II

106TH CONGRESS

1ST SESSION S. 58

To amend the Communications Act of 1934 to improve protections against

telephone service ‘‘slamming’’ and provide protections against telephone

billing ‘‘cramming’’, to provide the Federal Trade Commission jurisdiction over unfair and deceptive trade practices of telecommunications

carriers, and for other purposes.

IN THE SENATE OF THE UNITED STATES

JANUARY 19, 1999

Ms. COLLINS (for herself, Mr. DURBIN, and Mr. JEFFORDS) introduced the

following bill; which was read twice and referred to the Committee on

Commerce, Science, and Transportation

A BILL

To amend the Communications Act of 1934 to improve protections against telephone service ‘‘slamming’’ and provide protections against telephone billing ‘‘cramming’’,

to provide the Federal Trade Commission jurisdiction

over unfair and deceptive trade practices of telecommunications carriers, and for other purposes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Telephone Services

5 Fraud Prevention and Enforcement Act of 1999’’.
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1 SEC. 2. CONSUMER PROTECTIONS AGAINST TELEPHONE

2 SERVICE SLAMMING.

3 (a) IN GENERAL.—Section 258 of the Communica4 tions Act of 1934 (47 U.S.C. 258) is amended to read

5 as follows:

6 ‘‘SEC. 258. PROTECTIONS AGAINST UNAUTHORIZED

7 CHANGES IN SUBSCRIBER SELECTIONS OF

8 TELEPHONE EXCHANGE SERVICE OR TELE9 PHONE TOLL SERVICE.

10 ‘‘(a) PROHIBITION ON UNAUTHORIZED CHANGES.—

11 No telecommunications carrier or reseller of telecommuni12 cations services shall submit or execute a change of a pro13 vider of telephone exchange service or telephone toll serv14 ice except in accordance with this section and such ver15 ification procedures as the Commission shall prescribe.

16 ‘‘(b) VERIFICATION PROCEDURE REQUIREMENTS.—

17 ‘‘(1) IN GENERAL.—In order to verify a sub18 scriber’s selection of a telephone exchange service or

19 telephone toll service provider under this section, a

20 telecommunications carrier or reseller shall, at a

21 minimum, require the subscriber—

22 ‘‘(A) to affirm that the subscriber is au23 thorized to select the provider of that service

24 for the telephone number in question;

25 ‘‘(B) to acknowledge the type of service to

26 be changed as a result of the selection;
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1 ‘‘(C) to affirm the subscriber’s intent to

2 select the provider as the provider of that serv3 ice;

4 ‘‘(D) to acknowledge that the selection of

5 the provider will result in a change in providers

6 of that service; and

7 ‘‘(E) to provide such other information as

8 the Commission considers appropriate for the

9 protection of the subscriber.

10 ‘‘(2) ADDITIONAL REQUIREMENTS.—The proce11 dures prescribed by the Commission to verify a sub12 scriber’s selection of a provider shall—

13 ‘‘(A) provide for a complete copy of ver14 ification of a change in provider in oral, writ15 ten, or electronic form;

16 ‘‘(B) require the retention of such verifica17 tion in such manner and form and for such

18 time as the Commission considers appropriate;

19 ‘‘(C) require that verification occur in the

20 same language as that in which the change is

21 solicited; and

22 ‘‘(D) provide for a copy of the verification

23 to be made available to the subscriber con24 cerned on request.

25 ‘‘(3) PROTECTION OF FREEZE OPTION.—
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1 ‘‘(A) PROTECTION.—The Commission may

2 not take action under this section to limit or

3 prevent a subscriber’s capability to require that

4 any change in the subscriber’s selection of a

5 provider of telephone exchange service or tele6 phone toll service not be carried out unless the

7 subscriber communicates the authorization for

8 the change to the subscriber’s service provider

9 in an express and direct manner.

10 ‘‘(B) PRESERVATION OF AUTHORITY RE11 LATING TO UNFAIR MARKETING OF FREEZE OP12 TIONS.—Nothing in this section shall be con13 strued to prohibit the Commission from pre14 venting the marketing or provision in an unfair

15 or anti-competitive manner of a capability to

16 preclude a change in a subscriber’s provider of

17 telephone exchange service or telephone toll

18 service without the subscriber’s affirmative con19 sent.

20 ‘‘(c) NOTICE TO SUBSCRIBERS OF CHANGES.—

21 ‘‘(1) IN GENERAL.—Whenever there is a change

22 in a subscriber’s selection of a provider of telephone

23 exchange service or telephone toll service, the tele24 communications carrier or reseller selected shall no25 tify the subscriber in a specific and unambiguous
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1 writing, not more than 15 days after the change is

2 processed by the carrier or the reseller—

3 ‘‘(A) of the subscriber’s new carrier or re4 seller; and

5 ‘‘(B) that the subscriber may request in6 formation regarding the date on which the

7 change was agreed to and the name of the indi8 vidual who authorized the change.

9 ‘‘(2) RESPONSE TO REQUEST.—A carrier or re10 seller receiving a request under paragraph (1)(B)

11 shall submit to the subscriber concerned, not later

12 than 15 days after the date of the request, the infor13 mation covered by the request.

14 ‘‘(d) FORFEITURE AND LIABILITY FOR UNAUTHOR15 IZED CHANGES.—

16 ‘‘(1) FORFEITURE.—Unless the Commission de17 termines there are mitigating circumstances, viola18 tion of subsection (a) is punishable by a forfeiture

19 of not less than $40,000 for the first offense, and

20 not less than $100,000 for each subsequent offense.

21 ‘‘(2) SUBSCRIBER LIABILITY.—A subscriber

22 whose telephone exchange service or telephone toll

23 service is changed in violation of the provisions of

24 this section or the verification procedures under this

25 section shall not be liable to the telecommunications
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1 carrier providing such service after the change, in

2 accordance with such procedures as the Commission

3 shall prescribe.

4 ‘‘(3) RECOVERY OF FORFEITURE AND LIABIL5 ITY.—The Commission may take such action as may

6 be necessary to collect any forfeitures imposed under

7 paragraph (1).

8 ‘‘(4) CONSTRUCTION.—The remedies provided

9 by paragraphs (1) and (2) are in addition to any

10 other remedies available under law.

11 ‘‘(e) DISQUALIFICATION AND REINSTATEMENT.—

12 ‘‘(1) DISQUALIFICATION FROM CERTAIN ACTIVI13 TIES BASED ON CONVICTION.—

14 ‘‘(A) DISQUALIFICATION OF PERSONS.—

15 Subject to subparagraph (C), any person con16 victed under section 2328 of title 18, United

17 States Code, in addition to any fines or impris18 onment under that section, may not carry out

19 any activities covered by section 214.

20 ‘‘(B) DISQUALIFICATION OF COMPANIES.—

21 Subject to subparagraph (C), any company sub22 stantially controlled by a person convicted

23 under section 2328 of title 18, United States

24 Code, in addition to any fines or imprisonment
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1 under that section, may not carry out any ac2 tivities covered by section 214.

3 ‘‘(C) REINSTATEMENT.—

4 ‘‘(i) IN GENERAL.—The Commission

5 may terminate the application of subpara6 graph (A) to a person, or subparagraph

7 (B) to a company, if the Commission de8 termines that the termination would be in

9 the public interest.

10 ‘‘(ii) EFFECTIVE DATE.—The termi11 nation of the applicability of subparagraph

12 (A) to a person, or subparagraph (B) to a

13 company, under clause (i) may not take ef14 fect earlier than 5 years after the date on

15 which the applicable subparagraph applied

16 to the person or company concerned.

17 ‘‘(2) CERTIFICATION REQUIREMENT.—Any per18 son described in subparagraph (A) of paragraph (1),

19 or company described in subparagraph (B) of that

20 paragraph, not reinstated under subparagraph (C)

21 of that paragraph shall include with any application

22 to the Commission under section 214 a certification

23 that the person or company, as the case may be, is

24 described in such subparagraph (A) or (B).

25 ‘‘(f) STATE LAW NOT PREEMPTED.—
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1 ‘‘(1) IN GENERAL.—Nothing in this section

2 shall be construed to preempt any State law that im3 poses more restrictive requirements, regulations,

4 damages, costs, or penalties on changes in a sub5 scriber’s service or selection of a provider of tele6 phone exchange service or telephone toll services

7 than are imposed under this section.

8 ‘‘(2) EFFECT ON STATE COURT PROCEED9 INGS.—Nothing in this section shall be construed to

10 prohibit an authorized State official from proceeding

11 in State court on the basis of an alleged violation of

12 any general civil or criminal statute of such State or

13 any specific civil or criminal statute of such State

14 not preempted by this section.

15 ‘‘(g) REPORTS ON COMPLAINTS.—

16 ‘‘(1) REQUIREMENT.—Each local exchange car17 rier shall submit to the Commission on a quarterly

18 basis a report on the number of complaints of unau19 thorized changes in providers of telephone exchange

20 service or telephone toll service that are submitted to

21 such carrier by its subscribers. Each report shall

22 specify each provider of service complained of and

23 the number of complaints relating to such provider.

24 ‘‘(2) LIMITATION ON SCOPE.—The Commission

25 may not require any information in a report under
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1 paragraph (1) other than the information specified

2 in the second sentence of that paragraph.

3 ‘‘(3) UTILIZATION.—The Commission shall use

4 the information submitted in reports under para5 graph (1) to identify telecommunications carriers or

6 resellers that engage in patterns and practices of un7 authorized changes in providers of telephone ex8 change service or telephone toll service.

9 ‘‘(4) TERMINATION AUTHORITY.—The Commis10 sion may terminate the requirement in paragraph

11 (1) upon a determination by the Commission that

12 the number of complaints submitted to local ex13 change carriers regarding the changes described in

14 that paragraph has decreased by a significant

15 amount.’’.

16 (b) CRIMINAL PENALTY.—

17 (1) IN GENERAL.—Chapter 113A of title 18,

18 United States Code, is amended by adding at the

19 end the following:

20 ‘‘§ 2328. Unauthorized changes in telephone exchange

21 or telephone toll service

22 ‘‘Any person who submits or executes a change in a

23 provider of telephone exchange service or telephone toll

24 service not authorized by the subscriber concerned in will25 ful violation of the provisions of section 258 of the Com-
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1 munications Act of 1934 (47 U.S.C. 258), or the proce2 dures prescribed under subsection (a) of that section—

3 ‘‘(1) shall be fined in accordance with this title,

4 imprisoned not more than 1 year, or both; but

5 ‘‘(2) if previously convicted under this section

6 at the time of a subsequent offense, shall be fined

7 in accordance with this title, imprisoned not more

8 than 5 years, or both, for such subsequent offense.’’.

9 (2) CLERICAL AMENDMENT.—The chapter anal10 ysis for chapter 113A of title 18, United States

11 Code, is amended by adding at the end the follow12 ing:

‘‘2328. Unauthorized changes in telephone exchange or telephone toll service.’’.

13 SEC. 3. CONSUMER PROTECTIONS AGAINST TELEPHONE

14 BILLING CRAMMING.

15 Part II of title II of the Communications Act of 1934

16 (47 U.S.C. 251 et seq.) is amended by inserting after sec17 tion 258 the following new section:

18 ‘‘SEC. 258A. SUBSCRIBER PROTECTIONS RELATING TO

19 TELEPHONE BILLING.

20 ‘‘(a) PROHIBITION ON KNOWING SUBMISSION OF UN21 AUTHORIZED CHARGES.—

22 ‘‘(1) IN GENERAL.—No person, including a bill23 ing agent or telephone exchange service or telephone

24 toll service provider, may cause a charge to be in25 cluded on a subscriber’s bill for telephone exchange
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1 service or telephone toll service unless such charge

2 has been specifically and knowingly authorized by

3 the subscriber or is otherwise authorized or required

4 by law.

5 ‘‘(2) SCOPE OF PROHIBITION.—The prohibition

6 in paragraph (1) shall apply to any submission of a

7 charge for purposes of the inclusion of the charge on

8 the bill of a subscriber, including the submission of

9 the charge to another entity by direct or indirect

10 means.

11 ‘‘(3) REGULATIONS.—The Commission may

12 prescribe regulations for purposes of carrying out

13 this subsection.

14 ‘‘(b) OBLIGATIONS OF BILLING AGENTS.—A billing

15 agent, including a telecommunications carrier or reseller

16 of telecommunications services, who issues a bill for tele17 phone exchange service or telephone toll service to a sub18 scriber shall—

19 ‘‘(1) state on the bill—

20 ‘‘(A) the name and toll-free telephone

21 number of any telecommunications carrier or

22 reseller for the subscriber’s telephone exchange

23 service and telephone toll service;
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1 ‘‘(B) the identity of each presubscribed

2 carrier or reseller of telecommunications serv3 ices; and

4 ‘‘(C) the charges associated with each car5 rier’s or reseller’s provision of telecommuni6 cations service during the billing period;

7 ‘‘(2) for services other than services described

8 in paragraph (1), state on a separate page—

9 ‘‘(A) the name of any company whose

10 charges are reflected on the subscriber’s bill;

11 ‘‘(B) the services for which the subscriber

12 is being charged by that company;

13 ‘‘(C) the charges associated with that com14 pany’s provision of service during the billing pe15 riod;

16 ‘‘(D) the toll-free telephone number that

17 the subscriber may call to dispute that compa18 ny’s charges; and

19 ‘‘(E) that disputes about that company’s

20 charges will not result in disruption of tele21 phone exchange service or telephone toll service;

22 and

23 ‘‘(3) show the mailing address of any tele24 communications carrier or reseller or other company

25 whose charges are reflected on the bill.
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1 ‘‘(c) ADDITIONAL REQUIREMENTS RELATING TO

2 BILLING.—

3 ‘‘(1) PROHIBITION ON DISRUPTION OF TELE4 PHONE SERVICE BASED ON DISPUTE OF CERTAIN

5 CHARGES.—A provider of telephone exchange service

6 or telephone toll service may not cease or otherwise

7 disrupt the provision of such service to a subscriber

8 in the event of the subscriber’s dispute of a charge

9 for any service other than telephone exchange service

10 or telephone toll service that is included on the sub11 scriber’s bill for such service.

12 ‘‘(2) TOLL-FREE NUMBER FOR DISPUTE OF

13 CERTAIN CHARGES.—Any provider of services cov14 ered by subsection (b)(2) shall ensure the availability

15 of a toll-free telephone number that a subscriber

16 issued a bill including a charge for such services

17 may call in order to resolve disputes relating to the

18 charge. Such number may be the number of the pro19 vider or the agent that issued the bill.

20 ‘‘(d) FORFEITURE FOR VIOLATIONS.—

21 ‘‘(1) FORFEITURE.—Unless the Commission de22 termines there are mitigating circumstances, viola23 tion of subsection (a) is punishable by a forfeiture

24 of not less than $40,000 for the first offense, and

25 not less than $100,000 for each subsequent offense.
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1 ‘‘(2) RECOVERY.—The Commission may take

2 such action as may be necessary to collect any for3 feitures imposed under paragraph (1).

4 ‘‘(e) STATE LAW NOT PREEMPTED.—

5 ‘‘(1) IN GENERAL.—Nothing in this section

6 shall be construed to preempt any State law that im7 poses more restrictive requirements, regulations,

8 damages, costs, or penalties on the inclusion on sub9 scriber bills of charges for telephone exchange serv10 ice or telephone toll service than are imposed under

11 this section.

12 ‘‘(2) EFFECT ON STATE COURT PROCEED13 INGS.—Nothing in this section shall be construed to

14 prohibit an authorized State official from proceeding

15 in State court on the basis of an alleged violation of

16 any general civil or criminal statute of such State or

17 any specific civil or criminal statute of such State

18 not preempted by this section.

19 ‘‘(f) REPORTS ON COMPLAINTS.—

20 ‘‘(1) REQUIREMENT.—Each local exchange car21 rier shall submit to the Commission on a quarterly

22 basis a report on the number of complaints of the

23 inclusion of unauthorized charges on the bills of its

24 subscribers that are submitted to such carrier by its

25 subscribers. Each report shall specify the basis of
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1 each charge complained of and the number of com2 plaints arising from such basis.

3 ‘‘(2) LIMITATION ON SCOPE.—The Commission

4 may not require any information in a report under

5 paragraph (1) other than the information specified

6 in the second sentence of that paragraph.

7 ‘‘(3) UTILIZATION.—The Commission shall use

8 the information submitted in reports under para9 graph (1) to identify telephone exchange service and

10 telephone toll service providers that engage in pat11 terns and practices of including unauthorized

12 charges in their bills for such service.

13 ‘‘(4) TERMINATION AUTHORITY.—The Commis14 sion may terminate the requirement in paragraph

15 (1) upon a determination by the Commission that

16 the number of complaints submitted to local ex17 change carriers regarding the inclusion of charges

18 described in that paragraph has decreased by a sig19 nificant amount.’’.

20 SEC. 4. FEDERAL COMMUNICATIONS COMMISSION JURIS21 DICTION OVER TELEPHONE SERVICE BILL22 ING PROVIDERS AND CERTAIN OTHER SERV23 ICE PROVIDERS.

24 Part II of title II of the Communications Act of 1934

25 (47 U.S.C. 251 et seq.), as amended by section 3(a) of
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1 this Act, is further amended by inserting after section

2 258A the following new section:

3 ‘‘SEC. 258B. JURISDICTION OVER TELEPHONE SERVICE

4 BILLING PROVIDERS AND CERTAIN OTHER

5 SERVICE PROVIDERS.

6 ‘‘(a) IN GENERAL.—Subject to subsections (b) and

7 (c), the Commission may assess and recover any penalty,

8 fine, or forfeiture provided for under this Act and may

9 impose any other sanction provided for under this Act (in10 cluding an order to cease and desist under section 312(b))

11 against any entity that is not a telecommunications carrier

12 for a violation of or failure to comply with any provision

13 of this Act, or any rule, regulation, or order under this

14 Act, to the extent that such entity—

15 ‘‘(1) provides billing services for the provision

16 of telephone exchange service or telephone toll serv17 ice;

18 ‘‘(2) provides billing services for services for

19 which charges appear on a subscriber’s bill for tele20 phone exchange service or telephone toll service; or

21 ‘‘(3) provides services for which charges appear

22 on a subscriber’s bill for telephone exchange service

23 or telephone toll service.

24 ‘‘(b) LIMITATION.—The Commission may not exer25 cise the authority in subsection (a) with regard to an en-
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1 tity unless the Commission determines that the entity has

2 willfully or knowingly violated or failed to comply with a

3 provision of this Act or a rule, regulation, or order under

4 this Act.

5 ‘‘(c) ENFORCEMENT ACTIONS.—

6 ‘‘(1) IN GENERAL.—The Commission may un7 dertake any action provided for under this Act for

8 purposes of the enforcement of a penalty, fine, for9 feiture, or other sanction under subsection (a).

10 ‘‘(2) CERTAIN FORFEITURE ACTIONS.—In de11 termining and imposing a forfeiture penalty under

12 section 503(b) utilizing the authority in subsection

13 (a), the Commission shall not be subject to the re14 quirements set forth in paragraph (5) of such sec15 tion.’’.

16 SEC. 5. FEDERAL TRADE COMMISSION JURISDICTION OVER

17 UNFAIR OR DECEPTIVE PRACTICES OF TELE18 COMMUNICATIONS CARRIERS.

19 Section 5(a) of the Federal Trade Commission Act

20 (15 U.S.C. 45(a)) is amended by adding at the end the

21 following:

22 ‘‘(4) Notwithstanding the exception in paragraph (2),

23 the Commission is empowered to prevent telecommuni24 cations carriers (as that term is defined in section 3(44)

25 of the Communications Act of 1934 (47 U.S.C. 153(44)))
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1 from using unfair or deceptive acts or practices in or af2 fecting commerce. The power of the Commission under

3 this paragraph is in addition to any power or authority

4 of the Federal Communications Commission over tele5 communications carriers under the Communications Act

6 of 1934.’’.

7 SEC. 6. PROVISION TO FEDERAL TRADE COMMISSION OF

8 FEDERAL COMMUNICATIONS COMMISSION

9 INFORMATION ON TELEPHONE SERVICES

10 FRAUD.

11 (a) REQUIREMENT.—Part II of title II of the Com12 munications Act of 1934 (47 U.S.C. 251 et seq.) is

13 amended by adding at the end the following:

14 ‘‘SEC. 262. PROVISION TO FEDERAL TRADE COMMISSION OF

15 FEDERAL COMMUNICATIONS COMMISSION

16 INFORMATION ON TELEPHONE SERVICES

17 FRAUD.

18 ‘‘Not later than 180 days after the date of the enact19 ment of the Telephone Services Fraud Prevention and En20 forcement Act of 1999, and every month thereafter, the

21 Commission shall provide to the Federal Trade Commis22 sion any information collected by the Commission as a re23 sult of complaints to the Commission regarding telephone

24 services fraud, including the following:
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1 ‘‘(1) The submission or execution of an unau2 thorized change of provider of telephone exchange

3 service or telephone toll service.

4 ‘‘(2) The inclusion on a subscriber’s bill for

5 telephone exchange service or telephone toll service

6 of a charge that has not been specifically and know7 ingly authorized by the subscriber concerned or oth8 erwise authorized or required by law.’’.

9 (b) TREATMENT OF INFORMATION.—The Federal

10 Trade Commission shall incorporate in an appropriate

11 manner into the Consumer Sentinel online database main12 tained by that Commission any information provided to

13 that Commission under section 262 of the Communica14 tions Act of 1934, as added by subsection (a).

15 SEC. 7. STUDY OF CONSUMER BILLING CONTROLS RELAT16 ING TO TELEPHONE BILLS.

17 (a) REQUIREMENT.—The Federal Communications

18 Commission shall carry out a study of the feasibility and

19 advisability of requiring telephone service billing agents,

20 including telecommunications carriers who issue bills for

21 telephone exchange service or telephone toll service, to es22 tablish and provide consumer billing controls in order to

23 permit subscribers to prevent the inclusion of unauthor24 ized charges on bills for telephone service.
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1 (b) CONSULTATION.—In carrying out the study, the

2 Commission shall consult with the Federal Trade Commis3 sion, representatives of telecommunications carriers pro4 viding telephone exchange service or telephone toll service,

5 State commissioners, and consumers of telephone service.

6 (c) REPORT.—The Federal Communications Com7 mission shall submit to Congress a report on the results

8 of the study not later than 6 months after the date of

9 the enactment of this Act.

Æ