[Congressional Record Volume 147, Number 156 (Tuesday, November 13, 2001)]
[House]
[Pages H8107-H8109]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
AMERICAN SPIRIT FRAUD PREVENTION ACT
Mr. TAUZIN. Mr. Speaker, I move to suspend the rules and pass the
bill (H.R. 2985) to amend the Federal Trade Commission Act to increase
civil penalties for violations involving certain proscribed acts or
practices that exploit popular reaction to an emergency or major
disaster declared by the President, and to authorize the Federal Trade
Commission to seek civil penalties for such violations in actions
brought under section 13 of that Act.
The Clerk read as follows:
H.R. 2985
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``American Spirit Fraud
Prevention Act''.
SEC. 2. INCREASE IN PENALTIES FOR UNFAIR OR DECEPTIVE ACTS OR
PRACTICES EXPLOITING REACTION TO CERTAIN
EMERGENCIES AND MAJOR DISASTERS.
(a) Violations of Prohibition Against Unfair or Deceptive
Acts or Practices.--Section 5(m)(1) of the Federal Trade
Commission Act (15 U.S.C. 45(m)(1)) is amended by adding at
the end the following:
``(D) In the case of a violation involving an unfair or
deceptive act or practice in an emergency period or disaster
period, the amount of the civil penalty under this paragraph
shall be double the amount otherwise provided in this
paragraph, if the act or practice exploits popular reaction
to the national emergency, major disaster, or emergency that
is the basis for such period.
``(E) In this paragraph--
``(i) the term `emergency period' means the period that--
``(I) begins on the date the President declares a national
emergency under the National Emergencies Act (50 U.S.C. 1601
et seq.); and
``(II) ends on the expiration of the 1-year period
beginning on the date of the termination of the national
emergency; and
``(ii) the term `disaster period' means the 1-year period
beginning on the date the President declares an emergency or
major disaster under the Robert T. Stafford Disaster Relief
and Emergency Assistance Act (42 U.S.C. 5121 et seq.).''.
(b) Violations of Other Laws Enforced by the Federal Trade
Commission.--Section 13 of the Federal Trade Commission Act
(15 U.S.C. 53) is amended by adding at the end the following:
``(e)(1) If a person, partnership, or corporation is found,
in an action under subsection (b), to have committed a
violation involving an unfair or deceptive act or practice in
an emergency period or a disaster period, and if the act or
practice exploits popular reaction to the national emergency,
major disaster, or emergency that is the basis for such
period, the court, after awarding equitable relief (if any)
under any other authority of the court, shall hold the
person, partnership, or corporation liable for a civil
penalty of not more than $22,000 for each such violation.
``(2) In this subsection--
``(A) the term `emergency period' means the period that--
``(i) begins on the date the President declares a national
emergency under the National Emergencies Act (50 U.S.C. 1601
et seq.); and
``(ii) ends on the expiration of the 1-year period
beginning on the date of the termination of the national
emergency; and
``(B) the term `disaster period' means the 1-year period
beginning on the date the President declares an emergency or
major disaster under the Robert T. Stafford Disaster Relief
and Emergency Assistance Act (42 U.S.C. 5121 et seq.).''.
The SPEAKER pro tempore. Pursuant to the rule, the gentleman from
Louisiana (Mr. Tauzin) and the gentleman from New York (Mr. Towns) each
will control 20 minutes.
The Chair recognizes the gentleman from Louisiana (Mr. Tauzin).
General Leave
Mr. TAUZIN. Mr. Speaker, I ask unanimous consent that all Members may
have 5 legislative days within which to revise and extend their remarks
and include extraneous material on H.R. 2985.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from Louisiana?
There was no objection.
Mr. TAUZIN. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, September 11 brought this country face-to-face with what
was once thought to be an unimaginable series of events. However, these
cowardly acts of terrorism sparked in this country an unprecedented
level of generosity, an outpouring of spirit, of patriotism, but also
of dollars.
Immediately, from every corner of this country, charities were
inundated with money, with food, with clothing. Hospitals saw long
lines of people offering to donate blood. Here in this Capitol complex
Members and wives and husbands and staff lined up to donate blood.
Shelters for the injured and homeless sprang up out of office
buildings, restaurants and small businesses. Financial donations alone
exceeded $1 billion.
If there is ever any silver lining in this national tragedy that this
awful atrocity created upon the people of this land, it is this: We saw
the incarnation of the American spirit again, the true strength of our
country, the true, indeed, the blessed meaning of the United States of
America.
But as with this and any disaster, there are unscrupulous people who
will take advantage of that generosity. Unfortunately, this national
emergency was no different. On the heels of the September 11
atrocities, we heard stories of scam telemarketers and scam charities
trying to collect for ``disaster relief'' and crooks appearing to be
affiliated with fire department fund-raising groups going door-to-door
asking for funds. H.R. 2985 is aimed directly at these scam artists.
The American Spirit Fraud Prevention Act declares frauds during these
times to be different. H.R. 2985 allows the Federal Trade Commission to
increase civil penalties for unfair and deceptive acts or practices
that exploit this Nation's reaction to a national emergency or a
national disaster. With this bill, the FTC can collect up to $22,000 in
civil penalties for each and every violation. This will send a strong
and unequivocal message to criminals hoping to prey on the kindness of
strangers, ``You will pay.''
I want to thank the gentleman from Georgia (Mr. Deal) and the
gentleman from New Hampshire (Mr. Bass), the original sponsors of the
American Spirit Fraud Prevention Act. This is an excellent bill. I
strongly urge its passage. I hope those who would scam the generosity
of Americans in this tragic time will pay attention tonight, because,
if they do not, the FTC will see you in court.
Mr. Speaker, I reserve the balance of my time.
Mr. TOWNS. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, as ranking member on this Subcommittee on Commerce,
Trade and Consumer Protection, I am pleased to join the gentleman from
[[Page H8108]]
Florida (Chairman Stearns), the chairman of the subcommittee, in
cosponsoring H.R. 2985, the American Spirit Fraud Prevention Act. The
Committee on Energy and Commerce has reported the bill to the House by
voice vote and without any amendments.
Mr. Speaker, this legislation says to any con artist, do not even
think about it, trying to capitalize on national emergencies or
disasters. It will not be worth it.
For con artists that exploit popular reaction to a presidentially
declared emergency or major disaster, this bill requires the Federal
Trade Commission to double the maximum civil penalties from $11,000 to
$22,000 per violation. The courts have said that each day the fraud
occurs constitutes a separate violation subject to the full civil
penalties. In other words, it says crime does not pay. At $22,000 a
day, it will be very costly for any scam artist to perpetrate frauds
that exploit the tragedy of September 11 in New York City.
Fortunately, we have not seen a lot of fraud involving the horrific
events of September 11. The FTC reports that it is investigating each
and every complaint that is made. So far, no frauds have been
identified by the FTC investigation, but let me tell you, those
investigations are continuing.
Although there is no evidence yet of collections for phony charities
or sales of gas masks or other products that do not perform as
advertised, the best way to prevent fraud is to make sure it is well
known that fraud simply will not be tolerated. Experience has shown
that, given the opportunity, fraud will occur. This legislation makes
clear that the price has just gone way up for taking advantage of
people in a time of crisis.
Mr. Speaker, I urge my colleagues to vote for H.R. 2985, the American
Spirit Fraud Prevention Act.
Mr. Speaker, I reserve the balance of my time.
Mr. TAUZIN. Mr. Speaker, I am pleased to yield such time as he may
consume to the gentleman from New Hampshire (Mr. Bass), one of the two
authors of the legislation.
Mr. BASS. Mr. Speaker, I thank the distinguished chairman of the
committee for yielding me time.
Mr. Speaker, a little more than 2 months ago, America was visited by
an unspeakable horror. For the first time in more than a century and a
half, this Nation was attacked viciously on its own home territory.
In the weeks since September 11, the Nation has mourned, has
expressed anger, has been anxious, concerned, but also very generous.
The American spirit has reached levels that now stands as a symbol of
this Nation's greatness and ability to support a just cause, the relief
of the victims of these tragedies and their families.
But we have also seen the darker side of humanity. Reports of people
using this tragedy and the generous American spirit for their own gain
have appeared. The Department of Justice, the Federal Trade Commission
and the States attorneys general have some powers to prosecute those
engaged in fraud and deceptive practices, but we must make it clear
that we will severely punish those who aim to take advantage of
America's charity or an organization's good name during an emergency.
Congress must also make sure that consumers are not inundated with
false and deceptive claims about goods and services that would exploit
the circumstances of an emergency or disaster. Whether it is selling
Cipro or other drugs under false information or offering fraudulent
terrorist insurance, these practices must carry a penalty commensurate
with their nature. We cannot let the detestable actions of so few mar
the pride and patriotism we all share over the phenomenal generosity
and outpouring of support from across America and the world. We cannot
let the fear and anxiety of our citizens be preyed upon by scam artists
peddling their cheats and swindles.
I have no doubt that the victims, their families and friends and all
Americans are as humbled as I am with the response of this country. Now
we need to ensure that those who would abuse this determined American
spirit are equally staggered at our response.
The American Spirit Fraud Prevention Act would double the penalties
the FTC could levy during times of presidentially declared emergencies
and disasters if the offending action aimed to exploit the crisis.
These times, sadly, occur more often than one might think, and the
attempts to profit from them follow just as regularly. All hope of
profit and gain must be removed from the equation of these people.
I just want to say that this effort would not have been possible
without the support of the bill's coauthor, my friend, the gentleman
from Georgia (Mr. Deal); the gentleman from Louisiana (Chairman
Tauzin); the gentleman from Florida (Chairman Stearns); the ranking
member, the gentleman from New York (Mr. Towns); and the entire
Committee on Energy and Commerce. I thank you all for your help with
this, and I urge its prompt passage.
Mr. TOWNS. Mr. Speaker, I yield myself 2 minutes.
Mr. Speaker, this legislation gives the FTC the power to protect the
consumers. Quite often, when people are grieving, they become extremely
vulnerable, and people will go in and take advantage of them. But this
legislation says that the teeth are there now, and that the FTC can
protect people that have these kinds of problems.
It is my understanding that we have not had a lot of this up to this
point, but I think it would be foolish for us not to put the
legislation in place to let people know that if you do do it, you will
be penalized and you will be penalized severely. I think this
legislation does that.
I want to thank my colleagues on the other side, of course, the
gentleman from Florida (Mr. Stearns), and of course, the gentleman from
Louisiana (Mr. Tauzin), and all the others on the Democratic side for
the support of this legislation; because coming from New York and
knowing in terms of the kind of tragedies that we have had over the
past few months, in terms of September 11, and then yesterday in terms
of the crash in Queens, New York, we have had some tough times. I think
that we need to make certain that the people do not go through a double
kind of tough time by people coming in and defrauding them.
Mr. Speaker, I reserve the balance of my time.
Mr. TAUZIN. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, let me thank my good friend, the gentleman from New York
(Mr. Towns) for his statement and strong support of this legislation.
More importantly, I thank him for his excellent cooperation on this and
so many pieces of legislation that we have worked together on in the
Committee on Energy and Commerce. You are indeed, sir, a great public
servant. I want to thank you for that.
Let me also clarify something: This bill amends the FTC statutes to
deal with fraud and scam artists. It does not affect the issue that was
heard before our committee just recently on the question of what is
being done with the funds raised by legitimate charities, such as the
United Way and Red Cross. This does not deal with that. I do not want
this bill confused with those good charities who do such good work
around our country.
{time} 2030
On the other hand, I want to use this opportunity to urge the
American Red Cross, who I understand will be here tomorrow for a press
conference on the issue raised at our hearings, I think just last week
on the subject matter, I want to urge the American Red Cross to
reconsider its position. Americans all over this land, in small towns
and hamlets and in rural settings, rose to the call of the Red Cross to
donate money to the victims and their families in New York and here in
Washington and the families in Pennsylvania who suffered on September
11, and raised the unprecedented, I think, $547 million for the Red
Cross for that special purpose.
To divert those funds to some other purpose, I believe, in my humble
opinion, would not be consistent with honoring the donations of these
many millions of Americans to the families who suffered so horribly on
September 11. Those donations were made not to the Red Cross, but
through the Red Cross to those families. I think the more the Red Cross
does, the more the United Way does and the other charities do to get
that money to those families, the more the American public will
appreciate it, and I think even be more generous to the Red Cross and
the United
[[Page H8109]]
Way and other charities when they are called upon again to respond for
whatever tragedies we may suffer, tornadoes or earthquake disasters
this country may face in the future.
I understand the Red Cross may tomorrow simply say, if you do not
like what we are doing with the money, call us and we will refund it.
That is not a good answer. That is a terrible answer. Americans do not
want a refund. They want the money they donated for those families to
go to those families and they want the Red Cross and other charities to
honor those donations.
So again as a friend of the Red Cross, as a supporter of the Red
Cross, as a great supporter of the United Way, this Congress has always
supported those institutions, I want to urge the Red Cross again to
reconsider their position. Those monies were not donated for a reserve
account, they were donated through you to the families who suffered on
September 11. You ought to have the decency to make sure those families
get that money as quickly as you can, because doggone it, that is what
Americans intended when they sent that money into you in such record
amounts.
Mr. DEAL of Georgia. Mr. Speaker, the tragic events of September 11,
2001 were a blow to this nation. The attacks showed we were vulnerable
to an outside attack. As bad as these attacks were, they did showcase
the spirit of America. We, as Americans, did not roll over, we came
together and showed the world why this land is great.
One way many decided to help was through financial donations to any
one of numerous charitable organizations to help those in need. As we
have seen over the past several months, Americans have been very
generous in their giving. The best of America has been on display.
However, just underneath the surface of these kind souls, is a group of
individuals that try to take advantage of tragic events and people's
generosity.
There are people out there who try to scam money and say it is for
relief efforts. They use the telephone and Internet in order to solicit
donations. The problems lies in the fact that even though on the
surface these solicitations seem legitimate, they are not. The money
usually goes directly into the person's pocket and never is used to
help those in need. For this reason, I am proud to have been able to
work with the gentleman from New Hampshire on this bill. It is
important to make the penalties for fraud during times of national
emergency so high, no one will attempt such deeds. It is also important
that we send a message to the American people that such frauds will not
be tolerated and they can feel safe in the fact that anyone who
perpetrates such crimes will be punished. Let the American spirit shine
through and may we continue to help those in need.
Mr. TAUZIN. Mr. Speaker, I urge adoption of the bill, and I yield
back the balance of my time.
The SPEAKER pro tempore (Mr. Forbes). The question is on the motion
offered by the gentleman from Louisiana (Mr. Tauzin) that the House
suspend the rules and pass the bill, H.R. 2985.
The question was taken; and (two-thirds having voted in favor
thereof) the rules were suspended and the bill was passed.
A motion to reconsider was laid on the table.
____________________