II

105TH CONGRESS

1ST SESSION S. 1410

To amend section 258 of the Communications Act of 1934 to enhance the

protections against unauthorized changes in subscriber selections of telephone service providers, and for other purposes.

IN THE SENATE OF THE UNITED STATES

NOVEMBER 7, 1997

Mr. REED introduced the following bill; which was read twice and referred to

the Committee on Commerce, Science, and Transportation

A BILL

To amend section 258 of the Communications Act of 1934

to enhance the protections against unauthorized changes

in subscriber selections of telephone service providers,

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. FINDINGS; PURPOSE.

4 (a) FINDINGS.—Congress makes the following find5 ings:

6 (1) As the telecommunications industry has

7 moved toward competition in the provision of long

8 distance telephone services, consumers have increas-
2

•S 1410 IS

1 ingly elected to change the carriers that provide

2 their long distance telephone services. As many as

3 50,000,000 consumers now change long distance

4 telephone service providers each year.

5 (2) The fluid nature of the market for long dis6 tance telephone services has also allowed an increas7 ing number of unauthorized changes of telephone

8 service providers to occur. Such changes have been

9 called ‘‘slamming’’, a term which denotes any prac10 tice in which a consumer’s long distance telephone

11 service provider is changed without the consumer’s

12 knowledge or consent.

13 (3) Slamming accounts for the largest number

14 of consumer complaints received by the Common

15 Carrier Bureau of the Federal Communications

16 Commission. As many as 1,000,000 consumers are

17 subject to the unauthorized change of telephone

18 service providers each year.

19 (4) The increased costs which consumers face

20 as a result of the unauthorized change of telephone

21 service providers threaten to deprive consumers of

22 the financial benefits created by a competitive mar23 ketplace in telephone services.

24 (5) The burdens placed upon consumers by un25 authorized changes of telephone service providers
3

•S 1410 IS

1 will expand exponentially as competition enters into

2 the markets for intraLATA and local telephone serv3 ices.

4 (6) The Telecommunications Act of 1996

5 sought to combat unauthorized changes of telephone

6 service providers by requiring that a provider who

7 changes a subscriber without authorization pay the

8 previously selected carrier an amount equal to all

9 charges paid by the subscriber after the change. The

10 Federal Communications Commission has proposed

11 regulations to implement this requirement. Imple12 menting these regulations will eliminate many of the

13 financial incentives to execute unauthorized changes

14 of telephone service providers. However, under cur15 rent and proposed regulations consumers have, and

16 will continue to face, difficulty in securing proof of

17 unauthorized changes. Thus, enforcement of the reg18 ulations will be impeded by a lack of tangible proof

19 of consumer consent to the change of telephone serv20 ice providers.

21 (7) The interests of consumers require that

22 telephone service providers maintain evidence of

23 their verification of consumer consent to changes in

24 telephone service providers. This evidence should

25 take the form of a consumer’s written consent or a
4

•S 1410 IS

1 recording of a consumer’s oral consent obtained by

2 the telephone service provider or a third party.

3 (8) Both Congress and the Federal Commu4 nications Commission should continue to examine

5 electronic means by which consumers could most

6 readily change telephone service providers while en7 suring that such changes would result only from

8 consumer action evidencing express consent to such

9 changes.

10 (9) By providing consumers with a private right

11 of action in State court, if State law permits,

12 against those who have executed unauthorized

13 changes of telephone service providers, Congress in14 sures in a constitutional manner that neither Fed15 eral nor State courts will be overburdened with liti16 gation, while also providing the proper forum for

17 such actions given that competition will soon come

18 to all segments of the telephone service market.

19 (10) The majority of consumers who have been

20 subject to the unauthorized change of telephone

21 service do not seek redress through the Federal

22 Communications Commission. In light of the general

23 responsibilities of the States for consumer protec24 tion, as well as the prosecutions against unauthor25 ized changes already undertaken by the States, it is
5

•S 1410 IS

1 essential that the States be allowed to pursue ac2 tions on behalf of their citizens, while also preserv3 ing the proper role of the Federal Communications

4 Commission in regulating the telecommunications in5 dustry.

6 (b) PURPOSES.—The purposes of this Act are—

7 (1) to protect consumers from unauthorized

8 changes of telephone service providers;

9 (2) to allow the efficient prosecution of legal ac10 tions against telephone service providers who de11 fraud consumers by transferring telephone service

12 providers without consumer consent; and

13 (3) to facilitate the ready selection of telephone

14 service providers by consumers.

15 SEC. 2. ENHANCEMENT OF PROTECTIONS AGAINST UNAU16 THORIZED CHANGES IN SUBSCRIBER SELEC17 TIONS OF TELEPHONE SERVICE PROVIDERS.

18 (a) VERIFICATION OF AUTHORIZATION.—

19 (1) IN GENERAL.—Subsection (a) of section

20 258 of the Communications Act of 1934 (47 U.S.C.

21 258) is amended—

22 (A) by striking ‘‘(a) PROHIBITION.—No

23 telecommunications’’ and inserting the follow24 ing:

25 ‘‘(a) PROHIBITION.—
6

•S 1410 IS

1 ‘‘(1) IN GENERAL.—No telecommunications’’;

2 (B) in paragraph (1), as so designated, by

3 inserting after the first sentence the following:

4 ‘‘Such procedures shall require the verification

5 of a subscriber’s selection of a provider in writ6 ten or oral form (including a signature or voice

7 recording) and shall require the retention of

8 such verification in such manner and form and

9 for such time as the Commission considers ap10 propriate.’’; and

11 (C) by adding at the end the following:

12 ‘‘(2) VERIFICATION.—

13 ‘‘(A) IN GENERAL.—For purposes of para14 graph (1), the verification of a subscriber’s se15 lection of a telephone exchange service or tele16 phone toll service provider shall take the form

17 of a written or oral communication (in the same

18 language as the solicitation of the selection) in

19 which the subscriber—

20 ‘‘(i) acknowledges the type of service

21 to be changed as a result of the selection;

22 ‘‘(ii) affirms the subscriber’s intent to

23 select the provider as the provider of that

24 service;
7

•S 1410 IS

1 ‘‘(iii) affirms that the subscriber is

2 authorized to select the provider of that

3 service for the telephone number in ques4 tion;

5 ‘‘(iv) acknowledges that the selection

6 of the provider will result in a change in

7 providers of that service;

8 ‘‘(v) acknowledges that only one pro9 vider may provide that service for that

10 telephone number; and

11 ‘‘(vi) provides such other information

12 as the Commission considers appropriate

13 for the protection of the subscriber.

14 ‘‘(B) REQUIREMENTS FOR ORAL VERIFICA15 TIONS.—An oral verification of a change in tele16 phone service providers under this paragraph—

17 ‘‘(i) may not be made in the same

18 communication in which the change is so19 licited;

20 ‘‘(ii) may be made only to a qualified

21 and independent agent (as determined in

22 accordance with regulations prescribed by

23 the Commission) of the provider concerned;

24 and
8

•S 1410 IS

1 ‘‘(iii) shall include a prompt and clear

2 disclosure by the agent that the purpose of

3 the telephone call is to verify that the sub4 scriber has consented to the change.

5 ‘‘(C) CONFIRMATION OF CHANGE.—A pro6 vider submitting or executing a change in tele7 phone service providers shall notify the sub8 scriber concerned by mail of the change not

9 later than 5 business days after the date on

10 which the change is executed. The confirmation

11 shall be provided in the language in which the

12 change was solicited.

13 ‘‘(D) AVAILABILITY OF VERIFICATIONS.—

14 A provider shall make available to a subscriber

15 a copy of a verification under this paragraph

16 upon the request of the subscriber or an au17 thorized representative of the subscriber.’’.

18 (2) REGULATIONS.—The Federal Communica19 tions Commission shall complete the adoption of the

20 regulations required under section 258(a) of the

21 Communications Act of 1934 by reason of the

22 amendments made by paragraph (1) not later than

23 270 days after the date of enactment of this Act.

24 (b) ADDITIONAL REMEDIES.—Such section is further

25 amended by adding at the end the following:
9

•S 1410 IS

1 ‘‘(c) PRIVATE RIGHT OF ACTION.—

2 ‘‘(1) PRIVATE RIGHT.—A person or entity may,

3 if otherwise permitted by the laws or rules of court

4 of a State, bring in an appropriate court of that

5 State—

6 ‘‘(A) an action based on a violation of sub7 section (a) or the regulations prescribed under

8 such subsection to enjoin such violation;

9 ‘‘(B) an action to recover for actual mone10 tary loss from such a violation or to receive

11 $1,000 in damages for each such violation,

12 whichever is greater; or

13 ‘‘(C) both such actions.

14 ‘‘(2) TREBLE DAMAGES.—If the court finds

15 that the defendant willfully or knowingly violated

16 subsection (a) or the regulations prescribed under

17 such subsection, the court may, in its discretion, in18 crease the amount of the award to an amount equal

19 to not more than 3 times the amount available

20 under paragraph (1)(B).

21 ‘‘(3) COSTS OF LITIGATION.—The court, in is22 suing any final order in an action brought pursuant

23 to this subsection may award costs of litigation (in24 cluding reasonable attorney and expert witness fees)
10

•S 1410 IS

1 to the prevailing plaintiff whenever the court deter2 mines that such award is appropriate.

3 ‘‘(d) ACTIONS BY STATES.—

4 ‘‘(1) AUTHORITY OF STATES.—

5 ‘‘(A) IN GENERAL.—Whenever the attor6 ney general of a State, or an official or agency

7 designated by a State, has reason to believe

8 that any person has engaged or is engaging in

9 an activity or practice of activities with respect

10 to residents of that State in violation of sub11 section (a) or the regulations prescribed under

12 such subsection, the State may bring a civil ac13 tion on behalf of its residents to enjoin such ac14 tivities, an action to recover for the greater of

15 actual monetary loss or $1,000 in damages for

16 each violation, or both such actions.

17 ‘‘(B) TREBLE DAMAGES.—If the court

18 finds the defendant willfully or knowingly vio19 lated such subsection or regulations, the court

20 may, in its discretion, increase the amount of

21 the award to an amount equal to not more than

22 3 times the amount available under the sub23 paragraph (A).

24 ‘‘(2) EXCLUSIVE JURISDICTION OF FEDERAL

25 COURTS.—
11

•S 1410 IS

1 ‘‘(A) IN GENERAL.—The district courts of

2 the United States, the United States courts of

3 any territory, and the District Court of the

4 United States for the District of Columbia shall

5 have exclusive jurisdiction over all civil actions

6 brought under this subsection.

7 ‘‘(B) ADDITIONAL RELIEF.—Upon proper

8 application, such courts shall also have jurisdic9 tion to issue writs of mandamus, or orders af10 fording like relief, commanding the defendant

11 to comply with the provisions of subsection (a)

12 or regulations prescribed under such subsection,

13 including the requirement that the defendant

14 take such action as is necessary to remove the

15 danger of such violation. Upon a proper show16 ing, a permanent or temporary injunction or re17 straining order shall be granted without bond.

18 ‘‘(3) RIGHTS OF COMMISSION.—

19 ‘‘(A) NOTICE.—The State shall serve prior

20 written notice of any such civil action upon the

21 Commission and provide the Commission with a

22 copy of its complaint, except in any case where

23 such prior notice is not feasible, in which case

24 the State shall serve such notice immediately

25 upon instituting such action.
12

•S 1410 IS

1 ‘‘(B) RIGHTS.—The Commission shall have

2 the right—

3 ‘‘(i) to intervene in any action covered

4 by subparagraph (A);

5 ‘‘(ii) upon so intervening, to be heard

6 on all matters arising therein; and

7 ‘‘(iii) to file petitions for appeal.

8 ‘‘(4) VENUE; SERVICE OF PROCESS.—Any civil

9 action brought under this subsection in a district

10 court of the United States may be brought in the

11 district wherein the defendant or victim is found,

12 wherein the defendant is an inhabitant or transacts

13 business, or wherein the violation occurred or is oc14 curring, and process in such cases may be served in

15 any district in which the defendant is an inhabitant

16 or where the defendant may be found.

17 ‘‘(5) INVESTIGATORY POWERS.—For purposes

18 of bringing a civil action under this subsection, noth19 ing in this subsection shall prevent the attorney gen20 eral of a State, or an official or agency designated

21 by a State, from exercising the powers conferred on

22 the attorney general or such official by the laws of

23 such State to conduct investigations or to administer

24 oaths or affirmations or to compel the attendance of
13

•S 1410 IS

1 witnesses or the production of documentary and

2 other evidence.

3 ‘‘(6) EFFECT ON STATE COURT PROCEED4 INGS.—Nothing in this subsection shall be construed

5 to prohibit any official authorized by State law from

6 proceeding in State court on the basis of an alleged

7 violation of any civil or criminal statute of such

8 State.

9 ‘‘(7) LIMITATION.—Whenever the Commission

10 has instituted a civil action for violation of sub11 section (a) or there regulations prescribed under

12 such subsection, no State may, during the pendency

13 of such action instituted by the Commission, subse14 quently institute a civil action against any defendant

15 named in the Commission’s complaint for any viola16 tion as alleged in the Commission’s complaint.

17 ‘‘(8) DEFINITION.—In this subsection, the term

18 ‘attorney general’ means the chief legal officer of a

19 State.’’.

20 SEC. 3. REPORT ON ELECTRONIC MEANS FOR VERIFYING

21 SUBSCRIBER AUTHORIZATIONS OF SELEC22 TIONS OF TELEPHONE SERVICE PROVIDERS.

23 Not later than December 31, 1999, the Federal Com24 munications Commission shall submit to Congress a re25 port on the technological feasibility and practicability of
14

•S 1410 IS

1 permitting subscribers to authorize changes in telephone

2 service providers by electronic means (including authoriza3 tion by electronic mail or by use of personal identification

4 numbers or other security mechanisms) without thereby

5 increasing the likelihood of unauthorized changes in such

6 providers.

Æ