[Congressional Record (Bound Edition), Volume 151 (2005), Part 17]
[House]
[Pages 23613-23615]
[From the U.S. Government Publishing Office, www.gpo.gov]




                  AMERICAN SPIRIT FRAUD PREVENTION ACT

  Mr. STEARNS. Mr. Speaker, I move to suspend the rules and pass the 
bill (H.R. 3675) to amend the Federal Trade Commission Act to increase 
civil penalties for violations involving unfair or deceptive acts or 
practices that exploit popular reaction to an emergency or major 
disaster, 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. 3675

       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 a national emergency period or 
     disaster period, or relating to an international disaster, 
     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 or major disaster that is the basis for such 
     period, or to the international disaster.
       ``(E) In this paragraph--
       ``(i) the term `national 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;
       ``(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.); and
       ``(iii) the term `international disaster' means any natural 
     or man-made disaster in response to which the President 
     furnishes assistance to any foreign country, international 
     organization, or private voluntary organization pursuant to 
     section 491 of the Foreign Assistance Act (22 U.S.C. 
     2292(b)).''.
       (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 
     a national emergency period or a disaster period, or relating 
     to an international disaster, and if the act or practice 
     exploits popular reaction to the national emergency or major 
     disaster that is the basis for such period, or to the 
     international disaster, 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 `national 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;
       ``(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.); and
       ``(C) the term `international disaster' means any natural 
     or man-made disaster in response to which the President 
     furnishes assistance to any foreign country, international 
     organization, or private voluntary organization pursuant to 
     section 491 of the Foreign Assistance Act (22 U.S.C. 
     2292(b)).''.

  The SPEAKER pro tempore. Pursuant to the rule, the gentleman from 
Florida (Mr. Stearns) and the gentlewoman from Illinois (Ms. 
Schakowsky) each will control 20 minutes.
  The Chair recognizes the gentleman from Florida (Mr. Stearns).


                             General Leave

  Mr. STEARNS. 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 this legislation.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Florida?
  There was no objection.
  Mr. STEARNS. Mr. Speaker, I yield myself such time as I may consume.
  Since the difficult weeks following the destruction wrought by 
hurricanes Katrina and Rita, America has witnessed the overpowering 
kindness of the American heart, the charitable generosity of Americans 
to help each other. That outpouring of support, financial, spiritual, 
and otherwise, is beginning to give those who are suffering hope that 
their communities and lives will finally be rebuilt. The generosity of 
America is the heart of this great land and is a national treasure that 
benefits the entire world.
  Unfortunately, there are disturbing reports that some unscrupulous 
persons are again trying to capitalize on the plight of others to make 
a fast profit and sully the greatness of America and its capability. 
Like the reports following September 11, fraudsters are again at work 
trying to take advantage of the kindness of Americans who want to help 
people who are suffering. And as we learned at the Katrina hearing I 
held in my subcommittee, the Internet as well as the old-fashioned 
door-to-door and telephone solicitations again are the tools of choice 
for those thieves scheming to defraud Americans of their

[[Page 23614]]

charitable contributions. This is abhorrent and, in my opinion, 
particularly egregious in times of national tragedy.
  While the Federal Government and the States have ways to prosecute 
these crimes, I think it is absolutely necessary to put those who take 
advantage of America's charitable generosity on notice that they will 
face severe penalties. Law enforcement is busy tracking down these 
thieves, and the Congress needs to make certain that this activity will 
be aggressively prosecuted once they are exposed and finally brought to 
justice.
  Our response to these crimes also must serve to encourage those who 
want to give their time and money to aid those in need to do so without 
fear of becoming victims themselves. Whether it is phony Web sites, 
spam e-mail solicitations, or just the old-fashioned scam artist, we 
must ensure that the financial generosity of Americans to help those in 
crisis is not slowly corroded by fraud. Charitable giving is a unique 
American tradition that provides incredible support to relief efforts 
and their agencies; and it must, Mr. Speaker, be protected.
  H.R. 3675, the American Spirit Fraud Prevention Act, would double the 
civil penalties available to the Federal Trade Commission in their 
prosecutions of fraudulent schemes that exploit popular reaction to 
national disasters or emergencies as unfair or deceptive acts or 
practices. Now, these increased penalties, up to $22,000, would go into 
effect after a declaration of a national emergency or a national 
disaster by the President of the United States. A trigger for 
international disasters also was added to the bill in response to 
international emergencies like the Asian tsunami and the earthquake in 
Pakistan.
  Mr. Speaker, I believe this is a necessary bill that honors the 
generosity of all American people by ensuring that the tradition, our 
proud tradition, of charitable giving remains safe from the now 
notorious and despicable criminals that seek to steal from the hearts 
of our fellow Americans.
  I would like to thank, in particular, the gentleman from New 
Hampshire (Mr. Bass) for his steadfast and strong leadership on this 
issue. He has done a great service to all Americans with this bill. I 
urge my colleagues to pass H.R. 3675, the American Spirit Fraud 
Prevention Act.
  Mr. Speaker, I reserve the balance of my time.
  Ms. SCHAKOWSKY. Mr. Speaker, I yield myself such time as I may 
consume.
  Mr. Speaker, I rise in support of H.R. 3675, the American Spirit 
Fraud Prevention Act. Hurricane Katrina was one of the worst natural 
disasters to have ever struck the United States; and it will take 
months, if not years, to recover from its wake. Countless lives were 
lost, and the Nation was confronted with a new reality, a harsh sense 
of our vulnerabilities. One saving grace, the one ray of hope that 
helped to combat the pain, suffering, and sadness of the Nation, was 
the commitment displayed by Americans who were determined to help. As 
the cities of New Orleans, Gulfport, Biloxi, and others try to regain 
their footing, residents around the Nation, including the Chicago area, 
where I am from, have opened their hearts, their homes, and their 
pocketbooks to provide support to those who have lost so much.
  Over $1 billion has been raised for relief efforts and aid to victims 
of Katrina from donations large and small made by the American public.
  Unfortunately, however, there are some in our country who 
demonstrated the shameful side of humanity by attempting to illegally 
profit from Katrina. Those individuals tried to exploit the generosity 
demonstrated by so many through fraudulent solicitations in which they 
claimed to be representing organizations benefiting the victims or 
providing emergency response services. While those despicable acts are 
already illegal, it is necessary for the Congress, on behalf of our 
constituents, to send a clear message that such behavior will be 
subject to even more severe penalties in the future.
  Under H.R. 3675, the American Spirit Fraud Prevention Act, the 
maximum civil fines for actions of fraud in an attempt to profit from 
national emergencies will be doubled. These increased penalties will 
apply to all violations that occur within 1 year of the time the 
President declares a disaster and all violations that occurred during 
and up to 1 year after the expiration of a Presidential emergency 
declared under the National Emergencies Act.
  The American public is caring and committed. We care about the well-
being of our neighbors, and we are committed to do what we can to 
ensure prosperity and security for this Nation. While our government 
needs to do much more to improve its preparedness and response, we will 
not allow the generous and caring spirit of the American public to be 
victimized during a national emergency.
  I urge my colleagues to vote in support of this bill.
  Mr. Speaker, I reserve the balance of my time.
  Mr. STEARNS. Mr. Speaker, I yield such time as he may consume to the 
gentleman from New Hampshire (Mr. Bass), who is the author of the bill.
  Mr. BASS. Mr. Speaker, I thank my friend from Florida for yielding me 
this time. I think I will thank him twice during this speech for what 
he has been able to do, which was to bring this bill to the floor 
quickly, along with my friend from Illinois.
  As he mentioned, the American Spirit Fraud Prevention Act will double 
the penalties that the Federal Trade Commission can levy against 
individuals who commit fraud during times of Presidential emergencies 
or disasters if the offending action is associated with our response to 
the disaster.
  This would be the third time that I have introduced this bill. It has 
passed Congress on two previous occasions, and I sincerely hope that it 
will pass again today.
  Americans have opened their hearts and their wallets over and over 
again in the last 4 or 5 years, donating $2.2 billion in the wake of 
September 11; $1.3 billion for the tsunami victims; and as of now, over 
$1.7 billion for Katrina aid. In 2004 alone, charities raised $248.5 
billion in the United States.
  Americans should be proud that we can come together as a country over 
and over again even though oftentimes we have to dig a little deep in 
order to help people who are in trouble.

                              {time}  1430

  My hometown of Peterborough got together and adopted a town in 
Mississippi. We will raise close to $50,000 for this little town in 
Mississippi by the end of this week. I think that is enormously 
admirable. The money contributed is carefully accounted for, and it 
goes to the exact place it needs to go.
  However, there is fraud. I understand that the Nation's first 
Internet charity fraud case involving Hurricane Katrina has been 
uncovered. An individual has been charged and a Federal indictment is 
pending for creating a consumer Web site that asked that donations be 
made on line, purportedly to support humanitarian airlift operations to 
get victims out of Louisiana. Two people in Los Angeles set up a table 
outside a big box department store in Burbank and displayed fliers that 
read, ``Help now. American Red Cross relief for Hurricane Katrina.'' It 
had no connection whatever with the Red Cross.
  Now, as was mentioned before, Federal officials do have some power to 
prosecute those engaged in fraud, but if we double the penalties at 
times when Americans are most likely to be wanting to give without 
doing the proper research that is necessary before any gift is made, I 
think we will create an extra element of deterrence.
  I want to thank again my friend from Florida and my friend from 
Illinois as chairman and ranking member of the Subcommittee on 
Commerce, Trade, and Consumer Protection of the Committee on Energy and 
Commerce for allowing this bill once again to come to the floor of the 
House. I want to thank Chairman Barton and Ranking Member Dingell as 
well.
  Mr. Speaker, it is time to pass this bill out of the Congress, pass 
it through the Senate and send it to the President's desk. I look 
forward to

[[Page 23615]]

working with my colleagues in the committee and in the House and the 
Senate and White House to make sure this happens quickly.
  Mr. STEARNS. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, as the gentleman from New Hampshire has pointed out, we 
passed this twice before, and this is the third time. This a timely 
bill. More importantly, it is appropriate, and it is in need of passage 
more than ever. So I urge my colleagues not only to support it, but 
also I urge leadership in both Houses to move this bill to the 
President.
  Ms. SCHAKOWSKY. Mr. Speaker, I yield back the balance of my time.
  Mr. STEARNS. Mr. Speaker, I yield back the balance of my time.
  The SPEAKER pro tempore (Mr. Petri). The question is on the motion 
offered by the gentleman from Florida (Mr. Stearns) that the House 
suspend the rules and pass the bill, H.R. 3675.
  The question was taken.
  The SPEAKER pro tempore. In the opinion of the Chair, two-thirds of 
those present have voted in the affirmative.
  Mr. STEARNS. 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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