wadah the plans for the future to make sure whenever we do is not harmful. plus the meredith attwell baker is a lawyer with the law degree from the university houston. what surprised you in your few months that the fcc? >> guest: the fcc, having come from ntia which is a wonderful government agency but it is smaller and you were part of a larger team at ntia. this fun because you were part of the trade trips and part of the economic agenda. but you are kind of always answering as the team, not necessarily what you think. when you go to the expert agency of the fcc it is almost three times as large part of the death of the expertise there is incredible and the fact you are independent and it is communications all the time is really delightful. my second or third day of work i met this woman and she was lovely, and she said i have been working on the universal service

high-cost funds for the last 18 years, so it is terrific to be able to have the expertise to really understand these issues in as much depth as we needed to be able to make the decisions for the communications for the next generation. >> host: you have gone from the presidential administration to a minority position on the fcc. >> guest: that is true but we are five people. when people have analyzed it, which move together 90% of the time. host: last question. >> guest: what are some of the priorities you have over your term at the fcc that we have not talked about here? broadband clearly takes up a lot of discussion these days. do you have other things relating to broadband or other issues entirely? >> guest: i think my experience with ntia and spectrum can add a great deal to the agenda so i want to work on the fcc strategic plan so we have again a short term in mid term and long term plan for the next generation of spectrum

usage so that is something i hope to bring to the table and those relationships and that knowledge to think is important. and i again, think we need to empower parents with the technology to parent their children better in this century. >> host: finally commissioner baker, any left over issues when it comes to digital tv and the digital transmission? >> guest: i think we are still case-by-case analyzing some of the markets and the engineers in the consumer bureaus are working on that. let's though meredith attwell baker is the newest republican to mr. on the federal communications commission and kim hart was with the hill newspaper. thank you both. >> guest: thank you.

the hennison madrid fortiss three internet companies of collective $1.4 billion by

manipulating consumers into providing their credit-card numbers, leading to what it in the history charges for it that we will hear from two of those customers during this hearing. rockefeller of west virginia chairs the senate commerce committee. this is an hour and 35 minutes. >> i will make an opening statement. [inaudible conversations] every single day, millions of american consumers sit down in front of their computers to make travel plans, to send somebody some flowers or to order movie tickets for some other transactions. for many american shopping on

line is know as routine as going to the grocery stores for milk. according to a recent survey 59% of all adult americans have now purchased goods or services over the internet. shopping online is in fact an exciting new way for people to learn about products, to compare prices, and to find a good bargain. and in tough economic times when americans are doing all they can to make ends meet, every nickel, every dollar counts. but when we go on line to buy things, we all have a few very important expectations about how we should be treated, regardless of how and where we make the purchase. first of all we expect the merchants that we do business with to treat us honestly, fairly and we expect that on the

internet. we expect on line merchants to clearly explain their prices in their terms to us. so that we know exactly what we are getting if we decide to spend our money at their web sites. and when we agree to buy something from them we expect mergence to protect our credit card and other financial information that we share with them. that is why aegis so darned disturbing to me to learn through our investigation that we have done on this committee, over 300,000 pages of research, what is happening to millions of american consumers every day who were shopping on the internet including the to consumers we have invited to testify today. what is happening is that many online merchants have decided to be trade their customers' trust. for a few extra bucks in profits, these mergence pass the

consumers' personal billing information on to mysterious companies with names like f.e. on, vertrue, webloyalty, companies that have a long troubling history of misleading sales practices. from the consumer's point of view, here is how it happens. section 1 of the scam. you are shopping on line and you decide to send somebody flowers or buy a plane ticket or a movie ticket or whatever or even order a pizza. you type in your home address and you type in your e-mail address and other information necessary to process the sale. vinnette the very end of the process, you do the really important thing. you pull your wallet out comment you type in your 16 digit credit-card or debit card number and you press purchase. what our committee has been

investigating is what can happen to you after you have made that purchase. it is truly unbelievable. while you think that you are going through the final checkout process, and i associate this through buying books on aol.com. there is a definite process and it takes the number of steps. what is really going on is that some very sophisticated on line businesses are taking you into signing up for you celeste membership clubs. these businesses take the credit card number you have typed in for your purchase and use it to enroll you in a bogus club with names like reservation rewards, great fun, value max shopping service. most consumers don't realize they have been scammed until months later, when they noticed

that the club has been charging their credit card $10.95 a month or whatever. why does this matter? a-10 dollar monthly charge may not sound like a big deal to some people in this room. there are these numbers to consider. today as we conduct this hearing there are more than 4 million american consumers whose credit cards are being charged by these clubs. and most of these customers don't even know that is happening. according to a report, the commerce committee staff presented to me about this problem, these on line scams that made more than $1,400,000,000 to these tactics in charge more than 30 million american people. consider these numbers for a moment. that is a lot of money and simply outrageous to me and

frankly, i think it is unamerican and i know you share my views. i suspect you share my views. what i find most that rages about these dams are the reputable on line businesses that are willing to take part in these scams. committees provided me with the vista av-8 well-known on line businesses that have each made more than a billion dollars in sharing their customer card internation-- information with the internet's camera so they get what they want. we have printed copies of this if anybody is interested in several of them have already withdrawn since they knew this was going on and we were going to have this hearing. u.s. air, continental airlines etc. have withdrawn from all of this, or say they are about to get rid of all of this. but we have all heard of these companies when we have shot that

some of the web site. conclusion? america is a country of businessmen and businesswomen but we all have great respect for enterprising people who have developed good products and sell them in our competitive marketplace. but we are here today because we want to highlight the important point that tricking customers into buying goods and services they do not want is not okay. not even close. it is not ethical, it is not right and it is not the way business should be done in america and it should be stopped. it will be stopped. the american consumers and none of the worry their favorite web sites are ripping them off during the checkout process. the checkout process is complicated. we have not completed this investigation yet but when i've learned about these business practices so far this very troubling and to be frank, which my colleagues starting the hearing i think the committee

needs to start thinking about legislative steps to make sure that this process comes to a complete hault. we did it with telemarketing, we did it with phone scams. we can do it on the internet. that is the end of my statement. do you have a statement he would like to make? >> i want you-- to commend you for holding this important hearing. the chairman has a great reputation for fighting fraud and having this hearing to talk about these issues is extremely important to the people of this country as well as the people of america and people of florida who i represent. we have to many hard-working floridians were being scammed in transactions just like that and one of our great floridians, mr. ray france is here today and he has fallen prey to these's transaction marketers. people are often unaware that they have signed up for these scams. that is why they are scams.

i had a chance to meet with mr. france today mr. chairman. he is an american hero. he served their country bravely in the army and part of airborne. in fact he was so committed mr. chairman to being in airborne that when he sought to unless they said no you can't be in the airborne and he fought and fought and fought and they said you have to give up their 12,000-dollar bonus we were going to give you for joining the army and he said that is okay because i want to serve my country and that is why i am volunteering for the army. he was injured in iraq fighting for freedom and now he came home and is living is like this a good floridian and he gets scammed. like a good army soldier he as he went after these impostors. he tracked them down helped figured out what they were doing and why they are doing it and we will hear more from him today. mr. chairman i call this post-transaction marketing colleague and scam. you are purchasing something like a describer unnao alf buying a book or whatever it may

be and all of a sudden as pop-up comes up and you think it is one of those normal disclosures that no one reads. you click it to go through with your transaction and all of a sudden you are signed up for $10 a month like you said. these fraudsters are stealing from our people. my attorney general in florida, bill mccollum is doing a great job going after these votes and he has filed several actions and is working hard against them but we need to do more and you are drawing you like to this problem mr. chairman and i really appreciate it because the people of this country need to know through information that this-- these scammers are out there. the best prophylactic they can have against these scams is knowing about them and as you suggest perhaps we need to increase penalties are held on the enforcement side so we can stop these fraudsters from stealing from our people. ipers she having this hearing today mr. chairman. thank you. >> thank you senator. >> endless congress i held a couple of hearings on the issue of internet privacy.

the question is, what is happening to the information that they have virtually hall on all of us. what sites talid visit? where do we navigate and i made the point than that somebody following you when you went to the shopping center and made notes about everywhere you went, everything you looked at in meredith attwell baker and the question in your mind would be a wire you following me number one and number two who are you selling the information to about where i went? the privacy issue is very important. we had two hearings and i hope we will be legislation which i have been working on that issue but this is another piece of this issue of the internet, the on line activities. first of all advertising on the internet is what supports the internet and the internet is a remarkable thing. no one wants to withdraw the support that is necessary for the internet to exist and survived. on line commerce is very important as well. that is what we are talking about, but the question for all

of this book on line commerce is who uses our credit card information and for what purpose? when you put your credit card information and in order to purchase something as senator rockefeller indicated you expect especially at reputable web site that that is not going to be shared with anybody, that that is protected. we find out now by some good work by some investigators on our staff that that is not the case. the issue of post-transaction marketing, data passing, free to play conversance. that is a fancy way of describing practices that are engaged in by people that ought to be ashamed of themselves. really ought to be ashamed of themselves. web site the guess have been to all of these web sites to buy movie tickets. pizza hut, continental airlines and you people go to web site do

you know are reputable and then they danced with. that web site is used by something else that says free. except it is just free for a bed and it is the monthly billing thereafter in by the way the reputable web site shifts your financial data to the company that pops up the ad that says free and is trying to you into this. that is unbelievable to me. when you see things that are shameful it seems to me you would expect that would stop immediately but shame is not always an emotion that persuades people that are making a lot of money to stop. my understanding is affinion has changed some of their practices since this investigation began and we welcome that, but there are others out there and i think this is the really important reason to have a hearing. at the root cause, the question is who gets financial information and how was it used or how was it misused, and this investigation has turned up i

think some shoddy business practices that have to stop and i don't they will stop on their own necessarily. i think the chairman has suggested there may well need to be required some legislation here, and i appreciate that work in the work of the committee. let me just finally quickly say i appreciate the witnesses who have been here and you are going to present testimony today. we thank you for traveling and shedding some light on these issues. >> thank you senator. incidentally, the work that webloyalty and some others said pulled back a bit and is totally insufficient and i think some of our legal scholars are going to make that very clear. ray france we are proud to have you here, when the lindquist you also. florencia marotta-wurgler who as an assistant professor at new york university school of law.

you are one panel said you are all one person. professor robert meyer, wharton school university of pennsylvania. we have done a lot of work on all of this. mr. france, let me go to you first if i might and pull that microphone up. first of all of the like to thank you four, as the senator did for your service to our country, for your bravery, turning down the $12,000. >> it was actually 13. [laughter] >> okay. you are a super hero plus. now i think we have got to defend you from some scams and we are going to. in your testimony, you made the point that when you made a purchase on the web site called -- you got automatically assigned up in a so-called membership club called value max emken value max started charging

you $19.99 a month, is that correct? >> that is correct, sir. that would seem fair. starting with you mr. france, forget my question. make a statement. >> okay, sir. >> questions will follow. i do this quite frequently. [laughter] >> it is your show, sir. >> that is true. [laughter] >> first of all i would like to thank you chairman rockefeller and ranking member hutchinson for inviting me out to speak. i would also like to thank the center of my beautiful home state of florida for his kind words. it was unexpected but greatly appreciated. my name is raymond france. i am a former paratrooper and a two-time combat veteran. i fought in afghanistan and

iraq. i received a traumatic brain injury when my humvee was struck by an ied, which exploded next to my vehicle. i was awarded the purple hauck in our i have a this ability of 100%. earlier this year i paid to use the service of an online company called insel's to let the people on the internet. it is just an informational web site. i did use this company in the past and was familiar with the web site and their services. on this particular occasion just like before i got the information i was looking for and entered my billing information in completed the transaction. the next day it posted my count is usual. two with three months later i was notified by my bank that my counted been overdrawn. i was not sure how this could happen because the lived on a fixed income and i support myself with than those means. i went to the bank to figure this out. ifrs they were only able to tell me was due to an automatic withdrawal that was that the

bomb mic and the time. the bank was able to give me the name of the company that made these withdrawals. value max. the bank manager for it for me this the bin the reoccurring transaction that i had supposedly agreed to. there were unable to give me any more information. i had no idea of the company was and still to the states do not know what they do. i started searching the web in hopes of finding some way of contacting this company. what i found was hundreds of blogs asking the same question. eventfully at founding e-mail address for valli maxon fennan emile to which are receive no reply. later on i found it phone number. when i call the person who answered repeatedly asked for personal information on myself, the things that's such as social security number and e-mail address is bracketone ebsen reluctant to give up the information i was told they'd reach the rung division of the company and i needed to call another branch in another state. this process repeated itself

quite a few times and threw it all i still had no answers. so i decided to write the better business bureau. time pass with no reply and then i received an e-mail from the better business bureau. vow u said told them they would refund my money but it was my fault because i agree to a free, four day trial and a $19.99 fee every month after that. collington them i agree to this, use the service of the company mentioned earlier. in total this took over eight months and the refund to keep in longer. if my count had not been overdrawn who knows how long before i would have noticed these withdrawals. i am a disabled that he loved his country and serve it with pride that i may not have it is that some of the soldiers returning from the front lines. i do have a lot of challenges i must face due to my server is connected disabilities. but this company dahlia max

cause me but financial and mental hardship. it took me close to a year to recover my money, money i did not give them permission to take. i am 27 years old. i use the internet constantly. i both understand it and am able to utilize it with ease and even earn college credits in computer application. with that said i believe i would not agree to a financial obligation and knew nothing about nor wanted. it is still unclear to me at this point how they were able to access my account. that is unless you consider the fact that this company chooses to use the seating methods in correlation with other companies to take advantage of on line consumers. this is nothing short of theft. my country promised to take care of me when i returned home but without laws that govern these unethical practices and said my country is allowing me to be taken advantage of. this is a problem that must resolve because it is not just the that's that are victims of

all americans. and not today, then tomorrow or next week. the bottom line is if left unchecked these practices will spin out of control. now this issue has been brought to light it is imperative the leaders of this great country are proactive and aggressive in putting an end to it. thank you. >> thank you very much. ms. lindquist. >> good afternoon. my name is linda lindquist and i am from thune, wisconsin. in april 2007 my 90-year-old daughter and i went to temporary live in atlanta georgia. my daughter had sustained the spinal cord injury in 2007 while downhill skiing and was a quadriplegic. she started to get moving back in her legs and both my husband and i thought she needed to go to his specialty spinal cord facility in order to give her the best opportunity for recovery. this would mean i have been would have to care for of the

three children so low in wisconsin. one of the best things about being in atlanta was meeting and socializing with other families in the same situation. one of our favorite things to do with to go to the movie theater. in july of 2007 i started purchasing tickets for movie tickets.com. i remember at the end of the transaction on the confirmation page was a coupon stating, get $10 off your next purchase. soi click on the key bomb because it seemed it was a legitimate offer for movie tickets thought, and that thought they were in reputable web site. the next page needed my personal information and i decided i did not have enough time to fill out that page so i closed out of the web site. approximately two weeks later i purchased tickets on movie tickets.com. this time however i did start to fill out the personal and formation but after going to the next page, i realized that this was probably a scam. at no time did i include my

credit card information or knowingly agree to any terms and conditions. after four months of physical rehab my daughter was beginning to make great improvements in their state ended up being lengthened by another year. we finally returned home in august of 2008 and in october of 2008 my husband was paying our bills and ask me to take a look of the credit card statement. there were two charges for $10 each, one from reservation rewards and one from shoppers discount. i did not know what the charges were for but i told my husband i would find out. i first called the 1-800-number listed on the credit card statement. as he reservations reward. i spoke with a customer service representative who told me i had signed up for reservation rewards and shoppers discounts on line after a movie ticket purchase on movie tickets.com. i told the representative i had not knowingly signed up for the servers and actel they have got my credit card number. she stated movie tickets.com

gave them my credit card number. inez what service exactly at this thing for. she stated they offered coupons and discounts from restaurants and hotels. i told her that i had never gotten any correspondence from them either on line or via mail regarding my membership. i then asked her to cancel my membership and to tell me how much money i had paid to date. sheahan clyde i had paid $320. i was shot. isd fica get a refund from my money and since i had no idea i had been subscribed to the service. she stated she would cancel my membership and credit me the last month payment of $20. at that time i did not think i have any options as far as getting my money back but the more i thought about it the more i was upset with movie tickets.com. here was what i thought was a reputable web site when they were allowing the scam at the end of the purchase. i then went on movie tickets.com

regarding the money i had lots giving-- approximately 30 days later i got no correspondence from them stating that i would be getting a full refund. i am a college-educated person who is on line every day. i have made hundreds of online purchases over the last ten years. i have seen many scams and offers on the internet and it's only been lured in by one, this monday to the fact that the scam was associated with the rippetoe web site and requires just one click. just let's begin when i purchased an airline ticket for my son to travel here to washington d.c. on airtran airways what should appear on their confirmation page but they get $20 cash back offers from great fun. you can bet i will be sending airtran and e-mailed regarding my disappointment in their choice of an affiliate's. thank you. ..

my overall opinion of these practices is threefold. first, sales methods used by these firms do not constitute marketing of the term is understood and practiced by ethical grievances and is taught in schools of management.

in almost all cases the membership program is being offered to consumers is limited out any value to communicate information that will allow informed choices by consumers and the firms use these methods do so little interest in building or nurturing long-term relationships with the contacted customers. in contrast, at the cornerstone of the theme by luring customers into paying for her shows from programs that they would not describe to giving their full awareness. second, while the substantive content of the sales practices varies, this deception is achieved through a coordinated set of communications that display distinctive common architecture. these include the use of web designs that have obscured the relationship that exists between the first and third-party sellers, offering enticement of pre-premiums or incentives that consumers will have a chance of ever obtaining. creating false belief that no financial risk incurred by agreeing to the transaction, and

by creating exit barriers that make it difficult to avoid and/or recover unintended membership payments, such as by making continued membership of default option for consumers for not fully cognizant of what they have signed up for. third, the architecture achieve the deception by exploiting a series of well-known psychological biases that are known to limit consumer's ability to make fully informed choices in markets. the most general of these is the creation of web environment that we consumers to make decisions using automated or unconscious processes that do not fully consider all of the information that is available i website or presented in its decision setting. examples include site designs that create the false impression that the offers being made by familiar trusted seller, designed by mr. and consumers of tension away from tax that might describe the nature of the transaction and by exploiting tendencies to choose default or accept options when there is confusion about what the correct course of action it would be in

a web session. i should also note that the lack of the locality is inflated by the fact that they are often targeted at vulnerable populations were ill-equipped to absorb the financial losses they impose. specifically the practices may be particularly effective when targeted at consumers of limited means for home or small cash enticements promised by the programs would represent significant mutual asset and/or older consumers who have limited experience navigating the web. i've consumers with limited by the experience may be taken for no other reason than herbert believes that the sellers on the web follow the same norms of ethical exchange that they have come to expect than traditional markets or payment for goods and services as a choice of the consumer, not something one has to opt-out of. finally come the persistence of the scale schemes also pose long-term risk to legitimate businesses who conducts sales and an ethical manner over the web. of these parsers proliferate a negative experience of consumers who were taken in by the

schemes, they serve to foster feelings of mistrust towards legitimate sellers, thus impeding the growth of a major modern channel of commerce. thank you. >> and now. >> thank you for inviting me to testify on the issue of aggressive sales tactics on the internet and their impact on consumers. my name is florencia marotta-wurgler intimate associates at university of law. i teach courses in contract e-commerce and sales in much of my research focuses on contracting practices in electronic commerce. the key question regarding post-transaction marketing today's hearing is whether consumers are legitimately entering into these transactions, whether they are being effectively tricked into them. my general assessment based on both the norms of online commerce and academic research is that consumers may indeed need further protection from these marketing practices. my first point is a post-transaction marketing

tempe. one of the well-established norms of online commerce is that sellers require consumers to complete a check off process that includes entering their payment information whenever they want to make a purchase online. this allows consumers to be comfortable and online purchases and greatly facilitate e-commerce activity. post-transaction marketing techniques interfere with the established norms. the timing of the third-party offers interrupts the checkout process with the original vendors thus increasing the likelihood that consumers end up subscribing to an unwanted service without even noticing because they were prompted to enter e-mail address incentive payment information for the second transaction. so what i would like to highlight here is that these practices violate norms of online commerce, consumers associate purses of payment details and e-mail addresses with e-mail information. the next question is whether fineprint explaining the nature of the transaction can substitute for these deviation from the norms and provided legitimate basis for the

transaction. so my second point is that current methods of disclosure of the terms of the post-transaction marketing offers are insufficient to provide adequate notice. the basic problem with relying on disclosures and fineprint is that people simply don't read it. for example, two co-authors and i have said the extent to which people who buy software online to choose to click on them with the fineprint governing the use of the software. we found that only one or two out of every 1000 shoppers chooses to read the contracts. moreover, those who did actually click on the contact spent too little time on the two have actually read it. in a follow-up study, we found that the prominence of the disclosure did little to increase the probability that contracts would be right. in fact, consumers are a mockery to read the fine print even when sellers for the terms right in front of them and require explicit by checking a box immediately below the terms. and even if it were the case, that consumers were inclined to re-fineprint, which they are not, post-transaction marketers structure and display fine print

in a format that further discourages reading and comprehension. these marketers present their offers and a form that is deceptively similar to that one used by the original selected vendor and even included selected vendors branding and logo. consumers are induced to believe that they're dealing with familiar vendors can easily be lulled into complacency. our study suggest this is a genuine problem. we found that even fewer than two in 1000 consumers read fine print when they were dealing with rigor more routable sellers. this makes sense of consumers will feel less they need when dealing with known vendors. post transaction or marketing firms offers exploit this trust. another way in which these marketers discourage reading is by identifying their authors as rewards or bonuses when consumers should be grateful to receive. the offers all show/larger terms around the pace of his congratulations and thank you. studies have shown that consumers focus on only a few salient aspects of the service when deciding on a purchase.

these bells and whistles have the effect of diverting attention from important information about fees. the just as good news that conspicuously flashed on the screen, the bad news is suspiciously hidden. the terms related to the fees and automatic transfers of payment information appearing small print in the left or bottom of the page and appear under another layer of ungraded happy title such as congratulations and great news. a relevant disclosures appear at the end of unfair grass. of course, the problem with this is that researches show that the manner in which sellers display information affects the information. even the rare consumer who actually does take a quick look at it could be forgiven for not understanding it. so i've a few suggestions to help remedy these problems. first, automatic transfers of payment information from november's should not be allowed. instead, consumers should be asked to enter their credit card information at each transaction. this will preserve the well-established norms of

e-commerce. second, they should be required to identify themselves prominently into franchi themselves in the original vendors. there, they should clearly and prominently described fees and services. finally, they should plainly explain how in world consumers could cancel or seek a refund. >> thank you. before i go to your professor cox. you both talked about fineprint and the fineprint is just the greatest scam of all time. i see some charts over there. do any of those have fineprint on them? >> yes, they do. >> i like to see -- >> sure. >> i would make this a metropolitan art show. i just like to see them. all rights, while that's not as good as some that i've seen. where they have $10 in bright

blue, a big square up at the top. and then there will be like five more of those paragraphs in small print, which i'm not 20, i have good eyesight. and if i had a galileo telescope i would not be able to be about fineprint. i mean it is absolutely impossible. in that fineprint, if i'm not mistaken is all of the damage that they are going to do to you. but of course you don't read it because underneath, in the same bright blue, the one that i'm thinking of that $10, underneath that in big print is, guess. so what do you do with? you go $10, yes. you don't read anything in between because he said one out of every 1 million duet. >> one out of every 1000.

>> so anyway, i just want to make that point. professor cox, onto you. >> thank you mr. chairman. or over a decade end of a law i've attempted to come back and call attention to the practices examined here. practices that during the financial accounts of americans without legitimate purpose cost cynicism about commerce and harm competitors who are trying to be honest. i'd like to make three points. first, the practice examines here is not limited to the internet. they're part of a bigger problem, a problem called pre-aquatic marketing. it is the sale by retailers and financial institutions of special access to consumers account so that third parties can charge these accounts without obtaining account numbers for consumers. it occurs through every channel of direct marketing, including direct mail inbound as well as internet transactions.

it involves all the nations largest financial institutions at some point and continues to involve the vast majority of the nation's largest banks, credit card issuers, and mortgage companies. interestingly it is not something that is quite spent on independence and community bankers or credit unions. it works by circumventing a shorthand method we all use to signal consent to a transaction. we know we are done when we have them on our credit card, swipe the machine, read them the number over the phone, or entered into the internet. this problem is especially bad with those with mental impairments due to illness or other reasons and those who do not speak english as their primary language. they are particularly victimized by the complexity of these transactions. my second point is that it is difficult to control this problem with existing deceptive practices and other consumer protection laws. like it or not, they are fully disclosed, even if in a fundamentally misleading context. this causes some court to

struggle with whether the consumer should be held as possible for carefully reading the fineprint. i think this is like a branding the crime bashan forgetting pickpocketed in a streetwear says beware of big doctors. the existence of self-disclosure causes problem in the courts. this debate of law about deceptive practices is distinct from the larger and more important point. preacquired account marketing of which this is a good example. the results of which is many consumers have their accounts charge without their knowledge and without wanting the products they supposedly purchased. the evidence on this point is absolutely overwhelming. and i'd like to say your staff reports on this i literally got up and cheered when i read it. it's phenomenal, it's detailed, it's thorough and it's beautifully presented. and it's consistent with all the other information about this form of marketing and other

direct marketing channels. for instance, illinois attorney general lisa madigan did a phone survey of people who were supposedly active paying members of membership clubs involving a direct-mail solicitation with live checks involving an agreement between a national bank and a membership club and found literally nobody who was aware that they were a member, even though they were paying for it. iowa attorney general tom miller did a mail survey with bircher members and found essentially the same result. and in my experiments with the attorney general's office, prosecuting several of these cases, including one against fleet mortgage company where people's mortgage accounts were charged through both direct mail and telemarketing. and they did a survey of the consumer services representatives with fleet mortgage and he got almost the same exact responses that were reported in your staff reports from those consumer services representatives. quotes such as this is a fraud,

this is a scam, why do we allow our customers to be charged like this? the third and final point is that unlike the often difficult and tricky regulatory problems where you have to balance how exactly what you're been in the still is not to prevent legitimate commerce. this is one of those rare cases where there is a clear and obvious solution. prohibit retailers and financial and touche and from selling access to consumers account to third parties. there is no legitimate commercial reason to do this. consumers mostly already think this is the law and it should be the law. it is with great appreciation that itu mr. chairman for calling this. it has been a frustrating decade to call attention to this problem and with one flail swoop you party made more impact on this than a decade worth of work by many other people who are trying to conduct this problem. thank you very much. >> thank you very much professor

cox. you are very kind to the committee and the staff. i want to go back mr. france to exactly where it was because i think it's important to get this stuff on the record. so that we can achieve at some of you have called for. we were already at the part when he said then they started charging me $19.99 a month you said. >> yes, sir. >> have you ever heard of it before they started charging you the $19.99 a month. >> no, sir. >> did you ever give value backs your credit card number or bank account number? >> no, sir. >> have you been asked to type in your 16 credit card number to join this club, would you have done it? >> no, sir. >> thank you. i'd like to ask you for your son

thank you for coming out from wisconsin. your testimony was you were using a website called movietickets.com. you thought you were buying movie tickets, but in turn you were also buying memberships due to class called reservation rewards and sharper discounts in both of these clubs are charging you $10 a month. is that correct? >> yes. >> have you ever heard of these companies before these clubs started charging me $10 a month? >> no. >> did you ever authorize them to charge your credit card $10 a month? >> no, not knowingly. >> did you ever give reservation rewards are shopping discount your credit number or your bank account? >> no. >> is good enough to type in your 16 digit credit card number to join the reservation rewards or shoppers discount club amah would you have done so? >> no. >> so mr. france and ms. lindquist i'm sorry got caught in the scam.

you clearly did and you are clearly highly literate, thus taking away this thing that people can get scammed even though they don't know the internet very well. you know it's very, very well and you got scammed. one of our members claire mccaskill from missouri has to be something the administration asked her to do, but her mother got scammed a she is absolutely in a rage about it. millions of other americans have been ripped off the same way that you do has been. it's outrageous and are going to find a way to stop it. mr. france and ms. lindquist one of the most disturbing things we've learned is that hundreds of websites like movietickets.com have taken they are customers information to these bogus clubs. in fact we take every time one gets tricked into joining this cause the online merchant gets what is known as a bounty.

they literally put a price on the customer side. mr. france, how does it make you feel to learn that they paid a bounty for selling your credit card information to value backs club? >> it's hard to put that into words, sir. but at the easiest, disgusted. that they could even do that and enjoy it and profit off of it and believe that they are doing right or that they can even sleep. and especially if they are an american company. because if we acclaimed that america is the greatest country in the world then it starts with taking care of our fellow citizens and not taking advantage of them. so i would say disgusted with the the best way to describe that. >> and you mrs. lindquist. >> i would have to agree with you. it's shocking they can sell my credit card information to an

unknown company. and everybody i talked to that i told i was coming here it's happened to so many people i know. but they just maybe got charged a month or two and then found it. and maybe that's the goal of these companies is just to charge these people $10 or $20 but multiply that by millions of people and -- >> like 30 million people at different times. you're right. my time is up and i interned to senator dorgan. >> ms. lindquist, my understanding is that you were charged by the use companies and never received any product, is that correct? >> that is correct. >> you have any mailing or coupons from them, no product of any kind? >> nothing. >> does this sound like fraud to you? >> so someone is charging you because they say you purchase something from them except he

received nothing and they are charging your bank account and it just seems to me -- i don't know the legality but it just seems to me that if someone is taking money out of your checking account and giving you nothing in return, that is something beyond just shameful. there must be a legal term mayor. the other issue that i find really trouble funkier is that reputable sites. i buy movie tickets online from time to time and you go to the sites because they're reputable presumably. reputable sites are actually being reimbursed by the companies that are scamming you. and i assume they're being reimbursed because variable to be a writer on that company's website and that's where they get their customers. you show up at the website wanting to make a transaction, buying a ticket for a movie or an airline ticket and that brings you to this page and then

they pop up with some sort of an ad that suggests you get something free and then the reputable website gives that company -- provides that company your credit card number. >> i know. >> mr. france and ms. lindquist, that is unbelievable to me. in addition to being shameful, it is so dishonest. and i think professor cox said this is a very important hearing in the sense that my hope from this hearing is that we will find ways to shut down the site dvd. there's no nice way of describing this. this is wholesale cheating of a lot of people and i think it just has to stop. i had not previously as i indicated earlier i had not previously been even aware of the terms that are being used, but i'm aware there are a lot of charlatans out there looking for ways to cheat people to the

extent that they can get by with it. and mr. france, you indicate you have no knowledge of how some men even got your credit card information, is that correct? >> absolutely not. unless they worked with this company and gave them my credit card information. and put a so-called bounty on me. >> mr. cox, you work for the attorney general of minnesota? >> senator dorgan, mr. chairman, i used to run the consumer protection at the attorney general's office. for an half years ago i left to go to that university of minnesota law school. >> looks like we have some people would be protected pretty badly. what do you make of the notion of somebody extracting money from mr. france and ms. lindquist accounts without providing a product to them? without them even know they purchase something. that seems to me like fraud.

>> mr. chairman, senator dorgan, i've been astounded for ten years that this goes on and on and tried every way to call attention to it that i could. the fundamental problems here are that the disclosures are made so many try to attack the problem you bind up in this legal battle about the sufficiency of the disclosures. you have to really shift focus and ask exactly the question you're asking. who in gods name agrees that we should allow a practice where everyone who winds up getting charged is unaware, essentially everyone, maybe one or 2% is essentially unaware that they are a member and being charged for something they don't know and they don't want. i'm another point, it hardly works because you would think the markets might solve correct by the reputational hat to that you retailers or the banks that are involved, etc. the problem is when the charge concert comes in the name of the club in all the attention is directed to the club.

so you get this problem with the market doesn't take care of it because the reputational interest. >> the very reputable websites are playing ball and making money off of this scam. maybe we have to take a look at saint to the reputable website, you know what, you all that sort of thing to bounce up on your webpage you have some liability here. you better find out who's using your webpage and you certainly better find out who you are providing financial information on your customers do. you buy an airplane ticket ms. lindquist and if that company that she bought the ticket from provides your credit card number to somebody else, shame on them. they have some liability in my judgment. you may not now, but maybe we better find out if there is a way to do that. my time is about up. glenn me ask you an obvious question, ms. lindquist. he started by talking about your personal situation. tell me about your daughter. is she better as a result of your trip? the mac she is doing a lot better because with atlanta she

can walk short distances. she's very lucky but she's still working. >> good for her. >> thank you. >> thank you senator dorgan. these are available if anybody wants them. these are the bad guys were talking about, some very big companies who like their $10 every month and are $20 every month and money can go up or down. at the discretion of the scammer. so if you want a copy, we'll be glad to give it to you. >> thank you mr. chairman. thank you for all the witnesses and your testimony today. i want to talk about the legal issues affected with professor meyer. i too had the honor to serve in the attorney general's office in florida and go after unfair and deceptive trade part says that their crimes unit. and our folks nonoffice now under bill mccullough are going

after these different vendors, but i want to ask you to follow up on what senator dorgan was saying. it seems to me that an attorney general could go after one of these so-called reputable companies who are enabling these scam artists to steal the information from unsuspecting consumers. so if an airline, for example, allows this company to operate on its website without proper disclosures and to unwittingly take this money from consumers on this annuity scam that happens month after month after month, couldn't an attorney general go under the unfair trade practices act and hold these folks accountable? >> mr. chairman, senator lemieux, yes. these are a little bit more difficult to prosecute then you would think they are. they're just extremely costly.

and as you know they don't shake a lot of money and attorney generals office is and you have to make tough choices between going after all kinds of bad guys. buy gas and thank you all. as an academic i'll plug my article. to the usage and the fact that nobody knows it and to go after these other entities. for a frankly, i think the hearings were doing here is probably more effective at doing that than anything else. but the answer to your question is yes and it should happen. >> professor? >> my answer is similar to repress or cox. i believe that going under unep might be more effective. the disclosures are not effective for some courts might say that in order to have a sent, particularly in consumer protection, there has to be noticed and it must be

ambiguous. i highly suspicious that given the way the offers are presented it as been done in an ambiguous fashion. the event was not meaningful and does not valid. however there are other course of my belated disclosure is is in fact valid. that's why i think that's going under your desk made to be more effect they have. it just might not be that certain. >> i agree with you and if i were still in the ag's office that would let to go after this case because it's not just deceptive, it's unfair. and it makes no sense, mr. chairman, that you can be in a situation where you're going to be ticket and someone sends you up for an alleged product or service that you never receive and you get charged monthly for it. it's outrageous and it's unconscionable. and i think that the chairman is right and senator dorgan is right in that there should be and i want to fall on professor cox comments.

they should be prohibited from selling this financial information. businesses who are working on the internet should be no different than businesses were working in regular commerce. and if i went to 711 to buy a cup of coffee, used my credit card and they took my financial information and sold it to somebody else who then started charging me $10 a month, you know, we would all recognize that is outlandish. and it's no different if you're on the internets. and we are so now accustomed to the e. transactions. and as he said no one reads these disclaimers. and they know that when they put them out there. it's one thing to give you information on these disclaimers about which you can or cannot do when you're using this product or service. it's another thing to bury deeper than that you are finding service. which probably is not even a real service are real product. so i command and support the comments that were made by my colleagues earlier that there should be a prohibition in the law that prevents unless all

sorts of hoops or jump through, all sorts of hoops would show knowledge and consent by the consumer that your financial information be sold to somebody else. and shame on these companies, these reputable companies who are allowing this to occur on the websites. i want to thank again mr. france and ms. lindquist for coming forward and spending your time and been involved here because you're shining light on a problem and i assume is affecting thousands of americans and for your willingness to come forward we may not know for. i appreciate you and the staff that is done such a great job in bringing these issues forward. and thank you for all of our experts have testified here today. thank you, mr. chaiman. >> thank you, senator. senator udall. >> thank you very much chairman rockefeller and i want in particular to thank you for doing this investigation and doing this hearing today because i think it raises consumer

awareness in such a way that really brings some light to this process. and one of our witnesses said earlier, you know, you could go into a lot of things but a hearing like this i think brings that out to the public. and i'm anyway reminded of my days as state attorney general where we used to say when worked in the consumer protection context a good business wants bad business out of business. and that's senator lemieux just that, any legitimate business that's teaming up with these kind of scam operators, i wouldn't call them a good business anymore. good businesses should be stepping forward, they should be distancing themselves from this kind of behavior. and they should be working with prosecutors, with state district attorneys, with attorneys general, to get this done.

and to get people prosecuted him to say we are going to take this very seriously. i have a case in new mexico that i believe professor meyer has highlighted. and this is -- here you have a santa fe woman who was bilked out of $700 after multiple visits to vista prints websites to purchase materials for a real estate business. you describe it in your written testimony that confusing charges appeared on her credit card long after the original online purchases. and she didn't have a clue what was going on. and it goes to professor cox the efficiency of the disclosures. what i want to ask any of the witnesses here, you know, we ought to be putting people that do this in jail. these are the same kinds of operators that we put in jail in

new mexico doing telemarketing fraud. and i would ask the witnesses that have -- have the expertise here to tell me, you know, should the federal trade commission updated rules for telemarketing and mail order sales to address these new online scams, or does the agency lacked authority. how do we get it so state prosecutors, attorneys general, others can focus on this area and make sure that the bad guys are being brought to justice? you cannot jump in, just don't do it all once. >> i'm a little embarrassed that i will add one thing. at 18 i was the youngest member of the udall campaign for president.

just real quickly, the problem with the ftc and the problem with the civil enforcement problem here is that this thing is to use technical language, brought in at its core. it's not a matter of separating out the good parties from the bad party, which it usually is in a civil enforcement context. this type of practice just shouldn't be allowed. it is inevitably i have never seen it ever in any of its many new knowledge is ever do anything but result and charged millions of charges overwhelmingly 98%, 99% of people being charged for things they don't know. so i think the problem is regulatory. we're quickly on the federal trade commission, many of these, i'm not sure what the percentages are these days. areas to be privately run through banks in the federal trade commission has limited jurisdiction there. so it's going to be a difficult problem to sort out exactly where the regulatory authority needs to happen in order to control fundamentally this

problem of selling access to consumer accounts by retailers and financial stations. >> do either of you -- >> yeah, my view of it is that sort of the web introduces sort of a basically opens the door to a wide array of exploiting people's frailties and vulnerabilities and processing information. i think of a lot of existing legislation was designed for a previous world and in some sense it significantly needs to be updated. and i agree with professor cox that the structure of these businesses is such that the only way these companies make money is through open and outright deception. and the one thing i've noticed is that they are incredibly good psychologists and you basically get them to cut back on one area and you find incredibly ingenious ways of getting people to the work people these programs or some other different ways. and they're constantly doing

online experiments and essentially they find out that people catch on and they say that's bad and we're going to keep doing these experiments until we find them one that works. >> the folks i to know that chairman rockefeller and agee's and district attorneys are going to focus on them and bring this out into the sunlight and bring these people to justice. thank you mr. chairman for focusing the commerce committee on this issue. i mean, this is a very important issue to consumers and i think you've done us and the american people a big favor and focusing on consumer protection in a new way that i don't think has been done on the commerce committee and a longtime. thank you. >> thank you. >> senator udall, thank you very much. >> was that you professor cox that was on the udall for president committee? >> i'm ashamed to admit. >> i was distracting senator udall because i was try to figure out if you then jump ship

on come for mondale. it appears that you did not. >> i did give out the vote in illinois for jimmy carter. very poorly you might die. it actually got notices of how about get the vote out west. >> i wanted to welcome you professor cox for the purpose of record, professor cox has been very active in a number of very important consumer issues and has helped me on some of the work we're doing with cell phones, which is now emerged again this week with the early termination fees charged by verizon and other things. so i want to thank you for that. and i know you were working with mike hench, the attorney general, did you file the suit on similar things like this before? >> senator klobuchar, yes. it was the predecessor to vertrue and u.s. bank were. there was about five suits including fleet mortgage

company. we try to go up the chain and hold people responsible at the financial institution level. we had some success but then this whole thing sort of bag away and this is just i'm giddy. that you're taking a look at this huge problem. >> do you think that there are things we can do -- what would you suggest that we do? the easiest thing to make the current laws sufficient to curb the abuses online? >> thank you, senator klobuchar. this again as an actual tv solution which really is the case when he confronts these problems. financial institutions and retailers shouldn't sell a account numbers and access to account to third-party sellers. there's just no reason or legitimate crucial reason to allow that. i think in my testimony i explain some of the attempt to justifications and why they are just somewhat pitiful. there's really not much of an argument here. now you get into a more tricky problem when you get the problem

of sellers retaining account information and then later reusing it. >> for their own purposes were talking about? >> for instance, you might order contact lenses from every quarter retain your information then regularly fill you with that information. it can also be misused in ways that mimic this problem. so i think you can attack that problem but that's a little trickier legislative drafting issue. i really do think that there is an obvious and clear solution to this and it's just to shut down selling consumed access to consumers accounts. >> had there been any attempt by online retailers to try to stop this? to try to exert pressure on this or it's because they're getting access so why would they? >> they are the actual ones who are profiting from selling this. i will say if you look at section 502 of the glen ledge bliley act, section 502 t. as

something that pretty much on its face says you can't do the financial institutions anyway which is a big part of this problem. they can't make those sales, but the occ and along with other regulators were authorized to enact regulations and institute regulations that essentially completely circumvented when i saw was the intent of that legislation and allowed access to consumers accounts as long as the actual sharing of the information was just encrypt it. but then the membership of says yes they can send it and then they just decrypt the numbers. so it didn't effectively do anything even though on its face that seems to really solve the problem. >> and so, what do you think of an evidence also shows or maybe you know the people they get into one of these. to most of them eventually cancel about? >> you can sort out into certain subgroups exactly -- great question. you can sort out into subgroups

to the people are. some people will cancel during the 30 day trial period, but with very interesting and a large database sample shows that in fact most people who wind up getting this catch it after it's initially billed, not during the 30 day period. which is counter indicated if you thought they really worked way they set it to you and so most people catch it in the 60 and 90 day time frame. some people, some people don't catch it and particularly when it's billed annually, they have two sometimes be billed three, four, five years. so when i would talk to consumers who have this problem, if you look at it and you will build i'd say go back and look at your bill, your credit card or bank statement or mortgage account for the year before in the year before and find out how long does this happen to you. and these companies and parts list on these customers pay full revenue and are automatically

renewed. >> right. i've gotten into some of the situations. those kinds of customers. and i go back to look at the visa bill and try to fix it. but then still eventually do most people can't pull it? >> of course, because eventually nobody really wants this. when you boil it all down at the end of the day, i don't think there's a partisan issue. i can't imagine why anyone and i'm so glad to see that it's not that way, anyone would say we want people to sell products for the people being charged have no idea they're being charged for it and don't want it. it's just absurd. >> mr. meyer and then i'm out of time. >> i just want to add that on terms of these multi- charges that for people that actually don't cancel, essentially every year they increase the charge by a couple dollars. so essentially they keep increasing the charge until finally you do catch it. and like professor cox said it could be three, five years before some people find out.

>> so there's an art form to seeing how far you can raise it without people being suspicious. senator nelson. >> thank you, mr. chairman. mr. france, i'm sorry you had to go through what you went through just to get back your money, not even to speak of all of the trauma and time and so forth that you had to go through. so, but you are an example of what's happening with this explosion of technology. we have people that are now instead of using a crowbar to steal, now used technological improvements. and they are doing the same thing. and they are doing it with a lot of deception as the chairman. have pointed out.

and this committee is handling a lot of other things called phishing with a ph and farming with a ph and spoofing, which is another one we just had in florida, a spoofing case. that's one you luck on your cell phone and you see the number that's calling you. well, if you alter that number to make it appear like you are looking into what happened to this lady, a single woman and suddenly she's getting a call from her own residence. and of course, somebody was doing this to play a prank on her. while the lady is absolutely petrified. she thinks somebody is in her house. or one of the worst ones is that they called 911 masquerading as a certain number home that there is a burglary going on.

911 dispatch is the s.w.a.t team and you can imagine what mayhem might have been on an unsuspecting household with the police suddenly breaking in. this is what technology is gotten us to. and this is what we've got to change. so, thank you for sharing your story with us mr. france. >> you are welcome. thank you for having me. >> and we're going to try and do something about it. and thanks to you, mr. chairman. >> y-yankee mr. nelson. and i would point out again this is not the few people were talking about. at any given point i think the fact is there are 4 million people who are being scammed and over we have comments here from people 2003, 2002 over the years were talking about tens and tons of billions of people.

the amount may be small, but the amount is not small to those who are struggling to get by. and you made ms. lindquist very, very well. ten dollars, $19.95 can put you in bankruptcy, can have people all over you. and can add to other traumas that are ready taking place into your life. question for our experts. there are thousands and thousands of businesses out there on the internet trying to sell us their goods and services. they have to convince us that their product is good if they want us to purchase from them and stay with them and to see from our point of view as a trust worthy company. and then only after they've convinced us that their product is trustworthy, they are trustworthy, and their product is worth it, do we then pull out our credit cards and enter the

16 digit to complete the purchase. in fact, according to be says, it do to me, rules for merchants, to complete a valid online purchase, customers must type in their billing information, they are 16 digit full credit card number and their digit security code called cbv to. so here's my question, to any of the three of you. if anybody else can charge of the cards only after consumers have entered their full information. how is it possible they can charge millions of shoppers who have never given they are credit card numbers to them? >> they can't and they shouldn't. the argument is that the selected vendors disclose or

demand authorization on this by the consumers by disclosing them and this in their privacy policy. if you go to the privacy policy, which nobody reads by the way, of a fandango or their businesses they say were protecting all sorts of information, but you're also giving us the authorization to transfer your payment or personal to viable information to some selected partners. so the authorization stems from this type of contract, which is i should mention, unenforceable against the event is not unambiguous enough. so clearly it would seem to me that there is no reasonable way in which this would be unenforceable, i'm sorry, illegal way of transferring information without the consumer over entering the numbers his or herself here it of course, it has been, but theoretically i

don't think it should be. >> i think from the other related part of it is that how do consumers suddenly find themselves having sort of agreed to the transfer of this information. and i think senator, the answer there is that in many circumstances and tumors are making these decisions using very, very quickly sort of automated processes that they're not really aware of and in many cases they think they are still in their original site. they think in many cases what they're being part of is the original purchase process of the original site. i should say to mr. france, i actually was taken in by the intel he is as well. and what happened then is you go to the site and you think you're getting some information and there's a little part where you have to, i think i had to pay 1 dollar on a credit card to be able to get some information and

then you click a red button that says given my information and you click it and what happens next is that you are not given the information, you suddenly are at a new page and you're wondering where's my information? and then you are looking around for a button to click to get the information and there's a red button at the bottom that says, show my report, and you click on the reports and as soon as he done that, you become a member in this program. and it would be the thing where you would have no earnest whatsoever as what you had agreed to do. you said, professor cox, in your testimony that this membership club industry quote, would cease to exist almost overnight if it had to sell its products like every other retailer. and you explain that's? >> thank you mr. chairman. if nobody is aware that they are actually quote i mean your

product, that rather suggests that, you know, you're going to have a problem actually selling your product if you have to convince people to pay you the money that you are demanding for the service. after ten years of observing essay of no question that if they had to sell this in a legitimate way that these companies would not exist. >> my time is out. before i go to the next senator, one of the things i regret about this hearing is actually the lack of focus on the evilness and lethality of the fine print, small print. that if you can put something in small print and you know you take prescription not of the brown paper bag and you take the little bottle out and then there's this paper were to immediately throw when because you can't read it. or you'd have to set aside an evening to read it. i mean, it's so phony and yet it's a flat-out practice that we allow to continue. senator

lemieux. >> i just have one final question for our experts and that is is there anything that we did not talk about that you would offer up suggestions to how to best combat this fraud and we can start with professor meyer and go down and then maybe will finish up with our citizen consumers and see if there's anything else they think of which would be a good way to prevent this from from happening other unsuspecting americans. >> shore, while some of these had been mentioned before. one of which is i think that it's really important that if you have a hand off for one site to the next that the consumer really needs to know that they are no longer dealing with the original merchants that they have. as an example, i have this figure over here on the right. this is a case where a customer without a vista print website buying online labels and this is sort of the site they were immediately taken to.

and throughout the site there's all these references to the fact that it's vista print and its vista print thanking you and vista print everywhere. and only if it's a case where you look at the very tiny fine print at the very bottom do you find out that this is actually a site maintains that has nothing to do with vista print. it has nothing to do with any other merchants that happened to be named there. and i think that one of the reasons this happens is that these customers are leeward into not thinking very carefully and making decisions very quickly, but whatever you can do to suddenly sharpen their antennas and say, you are no longer in a safe zone. you've now gone in an area where you have to be weary. start looking at the fine print. i think that would be one small step. >> dear training off the credible brand. >> there's no reason when you look at this there should be any reason for mistrusts. you didn't totally trust whatever they're providing. >> i guess what i'd like to

highlight is the importance of preserving online norms. the reason laypeople have to delve into the fine print is they know what the certain steps they are expected consequences, particularly with financial liability. you enter credit card information, you expect to be liable for something. if you enter e-mail information you expect to get an e-mail. so that's extremely important. otherwise trusting online markets would be seriously damaged and people might be relied into enter online transactions. the second point i'd like to make is that disclosures in the form of fine print are terribly ineffective out of learning consumers. much of our current law focus of on the idea of disclosure that as long as you disclose things and find printed spine because consumers know what they're getting into. and they're actually assenting to the action that's in the fine print. research of studies have shown that this is not the case, not the way consumers behave. why pay to highlight the

importance of that disclosure is really not that affect dave into duping consumers into these types of transactions. >> i just like to thank you because i always try to teach my kids the value. >> mr. france, anything else we need to be aware of that might be helpful in preventing this fraud from happening in the future? >> i think one of the biggest upset could be done is like had been mentioned earlier is to actually hold these reputable or at one time reputable companies responsible for allowing these other sites to come in and do that and essentially they are one in the same. they may not be taking as much money, but by allowing these other companies to come and they're just as guilty. and if we can discourage them from allowing these companies then, then i think we'll see a lot less of this problem in the future. >> thank you.

ms. lindquist? >> i agree with mr. france that the companies of the reputable websites and to be held more responsible about to their affiliated with. >> thank you again mr. chairman. i think we got some good direction from our witnesses. >> i agree with you senator lemieux. before -- we are going to have a good vote in about ten minutes. so we need to close. i want to ask one question and put something in the record. i asked unanimously and give consent to play several in today's hearing. one is the staff reports called a aggressive sales tax on the internet. which was circulated to members yesterday afternoon. the prepared statement of robert mckenna, the attorney general of washington, the prepared

statement of professor benjamin andelman of the business harvard school. a letter and other materials sent to the community i richard fernandez, the ceo of web loyalty and statements by members of the committee who wanted to be here but were unable to be here because as usual there's many, many hearings going on. final question, from our experts, i guess you professor marotta-wurgler, affinion, webloyalty, have announced their reinvention and i decided to pull back a little bit. it's interesting. it's just like, you know, i get a letter from the ceo of u.s. airways group inc. saying they're not going to do this anymore. we haven't even gotten to the hearing and they got it

yesterday. and continental airlines is going to check in and probably pull out of the whole thing. it just shows how fragile this whole situation is and how devastating it is and how easy it is to make it devastating. so affinion vertrue and webloyalty are going to require their consumers to enter the last four digits of their credit card for proof of acceptance of their offer. now, vertrue announced this yesterday and affinion announced their move on friday of last week. professor marotta-wurgler, i understand you enrolled one of these programs after you purchased a movie tickets from fandango. did they ask for your last four digits of your credit card as proof of enrollment? >> yes, chairman, i did on friday night. i thought it would be a good experience for the hearing to actually enrollments.

i was actually concerned about whether the e-mails disclosed to confirm it to anything. and yes i did purchase a movie ticket to see where the wild things are which i didn't go to. ..

so it seems 11 is dealing with an original then there any given practices one associate is giving the last four digits of the credit card number as a way of verifying your identity, not as a way of paying so you call your credit card company and ask for the last four digits of your credit card or the last four digits of your security-- it did not require any extra effort. it didn't require that much more attention because i thought fandango was the one offering my $10 for being a loyal customer and they were just trying to see that i was the person who was claiming to be because now they have a legend that says the limit one per person just in case people are flooding into these types of services. so yes, they give you one side but they take away on the other so i don't believe these are

enough. they are clearly better than the default but they are certainly not enough. >> i agree and i thank you for that. the graveness senator mccaskill is on her way over here who at about 127 miles per hour and she wants to get in one round of questions before the votes, so i will defer to her the moment she stepped in. from my point just a few closing thoughts. this investigation i think starts and ends with the american consumer. everybody is taking advantage of everything they can. the vodka is always a temptation and when it comes up and telemarketing we stop it and when it comes up here we stop and then you can argue whether it should be the ftc or legislation, we have to stop it. we have to stop it from ever happening again and expose those who continue to do it. my message to consumers i guess would be, be very careful there

on that, and that is something that really makes me very, very angry that the use of fine print to deceive americans at all levels on many subjects which we have not even covered at this hearing, the use of small print to hide pharmaceuticals, secrets, you know, this this mix with that said iraq? it is in the fine print. you should have read the fine print and that infuriates me, so why think this is a huge problem. it is an american problem. it is classic greed and the sad part is that you know these big companies, they are getting ten bucks a month or $19.95 a month and actually these webs can raise it to whatever they want. there is nothing stopping them, right? so they can raise it to whatever

they want and as indicated they try to figure out what the point is where ms. lindquist goes bananas because she has really been had and then she closes down, so that, be wary if you are a consumer. i worry about this brinkley because the holiday shopping season is just beginning and all over this country people who are in economic distress will be spending quite a few dollars they have on holiday shopping because they have children and grandchildren and that is what parents and grandparents tend to do. that brings me to my second thought and that is my message for the companies that profit from tricking consumers into joining their clubs yet say over and over again that what they do is legal. and they operate within the law. i am not a lawyer, but this is what i think. just because you say what you do is legal, it doesn't make it right in professor cox i would like for you to finish my

sentence. >> amen. [laughter] >> alright. we are waiting now on senator mccaskill. believe me, it is worth the wait. if we did this to telemarketers to stop them cold, what is the big problem? >> mr. chairman i don't actually agree with you that we stopped telemarketers cold but one of the things, and i was intimately involved in the telemarketing sales rule. but, the original rule was exactly what we are talking about. you just can't sell billing information and can give it to a third party. somewhere in the process between the proposed rule in the final rule were bound up with this very complex process that involved this concept of free to pay conversance oh actually companies started to circumvent all of that by just charging 1 dollar. instead of saying it is free they say it is the 1 dollar to

get your coupon. there are still problems particularly within about telemarketing where you call your customer service representative at the bank and when they are done talking to you they say by the way would you like to do this? an example would be ticketmaster you call ticketmaster and depending on the ticket to call for they will say are you interested in a free trial offer in this? i not sure the telemarketing sales world solve the problem. i think it raised the stakes a little bit and then admitted and of the company shifted most of their resources over to direct mail and the internet. the problem as he puts those done and maybe this becomes more attractive and i don't think we are completely solve the problem. >> you know, granted i am waiting for senator mccaskill but the internet is very interesting to me because it was discovered and is the source of almost everything that everybody

does. i don't go on aol.com. i go on amazon.com, but-- for books. but, and then yet, under president george bush, and under president barack obama, there are two directors of national intelligence the were the most powerful people in there to administration's, respected intelligence world. they have both said that the number one national security threat is not north korea. does not china. it is not you know, iran. it is cybersecurity. and that is the use of the internet from anyplace in the world, undetectable for the most part, to shut down already portions of brazilian cities have already done the lot of damage to the pentagon, to a

variety of downloading endless amounts of the information from secret u.s. government sources. so, the internet is our friend and the internet is our enemy. and the most dangerous thing that confronts us in terms of surviving. they can shut down a grid. they can shut down hospital systems. i mean, it is a very tricky business to me, the internet. if somebody can't tell me that senator mccaskill is about here, i am going to close the hearing. >> she is on her way. >> no, i am sorry. i can't wait. if you want to, she will pop in here. and she will be worth it because she is terrific. and she is a prosecutor,

attorney general and all this kind of stuff and she is just wonderful. and agreed on the subject. i want to thank you all very, very much for taking the time. i agree with you professor cox that this will have an effect, and it already has. and, of it may be $10 or $20 a month but it is a wrongful ten or $20 it is not fair to do that to the american people under any circumstances and we have to stop it. having said that, this hearing is adjourned. >> the senate began debate on health care legislation today. for more information on the senate bill and the house version, go to c-span's health care hub. watts speeches, congressional hearings in news briefings. that is that c-span.org/health care. now here is some health care debate from the senate floor.

we will start with senate leaders harry reid and mitch mcconnell. after that maryland senator mikulski on her amendment on women's health screening. later, senator john mccain talks about his objections to the overall bill. >> mr. president, the next few weeks will tell us a lot about whether senators are more committed to solving problems are creating them. we have before us a historic occasion. that is where time in history we have never been before. a chance to ensure the well-being of both our fellow citizens and the recovering economy. we have before us the opportunity to relieve the suffering of many in prevent even worse pain in the future. but if we are to seize this opportunity this debate must be on the facts, not fear. we must they focused on how we can best help the american people and the american economy. we must avoid the temptation to

drown the distractions and distortions. in other words to restore our jobs. mr. president last week, my counterpart, this thing which republican leader, senator mcconnell called the health care crisis "manufactured." the american people mr. president would beg to differ. i have said on this floor before on several occasions that last year's 750,000 people filed bankruptcy. that is true. i said previously that half the people that filed bankruptcy filed because of medical expenses. but we have learned a report that came out last week that that number is too small. that realistically it is about 70% of the people that filed for bankruptcy, filed because of

health care costs. i have also said on this floor that at the people that filed for bankruptcy because of medical expenses did so even though they have insurance. we learned last week of that number is also too small. is 62%, 62% of the people that filed bankruptcy because of medical expenses who were already insured. now, mr. president is that a crisis in america? 750,000 people filed bankruptcy. about 70% of them filed because of health care costs and 62% of those who filed for bankruptcy because of health care costs have health insurance. what a sad commentary on the delivery system of health care in our country. this weekend the republican leaders that we should go back to square one. in fact is that quote was there is no way to fix this bill. mr. president that is what we do. we are legislators.

i have been to congress a long time. i have been fortunate to get things passed. never ever have i gotten the legislation that i wrote past the way it was written. whip rare exception that happens. now i would say to my friend, the junior senator from arizona, that republicans of had a seat at the table from the very beginning of the health care debate. as an example of that in the help committee. 161 amendments that republicans offered in that committee were part of the help of bill out of that committee. but when you hear someone say there is no way to fix this bill you have to look at the underlying statements this gentleman has made in the past. basically there is no problem with health care. things the way they are are just

fine. and facts 750,000 people that filed for bankruptcy last year, 70% because of health care costs, is not important. mr. president that is exactly what the legislative process is all about, changing things, working on things, taking out things you don't like, debating mnd-n improving. democrats stand ready to do so and i hope my republican colleagues stand ready to do so. as we brown's the last turn along this journey, i renew my plea to this body to senators, democrats and republicans let's discuss the specifics of this bill not the whispers of wild rumors. well we will disagree at times, but as at least agree doing nothing is not an option. and while each of us may not say yes to each word in this bill as it currently breeds lead this least admit simply saying no isn't enough. we will do this work

transparently and we will do this work tirelessly. that may mean debating and voting late at night. i say to everyone within the sound of my voice the next weekend's, plural, we will be working. i have the dense this weekend that i will have to postpone. some i will have to cancel. that is the way is going to have to be with everyone. there's not an issue more important than finishing this legislation. i know people have things they want to do back in their states and rightfully so. i know people have fund-raisers because they are running for re-election. i know they are important things people have to do but nothing could be more important than this and we notified everybody prior to the break that we would be working weekends. our cloakroom did it by e-mails. we transmitted this message time and time again. so, we are going to have to work saturdays and sundays. this crisis, and yes it is a

real crisis, is simply too hazardous to our constituents health not to work as much and as long as we have to. this is a good bill we have before us, save lives, saves money and save medicare. the evidence about this continues to pour in. a few days ago, one of the nation's foremost economists the man by the name of jonathan gruber analyze their billing concluded it will help americans pay less and get more. he found that while the cost of private insurance continues to rise an extremely rapid rates, those who use the new health care insurance changes we propose will save hundreds and in some cases thousands of dollars per year per person. gratified we have already taken health insurance reform further in a new point in american history but i'm not satisfied and will not rest until we finish the job. health care fairness will come if we dedicate the coming weeks

to solutions, not scare tactics. >> mr. president. >> the republican leader. >> i just want to reiterate the point that the majority leader just made, that he is anticipating as being in on the weekends and to underscore why that seems to be necessary is because the majority is intent on passing this health care bill that the americans oppose, the american people oppose. we have looked at all the surveys and in addition to that there are a number of things that actually must be done this week, this month that we have a debt ceiling expiring or needing to be expanded according to the administration. we have not passed appropriation built. there are tax extenders that expire at the end of the year. there are patriot act provisions

that expire at the end of the year. mr. president there of many things we must do this month and yet we are going to spend an enormous amount of time working on a bill that the american people wish we would not pass this month. let me just say first i want to welcome everybody back. senators then staff after what hopefully was a restful and happy thanksgiving. i had a chance, i actually worked monday and tuesday of last week and had a chance to spend a good deal of time out in my state of kentucky with a number of folks and i must tell you mr. president nobody would shy about telling me what they thought about the health care bill. nobody was shy about it. they had obviously been paying a lot of attention to it. many had focused on the vote to proceed to this 2007 page bill a

week ago. many people have an opinion insofar mr. president not a single solitary kentuckian i have run into-- admittedly this is anecdotal but not a single solitary one said anything that you've got to stop that health care bill and i assured them we would do the very best we could to leave their dramatically change it by amendment or hopefully on a bipartisan basis, keep this 2007 a four page bill from passing. a lot of people i met had that kind of an observation. i expect it is pretty similar across the country. kentuckians want to know how spending trillions of dollars to don't have on a plan that raises health insurance premiums and taxes on families and small businesses is good for health care or if the jobs offer the economy for that matter. the fact is, americans feel like they have been taken for a ride in this debate.

they are beginning to realize what administration officials met when they said that a crisis was a terrible thing to waste. earlier this year, they said a crisis is a terrible thing to waste. the notion that we would even consider spending trillions of dollars we don't have in a way that the majority of americans don't even want is proof that this health care bill is completely and totally it is now perfectly clear what happened. the administration and its allies in congress have wanted to push government-run health care for many years and they have viewed the economic crisis that we are in as their moment to do it. so they sold their plan as an end to the-- anecdote to the recession even though their plan would only make things worse. but now americans are beginning to see the truth behind the rhetoric. no one believes, no one, that

trillions in spending taxes and that will do anything but kill jobs and darken the economic prospects of struggling americans and their children. the administrations health care plan won't alleviate the situation we are in. instead it would punish struggling americans at the moment when all they want is a little help. proponents of this bill couch their efforts with the refrain that history is calling. how often have we heard that mr. president? history is calling. i think they have got it half right. someone is calling all right. but it is not history. it is the american worker. he is wondering where the jobs are. if the middle class family wondering how congress should try to pass a scheme that won't do anything to control costs. it is one of the roughly

40 million seniors wondering when medicare became a bank to fund more government and higher premiums. i have enumerated the specifics about the medicare cuts in this bill before. nearly $135 billion in cuts to hospitals, $135 billion in cuts to hospitals. $120 billion in cuts to medicare advantage. nearly been billion dollars in cuts to nursing homes and mr. president if that were not enough, $8 billion in cuts to hospices. haass this is. nearly half a trillion dollars in cuts. this is what some have audaciously referred to as "saving medicare and ", half a

trillion dollars in cuts referred to as "saving medicare." i don't know what is more preposterous, saying that this plan saves medicare or thinking that people will actually believe that. arthur dear sing gets it. he is a constituent of mine from arsay kentucky. gears woodley had to say about this plan. he wrote, "i agree there are some things in the health care system that need to be fixed or improved but let's work on the most important fibers six issues rather than turn the whole system upside down and run up the cost for all of us and take away from us seniors. now he knows what he is talking about. ninos this bill does not reflect the views of the american people. americans have been asking us to cut costs, not raise them.

they want the kind of step-by-step reforms that would actually make a difference without bankrupting the country and without further expanding the role of government in their lives. americans don't want this bill to pass. they do not want it to pass. instead they one is to earn their trust with the kind of common-sense reforms republicans have been talking about all year and which our friends on the other side of simply brushed aside. americans want us to end the junk lawsuits against doctors and hospitals the drive up costs and yet there's not a serious word about doing so in the 2,074 pages in this democrat bill. americans want us to encourage healthy choices like prevention and wellness programs and yet democratic leaders could not

come up with a serious word about these kinds of reforms in 200074 pages. americans want us to lower costs by letting consumers buy coverage across state lines. they wanted to let small businesses band together to negotiate lower insurance rates. and yet democrats have ignored both of these ideas despite having the opportunity certainly into thousand 74 pages to include such ideas. americans also want us to address the rampant waste, fraud and abuse in the current system before we created an entirely new government program. and yet democrats don't seriously confront this problem in their 2007 e4 page monuments, monuments-- to more government, more taxes, more spending and more debt. americans are fed up with big

government solutions that drive up taxes and drive up debt and which only seemed to create more problems, more of use and more fraud. and on the face of this our friends on the other side of the aisle appear determined to plow ahead with their plan. they don't seem to care that americans are telling them to stop, to stop this and to start over and fix the problem. which is health care cost. democratic leaders may think they hear history calling. but the sounds they should be hearing are the voices and the concerns of ordinary americans. the american people will be heard in this debate, i assure you. in a democracy, public opinion should not be and never is

irrelevant. now mr. president, at the beginning of the health care debate we were told that this trillion dollar experiment would actually lower premiums for american families. and yet just this morning, this very morning the independent congressional budget office provided an analysis showing that the democratic bill will actually increase premiums, increased premiums for american families. that is the cbo this morning indicated that this will actually increase premiums for american families. sally bill that is being sold as a way to reduce costs actually drives them up. the bottom line is this. after 2,074 pages and trillions for in government spending, massive new taxes and a half a trillion dollar cut in medicare,

most people mr. president according to congressional budget office, most people will see their insurance premiums go up. this is not what the american people are asking for. and it certainly is not reform. mr. president, i yield the floor. >> mia amendment and the essential aspects of it is that it guarantees women access to lifesaving, preventive services and screening. this amendment eliminates one of the major barriers to excessing they care for accessing care in the area of preventive services. it does not by getting rid of or minimizing height co-pays and high deductibles that are often overwhelming hurdles for women to access screening programs. we know that screening is important and early detection is

important because it saves lives but it also saves money. it does it by reducing the top diseases that are killing women today or certainly impairing their lives. what does the center for disease control tell us? here are the top killers of women. number one, cancer, breast cancer, cervical cancer, colorectal and ovarian cancer but up front and high on the list is long cancer. if identified early it can be treated with less evasive procedures and lower costs. another top killer of women is heart and vascular disease and then there are the silent killers that often go undetected like diabetes which can result in terrible consequences, the loss of an eye, the loss of a limb, the loss of a kidney.

we knell have screenings that are proven to detect these diseases early in guaranteed access to these as i said will save money and save lives. but if we look at where we are today, we find that women often forgo those critical preventive screenings because they simply cannot afford it or their insurance company won't pay for it unless it is mandated by state law. women right now don't have-- many women right now don't have insurance at all. 17 million women in the united states of america are uninsured. or, when they are insured, they have to pay large out-of-pocket expenses. 3m five women have significant problems paying their medical bills. women are more likely than men to nicolette the care or treatment because of the cost. 14% of women report that delay or go without needed health

care. women of child-bearing age incurs 60% more out-of-pocket health care costs than men, simply because of the maternity aspects. often women face the punitive practices of insurance companies. number one, gender discrimination. women often pay more and get less. for many insurance companies, simply being in baughman is a preexisting condition. let me repeat that. for many insurance companies, simply being a woman is a preexisting condition. weep pay more because of our gender. anywhere from 2% to over 100%. 825-year-old woman is charged up to 45% more than a 25-year-old male in the same identified health status. 840-year-old woman is charged at

least 40% more than a 40-year-old man with this same health status for the same insurance policy. what does my amendment do? it guarantees access to those critical preventive services for women to combat the number one killers and they provide these services at minimum cost. the overall cost of my amendment has been scored by cbo. it says the cost is $1 billion. the majority leader, the democratic leader has provided opportunities to meet those costs. this amendment eliminates this big barrier of co-payments and deductibles and let's talk about the benefit package. this benefit packages based on erisa recommendations. ada is based on also the recommendations of cdc. it this amendment passes, women will have access to the same preventive health services as

women in congress have. let me repeat that. if this passes, the women of america will have access to the same preventive services that we in congress have. what does that mean? a, if your doctor says you need it, screening for cervical cancer if your doctor says you need it. that check on diabetes if your doctor is worried about you and wonder that along with symptoms related to, there are other things, a loss of weight and other things wedded this critical juncture of your life, do you have diabetes because at 40 you are less likely to need kidney dialysis then when you were 60. i think this is a great amendment. the pending bill does not cover key preventive services like an annual screening for women of all ages to focus on a unique--

are unique health needs. we know that for many people, for example there are 15 million people in america with diabetes, half are women that there are many more women and often pregnant women who do not get the proper prenatal care that have diabetes. heart disease is one of the top two leading causes of death than women. cancer, and heart disease. every year, over 260-- over 267,000 women die from heart attacks. women are generally unaware of their heart risk. maya amendment litigant ensure heart disease screening for women. remember that famous steady, take an aspirin a day and keep a heart attack away? it was done on 10,000 male medical residents and not one woman was included. then thanks to a bipartisan

effort and nih, women of the senate supported by the good guys in the senate were able to get that type of screening for women, get that the valuation, know that the manifest system is different than the guys do in that we are on their way to detection if you can afford to have a doctor and if you can afford to have the screening. my amendment also guarantees screening for breast cancer, guests for mammograms. we don't mandate that you have a at age 40. what we say is discussed this with your doctor but if your doctor says you need one you are going to get one. studies have found screenings decreases breast cancer among women by over 40%. regular pap smears reduce cervical cancer by 40%. this year over 4,000 women will die of cervical cancer. so, my amendment does focus on

women's health. keeping a woman held the not only impact all like that for family. it impacts our ability to care for her child or an aging parent. early detection saves money by treating diseases early. screening test for and cervical cancer cost about $150 but the treating of advanced breast cancer is over $10,000 can even go much higher. the treating of their early stages of cervical cancer is 13,000 king go most-- much further. my amendment-- preventive services the patient would use between the doctor and patient. the debate is focused on what you should have when. we agree. decisions should be made in doctors' offices, not in the office of a member of congress or the office of then insurance

executive. the decision about what is medically appropriate and medically necessary is between a woman and her doctor. the authors of the bill have done a very good job in protecting women in many areas. this refined and improved and i think this particular issue. that is why i support the overall health reform bill providing universal access to health care for over 90% of the american people and punitive practices of the insurance companies, strengthening medicare and improving quality and public health by using innovation in preventive services and quality. we can't pass health reform bill-- and what i want to conclude by saying we will end the confusion about what is needed in the area of preventive health services for women, our coverage is often skimpy and spartan and we want to make sure

that what we do enables us to have access to these comprehensive services. mr. president i hope this amendment passes unanimously. i believe that the people on both sides of the child would believe and its underlying premise, that early detection and screening really does save lives and save money. often those things you need to women have not been included in health care reform, and today we guarantee it and we are sure it and we make it affordable by dealing with co-payments and deductibles in a way that cbo feels it's fiscally achievable and in the long run i think by doing this it will mean a lot to families and it will mean a lot to the federal budget. mr. president, i yield the floor. >> the senator from montana. >> mr. president before giving a statement on the bill i would

just like to compliment the senator from maryland. for standing up for and essentially helping with the health care of women. as she has pointed out women are discriminated against a day in america and various ways, and her amendment addresses some of that discrimination. i very much appreciate that. i know all the women in the country do but i do too. i have go to mom, have that sisters and women in my family that very much care. i think about 80% of the health care decisions made for families would be by women and it is all the more important that women are not discriminated against. partly because they make so many decisions and in fact health care for americans but second, women themselves are often discriminated against. some states have gender ratings which discriminate against

women. other states and a certain sense a preexisting condition in itself is a factor which discriminates against women but i very much want to thank the senator from maryland. she has hit the nail on the head here and it is another reason why this health care reform is going to mean so much to so many americans and ipers nelly thank the senator from maryland. mr. president the president il campaign of 1912, theodore roosevelt's platformed said this. quote we pledge ourselves to work unceasingly with the protection of home, life against the hazards of sickness. through the adoption of a system of social insurance adapted to american use, end quote. today we are closer than ever to enacting health care reform. as in teddy roosevelt's time we seek protection against the

hazards of sickness. of necessity we seek a system uniquely adapted to the american use. and recognizing the daunting task still ahead of us, we pledge ourselves to work unceasingly to get the job done. in the years since teddy roosevelt, some of our nation's greatest leaders signed up for this job. but at the same time we have never faced a greater need to get the job done then we do today. why is that? well, basically because health care costs are skyrocketing out of control. everyday american businesses are forced to cut benefits for their workers, cut benefits to remain competitive in the global marketplace. every 30 seconds, another american files for medical bankruptcy. just think of that, every 32nd another american files for the

medical bankruptcy and every year 1.5 billion families lose their homes because of health care costs. our system is in crisis. we have and historic need. we have an opportunity to enact groundbreaking reform that will finally reign in the growth of health care costs and help to bring financial stability back to american families and businesses. unfortunately, there are some who stand in the way. unfortunately, there are some who were spreading misinformation about how health care reform will work. , this very floor, i have heard arguments that health care reform is about government trying to take over health care. that is false. the truth is that health care reform is about allowing patients and doctors to take back control of health care allowing patients and their

doctors together, they themselves, to take back control of the big insurance companies. our plan would not increase the government's commitment to health care but don't just take my word for it, the nonpartisan congressional budget office says and i quote, during the decade following the ten year budget window, the increases and decreases in the federal budgetary commitment to health care stemming from this legislation would roughly balance out so that there would be no significant change in that commitment, and quote. that is right, health care reform will not increase the federal government's budgetary commitment to health care. i have also heard it argued that health care reform will increase the budget deficit. that too is false. plainly, pat netley false. the congressional budget office bipartisan congressional budget office says our plan would

reduce the federal deficit by $130 billion in the first ten years. reduce the deficit. in the first ten years. that trend would continue the cbo says, over the next decade. during the next decade the cbo says it would reduce the deficit by $450 billion, that is nearly a half a trillion dollars in deficit reduction according to the congressional budget office and the second ten years. i have also heard it argued that health care reform will raise taxes. that too is false. and that health care reform will provide billions of dollars in tax relief to help american families and small businesses to afford quality health insurance. tax cuts. the joint tax committee again bipartisan served both bodies, but the house and the senate, tells us for example our bill would provide $40 billion in tax cuts in the year 2017 alone,

$40 billion alone in the year 2017. the average effective tax there will get a tax cut of nearly $450. the average effective tax fair with an income under $75,000 in the year 2017 will get a tax cut of more than $1,300. let me repeat that. the average effective taxpayer with an income under $75,000 in the year 2017 will get a tax cut of more than $1,300 also a tax cut in the early years when it ramps of to the amount in 2017. in the same vein i've heard clinton health care reform will increase higher costs for americans. that too is called. health care reform and not result in higher costs for americans. health care reform is about lowering health care costs and making quality health care affordable for all americans.

lowing costin it will achieve this objective. how? in many ways. first health care reform will end a piece of practices by insurance companies. reform will stop insurance companies from denying coverage or raking up ways for those with preexisting conditions. it will stop that in this legislation. reform will stop insurance companies from dropping coverage or reducing benefits for those who get sick. these reforms will protect consumers as they will protect americans and reduce premium costs to americans who are sick and these are helping lower costs for small businesses and their employers. right now if one employee in the small business gets sick, just one, insurance company can double the premiums that they charge the whole business and say-- i know that is true. i've heard that time and time again from small business owners in montana. just because one employee gets

sick, the insurance companies jack up premiums, double the premiums they otherwise would charge the whole business and that is just wrong. we stop that in this legislation how else to be lower cost? health care reform would provide billions of dollars in tax credits and a formal limit out-of-pocket costs such as co-payments, insurance companies are able to charge. we limit them. this law also would help to ensure americans can afford their total health care costs and not just their premiums. very important. premiums are cost and out-of-pocket costs are caused. this bill addresses but, limits the premiums and limits in growth and out-of-pocket costs of the total cost of premiums plus out-of-pocket costs for all americans will be lower under this legislation than it otherwise would be. health care reform will work to repeal the hidden tax of $1,000 in increased premiums american families pay each year in order to cover the costs of the

uninsured. today the millions of americans without health insurance are too often forced to turn to emergency rooms to get the care they need and health care provider shift the cost of that care on to other americans with health insurance. people with insurance therefore pay a higher premium by providing quality affordable health insurance to millions more americans, health care reform will reduce this hidden tax and reduced premiums for all americans. $8,000 per year per family due to the uncompensated care. this bill will virtually stop that. stop that hidden tax. stobbe that additional $1,000 that goes to the average family in premiums. how else do we reduce health care costs? by providing affordable health care cost millions of more americans which will increase the number of americans insured. why? what is so good about that? more people have health insurance but also it will spread the risk of paying for an

accident or disease. if more people covered, the risk is shared more broadly in spreading the risk more broadly should lower premium rates for everybody. it is a basic tenet of insurance. fit, health care reform will reduce cost by cutting administrative red tape. no small item. today insurance companies spend a lot of time and money finding ways to discriminate against people. they spend time and money finding ways to deny or drop coverage and insurance companies pass those costs on to all americans in the form of higher premiums. the figure i've heard mr. president and its 18% of our administrative costs and this legislation would dramatically reduce that percentage to a much lower number. don't know exactly to what level yet but a much much lower level today. 18% and perhaps more of total health care dollars go to pay administrative costs. that is subtly not the case and other countries, 45% and other

countries and we have to get that cost down in america and health care reform will significantly achieve that result. health care reform will out of this discrimination and also reform or eliminate those of administrative cost. for the more health care reform will work to streamline administrative procedure across the board by requiring standard enrollment forms to insurance exchanges. that too will help streamline and help reduce administrative costs. providing for a standard enrollment forms and also the standard market materials through insurance exchanges, that is going to lord administrative cots and it will make it much easier for person to shop to know which policy is best for him more for her and with all the other reforms were making so the competition is a more and a surprise, not with just a fancy term for saying that nine preexisting condition and putting all those extra

escape clauses insurance companies often provide in small print. in a letter released today the cbo said compared with the plans available in the nongroup market under current law and group policies under the proposal would have lower administrative costs. compared with plans available in the individual market in individual seeking insurance under the current law individual policies under the proposal would have lower administrative costs, lower, not higher, lower. six, another way we reduce costs. health care reform creach insurance exchanges where consumers can easily shop and compare plans to find the right coverage. exchanges will make it easier for americans to choose the most efficient plants. and that will reduce their cost and put pressure on insurance companies to offer lower costs and higher quality plans. seventh, and still another way

this plan reduces costs, small business insurance exchanges will allow small companies to pull together to spread their risk and increased their buying power. more pulling available for small business insurance exchanges. this will allow small businesses to negotiate lower rates and provide more quality insurance plans with lower premiums to their employees. eight, health care reform will strengthen oversight and enforcement measures to cut down on fraud, waste and abuse in the health care system. fraud, waste and abuse are estimated to cost of health care system more than $60 billion every year. this bill will help reform our system, to reduce fraud, waste and abuse which eats up to many health care dollars. ninth, health care reform will move the focus toward efficiency and value with payment incentives that reward quality

of care, not quantity and volume but preboard quality care, reward outcomes. over the long run paying doctors and other health care providers for quality instead of quantity reduces health care costs. tent, they tend reason we will lower cost with this legislation. health care reform will lower costs by working to change the focus of our health care system for treating sickness to promoting wellness. a big problem we have today, we treat sickness and we don't spend enough time promoting wellness. reform will make critical investments and policies that promote healthy living and help prevent chronic conditions that drive up costs throughout the system. these are just ten examples of how health care reform reduces health care costs, lower the premiums for american consumers and there are many more. at least those are ten, as i said and others. on the other hand without reform, that is without passing

this legislation costs are guaranteed to continue to skyrocket out of control. sends congress bill to enact health care reform in the 1990's, health care premiums have risen eight times faster than wages. just consider that. since the last time we attempted to pass health care reform and failed, health care premiums have risen eight times faster than wages. if we don't reform our health care system now, premiums will increase 84% in the next seven years. not just premiums that out-of-pocket costs. those two will increase at a rate much faster than wage increases. today health care coverage cost the average american family more than $13,000 a year according to the kaiser family foundation. if current trends continue without reform the average family plan will cost more than $30,000 a year in the next ten years ago that is up from 13,000

today to 30,010 years from now. businesses can see their health care costs double in that same time. without reform the nation's long-term fiscal picture is almost certainly unsustainable. as peter orszag said when he was director of the congressional budget office and i quote kim, rising health care costs represent the single most important factor influencing the federal government's long term fiscal balance, and quote. he was right. without reform instead of working to reduce our national deficit and stabilize the federal budget we will see total health care spending nearly doubled to encompass one-fifth of our gross domestic product in less than ten years. entitlement spending will double by the year 2,050. without reform billions of uninsured americans will continue to suffer. without reform, costs will just

skyrocket. a harvard study found every year in america lack of health care coverage leads to 45,000 deaths. people without health insurance have a 40% higher risk of death than those with private health insurance. 40% higher chance of death. if you don't have health insurance compared to those who do. that is 46 million americans at risk today because they did not have health insurance. the reason-- reason johns hopkins study found children without insurance have a 60% higher chance of death than those with private health insurance, 60% higher risk of death than those with private health insurance. and other recent harvard study found the risk of dying from car accidents and other traumatic injuries is 80% higher for those without any insurance. 80% higher. that is a risk from dying in car accidents is 80% higher if you

don't have health insurance. and the greatest country on earth no american should die simply because they don't have health insurance. so mr. president we are at a crossroads in history. we have an historic opportunity to enact reform to stabilize our economy, provide quality affordable health care coverage for millions of americans. we are not the first to be here but we have come further than ever before. we laid the groundwork in the finance committee and health committees. we held many hearings and caliphs hours of meetings and health care reform. each committee crafted meaningful legislation and exhaustive markups were we inc. the amendments from both sides of the aisle. we produce balance meaningful legislation and i am very proud of the work that both committees have accomplished. now we have one health care reform plan before us in the senate, the two basic bills merge together. we have an opportunity to debate

the plan and offer amendments to make it even better. then we will be called upon to vote. the health care of our nation is depending on us. the health care of our economy is depending on us. history itself is depending on us to answer the call. i am confident that we will have at long last answer the call of history. i am confident that we will soon enact meaningful health care reform that will lower costs and bring quality affordable coverage to millions of americans. >> madam president, simply put this motion to commit would be a requirement that we eliminate the half a trillion dollars in medicare cuts a half a trillion dollars in cuts better on specified as to how and a half a trillion dollars in cuts that would directly impact the health

care of citizens in this country. medicare advantage cuts totaling $118 billion an independent medicare advisory board that would cost $23 billion, expansion of medicare, hospital penalties totaling $7.1 billion, home health care cuts totaling $42.1 billion, haass this. of all the things, hospice-- some $8 billion the list goes on and on. all of these are cuts in the obligations that we have assumed and are the rightful, rightful benefits that people have earned and our citizens particularly our senior citizens acrohi