[Congressional Record Volume 145, Number 19 (Wednesday, February 3, 1999)]
[Senate]
[Pages S1145-S1147]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Ms. COLLINS (for herself, Mr. Cochran, Mr. Levin, Mr. Durbin, 
        and Mr. Burns):
  S. 335. A bill to amend chapter 30 of title 39, United States Code, 
to provide for the nonmailability of certain deceptive matter relating 
to games of chance, administrative procedures, orders, and civil 
penalties relating to such matter, and for other purposes; to the 
Committee on Governmental Affairs.


       DECEPTIVE MAIL PREVENTION AND ENFORCEMENT IMPROVEMENT ACT

  Ms. COLLINS. Mr. President, today, during National Consumer 
Protection Week, I am introducing the Deceptive Mail Prevention and 
Enforcement Act, a comprehensive bill designed to stem the rising tide 
of deceptive mailings that are flooding the mailboxes of the people of 
Maine and people throughout the country.
  I am very pleased to have the cosponsorship of a trio of 
distinguished Senators in this regard: Senator Cochran, the chairman of 
the subcommittee with legislative jurisdiction over these types of 
mailings, who has been a leader in the effort to curtail deceptive 
mailings and sweepstakes fraud; Senator Levin, who serves as the 
ranking minority member of the Permanent Subcommittee on 
Investigations, and who has played an active role not only in the 
hearings held last year, but also in introducing his own legislation on 
this issue, which I am pleased to cosponsor. He has a longstanding 
interest in curtailing deceptive mailings. I am also pleased to have 
the support of Senator Durbin, with whom I have worked very closely on 
many consumer issues.
  Mr. President, several months ago, prompted by complaints that I have 
received from my constituents in Maine, I initiated an investigation 
into sweepstakes fraud and deceptive mailings. Over the course of this 
investigation, I have seen countless examples of mailings that 
deceptively promise extravagant prizes in order to entice consumers to 
make unnecessary and unneeded purchases. Unfortunately, this calculated 
confusion works far too often. In one particularly egregious example, 
one deceptive mailing prompted some of its victims to fly to Florida, 
believing that they then would be the first to claim the grand prize 
promised in a major sweepstakes.
  Deceptive mailings take many forms. One such form that I find 
particularly offensive is ``Government look-alike mailings,'' which 
appear deceptively like a mailing from a Federal agency or other 
official entity. An example of such a deceptive mailing was recently 
sent to me by a woman from Machiasport, ME. The postcard that she 
received was marked ``Urgent Delivery, a Special Notification of Cash 
Currently Being Held by the U.S. Government is ready for shipment to 
you.'' I have blown up a copy of the postcard she received so you can 
see just how deceptive this mailing was. On the back of the postcard, 
the consumer was asked to send $9.97 to learn how to receive this cash. 
Of course, this was not a legitimate mailing from the Federal

[[Page S1146]]

Government, but simply a ploy used by an unscrupulous individual to 
trick an unsuspecting consumer into sending money.
  Mr. President, millions of Americans have received sweepstakes 
letters that use deceptive marketing ploys to encourage the purchase of 
magazines and other products. A common tactic is a ``promise'' of 
winning printed in large type, such as this example: ``You Were 
Declared One of Our Latest Sweepstakes Winners and You're About to be 
Paid $833,337 in Cash.'' A constituent of mine from Portland, ME, 
received this mailing, but, of course, he wasn't really a winner. It 
takes an awfully sharp eye and very careful scrutiny to notice the very 
fine print that states that the money is won only ``if you have and 
return the grand prize-winning number in time.''
  Mr. President, thousands of consumers have made very frequent 
purchases, often of more than $1,000 a year, in response to deceptive 
sweepstakes mailings. I have heard sad stories from many people who 
have described personal horror stories caused by these deceptive 
mailings. Some people have told me of their elderly parents spending 
$10,000, $20,000, even as much as $60,000 in one case, hoping that 
their next purchase would result in a large prize. Senior citizens are 
particularly vulnerable, as they generally trust the statements made by 
these marketing appeals, particularly if they are pitched by 
celebrities, or if the mailing appears to be connected or in some way 
sanctioned by the Federal Government.
  To increase consumer protections, and to punish those who use such 
deceptive mailings to prey on our senior citizens, the bill that I am 
introducing today, along with Senators Cochran, Levin and Durbin, will 
attack sweepstakes fraud and deceptive mailings on four fronts.
  First, the bill will prevent fraud and deception by requiring 
companies to be more honest with the American people when using 
sweepstakes and other promotional mailings. My legislation would 
establish new standards for sweepstakes, including clear disclosure. In 
addition, my legislation would strengthen the law against mailings that 
mimic Government documents. Mailings could not use any language or 
device that gives the appearance that the mailing is connected, 
approved, or endorsed by the Federal Government.
  Second, this bill provides strong new financial penalties for sending 
mail that does not comply with these and existing standards. Civil 
penalties include fines ranging from $50,000 to $2 million would be 
allowed depending on the number of mailings sent.
  Third, the bill strengthens Federal law enforcement efforts and makes 
them more effective by giving the U.S. Postal Inspection Service 
additional tools to combat these deceptive practices.
  Fourth, my legislation would preserve the important role the States 
play in fighting this type of fraud and deception. Our bill would not 
preempt States and local laws protecting consumers from fraudulent and 
deceptive mailings.
  Mr. President, hundreds of millions of these promotional materials 
are sent out each year to consumers across the country. By design, they 
are meant to confuse their recipients and to trick them into spending 
money needlessly under the false pretense that doing so will earn them 
huge rewards.
  As the chairman of the Permanent Subcommittee on Investigations, I 
will shortly be holding hearings on this issue in the coming months to 
document the nature and extent of the problem and how these deceptive 
mailings affect Americans, particularly our senior citizens.
  I look forward to working with my colleagues, particularly the 
subcommittee's ranking member, Senator Levin, who has been such a 
leader in this area. It is my hope that Congress will enact the 
Deceptive Mail Prevention and Enforcement Improvement Act to increase 
consumer protections, to improve law enforcement efforts, and to 
provide effective penalties for those who deceive American consumers.
  Mr. President, I yield any remaining time to the Senator from 
Michigan, Senator Levin.
  The PRESIDING OFFICER. The Senator from Michigan is recognized.
  Mr. LEVIN. Mr. President, I thank my good friend from Maine for her 
leadership, her kind words, and for her bill, which I am proud to 
cosponsor. The bill I am introducing today, with her support and the 
support of Senator Durbin, addresses the same kinds of practices. These 
two bills together, if adopted, would go a long way toward addressing 
the deceptive mailing practices that we see under the general heading 
of ``sweepstakes.''
  The bill that I am introducing, with the cosponsorship of Senator 
Collins and Senator Durbin, will help eliminate the deceptive practices 
in mailings that use games of chance, like sweepstakes, to induce 
consumers to purchase a product that they may not need and to play a 
game that they will not win.
  I originally introduced this bill last year. It was not enacted. It 
was introduced late in the session. I am very hopeful that this bill 
and Senator Collins' bill will be enacted this year following the 
hearings that she has just described--important hearings which I 
commend our chairman of the subcommittee for scheduling, for 
initiating.
  The bill that I am introducing--this part of the remedy for the 
current abuses--will stiffen the penalties for deceptive mailings, will 
give the Postal Service administrative subpoena power, will restrict 
the use of misleading language and symbols, and require better 
disclosure about chances of winning and statements that no purchase is 
necessary to win.
  The elderly are easy prey for the gimmicks used in these kinds of 
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--and these gimmicks have 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 very misleading mailings.
  In early September 1998, 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 one reason why federal 
legislation in this area is needed. The bill I'm introducing today will 
help 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.
  That is not allowed. You cannot require that a purchase be made in 
order to win a prize. But these deceptive practices are such and they 
are so finely honed that, no matter what the fine print says about no 
purchase being necessary, the recipient of the mailing often is led to 
believe, by the nature of the mailing, that a purchase indeed will 
enhance the opportunity to win the prize. Senator Collins addresses the 
sum of those issues in her bill.
  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 can find and 
read the rules, it frequently takes a law degree to understand them.

[[Page S1147]]

  The bill I am introducing will help to protect consumers from 
deceptive practices by directing the Postal Service to develop and 
issue regulations that restrict the use of misleading language and 
symbols in direct mail game of chance solicitations, including 
sweepstakes. 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 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 also 
would benefit, in that the adverse publicity recently aimed at the 
industry because of ``You Have Won a Prize'' campaigns has maligned the 
industry as a whole. Cleaning up deceptive advertising could improve 
the industry's image.
  For those entities that continue to use deceptive mailings, my bill 
imposes a civil penalty of $10,000 for each piece of mail that violates 
Postal Service regulations. Currently the Postal Service can impose a 
fine for noncompliance with a Postal Service order. My bill imposes a 
fine whether or not the order actually has been issued. This has the 
effect of applying the penalty to the deceptive offense, not for 
noncompliance with the order.
  My bill also allows the Postal Service to quickly respond to changes 
in deceptive marketing practices by giving the Postal Service the 
authority to draft regulations that will be effective against the 
``scheme du jour.'' A deceptive practice used today, may not be used 
tomorrow. As soon as the Post Office learns about one scheme, it 
changes. If legislation is passed that requires a specific notice, it 
can take just a short time before another deceptive practice pops up to 
by-pass the legislation. My bill gives the Postal Service the authority 
to evaluate what regulatory changes will be required to keep pace with 
the ever changing deceptive practices. This will help weed out 
deceptive practices in a timely manner.
  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. Currently the $10,000 fine--and civil penalty which 
exists--can only be imposed for noncompliance with a Postal Service 
order. There has to be an order issued which is violated before there 
can even be a civil fine. Our bill would impose a fine for violating 
the law, a penalty for perpetrating the deceptive offense or practice, 
and it would not require that there be an order previously entered. By 
the time the Postal Service gets through all the administrative hoops, 
the sweepstakes promoter may have folded up operations and disappeared, 
or has destroyed all the evidence. By granting the Postal Service 
limited subpoena authority to obtain relevant 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 1999 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 legitimate 
product, 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, the Postal Service will be able to stop the solicitation 
and impose a significant penalty.
  So we are going to take a tough approach, both through Senator 
Collins' bill which I have cosponsored, through my bill which she has 
cosponsored, along with others, and this tough approach that is 
absolutely essential if we are going to protect seniors and others from 
the kind of deceptive practices which cost them so much money by 
encouraging them, through these practices, to buy items that they 
really do not want in order to win prizes that truly are unlikely or 
impossible to win.
                                 ______