II

Calendar No. 356

105TH CONGRESS

2D SESSION S. 1618

[Report No. 105–183]

To amend the Communications Act of 1934 to improve the protection of

consumers against ‘‘slamming’’ by telecommunications carriers, and for

other purposes.

IN THE SENATE OF THE UNITED STATES

FEBRUARY 9, 1998

Mr. MCCAIN (for himself, Mr. HOLLINGS, Ms. SNOWE, Mr. FRIST, Mr. REED,

Mr. BRYAN, Mr. DORGAN, Mr. JOHNSON, Mr. HARKIN, Mr. KERRY, Mr.

INOUYE, Mr. ABRAHAM, Mr. BAUCUS, Mr. LOTT, Mr. SMITH of Oregon,

Mr. SMITH of New Hampshire, Mr. GORTON, and Mr. SHELBY) introduced the following bill; which was read twice and referred to the Committee on Commerce, Science, and Transportation

MAY 5, 1998

Reported by Mr. MCCAIN, with amendments

[Omit the part struck through and insert the part printed in italic]

A BILL

To amend the Communications Act of 1934 to improve the

protection of consumers against ‘‘slamming’’ by 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,
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1 SECTION 1. IMPROVED PROTECTION FOR CONSUMERS

2 AGAINST ‘‘SLAMMING’’ BY TELECOMMUNI3 CATIONS CARRIERS. CONSUMERS.

4 (a) VERIFICATION OF AUTHORIZATION.—Subsection

5 (a) of section 258 of the Communications Act of 1934 (47

6 U.S.C. 258) is amended to read as follows:

7 ‘‘(a) PROHIBITION.—

8 ‘‘(1) IN GENERAL.—No telecommunications

9 carrier shall carrier or reseller of telecommunications

10 services shall submit or execute a change in a sub11 scriber’s selection of a provider of telephone ex12 change service or telephone toll service except in ac13 cordance with this section and such verification pro14 cedures as the Commission shall prescribe.

15 ‘‘(2) VERIFICATION.—

16 ‘‘(A) IN GENERAL.—In order to verify a

17 subscriber’s selection of a telephone exchange

18 service or telephone toll service provider under

19 this section, the telecommunications carrier or

20 reseller shall, at a minimum, require the sub21 scriber—

22 ‘‘(i) to acknowledge the type of service

23 to be changed as a result of the selection;

24 ‘‘(ii) to affirm the subscriber’s intent

25 to select the provider as the provider of

26 that service;
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1 ‘‘(iii) to affirm that the subscriber the

2 consumer is the subscriber or is authorized

3 to select the provider of that service for the

4 telephone number in question;

5 ‘‘(iv) to acknowledge that the selection

6 of the provider will result in a change in

7 providers of that service; and

8 ‘‘(v) to acknowledge that the individ9 ual making the oral communication is the

10 subscriber; and

11 ‘‘(vi) (v) to provide such other infor12 mation as the Commission considers appro13 priate for the protection of the subscriber.

14 ‘‘(B) ADDITIONAL REQUIREMENTS.—The

15 procedures prescribed by the Commission to

16 verify a subscriber’s selection of a provider

17 shall—

18 ‘‘(i) preclude the use of negative op19 tion marketing;

20 ‘‘(ii) provide for verification of a

21 change in telephone exchange service or

22 telephone toll service provider in oral, writ23 ten, or electronic form; and

24 ‘‘(iii) require the retention of such

25 verification in such manner and form and
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1 for such time as the Commission considers

2 appropriate.

3 ‘‘(3) INTRASTATE SERVICES.—Nothing in this

4 section shall preclude any State commission from en5 forcing such procedures with respect to intrastate

6 services.

7 ‘‘(4) SECTION NOT TO APPLY TO WIRELESS.—

8 This section does not apply to a provider of commer9 cial mobile service, as that term is defined in section

10 332(d)(1) of this Act.’’.

11 (b) RESOLUTION OF COMPLAINTS.—Section 258 of

12 the Communications Act of 1934 (47 U.S.C. 258) is

13 amended by adding at the end thereof the following:

14 ‘‘(c) NOTICE TO SUBSCRIBER.—Whenever there is a

15 change in a subscriber’s selection of a provider of tele16 phone exchange service or telephone toll service, the tele17 communications carrier or reseller selected shall notify the

18 subscriber in writing, not more than 15 days after the

19 change is executed, of the change, the date on which the

20 change was effected, and the name of the individual who

21 authorized the change. processed by the telecommunications

22 carrier or the reseller—

23 (1) of the subscriber’s new carrier; and

24 (2) that the subscriber may request information

25 regarding the date on which the change was agreed to
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1 and the name of the individual who authorized the

2 change.

3 ‘‘(d) RESOLUTION OF COMPLAINTS.—

4 ‘‘(1) PROMPT RESOLUTION.—

5 ‘‘(A) IN GENERAL.—The Commission shall

6 prescribe a period of time, not in excess of 120

7 days, for a days after a telecommunications car8 rier or reseller receives notice, for the tele9 communications carrier or reseller to resolve a

10 complaint by a subscriber concerning an unau11 thorized change in the subscriber’s selection of

12 a provider of telephone exchange service or tele13 phone toll service.

14 ‘‘(B) UNRESOLVED COMPLAINTS.—If a

15 telecommunications carrier or reseller fails to

16 resolve a complaint within the time period pre17 scribed by the Commission, then, within 10

18 days after the end of that period, the tele19 communications carrier or reseller shall—

20 ‘‘(i) notify the subscriber in writing of

21 the subscriber’s right to file a complaint

22 with the Commission concerning the unre23 solved complaint, the subscriber’s rights

24 under this section, and all other remedies
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1 available to the subscriber concerning un2 authorized changes;

3 ‘‘(ii) inform the subscriber in writing

4 of the procedures prescribed by the Com5 mission for filing such a complaint; and

6 ‘‘(iii) provide the subscriber a copy of

7 any evidence in the carrier’s or reseller’s

8 possession showing that the change in the

9 subscriber’s provider of telephone exchange

10 service or telephone toll service was sub11 mitted or executed in accordance with the

12 verification procedures prescribed under

13 subsection (a).

14 ‘‘(2) RESOLUTION BY COMMISSION.—The Com15 mission shall provide a simplified process for resolv16 ing complaints under paragraph (1)(B). The sim17 plified procedure shall preclude the use of interrog18 atories, depositions, discovery, or other procedural

19 techniques that might unduly increase the expense,

20 formality, and time involved in the process. The

21 Commission shall issue an order resolving any such

22 complaint at the earliest date practicable, but in no

23 event later than—
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1 ‘‘(A) 150 days after the date on which it

2 received the complaint, with respect to liability

3 issues; and

4 ‘‘(B) 90 days after the date on which it re5 solves a complaint, with respect to damages

6 issues, if such additional time is necessary.

7 ‘‘(3) DAMAGES AWARDED BY COMMISSION.—In

8 resolving a complaint under paragraph (1)(B), the

9 Commission may award damages equal to the great10 er of $500 or the amount of actual damages. The

11 Commission may, in its discretion, increase the

12 amount of the award to an amount equal to not

13 more than 3 times the amount available under the

14 preceding sentence.

15 ‘‘(e) PENALTY.—

16 ‘‘(1) IN GENERAL.—Unless the Commission de17 termines that there are mitigating circumstances,

18 violation of subsection (a) is punishable by a fine of

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

20 less than $150,000 for each subsequent offense.

21 ‘‘(2) FAILURE TO NOTIFY TREATED AS VIOLA22 TION OF SUBSECTION (a).—If a telecommunications

23 carrier or reseller fails to comply with the require24 ments of subsection (d)(1)(B), then that failure shall

25 be treated as a violation of subsection (a).
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1 ‘‘(f) RECOVERY OF FINES.—The Commission may

2 take such action as may be necessary—

3 ‘‘(1) to collect any fines it imposes under this

4 section; and

5 ‘‘(2) on behalf of any subscriber, any damages

6 awarded the subscriber under this section.’’. section.

7 (g) CHANGE INCLUDES INITIAL SELECTION.—For pur8 poses of this section, the initiation of service to a subscriber

9 by a telecommunications carrier or a reseller shall be treat10 ed as a change in a subscriber’s selection of a provider of

11 telephone exchange service or telephone toll service.

12 (c) STATE RIGHT-OF-ACTION.—Section 258 of the

13 Communications Act of 1934 (47 U.S.C. 258), as amend14 ed by subsection (b), is amended by adding at the end

15 thereof the following:

16 ‘‘(g) (h) ACTIONS BY STATES.—

17 ‘‘(1) AUTHORITY OF STATES.—Whenever the

18 attorney general of a State, or an official or agency

19 designated by a State, has reason to believe that a

20 telecommunications carrier or reseller has engaged or

21 is engaging in a pattern or practice of changing tele22 phone exchange service or telephone toll service pro23 vider without authority from subscribers in that

24 State in violation of this section or the regulations

25 prescribed under this section, the State may bring a
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1 civil action on behalf of its residents to enjoin such

2 unauthorized changes, an action to recover for ac3 tual monetary loss or receive $500 in damages for

4 each violation, or both such actions. If the court

5 finds the defendant willfully or knowingly violated

6 such regulations, the court may, in its discretion, in7 crease the amount of the award to an amount equal

8 to not more than 3 times the amount available

9 under the preceding sentence.

10 ‘‘(2) EXCLUSIVE JURISDICTION OF FEDERAL

11 COURTS.—The district courts of the United States,

12 the United States courts of any territory, and the

13 District Court of the United States for the District

14 of Columbia shall have exclusive jurisdiction over all

15 civil actions brought under this subsection. Upon

16 proper application, such courts shall also have juris17 diction to issue writs of mandamus, or orders afford18 ing like relief, commanding the defendant to comply

19 with the provisions of this section or regulations pre20 scribed under this section, including the requirement

21 that the defendant take such action as is necessary

22 to remove the danger of such violation. Upon a prop23 er showing, a permanent or temporary injunction or

24 restraining order shall be granted without bond.
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1 ‘‘(3) RIGHTS OF COMMISSION.—The State shall

2 serve prior written notice of any such civil action

3 upon the Commission and provide the Commission

4 with a copy of its complaint, except in any case

5 where such prior notice is not feasible, in which case

6 the State shall serve such notice immediately upon

7 instituting such action. The Commission shall have

8 the right—

9 ‘‘(A) to intervene in the action;

10 ‘‘(B) upon so intervening, to be heard on

11 all matters arising therein; and

12 ‘‘(C) to file petitions for appeal.

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

14 action brought under this subsection in a district

15 court of the United States may be brought in the

16 district wherein the defendant is found or is an in17 habitant or transacts business or wherein the viola18 tion occurred or is occurring, and process in such

19 cases may be served in any district in which the de20 fendant is an inhabitant or where the defendant may

21 be found.

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

23 of bringing any civil action under this subsection,

24 nothing in this section shall prevent the attorney

25 general of a State, or an official or agency des-
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1 ignated by a State, from exercising the powers con2 ferred on the attorney general or such official by the

3 laws of such State to conduct investigations or to

4 administer oaths or affirmations or to compel the at5 tendance of witnesses or the production of documen6 tary and other evidence.

7 ‘‘(6) EFFECT ON STATE COURT PROCEED8 INGS.—Nothing contained in this subsection shall be

9 construed to prohibit an authorized State official

10 from proceeding in State court on the basis of an al11 leged violation of any general civil or criminal stat12 ute of such State.

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

14 has instituted a civil action for violation of regula15 tions prescribed under this section, no State may,

16 during the pendency of such action instituted by the

17 Commission, subsequently institute a civil action

18 against any defendant named in the Commission’s

19 complaint for any violation as alleged in the Com20 mission’s complaint.

21 ‘‘(8) DEFINITION.—As used in this subsection,

22 the term ‘attorney general’ means the chief legal of23 ficer of a State.

24 ‘‘(h) (i) STATE LAW NOT PREEMPTED.—Nothing in

25 this section or in the regulations prescribed under this sec-
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1 tion shall preempt any State law that imposes more re2 strictive intrastate requirements or regulations on, or

3 which prohibits unauthorized changes in, a subscriber’s se4 lection of a provider of telephone exchange service or tele5 phone toll service.’’.

6 (d) REPORT ON CARRIERS EXECUTING UNAUTHOR7 IZED CHANGES OF TELEPHONE SERVICE.—

8 (1) REPORT.—Not later than October 31, 1998,

9 the Federal Communications Commission shall sub10 mit to Congress a report on unauthorized changes of

11 subscribers’ selections of providers of telephone ex12 change service or telephone toll service.

13 (2) ELEMENTS.—The report shall include the fol14 lowing:

15 (A) A list of the 10 telecommunications car16 riers that, during the 1-year period ending on

17 the date of the report, were subject to the highest

18 number of complaints of having executed unau19 thorized changes of subscribers from their selected

20 providers of telephone exchange service or tele21 phone toll service when compared with the total

22 number of subscribers served by such carriers.

23 (B) The telecommunications carriers, if

24 any, assessed fines under section 258(e) of the

25 Communications Act of 1934 (as added by sub-
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1 section (c)), during that period, including the

2 amount of each such fine and whether the fine

3 was assessed as a result of a court judgment or

4 an order of the Commission or was secured pur5 suant to a consent decree.

6 SEC. 2. REPORT ON TELEMARKETING PRACTICES.

7 (a) IN GENERAL.—The Federal Communications

8 Commission shall issue a report within 180 days after the

9 date of enactment of this Act on the telemarketing prac10 tices used by telecommunications carriers or resellers or

11 their agents or employees for the purpose of soliciting

12 changes by subscribers of their telephone exchange service

13 or telephone toll service provider.

14 (b) SPECIFIC ISSUES.—As part of the report required

15 under subsection (a), the Commission shall include find16 ings on—

17 (1) the extent to which imposing penalties on

18 telemarketers would deter unauthorized changes in a

19 subscriber’s selection of a provider of telephone ex20 change service or telephone toll service;

21 (2) the need for rules requiring third-party ver22 ification of changes in a subscriber’s selection of

23 such a provider; and

24 (3) whether wireless carriers should continue to

25 be exempt from the verification and retention re-
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1 quirements imposed by section 258(a)(2)(B)(iii) of

2 the Communications Act of 1934 (47 U.S.C.

3 258(a)(2)(B)(iii)).

4 (c) RULEMAKING.—If the Commission determines

5 that particular telemarketing practices are being used with

6 the intention to mislead, deceive, or confuse subscribers

7 and that they are likely to mislead, deceive, or confuse

8 subscribers, then the Commission shall initiate a rule9 making to prohibit the use of such practices within 120

10 days after the completion of its report.

Calendar No. 356

105TH CONGRESS

2D SESSION S. 1618

[Report No. 105–183]

A BILL

To amend the Communications Act of 1934 to imother purposes. ming’’ by telecommunications carriers, and for prove the protection of consumers against ‘‘slamMAY 5, 1998

Reported with amendments