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H.R. 868 (103rd): Telemarketing and Consumer Fraud and Abuse Prevention Act


The text of the bill below is as of Feb 24, 1993 (Reported by House Committee).


HR 868 RH

Union Calendar No. 9

103d CONGRESS

1st Session

H. R. 868

[Report No. 103-20]

To strengthen the authority of the Federal Trade Commission to protect consumers in connection with sales made with a telephone, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

February 4, 1993

Mr. SWIFT (for himself, Mr. OXLEY, Ms. LAMBERT, and Mr. GILLMOR) introduced the following bill; which was referred to the Committee on Energy and Commerce

February 24, 1993

Committed to the Committee of the Whole House on the State of the Union and ordered to be printed


A BILL

To strengthen the authority of the Federal Trade Commission to protect consumers in connection with sales made with a telephone, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ‘Consumer Protection Telemarketing Act’.

SEC. 2. FINDINGS.

    The Congress makes the following findings:

      (1) Telemarketing differs from other sales activities in that it can be carried out by sellers across State lines without direct contact. Telemarketers can also be very mobile, easily moving from State to State.

      (2) Interstate telemarketing fraud has become a problem of such magnitude that the resources of the Federal Trade Commission are not sufficient to insure adequate consumer protection from such fraud.

      (3) Consumers and others are estimated to lose $10 billion a year in telemarketing fraud.

      (4) Consumers are victimized by other forms of telemarketing deception and abuse.

      (5) Consequently, Congress should enact legislation that will offer consumers necessary protection from telemarketing deception (including fraud) and abuse.

SEC. 3. TELEMARKETING RULES.

    (a) IN GENERAL-

      (1) The Commission shall prescribe rules prohibiting deceptive (including fraudulent) telemarketing activities and other abusive telemarketing activities.

      (2) The Commission shall include in such rules respecting deceptive telemarketing activities--

        (A) a definition of deceptive telemarketing activities, and

        (B) criteria that are symptomatic of deceptive telemarketing as distinguished from ordinary telemarketing business practices.

      (3) The Commission shall include in such rules respecting other abusive telemarketing activities a requirement that telemarketers may not undertake a pattern of unsolicited telephone calls which the reasonable consumer would consider coercive or abusive of such consumer’s right to privacy. In prescribing the rules described in this paragraph, the Commission shall consider--

        (A) including a requirement that goods or services offered by telemarketing be shipped or provided within a specified period and that if the goods or services are not shipped or provided within such period, a refund be required, and

        (B) including, where practicable, authority for a person who orders a good or service through telemarketing to cancel the order within a specified period.

    (b) RULEMAKING-

      (1) The Commission shall prescribe the rules under subsection (a) within 270 days after the date of enactment of this Act. Such rules shall be prescribed in accordance with section 553 of title 5, United States Code.

      (2) A rule issued under subsection (a) shall be considered a rule issued under section 18(a)(1)(B) of the Federal Trade Commission Act.

    (c) ENFORCEMENT- Any violation of any rule prescribed under subsection (a) shall be treated as a violation of a rule under section 5 of the Federal Trade Commission Act (15 U.S.C. 45) regarding unfair or deceptive acts or practices.

SEC. 4. ACTIONS BY STATES.

    (a) IN GENERAL- Whenever an attorney general of any State has reason to believe that the interests of the residents of that State have been or are being threatened or adversely affected because any person has engaged or is engaging in a pattern or practice of telemarketing which violates any rule of the Commission under section 3, the State may bring a civil action on behalf of its residents in an appropriate district court of the United States to enjoin such telemarketing, to enforce compliance with such rule of the Commission, to obtain damages, restitution, or other compensation on behalf of residents of such State, or to obtain such further and other relief as the court may deem appropriate.

    (b) NOTICE- The State shall serve prior written notice of any civil action under subsection (a) upon the Commission and provide the Commission with a copy of its complaint, except that if it is not feasible for the State to provide such prior notice, the State shall serve such notice immediately upon instituting such action. Upon receiving a notice respecting a civil action, the Commission shall have the right (1) to intervene in such action, (2) upon so intervening, to be heard on all matters arising therein, and (3) to file petitions for appeal.

    (c) CONSTRUCTION- For purposes of bringing any civil action under subsection (a), nothing in this Act shall prevent an attorney general from exercising the powers conferred on the attorney general by the laws of such State to conduct investigations or to administer oaths or affirmations or to compel the attendance of witnesses or the production of documentary and other evidence.

    (d) ACTIONS BY THE COMMISSION- Whenever the Commission has instituted a civil action for violation of any rule prescribed under section 3, no State may, during the pendency of such action instituted by the Commission, institute a civil action under subsection (a) against any defendant named in the Commission’s complaint for acts or omissions alleged in the complaint for violation of any rule as alleged in the Commission’s complaint.

    (e) Actions by Other State Officials-

      (1) Nothing contained in this section shall 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.

      (2) In addition to actions brought by an attorney general of a State under subsection (a), such an action may be brought by officers of such State who are authorized by the State to bring actions in such State for protection of consumers and who are designated by the Commission to bring an action under subsection (a) against persons that the Commission has determined have or are engaged in a pattern or practice of telemarketing which violates a rule of the Commission under section 3.

SEC. 5. ACTIONS BY PRIVATE PERSONS.

    (a) IN GENERAL- Any person adversely affected by any pattern or practice of telemarketing which violates any rule of the Commission under section 3 or an authorized person acting on such person’s behalf may, within 3 years after discovery of the violation, bring a civil action in an appropriate district court of the United States against a person who has engaged or is engaging in such pattern or practice of telemarketing if the amount in controversy exceeds the sum or value of $50,000 in actual damages for each person adversely affected by such telemarketing. Such an action may be brought to enjoin such telemarketing, to enforce compliance with any rule of the Commission under section 3, to obtain damages, or to obtain such further and other relief as the court may deem appropriate.

    (b) NOTICE- The plaintiff shall serve prior written notice of the action upon the Commission and provide the Commission with a copy of its complaint, except in any case where such prior notice is not feasible, in which case the person shall serve such notice immediately upon instituting such action. The Commission shall have the right (A) to intervene in the action, (B) upon so intervening, to be heard on all matters arising therein, and (C) to file petitions for appeal.

    (c) ACTIONS BY THE COMMISSION- Whenever the Commission has instituted a civil action for violation of any rule prescribed under section 3, no person may, during the pendency of such action instituted by the Commission, subsequently institute a civil action against any defendant named in the Commission’s complaint for violation of any rule as alleged in the Commission’s complaint.

    (d) COSTS AND FEES- The court, in issuing any final order in any action brought under subsection (a), may award costs of suit and reasonable fees for attorneys and expert witnesses to the prevailing party.

    (e) CONSTRUCTION- Nothing in this section shall restrict any right which any person may have under any statute or common law.

SEC. 6. CLEARINGHOUSE.

    (a) IN GENERAL- The Commission shall establish a clearinghouse for inquiries made to Federal agencies concerning telemarketing. The clearinghouse will provide information (other than information which may not be disclosed under section 552(b) of title 5, United States Code, or under regulations prescribed by the Commission to implement such section) to anyone making inquiries respecting persons engaged in telemarketing or direct such inquiries to the appropriate Federal or State agency.

    (b) LIABILITY FOR PROVIDING INFORMATION- No person who provides information to the clearinghouse established under subsection (a) shall be liable for damages for the provision of such information unless such person provided such information knowing it to be false.

SEC. 7. ADMINISTRATION AND APPLICABILITY OF ACT.

    (a) IN GENERAL- Except as otherwise provided in sections 4 and 5, this Act shall be enforced by the Commission under the Federal Trade Commission Act (15 U.S.C. 41 et seq.). Consequently, no activity which is outside the jurisdiction of that Act shall be affected by this Act.

    (b) ACTIONS BY THE COMMISSION- The Commission shall prevent any person from violating a rule of the Commission under section 3 in the same manner, by the same means, and with the same jurisdiction, powers, and duties as though all applicable terms and provisions of the Federal Trade Commission Act (15 U.S.C. 41 et seq.) were incorporated into and made a part of this Act. Any person who violates such rule shall be subject to the penalties and entitled to the privileges and immunities provided in the Federal Trade Commission Act in the same manner, by the same means, and with the same jurisdiction, power, and duties as though all applicable terms and provisions of the Federal Trade Commission Act were incorporated into and made a part of this Act.

SEC. 8. DEFINITIONS.

    For purposes of this Act:

      (1) The term ‘attorney general’ means the chief legal officer of a State.

      (2) The term ‘Commission’ means the Federal Trade Commission.

      (3) The term ‘State’ means any State of the United States, the District of Columbia, Puerto Rico, the Northern Mariana Islands, and any territory or possession of the United States.

      (4) The term ‘telemarketing’ means a plan, program, or campaign which is conducted to induce purchases of goods or services by significant use of one or more telephones and which involves more than one interstate telephone call. The term does not include the solicitation of sales through the mailing of a catalog which--

        (A) contains a written description or illustration of the goods or services offered for sale,

        (B) includes the business address of the seller,

        (C) includes multiple pages of written material or illustrations, and

        (D) has been issued not less frequently than once a year,

      where the person making the solicitation does not solicit customers by telephone but only receives calls initiated by customers in response to the catalog and during those calls takes orders only without further solicitation.

SEC. 9. REVIEW.

    Upon the expiration of 5 years following the date of the enactment of this Act, the Federal Trade Commission shall review the implementation of this Act and its effect on deceptive telemarketing activities and report the results of the review to the Congress.