[House Report 106-431]
[From the U.S. Government Publishing Office]



106th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 1st Session                                                    106-431

======================================================================



 
             DECEPTIVE MAIL PREVENTION AND ENFORCEMENT ACT

                                _______


November 1, 1999.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

    Mr. Burton of Indiana, from the Committee on Government Reform, 
                        submitted the following

                              R E P O R T

                             together with

                            ADDITIONAL VIEWS

                        [To accompany H.R. 170]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Government Reform, to whom was referred 
the bill (H.R. 170) to require certain notices in any mailing 
using a game of chance for the promotion of a product or 
service, and for other purposes, having considered the same, 
report favorably thereon with an amendment and recommend that 
the bill as amended do pass.

                                CONTENTS

                                                                   Page
  I. Purpose and Summary..............................................9
 II. Background and Need for the Legislation.........................11
III. Legislative Hearings and Committee Actions......................13
 IV. Committee Hearings and Written Testimony........................13
  V. Explanation of the Bill.........................................17
 VI. Committee Oversight Findings....................................31
VII. Budget Analysis and Projections.................................31
VIII.Cost Estimate of the Congressional Budget Office................31

 IX. Statement of Constitutional Authority...........................34
  X. Committee Recommendation........................................34
 XI. Congressional Accountability Act, P.L. 104-1....................34
XII. Unfunded Mandates Reform Act; P.L. 104-4, Section 423...........34
XIII.Federal Advisory Committee Act (5 U.S.C. App.) Section 5(b).....34

XIV. Changes in Existing Law.........................................35
 XV. Additional Views................................................48

  The amendment is as follows:
  Strike out all after the enacting clause and insert in lieu 
thereof the following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``Deceptive Mail Prevention and 
Enforcement Act''.

SEC. 2. RESTRICTIONS ON MAILINGS USING MISLEADING REFERENCES TO THE 
                    UNITED STATES GOVERNMENT.

  Section 3001 of title 39, United States Code, is amended--
          (1) in subsection (h)--
                  (A) in the first sentence by striking ``contains a 
                seal, insignia, trade or brand name, or any other term 
                or symbol that reasonably could be interpreted or 
                construed as implying any Federal Government 
                connection, approval or endorsement'' and inserting the 
                following: ``which reasonably could be interpreted or 
                construed as implying any Federal Government 
                connection, approval, or endorsement through the use of 
                a seal, insignia, reference to the Postmaster General, 
                citation to a Federal statute, name of a Federal agency, 
                department, commission, or program, trade or brand name, 
                or any other term or symbol; or contains any reference to 
                the Postmaster General or a citation to a Federal statute 
                that misrepresents either the identity of the mailer or 
                the protection or status afforded such matter by the 
                Federal Government''; and
                  (B) in paragraph (2)--
                          (i) in subparagraph (A) by striking ``and'' 
                        at the end;
                          (ii) in subparagraph (B) by striking ``or'' 
                        at the end and inserting ``and''; and
                          (iii) by inserting after subparagraph (B) the 
                        following:
                  ``(C) such matter does not contain a false 
                representation stating or implying that Federal 
                Government benefits or services will be affected by any 
                purchase or nonpurchase; or'';
          (2) in subsection (i) in the first sentence--
                  (A) in the first sentence by striking ``contains a 
                seal, insignia, trade or brand name, or any other term 
                or symbol that reasonably could be interpreted or 
                construed as implying any Federal Government 
                connection, approval or endorsement'' and inserting the 
                following: ``which reasonably could be interpreted or 
                construed as implying any Federal Government 
                connection, approval, or endorsement through the use of 
                a seal, insignia, reference to the Postmaster General, 
                citation to a Federal statute, name of a Federal 
                agency, department, commission, or program, trade or 
                brand name, or any other term or symbol; or contains 
                any reference to the Postmaster General or a citation 
                to a Federal statute that misrepresents either the 
                identity of the mailer or the protection or status 
                afforded such matter by the Federal Government''; and
                  (B) in paragraph (2)--
                          (i) in subparagraph (A) by striking ``and'' 
                        at the end;
                          (ii) in subparagraph (B) by striking ``or'' 
                        at the end and inserting ``and''; and
                          (iii) by inserting after subparagraph (B) the 
                        following:
                  ``(C) such matter does not contain a false 
                representation stating or implying that Federal 
                Government benefits or services will be affected by any 
                contribution or noncontribution; or'';
          (3) by redesignating subsections (j) and (k) as subsections 
        (m) and (n), respectively; and
          (4) by inserting after subsection (i) the following:
  ``(j)(1) Any matter otherwise legally acceptable in the mails which 
is described in paragraph (2) is nonmailable matter, shall not be 
carried or delivered by mail, and shall be disposed of as the Postal 
Service directs.
  ``(2) Matter described in this paragraph is any matter that--
          ``(A) constitutes a solicitation for the purchase of or 
        payment for any product or service that--
                  ``(i) is provided by the Federal Government; and
                  ``(ii) may be obtained without cost from the Federal 
                Government; and
          ``(B) does not contain a clear and conspicuous statement 
        giving notice of the information set forth in clauses (i) and 
        (ii) of subparagraph (A).''.

SEC. 3. RESTRICTIONS ON SWEEPSTAKES AND DECEPTIVE MAILINGS.

  Section 3001 of title 39, United States Code, is amended by inserting 
after subsection (j) (as added by section 2(4) of this Act) the 
following:
  ``(k)(1) In this subsection--
          ``(A) the term `clearly and conspicuously displayed' means 
        presented in a manner that is readily noticeable, readable, and 
        understandable to the group to whom the applicable matter is 
        disseminated;
          ``(B) the term `facsimile check' means any matter that--
                  ``(i) is designed to resemble a check or other 
                negotiable instrument; but
                  ``(ii) is not negotiable;
          ``(C) the term `skill contest' means a puzzle, game, 
        competition, or other contest in which--
                  ``(i) a prize is awarded or offered;
                  ``(ii) the outcome depends predominately on the skill 
                of the contestant; and
                  ``(iii) a purchase, payment, or donation is required 
                or implied to be required to enter the contest; and
          ``(D) the term `sweepstakes' means a game of chance for which 
        no consideration is required to enter.
  ``(2) Except as provided in paragraph (4), any matter otherwise 
legally acceptable in the mails which is described in paragraph (3) is 
nonmailable matter, shall not be carried or delivered by mail, and 
shall be disposed of as the Postal Service directs.
  ``(3) Matter described in this paragraph is any matter that--
          ``(A)(i) includes entry materials for a sweepstakes or a 
        promotion that purports to be a sweepstakes; and
          ``(ii)(I) does not contain a statement that discloses in the 
        mailing, in the rules, and on the order or entry form, that no 
        purchase is necessary to enter such sweepstakes;
          ``(II) does not contain a statement that discloses in the 
        mailing, in the rules, and on the order or entry form, that a 
        purchase will not improve an individual's chances of winning 
        with such entry;
          ``(III) does not state all terms and conditions of the 
        sweepstakes promotion, including the rules and entry procedures 
        for the sweepstakes;
          ``(IV) does not disclose the sponsor or mailer of such matter 
        and the principal place of business or an address at which the 
        sponsor or mailer may be contacted;
          ``(V) does not contain sweepstakes rules that state--
                  ``(aa) the estimated odds of winning each prize;
                  ``(bb) the quantity, estimated retail value, and 
                nature of each prize; and
                  ``(cc) the schedule of any payments made over time;
          ``(VI) represents that individuals not purchasing products or 
        services may be disqualified from receiving future sweepstakes 
        mailings;
          ``(VII) requires that a sweepstakes entry be accompanied by 
        an order or payment for a product or service previously 
        ordered;
          ``(VIII) represents that an individual is a winner of a prize 
        unless that individual has won such prize; or
          ``(IX) contains a representation that contradicts, or is 
        inconsistent with sweepstakes rules or any other disclosure 
        required to be made under this subsection, including any 
        statement qualifying, limiting, or explaining the rules or 
        disclosures in a manner inconsistent with such rules or 
        disclosures;
          ``(B)(i) includes entry materials for a skill contest or a 
        promotion that purports to be a skill contest; and
          ``(ii)(I) does not state all terms and conditions of the 
        skill contest, including the rules and entry procedures for the 
        skill contest;
          ``(II) does not disclose the sponsor or mailer of the skill 
        contest and the principal place of business or an address at 
        which the sponsor or mailer may be contacted; or
          ``(III) does not contain skill contest rules that state, as 
        applicable--
                  ``(aa) the number of rounds or levels of the contest 
                and the cost to enter each round or level;
                  ``(bb) that subsequent rounds or levels will be more 
                difficult to solve;
                  ``(cc) the maximum cost to enter all rounds or 
                levels;
                  ``(dd) the estimated number or percentage of entrants 
                who may correctly solve the skill contest or the 
                approximate number or percentage of entrants correctly 
                solving the past 3 skill contests conducted by the 
                sponsor;
                  ``(ee) the identity or description of the 
                qualifications of the judges if the contest is judged 
                by other than the sponsor;
                  ``(ff) the method used in judging;
                  ``(gg) the date by which the winner or winners will 
                be determined and the date or process by which prizes 
                will be awarded;
                  ``(hh) the quantity, estimated retail value, and 
                nature of each prize; and
                  ``(ii) the schedule of any payments made over time; 
                or
          ``(C) includes any facsimile check that does not contain a 
        statement on the check itself that such check is not a 
        negotiable instrument and has no cash value.
  ``(4) Matter that appears in a magazine, newspaper, or other 
periodical shall be exempt from paragraph (2) if such matter--
          ``(A) is not directed to a named individual; or
          ``(B) does not include an opportunity to make a payment or 
        order a product or service.
  ``(5) Any statement, notice, or disclaimer required under paragraph 
(3) shall be clearly and conspicuously displayed. Any statement, 
notice, or disclaimer required under subclause (I) or (II) of paragraph 
(3)(A)(ii) shall be displayed more conspicuously than would otherwise 
be required under the preceding sentence.
  ``(6) In the enforcement of paragraph (3), the Postal Service shall 
consider all of the materials included in the mailing and the material 
and language on andvisible through the envelope or outside cover or 
wrapper in which those materials are mailed.
  ``(l)(1) Any person who uses the mails for any matter to which 
subsection (h), (i), (j), or (k) applies shall adopt reasonable 
practices and procedures to prevent the mailing of such matter to any 
person who, personally or through a conservator, guardian, or 
individual with power of attorney--
          ``(A) submits to the mailer of such matter a written request 
        that such matter should not be mailed to such person; or
          ``(B)(i) submits such a written request to the attorney 
        general of the appropriate State (or any State government 
        officer who transmits the request to that attorney general); 
        and
          ``(ii) that attorney general transmits such request to the 
        mailer.
  ``(2) Any person who mails matter to which subsection (h), (i), (j), 
or (k) applies shall maintain or cause to be maintained a record of all 
requests made under paragraph (1). The records shall be maintained in a 
form to permit the suppression of an applicable name at the applicable 
address for a 5-year period beginning on the date the written request 
under paragraph (1) is submitted to the mailer.''.

SEC. 4. POSTAL SERVICE ORDERS TO PROHIBIT DECEPTIVE MAILINGS.

  Section 3005(a) of title 39, United States Code, is amended--
          (1) by striking ``or'' after ``(h),'' each place it appears; 
        and
          (2) by inserting ``, (j), or (k)'' after ``(i)'' each place 
        it appears.

SEC. 5. TEMPORARY RESTRAINING ORDER FOR DECEPTIVE MAILINGS.

  (a) In General.--Section 3007 of title 39, United States Code, is 
amended--
          (1) by redesignating subsection (b) as subsection (c); and
          (2) by striking subsection (a) and inserting the following:
  ``(a)(1) In preparation for or during the pendency of proceedings 
under section 3005, the Postal Service may, under the provisions of 
section 409(d), apply to the district court in any district in which 
mail is sent or received as part of the alleged scheme, device, 
lottery, gift enterprise, sweepstakes, skill contest, or facsimile 
check or in any district in which the defendant is found, for a 
temporary restraining order and preliminary injunction under the 
procedural requirements of rule 65 of the Federal Rules of Civil 
Procedure.
  ``(2)(A) Upon a proper showing, the court shall enter an order which 
shall--
          ``(i) remain in effect during the pendency of the statutory 
        proceedings, any judicial review of such proceedings, or any 
        action to enforce orders issued under the proceedings; and
          ``(ii) direct the detention by the postmaster, in any and all 
        districts, of the defendant's incoming mail and outgoing mail, 
        which is the subject of the proceedings under section 3005.
  ``(B) A proper showing under this paragraph shall require proof of a 
likelihood of success on the merits of the proceedings under section 
3005.
  ``(3) Mail detained under paragraph (2) shall--
          ``(A) be made available at the post office of mailing or 
        delivery for examination by the defendant in the presence of a 
        postal employee; and
          ``(B) be delivered as addressed if such mail is not clearly 
        shown to be the subject of proceedings under section 3005.
  ``(4) No finding of the defendant's intent to make a false 
representation or to conduct a lottery is required to support the 
issuance of an order under this section.
  ``(b) If any order is issued under subsection (a) and the proceedings 
under section 3005 are concluded with the issuance of an order under 
that section, any judicial review of the matter shall be in the 
district in which the order under subsection (a) was issued.''.
  (b) Repeal.--
          (1) In general.--Section 3006 of title 39, United States 
        Code, and the item relating to such section in the table of 
        sections for chapter 30 of such title are repealed.
          (2) Conforming amendments.--(A) Section 3005(c) of title 39, 
        United States Code, is amended by striking ``section and 
        section 3006 of this title,'' and inserting ``section,''.
          (B) Section 3011(e) of title 39, United States Code, is 
        amended by striking ``3006, 3007,'' and inserting ``3007''.

SEC. 6. CIVIL PENALTIES AND COSTS.

  Section 3012 of title 39, United States Code, is amended--
          (1) in subsection (a) by striking ``$10,000 for each day that 
        such person engages in conduct described by paragraph (1), (2), 
        or (3) of this subsection.'' and inserting ``$50,000 for each 
        mailing of less than 50,000 pieces; $100,000 for each mailing 
        of 50,000 to 100,000 pieces; with an additional $10,000 for 
        each additional 10,000 pieces above 100,000, not to exceed 
        $2,000,000.'';
          (2) in paragraphs (1) and (2) of subsection (b) by inserting 
        after ``of subsection (a)'' the following: ``, (c), or (d)'';
          (3) by redesignating subsections (c) and (d), as subsections 
        (e) and (f), respectively; and
          (4) by inserting after subsection (b) the following:
  ``(c)(1) In any proceeding in which the Postal Service may issue an 
order under section 3005(a), the Postal Service may in lieu of that 
order or as part of that order assess civil penalties in an amount not 
to exceed $25,000 for each mailing of less than 50,000 pieces; $50,000 
for each mailing of 50,000 to 100,000 pieces; with an additional $5,000 
for each additional 10,000 pieces above 100,000, not to exceed 
$1,000,000.
  ``(2) In any proceeding in which the Postal Service assesses 
penalties under this subsection the Postal Service shall determine the 
civil penalty taking into account the nature, circumstances, extent, 
and gravity of the violation or violations of section 3005(a), and with 
respect to the violator, the ability to pay the penalty, the effect of 
the penalty on the ability of the violator to conduct lawful business, 
any history of prior violations of such section, the degree of 
culpability and other such matters as justice may require.
  ``(d) Any person who violates section 3001(l) shall be liable to the 
United States for a civil penalty not to exceed $10,000 for each 
mailing to an individual.''.

SEC. 7. ADMINISTRATIVE SUBPOENAS.

  (a) In General.--Chapter 30 of title 39, United States Code, is 
amended by adding at the end the following:

``Sec. 3016. Administrative subpoenas

  ``(a) Subpoena Authority.--
          ``(1) Investigations.--
                  ``(A) In general.--In any investigation conducted 
                under section 3005(a), 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 considers relevant or material to 
                such investigation.
                  ``(B) Condition.--No subpoena shall be issued under 
                this paragraph except in accordance with procedures, 
                established by the Postal Service, requiring that--
                          ``(i) a specific case, with an individual or 
                        entity identified as the subject, be opened 
                        before a subpoena is requested;
                          ``(ii) appropriate supervisory and legal 
                        review of a subpoena request be performed; and
                          ``(iii) delegation of subpoena approval 
                        authority be limited to the Postal Service's 
                        General Counsel or a Deputy General Counsel.
          ``(2) Statutory proceedings.--In any statutory proceeding 
        conducted under section 3005(a), the Judicial Officer may 
        require by subpoena the attendance and testimony of witnesses 
        and the production of any records (including books, papers, 
        documents, and other tangible things which constitute or 
        contain evidence) which the Judicial Officer considers relevant 
        or material to such proceeding.
          ``(3) Rule of construction.--Nothing in paragraph (2) shall 
        be considered to apply in any circumstance to which paragraph 
        (1) applies.
  ``(b) Service.--
          ``(1) Service within the united states.--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) Foreign service.--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 on business persons.--Service of any such 
        subpoena may be made 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 on natural persons.--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) Verified return.--A verified return by the individual 
        serving any such subpoena setting forth the manner 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) In general.--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) Jurisdiction.--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 may 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.''.
  (b) Regulations.--Not later than 120 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 the 
amendment made by subsection (a).
  (c) Semiannual Reports.--Section 3013 of title 39, United States 
Code, is amended by striking ``and'' at the end of paragraph (4), by 
redesignating paragraph (5) as paragraph (6), and by inserting after 
paragraph (4) the following:
          ``(5) the number of cases in which the authority described in 
        section 3016 was used, and a comprehensive statement describing 
        how that authority was used in each of those cases; and''.
  (d) 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.''.

SEC. 8. REQUIREMENTS OF PROMOTERS OF SKILL CONTESTS OR SWEEPSTAKES 
                    MAILINGS.

  (a) In General.--Chapter 30 of title 39, United States Code (as 
amended by section 7 of this Act) is amended by adding after section 
3016 the following:

``Sec. 3017. Nonmailable skill contests or sweepstakes matter; 
                    notification to prohibit mailings

  ``(a) Definitions.--In this section--
          ``(1) the term `promoter' means any person who--
                  ``(A) originates and mails any skill contest or 
                sweepstakes, except for any matter described in section 
                3001(k)(4); or
                  ``(B) originates and causes to be mailed any skill 
                contest or sweepstakes, except for any matter described 
                in section 3001(k)(4);
          ``(2) the term `removal request' means a request stating that 
        an individual elects to have the name and address of such 
        individual excluded from any list used by a promoter for 
        mailing skill contests or sweepstakes;
          ``(3) the terms `skill contest', `sweepstakes', and `clearly 
        and conspicuously displayed' have the same meanings as given 
        them in section 3001(k); and
          ``(4) the term `duly authorized person', as used in 
        connection with an individual, means a conservator or guardian 
        of, or person granted power of attorney by, such individual.
  ``(b) Nonmailable Matter.--
          ``(1) In general.--Matter otherwise legally acceptable in the 
        mails described in paragraph (2)--
                  ``(A) is nonmailable matter;
                  ``(B) shall not be carried or delivered by mail; and
                  ``(C) shall be disposed of as the Postal Service 
                directs.
          ``(2) Nonmailable matter described.--Matter described in this 
        paragraph is any matter that--
                  ``(A) is a skill contest or sweepstakes, except for 
                any matter described in section 3001(k)(4); and
                  ``(B)(i) is addressed to an individual who made an 
                election to be excluded from lists under subsection 
                (d); or
                  ``(ii) does not comply with subsection (c)(1).
  ``(c) Requirements of Promoters.--
          ``(1) Notice to individuals.--Any promoter who mails a skill 
        contest or sweepstakes shall provide with each mailing a 
        statement that--
                  ``(A) is clearly and conspicuously displayed;
                  ``(B) includes the address or toll-free telephone 
                number of the notification system established under 
                paragraph (2); and
                  ``(C) states that the notification system may be used 
                to prohibit the mailing of all skill contests or 
                sweepstakes by that promoter to such individual.
          ``(2) Notification system.--Any promoter that mails or causes 
        to be mailed a skill contest or sweepstakes shall establish and 
        maintain a notification system that provides for any individual 
        (or other duly authorized person) to notify the system of the 
        individual's election to have the name and address of the 
        individual excluded from all lists of names and addresses used 
        by that promoter to mail any skill contest or sweepstakes.
  ``(d) Election To Be Excluded From Lists.--
          ``(1) In general.--An individual (or other duly authorized 
        person) may elect to exclude the name and address of that 
        individual from all lists of names and addresses used by a 
        promoter of skill contests or sweepstakes by submitting a 
        removal request to the notification system established under 
        subsection (c).
          ``(2) Response after submitting removal request to the 
        notification system.--Not later than 60 calendar days after a 
        promoter receives a removal request pursuant to an election 
        under paragraph (1), the promoter shall exclude the 
        individual's name and address from all lists of names and 
        addresses used by that promoter to select recipients for any 
        skill contest or sweepstakes.
          ``(3) Effectiveness of election.--An election under paragraph 
        (1) shall remain in effect, unless an individual (or other duly 
        authorized person) notifies the promoter in writing that such 
        individual--
                  ``(A) has changed the election; and
                  ``(B) elects to receive skill contest or sweepstakes 
                mailings from that promoter.
  ``(e) Private Right of Action.--
          ``(1) In general.--An individual who receives one or more 
        mailings in violation of subsection (d) may, if otherwise 
        permitted by the laws or rules of court of a State, bring in an 
        appropriate court of that State--
                  ``(A) an action to enjoin such violation,
                  ``(B) an action to recover for actual monetary loss 
                from such a violation, or to receive $500 in damages 
                for each such violation, whichever is greater, or
                  ``(C) both such actions.
        It shall be an affirmative defense in any action brought under 
        this subsection that the defendant has established and 
        implemented, with due care, reasonable practices and procedures 
        to effectively prevent mailings in violation of subsection (d). 
        If the court finds that the defendant willfully or knowingly 
        violated subsection (d), the court may, in its discretion, 
        increase the amount of the award to an amount equal to not more 
        than 3 times the amount available under subparagraph (B).
          ``(2) Action allowable based on other sufficient notice.--A 
        mailing sent in violation of section 3001(l) shall be 
        actionable under this subsection, but only if such an action 
        would not also be available under paragraph (1) (as a violation 
        of subsection (d)) based on the same mailing.
  ``(f) Promoter Nonliability.--A promoter shall not be subject to 
civil liability for the exclusion of an individual's name or address 
from any list maintained by that promoter for mailing skill contests or 
sweepstakes, if--
          ``(1) a removal request is received by the promoter's 
        notification system; and
          ``(2) the promoter has a good faith belief that the request 
        is from--
                  ``(A) the individual whose name and address is to be 
                excluded; or
                  ``(B) another duly authorized person.
  ``(g) Prohibition on Commercial Use of Lists.--
          ``(1) In general.--
                  ``(A) Prohibition.--No person may provide any 
                information (including the sale or rental of any name 
                or address) derived from a list described in 
                subparagraph (B) to another person for commercial use.
                  ``(B) Lists.--A list referred to under subparagraph 
                (A) is any list of names and addresses (or other 
                related information) compiled from individuals who 
                exercise an election under subsection (d).
          ``(2) Civil penalty.--Any person who violates paragraph (1) 
        shall be assessed a civil penalty by the Postal Service not to 
        exceed $2,000,000 per violation.
  ``(h) Civil Penalties.--
          ``(1) In general.--Any promoter--
                  ``(A) who recklessly mails nonmailable matter in 
                violation of subsection (b) shall be liable to the 
                United States in an amount of $10,000 per violation for 
                each mailing to an individual of nonmailable matter; or
                  ``(B) who fails to comply with the requirements of 
                subsection (c)(2) shall be liable to the United States.
          ``(2) Enforcement.--The Postal Service shall, in accordance 
        with the same procedures as set forth in section 3012(b), 
        provide for the assessment of civil penalties under this 
        section.''.
  (b) Technical and Conforming Amendments.--The table of sections for 
chapter 30 of title 39, United States Code, is amended by adding after 
the item relating to section 3016 the following:

``3017. Nonmailable skill contests or sweepstakes matter; notification 
to prohibit mailings.''.

  (c) Effective Date.--This section shall take effect 1 year after the 
date of enactment of this Act.

SEC. 9. STATE LAW NOT PREEMPTED.

  (a) In General.--Nothing in the provisions of this Act (including the 
amendments made by this Act) or in the regulations promulgated under 
such provisions shall be construed to preempt any provision of State or 
local law that imposes more restrictive requirements, regulations, 
damages, costs, or penalties. No determination by the Postal Service 
that any particular piece of mail or class of mail is in compliance 
with such provisions of this Act shall be construed to preempt any 
provision of State or local law.
  (b) Effect on State Court Proceedings.--Nothing contained in this 
section shall be construed to prohibit an authorized State official 
from proceeding in State court on the basis of an alleged violation of 
any general civil or criminal statute of such State or any specific 
civil or criminal statute of such State.

SEC. 10. TECHNICAL AND CONFORMING AMENDMENTS.

  (a) References to Repealed Provisions.--Section 3001(a) of title 39, 
United States Code, is amended by striking ``1714,'' and ``1718,''.
  (b) Conformance With Inspector General Act of 1978.--
          (1) In general.--Section 3013 of title 39, United States 
        Code, is amended--
                  (A) by striking ``Board'' each place it appears and 
                inserting ``Inspector General'';
                  (B) in the third sentence by striking ``Each such 
                report shall be submitted within sixty days after the 
                close of the reporting period involved'' and inserting 
                ``Each such report shall be submitted within 1 month 
                (or such shorter length of time as the Inspector 
                General may specify) after the close of the reporting 
                period involved''; and
                  (C) by striking the last sentence and inserting the 
                following:
``The information in a report submitted under this section to the 
Inspector General with respect to a reporting period shall be included 
as part of the semiannual report prepared by the Inspector General 
under section 5 of the Inspector General Act of 1978 for the same 
reporting period. Nothing in this section shall be considered to permit 
or require that any report by the Postmaster General under this section 
include any information relating to activities of the Inspector 
General.''.
          (2) Effective date.--This subsection shall take effect on the 
        date of enactment of this Act, and the amendments made by this 
        subsection shall apply with respect to semiannual reporting 
        periods beginning on or after such date of enactment.
          (3) Savings provision.--For purposes of any semiannual 
        reporting period preceding the first semiannual reporting 
        period referred to in paragraph (2), the provisions of title 
        39, United States Code, shall continue to apply as if the 
        amendments made by this subsection had not been enacted.

SEC. 11. EFFECTIVE DATE.

  Except as provided in section 8 or 10(b), this Act shall take effect 
120 days after the date of enactment of this Act.

                         I. Purpose and Summary

    H.R. 170 would establish strong consumer protections to 
prevent a number of types of deceptive mailings. It will impose 
various requirements on sweepstakes mailings, skill contests, 
facsimile checks, and mailings made to look like government 
documents. The reported bill will establish strong financial 
penalties, provide the Postal Service with additional authority 
to investigate and stop deceptive mailings, and preserve the 
ability of states to impose stricter requirements on such 
mailings.
    H.R. 170, as amended by the substitute agreed to by the 
Committee on October 28, would require sweepstakes mailings to 
clearly and conspicuously display: (1) a statement in the 
mailing, including the rules and order form, that no purchase 
is necessary to enter the contest; (2) a statement that a 
purchase would not improve the recipient's chances of winning; 
(3) all terms and conditions of the sweepstakes promotion, 
including the rules and entry procedures in language that is 
easy to find, read and understand; (4) the sponsor or mailer of 
the promotion and the principal place of business or other 
contact address of the sponsor or mailer; and (5) rules that 
clearly state the estimated odds of winning each prize, the 
quantity, estimated retail value, and nature of each prize, and 
the schedule of any payments made over time. In addition, the 
bill would prohibit sweepstakes mailings from making certain 
statements, including statements that an entry must be 
accompanied by an order or payment for a product previously 
ordered or that an individual is a winner of a prize unless 
that individual actually has won a prize.
    The bill also imposes requirements on skill contest 
mailings. Skill contests are defined as a puzzle, game, 
competition, or other contest in which a prize is awarded based 
on skill, and a purchase, payment, or donation is required. 
Skill contests mailings would be required to follow provisions 
on rules and disclosure of the sponsor similar to sweepstakes 
promotions. Skill contests mailings also must disclose: (1) the 
number of rounds, the cost to enter each round, whether 
subsequent rounds will be more difficult, and the maximum cost 
to enter all rounds; (2) the percentage of entrants who may 
solve correctly the skill contest; (3) the identity of the 
judges and the method used in judging; and (4) the date the 
winner will be determined as well as quantity and estimated 
value of each prize.
    The bill imposes new federal standards on facsimile checks 
sent in any mailing. These checks must include a statement on 
the check itself that it is non-negotiable and has no cash 
value.
    The legislation strengthens existing law on government 
look-alike mailings. Such mailings often come in a brown 
envelope and may use terms that imply a connection with the 
federal government, but actually are solicitations by a private 
sector company for a product or service. To address government 
look-alike mailings, the bill prohibits mailings that imply a 
connection to, approval, or endorsement by the federal 
government through the misleading use of a seal, insignia, 
reference to the Postmaster General, citation to a federal 
statute, trade or brand name, or any other term or symbol, 
unless the mailings carry two disclaimers already contained in 
existing law.
    Additionally, the bill prohibits mailings that contain any 
false representation implying that federal government benefits 
or services will be affected by any purchase or non-purchase. 
Any mailing that offers to sell any product or service provided 
by the federal government without cost must contain a notice to 
that effect.
    In addition to restrictions on the deceptive mailings 
themselves, the bill imposes new obligations on the companies 
sending sweepstakes and skill contests. Any person who uses the 
mail for any covered mailing would be required to adopt 
reasonable practices and procedures to prevent the mailing of 
these materials to any person, who by virtue of a written 
request, including requests made by a conservator, guardian, 
individual with power of attorney or a state attorney general, 
states their intent not to receive such mailings. The bill 
requires these persons or companies to maintain records of such 
requests for five years.
    The bill further requires companies sending sweepstakes or 
skill contests to establish a notification system, which would 
allow consumers to call a toll-free number to be removed from 
the mailing lists of the company. All sweepstakes or skill 
contest mailings would be required to contain the contact 
information for the company's notification system. The bill 
establishes a private right of action in state court for 
citizens who receive a follow-up mailing despite having 
requested removal from a mailer's lists. A similar provision 
was enacted as part of the Telephone Consumer Protection Act of 
1991 (47 U.S.C. 227).
    Under current law, the United States Postal Service (USPS) 
has inadequate authority to investigate, penalize, and stop 
deceptive mailings. The USPS does not have subpoena authority, 
is unable to obtain an order to stop deceptive mailings 
nationwide, and may only seek financial penalties when a 
company violates an order previously imposed by the USPS for 
sending deceptive mailings. This bill addresses these 
weaknesses in current law by granting the USPS subpoena 
authority, nationwide stop mail authority, and the ability to 
impose civil penalties.
    The bill also increases the civil penalties that the USPS 
may impose. The civil penalties for sending mailings that do 
not comply with the bill would be up to $25,000 for each 
mailing of less than 50,000 pieces; $50,000 for each mailing of 
50,000 to 100,000 pieces; with an additional $5,000 for each 
additional 10,000 pieces above 100,000, not to exceed 
$1,000,000. Any person who, through the use of the mail, evades 
or attempts to evade the terms of an order would be liable for 
twice the amount of this civil penalty.
    The bill also recognizes the states' strong role in 
investigating and prosecuting deceptive mailings. The bill 
states that nothing in the Act shall preempt any provision of 
state or local law that imposes more restrictive requirements, 
regulations, damages, costs or penalties. Nothing contained in 
the bill shall be construed to prohibit an authorized state 
official from proceeding in state court on the basis of an 
alleged violation of any civil or criminal statute of such 
state.
    Nearly all provisions of the bill would take effect 120 
days after the date of enactment.

              II. Background and Need for the Legislation

    The direct marketing industry has used sweepstakes mailings 
for over 30 years as a method to promote the sale of their 
products. Companies use sweepstakes to sell magazines and other 
merchandise, while other groups use sweepstakes mailings to 
raise funds or promote services.
    While most sweepstakes are legitimate and appropriate 
marketing devices, some of these promotions can be used to 
defraud and deceive consumers. Four major sweepstakes firms 
each send out hundreds of millions of mailings every year, and 
there is evidence that a significant number of individuals make 
excessive purchases in response to these mailings. In the 
aggregate, the sweepstakes industry has sent over one billion 
mailings per year in recent years. Deceptive mailings include a 
wide variety of promotions, including sweepstakes, skill 
contests, solicitations, and sales of goods or services by 
mail.
    The Magazine Publishers of America estimates that Americans 
annually spend $7 billion on magazine subscriptions, and 12 
percent of those sales derive from sweepstakes promotions. 
Thus, sweepstakes companies generate nearly $1 billion of 
magazine revenues per year. Indeed, sweepstakes mailings 
account for nearly one-third of all 156 million new magazine 
subscriptions sold each year.
    In the last 20 years, major sweepstakes companies have 
greatly increased their grand prizes and the sophistication of 
their marketing practices. They conduct a variety of contests 
every year, many offering a multi-million-dollar prize. 
Companies use many traditional direct marketing principles, 
such as targeting consumers according to timing, frequency and 
monetary value or the dollar amount of the purchases.
    Sweepstakes companies are constantly testing their 
marketing appeals, and have generally concluded that consumers 
make purchases in response to mailings with large prizes, 
``involvement devices'' such as stickers and stamps, and 
certain types of personalized appeals. As with many direct mail 
companies, sweepstakes firms send a large number of mailings to 
the general public that are often followed by targeted mailings 
to specialized lists of repeat customers.
    Mass mailings can be personalized within several places in 
a letter, and can feature symbols, devices, or documents that 
make them look unique. In general, the goal of such mass 
mailings is to distinguish them from other mail, enticing the 
consumer to open the envelope. Upon viewing the contents of 
these mass mailings, the consumer finds a personalized mailing 
that offers a message that can convince the consumer to make a 
purchase.
    Those on a target list can be sent even more sophisticated 
mailings, informing them when they became a customer, how many 
purchases they have made recently, and when they last entered a 
contest without making a purchase. Such mailings reinforce the 
concept that purchases are linked with receiving sweepstakes 
mailings and, therefore, with winning a prize. The implication, 
sometimes made by a direct statement, is that if the customer 
does not purchase a product, they may not receive the future 
sweepstakes mailings necessary to win a prize. Sweepstakes 
mailers often advertise the same contest in multiple mailings, 
thereby confusing targeted or vulnerable recipients and 
enticing them to make several purchases for the same contest.
    The tactics of sweepstakes mailings have generated 
thousands of consumer complaints, including complaints to state 
Attorneys General, the Federal Trade Commission, the Postal 
Service, consumer groups, and Members of Congress.
    Skill contests differ from sweepstakes in that the consumer 
must demonstrate skill, such as solving a word puzzle, in order 
to win the prize. The key difference between a skill contest 
and a sweepstakes is that a skill contest does not rely on 
chance, and may require consideration to participate. Winning a 
sweepstakes must be based solely on chance and no purchase can 
be required. Like sweepstakes promotions, skill contests may 
also be used in a deceptive manner to promote unnecessary 
purchases or payments.
    Consumers may be similarly deceived by skill contests 
offering large prizes in return for the payment of a small 
``judging fee.'' Responding to such mailings by sending money 
may only result in the consumer receiving even more mailings 
with additional skill contests that must be completed before 
any prize is awarded. Many skill contests have several levels 
that culminate in a complex contest that is extremely 
difficult. Thus, by the time the consumer is close to actually 
winning a prize, they have invested substantial sums of money 
solving relatively easy puzzles only to be presented with an 
extremely difficult puzzle that they have very little chance of 
solving.
    Facsimile checks are also used in promotional mailings, 
sometimes by operators of sweepstakes or skill contests, to 
catch the eye of the recipient. Mailings may be designed so 
that such facsimile checks are displayed through a window 
envelope, prompting many consumers to open the mailing. The 
facsimile check itself may look real in many respects, such as 
having an authorized signature and showing the name of a 
financial institution. Such facsimile checks can deceive 
consumers.
    Mailings may also be deceptive through the use of a variety 
of terms or symbols designed to make the mailing appear to be 
connected or endorsed by the federal government. Some mailings 
may offer to sell a product the government provides for free 
without so indicating.

            III. Legislative Hearings and Committee Actions

    H.R. 170 was introduced on January 6, 1999, by Mr. LoBiondo 
of New Jersey and Mr. Condit of California and referred to the 
Committee on Government Reform. On January 20, 1999, the bill 
was subsequently referred to the Postal Service Subcommittee. 
The measure was considered by the Subcommittee on September 30, 
1999. H.R. 170 was approved as amended by voice vote, and 
forwarded to the full Committee. On October 28, 1999, the full 
Committee on Government Reform considered H.R. 170 and passed 
the measure as amended by voice vote.

              IV. Committee Hearings and Written Testimony

    Both the Senate and the House have had several bills 
introduced regarding deceptive sweepstakes mailings during the 
105th and the 106th Congresses.
    The Postal Service Subcommittee conducted a hearing on the 
issue on August 4, 1999, because of the deep concern regarding 
the need to protect recipients, particularly the elderly, who 
fall prey to the deceptive information transmitted in the 
mailings, while at the same time recognizing that there is a 
commercial aspect to legitimate sweepstakes mailing that must 
be balanced against fraudulent and misleading mailings.
    Representative LoBiondo and Representative Rogan testified 
for their own bills, H.R. 170 and H.R. 237, which were both 
introduced on January 6, 1999. The Subcommittee also invited 
witnesses who commented on these bills as well as S. 335, the 
Senate passed legislation, the Deceptive Mail Prevention and 
Enforcement Act.
    Two sweepstakes bills, H.R. 2678 and H.R. 2731, were 
introduced in the House and referred to the subcommittee after 
the hearing and were, therefore, not considered at that time.

      hearing conducted by the subcommittee on the postal service

    In addition to Representatives LoBiondo and Rogan, the 
witnesses at the Subcommittee hearing on August 4, 1999, 
included the Honorable Orson Swindle, Commissioner, Federal 
Trade Commission (FTC); Ken Hunter, Chief Postal Inspector, 
United States Postal Inspection Service; Bernard L. Ungar, 
Director, Government Business Operations Issues, General 
Accounting Office (GAO); Sara Cooper, National Consumers League 
(NCL); Virginia Tierney, American Association of Retired 
Persons (AARP); Lee M. Cassidy, National Federation of 
Nonprofits (NFN); Jerry Cerasale, Direct Marketing Association 
(DMA); Michael Pashby, Magazine Publishers of America (MPA); 
Linda Goldstein, Promotion Marketing Association (PMA).
    Commissioner Swindle of the FTC testified that the Federal 
Trade Commission Act prohibits unfair methods of competition 
and deceptive practices affecting commerce and has a long 
history of challenging deceptive mail promotions. Its recent 
efforts include ``Project Mailbox,'' a joint federal-state 
initiative focusing on deceptive use of sweepstakes, prize 
promotions and other misleading marketing techniques in mail 
solicitations. The FTC systemically collects and analyzes 
consumer complaint data, which is currently about 7,000 
contacts a week, and more than 423,000 consumer complaints and 
inquiries. The Commissioner testified that the legislation 
covering sweepstakes was consistent with FTC's Telemarketing 
Sales Rule (TSR) which covers telemarketing and consumer fraud 
in that they both ensure that consumers receive information 
necessary to prevent making purchasing decisions on false or 
misleading information.
    The Inspection Service testified that among its duties, it 
is responsible for protecting consumers from being victimized 
by fraudulent schemes and other crimes using the U.S. mails 
system. Presently, 39 U.S.C. Sec. 3005 permits the Postal 
Service to take administrative action to return mail sent in 
response to a deceptive mailing, however, the proceedings may 
be time-consuming. Section 3007 authorizes the U.S. district 
courts to issue an injunction to prevent consumer losses while 
administrative proceedings are pending; it also allows the U.S. 
district courts to issue temporary restraining orders and 
preliminary injunctions. Other statutes permit the Postal 
Service to withhold mail sent to false or fictitious names or 
addresses. However, the Inspection Service testified that 
despite some success in protecting consumers, unscrupulous 
promoters have capitalized on the weaknesses of the statutes 
and continue to exploit the public. Though there are provisions 
for false representations in lotteries, there is no such 
provision for solicitations using sweepstakes, prize 
promotions, games of skill, or facsimile checks. Additionally, 
Mr. Hunter testified that the statues offer little in use of 
penalties to deter the fraudulent use of the mails. The 
Inspection Service is limited by the lack of subpoena 
authority. They asked for administrative subpoena authority 
such as given to other federal agencies whereby only records, 
document and other non-testimonial material relevant to the 
investigation could be compelled. The witness testified that 
because some promoters of fraudulent mailings use multiple 
fictitious names and addresses, consumers could be victimized 
many times by the same promoter. They suggested that the 
solicitor's name and principal place of business should be 
disclosed in a clear and conspicuous manner. It was suggested 
that the Inspection Service be permitted to detain mail to the 
promoter for temporary periods to forestall consumer injury. 
However, as some promoters receive mail in more than one 
judicial district, the Postal Service and the Department of 
Justice must apply to each district court in the district where 
mail is received. This can be avoided by allowing the court in 
any district where the promoter receives mail to order the 
Postal Service to detain mail, by virtue of a temporary 
restraining order, received at any address in response to the 
fraudulent scheme. The Postal Inspection Service does not 
advocate preemption of state and local statutes.
    Mr. Ungar of the GAO testified that consumer problems with 
deceptive mailings appear substantial, although comprehensive 
data to indicate the full extent of consumer problems with 
deceptive mailings were unavailable. However, studies conducted 
by the GAO and a national market research firm provided 
additional data regarding telephone pay per call schemes, 
telephone carrier switching (or slamming), prizes/sweepstakes/
gifts schemes that solicit advance fees prior to participation, 
complaints against credit bureau policies, and third party debt 
collection.
    The National Consumers League testified that there was a 
need for a central source of advice on telemarketing and 
assistance for fraud. The NCL created the National Fraud 
Information Center, which is a hotline for consumers to call 
for advice and to report suspected fraud. The information is 
relayed to more than 160 federal, state and local law 
enforcement agencies. Many telemarketing schemes are initiated 
by mail announcing that the consumer has won a prize and they 
should call to claim their winnings after paying a fee. Elderly 
people are more susceptible to falling for such schemes. It is 
becoming increasingly difficult to distinguish between 
legitimate and fraudulent sweepstakes. Even ``no purchase 
necessary'' messages do not convince consumers that a purchase 
will not put them in a better winning category. The NCL 
testified that a clear and prominent disclosure indicating that 
the mailing is merely an invitation to enter a game of chance, 
the odds of winning and that making apurchase will not in any 
way improve the chance of winning is essential. They testified that the 
Postal Inspection Service need more tools to stop fraudulent and 
deceptive mailings and must be able to issue subpoenas to help in its 
investigations.
    AARP testified that it has for the past three years 
campaigned against charity and telemarketing fraud because of 
targeting of older Americans. It has taken steps to educate its 
members and the public. In their studies, it was reported that 
40 percent of older American, mean age of 72, respond to 
sweepstakes solicitation. Those who ask to be billed later are 
more likely to continue participation in the sweepstakes. 
Twenty-three percent of those who participate believe that 
purchasing something might increase their chances of winning, 
in spite of disclaimers stating that a purchase is not 
necessary to win. AARP endorsed provisions to require mailings 
to include language stating that a purchase is not necessary to 
win, providing definition and guidelines to games of skill and 
providing stiff penalties for noncompliance. Also, it endorses 
enhanced subpoena authority to the Postal Inspection Service to 
stop deceptive mail and a notification system to provide 
consumers with numbers to call to have their names removed from 
the mailing lists of companies that promote products and 
services through sweepstakes. Both NCL and AARP testified in 
support of adding a private right of action to the bill, 
similar to that that exists in the Telephone Consumer 
Protection Act.
    The National Federation of Nonprofits (NFN) testified that 
charities especially rely on public trust to raise funds. They 
said that deceptive mailings should be prevented, but 
legislation should not discourage creative marketing, nor 
permit reasonable people to be deceived. They testified that 
the Senate bill might unnecessarily restrict charities and 
other nonprofit organization from seeking funds. NFN asked that 
charities and other nonprofit organizations should be exempt 
from the provisions of the legislation. Furthermore, they 
requested a 90-day period within which names can be added to 
the ``do not mail'' list, rather than 45 days.
    The Direct Marketing Association (DMA) testified that many 
of its 4,800 members utilize sweepstakes promotions to 
advertise their products. They reported that 80 percent of 
American households have received sweepstakes and 56 percent of 
those have entered. DMA testified that fraudulent operators 
required a payment at entry, including shipping and handling 
charges. DMA supports the increased authority for the Postal 
Service to issue subpoenas for information, after providing due 
process, and stop mail orders issued in one U.S. District Court 
to be enforceable in all Districts in the United States. DMA 
testified that 9 out of 10 sweepstakes participants do not make 
a purchase. However, DMA supports a national standard to help 
avoid confusion and to help those who are adversely impacted by 
these mailing to no longer receive such promotions. DMA opposes 
any legislation that would impede commercial speech; they 
oppose the legislative provisions that prescribe specific 
language, placement and size of font. They advocate that the 
bill establish a national standard, and not delegate authority 
to the Postal Service or another federal agency to establish 
them. Commenting on the manager's amendment in the Senate, the 
DMA supported the Federal Trade Commission's use of the terms 
``clear and conspicuous'' and opposed the inclusion of the word 
``prominent'' as confusing and not adding to the requirements 
in the legislation. However, DMA supports significant penalties 
for violation of the disclosures and the need for national 
standards. DMA supports the inclusion of an individual, private 
right of action in the bill, similar to the Telephone Consumer 
Protection Act.
    Michael Pashby of the Magazine Publishers of America (MPA), 
testified that sweepstakes has been used as a marketing tool in 
that industry for more than 30 years. The organization supports 
legislative changes to remedy the controversy in sweepstakes 
mailing practices and a uniform national standard for 
disclosures. MPA endorses self-regulatory efforts and consumer 
education, which they implemented in January to identify 
consumers who over subscribe, and reminding them of the ``no 
purchase'' clause. They also support the opt-out provision of 
consumers to deter future mailings. MPA is a founding member of 
the Freedom to Advertise Coalition, which is against the use of 
express wording, type size, style or place of sweepstakes 
disclosures. They are against giving additional rulemaking 
authority to the Postal Service because of the belief that the 
USPS is not subject to the Administrative Procedure Act and the 
public hearing and due process protections of law. MPA 
advocates the ``clear and conspicuous'' standard as used by the 
FTC and has concerns with the Manager's Amendment to insert 
``prominently'' in the formula. PMA supports the company-by-
company opt-out provision, and a preemption provision.
    Testifying on behalf of the Promotion Marketing Association 
(PMA) Linda Goldstein said that PMA supported strong consumer 
education to assist consumers in distinguishing between 
fraudulent and legitimate promotions. She said that there is 
great concern because of the decline in consumer confidence in 
sweepstakes resulting in loss of business and jobs. Many 
companies are instituting policies to identify high volume 
purchasers and to help them understand that purchase is not 
necessary to enter sweepstakes. Where appropriate, they are 
also instituting refunds and cancellations of orders. PMA 
supports legislation establishing uniform, minimum national 
standards for sweepstakes mailing that will curb fraudulent and 
deceptive practices while not restricting legitimate 
sweepstakes as an effective marketing tool. They caution that 
sweepstakes are a commercially protected form of free speech 
and therefore the legislation should conform to first amendment 
principles. PMA suggests thatthe legislation should be flexible 
enough to permit individual marketers to comply with different formats 
in their promotions. They support the clear and conspicuous language of 
the Senate bill rather than a uniform format that is more restrictive. 
PMA supports the affirmative disclosures relating to no purchase 
necessary language, numerical odds of winning and terms, conditions of 
the sweepstakes and the notification provision for the name removal 
procedure. However, magazines because of the manner in which the 
consumer acquires them, may find it burdensome to comply with the 
mandated disclosures. PMA, therefore, urges an exemption for magazines 
from disclosure provisions, as many marketers would place their 
advertisements in media other than magazines and newspapers. PMA 
opposes the Manager's Amendment to add the word ``prominently'' to the 
disclosure provisions, but supports the original ``clear and 
conspicuous'' language. PMA also was concerned at the lack of the 
reasonable person standard in the amendment though it is used in the 
FTC definition. The definition, they testified, should be determined in 
context of the group to whom the representation is primarily directed. 
The witness suggested some wording changes in the application of the 
notification system by replacing ``prohibit'' with ``exclude'' and ``or 
other duly authorized person'' with ``conservator, guardian or 
individual with power-of attorney.'' PMA is in favor of federal 
preemption because of the likely inconsistent regulations.

                       V. Explanation of the Bill


                      section-by-section analysis

Section 1: Short title

    This section cites the title of the bill as the ``Deceptive 
Mail Prevention and Enforcement Act.''

Section 2: Restrictions on mailings using misleading references to the 
        United States Government

    This section amends existing law, section 3001 (h) and (i) 
of title 39 of the U.S.C. and adds a new paragraph (j). This 
section adds to existing law by better preventing mailings from 
deceptively appearing to be endorsed or sent by the federal 
government.
    Paragraph (1) amends Section 3001(h) of Title 39 to broaden 
the types of mailings that are subject to the requirements of 
this subsection. The bill adds new terms to the list of those 
that would trigger the existing disclaimer requirements for 
solicitations by a non-governmental entity for the purchase of, 
or payment for, a product or service. In addition, paragraph 
(1)(C) imposes a new requirement which prohibits mailings 
covered under subsection (h) from containing a false 
representation stating or implying that federal government 
benefits or services will be directly affected by any purchase 
or nonpurchase.
    The new terms provide that any mailing which reasonably 
could be interpreted or construed as implying any endorsement, 
approval, or connection to the federal government through a 
reference to the Postmaster General, or name of a federal 
agency, department, commission, or program, or through the use 
of the seal or insignia of a federal entity would be considered 
nonmailable matter unless it satisfied the requirements of 
section 3001(h) (1), (2), or (3). In addition, mailings 
containing a reference to the Postmaster General or a citation 
to a federal statute that misrepresents either the identity of 
the mailer or the protection afforded such matter by the 
federal government would be considered nonmailable matter 
unless it met the requirements of section 3001(h) (1), (2), or 
(3).
    Concerns have been raised that the terms used to establish 
a government connection under existing law were unduly limited. 
By expanding the coverage of this subsection to include use of 
a reference to the Postmaster General, or name of a federal 
agency, department, commission, or program, the amendment 
adopted by the Committee intends to broaden the coverage of 
this subsection. Mailings should not use references to the 
Postmaster General or a Postmaster, the name of a federal 
agency, department, or commission, or the name of a federal 
program, to deceive consumers into believing the mailing or 
offer is endorsed or sent by the federal government.
    In addition, there is concern that mailings that sell 
products or services may contain false representations implying 
that an individual's federal benefits or services will be 
impacted if that individual does not make a purchase or agree 
to pay for a service. This section will prohibit mailings that 
appear to be connected to the government from soliciting funds 
through false representations implying that a reduction in an 
individual's government benefits may directly result if a 
product or service is not purchased. This provision is intended 
to prohibit the personalized representation in a mailing that 
an individual's own benefits, or those of a family member, will 
be directly affected by the individual's decision to purchase 
or not purchase goods or services, as opposed to false 
representations about federal benefits in general. Advocacy 
mailings, including those that solicit funds, which discuss the 
general status of federal benefits or programs, are not covered 
by this bill.
    Paragraph (2) amends subsection (i) of existing law to 
broaden the types of mailings that are subject to the 
requirements of this subsection. In a manner identical to 
paragraph (1), this paragraph adds new terms to the list of 
those that would trigger the existing disclaimer requirements 
for solicitations by anongovernmental entity for information or 
the contribution of funds or membership fees. In addition, paragraph 
(2)(C) imposes a new requirement which prohibits mailings covered under 
subsection (i) from containing a false representation stating or 
implying that federal government benefits or services will be affected 
directly by any purchase or nonpurchase.
    As in paragraph (1), paragraph (2) adds new terms to 
existing law to restrict the use of terms implying the 
endorsement or approval of, or some official connection to, the 
federal government. These changes to existing law are made for 
the same reasons described for subsection (h).
    Paragraph (3) redesignates subsections (j) and (k) of 
existing law as subsections (m) and (n). Any regulations 
necessary to implement the provisions of this bill shall be 
provided with appropriate notice and opportunity for comment. 
Since provisions of this bill relate to the mailability of 
matter under the existing Chapter 30, which is titled 
Nonmailable Matter, existing subsection 3001(j), which is 
redesignated as (m), would apply to any regulations issued to 
implement provisions of this Act.
    Paragraph (4) adds a new subsection (j) that declares as 
nonmailable any matter that constitutes a solicitation for the 
purchase of any product or service that is provided without 
cost by the federal government, if it does not contain a clear 
and conspicuous statement that the product or service is 
provided without cost by the federal government. Such mailings 
may use a corporate name that implies a connection to the 
federal government, and may refer to certain federal laws or 
requirements. A mailing, for example, may offer to complete a 
form to obtain a Social Security number for an individual for a 
$15 fee. Under the provisions of the bill, such a mailing must 
contain a statement indicating that such information is 
provided by the federal government and can be obtained without 
cost from the federal government.
    There may be instances where a company makes use of 
government forms or services that are provided for free, but 
adds value to these forms or services by providing an 
additional service or additional expertise. For example, a tax 
preparer may obtain and provide to a client government tax form 
and, in doing so, also provides tax advice. In such instances 
where an individual is paying for the expertise of a company, 
and the mere acquisition of a government form is incidental to 
the service, this subsection shall not apply.
    Similarly, a company may offer to sell a service that the 
federal government provides for free on a limited or qualified 
basis. For example, the federal government may offer a service 
only to certain individuals. If the service is not provided for 
free to the public in general, then it would be permissible 
under this provision to mail solicitations offering that 
service without the required disclaimer.

Section 3: Restrictions on sweepstakes and deceptive mailings

    This section establishes a number of consumer protections 
by making sweepstakes, skill contests, and facsimile checks 
nonmailable under certain circumstances.
    Section 3001 of existing law is amended by adding a new 
subsection (k), which details the requirements for sweepstakes, 
skill contests, and facsimile checks. Subsection (k)(1)(A) 
defines ``clearly and conspicuously displayed'' as presented in 
a manner that is readily noticeable, readable, and 
understandable to the group to whom the applicable matter is 
disseminated. A disclosure that is readily noticeable and 
understandable to the average member of the group to which the 
mail matter was sent would meet this definition. Subsection 
(k)(1)(B) defines a facsimile check as any matter designed to 
resemble a check or other negotiable instrument that is not 
negotiable. Subsection (k)(1)(C) defines a skill contest as a 
puzzle, game, competition, or other contest in which (i) a 
prize is awarded or offered; (ii) the outcome depends 
predominately on the skill of the contestant; and (iii) a 
purchase, payment, or donation is required or implied to be 
required to enter the contest. Subsection (k)(1)(D) defines a 
sweepstakes as a game of chance one voluntarily enters for 
which no consideration is required.
    Subsection (k)(2) directs the Postal Service not to 
deliver, and to dispose of, any mail declared nonmailable by 
paragraph (3). Subsection (k)(3) sets forth the conditions by 
which the Postal Service shall determine if sweepstakes, skill 
contests, and facsimile checks are nonmailable.
    Subsection (k)(3)(A)(i) limits the requirements on 
sweepstakes mailings to those mailings that include entry 
materials for a sweepstakes. Some mailings may contain 
information about a particular sweepstakes, but not offer an 
individual the opportunity to enter the sweepstakes or purchase 
a product. Such mailings might announce a future sweepstakes or 
respond to the inquiry of an individual about an ongoing 
sweepstakes. Since such mailings do not offer the opportunity 
to make a purchase enter a sweepstakes, there is no direct link 
between placing an order and entering the sweepstakes. While 
this subsection does not impose requirements on sweepstakes 
mailings that do not include entry materials, those sending 
such sweepstakes mailings are cautioned to avoid marketing 
practices designed to circumvent the consumer safeguards 
provided in this section.
    Subsection (k)(3)(A)(ii) contains a number of requirements 
for sweepstakes mailings. Subsections (k)(3)(A)(ii)(I) and (II) 
require allsweepstakes mailings to contain a statement in the 
mailing, in the rules, and on the order form that no purchase is 
necessary to enter the sweepstakes and that a purchase will not improve 
the chances of winning with that entry.
    The Committee recognizes the wide variety of formats used 
in sweepstakes mailings, and should a mailing not contain a 
separate solicitation, rules and entry or order form, these 
statements need only appear in the rules and on the order form. 
Should mailings contain the rules and order form on the same 
document or on separate sides of a document, the statements 
required by these subsections shall appear in both places.
    Subsection (k)(3)(A)(ii)(III) requires the terms and 
conditions of sweepstakes mailings, including the rules and 
entry procedures, to be written in language that is easy to 
find, read, and understand.
    Subsection (k)(3)(A)(ii)(IV) requires each sweepstakes 
mailing to state the name of the sponsor or mailer and their 
principal place of business or the address at which they may be 
contacted. Many sweepstakes mailings use the name of fictitious 
companies or identities intended to hide the true name of the 
company responsible for the sweepstakes mailing. The use of 
fictitious company names, combined with the use of Post Office 
Boxes or addresses of Commercial Mail Receiving Agencies makes 
it difficult for consumers and enforcement agencies to identify 
the actual name and address of the party responsible for the 
mailing. Those sending sweepstakes mailings are expected to 
disclose on each mailing a name and address where the sponsor 
of the sweepstakes may be contacted.
    Subsection (k)(3)(A)(ii)(V)(aa) requires the rules in each 
sweepstakes mailing to list the estimated odds of winning each 
prize, and the odds should be stated in clear terms. If the 
odds of winning a particular prize or all prizes are dependent 
on the number of entries received, the rules should state the 
estimated odds based on the number of expected entries.
    Subsection (k)(3)(A)(ii)(V)(bb) requires the rules in each 
sweepstakes mailing to clearly state the quantity, estimated 
retail value, and nature of each prize.
    Subsection (k)(3)(A)(ii)(V)(cc) requires the rules in each 
sweepstakes mailing to clearly state the schedule of any 
payments made over time. For example, if a $1,000,000 prize is 
to be awarded over 20 years, the rules should indicate that the 
$1,000,000 shall be paid in equal amounts of $50,000 per year 
for 20 years starting in 1999.
    Subsection (k)(3)(A)(ii)(VI) prohibits sweepstakes mailings 
from representing that individuals not purchasing products or 
services may be disqualified from receiving future sweepstakes 
mailings. There is concern that some sweepstakes mailings link 
ordering products with entering the contests, and may give the 
impression that not purchasing a product will prevent an 
individual from receiving future contest entries.
    Subsection (k)(3)(A)(ii)(VII) prohibits sweepstakes 
mailings from requiring that an entry be accompanied by an 
order or payment for a product or service previously ordered. 
This subsection outlaws ``prompt pay'' sweepstakes, which offer 
the opportunity to enter a sweepstakes only to those making or 
paying for a purchase. Such sweepstakes inappropriately link 
the purchase of a product with entering a sweepstakes.
    Subsection (k)(3)(A)(ii)(VIII) prohibits sweepstakes 
mailings from representing that an individual is a winner of a 
prize unless that individual has actually won a prize.
    Subsection (k)(3)(A)(ii)(IX) prohibits sweepstakes mailings 
from containing any representation that contradicts or is 
inconsistent with the sweepstakes rules or with any other 
disclosure required under this subsection. Sweepstakes mailings 
are prohibited from including any statement qualifying, 
limiting, or explaining the rules or disclosures in a manner 
inconsistent with the rules or disclosures.
    Subsection (k)(3)(B) establishes requirements for mailings, 
including entry materials for skill contests or promotions that 
purport to be a skill contest. Subsection (k)(3)(B)(ii)(I) 
requires skill contests to state all terms and conditions, 
including the rules and entry procedures, in language that is 
easy to find, read, and understand.
    Subsection (k)(3)(B)(ii)(II) requires each skill contest 
mailing to state the name of the sponsor or mailer and their 
principal place of business or the address at which they may be 
contacted.
    Subsection (k)(3)(B)(ii)(III) lists the requirements for 
the rules of skill contests: (aa) the number of rounds or 
levels of the contest and the cost to enter each round or 
level; (bb) if subsequent rounds or levels of the contest will 
be more difficult to solve; (cc) the maximum cost to enter all 
rounds or levels of the contest; (dd) the estimated number or 
percentage of entrants who may correctly solve the skill 
contest or the approximate number or percentage of entrants 
correctly solving the past three skill contests conducted by 
the sponsor; (ee) the identity or description of the 
qualifications of the judges if the contest is judged by other 
than the sponsor; (ff) the method used in judging; (gg) the 
date by whichthe winner or winners will be determined and the 
date or process by which prizes will be awarded; (hh) the quantity, 
estimated retail value, and nature of each prize; and (ii) the schedule 
of any payments made over time.
    Subsection (k)(3)(C) requires any facsimile check to 
contain a statement on the check itself that it is not a 
negotiable instrument and has no cash value. These documents 
seek to attract the attention of consumers, often by including 
a device that resembles a check, but which is not negotiable. 
Such facsimile checks may include a bank name, the name of the 
recipient of the letter listed as the payee, a dollar amount, 
and an authorized signature. Facsimile checks may create 
consumer confusion, increasing the impression that an 
individual has actually won a large amount of money or is 
eligible to receive the payment listed on the facsimile check. 
Including a clear and conspicuous disclaimer on the face of the 
facsimile check, which states that the check is not a 
negotiable instrument and has no cash value, will decrease the 
consumer's confusion over the nature of the facsimile check.
    Subsection (k)(4) provides an exemption from the 
nonmailability provisions of the bill for magazines, 
newspapers, and other periodicals containing sweepstakes, skill 
contests, and facsimile checks if the sweepstakes, skill 
contest, or facsimile check, contained therein (A) is not 
directed to a named individual, or (B) does not include an 
opportunity to make a payment or order a product or service.
    The Committee does not intend that magazines, newspapers, 
and other periodicals be judged as nonmailable simply because 
they contain an advertisement publicizing a sweepstakes or 
skill contest, or because they contain a facsimile check. An 
advertisement alone does not present the same potential for 
abuse or deception as direct mail promotions unless such 
advertisement contains personalization and offers the 
opportunity to make a purchase. Advertisements including those 
elements would make the publication similar to a promotional 
mailing soliciting a purchase from an individual and, thus, 
would be required to adhere to the provisions of subsection 
(k)(3) (A), (B), and (C).
    Subsection (k)(5) requires any statement, notice, or 
disclaimer required under paragraph (3) to be clearly and 
conspicuously displayed, and the statements required under 
(k)(3)(A)(ii) (I) and (II) to be more conspicuously displayed. 
This provision ensures that the statements required by the bill 
are readily apparent and understood by the average reader, and 
ensures that the statements that no purchase is necessary and 
that a purchase would not improve an entrant's chances of 
winning be displayed more prominently. The Federal Trade 
Commission suggested that the use of ``more conspicuously,'' 
rather than ``prominent,'' avoids the confusion arising from 
the introduction of a new standard as suggested by S. 335, and 
tracks laws enforced by that agency, including the Truth in 
Lending Act, 15 U.S.C. 1632(a).
    This ``more conspicuously'' requirement recognizes the 
importance of the two disclaimers and the fact that what is 
``clear and conspicuous'' for one disclaimer may differ from 
what is necessitated by another. As in the requirement 
contained in the Truth-in-Lending Act, it is intended that the 
disclosures that no purchase is necessary and that a purchase 
will not improve an individual's chances of winning be more 
conspicuously displayed than the other statements, notices, and 
disclaimers required under (k)(3). This may be accomplished in 
a variety of ways as befit the format and layout of different 
promotional mailings. In determining whether these two 
disclosures meet the ``more conspicuously'' standard, it is 
intended that consideration be given to the manner in which 
these disclosures are presented in relation to the other 
material appearing on the same page or document on which these 
disclosures appear. It is not the intent to require that these 
two disclosures necessarily appear in a larger type size, 
bolder typeface, or similarly more prominent graphic depiction 
than the other disclosures required under (k)(3), which may be 
appearing elsewhere in the solicitation materials. For example, 
these two disclosures appearing on the entry or order device 
may, by virtue of their very placement and location, be deemed 
to be ``displayed more conspicuously'' than other disclosures 
appearing elsewhere in the solicitation.
    Subsection (k)(6) directs the Postal Service, when 
enforcing paragraph (3), to consider all the materials included 
in the mailing and language on and visible through the 
envelope. Mailings should be judged based upon their overall 
impression and that all elements of a mailing should be 
reviewed to determine mailability. A mailing may be designed so 
that some portions comply with the requirements of paragraph 
(3), even though other aspects of the mailing are deceptive and 
misleading. In such cases, the Postal Service shall consider 
the disclosures in the context of all the elements of the 
advertisement and, if such disclosures are ineffective in 
correcting the overall deceptive representation of the mail 
piece, it should be declared nonmailable.
    Subsection (l)(1) requires any person who uses the mails 
for any mailings covered under subsections (h), (i), (j), or 
(k) to adopt reasonable practices and procedures to allow 
individuals to request that they no longer receive such 
mailings. An individual may make such a request personally, or 
through a conservator, guardian, or individual with power of 
attorney. Subsection (l)(1)(A) requires such a request to be in 
writing to the mailer of such matter. Subsection (l)(1)(B) 
allows a written request to be submitted to an attorney general 
(or any state government official who transmits the request to 
that attorney general) for submission to the mailer of such 
matter.
    Numerous individuals have encountered great difficulty 
removing their names or the names of their family members from 
sweepstakes mailing lists. Companies sending promotional 
mailings covered by the bill should implement a system to 
remove from their mailing lists the names of individuals who do 
not wish to receive such mailings. Companies may elect to 
establish their own toll-free telephone number to provide 
consumers with information about how they may be removed from 
mailing lists or where an appropriately authorized individual 
may write to request the removal of an individual. Companies 
may satisfy the requirements of this subsection by 
participating in the system established by section 8 of the 
bill, but shall also allow individuals identified in subsection 
(l)(1) to request the removal of individuals from their own 
mailing lists.
    Subsection (l)(2) requires any person who uses the mails 
for any mailings covered under subsections (h), (i), (j), or 
(k) to maintain or cause to be maintained a record of all 
requests made under paragraph 1. The records shall be 
maintained in a form to permit the suppression of an applicable 
name at the applicable address for five years from the time a 
mailer receives the request to remove the name.

Section 4: Postal Service orders to prohibit deceptive mailings

    This section amends section 3005 of existing law to allow 
the Postal Service to impose orders prohibiting the delivery 
and receipt of mail by those found to be mailing nonmailable 
matter under subsections (j) and (k), as added by sections 2 
and 3 of the bill. The bill simply adds subsections (j) and (k) 
to those already included in section 3005.
    Under existing law, such an order allows the Postmaster to 
return mail delivered to a company found in violation of the 
law, forbids the payment by a postmaster of any money order or 
postal note drawn to such a company, provides for return to the 
customer of the sum in such postal note, and requires the 
person in violation to cease and desist from engaging in the 
deceptive activities.

Section 5: Temporary restraining order

    This section authorizes a district court, upon a proper 
showing, to issue an order to detain incoming and outgoing mail 
which is the subject of a proceeding under section 3005. A 
proper showing shall require proof of a likelihood of success 
on the merits. When mail is sent or received in more than one 
district, the order may be sought in a single district but will 
be applicable in all relevant districts. Section 3007 of 
existing law is amended by redesignating subsection (b) as (c) 
and striking existing subsection (a) and inserting new 
subsection (a) and (b). Subsection (a)(1) authorizes the Postal 
Service, in preparation for or during the pendency of 
proceedings under section 3005, to request from a district 
court in any district in which mail is sent or received, or in 
any district in which the defendant is located, a temporary 
restraining order and preliminary injunction. Proceedings must 
follow the requirements of Rule 65 of the Federal Rules of 
Civil Procedure.
    Subsection (a)(2)(A) establishes that, upon a proper 
showing, the court shall enter an order that shall remain in 
effect during the pendency of any statutory proceedings and any 
judicial review of such proceedings, or any action to enforce 
orders issued under the proceedings. The order shall direct the 
Postmaster, in any and all districts, to detain the defendant's 
incoming and outgoing mail that is the subject of proceedings 
under section 3005. Currently, the Postal Service must apply to 
each district in which a defendant receives mail in order to 
obtain an injunction detaining the incoming mail. Numerous 
instances have been reported where a promoter used several 
addresses in multiple districts under a variety of names, 
requiring the Postal Service to bring an action in each 
judicial district to detain all incoming mail. This provision 
promotes the efficient use of judicial and investigative 
resources.
    Subsection (a)(2)(B) states that a proper showing shall 
require proof of a likelihood of success on the merits of the 
proceedings under section 3005. The standard for issuing a 
temporary restraining order under existing section 3007 is 
probable cause. This provision changes the standard to bring 
the standard in line with that of other statutory injunction 
provisions. A proper showing shall only require proof of a 
likelihood of success on the merits by a preponderance of 
evidence. The bill provides that no finding of irreparable harm 
would be necessary if the government has shown a likelihood of 
success on the merits of the statutory based action.
    Subsection (a)(3) requires that mail detained pursuant to 
the statute be made available for examination by the defendant, 
who would have been notified of the action pursuant to the 
requirements of Rule 65 noted above. Any mail matter that the 
Postal Service has not clearly shown to be the subject of 
proceedings under section 3005 shall be delivered as addressed. 
The Postal Service is also expected to promptly deliver any of 
the defendant's mail that has no relationship to the detention. 
It shall carefully review such mail so as not to impose an 
undue burden or unfair restriction on the defendant's receipt 
of other mail.
    Subsection (a)(4) states that no finding of intent to make 
a false representation or to conduct a lottery is required to 
support the issuance of an order under this section.
    Subsection (b) states that any judicial review of the 
proceedings under sections 3005 shall be in the district in 
which the order under subsection (a) was issued. Thus, the 
decision made in the administrative forum would be appealed to 
the District Court that granted the temporary restraining 
order.
    As suggested by the Department of Justice, references to 
Section 3006 of title 39 are removed from this bill, since 
Section 3006 was found unconstitutional by the United States 
Supreme Court in Blount v. Rizzi, 400 U.S. 410 (1971), and has 
not been enforced.

Section 6: Civil penalties and costs

    The Postal Inspection Service testified that mailers 
routinely change their promotions in order to comply with an 
issued stop order but the new promotions often violate the law 
in a different way. Section 3012 is amended to give the Postal 
Service the authority to impose a fine without first obtaining 
a stop order, and to base the Section 3012 fines on the size of 
the mailing in question, rather than on the number of days on 
which the activity being penalized was performed. Under current 
law, the Postal Service can only impose a fine based on the 
violation of a stop order, not based on the activity for which 
the stop order is issued. This section provides for fines based 
solely on the activity being penalized (before a stop order is 
issued), and provides for larger fines for subsequently 
violating a stop order. In doing so, the bill significantly 
increases the civil fine available for failure to comply with a 
stop order.
    Subsection (a) of existing law is amended by increasing the 
civil penalty for violating or evading a stop order from 
$10,000 per day to a sliding scale based on the quantity of 
pieces mailed. The penalty scale is $50,000 for each mailing of 
less than 50,000 pieces; $100,000 for each mailing of 50,000 to 
100,000 pieces; and an additional $10,000 for each additional 
10,000 pieces above 100,000, not to exceed $2,000,000. These 
fines are twice the amounts provided in subsection (c), since 
they are intended to punish not only the activity being 
penalized, but also the failure to comply with a stop order.
    Subsection (c), as amended, provides for a civil penalty 
prior to the issuance of a stop order. This penalty also is 
calculated on a sliding scale based on the quantity of pieces 
mailed. The penalty scale is $25,000 for each mailing of less 
than 50,000 pieces; $50,000 for each mailing of 50,000 to 
100,000 pieces; and an additional $5,000 for each additional 
10,000 pieces above 100,000, not to exceed $1,000,000.
    Under current law, the civil penalty imposed by subsection 
(a) takes into account certain factors such as the nature, 
circumstances, extent, and gravity of the violation. With 
respect to the violator, current law also considers the 
defendant's ability to pay the penalty, the effect of the 
penalty on the ability of the violator to conduct lawful 
business, any history of prior violations of such section, the 
degree of culpability and other such matters as justice may 
require. The civil penalty imposed in subsection (c) takes the 
same factors into account.
    Subsection (d) provides for a separate penalty if a company 
fails to comply with the requirement to adopt reasonable 
practices and procedures to prevent unwanted mailings to 
consumers who have requested cessation of such mailings. 
Violations of this provision can result in a civil penalty of 
$10,000 for each improper mailing. Mailers who are in 
compliance with the provisions included in Section 8 of this 
Act would not be subject to this fine.

Section 7: Administrative subpoenas

    Section 7 adds a new section 3016 to authorize the use of 
subpoenas in investigations conducted under Section 3005(a) of 
title 39.
    Subsection (a) of section 3016 authorizes the use of 
subpoenas in any investigation conducted under Section 3005(a). 
The subpoena authority allows for the production of any 
records, including books, papers, documents, and other tangible 
things which constitute or contain evidence that is relevant or 
material to the investigation. Subpoena authority will provide 
an additional investigative tool necessary in investigations of 
deceptive mail schemes. The subpoena authority should assist in 
establishing violations of Subsections 3001 (d), (h), (i), (j), 
and (k) of title 39 and in the assessment of penalties.
    As suggested by the Department of Justice and the United 
States Postal Service Office of the Inspector General, 
subsection (a) requires the Postal Service to develop 
procedures for the issuance of subpoenas, including the mandate 
that: (1) a case be opened on an individual or entity before a 
subpoena can be issued; (2) a headquarters-level review of each 
subpoena be conducted; and (3) the Postmaster General may only 
delegate subpoena approval authority to the Postal Service's 
General Counsel or a Deputy General Counsel. The Committee 
recognizes that effective enforcement of this legislation 
requires the timely issuance of subpoenas. Therefore, the 
Committee fully expects that the Postal Service will implement 
efficient and effective procedures for the expeditious approval 
of requested subpoenas, and the Committee plans to examine this 
matter in its future oversight activities in order to ensure 
that an expeditious process has indeed been established.
    In addition, Subsection (a)(2) of section 3016 will make 
this subpoenaauthority available to Judicial Officers during 
the course of a hearing during which the Postal Service may issue an 
order under Section 3005(a). The current sanctions for failure of a 
party to comply with a discovery order of the presiding officer (39 
C.F.R. 952.21(j))--precluding the offending party from supporting or 
opposing designated charges, or inferring that facts would be adverse 
to a party--may not adequately substitute for either the actual 
production of documents or the testimony of persons. This change would 
give the Judicial Officer an additional tool for use in ensuring a fair 
hearing, available in appropriate instances at the request of either 
party. Final authority to issue subpoenas is vested with the Judicial 
Officer in these circumstances, to avoid conflicts of interest when the 
Judicial Officer seeks to subpoena Postal Service records or testimony 
on behalf of the subject of the hearings. The proposed subpoena 
authority would also parallel the authority already in place in the 
Program Fraud Civil Remedies Act (31 U.S.C. 3804) and, for the Board of 
Contract Appeals, in the Contract Disputes Act of 1978 (41 U.S.C. 610).
    Subsection (b) of section 3016 designates the method of 
service of process within the United States and abroad. The 
section also differentiates the service of process upon natural 
persons versus businesses along with the proof of such service.
    Subsection (c) of section 3016 prescribes the procedure for 
the Postmaster General to seek enforcement of a subpoena. 
Although the subpoenas are not self-enforcing, a federal 
district court pursuant to these regulations can enforce them.
    Subsection (b) of the Section 7 authorizes the Postal 
Service to promulgate regulations setting forth the procedures 
it will use to implement section 3016. These regulations are to 
be promulgated no later than 120 days after the enactment of 
this section.
    As suggested by the Department of Justice and the Postal 
Service's Inspector General, subsection (c) of Section 7 
mandates that the Postal Service's use of the subpoena 
authority created by section 3016 be included in the 
information required to be included in the Inspector General's 
semiannual reports under section 3013.

Section 8: Requirements of promoters of skill contests or sweepstakes 
        mailings

    Section 8 creates a new section 3017 entitled ``Nonmailable 
skill contests or sweepstakes matter; notification to prohibit 
mailings.''
    In general, section 8 mandates that sweepstakes operators 
establish easy-to-use notification systems by which a person or 
someone legally authorized to act on their behalf, such as a 
legal guardian, or a relative with power of attorney, can have 
their name and address removed from the promoter's sweepstakes 
mailings lists. Upon appropriate notification, promoters will 
have 60 calendar days to remove the names and addresses from 
their mailing lists. Any subsequent mailings sent after the 60-
day period to people who have requested removal from mailing 
lists are considered nonmailable matter, and the promoter may 
be held liable for civil penalties for sending such matter.
    Subsection (a)(1) defines who must comply with section 8. 
Promoter is defined as any person who originates sweepstakes 
and/or games of skill mailings. The person who merely prints or 
mails matter for a skill contest or sweepstakes is not covered 
by this section, unless that printer or mailer also originates 
or materially assists with operating the sweepstakes or 
contest. Only the originator of the sweepstakes or contest that 
is the subject of the mailing must comply with section 8 to 
ensure that the person responsible for the creation and 
promotion of the sweepstakes is covered rather than a middleman 
who simply prints or sends the mailing.
    Promoters who send matter which is included in a magazine, 
newspaper or other periodical, as defined and limited by 
Section 3001(k)(4) of Title 39 (as amended), are not subject to 
the requirements of this section for those mailings, just as 
they are not subject to the disclosure requirements of Section 
3 of the Bill. Because these mailings do not encourage an 
individual to make a purchase in connection with the mailing, 
these types of mailings are of much less concern.
    Subsection (a)(2) defines a removal request as a request 
stating that an individual elects to have their name and 
address removed from skill contest or sweepstakes mailing 
lists. Submission of this removal request will indicate an 
individual's choice to be removed from all sweepstakes and 
skill contest mailing lists used by the promoter who receives 
the request. This subsection, however, does not require 
specific language to state such an intent.
    Subsection (a)(3) states that the terms ``skill contest,'' 
``sweepstakes,'' and ``clearly and conspicuously displayed'' 
are identical to the definitions of these terms previously used 
in section 3 of the bill.
    Subsection (a)(4) defines the term ``duly authorized 
person,'' as used to describe those who may request removal 
from sweepstakes and skill contest mailing lists on behalf of 
another. This definition tracks the language of Subsection 
3001(l)(1) as amended by Section 3 of this bill, describing 
those who are authorized to request removal on behalf of 
another under that section.
    Subsection (b) describes nonmailable material as any matter 
that (i) is a skill contest or sweepstakes (except if included 
in a magazine, newspaper, or other periodical); (ii) is 
addressed to an individual who made an election to be excluded 
from mailing lists by using the uniform notification system; 
and (iii) does not contain the information required by 
subsection (c)(1).
    Promoters of skill contests or sweepstakes must provide in 
each mailing a clear and conspicuous statement that includes a 
toll-free telephone number or address of the notification 
system as required by subsection (c)(1). The mailpieces must 
also state that a person can use the system to prohibit the 
promoter from sending any further mailings. These requirements 
are essential to inform consumers of the option to halt all 
further sweepstakes and skill contest mailings from the 
promoter. Placing the toll-free number directly on all mailings 
with a description of the specific steps a person must take to 
stop all mailings from the promoter ensures that the removal 
process is easily understandable.
    Subsection (c)(2) requires promoters covered by section 8 
to establish and maintain a notification system.
    Subsection (d)(1) specifies that an individual must submit 
a removal request to the notification system in order for their 
name and address to be excluded from future mailings. Promoters 
are free to accept removal requests through the use of a toll-
free number.
    Subsection (d)(2) states that promoters must remove an 
individual's name and address from skill contests and 
sweepstakes mailings lists no later than 60 calendar days after 
the notification system receives an individual's removal 
request. Promoters shall not include the individual's name in 
mailing lists used for sweepstakes or skills contest mailings 
after the 60-calendar day period has elapsed.
    Sixty calendar days is a sufficient period of time to allow 
promoters to check the system and remove individuals from their 
mailing lists. In addition, mailers often prepare mailings 
weeks before sending them, and requiring such mailers to find 
and remove specific mailpieces from such mailings would be too 
onerous. The goal is to keep the amount of time promoters have 
to remove names to a reasonable minimum, so that months and 
months will not elapse while numerous additional mailings flood 
mailboxes.
    Subsection (d)(3) establishes the means by which an 
individual can reverse a decision not to receive sweepstakes or 
skill contest mailings from a promoter. In order for an 
individual to change their election to be removed from all 
sweepstakes and skill contest mailing lists, the individual 
must advise the promoter in writing that they wish to receive 
such mailings again. During the time that an individual has 
been removed from all mailing lists, promoters should not flood 
such individuals with mailings or phone calls urging them to 
change their election.
    Subsection (e) is modeled on the private right of action 
created by the Telephone Consumer Protection Act of 1991, found 
at Section 227 (c)(5) of Title 47, and is expected to operate 
in a similar manner. This subsection establishes a private, 
individual right of action in State court for those individuals 
who receive sweepstakes or skill contest mailings from a 
promoter more than 60 days after the individual has elected not 
to receive such mailings from the promoter. The promoter's 
liability for each violation is limited to the actual monetary 
loss caused by the individual's receipt of the mailing, or 
$500, whichever is greater, unless the promoter willfully 
violated subsection (d). Given the damage limit, action most 
likely would be undertaken in the small claims court of that 
state. Individuals can also seek injunctions against future 
skill contest or sweepstakes mailings from the promoter in the 
appropriate state court.
    Subsection (f) states that promoters will not be subject to 
civil liability if they exclude an individual's name and 
address from their mailing lists, so long as (i) a removal 
request is received by the notification system; (ii) the 
promoter or person maintaining the system has a good faith 
belief that the request is from the individual whose name and 
address is to be excluded or is from another duly authorized 
person. Promoters should not be held liable for removing 
someone from their mailing lists if they have a good faith 
belief that the person wished to be dropped from the lists, 
even though it is subsequently discovered that the person 
making the request was not actually the individual or the 
person with the legal authority to request removal.
    One major concern is misuse of the removal lists. Since 
many on the lists will be those who have been the most 
susceptible to misleading sweepstakes and skill contest 
mailings, such lists could be used to determine who is 
particularly vulnerable to future deception. Protection of 
these names is of the utmost importance. Therefore, under 
subsection (g)(1)(A), no person may disclose any information 
derived from these lists for commercial purposes, especially 
the sale or rental of names or addresses. Subsection (g)(1)(B) 
defines ``list'' as any roster of names and addresses or other 
related information compiled from individuals who elect not to 
receive sweepstakes and skill contest mailings.
    Penalties for violation of subsection (g)(1) are 
significant. Subsection (g)(2) states that any person who 
violates subsection (g)(1) shall be assessed a civil penalty by 
the Postal Service of up to $2,000,000 per violation. Strong 
civil penalties are necessary in order to deter misuse of the 
lists.
    Under subsection (h)(1)(A), any promoter who recklessly 
mails sweepstakes or skills contest mailings (beyond the 60 day 
period, which begins on the day the promoter receives the 
request) to an individual who has made a proper removal request 
is liable to the United States for $10,000 per mailing. This 
strong penalty is also necessary. It will deter promoters from 
violating the requirement that they remove an individual from 
their mailing lists and will encourage promoters to maintain an 
adequate notification system.
    Failure to substantially comply with the requirement that 
promoters establish and maintain a notification system will 
also subject these promoters to civil penalties under 
subsection (h)(1)(B). The Courts can determine appropriate 
amounts on a case by-case basis.
    Subsection (h)(2) states that the Postal Service shall 
assess civil penalties under section 8, in accordance with the 
procedures set forth in section 3012(b). Subsection (c) states 
that section 8 will take effect one year after the date of 
enactment of the Act.

Section 9: State laws not preempted

    Subsection (a) states that nothing in this bill shall be 
construed to preempt any provision of state or local law that 
imposes more restrictive requirements, regulations, damages, 
costs or penalties. States and localities should be able to 
impose and enforce laws that also seek to prevent deceptive 
mailings. Also, other agencies may take actions against 
deceptive mailings under other federal laws, and the Committee 
does not intend that the provisions of this bill restrict or 
preempt any federal law or limit any civil penalties that may 
be imposed under other federal laws.
    Subsection (b) states that nothing contained in this 
section shall be construed to prohibit an authorized state 
official from proceeding in state court on the basis of an 
alleged violation of any civil or criminal statute of such 
state.

Section 10: Technical and conforming amendments

    Subsection (a) removes references in Section 3001 of Title 
39 to Sections 1714 and 1718 of Title 18, which were repealed 
by Title XII of the Crime Control Act of 1990, Public Law 101-
647.
    Subsection (b) insures that the reporting requirements of 
Chapter 30 are updated to reflect conformance with the 
Inspector General Act of 1978 (as required by Section 
410(b)(10) of Title 39) as well as the creation of a 
structurally independent Inspector General for the Postal 
Service in 1996. This change takes effect upon enactment of the 
bill. Under the Inspector General Act, Inspectors General are 
responsible for all audits and investigations conducted within 
their respective federal entities. The original intent of 
section 3013, as described in the legislative history to PL 98-
186, was to require twice-yearly reports to the Congress on the 
investigative activities of the Postal Service under the false 
representation statutes.

Section 11: Effective date

    Except as noted in Section 8 and Section 10(b), the 
provisions of the bill will take effect 120 days after the date 
of enactment.

                    VI. Committee Oversight Findings

    Pursuant to rule XIII, clause 3(c)(1), of the Rules of the 
House of Representatives, the results and findings for those 
oversight activities are incorporated in the recommendations 
found in the bill and in this report.

                  VII. Budget Analysis and Projections

    The budget analysis and projections required by Section 
308(a) of the Congressional Budget Act of 1974 are contained in 
the estimate of the Congressional Budget Office.

         VIII. Cost Estimate of the Congressional Budget Office

                                     U.S. Congress,
                               Congressional Budget Office,
                                  Washington, DC, November 1, 1999.
Hon. Dan Burton,
Chairman, Committee on Government Reform,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 170, the Deceptive 
Mail Prevention and Enforcement Act.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contacts are Mark 
Grabowicz (for federal costs) and John Harris (for the private-
sector impact).
            Sincerely,
                                          Barry B. Anderson
                                    (For Dan L. Crippen, Director).
    Enclosure.

H.R. 170--Deceptive Mail Prevention and Enforcement Act

    Summary: H.R. 170 would establish a number of new federal 
crimes and restrictions relating to deceptive mailings and 
sweepstakes and would increase the penalties for such offenses. 
CBO estimates that implementing this legislation would not 
result in any significant impact on the federal budget. Because 
enactment of H.R. 170 could affect receipts, pay-as-you-go 
procedures would apply to the bill. However, CBO estimates that 
any impact on receipts would not be significant.
    H.R. 170 contains several private-sector mandates as 
defined in the Unfunded Mandates Reform Act (UMRA), but the 
costs imposed by these mandates would not exceed the statutory 
threshold established in UMRA ($100 million in 1996, adjusted 
annually for inflation). This legislation contains no 
intergovernmental mandates as defined in UMRA and would impose 
no costs on the budgets of state, local, or tribal governments.
    Estimated cost to the federal government: Because H.R. 170 
would establish new federal crimes relating to deceptive 
mailings and sweepstakes, the federal government would be able 
to pursue cases that it otherwise would not be able to 
prosecute. CBO expects that any increase in federal costs for 
law enforcement by the Postal Service or court proceedings 
would not be significant, however, because of the small number 
of additional cases likely to be involved. Any additional costs 
to the Postal Service would be classified as off-budget, while 
any increased costs to the federal judiciary would be subject 
to appropriation.
    Because violators of the provisions of H.R. 170 could be 
subject to civil penalties, the federal government might 
collect additional fines if the bill is enacted. Collections of 
such fines are recorded in the budget as governmental receipts 
(revenues). CBO expects that any additional receipts would be 
less than $500,000 annually.
    Pay-as-you-go considerations: The Balanced Budget and 
Emergency Deficit Control Act sets up pay-as-you-go procedures 
for legislation affecting direct spending or receipts. Enacting 
H.R. 170 could affect receipts, but CBO estimates that any such 
effects would be less than $500,000 a year.
    Estimated impact on state, local, and tribal governments: 
H.R. 170 contains no intergovernmental mandates as defined in 
UMRA and would impose no costs on the budgets of state, local, 
or tribal governments.
    Estimated impact on the private sector: H.R. 170 would 
create several new private-sector mandates for direct-mail 
advertisers and sweepstakes and contest operators. Direct-mail 
advertisers would be required to remove references to the 
Postmaster General from their advertisements. Sweepstakes and 
contest operators would be required to add a number of 
disclosures to their mailings and to honor requests from 
individuals to be excluded from future mailings. CBO estimates 
that the total costs of these mandates to the private sector 
would fall below the threshold established in UMRA ($100 
million in 1996, adjusted annually for inflation).
    To keep firms from implying that their products or services 
are endorsed or approved by the federal government, federal law 
already prohibits most uses of federal symbols or the names and 
titles of federal agencies and officers in mailed 
advertisements. H.R. 170 would specifically extend that 
prohibition to the name and title of the Postmaster General. In 
order to comply with the mandate, firms would need to remove 
references to the Postmaster General from their existing 
advertisements. Because printing and postage constitute the 
bulk of firms' expenses in producing and distributing 
advertisements through the mail and the new prohibition would 
do little to affect either, this mandate would not have a 
significant impact on firms' immediate costs of doing business.
    The disclosures that sweepstakes and contest operators 
would be required to make include: an explanation that purchase 
of the firm's products affect neither the odds of winning nor 
inclusion in future mailings; a statement of rules, conditions, 
fees, and entry procedure; and a description for each prize, 
given the quantity, the retail value, and a numerical statement 
of the odds of winning. Firms would also be required to put 
disclaimers on facsimile checks and to refrain from 
representing a person as a winner unless that person has won a 
prize. The largest sweepstakes firms already make most of these 
disclosures. To comply with themandate, an individual firm 
might have to do no more than add a single disclosure, such as a 
numerical statement of odds. Other firms might have to do considerably 
more. The costs of redrafting and redesigning mailings would thus vary 
from firm to firm. Development costs for new mailings, however, are 
relatively small in relation to costs for printing and postage. CBO 
anticipates that sweepstakes and contest operators would try to avoid 
increasing the number of pages in their mailings because that would 
result in printing and postage cost increases. Consequently, although 
variation within the industry makes precise estimate difficult, the 
cost to firms of adding additional disclosures would probably be small.
    H.R. 170 would require sweepstakes operators to honor 
direct written requests from individuals to be excluded from 
future mailings. The firms would be required to store and to 
honor the requests for five years. Many firms already honor 
such requests, however, and, because there is little reason to 
believe that the number of requests firms receive would 
increase significantly in the future, it is unlikely that 
firms' costs would increase because of this mandate. Currently, 
only a small portion of recipients of sweepstakes-related mail 
request to be excluded from future mailings. Seventy to eighty 
percent of recipients simply discard unwanted mailings.
    Sweepstakes and contest operators would also be required to 
participate in the creation of a national notification system 
that would allow individuals to make a single request that 
their names be removed from the mailing lists of all 
sweepstakes and contest operators. The notification system 
would have to forward written requests from individuals to 
participating firms within 60 business days. Such firms would 
be required to include information about the notification 
system in their mailings. Most sweepstakes firms already 
participate in the Direct Marketing Association's Mail 
Preference Service, which is similar to the notification system 
required by H.R. 170. The Mail Preference Service, however, 
deals with all forms of direct mail, including catalogs, 
coupons, and other advertisements. In order to comply with the 
mandate, sweepstakes and contest operators would need to 
establish a system limited to sweepstakes and contest mailings. 
The Direct Marketing Association budgets approximately $500,000 
per year to operate the Mail Preference Service. CBO expects 
that it would cost sweepstakes and contest operators a similar 
amount each year to operate the notification system. Startup 
costs would increase the amount required in the first year.
    Previous CBO estimate: On June 15, 1999, CBO transmitted a 
cost estimate for S. 335, the Deceptive Mail Prevention and 
Enforcement Act, as ordered reported by the Senate Committee on 
Governmental Affairs on May 20, 1999. Unlike H.R. 170, S. 335 
would allow the Postal Service to spend any penalties collected 
under the bill, and the two cost estimates reflect this 
difference.
    Estimate prepared by: Federal costs: Mark Grabowicz; impact 
on the private sector: John Harris.
    Estimate approved by: Peter H. Fontaine, Deputy Assistant 
Director for Budget Analysis.

               IX. Statement of Constitutional Authority

    Pursuant to rule XIII, clause 3(d)(1), the Committee finds 
that clauses 7, and 18 of Article 1, Section 8 of the U.S. 
Constitution grants Congress the power to enact this law.

                      X. Committee Recommendations

    On October 28, 1999, a quorum being present, the Committee 
ordered the bill favorably reported to the House for 
consideration by voice vote.

         XI. Congressional Accountability Act; Public Law 104-1

    The Committee finds that the legislation does not relate to 
the terms and conditions of employment or access to public 
services or accommodations within the meaning of section 
102(B)(3) of the Congressional Accountability Act (P.L. 104-1).

    XII. Unfunded Mandates Reform Act; Public Law 104-4, Section 423

    The Committee finds that the legislation does not impose 
Federal mandates within the meaning of section 423 of the 
Unfunded Mandates Reform Act (P.L. 104-4); enactment of H.R. 
170 should also result in no significant regulatory impact. 
Although H.R. 170 contains several private-sector mandates, the 
Congressional Budget Office has determined that the cost of 
these mandates to the private sector would be well below the 
threshold specified in P.L. 104-4.

   XIII. Federal Advisory Committee Act (5 U.S.C. App.) Section 5(b)

    The Committee finds that the legislation does not establish 
or authorize establishment of an advisory committee within the 
definition of 5 U.S.C. App., Section 5(b).

       XIV. Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, existing law in which no change is 
proposed is shown in roman):

                     TITLE 39, UNITED STATES CODE

           *       *       *       *       *       *       *



                         PART IV--MAIL MATTER

           *       *       *       *       *       *       *


                     CHAPTER 30--NONMAILABLE MATTER

Sec.
3001. Nonmailable matter.
     * * * * * * *
[3006. Unlawful matter.]
     * * * * * * *
3015. Nonmailable plant pests and injurious animals.
3016. Administrative subpoenas.
3017. Nonmailable skill contests or sweepstakes matter; notification to 
          prohibit mailings.

Sec. 3001. Nonmailable matter

  (a) Matter the deposit of which in the mails is punishable 
under section 1302, 1341, 1342, 1461, 1463, [1714,] 1715, 1716, 
1717, [1718,] or 1738 of title 18, or section 26 of the Animal 
Welfare Act is nonmailable.

           *       *       *       *       *       *       *

  (h) Matter otherwise legally acceptable in the mails which 
constitutes a solicitation by a nongovernmental entity for the 
purchase of or payment for a product or service; and [contains 
a seal, insignia, trade or brand name, or any other term or 
symbol that reasonably could be interpreted or construed as 
implying any Federal Government connection, approval or 
endorsement] which reasonably could be interpreted or construed 
as implying any Federal Government connection, approval, or 
endorsement through the use of a seal, insignia, reference to 
the Postmaster General, citation to a Federal statute, name of 
a Federal agency, department, commission, or program, trade or 
brand name, or any other term or symbol; or contains any 
reference to the Postmaster General or a citation to a Federal 
statute that misrepresents either the identity of the mailer or 
the protection or status afforded such matter by the Federal 
Government is nonmailable matter and shall not be carried or 
delivered by mail, and shall be disposed of as the Postal 
Service directs, unless--
          (1) such nongovernmental entity has such expressed 
        connection, approval or endorsement;
          (2)(A) such matter bears on its face, in conspicuous 
        and legible type in contrast by typography, layout, or 
        color with other printing on its face, in accordance 
        with regulations which the Postal Service shall 
        prescribe, the following notice: ``THIS PRODUCT OR 
        SERVICE HAS NOT BEEN APPROVED OR ENDORSED BY THE 
        FEDERAL GOVERNMENT, AND THIS OFFER IS NOT BEING MADE BY 
        AN AGENCY OF THE FEDERAL GOVERNMENT.'', or a notice to 
        the same effect in words which the Postal Service may 
        prescribe; [and]
          (B) the envelope or outside cover or wrapper in which 
        such matter is mailed bears on its face in capital 
        letters and in conspicuous and legible type, in 
        accordance with regulations which the Postal Service 
        shall prescribe, the following notice: ``THIS IS NOT A 
        GOVERNMENT DOCUMENT.'', or a notice to the same effect 
        in words which the Postal Service may prescribe; [or] 
        and
          (C) such matter does not contain a false 
        representation stating or implying that Federal 
        Government benefits or services will be affected by any 
        purchase or nonpurchase; or

           *       *       *       *       *       *       *

  (i) Matter otherwise legally acceptable in the mails which 
constitutes a solicitation by a nongovernmental entity for 
information or the contribution of funds or membership fees and 
[contains a seal, insignia, trade or brand name, or any other 
term or symbol that reasonably could be interpreted or 
construed as implying any Federal Government connection, 
approval or endorsement] which reasonably could be interpreted 
or construed as implying any Federal Government connection, 
approval, or endorsement through the use of a seal, insignia, 
reference to the Postmaster General, citation to a Federal 
statute, name of a Federal agency, department, commission, or 
program, trade or brand name, or any other term or symbol; or 
contains any reference to the Postmaster General or a citation 
to a Federal statute that misrepresents either the identity of 
the mailer or the protection or status afforded such matter by 
the Federal Government is nonmailable matter and shall not be 
carried or delivered by mail, and shall be disposed of as the 
Postal Service directs, unless--
          (1) such nongovernmental entity has such expressed 
        connection, approval or endorsement;
          (2)(A) such matter bears on its face, in conspicuous 
        and legible type in contrast by typography, layout, or 
        color with other printing on its face, in accordance 
        with regulations which the Postal Service shall 
        prescribe, the following notice: ``THIS ORGANIZATION 
        HAS NOT BEEN APPROVED OR ENDORSED BY THE FEDERAL 
        GOVERNMENT, AND THIS OFFER IS NOT BEING MADE BY AN 
        AGENCY OF THE FEDERAL GOVERNMENT.'', or a notice to the 
        same effect in words which the Postal Service may 
        prescribe; [and]
          (B) the envelope or outside cover or wrapper in which 
        such matter is mailed bears on its face in capital 
        letters and in conspicuous and legible type, in 
        accordance with regulations which the Postal Service 
        shall prescribe, the following notice: ``THIS IS NOT A 
        GOVERNMENT DOCUMENT.'', or a notice to the same effect 
        in words which the Postal Service may prescribe; [or] 
        and
          (C) such matter does not contain a false 
        representation stating or implying that Federal 
        Government benefits or services will be affected by any 
        contribution or noncontribution; or

           *       *       *       *       *       *       *

  (j)(1) Any matter otherwise legally acceptable in the mails 
which is described in paragraph (2) is nonmailable matter, 
shall not be carried or delivered by mail, and shall be 
disposed of as the Postal Service directs.
  (2) Matter described in this paragraph is any matter that--
          (A) constitutes a solicitation for the purchase of or 
        payment for any product or service that--
                  (i) is provided by the Federal Government; 
                and
                  (ii) may be obtained without cost from the 
                Federal Government; and
          (B) does not contain a clear and conspicuous 
        statement giving notice of the information set forth in 
        clauses (i) and (ii) of subparagraph (A).
  (k)(1) In this subsection--
          (A) the term ``clearly and conspicuously displayed'' 
        means presented in a manner that is readily noticeable, 
        readable, and understandable to the group to whom the 
        applicable matter is disseminated;
          (B) the term ``facsimile check'' means any matter 
        that--
                  (i) is designed to resemble a check or other 
                negotiable instrument; but
                  (ii) is not negotiable;
          (C) the term ``skill contest'' means a puzzle, game, 
        competition, or other contest in which--
                  (i) a prize is awarded or offered;
                  (ii) the outcome depends predominately on the 
                skill of the contestant; and
                  (iii) a purchase, payment, or donation is 
                required or implied to be required to enter the 
                contest; and
          (D) the term ``sweepstakes'' means a game of chance 
        for which no consideration is required to enter.
  (2) Except as provided in paragraph (4), any matter otherwise 
legally acceptable in the mails which is described in paragraph 
(3) is nonmailable matter, shall not be carried or delivered by 
mail, and shall be disposed of as the Postal Service directs.
  (3) Matter described in this paragraph is any matter that--
          (A)(i) includes entry materials for a sweepstakes or 
        a promotion that purports to be a sweepstakes; and
          (ii)(I) does not contain a statement that discloses 
        in the mailing, in the rules, and on the order or entry 
        form, that no purchase is necessary to enter such 
        sweepstakes;
          (II) does not contain a statement that discloses in 
        the mailing, in the rules, and on the order or entry 
        form, that a purchase will not improve an individual's 
        chances of winning with such entry;
          (III) does not state all terms and conditions of the 
        sweepstakes promotion, including the rules and entry 
        procedures for the sweepstakes;
          (IV) does not disclose the sponsor or mailer of such 
        matter and the principal place of business or an 
        address at which the sponsor or mailer may be 
        contacted;
          (V) does not contain sweepstakes rules that state--
                  (aa) the estimated odds of winning each 
                prize;
                  (bb) the quantity, estimated retail value, 
                and nature of each prize; and
                  (cc) the schedule of any payments made over 
                time;
          (VI) represents that individuals not purchasing 
        products or services may be disqualified from receiving 
        future sweepstakes mailings;
          (VII) requires that a sweepstakes entry be 
        accompanied by an order or payment for a product or 
        service previously ordered;
          (VIII) represents that an individual is a winner of a 
        prize unless that individual has won such prize; or
          (IX) contains a representation that contradicts, or 
        is inconsistent with sweepstakes rules or any other 
        disclosure required to be made under this subsection, 
        including any statement qualifying, limiting, or 
        explaining the rules or disclosures in a manner 
        inconsistent with such rules or disclosures;
          (B)(i) includes entry materials for a skill contest 
        or a promotion that purports to be a skill contest; and
          (ii)(I) does not state all terms and conditions of 
        the skill contest, including the rules and entry 
        procedures for the skill contest;
          (II) does not disclose the sponsor or mailer of the 
        skill contest and the principal place of business or an 
        address at which the sponsor or mailer may be 
        contacted; or
          (III) does not contain skill contest rules that 
        state, as applicable--
                  (aa) the number of rounds or levels of the 
                contest and the cost to enter each round or 
                level;
                  (bb) that subsequent rounds or levels will be 
                more difficult to solve;
                  (cc) the maximum cost to enter all rounds or 
                levels;
                  (dd) the estimated number or percentage of 
                entrants who may correctly solve the skill 
                contest or the approximate number or percentage 
                of entrants correctly solving the past 3 skill 
                contests conducted by the sponsor;
                  (ee) the identity or description of the 
                qualifications of the judges if the contest is 
                judged by other than the sponsor;
                  (ff) the method used in judging;
                  (gg) the date by which the winner or winners 
                will be determined and the date or process by 
                which prizes will be awarded;
                  (hh) the quantity, estimated retail value, 
                and nature of each prize; and
                  (ii) the schedule of any payments made over 
                time; or
          (C) includes any facsimile check that does not 
        contain a statement on the check itself that such check 
        is not a negotiable instrument and has no cash value.
  (4) Matter that appears in a magazine, newspaper, or other 
periodical shall be exempt from paragraph (2) if such matter--
          (A) is not directed to a named individual; or
          (B) does not include an opportunity to make a payment 
        or order a product or service.
  (5) Any statement, notice, or disclaimer required under 
paragraph (3) shall be clearly and conspicuously displayed. Any 
statement, notice, or disclaimer required under subclause (I) 
or (II) of paragraph (3)(A)(ii) shall be displayed more 
conspicuously than would otherwise be required under the 
preceding sentence.
  (6) In the enforcement of paragraph (3), the Postal Service 
shall consider all of the materials included in the mailing and 
the material and language on and visible through the envelope 
or outside cover or wrapper in which those materials are 
mailed.
  (l)(1) Any person who uses the mails for any matter to which 
subsection (h), (i), (j), or (k) applies shall adopt reasonable 
practices and procedures to prevent the mailing of such matter 
to any person who, personally or through a conservator, 
guardian, or individual with power of attorney--
          (A) submits to the mailer of such matter a written 
        request that such matter should not be mailed to such 
        person; or
          (B)(i) submits such a written request to the attorney 
        general of the appropriate State (or any State 
        government officer who transmits the request to that 
        attorney general); and
          (ii) that attorney general transmits such request to 
        the mailer.
  (2) Any person who mails matter to which subsection (h), (i), 
(j), or (k) applies shall maintain or cause to be maintained a 
record of all requests made under paragraph (1). The records 
shall be maintained in a form to permit the suppression of an 
applicable name at the applicable address for a 5-year period 
beginning on the date the written request under paragraph (1) 
is submitted to the mailer.
  [(j)] (m) Except as otherwise provided by law, proceedings 
concerning the mailability of matter under this chapter and 
chapters 71 and 83 of title 18 shall be conducted in accordance 
with chapters 5 and 7 of title 5.
  [(k)] (n) The district courts, together with the District 
Court of the Virgin Islands and the District Court of Guam, 
shall have jurisdiction, upon cause shown, to enjoin violations 
of section 1716 of title 18.

           *       *       *       *       *       *       *


Sec. 3005. False representations; lotteries

  (a) Upon evidence satisfactory to the Postal Service that any 
person is engaged in conducting a scheme or device for 
obtaining money or property through the mail by means of false 
representations, including the mailing of matter which is 
nonmailable under section 3001(d), (h), [or] (i), (j), or (k) 
of this title, or is engaged in conducting a lottery, gift 
enterprise, or scheme for the distribution of money or of real 
or personal property, by lottery, chance, ordrawing of any 
kind, the Postal Service may issue an order which--
          (1) * * *

           *       *       *       *       *       *       *

For purposes of the preceding sentence, the mailing of matter 
which is nonmailable under such section 3001(d), (h), [or] (i), 
(j), or (k) by any person shall constitute prima facie evidence 
that such person is engaged in conducting a scheme or device 
for obtaining money or property through the mail by false 
representations.

           *       *       *       *       *       *       *

  (c) As used in this [section and section 3006 of this title,] 
section, the term ``representative'' includes an agent or 
representative acting as an individual or as a firm, bank, 
corporation, or association of any kind.

           *       *       *       *       *       *       *


[Sec. 3006. Unlawful matter

  [Upon evidence satisfactory to the Postal Service that a 
person is obtaining or attempting to obtain remittances of 
money or property of any kind through the mail for an obscene, 
lewd, lascivious, indecent, filthy, or vile thing or is 
depositing or causing to be deposited in the United States mail 
information as to where, how, or from whom such a thing may be 
obtained, the Postal Service may--
          [(1) direct any postmaster at an office at which mail 
        arrives, addressed to such a person or to his 
        representative, to return the mail to the sender marked 
        ``Unlawful''; and
          [(2) forbid the payment by a postmaster to such a 
        person or his representative of any money order or 
        postal note drawn to the order of either and provide 
        for the return to the remitter of the sum named in the 
        money order.]

Sec. 3007. Detention of mail for temporary periods

  [(a) In preparation for or during the pendency of proceedings 
under sections 3005 and 3006 of this title, the United States 
district court in the district in which the defendant receives 
his mail shall, upon application therefor by the Postal Service 
and upon a showing of probable cause to believe either section 
is being violated, enter a temporary restraining order and 
preliminary injunction pursuant to rule 65 of the Federal Rules 
of Civil Procedure directing the detention of the defendant's 
incoming mail by the postmaster pending the conclusion of the 
statutory proceedings and any appeal therefrom. The district 
court may provide in the order that the detained mail be open 
to examination by the defendant and such mail be delivered as 
is clearly not connected with the alleged unlawful activity. An 
action taken by a court hereunder does not affect or determine 
any fact at issue in the statutory proceedings.]
  (a)(1) In preparation for or during the pendency of 
proceedings under section 3005, the Postal Service may, under 
the provisions of section 409(d), apply to the district court 
in any district in which mail is sent or received as part of 
the alleged scheme, device, lottery, gift enterprise, 
sweepstakes, skill contest, or facsimile check or in any 
district in which the defendant is found, for a temporary 
restraining order and preliminary injunction under the 
procedural requirements of rule 65 of the Federal Rules of 
Civil Procedure.
  (2)(A) Upon a proper showing, the court shall enter an order 
which shall--
          (i) remain in effect during the pendency of the 
        statutory proceedings, any judicial review of such 
        proceedings, or any action to enforce orders issued 
        under the proceedings; and
          (ii) direct the detention by the postmaster, in any 
        and all districts, of the defendant's incoming mail and 
        outgoing mail, which is the subject of the proceedings 
        under section 3005.
  (B) A proper showing under this paragraph shall require proof 
of a likelihood of success on the merits of the proceedings 
under section 3005.
  (3) Mail detained under paragraph (2) shall--
          (A) be made available at the post office of mailing 
        or delivery for examination by the defendant in the 
        presence of a postal employee; and
          (B) be delivered as addressed if such mail is not 
        clearly shown to be the subject of proceedings under 
        section 3005.
  (4) No finding of the defendant's intent to make a false 
representation or to conduct a lottery is required to support 
the issuance of an order under this section.
  (b) If any order is issued under subsection (a) and the 
proceedings under section 3005 are concluded with the issuance 
of an order under that section, any judicial review of the 
matter shall be in the district in which the order under 
subsection (a) was issued.
  [(b)] (c) This section does not apply to mail addressed to 
publishers of newspapers and other periodical publications 
entitled to a periodical publication rate or to mail addressed 
to the agents of those publishers.

           *       *       *       *       *       *       *


Sec. 3011. Judicial enforcement

  (a) * * *

           *       *       *       *       *       *       *

  (e) Nothing in this section or in section 3010 shall be 
construed as amending, preempting, limiting, modifying, or 
otherwise in any way affecting section 1461 or 1463 of title 18 
or section [3006, 3007,] 3007 or 3008 of this title.

Sec. 3012. Civil penalties

  (a) Any person--
          (1) * * *

           *       *       *       *       *       *       *

shall be liable to the United States for a civil penalty in an 
amount not to exceed [$10,000 for each day that such person 
engages in conduct described by paragraph (1), (2), or (3) of 
this subsection.] $50,000 for each mailing of less than 50,000 
pieces; $100,000 for each mailing of 50,000 to 100,000 pieces; 
with an additional $10,000 for each additional 10,000 pieces 
above 100,000, not to exceed $2,000,000. A separate penalty may 
be assessed under thissubsection with respect to the conduct 
described in each such paragraph.
  (b)(1) Whenever, on the basis of any information available to 
it, the Postal Service finds that any person has engaged, or is 
engaging, in conduct described by paragraph (1), (2), or (3) of 
subsection (a), (c), or (d), the Postal Service may, under the 
provisions of section 409(d) of this title, commence a civil 
action to enforce the civil penalties established by such 
subsection. Any such action shall be brought in the district 
court of the United States for the district in which the 
defendant resides or receives mail.
  (2) If the district court determines that a person has 
engaged, or is engaging, in conduct described by paragraph (1), 
(2), or (3) of subsection (a), (c), or (d), the court shall 
determine the civil penalty, if any under this section, taking 
into account the nature, circumstances, extent, and gravity of 
the violation or violations of such subsection, and, with 
respect to the violator, the ability to pay the penalty, the 
effect of the penalty on the ability of the violator to conduct 
lawful business, any history of prior violations of such 
subsection, the degree of culpability, and such other matters 
as justice may require.
  (c)(1) In any proceeding in which the Postal Service may 
issue an order under section 3005(a), the Postal Service may in 
lieu of that order or as part of that order assess civil 
penalties in an amount not to exceed $25,000 for each mailing 
of less than 50,000 pieces; $50,000 for each mailing of 50,000 
to 100,000 pieces; with an additional $5,000 for each 
additional 10,000 pieces above 100,000, not to exceed 
$1,000,000.
  (2) In any proceeding in which the Postal Service assesses 
penalties under this subsection the Postal Service shall 
determine the civil penalty taking into account the nature, 
circumstances, extent, and gravity of the violation or 
violations of section 3005(a), and with respect to the 
violator, the ability to pay the penalty, the effect of the 
penalty on the ability of the violator to conduct lawful 
business, any history of prior violations of such section, the 
degree of culpability and other such matters as justice may 
require.
  (d) Any person who violates section 3001(l) shall be liable 
to the United States for a civil penalty not to exceed $10,000 
for each mailing to an individual.
  [(c)] (e) All penalties collected under authority of this 
section shall be paid into the Treasury of the United States.
  [(d)] (f) In any proceeding at any time under this section, 
the defendant shall be entitled as a defense or counterclaim to 
seek judicial review, if not already had, pursuant to chapter 7 
of title 5, of the order issued under section 3005 of this 
title. However, nothing in this section shall be construed to 
preclude independent judicial review otherwise available 
pursuant to chapter 7 of title 5 of an order issued under 
section 3005 of this title.

Sec. 3013. Semiannual reports on investigative activities of the Postal 
                    Service

  The Postmaster General shall submit semiannual reports to the 
[Board] Inspector General summarizing the investigative 
activities of the Postal Service. One semiannual report shall 
be submitted for the reporting period beginning on October 1 
and ending on March 31, and the other semiannual report shall 
be submitted for the reporting period beginning on April 1 and 
ending on September 30. [Each such report shall be submitted 
within sixty days after the close of the reporting period 
involved] Each such report shall be submitted within 1 month 
(or such shorter length of time as the Inspector General may 
specify) after the close of the reporting period involved and 
shall include with respect to such reporting period--
          (1) * * *

           *       *       *       *       *       *       *

          (4) the total amount of expenditures and obligations 
        incurred in carrying out the investigative activities 
        of the Postal Service; [and]
          [(5) the number of cases in which the authority 
        described in section 3016 was used, and a comprehensive 
        statement describing how that authority was used in 
        each of those cases; and
          [(5)] (6) such other information relating to the 
        investigative activities of the Postal Service as the 
        [Board] Inspector General may require.
[Upon approval of a report submitted under the first sentence 
of this section, the information in such report shall be 
included in the next semiannual report required under section 5 
of the Inspector General Act of 1978 (5 U.S.C. App.).] The 
information in a report submitted under this section to the 
Inspector General with respect to a reporting period shall be 
included as part of the semiannual report prepared by the 
Inspector General under section 5 of the Inspector General Act 
of 1978 for the same reporting period. Nothing in this section 
shall be considered to permit or require that any report by the 
Postmaster General under this section include any information 
relating to activities of the Inspector General.

Sec. 3016. Administrative subpoenas

  (a) Subpoena Authority.--
          (1) Investigations.--
                  (A) In general.--In any investigation 
                conducted under section 3005(a), 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 considers relevant or 
                material to such investigation.
                  (B) Condition.--No subpoena shall be issued 
                under this paragraph except in accordance with 
                procedures, established by the Postal Service, 
                requiring that--
                          (i) a specific case, with an 
                        individual or entity identified as the 
                        subject, be opened before a subpoena is 
                        requested;
                          (ii) appropriate supervisory and 
                        legal review of a subpoena request be 
                        performed; and
                          (iii) delegation of subpoena approval 
                        authority be limited to the Postal 
                        Service's General Counsel or a Deputy 
                        General Counsel.
          (2) Statutory proceedings.--In any statutory 
        proceeding conducted under section 3005(a), the 
        Judicial Officer may require by subpoena the attendance 
        and testimony of witnesses and the production of any 
        records (including books, papers, documents, and other 
        tangible things which constitute or contain evidence) 
        which the Judicial Officer considers relevant or 
        material to such proceeding.
          (3) Rule of construction.--Nothing in paragraph (2) 
        shall be considered to apply in any circumstance to 
        which paragraph (1) applies.
  (b) Service.--
          (1) Service within the united states.--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) Foreign service.--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 on business persons.--Service of any such 
        subpoena may be made 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 on natural persons.--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) Verified return.--A verified return by the 
        individual serving any such subpoena setting forth the 
        manner 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) In general.--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) Jurisdiction.--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 may 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.

Sec. 3017. Nonmailable skill contests or sweepstakes matter; 
                    notification to prohibit mailings

  (a) Definitions.--In this section--
          (1) the term ``promoter'' means any person who--
                  (A) originates and mails any skill contest or 
                sweepstakes, except for any matter described in 
                section 3001(k)(4); or
                  (B) originates and causes to be mailed any 
                skill contest or sweepstakes, except for any 
                matter described in section 3001(k)(4);
          (2) the term ``removal request'' means a request 
        stating that an individual elects to have the name and 
        address of such individual excluded from any list used 
        by a promoter for mailing skill contests or 
        sweepstakes;
          (3) the terms ``skill contest'', ``sweepstakes'', and 
        ``clearly and conspicuously displayed'' have the same 
        meanings as given them in section 3001(k); and
          (4) the term ``duly authorized person'', as used in 
        connection with an individual, means a conservator or 
        guardian of, or person granted power of attorney by, 
        such individual.
  (b) Nonmailable Matter.--
          (1) In general.--Matter otherwise legally acceptable 
        in the mails described in paragraph (2)--
                  (A) is nonmailable matter;
                  (B) shall not be carried or delivered by 
                mail; and
                  (C) shall be disposed of as the Postal 
                Service directs.
          (2) Nonmailable matter described.--Matter described 
        in this paragraph is any matter that--
                  (A) is a skill contest or sweepstakes, except 
                for any matter described in section 3001(k)(4); 
                and
                  (B)(i) is addressed to an individual who made 
                an election to be excluded from lists under 
                subsection (d); or
                  (ii) does not comply with subsection (c)(1).
  (c) Requirements of Promoters.--
          (1) Notice to individuals.--Any promoter who mails a 
        skill contest or sweepstakes shall provide with each 
        mailing a statement that--
                  (A) is clearly and conspicuously displayed;
                  (B) includes the address or toll-free 
                telephone number of the notification system 
                established under paragraph (2); and
                  (C) states that the notification system may 
                be used to prohibit the mailing of all skill 
                contests or sweepstakes by that promoter to 
                such individual.
          (2) Notification system.--Any promoter that mails or 
        causes to be mailed a skill contest or sweepstakes 
        shall establish and maintain a notification system that 
        provides for any individual (or other duly authorized 
        person) to notify the system of the individual's 
        election to have the name and address of the individual 
        excluded from all lists of names and addresses used by 
        that promoter to mail any skill contest or sweepstakes.
  (d) Election To Be Excluded From Lists.--
          (1) In general.--An individual (or other duly 
        authorized person) may elect to exclude the name and 
        address of that individual from all lists of names and 
        addresses used by a promoter of skill contests or 
        sweepstakes by submitting a removal request to the 
        notification system established under subsection (c).
          (2) Response after submitting removal request to the 
        notification system.--Not later than 60 calendar days 
        after a promoter receives a removal request pursuant to 
        an election under paragraph (1), the promoter shall 
        exclude the individual's name and address from all 
        lists of names and addresses used by that promoter to 
        select recipients for any skill contest or sweepstakes.
          (3) Effectiveness of election.--An election under 
        paragraph (1) shall remain in effect, unless an 
        individual (or other duly authorized person) notifies 
        the promoter in writing that such individual--
                  (A) has changed the election; and
                  (B) elects to receive skill contest or 
                sweepstakes mailings from that promoter.
  (e) Private Right of Action.--
          (1) In general.--An individual who receives one or 
        more mailings in violation of subsection (d) may, if 
        otherwise permitted by the laws or rules of court of a 
        State, bring in an appropriate court of that State--
                  (A) an action to enjoin such violation,
                  (B) an action to recover for actual monetary 
                loss from such a violation, or to receive $500 
                in damages for each such violation, whichever 
                is greater, or
                  (C) both such actions.
        It shall be an affirmative defense in any action 
        brought under this subsection that the defendant has 
        established and implemented, with due care, reasonable 
        practices and procedures to effectively prevent 
        mailings in violation of subsection (d). If the court 
        finds that the defendant willfully or knowingly 
        violated subsection (d), the court may, in its 
        discretion, increase the amount of the award to an 
        amount equal to not more than 3 times the amount 
        available under subparagraph (B).
          (2) Action allowable based on other sufficient 
        notice.--A mailing sent in violation of section 3001(l) 
        shall be actionable under this subsection, but only if 
        such an action would not also be available under 
        paragraph (1) (as a violation of subsection (d)) based 
        on the same mailing.
  (f) Promoter Nonliability.--A promoter shall not be subject 
to civil liability for the exclusion of an individual's name or 
address from any list maintained by that promoter for mailing 
skill contests or sweepstakes, if--
          (1) a removal request is received by the promoter's 
        notification system; and
          (2) the promoter has a good faith belief that the 
        request is from--
                  (A) the individual whose name and address is 
                to be excluded; or
                  (B) another duly authorized person.
  (g) Prohibition on Commercial Use of Lists.--
          (1) In general.--
                  (A) Prohibition.--No person may provide any 
                information (including the sale or rental of 
                any name or address) derived from a list 
                described in subparagraph (B) to another person 
                for commercial use.
                  (B) Lists.--A list referred to under 
                subparagraph (A) is any list of names and 
                addresses (or other related information) 
                compiled from individuals who exercise an 
                election under subsection (d).
          (2) Civil penalty.--Any person who violates paragraph 
        (1) shall be assessed a civil penalty by the Postal 
        Service not to exceed $2,000,000 per violation.
  (h) Civil Penalties.--
          (1) In general.--Any promoter--
                  (A) who recklessly mails nonmailable matter 
                in violation of subsection (b) shall be liable 
                to the United States in an amount of $10,000 
                per violation for each mailing to an individual 
                of nonmailable matter; or
                  (B) who fails to comply with the requirements 
                of subsection (c)(2) shall be liable to the 
                United States.
          (2) Enforcement.--The Postal Service shall, in 
        accordance with the same procedures as set forth in 
        section 3012(b), provide for the assessment of civil 
        penalties under this section.

           *       *       *       *       *       *       *


                            ADDITIONAL VIEWS

    The issue of consumer protection, whether it relates to 
telemarketing fraud or sweepstakes deception is finally 
receiving the attention it deserves. Because a number of people 
fell victim to telemarketing scams, Congress, in 1991 enacted 
legislation that addressed the problem of telephone fraud by 
handing consumers an option to enforce regulations against 
unwanted telephone solicitations. The Telephone Consumer 
Protection Act of 1991 (TCPA), which establishes consumer 
protections against unwanted telemarketing calls, mandates that 
individual telemarketing companies place consumers on a do-not-
call list if the consumer requests not to receive further 
solicitation. The act creates a private right of action, 
permitting persons to file suit in state court if an entity 
violates the TCPA provisions, absent state law to the contrary.
    Currently, S. 335, the Deceptive Mail Prevention and 
Enforcement Act, contains no provisions to provide consumers 
with a private right of action and instead relies on 
enforcement through civil penalties administered by the postal 
service. Under S. 335, the United States Postal Service has 
additional subpoena authority to investigate potential illegal 
sweepstakes practices, and consumers would report violations of 
the do-not-mail provision to the USPS for investigation. A 
private right of action would be an effective enforcement tool, 
particularly with respect to the problem of unwanted mailings.
    During deliberations by the Subcommittee on the Postal 
Service on H.R. 170, the Honesty in Sweepstakes Act of 1999, 
sponsored by Representatives LoBiondo and Condit, Chairman 
McHugh and I offered an amendment in the nature of a 
substitute. Included in that amendment which was adopted by 
voice vote, was language I authored which added a private right 
of action to sweepstakes legislation. Thus, allowing consumers 
to file suit in state court if a sweepstakes promoter continues 
to send mailings despite having requested removal from a 
mailer's list is an important tool. This private right of 
action closely mirrors the provision in the Telephone Consumer 
Protection Act of 1991, which establishes consumer protections 
against unwanted and intrusive telemarketing calls.
    The private right of action provision contained in section 
8 of H.R. 170, is supported by the National Consumers League, 
the American Association of Retired Persons and the Direct 
Marketing Association.

                                                      Chaka Fattah.

                                  
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