and other 
games of chance offerings that are sent through the mail. If you use 
sweepstakes or a game of chance to promote the sale of a product and 
provide adequate disclosure and abide with Postal Service regulations, 
then the Postal Service will deliver that solicitation. If deceptive 
practices are used in a sweepstakes or a game of chance solicitation, 
then the Postal Service will be able to stop the solicitation, and 
impose a significant penalty.
  Mr. President, I ask unanimous consent that the bill be printed in 
the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 2460

         Be it enacted by the Senate and House of Representatives 
     of the United States of America in Congress assembled,

     SECTION 1. DECEPTIVE GAMES OF CHANCE MAILINGS ELIMINATION.

       (a) Short Title.--This Act may be cited as the ``Deceptive 
     Games of Chance Mailings Elimination Act of 1998''.
       (b) Nonmailable Matter.--
       (1) In general.--Section 3001 of title 39, United States 
     Code, is amended--
       (A) by redesignating subsections (j) and (k) as subsections 
     (k) and (l), respectively; and
       (B) by inserting after subsection (i) the following:
       ``(j)(1) Matter otherwise legally acceptable in the mails 
     that constitutes a solicitation or offer in connection with 
     the sales promotion for a product or service or the promotion 
     of a game of skill that includes the chance or opportunity to 
     win anything of value and that contains words or symbols that 
     suggest the recipient will, or is likely to, receive anything 
     of value, shall conform with requirements prescribed in 
     regulations issued by the Postmaster General.
       ``(2) Matter not in conformance with the regulations 
     prescribed under paragraph (1) shall not be carried or 
     delivered by mail and shall be disposed of as the Postal 
     Service directs.
       ``(3) Regulations prescribed under paragraph (1) shall 
     require, at a minimum, that--
       ``(A) promotion of games of chance mailings contain 
     notification or disclosure statements, with sufficiently 
     large and noticeable type to be effective notice to 
     recipients that--
       ``(i) any recipient is not obligated to purchase a product 
     in order to win;
       ``(ii) sets out the chances of winning accurately; and
       ``(iii) advises that purchases do not enhance the 
     recipient's chances of winning;
       ``(B) games of chance mailings shall be clearly labeled 
     to--
       ``(i) identify such mailings as games of chance mailings; 
     and
       ``(ii) prohibit misleading statements representing that 
     recipients are guaranteed winners; and
       ``(C) solicitations in games of chance mailings may not 
     represent that the recipient is a member of a selected group 
     whose chances of winning are enhanced as a member of that 
     group.''.
       (2) False representations.--Section 3005(a) of title 39, 
     United States Code, is amended--
       (A) in the first sentence by striking ``section 3001 (d), 
     (h), or (i)'' and inserting ``section 3001 (d), (h), (i), or 
     (j)''; and
       (B) in the second sentence by striking ``section 3001 (d), 
     (h), or (i)'' and inserting ``section 3001 (d), (h), (i), or 
     (j)''.
       (c) Administrative Subpoenas.--
       (1) In general.--Chapter 30 of title 39, United States 
     Code, is amended by adding at the end the following:

     ``Sec. 3016. Administrative subpoenas

       ``(a) Authorization of Use of Subpoenas by Postmaster 
     General.--In any investigation conducted under this chapter, 
     the Postmaster General may require by subpoena the production 
     of any records (including books, papers, documents, and other 
     tangible things which constitute or contain evidence) which 
     the Postmaster General finds relevant or material to the 
     investigation.
       ``(b) Service.--(1) A subpoena issued under this section 
     may be served by a person designated under section 3061 of 
     title 18 at any place within the territorial jurisdiction of 
     any court of the United States.
       ``(2) Any such subpoena may be served upon any person who 
     is not to be found within the territorial jurisdiction of any 
     court of the United States, in such manner as the Federal 
     Rules of Civil Procedure prescribe for service in a foreign 
     country. To the extent that the courts of the United States 
     may assert jurisdiction over such person consistent with due 
     process, the United States District Court for the District of 
     Columbia shall have the same jurisdiction to take any action 
     respecting compliance with this section by such person that 
     such court would have if such person were personally within 
     the jurisdiction of such court.
       ``(3) Service of any such subpoena may be made by a Postal 
     Inspector upon a partnership, corporation, association, or 
     other legal entity by--
       ``(A) delivering a duly executed copy thereof to any 
     partner, executive officer, managing agent, or general agent 
     thereof, or to any agent thereof authorized by appointment or 
     by law to receive service of process on behalf of such 
     partnership, corporation, association, or entity;
       ``(B) delivering a duly executed copy thereof to the 
     principal office or place of business of the partnership, 
     corporation, association, or entity; or
       ``(C) depositing such copy in the United States mails, by 
     registered or certified mail, return receipt requested, duly 
     addressed to such partnership, corporation, association, or 
     entity at its principal office or place of business.
       ``(4) Service of any subpoena may be made upon any natural 
     person by--
       ``(A) delivering a duly executed copy to the person to be 
     served; or
       ``(B) depositing such copy in the United States mails by 
     registered or certified mail, return receipt requested, duly 
     addressed to such person at his residence or principal office 
     or place of business.
       ``(5) A verified return by the individual serving any such 
     subpoena setting forth the matter of such service shall be 
     proof of such service. In the case of service by registered 
     or certified mail, such return shall be accompanied by the 
     return post office receipt of delivery of such subpoena.
       ``(c) Enforcement.--(1) Whenever any person, partnership, 
     corporation, association, or entity fails to comply with any 
     subpoena duly served upon him, the Postmaster General may 
     request that the Attorney General seek enforcement of the 
     subpoena in the district court of the United States for any 
     judicial district in which such person resides, is found, or 
     transacts business, and serve upon such person a petition for 
     an order of such court for the enforcement of this section.
       ``(2) Whenever any petition is filed in any district court 
     of the United States under this section, such court shall 
     have jurisdiction to hear and determine the matter so 
     presented, and to enter such order or orders as may be 
     required to carry into effect the provisions of this section. 
     Any final order entered shall be subject to appeal under 
     section 1291 of title 28. Any disobedience of any final order 
     entered under this section by any court shall be punished as 
     contempt.
       ``(d) Disclosure.--Any documentary material provided 
     pursuant to any subpoena issued under this section shall be 
     exempt from disclosure under section 552 of title 5.''.
       (2) Regulations.--Not later than 180 days after the date of 
     enactment of this section, the Postal Service shall 
     promulgate regulations setting out the procedures the Postal 
     Service will use to implement this subsection.
       (3) Technical and conforming amendment.--The table of 
     sections for chapter 30 of title 39, United States Code, is 
     amended by adding at the end the following:

``3016. Administrative subpoenas.''.

       (d) Administrative Civil Penalties for Nonmailable Matter 
     Violations.--Section 3012 of title 39, United States Code, is 
     amended by adding at the end the following:

[[Page S10211]]

       ``(e)(1) In any proceeding in which the Postal Service 
     issues an order under section 3005(a), the Postal Service may 
     assess civil penalties in an amount of $10,000 per violation 
     for each mailing of nonmailable matter as defined under any 
     provision of this chapter.
       ``(2) The Postal Service shall prescribe regulations to 
     carry out the subsection.''.

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