[Congressional Record Volume 156, Number 161 (Wednesday, December 8, 2010)]
[House]
[Pages H8105-H8107]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




               GUARANTEE OF A LEGITIMATE DEAL ACT OF 2010

  Mr. WEINER. Mr. Speaker, I move to suspend the rules and pass the 
bill (H.R. 4501) to require certain return policies from businesses 
that purchase precious metals from consumers and solicit such 
transactions through an Internet website, as amended.
  The Clerk read the title of the bill.
  The text of the bill is as follows:

                               H.R. 4501

       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 ``Guarantee of a Legitimate 
     Deal Act of 2010''.

     SEC. 2. RETURN REQUIREMENTS FOR PURCHASERS OF PRECIOUS 
                   METALS.

       (a) Unlawful Conduct.--It shall be unlawful for any 
     purchaser of precious metals to--

[[Page H8106]]

       (1) sell, transfer to a third party, or refine through 
     melting or otherwise permanently destroy an item of jewelry 
     or precious metal before the purchaser of precious metals has 
     received an affirmative acceptance of an offer to purchase 
     the item for a specific price from the consumer to whom such 
     offer was made;
       (2) fail to promptly return to the consumer any jewelry or 
     other precious metal if the consumer declines the offer to 
     purchase made by the purchaser of precious metals; or
       (3) fail to insure any shipment to the consumer of such 
     jewelry or precious metals in an amount equal to--
       (A) the amount the consumer insured the shipment of the 
     jewelry or precious metals to the purchaser of precious 
     metals, if the consumer provides the purchaser of precious 
     metals with proof of such insurance; or
       (B) 60 percent of the melt-value of the jewelry or precious 
     metals, if the consumer does not provide the purchaser of 
     precious metals with proof of such insurance.
       (4) Law Enforcement Exception--Paragraph (1) of this 
     subsection shall not prohibit the sale or transfer of any 
     item of jewelry or precious metal to law enforcement agencies 
     or their personnel.
       (b) Definitions.--As used in this Act--
       (1) the term ``purchaser of precious metals'' means a 
     person who is in the business of purchasing jewelry or other 
     precious metals directly from consumers; and
       (2) the term ``melt-value'' means the reasonable estimated 
     value of any item of jewelry or precious metal, as determined 
     by the purchaser of precious metals, if such item were 
     processed and refined by the purchaser of precious metals.
       (c) Regulations.--The Commission may issue regulations 
     under section 553 of title 5, United States Code, to carry 
     out the purposes of this Act.

     SEC. 3. ENFORCEMENT BY THE FEDERAL TRADE COMMISSION.

       (a) Unfair and Deceptive Act or Practice.--A violation of 
     this Act or a regulation issued pursuant to this Act shall be 
     treated as an unfair or deceptive act or practice in 
     violation of a regulation under section 18(a)(1)(B) of the 
     Federal Trade Commission Act (15 U.S.C. 57a(a)(1)(B)) 
     regarding unfair or deceptive acts or practices.
       (b) Powers of Commission.--The Commission shall enforce 
     this Act in the same manner, by the same means, and with the 
     same jurisdiction, powers, and duties as though all 
     applicable terms and provisions of the Federal Trade 
     Commission Act (15 U.S.C. 41 et seq.) were incorporated into 
     and made a part of this Act. Any person who violates this Act 
     shall be subject to the penalties and entitled to the 
     privileges and immunities provided in that Act.

     SEC. 4. EFFECTIVE DATE.

        The provisions of this Act shall take effect 60 days after 
     the date of enactment of this Act.

  The SPEAKER pro tempore. Pursuant to the rule, the gentleman from New 
York (Mr. Weiner) and the gentleman from Kentucky (Mr. Whitfield) each 
will control 20 minutes.
  The Chair recognizes the gentleman from New York.


                             General Leave

  Mr. WEINER. Mr. Speaker, I ask unanimous consent that all Members 
have 5 legislative days in which to revise and extend their remarks and 
include extraneous material in the Record.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from New York?
  There was no objection.
  Mr. WEINER. Mr. Speaker, I yield myself such time as I may consume, 
and I don't intend to use all of the time. I thank the indulgence of 
the gentleman from Kentucky both in this debate and during 
consideration of this bill in committee.
  Mr. Speaker, during these difficult economic times, Americans are 
looking for any way that they can to try to make ends meet. They are 
taking on second jobs; they are looking through their cupboards, trying 
to see if there is anything they can sell. Just about any opportunity 
they can to make a few dollars people are looking for. That is why 
there has been a great deal of attention paid recently to companies 
that are advertising very heavily that if you give us your gold and 
jewelry, we will give you cash for those products.
  The problem is that when you put the gold and the jewelry in the 
envelope and send it to some of these companies, they are finding that 
consumers are not being treated very well. The Consumers Union and 
their publication Consumer Reports did a good expose on this, turning 
out the problems people face. Sometimes they are getting pennies on the 
dollar for what comes back, but even more difficult are the cases where 
people don't even agree to the transaction; or finding that since they 
didn't act fast enough, their gold or jewelry had been melted down, 
sold off for pennies on the dollar, and they were left with very little 
recourse.
  When Congress found out about this, a hearing was convened in 
Congressman Bobby Rush's subcommittee in the Energy and Commerce 
Committee. We heard from victims who had this happen to them. And we 
also heard from industry groups. There was virtual consensus that more 
needed to be done to protect consumers. You can have a debate, which 
perhaps should go on in each household before you engage in one of 
these transactions through the Internet or through the mail, whether or 
not you should see a neighborhood pawn broker, a neighborhood jeweler, 
someone who can give you some actual hands-on advice about these 
things. But as with so many things with rare jewelry, it's like a lot 
of other elements of products that consumers don't have a real 
intrinsic sense of what they should be worth, so they are subject to be 
taken advantage of.
  The act we are taking up today, the GOLD Act, the Guarantee of a 
Legitimate Deal Act of 2009, makes some changes in the law to give 
consumers a little bit more weight on their side of the scale, no pun 
intended. What it would mean is that under this new law a consumer 
would have to accept or reject the offer before the transaction has 
been considered complete. Right now there are many companies, including 
Cash4Gold, the biggest one of them, that will give a finite number of 
days after which they will simply melt down the gold and consider the 
transaction completed.
  It mandates that the purchasers of precious metals through the mail 
insure the products and send them back in the same insurance level that 
they were sent to them for. Let me explain why that's necessary. 
According to the postal service, we have a large number of people 
alleging that they would send their gold, say I don't want to do the 
deal, and mysteriously when the gold was mailed back to them, it 
disappeared in the mail. And, frankly, it seems more likely than not 
that the people sending back those shipments never actually did it.
  So what we are proposing here is that if someone insures it for $100 
going, it gets insured for $100 when it gets sent back as part of the 
transaction. And it would institute civil penalties for any company 
that melts down someone's gold without the prior approval by the 
consumer.
  Now, as I said, you can have a debate, and I think that it seems from 
a lot of the testimony that we took it's good to get a second or a 
third opinion about the true value, as you might really have some rare 
exotic piece of jewelry or something that has a high level of gold 
content; and you may find that when you send it to one of these places, 
as Consumer Reports found out when they did a study, they found out 
that the people were only getting on average of between 11 and 29 
percent of the value of the gold actually offered back to them.
  So you should try to get some advice from an actual person you trust 
in your community: a jeweler, a pawn broker, and the like.
  But also what this finally says is if you are going to go ahead with 
one of these transactions, if you are going to take a piece of jewelry 
that you have, put it in one of these prepaid envelopes and mail it 
off, you are going to continue to have control over the transaction 
should this law pass. That's why the Consumers Union supports it, the 
Jewelers Vigilance Council, which is the trade organization that 
testified. And it's my understanding that even the biggest player in 
the field that prompted this investigation, Cash4Gold, has said that 
they support this legislation. And while they have had problems, I want 
to commend them for doing so.
  I reserve the balance of my time.
  Mr. WHITFIELD. I yield myself as much time as I may consume.
  I want to thank the gentleman from New York for bringing this matter 
to the attention of the Congress, and specifically the Energy and 
Commerce Committee. As he said, with the economic downturn and with the 
dramatic increase in the price of gold, we see more and more people 
mailing their gold possessions in an envelope to these companies that 
are buying gold and then melting it down. It is a system that is ripe 
with the opportunity to defraud a lot of people. And this legislation, 
as the gentleman from New York stated, simply clarifies a number of 
issues.
  Number one, it makes it easier to determine whether or not a consumer 
is

[[Page H8107]]

accepting the offer of the company that's buying the gold. It also 
provides these additional protections on the insurance, because as the 
gentleman from New York said, frequently the client, the consumer, did 
not really want to sell; and yet it probably was melted down, and they 
said, well, we mailed it back to you, but it was lost in the mail.
  So this is important legislation, provides additional consumer 
protections at a time when a lot of our consumers are particularly 
vulnerable to being taken advantage of. I want to commend the gentleman 
once again for his actions and urge the support of H.R. 4501.
  I yield back the balance of my time.
  Mr. WEINER. I yield myself such time as I may consume.
  I want to thank Representative Whitfield for his kind words and for 
his help in crafting this bill and making it better than what it was 
first authored, Chairman Rush, who is the subcommittee chairman, and 
his staff, Peter Ketcham-Colwill, Michelle Ash, and also Yuri Beckelman 
of my staff and Bertine Moenaff of my staff, who helped do the 
research, and of course Consumers Union and the Jewelers Vigilance 
Council, who helped to provide testimony.
  I urge my colleagues to vote ``yes,'' and I yield back the balance of 
my time.

                              {time}  1130

  The SPEAKER pro tempore. The question is on the motion offered by the 
gentleman from New York (Mr. Weiner) that the House suspend the rules 
and pass the bill, H.R. 4501, as amended.
  The question was taken.
  The SPEAKER pro tempore. In the opinion of the Chair, two-thirds 
being in the affirmative, the ayes have it.
  Mr. WEINER. Mr. Speaker, on that I demand the yeas and nays.
  The yeas and nays were ordered.
  The SPEAKER pro tempore. Pursuant to clause 8 of rule XX and the 
Chair's prior announcement, further proceedings on this motion will be 
postponed.

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