[House Report 108-5]
[From the U.S. Government Publishing Office]
108th Congress Report
HOUSE OF REPRESENTATIVES
1st Session 108-5
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AMERICAN SPIRIT FRAUD PREVENTION ACT
_______
February 4, 2003.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
_______
Mr. Tauzin, from the Committee on Energy and Commerce, submitted the
following
R E P O R T
[To accompany H.R. 346]
[Including cost estimate of the Congressional Budget Office]
The Committee on Energy and Commerce, to whom was referred
the bill (H.R. 346) to amend the Federal Trade Commission Act
to increase civil penalties for violations involving certain
proscribed acts or practices that exploit popular reaction to
an emergency or major disaster declared by the President, and
to authorize the Federal Trade Commission to seek civil
penalties for such violations in actions brought under section
13 of that Act, having considered the same, report favorably
thereon without amendment and recommend that the bill do pass.
CONTENTS
Page
Purpose and Summary.............................................. 2
Background and Need for Legislation.............................. 2
Hearings......................................................... 2
Committee Consideration.......................................... 2
Committee Votes.................................................. 2
Committee Oversight Findings..................................... 2
Statement of General Performance Goals and Objectives............ 2
New Budget Authority, Entitlement Authority, and Tax Expenditures 3
Committee Cost Estimate.......................................... 3
Congressional Budget Office Estimate............................. 3
Federal Mandates Statement....................................... 4
Advisory Committee Statement..................................... 4
Constitutional Authority Statement............................... 4
Applicability to Legislative Branch.............................. 4
Section-by-Section Analysis of the Legislation................... 4
Changes in Existing Law Made by the Bill, as Reported............ 5
Purpose and Summary
The purpose of H.R. 346 is to amend the Federal Trade
Commission Act to increase civil penalties for violations
involving unfair or deceptive acts or practices that exploit
popular reaction to a national emergency or natural disaster.
Background and Need for Legislation
During times of national emergency or natural disaster,
Americans generously give financial assistance to their fellow
citizens in need. For example, it has been estimated that
charities have received in excess of $1 billion for those
affected by the September 11th terrorist acts. Unfortunately,
such emergencies are often an invitation for unscrupulous
persons to manipulate the emotions of generous citizens to
fraudulently line their own pockets. Scam artists will use the
telephone and Internet to prey on emotions--for example, by
being rude when asked for specific information or insinuating
that people who decline to give are unpatriotic. H.R. 346, the
American Spirit Fraud Prevention Act, takes measures to prevent
scam artists from capitalizing on national tragedies and takes
additional steps to penalize those practices.
Hearings
The Committee on Energy and Commerce did not hold hearings
on H.R. 346.
Committee Consideration
On Wednesday, January 29, 2003, the Full Committee on
Energy and Commerce met in open markup session and ordered H.R.
346 favorably reported to the House, without amendment, by a
voice vote, a quorum being present.
Committee Votes
Clause 3(b) of rule XIII of the Rules of the House of
Representatives requires the Committee to list the record votes
on the motion to report legislation and amendments thereto.
There were no record votes taken in connection with ordering
H.R. 346 reported. A motion by Mr. Tauzin to order H.R. 346
reported to the House, without amendment, was agreed to by a
voice vote.
Committee Oversight Findings
Pursuant to clause 3(c)(1) of rule XIII of the Rules of the
House of Representatives, the Committee has not held
legislative or oversight hearings on this legislation.
Statement of General Performance Goals and Objectives
The goal of H.R. 346 is to provide the Federal Trade
Commission (FTC) with the authority to increase penalties for
those who perpetuate frauds that capitalize on national
emergencies or natural disasters.
New Budget Authority, Entitlement Authority, and Tax Expenditures
In compliance with clause 3(c)(2) of rule XIII of the Rules
of the House of Representatives, the Committee finds that H.R.
346, the American Spirit Fraud Prevention Act, would result in
no new or increased budget authority, entitlement authority, or
tax expenditures or revenues.
Committee Cost Estimate
The Committee adopts as its own the cost estimate prepared
by the Director of the Congressional Budget Office pursuant to
section 402 of the Congressional Budget Act of 1974.
Congressional Budget Office Estimate
Pursuant to clause 3(c)(3) of rule XIII of the Rules of the
House of Representatives, the following is the cost estimate
provided by the Congressional Budget Office pursuant to section
402 of the Congressional Budget Act of 1974:
U.S. Congress,
Congressional Budget Office,
Washington, DC, January 30, 2003.
Hon. W.J. ``Billy'' Tauzin,
Chairman, Committee on Energy and Commerce,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 346, the American
Spirit Fraud Prevention Act.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Ken Johnson.
Sincerely,
William J. Gainer
(For Barry B. Anderson, Acting Director).
Enclosure.
H.R. 346--American Spirit Fraud Prevention Act
H.R. 346 would authorize the Federal Trade Commission (FTC)
to seek higher civil penalties for unfair or deceptive business
practices if businesses exploit the popular reaction to a
national emergency. This authority would apply to violations
committed within a year after the President has declared a
national emergency.
Based on information from the FTC, CBO estimates that
implementing H.R. 346 would increase the agency's enforcement
costs by less than $500,000 a year. Any such costs would be
subject to the availability of appropriated funds. Under the
bill, the FTC also may collect more civil fines, which are
classified in the budget as governmental receipts (revenues).
However, CBO estimates that any such increase in receipts would
be negligible.
H.R. 346 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act and
would impose no costs on state, local, or tribal governments.
The CBO staff contact for this estimate is Ken Johnson.
This estimate was approved by Peter H. Fontaine, Deputy
Assistant Director for Budget Analysis.
Federal Mandates Statement
The Committee adopts as its own the estimate of Federal
mandates prepared by the Director of the Congressional Budget
Office pursuant to section 423 of the Unfunded Mandates Reform
Act.
Advisory Committee Statement
No advisory committees within the meaning of section 5(b)
of the Federal Advisory Committee Act were created by this
legislation.
Constitutional Authority Statement
Pursuant to clause 3(d)(1) of rule XIII of the Rules of the
House of Representatives, the Committee finds that the
Constitutional authority for this legislation is provided in
Article I, section 8, clause 3, which grants Congress the power
to regulate commerce with foreign nations, among the several
States, and with the Indian tribes.
Applicability to Legislative Branch
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.
Section-by-Section Analysis of the Legislation
Section 1. Short title
Section 1 establishes the short title of the bill as the
``American Spirit Fraud Prevention Act.''
Section 2. Increase in penalties for unfair or deceptive acts or
practices exploiting reaction to certain emergencies and major
disasters
Subsection (a) of section 2 makes changes to section 5(m)
of the FTC Act. If the FTC brings an administrative action
under section 5 for an unfair or deceptive act or practice
committed during an emergency period or disaster period, and
the act or practice exploits popular reaction to the emergency
or disaster, the civil penalties provided under section 5(m)
are doubled from $11,000 to $22,000 per violation.
Subsection (b) of this section makes changes to section 13
of the FTC Act. If the FTC brings an action in Federal district
court under section 13 for an unfair or deceptive act or
practice committed during an emergency period or disaster
period, and the act or practice exploits popular reaction to
the emergency or disaster, after awarding any equitable relief,
subsection (b) requires the court to impose civil penalties in
the amount of $22,000 per violation. The civil penalties
collected under section 13 are not intended to preempt any
equitable relief the court may otherwise deem necessary.
For actions brought under section 5 or section 13 of the
FTC Act, an ``emergency period'' is defined as the period of
time that begins when the President declares an emergency under
the National Emergencies Act (50 U.S.C. 1601 et seq.) and ends
one year after the emergency is terminated. A ``disaster
period'' is defined as the one year period beginning on the
date the President declares an emergency or major disaster
under the Robert T. Stafford Disaster Relief and Emergency
Assistance Act (42 U.S.C. 5121 et seq.).
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 (new matter is
printed in italic and existing law in which no change is
proposed is shown in roman):
FEDERAL TRADE COMMISSION ACT
* * * * * * *
Sec. 5. (a) * * *
* * * * * * *
(m)(1)(A) * * *
* * * * * * *
(D) In the case of a violation involving an unfair or
deceptive act or practice in an emergency period or disaster
period, the amount of the civil penalty under this paragraph
shall be double the amount otherwise provided in this
paragraph, if the act or practice exploits popular reaction to
the national emergency, major disaster, or emergency that is
the basis for such period.
(E) In this paragraph--
(i) the term ``emergency period'' means the period
that--
(I) begins on the date the President declares
a national emergency under the National
Emergencies Act (50 U.S.C. 1601 et seq.); and
(II) ends on the expiration of the 1-year
period beginning on the date of the termination
of the national emergency; and
(ii) the term ``disaster period'' means the 1-year
period beginning on the date the President declares an
emergency or major disaster under the Robert T.
Stafford Disaster Relief and Emergency Assistance Act
(42 U.S.C. 5121 et seq.).
* * * * * * *
Sec. 13. (a) * * *
* * * * * * *
(e)(1) If a person, partnership, or corporation is found, in
an action under subsection (b), to have committed a violation
involving an unfair or deceptive act or practice in an
emergency period or a disaster period, and if the act or
practice exploits popular reaction to the national emergency,
major disaster, or emergency that is the basis for such period,
the court, after awarding equitable relief (if any) under any
other authority of the court, shall hold the person,
partnership, or corporation liable for a civil penalty of not
more than $22,000 for each such violation.
(2) In this subsection--
(A) the term ``emergency period'' means the period
that--
(i) begins on the date the President declares
a national emergency under the National
Emergencies Act (50 U.S.C. 1601 et seq.); and
(ii) ends on the expiration of the 1-year
period beginning on the date of the termination
of the national emergency; and
(B) the term ``disaster period'' means the 1-year
period beginning on the date the President declares an
emergency or major disaster under the Robert T.
Stafford Disaster Relief and Emergency Assistance Act
(42 U.S.C. 5121 et seq.).
* * * * * * *