It is true that from an acorn a mighty oak can grow, and in some cases you might have to cut out the rotten part of the acorn. If this is the most feasible approach, I would cut out the rotten part of the acorn of this bill and build an oak tree upon it.

I think a better start would be Senator Tydings' bill, for example. Perhaps adding the two of them and a good bit stronger language would be better. I honestly do not expect that the Congress at this point will pass much of these suggestions because then you would have what everybody is talking about, and that is a real consumer

revolution.

Give us these kinds of tools, give me 500 law students in the District of Columbia, and I would turn the FTC and the Justice Department and the major advertisers upside down and shake them. We are doing it with 50 or 60 of them already. Give us the tools we need, given the legal action organizations these tools, and there will be a consumer revolution, and I do not think the lobbyists and the manufacturers and the advertisers are going to allow this. I do not think Congress is going to pass this.

I think you have to use your best legislative judgment as to what you best can get through, and how you can graft what you think you can get through on to the best tree so it might sprout.

Senator Moss. Thank you. You have given us a large order. Wc will address ourselves to it.

I do appreciate your rather trenchant comments. Indeed, this is a field in which you do have some expertise. So we are very pleased to have it.

Mr. BANZHAF. I may be able to submit some additional suggestions in writing at a later time. I hope I might be able to. I do not know. Senator Moss. You are invited to do so. It would be helpful if you would.

Senator Pearson, do you have any questions?

Senator PEARSON. No questions. Thank you very much.

Senator Moss. Thank you very much. We wish we had a longer time to talk about it. We are beginning to push the clock pretty hard

now.

We have one final witness to be heard, Mr. George Gordin, Jr., of the National Consumer Law Center from Boston College.

Mr. Gordin, we are happy to have you down here.. We appreciate your coming.

STATEMENT OF GEORGE GORDIN, JR., NATIONAL CONSUMER LAW CENTER, BOSTON COLLEGE

Mr. GORDIN. If I may, I would like to second most of the remarks that Professor Banzhaf has just made and indicate that my testimony, the statement that was prepared for the record, is perhaps a more sober-sided and slightly narrower confirmation of what he has said. Senator Moss. We are very happy to have it. Incidentally, the entire statement will be placed in the record. You may handle it in any way you want. If you wish to highlight parts of it, you may do so. Mr. GORDIN. I realize the time is now short, so I will limit myself to just a few minutes, but I would like to say that we did not receive your letter and therefore did not realize the scope of the hearing until it was too late to do a good analysis.

With your permission, we would like to submit in writing for the record a broader statement covering those propositions, particularly the consumer counsel part.

Senator Moss. That would be welcome. If you would submit it in writing, we would be pleased.

Mr. GORDIN. In commenting on the administration bill and the Tydings bill it is the feeling of the National Consumer Law Center, and my own feeling, that one of the major problems with the administration bill is that it in itself really sets up uncertainties, whereas the Tydings bill provides for more certain prognostication for the businessman.

This I realize is contrary to what Mr. Weil felt about the bills. But in dealing with the proposal of S. 3092 you have the fact of some 55 years of interpretation of the language of the Federal Trade Commission Act, and this has actually resulted in a great deal of certainty. Secondly, the substantive law that the bill would actuate is largely the law of the States, and here again this is law that has been interpreted and set forth with a great deal of certainty by the various State courts.

I might point out that a good deal of this law is also in the very broad language of the Federal Trade Commission Act itself. Most of the States that have adopted this type of statute have used language similar to the broad general unfair and deceptive practices language of the FTC Act.

If you limit, as the administration does, to a series of 10 or 11 specific acts, all you are doing is inviting the unscrupulous, and after all it is the unscrupulous that these bills are aimed at, all you are doing is inviting them to find ways of getting around those particular prohibitions or finding new ways, new acts, new practices, that will take care of these particular problems.

We have seen this in the criminal law, that when you make the law too specific you are inviting an end run around it.

I think we find the same true in the tax laws, almost all laws. You are really saying you do not trust the courts to be fair and just. Yet I think our general experience with the legal system in this country is such that we can trust the courts to be honorable and just in their interpretation of a broad statement like "unfair and deceptive acts and practices."

So I think it is a mistake to limit the language. Moreover, we would surely have uncertainty with the administration bill because we would be using new language, the courts would have to go through perhaps 20 years of determining what intention is, what knowingly is in relation to each of the 11 practices involved.

We would also have to determine in relation to each one of the 11 specifics what the Congress intended to cover by each one of those acts in relation to a specific practice then before it.

Perhaps a vital defect in the administration bill is the so-called triggering mechanism, that is, the fact that a consumer would have to wait until the Attorney General had decided to bring an action, until that action had actually been successfully brought before he could file an action of his own which would result in a class action.

I think we are all aware of the delays inherent in bureauracies; this is inevitable whether it is a Government bureaucracy or a private one, a private organization.

It is far better if we would simply take this opportunity to let the consumer handle these things on his own, not bother setting up new bureaucracies. In this way we do not take a chance that the consumer might have to lose all of his remedies simply because of delay. By this I mean the situation where you have a supplier who may go bankrupt over a period of time or who may manage to seclude his assets while the Attorney General is in the process of bringing suit or perhaps is only in the process of thinking about bringing suit.

The consumer at least would have the opportunity as soon as he finds out that he has been defrauded or deceived of bringing the action forthwith and doing whatever the law permits by way of attaching

assets.

I would like to make one other point in relation to the problem of national against local acts. Many of these acts in defrauding the conconsumer or deceiving the consumer may well be local in nature. I would not dispute that for a minute.

I think actually almost everything that is done that is covered by any Federal law is basically local in nature. But the problem is national in a sense perhaps not mentioned by some of the other witnesses who commented on this. The problem is national insofar as we need to get at the assets of the deceiver because if it is covered only under State laws all he has to do is to keep his assets out of the jurisdiction of that State or if it is under a local ordinance, such as New York City, as you mentioned, Senator, all he has to do is to keep his assets out of New York City, and the courts of that particular jurisdiction cannot reach him, whereas the Federal courts have this ability to reach and preserve the assets until the termination of a suit.

Senator PEARSON. They could but it is a little bit difficult today. A judgment in one court can be transferred to another.

Mr. GORDIN. That is true. We are really talking about the unscrupulous, we are not talking about the average merchant here. I think the unscrupulous can always keep ahead of the courts, because the courts are a little slow moving. Even in the circumstances that we are now postulating, if the best of bills were passed we would still have the problem of catching up with some of these people. I think that is where the term "fly-by-night" originated-referring to some of these unscrupulous merchants.

Senator PEARSON. Let me ask a question, Mr. Chairman.

Senator Moss. Surely.

Senator PEARSON. We really failed, and I am talking about the Congress now in relation to our agencies, using the tools we have had in the field of enforcement, FTC and all down the line. It is not a good record, is it? Whether it is bureaucracy or undermanpower or political pressure, we have not made a very good record in this field?

Mr. GORDIN. It is my personal opinion that we have not, Senator. I have my own personal feeling that bureaucracies are something that are a necessary evil perhaps, but I am very much in favor of doing these things by private action, and I think that one of the things we may have overlooked in the last 50 years in our history of trying to find liberal solutions to problems is the use of private remedies and the use of private citizens.

Perhaps it is only now that we have reached the stage where these remedies and this kind of action can be effective. But certainly, as

Professor Banzhaf pointed out, the private bar now is becoming increasingly concerned with protecting the rights of private individuals, and I think individuals themselves, given the kind of legislative proposals that we are dealing with here, would be willing to take advantage of them to protect their own rights. This, of course, to me would be the most satisfactory way of handling almost any problem that you could think of; that is, in a sense self-help under the aegis of the Congress of the United States.

Senator Moss. If you have finished your summary, we do appreciate very much the statement that you prepared which I have had a chance to leaf through. I see it is quite inclusive, and if it is supplemented by written reactions to the questions which were in my letter this would be most helpful to us.

I agree heartily with your last observations that if we can unleash the enforcement power, as it were, of the common consumer, the ordinary citizen, especially with the awareness that the bar is now showing in advising him and helping him acquire his rights, that perhaps we can get an enforcement that is not available in any way by using the bureaucracy.

This is when I had a little colloquy with Mr. Weil, and he said the postal laws, for instance, would cover most of these things. But there just are not enough postal inspectors and the motivation, money, or time to do all that, but if you could release the initiative of the individual so he could move, perhaps you could accomplish that?

Mr. GORDIN. This is the problem, Mr. Chairman, because you have thousands and thousands of consumers-well, millions of consumers who are defrauded or upon whom there are deceptive practices practiced.

Nor are these practices indulged in by one or two organizations but by thousands of retail or manufacturing organizations.

It just simply would be an impossibility for one agency to attempt to track down and take into court each one of these thousands of manufacturers or retailers who are being unscrupulous in their conduct.

Consequently, I think if you leave it to private action and give them the tools which they now lack, there would be an increase in the confidence of the consumer that he can get justice in the courts, and a consequent decrease in unscrupulous activity on the part of the manufacturer or retailer because he knows he is going to have to pay for it where he does not want to pay for it, out of his own pocket, and this I think is the result of using class actions and using them in an effective way. I do not think they should be thought of as the be all and end all. They are not the last word. There are some things that will simply not lend themselves to class action, but I think in the long run they will be very helpful in reducing some of the friction the consumer has with the purveyor of goods.

Senator Moss. I do have just one question I want to ask. The industry has expressed some fears that class actions will result in blackmail or strike suits. How would judicial supervision curtail this? Is this possible?

Mr. GORDIN. I think it certainly is not only possible but it is probable. The courts have never allowed themselves to be used for suits that are absolutely baseless.

I think that there are several judicial remedies that are frequently overlooked. For instance, attorneys are subject to the canon of ethics. There is no difficulty if the courts of this land wish to do it to enforce those canons of ethics and require that attorneys when they bring suit have at least a modicum of knowledge and belief that these suits are not frivolous, that is, are not simply a matter of harassment of an opposing party. That happens to be one of the canons of ethics. I believe I have stated it in the prepared statement which I submitted. Senator PEARSON. Particularly under the Federal rules, the district court can just about do what it wants to just like that.

Mr. GORDIN. That is true. There is no question that the courts have great power; they have the contempt power which they can exercise, and on some occasions they have not been reluctant to do so.

Senator PEARSON. In pretrial, if you will let me interrupt you again, you can solve these things very quickly.

Mr. GORDIN. This, of course, is true under the Federal procedure. You have complete pretrial discovery rules, and, of course, under many State laws as well.

Senator Moss. So you feel we can place reliance in the judiciary to screen out these blackmail or strike suits, these unwarranted actions that apparently industry fears in this legislation?

Mr. GORDIN. I have a good deal of confidence in the Federal judges, Senator.

Senator Moss. Well, I certainly wish we had time to continue our colloquy. We appreciate very much your coming and testifying and bringing your testimony in writing, and we are looking forward to this additional material that you will submit and hopefully with the guidance we can get from you and the other witnesses before us we will be able to fashion some legislation that will be helpful in the direction we all want to go.

We see some problems in getting there, of course, but out of this we will try to fashion legislation that will give the consumer insurance that he is getting a fair deal in the marketplace, and by that, improve our marketplace and restore confidence in it. If not, confidence will continue to wane as some of the previous witnesses said is the case now that consumer confidence is at a very low ebb at the present time.

Most consumers feel that within some recent period of time advantage has been taken of them in some way or other. Hopefully if their losses can be restored, they once more will have confidence in the market, that it is honest and fair and gives them the information they need.

Thank you very much, Professor Gordin. (The statement follows.)

STATEMENT OF George GoRDIN, JR., STAFF ATTORNEY OF THE NATIONAL CONSUMER LAW CENTER AT BOSTON COLLEGE LAW SCHOOL

INTRODUCTION

Mrs. Smith and two hundred of her neighbors were tricked by Mr. Jones into paying $400.00 for a product worth no more than $200.00. Under the present law it is probable that the merchant will never have to defend himself or his business practices in a civil action brought by Mrs. Smith or her neighbors. It will be difficult for Mrs. Smith to find an attorney willing to take a case in which such a small amount of money is involved; if she can engage counsel, she will soon