Today at a hearing before the House Subcommittee on Highways and Transit, the Federal Trade Commission testified about the joint federal-state enforcement against fraudulent telemarketers under the Telemarketing and Consumer Fraud and Abuse Act of 1994 (the Act). The Act, the Commission said, "provides a practical framework for coordinating our efforts with those of the states, and results in an efficient and effective law enforcement program." The Subcommittee is examining the Act as a potential model for federal-state enforcement in the household goods moving industry.
The testimony, presented by Eileen Harrington of the FTC's Bureau of Consumer Protection, describes how the states and the FTC share authority to enforce the FTC's Telemarketing Sales Rule (TSR) under the Act. Harrington stated that "the Telemarketing Act strengthened the Commission's ability to combat telemarketing fraud," but it also "put many more cops on the telemarketing fraud beat ... by empowering the attorneys general of the states to bring civil actions ... to enjoin conduct prohibited by the TSR, and to obtain damages, restitution, or other compensation for their states' residents .... Moreover, the Act greatly increased the impact of individual state law enforcement actions by giving each state the power to obtain nationwide injunctive relief -- an appropriate approach, since telemarketing fraud is not confined within the boundaries of a particular state." The testimony also explains how the Act promotes coordination between the FTC and the states by requiring the states to inform the FTC when they file cases under the Act and by authorizing the Commission to intervene in state-filed actions.
The testimony described the important role of the FTC's consumer complaint database, Consumer Sentinel, in enforcing the TSR under the Act. The FTC and the states use Consumer Sentinel data "to reveal trends and newly emerging frauds, identify companies that should be targeted for enforcement action, and locate relevant witnesses." According to the testimony,
Consumer Sentinel began some years ago as a joint project of the FTC and the National Association of Attorneys General to develop a nationwide database of telemarketing fraud complaints. Now, Consumer Sentinel is a web-based, searchable consumer complaint database and law enforcement investigative tool for collecting and analyzing consumer complaint data about many types of transactions, not just telemarketing fraud. Consumer Sentinel also receives data from other public and private consumer organizations, including 64 local offices of the Better Business Bureaus across the nation, the National Consumers League's National Fraud Information Center, and Project Phonebusters, in Canada.
The testimony further described how the FTC and its partners at the state level use Consumer Sentinel data in planning, coordinating, and implementing federal-state enforcement "sweeps" against fraudulent and deceptive telemarketing operations. Sweeps are clusters of simultaneous law enforcement actions brought by the FTC and its partners against specific types of unlawful conduct -- such as travel fraud, advance fee loan scams, bogus prize promotions, and the like. Sweeps can range from as small as 3 cases to 50 or more cases. Since promulgation of the TSR, the FTC has spearheaded a series of 21 TSR sweeps against a broad range of telemarketing frauds. "In connection with those sweeps," the testimony stated, "the states have brought more than 330 enforcement actions against fraudulent telemarketers, about 20 of them under the TSR and the remainder under state law." At the same time, the testimony noted, the FTC has contributed 109 enforcement actions to sweeps under the Telemarketing Act, and has also brought another 17 individual cases not included in any sweep.
The Commission vote to approve the testimony was 5-0.
Copies of the testimony are available from the FTC's web site at http://www.ftc.gov and also from the FTC's Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580. The FTC works for the consumer to prevent fraudulent, deceptive and unfair business practices in the marketplace and to provide information to help consumers spot, stop and avoid them. To file a complaint, or to get free information on any of 150 consumer topics, call toll-free, 1-877-FTC-HELP (1-877-382-4357), or use the online complaint form. The FTC enters Internet, telemarketing, identity theft and other fraud-related complaints into Consumer Sentinel, a secure, online database available to hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.
(FTC Matter No.: P004101) (fed-state-tsr-enforce)