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[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[S. 58 Introduced in Senate (IS)]

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.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Telephone Services Fraud Prevention 
and Enforcement Act of 1999''.

SEC. 2. CONSUMER PROTECTIONS AGAINST TELEPHONE SERVICE SLAMMING.

    (a) In General.--Section 258 of the Communications Act of 1934 (47 
U.S.C. 258) is amended to read as follows:

``SEC. 258. PROTECTIONS AGAINST UNAUTHORIZED CHANGES IN SUBSCRIBER 
              SELECTIONS OF TELEPHONE EXCHANGE SERVICE OR TELEPHONE 
              TOLL SERVICE.

    ``(a) Prohibition on Unauthorized Changes.--No telecommunications 
carrier or reseller of telecommunications services shall submit or 
execute a change 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.
    ``(b) Verification Procedure Requirements.--
            ``(1) In general.--In order to verify a subscriber's 
        selection of a telephone exchange service or telephone toll 
        service provider under this section, a telecommunications 
        carrier or reseller shall, at a minimum, require the 
        subscriber--
                    ``(A) to affirm that the subscriber is authorized 
                to select the provider of that service for the 
                telephone number in question;
                    ``(B) to acknowledge the type of service to be 
                changed as a result of the selection;
                    ``(C) to affirm the subscriber's intent to select 
                the provider as the provider of that service;
                    ``(D) to acknowledge that the selection of the 
                provider will result in a change in providers of that 
                service; and
                    ``(E) to provide such other information as the 
                Commission considers appropriate for the protection of 
                the subscriber.
            ``(2) Additional requirements.--The procedures prescribed 
        by the Commission to verify a subscriber's selection of a 
        provider shall--
                    ``(A) provide for a complete copy of verification 
                of a change in provider in oral, written, or electronic 
                form;
                    ``(B) require the retention of such verification in 
                such manner and form and for such time as the 
                Commission considers appropriate;
                    ``(C) require that verification occur in the same 
                language as that in which the change is solicited; and
                    ``(D) provide for a copy of the verification to be 
                made available to the subscriber concerned on request.
            ``(3) Protection of freeze option.--
                    ``(A) Protection.--The Commission may not take 
                action under this section to limit or prevent a 
                subscriber's capability to require that any change in 
                the subscriber's selection of a provider of telephone 
                exchange service or telephone toll service not be 
                carried out unless the subscriber communicates the 
                authorization for the change to the subscriber's 
                service provider in an express and direct manner.
                    ``(B) Preservation of authority relating to unfair 
                marketing of freeze options.--Nothing in this section 
                shall be construed to prohibit the Commission from 
                preventing the marketing or provision in an unfair or 
                anti-competitive manner of a capability to preclude a 
                change in a subscriber's provider of telephone exchange 
                service or telephone toll service without the 
                subscriber's affirmative consent.
    ``(c) Notice to Subscribers of Changes.--
            ``(1) In general.--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 a 
        specific and unambiguous writing, not more than 15 days after 
the change is processed by the carrier or the reseller--
                    ``(A) of the subscriber's new carrier or reseller; 
                and
                    ``(B) 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.
            ``(2) Response to request.--A carrier or reseller receiving 
        a request under paragraph (1)(B) shall submit to the subscriber 
        concerned, not later than 15 days after the date of the 
        request, the information covered by the request.
    ``(d) Forfeiture and Liability for Unauthorized Changes.--
            ``(1) Forfeiture.--Unless the Commission determines there 
        are mitigating circumstances, violation of subsection (a) is 
        punishable by a forfeiture of not less than $40,000 for the 
        first offense, and not less than $100,000 for each subsequent 
        offense.
            ``(2) Subscriber liability.--A subscriber whose telephone 
        exchange service or telephone toll service is changed in 
        violation of the provisions of this section or the verification 
        procedures under this section shall not be liable to the 
        telecommunications carrier providing such service after the 
        change, in accordance with such procedures as the Commission 
        shall prescribe.
            ``(3) Recovery of forfeiture and liability.--The Commission 
        may take such action as may be necessary to collect any 
        forfeitures imposed under paragraph (1).
            ``(4) Construction.--The remedies provided by paragraphs 
        (1) and (2) are in addition to any other remedies available 
        under law.
    ``(e) Disqualification and Reinstatement.--
            ``(1) Disqualification from certain activities based on 
        conviction.--
                    ``(A) Disqualification of persons.--Subject to 
                subparagraph (C), any person convicted under section 
                2328 of title 18, United States Code, in addition to 
                any fines or imprisonment under that section, may not 
                carry out any activities covered by section 214.
                    ``(B) Disqualification of companies.--Subject to 
                subparagraph (C), any company substantially controlled 
                by a person convicted under section 2328 of title 18, 
                United States Code, in addition to any fines or 
                imprisonment under that section, may not carry out any 
                activities covered by section 214.
                    ``(C) Reinstatement.--
                            ``(i) In general.--The Commission may 
                        terminate the application of subparagraph (A) 
                        to a person, or subparagraph (B) to a company, 
                        if the Commission determines that the 
                        termination would be in the public interest.
                            ``(ii) Effective date.--The termination of 
                        the applicability of subparagraph (A) to a 
                        person, or subparagraph (B) to a company, under 
                        clause (i) may not take effect earlier than 5 
                        years after the date on which the applicable 
                        subparagraph applied to the person or company 
                        concerned.
            ``(2) Certification requirement.--Any person described in 
        subparagraph (A) of paragraph (1), or company described in 
        subparagraph (B) of that paragraph, not reinstated under 
        subparagraph (C) of that paragraph shall include with any 
        application to the Commission under section 214 a certification 
        that the person or company, as the case may be, is described in 
        such subparagraph (A) or (B).
    ``(f) State Law Not Preempted.--
            ``(1) In general.--Nothing in this section shall be 
        construed to preempt any State law that imposes more 
        restrictive requirements, regulations, damages, costs, or 
        penalties on changes in a subscriber's service or selection of 
        a provider of telephone exchange service or telephone toll 
        services than are imposed under this section.
            ``(2) Effect on state court proceedings.--Nothing in this 
        section 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 or any specific civil or criminal statute of such 
        State not preempted by this section.
    ``(g) Reports on Complaints.--
            ``(1) Requirement.--Each local exchange carrier shall 
        submit to the Commission on a quarterly basis a report on the 
        number of complaints of unauthorized changes in providers of 
        telephone exchange service or telephone toll service that are 
        submitted to such carrier by its subscribers. Each report shall 
        specify each provider of service complained of and the number 
        of complaints relating to such provider.
            ``(2) Limitation on scope.--The Commission may not require 
        any information in a report under paragraph (1) other than the 
information specified in the second sentence of that paragraph.
            ``(3) Utilization.--The Commission shall use the 
        information submitted in reports under paragraph (1) to 
        identify telecommunications carriers or resellers that engage 
        in patterns and practices of unauthorized changes in providers 
        of telephone exchange service or telephone toll service.
            ``(4) Termination authority.--The Commission may terminate 
        the requirement in paragraph (1) upon a determination by the 
        Commission that the number of complaints submitted to local 
        exchange carriers regarding the changes described in that 
        paragraph has decreased by a significant amount.''.
    (b) Criminal Penalty.--
            (1) In general.--Chapter 113A of title 18, United States 
        Code, is amended by adding at the end the following:
``Sec. 2328. Unauthorized changes in telephone exchange or telephone 
              toll service
    ``Any person who submits or executes a change in a provider of 
telephone exchange service or telephone toll service not authorized by 
the subscriber concerned in willful violation of the provisions of 
section 258 of the Communications Act of 1934 (47 U.S.C. 258), or the 
procedures prescribed under subsection (a) of that section--
            ``(1) shall be fined in accordance with this title, 
        imprisoned not more than 1 year, or both; but
            ``(2) if previously convicted under this section at the 
        time of a subsequent offense, shall be fined in accordance with 
        this title, imprisoned not more than 5 years, or both, for such 
        subsequent offense.''.
            (2) Clerical amendment.--The chapter analysis for chapter 
        113A of title 18, United States Code, is amended by adding at 
        the end the following:

``2328. Unauthorized changes in telephone exchange or telephone toll 
                            service.''.

SEC. 3. CONSUMER PROTECTIONS AGAINST TELEPHONE BILLING CRAMMING.

    Part II of title II of the Communications Act of 1934 (47 U.S.C. 
251 et seq.) is amended by inserting after section 258 the following 
new section:

``SEC. 258A. SUBSCRIBER PROTECTIONS RELATING TO TELEPHONE BILLING.

    ``(a) Prohibition on Knowing Submission of Unauthorized Charges.--
            ``(1) In general.--No person, including a billing agent or 
        telephone exchange service or telephone toll service provider, 
        may cause a charge to be included on a subscriber's bill for 
        telephone exchange service or telephone toll service unless 
        such charge has been specifically and knowingly authorized by 
        the subscriber or is otherwise authorized or required by law.
            ``(2) Scope of prohibition.--The prohibition in paragraph 
        (1) shall apply to any submission of a charge for purposes of 
        the inclusion of the charge on the bill of a subscriber, 
        including the submission of the charge to another entity by 
        direct or indirect means.
            ``(3) Regulations.--The Commission may prescribe 
        regulations for purposes of carrying out this subsection.
    ``(b) Obligations of Billing Agents.--A billing agent, including a 
telecommunications carrier or reseller of telecommunications services, 
who issues a bill for telephone exchange service or telephone toll 
service to a subscriber shall--
            ``(1) state on the bill--
                    ``(A) the name and toll-free telephone number of 
                any telecommunications carrier or reseller for the 
                subscriber's telephone exchange service and telephone 
                toll service;
                    ``(B) the identity of each presubscribed carrier or 
                reseller of telecommunications services; and
                    ``(C) the charges associated with each carrier's or 
                reseller's provision of telecommunications service 
                during the billing period;
            ``(2) for services other than services described in 
        paragraph (1), state on a separate page--
                    ``(A) the name of any company whose charges are 
                reflected on the subscriber's bill;
                    ``(B) the services for which the subscriber is 
                being charged by that company;
                    ``(C) the charges associated with that company's 
                provision of service during the billing period;
                    ``(D) the toll-free telephone number that the 
                subscriber may call to dispute that company's charges; 
                and
                    ``(E) that disputes about that company's charges 
                will not result in disruption of telephone exchange 
                service or telephone toll service; and
            ``(3) show the mailing address of any telecommunications 
        carrier or reseller or other company whose charges are 
        reflected on the bill.
    ``(c) Additional Requirements Relating to Billing.--
            ``(1) Prohibition on disruption of telephone service based 
        on dispute of certain charges.--A provider of telephone 
        exchange service or telephone toll service may not cease or 
        otherwise disrupt the provision of such service to a subscriber 
        in the event of the subscriber's dispute of a charge for any 
        service other than telephone exchange service or telephone toll 
        service that is included on the subscriber's bill for such 
        service.
            ``(2) Toll-free number for dispute of certain charges.--Any 
        provider of services covered by subsection (b)(2) shall ensure 
        the availability of a toll-free telephone number that a 
        subscriber issued a bill including a charge for such services 
        may call in order to resolve disputes relating to the charge. 
        Such number may be the number of the provider or the agent that 
        issued the bill.
    ``(d) Forfeiture for Violations.--
            ``(1) Forfeiture.--Unless the Commission determines there 
        are mitigating circumstances, violation of subsection (a) is 
        punishable by a forfeiture of not less than $40,000 for the 
        first offense, and not less than $100,000 for each subsequent 
        offense.
            ``(2) Recovery.--The Commission may take such action as may 
        be necessary to collect any forfeitures imposed under paragraph 
        (1).
    ``(e) State Law Not Preempted.--
            ``(1) In general.--Nothing in this section shall be 
        construed to preempt any State law that imposes more 
        restrictive requirements, regulations, damages, costs, or 
        penalties on the inclusion on subscriber bills of charges for 
        telephone exchange service or telephone toll service than are 
        imposed under this section.
            ``(2) Effect on state court proceedings.--Nothing in this 
        section 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 or any specific civil or criminal statute of such 
        State not preempted by this section.
    ``(f) Reports on Complaints.--
            ``(1) Requirement.--Each local exchange carrier shall 
        submit to the Commission on a quarterly basis a report on the 
        number of complaints of the inclusion of unauthorized charges 
        on the bills of its subscribers that are submitted to such 
        carrier by its subscribers. Each report shall specify the basis 
        of each charge complained of and the number of complaints 
        arising from such basis.
            ``(2) Limitation on scope.--The Commission may not require 
        any information in a report under paragraph (1) other than the 
        information specified in the second sentence of that paragraph.
            ``(3) Utilization.--The Commission shall use the 
        information submitted in reports under paragraph (1) to 
        identify telephone exchange service and telephone toll service 
        providers that engage in patterns and practices of including 
        unauthorized charges in their bills for such service.
            ``(4) Termination authority.--The Commission may terminate 
        the requirement in paragraph (1) upon a determination by the 
        Commission that the number of complaints submitted to local 
        exchange carriers regarding the inclusion of charges described 
        in that paragraph has decreased by a significant amount.''.

SEC. 4. FEDERAL COMMUNICATIONS COMMISSION JURISDICTION OVER TELEPHONE 
              SERVICE BILLING PROVIDERS AND CERTAIN OTHER SERVICE 
              PROVIDERS.

    Part II of title II of the Communications Act of 1934 (47 U.S.C. 
251 et seq.), as amended by section 3(a) of this Act, is further 
amended by inserting after section 258A the following new section:

``SEC. 258B. JURISDICTION OVER TELEPHONE SERVICE BILLING PROVIDERS AND 
              CERTAIN OTHER SERVICE PROVIDERS.

    ``(a) In General.--Subject to subsections (b) and (c), the 
Commission may assess and recover any penalty, fine, or forfeiture 
provided for under this Act and may impose any other sanction provided 
for under this Act (including an order to cease and desist under 
section 312(b)) against any entity that is not a telecommunications 
carrier for a violation of or failure to comply with any provision of 
this Act, or any rule, regulation, or order under this Act, to the 
extent that such entity--
            ``(1) provides billing services for the provision of 
        telephone exchange service or telephone toll service;
            ``(2) provides billing services for services for which 
        charges appear on a subscriber's bill for telephone exchange 
        service or telephone toll service; or
            ``(3) provides services for which charges appear on a 
        subscriber's bill for telephone exchange service or telephone 
        toll service.
    ``(b) Limitation.--The Commission may not exercise the authority in 
subsection (a) with regard to an entity unless the Commission 
determines that the entity has willfully or knowingly violated or 
failed to comply with a provision of this Act or a rule, regulation, or 
order under this Act.
    ``(c) Enforcement Actions.--
            ``(1) In general.--The Commission may undertake any action 
        provided for under this Act for purposes of the enforcement of 
        a penalty, fine, forfeiture, or other sanction under subsection 
        (a).
            ``(2) Certain forfeiture actions.--In determining and 
        imposing a forfeiture penalty under section 503(b) utilizing 
        the authority in subsection (a), the Commission shall not be 
        subject to the requirements set forth in paragraph (5) of such 
        section.''.

SEC. 5. FEDERAL TRADE COMMISSION JURISDICTION OVER UNFAIR OR DECEPTIVE 
              PRACTICES OF TELECOMMUNICATIONS CARRIERS.

    Section 5(a) of the Federal Trade Commission Act (15 U.S.C. 45(a)) 
is amended by adding at the end the following:
    ``(4) Notwithstanding the exception in paragraph (2), the 
Commission is empowered to prevent telecommunications carriers (as that 
term is defined in section 3(44) of the Communications Act of 1934 (47 
U.S.C. 153(44))) from using unfair or deceptive acts or practices in or 
affecting commerce. The power of the Commission under this paragraph is 
in addition to any power or authority of the Federal Communications 
Commission over telecommunications carriers under the Communications 
Act of 1934.''.

SEC. 6. PROVISION TO FEDERAL TRADE COMMISSION OF FEDERAL COMMUNICATIONS 
              COMMISSION INFORMATION ON TELEPHONE SERVICES FRAUD.

    (a) Requirement.--Part II of title II of the Communications Act of 
1934 (47 U.S.C. 251 et seq.) is amended by adding at the end the 
following:

``SEC. 262. PROVISION TO FEDERAL TRADE COMMISSION OF FEDERAL 
              COMMUNICATIONS COMMISSION INFORMATION ON TELEPHONE 
              SERVICES FRAUD.

    ``Not later than 180 days after the date of the enactment of the 
Telephone Services Fraud Prevention and Enforcement Act of 1999, and 
every month thereafter, the Commission shall provide to the Federal 
Trade Commission any information collected by the Commission as a 
result of complaints to the Commission regarding telephone services 
fraud, including the following:
            ``(1) The submission or execution of an unauthorized change 
        of provider of telephone exchange service or telephone toll 
        service.
            ``(2) The inclusion on a subscriber's bill for telephone 
        exchange service or telephone toll service of a charge that has 
        not been specifically and knowingly authorized by the 
        subscriber concerned or otherwise authorized or required by 
        law.''.
    (b) Treatment of Information.--The Federal Trade Commission shall 
incorporate in an appropriate manner into the Consumer Sentinel online 
database maintained by that Commission any information provided to that 
Commission under section 262 of the Communications Act of 1934, as 
added by subsection (a).

SEC. 7. STUDY OF CONSUMER BILLING CONTROLS RELATING TO TELEPHONE BILLS.

    (a) Requirement.--The Federal Communications Commission shall carry 
out a study of the feasibility and advisability of requiring telephone 
service billing agents, including telecommunications carriers who issue 
bills for telephone exchange service or telephone toll service, to 
establish and provide consumer billing controls in order to permit 
subscribers to prevent the inclusion of unauthorized charges on bills 
for telephone service.
    (b) Consultation.--In carrying out the study, the Commission shall 
consult with the Federal Trade Commission, representatives of 
telecommunications carriers providing telephone exchange service or 
telephone toll service, State commissioners, and consumers of telephone 
service.
    (c) Report.--The Federal Communications Commission shall submit to 
Congress a report on the results of the study not later than 6 months 
after the date of the enactment of this Act.
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