To amend the Communications Act of 1934 to improve the protection of consumers against "slamming" by telecommunications carriers, and for other purposes.

SECTION 1. IMPROVED PROTECTION FOR CONSUMERS.

    (a) Verification of Authorization.--Subsection (a) of section 258 
of the Communications Act of 1934 (47 U.S.C. 258) is amended to read as 
follows:
    ``(a) Prohibition.--
            ``(1) In general.--No telecommunications carrier or 
        reseller of telecommunications services shall submit or execute 
        a change in a subscriber's selection of a provider of telephone 
        exchange service or telephone toll service except in accordance 
        with this section and such verification procedures as the 
        Commission shall prescribe.
            ``(2) Verification.--
                    ``(A) In general.--In order to verify a 
                subscriber's selection of a telephone exchange service 
                or telephone toll service provider under this section, 
                the telecommunications carrier or reseller shall, at a 
                minimum, require the subscriber--
                            ``(i) to acknowledge the type of service to 
                        be changed as a result of the selection;
                            ``(ii) to affirm the subscriber's intent to 
                        select the provider as the provider of that 
                        service;
                            ``(iii) to affirm that the consumer is the 
                        subscriber or is authorized to select the 
                        provider of that service for the telephone 
                        number in question;
                            ``(iv) to acknowledge that the selection of 
                        the provider will result in a change in 
                        providers of that service; and
                            ``(v) to provide such other information as 
                        the Commission considers appropriate for the 
                        protection of the subscriber.
                    ``(B) Additional requirements.--The procedures 
                prescribed by the Commission to verify a subscriber's 
                selection of a provider shall--
                            ``(i) preclude the use of negative option 
                        marketing;
                            ``(ii) provide for verification of a change 
                        in telephone exchange service or telephone toll 
                        service provider in oral, written, or 
                        electronic form; and
                            ``(iii) require the retention of such 
                        verification in such manner and form and for 
                        such time as the Commission considers 
                        appropriate.
            ``(3) Intrastate services.--Nothing in this section shall 
        preclude any State commission from enforcing such procedures 
        with respect to intrastate services.
            ``(4) Section not to apply to wireless.--This section does 
        not apply to a provider of commercial mobile service, as that 
        term is defined in section 332(d)(1) of this Act.''.
    (b) Resolution of Complaints.--Section 258 of the Communications 
Act of 1934 (47 U.S.C. 258) is amended by adding at the end thereof the 
following:
    ``(c) Notice to Subscriber.--Whenever there is a change in a 
subscriber's selection of a provider of telephone exchange service or 
telephone toll service, the telecommunications carrier or reseller 
selected shall notify the subscriber in writing, not more than 15 days 
after the change is processed by the telecommunications carrier or the 
reseller--
            ``(1) of the subscriber's new carrier; and
            ``(2) that the subscriber may request information regarding 
        the date on which the change was agreed to and the name of the 
        individual who authorized the change.
    ``(d) Resolution of Complaints.--
            ``(1) Prompt resolution.--
                    ``(A) In general.--The Commission shall prescribe a 
                period of time, not in excess of 120 days after a 
                telecommunications carrier or reseller receives notice, 
                for the telecommunications carrier or reseller to 
                resolve a complaint by a subscriber concerning an 
                unauthorized change in the subscriber's selection of a 
                provider of telephone exchange service or telephone 
                toll service.
                    ``(B) Unresolved complaints.--If a 
                telecommunications carrier or reseller fails to resolve 
                a complaint within the time period prescribed by the 
                Commission, then, within 10 days after the end of that 
                period, the telecommunications carrier or reseller 
                shall--
                            ``(i) notify the subscriber in writing of 
                        the subscriber's right to file a complaint with 
                        the Commission concerning the unresolved 
                        complaint, the subscriber's rights under this 
                        section, and all other remedies available to 
                        the subscriber concerning unauthorized changes;
                            ``(ii) inform the subscriber in writing of 
                        the procedures prescribed by the Commission for 
                        filing such a complaint; and
                            ``(iii) provide the subscriber a copy of 
                        any evidence in the carrier's or reseller's 
                        possession showing that the change in the 
                        subscriber's provider of telephone exchange 
                        service or telephone toll service was submitted 
                        or executed in accordance with the verification 
                        procedures prescribed under subsection (a).
            ``(2) Resolution by commission.--The Commission shall 
        provide a simplified process for resolving complaints under 
        paragraph (1)(B). The simplified procedure shall preclude the 
        use of interrogatories, depositions, discovery, or other 
        procedural techniques that might unduly increase the expense, 
        formality, and time, involved in the process. The Commission 
        shall issue an order resolving any such complaint at the 
        earliest date practicable, but in no event later than--
                    ``(A) 150 days after the date on which it received 
                the complaint, with respect to liability issues; and
                    ``(B) 90 days after the date on which it resolves a 
                complaint, with respect to damages issues, if such 
                additional time is necessary.
            ``(3) Damages awarded by commission.--In resolving a 
        complaint under paragraph (1)(B), the Commission may award 
        damages equal to the greater of $500 or the amount of actual 
        damages. The Commission may, in its discretion, increase the 
        amount of the award to an amount equal to not more than 3 times 
        the amount available under the preceding sentence.
    ``(e) Penalty.--
            ``(1) In general.--Unless the Commission determines that 
        there are mitigating circumstances, violation of subsection (a) 
        is punishable by a fine of not less than $40,000 for the first 
        offense, and not less than $150,000 for each subsequent 
        offense.
            ``(2) Failure to notify treated as violation of subsection 
        (a).--If a telecommunications carrier or reseller fails to 
        comply with the requirements of subsection (d)(1)(B), then that 
        failure shall be treated as a violation of subsection (a).
    ``(f) Recovery of Fines.--The Commission may take such action as 
may be necessary--
            ``(1) to collect any fines it imposes under this section; 
        and
            ``(2) on behalf of any subscriber, any damages awarded the 
        subscriber under this section.
    ``(g) Change Includes Initial Selection.--For purposes of this 
section, the initiation of service to a subscriber by a 
telecommunications carrier or a reseller shall be treated as a change 
in a subscriber's selection of a provider of telephone exchange service 
or telephone toll service.''.
    (c) State Right-of-Action.--Section 258 of the Communications Act 
of 1934 (47 U.S.C. 258), as amended by subsection (b), is amended by 
adding at the end thereof the following:
    ``(h) Actions by States.--
            ``(1) Authority of states.--Whenever the attorney general 
        of a State, or an official or agency designated by a State, has 
        reason to believe that a telecommunications carrier or reseller 
        has engaged or is engaging in a pattern or practice of changing 
        telephone exchange service or telephone toll service provider 
        without authority from subscribers in that State in violation 
        of this section or the regulations prescribed under this 
        section, the State may bring a civil action on behalf of its 
        residents to enjoin such unauthorized changes, an action to 
        recover for actual monetary loss or receive $500 in damages for 
        each violation, or both such actions. If the court finds the 
        defendant willfully or knowingly violated such regulations, the 
        court may, in its discretion, increase the amount of the award 
        to an amount equal to not more than 3 times the amount 
        available under the preceding sentence.
            ``(2) Exclusive jurisdiction of federal courts.--The 
        district courts of the United States, the United States courts 
        of any territory, and the District Court of the United States 
        for the District of Columbia shall have exclusive jurisdiction 
        over all civil actions brought under this subsection. Upon 
        proper application, such courts shall also have jurisdiction to 
        issue writs of mandamus, or orders affording like relief, 
        commanding the defendant to comply with the provisions of this 
        section or regulations prescribed under this section, including 
        the requirement that the defendant take such action as is 
        necessary to remove the danger of such violation. Upon a proper 
        showing, a permanent or temporary injunction or restraining 
        order shall be granted without bond.
            ``(3) Rights of commission.--The State shall serve prior 
        written notice of any such civil action upon the Commission and 
        provide the Commission with a copy of its complaint, except in 
        any case where such prior notice is not feasible, in which case 
        the State shall serve such notice immediately upon instituting 
        such action. The Commission shall have the right--
                    ``(A) to intervene in the action;
                    ``(B) upon so intervening, to be heard on all 
                matters arising therein; and
                    ``(C) to file petitions for appeal.
            ``(4) Venue; service of process.--Any civil action brought 
        under this subsection in a district court of the United States 
        may be brought in the district wherein the defendant is found 
        or is an inhabitant or transacts business or wherein the 
        violation occurred or is occurring, and process in such cases 
        may be served in any district in which the defendant is an 
        inhabitant or where the defendant may be found.
            ``(5) Investigatory powers.--For purposes of bringing any 
        civil action under this subsection, nothing in this section 
shall prevent the attorney general of a State, or an official or agency 
designated by a State, from exercising the powers conferred on the 
attorney general or such official by the laws of such State to conduct 
investigations or to administer oaths or affirmations or to compel the 
attendance of witnesses or the production of documentary and other 
evidence.
            ``(6) Effect on state court proceedings.--Nothing contained 
        in this subsection shall be construed to prohibit an authorized 
        State official from proceeding in State court on the basis of 
        an alleged violation of any general civil or criminal statute 
        of such State.
            ``(7) Limitation.--Whenever the Commission has instituted a 
        civil action for violation of regulations prescribed under this 
        section, no State may, during the pendency of such action 
        instituted by the Commission, subsequently institute a civil 
        action against any defendant named in the Commission's 
        complaint for any violation as alleged in the Commission's 
        complaint.
            ``(8) Definition.--As used in this subsection, the term 
        `attorney general' means the chief legal officer of a State.
    ``(i) State Law Not Preempted.--Nothing in this section or in the 
regulations prescribed under this section shall preempt any State law 
that imposes more restrictive intrastate requirements or regulations 
on, or which prohibits unauthorized changes in, a subscriber's 
selection of a provider of telephone exchange service or telephone toll 
service.''.
    (d) Report on Carriers Executing Unauthorized Changes of Telephone 
Service.--
            (1) Report.--Not later than October 31, 1998, the Federal 
        Communications Commission shall submit to Congress a report on 
        unauthorized changes of subscribers' selections of providers of 
        telephone exchange service or telephone toll service.
            (2) Elements.--The report shall include the following:
                    (A) A list of the 10 telecommunications carriers 
                that, during the 1-year period ending on the date of 
                the report, were subject to the highest number of 
                complaints of having executed unauthorized changes of 
                subscribers from their selected providers of telephone 
                exchange service or telephone toll service when 
                compared with the total number of subscribers served by 
                such carriers.
                    (B) The telecommunications carriers, if any, 
                assessed fines under section 258(e) of the 
                Communications Act of 1934 (as added by subsection 
                (c)), during that period, including the amount of each 
                such fine and whether the fine was assessed as a result 
                of a court judgment or an order of the Commission or 
                was secured pursuant to a consent decree.

SEC. 2. REPORT ON TELEMARKETING PRACTICES.

    (a) In General.--The Federal Communications Commission shall issue 
a report within 180 days after the date of enactment of this Act on the 
telemarketing practices used by telecommunications carriers or 
resellers or their agents or employees for the purpose of soliciting 
changes by subscribers of their telephone exchange service or telephone 
toll service provider.
    (b) Specific Issues.--As part of the report required under 
subsection (a), the Commission shall include findings on--
            (1) the extent to which imposing penalties on telemarketers 
        would deter unauthorized changes in a subscriber's selection of 
        a provider of telephone exchange service or telephone toll 
        service;
            (2) the need for rules requiring third-party verification 
        of changes in a subscriber's selection of such a provider; and
            (3) whether wireless carriers should continue to be exempt 
        from the verification and retention requirements imposed by 
        section 258(a)(2)(B)(iii) of the Communications Act of 1934 (47 
        U.S.C. 258(a)(2)(B)(iii)).
    (c) Rulemaking.--If the Commission determines that particular 
telemarketing practices are being used with the intention to mislead, 
deceive, or confuse subscribers and that they are likely to mislead, 
deceive, or confuse subscribers, then the Commission shall initiate a 
rulemaking to prohibit the use of such practices within 120 days after 
the completion of its report.

Summary: Amends the Communications Act of 1934 to prohibit a telecommunications carrier or a reseller of telecommunications services from submitting or executing a change in a subscriber's selection of a provider of telephone exchange service or toll service, except in accordance with this Act and Federal Communications Commission (FCC) verification procedures. Requires a carrier or reseller, in verifying a subscriber's selection of a telephone exchange or toll service provider, to require the subscriber to: (1) acknowledge the type of service to be changed by the selection, (2) affirm the intent to select the service provider. (3) affirm that the consumer is the subscriber or is authorized to make such selection for that telephone number. (4) acknowledge that such selection will result in a change of service provider. And (5) provide any other such information the FCC considers appropriate for the subscriber's protection. Requires FCC selection verification procedures to: (1) preclude the use of negative option marketing. (2) provide for verification of a change of provider in oral, written, or electronic form. And (3) require the retention of such verification in a manner and form and for such time as the FCC considers appropriate. Makes the above provisions inapplicable to providers of commercial mobile service. Requires a carrier or reseller selected by a subscriber to notify the subscriber in writing not more than 15 days after the change is processed by the carrier or reseller: (1) of the subscriber's new carrier. And (2) that the subscriber may request information regarding the date of the change and the individual authorizing the change. Requires the FCC to: (1) prescribe a period not to exceed 120 days after receipt of notice of a complaint of an unauthorized change for the carrier or reseller to resolve such complaint. And (2) provide a simplified process for resolving such complaints. Authorizes the FCC, in resolving a complaint, to award damages of: (1) the greater amount of $500 or actual damages. Or (2) three times such amount. Provides penalties for violations of this Act and authorizes the FCC to collect fines and damages. Treats an initiation of service as a change in a subscriber's selection for purposes of this Act. Authorizes a State, when it has reason to believe that a carrier or reseller has or is engaged in a practice of changing service providers without subscriber authority, to bring an action on behalf of its residents to enjoin such changes and to recover damages. Gives Federal courts exclusive jurisdiction over such actions. Requires FCC notification of, and authorizes FCC intervention in, any such action. Requires the FCC to report to the Congress on unauthorized changes in subscribers' providers. Directs the FCC to issue a report on the telemarketing practices used by carriers or resellers to solicit changes by subscribers in their service providers. Authorizes the FCC to initiate a rulemaking to prohibit particular practices it determines are being used with the intention to mislead, deceive, or confuse subscribers.