hundreds of years, which says that if you buy an item or goods from a merchant and sign a note and subsequently do not pay entirely in cash, say you pay $10 in cash, you must sign an IO U for the balance, then you owe $40 more, or a total of $50 for item. The merchant can then sell you an absolutely bad radio, which he knew has never worked and never will work, and is perhaps not even a radio. And if that merchant takes that I O U and sells it to a bank or to a finance company, that bank or finance company can collect the $40 from you, the consumer, and it makes no difference whether that radio was not even a radio or even worked. You have to pay that bank or that finance company the full $40 no matter how completely fraudulent the transaction was and is completely bad material, simply because of this old anachronism in the commercial law which protects absolutely the bank or the finance company and really tells the consumer to be damned. This is one of the areas that we are looking into now.

Mrs. CLARK. I have seen hundreds of cases where consumers have been talked into buying merchandise they did not need, could not afford, and did not want by overwhelming, high-pressure salesmen.

I was in a housing apartment, visiting a young mother who had asked for help. We had secured furniture and children's clothing for her. I was there working with her on budgeting her income.

The door bell rang, and when the young mother answered, a magazine salesman entered. Within 10 minutes, even though that mother did not have shoes for her children to wear, that salesman had talked her into buying magazines. Just before the contract was signed, I called the mother into the backroom, explained quickly the unbelievable high price she would be paying for the magazines, and suggested that she tell the salesman she had changed her mind and was not interested in the magazines.

The bills being considered here today would give that consumer a 3-day cooling off period in which to cancel a sales contract she was talked into through high-pressure salesmanship. The consumers need this protection.

Other parts of the bills which are very, very important to the con

sumers are:

(1) Require not only that sellers make clear to consumers and customers all interest and finance charges in other words, uniform disclosure-but also regulate the amount of finance charges, credit insurance, and other charges which can be added to the purchase price;

(2) Give the homeowner a right to a hearing in court before the holder of a mortgage on his home can foreclose and sell the property; and

(3) Require that every retail sale arising from home solicitation must be accompanied by a notice-of-cancellation form. This is particularly important to the educationally deprived consumer since he seldom knows the name or the address of the company or the salesman which comes to his home and sells him merchandise.

The whole structure of the buyer-seller system is based on the premise that the buyer and the seller have equal bargaining knowledge and experience. This could not be further from the truth. The seller is a sophisticated, well-educated, experienced businessman. Often the

buyer is inexperienced and educationally deprived. This points up the need for a Consumer Protection Department which the bills call for the establishment of. Here the consumer could take his complaint, and the Department would be authorized to administer and enforce provisions of all consumer-protection bills.

Because of the education and action programs of the consumer components of the neighborhood development centers, which involve the indigent and educationally deprived, consumers are becoming aware of their being victimized in their marketplace. They are getting good and angry. They want some like of protection, and they are looking to you as lawmakers for that protection.

I can understand why you who are legislators cannot possibly conceive of such consumer abuses as we have mentioned here today. By the very virtue of being who you are and doing what you do, these things could never happen to you. No high-risk salesman or unscrupulous businessman would dare to victimize you, but for some consumers it is an everyday happening, a way of life.

For these consumers I urge you to make these bills law.

I thank you.

Senator TYDINGS. Thank you very much, Mrs. Clark. I think your testimony and that of Mrs. Bryant has been extremely helpful. There is no question in my mind that there are many thousands of tragic examples of just what you have pointed out, of people who are unable to help themselves, who are the victims of fraud, fraudulent procedures, high-pressure sales tactics, and pay hundreds and hundreds of dollars more than they should for material. And under the commercial law, they, the innocent consumers, are deprived of their day in court.

I can assure you that we are going to delve into this deeply and hopefully have legislation in this area early in the second session of this Congress.

We are going to continue hearings next Tuesday, as previously stated, and next Wednesday and perhaps more the week before Christmas and then on into the new year. We are going to have representatives of the offices of the peoples' services testify to help us go over, in detail, the legislation which we have proposed to limit or alleviate the problems which have been illustrated before us today. I have to get back to the hearing I mentioned earlier. I do thank you for being with us and your helpfulness in this matter.

We will stand in recess until next Tuesday at 10:45 o'clock. (Whereupon, at 10:35 a.m., a recess was taken until 10:45 a.m., Tuesday, December 12, 1967.)

CONSUMER PROTECTION LEGISLATION FOR THE

DISTRICT OF COLUMBIA

TUESDAY, DECEMBER 12, 1967

U.S. SENATE,

SUBCOMMITTEE ON BUSINESS AND COMMERCE,

OF THE COMMITTEE ON THE DISTRICT OF COLUMBIA,

Washington, D.C. The subcommittee met, pursuant to recess, at 11 a.m., in room 6226, New Senate Office Building, Senator Joseph D. Tydings (chairman of the subcommittee) presiding.

Present: Senator Tydings.

Also present: Chester H. Smith, staff director; James S. Medill, Howard A. Abrahams, assistant counsels; and Robert A. Burt, legislative assistant.

Senator TYDINGS. We will convene the hearing of the Subcommittee on Business and Commerce of the Committee on the District of Columbia of the Senate.

We are continuing the hearings this morning on S. 316, S. 2589, S. 2590, and S. 2592, relating to consumer protection in the District of Columbia.

We are delighted to have a number of distinguished witnesses with us this morning.

Our first witness is Prof. Egon Guttman, professor of law, Howard University, appearing on behalf of the Ad Hoc Committee on Consumer Protection.

We are delighted to welcome you and those you have with you and please ask that they sit with you.

Mr. GUTTMAN. May I introduce Mr. Benny L. Kass, who is associated with me?

Senator TYDINGS. We are delighted to welcome you here.

Mr. GUTTMAN. Mr. Kass will present a preliminary statement.

STATEMENT OF BENNY L. KASS ON BEHALF OF THE AD HOC COMMITTEE ON CONSUMER PROTECTION

Mr. KASS. Mr. Chairman, Professor Guttman will actually present our complete statement.

The Ad Hoc Committee on Consumer Protection is a local coalition organization. We are delighted to say that the statement submitted today is, in principle, supported by the following organizations: Jewish Community Council; Council of Churches of Greater Washington; National Consumer League; American Home Economic Association, District of Columbia Association; Washington Urban

League; American Veterans Committee, District of Columbia chapter; John F. Kennedy Lodge, B'nai B'rith; Office of Urban Affairs, archdiocese of Washington; Southwest Community Relations Council; District of Columbia City-Wide Consumer Council; American Jewish Committee; American Federation of State, County, and Municipal Employees, Local No. 1; Ad Hoc Group of Law Professors Teaching in Law Schools in the District of Columbia; Consumer Protection Committee of the Greater Washington chapter, Americans for Democratic Action; and National Council of Negro Women.

Senator TYDINGS. That is quite an impressive list.

Thank you very much. We shall now be glad to hear from you, Professor Guttman.

STATEMENT OF PROF. EGON GUTTMAN, PROFESSOR OF LAW, HOWARD UNIVERSITY, ON BEHALF OF THE AD HOC COMMITTEE ON CONSUMER PROTECTION

Mr. GUTTMAN. Mr. Chairman, I would like to thank you for this opportunity to appear before you. As Mr. Kass has pointed out, we are a local coalition organized for the purpose of obtaining a better deal for the consumer.

Our concern today is with legislation S. 316, S. 2589, S. 2590, and S. 2592.

Mr. Chairman, we regret that the serious problem of the door-todoor salesman embodied in S. 2591 is not, at present, before your committee. We respectfully request permission to be heard when that bill is called up for consideration, which we hope will be within the very near future. When such proposed legislation has become enacted law, we will focus on its implementation by local merchants, being throughout mindful that education is our ultimate objective.

Mr. Chairman, before we even begin to discuss particular bills with you, we would like to make one general observation. Although consumer education is important, it is not the only solution. If all buyers were sophisticated, there would be no need for us to testify this morning. We are concerned with all types of buyers, and thus we are aware of the existence of multifarious types of evil, protection from which requires not only education but also legislation.

The law merchant is indeed an ancient law embodied in our common law. One of its basic doctrines is caveat emptor-let the buyer beware. We wish to go on record that in today's economy, in today's society, we can no longer wholly support such a doctrine. There is no longer a place in our law for such a doctrine-unqualified and absolute. Yet were we to suggest that the doctrine read caveat vendor-let the seller beware, the entire business community, although already living with such approach to some respect-that is, as to warranties in sales, the doctrine of unconscionability as applied by the courts, and so forthwould be pounding at your door and ours, objecting to the broadness of our remarks. And yet why should caveat emptor be less unfair? All that we ask, Mr. Chairman, is that a situation of equality between buyer and seller be created, by protecting the buyer from some of the more extreme actions of unscrupulous sellers. Thus nothing we support is invidious to legitimate business, but on the contrary, is already a guideline to such legitimate business, and by which it acts.