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finally, that a Commission order, entered after a hearing and on the basis of a finding of violation, constitute prima facie evidence for purposes of a consumer suit. That is all you need to do, Mr. Chairman. That will solve the problem. At least you will know where to go if it is not done.

And I will tell you something else. We are an arm of the Congress. We are not the executive branch. We have no secrets from you.

Give to the Commission the funds to do the job, the funds which under this bill would be necessary to establish an effective Consumer Division at Department of Justice, and, in my opinion, you would give the consumer the greatest protection for his tax dollar. The Commission's extensive investigative efforts and factfinding procedures would thus be made available to the consumer. The Commission has the law and the expertise; and I am convinced it can do the job.

Let me say a few words about the consumer's right of private action for actual damages contemplated by this bill. This is a feature which is long overdue as far as consumers are concerned. Securing adequate redress for grievances is presently a major consumer problem. Effective remedies are not available in practice for consumers through present judicial procedures. Administrative remedies, such as those presently provided in the Federal Trade Commission Act, are not adequate since they do not provide for recovery of individual losses. Under the right of private action authorized by this bill, consumers will be able not only to bring individual actions, but also to bring class suits under the procedures of rule 23 of the Federal Rules of Civil Procedure. Acting as a class, consumers will be able to enforce their rights and recoup their losses as the total amount involved will make it economically feasible to institute an action seeking recovery for the group. Use of class suits will have a significant deterrent effect on the unscrupulous they will know that there is an increased likelihood they will be required to repay consumers who have been defrauded or deceived. To the extent consumer suits discourage fraud and deception, the burden on law enforcement agencies will be lightened.

There is one aspect of this bill that seems to be adverse to the interests of consumers. I refer to the fact that consumers must await governmental action before they have a right of private action for damages. I can accept this threshold requirement for several reasons.

You asked questions of Mr. McLaren, and you can very well ask them of me. I am here addressing myself to why I think this is proper

now.

First, if we can get the broad legislation I have proposed, it will be of substantial benefit to the consumer. Second, this would be the first legislation to my knowledge to authorize consumer suits for unfair or deceptive practices which violate the Federal Trade Commission Act. Its impact on the economy cannot be foretold. I am willing to measure this actual impact before plunging full speed ahead into an uncharted area of consumer class actions. In other words, let us learn to walk before we attempt to run. A journey of a thousand miles must begin with a single step. I, therefore, strongly endorse the principle of consumer class actions, and would be willing to accept at this time the fact that consumers must await governmental action before a private right of action accrues.

There are two other aspects of this bill I feel should be mentioned. Section 207, which provides that private actions must be brought within 1 year after the termination of any governmental action, is silent as to a time limitation based on the date the event giving rise to the cause of action occurred. Further, the bill is silent as to whether governmental action suspends the running of any statute of limitations. In this regard the treble damage provisions of the Clayton Act (15 U.S.C. 15, 16) provide for a 4-year statute of limitations based on the date the cause of action arose, and for suspension of such statute during the pendency of governmental action and for 1 year thereafter. I propose, therefore, that this bill be clarified in this respect along the lines of sections 4 and 5 of the Clayton Act. It would solve all the problems that are in here now.

Finally, one comment about section 208, which authorizes the Attorney General to issue civil investigative demands for investigational purposes. I defer to the Department as to the adequacy of these provisions for purposes of this bill. However, subsection (e) of section 208 makes sections 4 and 5 of the Antitrust Civil Process Act (15 U.S.C. 1313, 1314) applicable to material produced pursuant to any demand authorized by this section. Sections 4 and 5 of the Antitrust Civil Process Act provides for confidential treatment of all material produced pursuant to civil investigative demands, and, accordingly, such material would not be available to the Federal Trade Commission.

Now, I see little logic in keeping such material secret from the Commission. If the Commission and the Department are to have concurrent jurisdiction in this consumer protection area, the Department's investigative files should be available to the Commission under proper liaison arrangements, just as our investigative files are and have been available to the Department. This is one area where reciprocity is to be desired.

Thank you, Mr. Chairman. Those are my views. They did not come easy, but I feel them very deeply.

I kind of visualize that much of our consumer problem is kind of like the crime problem that is confronting the Congress today. We hear a lot about "Congress ought to solve the crime problem." Well, you are going to have to pass a whole new body of laws to do it; because somebody has to violate a law first, and of all of our crimes, most are local crimes. And most of this consumer mess is local. This is where it is.

Now, if you want the Federal Government to do it, you can do it— and I will tell you, when you pass the law, if I am still here, I am going to do the best I can to enforce it. But I will tell you I think that it is in the best interests of the America that we want out yonder somewhere for local people to get in and do their job. Do it on the local level. And where these things are interstate, then the appropriations of agencies like Federal Trade Commission make a little more sense. Senator Moss. Thank you very much, Chairman Dixon. Your presentation was forceful and eloquent and we appreciate it greatly. Because of your long experience on the Commission and your experience with the Congress before that, we certainly will listen to what you have to say and will give it the greatest of consideration.

Your appeal for local jurisdiction and local enforcement of the consumer protection laws interests me a great deal. As you know, Senator Hart and I have a bill pending for independent consumer councils

which visualizes them being placed in all cities and in all States. Does this fit in with the general plea you are making for local enforcement? Mr. DIXON. I would certainly hope so. I am very interested in the hearings that are going to come from this proposal.

I know that when an interstate dealer has a scheme that is brought into a State, that this ought to be a Federal job. This ought to be it. But when you sit and listen to the complaints that come in and the people describe the tragedies and all, if you begin to catalog the complaints, they are "I wanted a little room on my house and I wanted a contractor." Or some fellow came along here, a fly-by-night kind of fellow, the chain letter kind of thing, the referral selling kind of deal-all these things. And the great, great number of these problems are right on the street. The guy that buys secondhand furniture and paints it and sells it for new-we call that in Washington "up and down Seventh and 14th Streets," you know. He lives off the low-income people. It is rather tragic, some of the things they are faced with. Some of those things are not very nice. Some of those things are fraud. I believe they could be prosecuted as fraud.

But I think it is a local law he violated; that is what it is. When you get to Indianapolis or Philadelphia or our great cities, I am heartened by seeing our great cities begin to get interested in this thing.

If it is not going to be done at the State level, let it be done at the local level. But let it be done.

Senator Moss. If the jurisdiction of the FTC is increased as provided in S. 3201 to "affecting interstate commerce," and if the Federal Trade Commission has to undertake enforcement under that broadened jurisdiction, do you have any rough estimate of the size of staff that you would need?

Mr. DIXON. I said rather facetiously 7 or 8 years ago that 10,000 people would not be enough. People laugh when I say that. But there are 50 States in the Union. Anyway you want to call it-major metropolitan areas, from 200 to 500-whichever way you want to carry them. And if you are going to do the job right, we are talking about a massive undertaking. It is a massive undertaking.

Now, let it be said our States have been rather slow to move into this area, but they are moving. They are moving. And I see nothing wrong with the matching funds idea of encouragement. It is done in 25 or 30 other areas. What is wrong with doing it in the name of the consumer? If that what it takes to make a State move, make them move. It is no good to pass a law at a State level and hire one fellow and say, "We are in business." It is like having the Federal Trade Commission with the size of the Deceptive Practice Bureau which we have today, and we are in business; we have been left that way and we cannot get any more money. We are just getting hell for not doing everybody's work.

Senator Moss. I was very heartened, of course, to hear you testifying that you thought the States were moving. Is this a recent innovation that States have statutes parallel to the Federal Trade Commission Act or something similar to it? Or have they just been put into force?

Mr. DIXON. We started in depth back in 1965, or the early 1960's, on this program. There were some State statutes similar before that, but the great drive has come in the last 4 years. And it is underway. You can hardly go into any State where this is not being discussed in the legislature in one way or another.

Senator Moss. Well, of course, I have a great deal of affinity for what you say because I think you have the best way to get at problems where you have local enforcement. And especially, as you point out, since so many of these are small, rather individualized problems that are hard to work on out of Washington.

Mr. DIXON. This has come a long way, at least in recent times. This consumerism thing started when I was here as counsel to Senator Kefauver. Nobody had even thought about the consumer. After about 3 or 4 years, and after we had the drug hearings, everybody decided it was a good thing. And especially after Senator Kefauver got reelected-because a lot of people thought it was going to get him defeated, but he got more votes than ever before in his life. And it is a popular subject in America today. The businessman that thinks consumerism is going away is dreaming, because today the consumer is mad, and with very good rational reason he is mad. Wherever he turns-you know, what annoys most consumers, I bet, is what annoys you and me; it is in the service industry. Who is performing these services? If you have to call a plumber or an electrician or you have an automobile or a washing machine repaired, or something like that, is the Federal Government going to straighten this out? Are you kidding? These are mechanics and artisans right on the streets of America. These are local problems and they are the problems that annoy, annoy, until somebody says, "Well, something has to be done for the consumer." So they come to Washington and say, "You solve it."

You tell me how you are going to solve a shoddy job done by a plumber, a carpenter, an electrician, or a television repairman that is an independent businessman. You just tell me how you are going to do it. Because it affects commerce, are you going to go that far? Well, you have got some problems.

I say to you, the honest way is to go right where it belongs. If the consumer is being bamboozled on the local level, then the local government is at fault for allowing it.

If it takes licensing, inspectors or anything else, they ought to do it. Senator Moss. Would not the consumer protection of the Federal Trade Commission be more effective if the Commission had the power to issue trade regulation rules defining prohibited acts against consumers?

Mr. DIXON. We think we have that power. We put out a trade regulation rule on cigarette advertising, and if anybody does not think we have it, then he can contest us and we will go to court.

We think we have it. If the Congress wants to underwrite that in the law, it would settle it, and maybe it would be wise to do it.

But, mind you, Congress is rather careful about granting legislative powers to regulatory agencies, and so it has to be very carefully within the confines of terms, "how is this unfair methods of competition or unfair or deceptive practices?"

It has got to be material. It has got to be within those things. And it has got to have a basis and purpose within the definition of that.

Senator Moss. What about giving power to the Federal Trade Commission to collect for the consumer in actions where he has suffered a loss, to reimburse him? Would you go that far?

Mr. DIXON. I hope not. I have thought about that. I talked about it and thought about it. I thought maybe that at his step we ought not to

let him recover anything unless we found he should; but then when I thought about that, why should not a consumer who has been deceived, why should a consumer that has bought something represented to him-for instance, an automobile-if you buy an automobile, why should you not expect that that automobile will run, for instance? Or that for a reasonable period of time you do not have to pay to get it fixed or something, you see? Or why, if you buy some little gadget for the home and it does not work, why should you have to suffer that loss? Why should you not get your money back, or get one of those things that works?

Now these are questions. And I am reminded that if we are going to insist that our consumers get all these things, I agree we are going to pay for them.

I will tell you, all this consumerism has a word hidden back in there "quality." And quality control, more of it. And we will get it. But I will tell you this, that the consumer is long overdue, in many of the things he is buying, for getting quality and getting performance without having to spend more of his money.

So when I viewed this thing, I said to myself, Well, I think that this is the first step. I see no reason to have two departments. But if we are given adequate funds and if we find something is unfair or deceptive, and if that becomes final, then the burden is upon the one who brings the lawsuit. The burden is upon him to prove that this which was found damaged him, and that is not an easy thing to do. You have to show how you were damaged. For instance, if you bought something and you were deceived, but if it is really worth some value, how much value is that worth? How much were you damaged?

These are questions that will have to come in due time if the class lawsuit is to be brought.

I would not want the Federal Trade Commission to have to serve as such a body. But if this is the will of the Congress and you want to go that way. But I think the time has arrived that the consumer is entitled to recover from the deceptions he is being subjected to.

Senator Moss. We have a bill pending on the product guarantees that would be directed in this area.

Mr. DIXON. We are hopeful at the Commission. We had a long series of hearings on the automobile warranty, and we are hopeful that we will eventually get our report and recommendation in proper form to give you some advice.

I served as a member of President Johnson's Committee on this question in household goods and wares; and President Nixon had a new section in his consumer message that he wanted a report by the end of this year, and that is causing some degree of problems.

Senator Moss. You pointed out in your testimony that the 35 States now have some form of consumer protection, and therefore, a consumer who has been defrauded has a right of action in the State court. And of course, you made your plea for having the actions brought there primarily. So I wonder if you think S. 3201 really gives the consumer any added right, any significant change that he does not already have? Mr. DIXON. Oh, yes; it does. Against those interstate operators, I would say, the large operator who is very difficult for a State to get a hold of, it would give him the rights and it would give him this right of a class action suit also.

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