Mewhinney, Fred H., Washington representative, Millers' National Federa- Page tion, Washington, D.C.. Montgomery, C. P., attorney, Altadena, Calif. Morgan, Aubrey D., chairman of the board, Royal Oil Co., Fort Worth, Tex_ 325 281 287 275 318 National Automobile Dealers Association, New York, N.Y. 259 236 Ogle, Kenneth R., president, Children's Records, Inc., Cincinnati, Ohio__ Palumbo, executive director, Rhode Island Consumers' Council, Providence, R.I__. 290 262 Parker, F. W., general manager, Atlantic Portrait Plan, Inc., Miami, Fla., to Senator John O. Pastore__ 324 Patrick, William Penn, chairman of the board, Holiday Magic, Inc., San 300 Pearson, Douglas P., vice president, San Diego Cemetery Association, San 286 Perkins, Homer G., executive vice president, Stanley Home Products, Inc., 239 Perlmuter, Ernest A., president, Perlmuter Printing Co-- Piercy, C. K., assistant general manager, American Cyanamid Co., Princeton, N.J. 284 241 Presley, Mrs. Susan M., Huntington Beach, Calif., to Senator Thomas H. 298 Prinz, William, president, APCO Aluminum Products Inc., Akron, Ohio__ 308 317 Ray, Oakley M., vice president, American Feed Manufacturers Association, 242 251 Reasoner, William A., president, Kirby Co. Division of Scott & Fetzer Co-- Sard, Edward L., executive director, National Association of House to Satell, Edward M., president, American Foresight, Inc., Philadelphia, Pa.- 325 285 291 283 258 Sherwin, James T., attorney, Community-Wide Panel, New York, N.Y_. 256 324 Short, Winthrop A., president, Knapp Bros. Shoe Manufacturing Corp., 303 Simon, Ronald I., Avco Corp., New York, N.Y., to Senator Abraham Ribicoff 280 Stephens, Thomas E., Saugus, Calif___. 305 Swann, Eugene M., executive director, Contra Costa Legal Services Foundation, Richmond, Calif....... 295 Walz, G., general plant superintendent, Regal Ware, Inc., Wooster, Ohio- 282 279 Widell, Donald R., president, Cordon Bleu Co., Minneapolis, Minn. 287 248 Witherspoon, John K., Dupont Laundry, Washington, D.C.. 249 307 Woodward, E. S., president, Home Reliable Furnishings, Inc., Waynesboro, Va., to Senator Harry S. Byrd, Jr_____ 293 Wyner, Bernard, secretary, Pacific Coast Co., Weather-tite Aristocrat Divisions, Bedford, Ohio- 326 DOOR-TO-DOOR SALES REGULATION MONDAY, MARCH 4, 1968 U.S. SENATE, COMMITTEE ON COMMERCE, Washington, D.C. The subcommittee met, pursuant to notice, at 10:20 a.m., in room 5110, New Senate Office Building, Hon. Warren G. Magnuson, chairman of the committee, presiding. Present: Senators Magnuson and Morton. The CHAIRMAN. The committee will come to order. OPENING STATEMENT BY THE CHAIRMAN Senator MAGNUSON. The chairman wants to say at the outset that we are going to have to rush along today. I was hoping some other Senators would show up this morning, but it is going to be a busy day in the Senate today. We will probably be called to the floor at 11 o'clock, or 11:30 for a vote. I would like to read a short opening statement, however. The Consumer Subcommittee today opens 4 days of hearings on S. 1599, a bill which would give a consumer who enters a substantial contract with a door-to-door salesman, 1 full day to reconsider his purchase. The bill is patterned after a steadily increasing number of State cooling-off laws, for six States, including my own State of Washington, now have similar legislation allowing a cooling-off period. Yet because it affects 50 States, Federal legislation is important in this area. Not only will it establish clear and consistent requirements for transactions in all States, but it will enable law enforcement officers to deal with those fraudulent operators who move from State to State, successfully fleeing each jurisdiction one jump ahead of the local officials. We know of many instances where this occurs. The Door-to-Door Sales Act is the first piece of consumer legislation which the Commerce Committee has considered which will have one of its principal impacts in the low-income areas of our major cities. For we shall hear during these hearings how the peddler, with his friendly manner and misleading sales pitch, lures the low-income consumer into spending several times the normal retail selling price for the wide variety of wares which he is offering from furniture and clothing to television sets and religious articles. This past weekend the President's Advisory Commission on Civil Disorders released a shocking report on the social and economic conditions in the low-income areas of our major cities. One of the problems in these areas is clearly the economic exploitation of its inhabiStaff member assigned to this hearing: William G. Meserve. tants. If, through this bill, we can in some measure reduce this exploitation of the ghetto resident-and thereby reduce one of the major sources of urban anger and resentment-we shall have made a significant contribution to the maintenance of social order in our Nation's cities. While we earnestly hope that this bill will provide some meaningful assistance in easing the crushing burden of poverty, we also hope that its adverse impact on the reputable members of the direct selling industry will be kept to an absolute minimum. For there are, of course, many fine, substantial, American businesses which do a great service to the public through the responsible direct home selling of many products. The Avon lady and the Fuller Brush man, for example, the Watkins people and certain magazine people are familiar household institutions in America and have long been characterized by honest salesmanship. And companies such as these are as entitled to protection from the unfair competition of high pressure and misleading sales practices, as are the consumers who also suffer from those tactics. Some individuals have rightly pointed out that abuses exist in all forms of retail marketing. They have suggested that any form of cooling-off period should extend to all types of retailing. Therefore, during the next 4 days of hearings, the committee will attempt to determine whether the direct selling method of marketing, which is as old and respected as any form of selling, nevertheless leaves the buyer particularly susceptible to certain types of unscrupulous sales tactics. The bill before us is a working document. We have invited all of those industries which will be affected by this legislation to give us the benefit of their expertise. For we in no way intend to burden legitimate business enterprise. The bill may need revision to avoid an unintended impact. It may be that other forms of marketing should also be subjected to the cooling-off requirement. But to determine these needs, is the purpose of these hearings. Now, before we call our first witness, I would like to have reprinted in the record the text of S. 1599, and the remarks which I delivered in introducing it. Following this, we shall include the agency comments on the bill. (The data referred to above follows:) [S. 1599, 90th Cong., first sess.] A BILL To assist in the protection of the consumer by enabling him, under certain conditions, to rescind the retail sale of goods or services when the sale is entered into at a place other than the address of the seller Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That this Act may be cited as the "Door-toDoor Sales Act". DECLARATION OF PURPOSE SEC. 2. The Congress finds and declares that the consumer is frequently induced to purchase goods or services which he does not need or desire through the unsolicited and often unethical persuasion of certain door-to-door sellers. It is the purpose of this Act to enable the consumer to reconsider his purchase within a reasonable period of time and to rescind the sale if he acts before midnight of the following business day, and to impose civil or criminal penalties upon the seller who fails to pick up the goods and refund the buyer's money within three business days after receiving notification of the buyer's intent to rescind. SEC. 3. As used in this Act DEFINITIONS (1) "business day" means any day other than a Saturday, Sunday, or holiday. (2) "buyer" means a person who buys goods or obtains services from a seller for purposes other than resale. (3) "interstate commerce" means commerce between any place in a State and any place in another State, or between places in the same State through another State. (4) "place of business" means the main or branch office or local address of a seller. (5) "purchase price" means the total price paid or to be paid for the goods or services, such amount to include all interest and service charges. (6) "seller" means any person engaged in the business of selling goods or furnishing services to buyers. (7) "State" includes each of the several States, the District of Columbia, the Commonwealth of Puerto Rico, Guam, the Virgin Islands, the Canal Zone, and American Samoa. RESCISSION OF DOOR-TO-DOOR SALES SEC. 4. (a) Any sale of goods or contract to sell goods made in interstate commerce, or any sale of goods or contract to sell goods made in whole or in part of any item which has been shipped in interstate commerce, or any sale of goods or contract to sell goods affecting interstate commerce, for a purchase price in excess of $25, which is entered into at a place other than the place of business of the seller may be rescinded by the buyer if the buyer (1) furnishes to the seller a notice of intent to rescind the sale or the contract of sale either by letter, postmarked not later than midnight of the first business day following such sale or the first business day following the day on which such contract was signed, or in a writing, delivered to the local business address of the seller not later than 6 o'clock post meridian of the first business day following such sale or the first business day following the day on which such contract was signed, and (2) gives up possession of any goods, subject to such sale or contract for sale, delivered to the buyer prior to receipt by the seller of such notice of intent to rescind. A seller shall, within three business days after receipt of such notice of intent to rescind the sale or contract of sale under this section, pick up, at his own expense, any goods, subject to the sale or contract of sale, delivered to the buyer prior to receipt by the seller of such notice and refund all amounts of money paid by the buyer less reasonable charges for any damage to such goods which occurred while in the possession of the buyer. (b) Any unexecuted contract for the sale of services using any item which was shipped in interstate commerce, or any unexecuted contract for the sale of services affecting interstate commerce, for a purchase price in excess of $25, which is entered into at a place other than the place of business of the seller may be rescinded by the buyer if the buyer (1) furnishes to the seller a notice of intent to rescind the contract for the sale of services either by letter, postmarked not later than midnight of the first business day following the day on which such contract was signed, or in a writing delivered to the local business address of the seller not later than 6 o'clock post meridian of the first business day following the day on which such contract was signed, and (2) gives up possession of any goods delivered to the buyer by reason of such contract prior to receipt by the seller of such notice of intent to rescind. A seller shall, within three business days after receipt of such notice of intent to rescind an unexecuted contract for the sale of services under this section, pick up, at his own expense, any goods, subject to the unexecuted contract for the sale of services, delivered to the buyer prior to receipt by the seller of such notice and refund all amounts of money paid by the buyer less reasonable charges for (1) any portion of the services performed prior to receipt of such notice and (2) any damage to such goods which occurred while in the possession of the buyer. (c) This section does not apply to mail order sales, telephone sales, catalog sales where an order is placed by mail or telephone, or sales in which the buyer has requested the seller to enter into the sale at a place other than the seller's place of business, but it does apply to sales in which the buyer has requested the seller to conduct a demonstration or exhibition at a place other than the seller's place of business and has not also requested to enter into a sale at that place at the same time he has requested such demonstration or exhibition. RECEIPT REQUIRED IN DOOR-TO-DOOR SALES SEC. 5. (a) In every sale or contract to sell goods or services subject to the provisions of section 4 the seller shall deliver to the buyer, at the time of making such sale or signing such contract, a receipt which clearly and conspicuously sets forth: (1) the seller's name and place of business; (2) a description of the goods or services sold; (3) the amount of money paid by the buyer or the cash value of any goods delivered to the seller at the time the sale or contract was entered into. In the case of a sale subject to the provisions of such section, the receipt shall clearly and conspicuously bear, in at least 10 point bold type, the following statement: "Notice to Buyer: You may rescind this sale provided that you notify the seller of your intent to do so either by letter, postmarked not later than midnight of the first business day following the sale, or in a writing delivered to the place of business set forth in this receipt not later than 6:00 p.m. of the first business day following the sale. Failure to exercise this option, however, will not interfere with any other remedies against the seller which you may possess." In the case of a contract to sell goods or services subject to the provisions of such section, the receipt shall clearly and conspicuously bear, in at least 10 point bold type, the following statement: "Notice to Buyer: You may rescind this contract provided that you notify the seller of your intent to do so either by letter, postmarked not later than midnight of the first business day following the signing of the contract or in a writing delivered to the place of business set forth in this receipt not later than 6:00 p.m. of the first business day following the signing of the contract. Failure to exercise this option, however, will not interfere with any other remedies against the seller which you may possess." The receipt shall be properly dated and signed by the seller. (b) No receipt shall contain, or be accompanied by any document which contains, provisions by which the buyer waives his rights under this statute. ENFORCEMENT SEC. 6. (a) When a seller, who has received notice of intent to rescind the sale or contract of sale, fails to pick up the goods and refund the purchase price paid by the buyer within three business days as provided in section 4, the buyer may bring suit against the seller in any court of competent jurisdiction and recover the amount paid by the buyer upon entering into such sale or contract and an additional equal amount as liquidated damages. The court in such action shall, in addition to any judgment awarded to the plaintiff, require defendant to pay plaintiff a reasonable attorney's fee and costs of the action. The buyer's right to bring an action and to recover judgment against a seller, as provided in this subsection, shall terminate upon the filing of a complaint by the Attorney General of the United States, by any United States attorney, or by any prosecuting attorney of any State, or any political subdivision thereof, under subsection (b) of this section. (b) When a seller, who has received a notice of intent to rescind a sale or contract of sale fails to pick up the goods and refund the purchase price paid by the buyer within the three business days provided in section 4, or when a seller willfully fails to deliver a receipt setting forth all the information required by section 5, or willfully fails to set forth such information in the manner required by such section 5, or attempts to secure a waiver of the buyer's rights under this statute in violation of the provisions of such section 5, the Attorney General of the United States or any United States attorney, or any proscuting attorney of any State, or any political subdivision thereof, may bring suit in the name of the United States, in any court of competent jurisdiction, against the seller, charging him with a misdemeanor, punishable by a fine not to exceed $1,500 for each violation. In addition, in any action under this subsection the Attorney General of the United States or any United States attorney, or any prosecuting attorney of any State, or any political subdivision thereof, may also recover from the defendant, on behalf of the buyer, the full amount paid by such buyer upon entering into such sale or contract, and upon recovering such amount, shall pay it over to the buyer. Action taken under this subsection shall preclude entry of judgment in any court under subsection (a), except that no action shall be taken under this subsection based on any transaction in which judgment has |