II

105TH CONGRESS

2D SESSION S. 1740

To amend the Communications Act of 1934 to improve the protections against

the unauthorized change of subscribers from one telecommunications

carrier to another, and for other purposes.

IN THE SENATE OF THE UNITED STATES

MARCH 10, 1998

Ms. COLLINS (for herself and Mr. DURBIN) 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 the

protections against the unauthorized change of subscribers from one telecommunications carrier to another, 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 Slamming

5 Prevention Act of 1998’’.
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1 SEC. 2. IMPROVEMENTS OF PROTECTIONS AGAINST UNAU2 THORIZED CHANGES OF PROVIDERS OF

3 TELEPHONE SERVICE.

4 (a) CLARIFICATION OF VERIFICATION PROCE5 DURES.—Subsection (a) of section 258 of the Communica6 tions Act of 1934 (47 U.S.C. 258) is amended to read

7 as follows:

8 ‘‘(a) PROHIBITION.—

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

10 carrier 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.—The procedures pre16 scribed by the Commission to verify a subscriber’s

17 selection of a telephone exchange service or tele18 phone toll service provider shall—

19 ‘‘(A) preclude the use of negative option

20 letters of agency as a verification method; and

21 ‘‘(B) require the retention of the verifica22 tion of a subscriber’s selection in such manner

23 and form and for such time as the Commission

24 considers appropriate.’’.

25 (b) LIABILITY FOR CHARGES.—Subsection (b) of

26 such section is amended—
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1 (1) by striking ‘‘(b) LIABILITY FOR

2 CHARGES.—Any telecommunications carrier’’ and

3 inserting the following:

4 ‘‘(b) LIABILITY FOR CHARGES.—

5 ‘‘(1) IN GENERAL.—Any telecommunications

6 carrier’’;

7 (2) by designating the second sentence as para8 graph (3) and inserting at the beginning of such

9 paragraph, as so designated, the following:

10 ‘‘(3) CONSTRUCTION OF REMEDIES.—’’; and

11 (3) by inserting after paragraph (1), as des12 ignated by paragraph (1) of this subsection, the fol13 lowing:

14 ‘‘(2) SUBSCRIBER PAYMENT OPTION.—

15 ‘‘(A) IN GENERAL.—A subscriber whose

16 telephone exchange service or telephone toll

17 service is changed in violation of the procedures

18 prescribed under subsection (a) may elect to

19 pay the carrier previously selected by the sub20 scriber for any such service received after the

21 change in full satisfaction of amounts due from

22 the subscriber to the carrier providing such

23 service after the change.

24 ‘‘(B) PAYMENT RATE.—Payment for serv25 ice under subparagraph (A) shall be at the rate
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1 for such service charged by the carrier pre2 viously selected by the subscriber concerned.’’.

3 (c) ADDITIONAL PENALTIES.—Such section is fur4 ther amended by adding at the end the following:

5 ‘‘(c) CIVIL PENALTIES.—

6 ‘‘(1) IN GENERAL.—Unless the Commission de7 termines that there are mitigating circumstances,

8 any telecommunications carrier who submits or exe9 cutes a change in a provider of telephone exchange

10 service or telephone toll service in violation of the

11 procedures prescribed under subsection (a) shall be

12 fined a minimum of $50,000 for the first offense

13 and shall be fined a minimum of $100,000 for any

14 subsequent offense.

15 ‘‘(2) PENALTIES FOR ACTIVITIES OF AGENTS

16 AND RESELLERS.—The Commission may assess pen17 alties for violations of the procedures prescribed

18 under subsection (a) in the case of a carrier that

19 submits or executes unauthorized changes on behalf

20 of its agents or resellers if the carrier meets such

21 conditions as the Commission shall prescribe in reg22 ulations.

23 ‘‘(d) CRIMINAL PENALTIES.—Any person who sub24 mits or executes a change in a provider of telephone ex-
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1 change service or telephone toll service in willful violation

2 of the procedures prescribed under subsection (a)—

3 ‘‘(1) shall be fined in accordance with title 18,

4 United States Code, imprisoned not more than 1

5 year, or both; but

6 ‘‘(2) if previously convicted under this sub7 section at the time of a subsequent offense, shall be

8 fined in accordance with title 18, United States

9 Code, imprisoned not more than 5 years, or both, for

10 such subsequent offense.

11 ‘‘(e) DISQUALIFICATION FROM CERTAIN ACTIVI12 TIES.—

13 ‘‘(1) DISQUALIFICATION OF PERSONS.—Subject

14 to paragraph (3), any person convicted under sub15 section (d), in addition to any fines or imprisonment

16 under that subsection, may not carry out any activi17 ties covered by section 214.

18 ‘‘(2) DISQUALIFICATION OF COMPANIES.—Sub19 ject to paragraph (3), any company substantially

20 controlled by a person convicted under subsection

21 (d) may not carry out any activities covered by sec22 tion 214.

23 ‘‘(3) REINSTATEMENT.—

24 ‘‘(A) IN GENERAL.—The Commission may

25 terminate the application of paragraph (1) or
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1 (2) of this subsection to a person or company,

2 as the case may be, if the Commission deter3 mines that the termination would be in the pub4 lic interest.

5 ‘‘(B) EFFECTIVE DATE.—The termination

6 of the applicability of paragraph (1) or (2) to

7 a person or company, as the case may be, under

8 subparagraph (A) may not take effect earlier

9 than 5 years after the date on which the appli10 cable paragraph applied to the person or com11 pany.

12 ‘‘(f) ACTIONS BY STATES.—Whenever the attorney

13 general of a State, or an official or agency designated by

14 a State, has reason to believe that any person has engaged

15 or is engaging in a pattern or practice of unauthorized

16 changes in providers of telephone exchange service or tele17 phone toll service of residents in such State in violation

18 of the procedures prescribed under subsection (a), the

19 State may bring a civil action on behalf of its residents

20 to enjoin such practices, to recover damages equal to the

21 actual monetary loss suffered by such residents, or both.

22 If the court finds the defendant executed such changes

23 in willful and knowing violation of such procedures, the

24 court may, in its discretion, increase the amount of the
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1 award to an amount equal to not more than 3 times the

2 amount awardable under the preceding sentence.

3 ‘‘(g) NO PREEMPTION OF STATE LAW.—Nothing in

4 this section shall preempt the availability of relief under

5 State law for unauthorized changes of providers of intra6 state telephone exchange service or telephone toll service.

7 ‘‘(h) REPORTS ON COMPLAINTS.—

8 ‘‘(1) REPORTS REQUIRED.—Each telecommuni9 cations carrier shall submit to the Commission, as

10 frequently as the Commission shall require, a report

11 on the number of complaints of unauthorized

12 changes in providers of telephone exchange service

13 or telephone toll service that are submitted to the

14 carrier by its subscribers. Each report shall specify

15 each provider of service complained of and the num16 ber of complaints relating to such provider.

17 ‘‘(2) UTILIZATION.—The Commission shall use

18 the information submitted in reports under this sub19 section to identify telecommunications carriers that

20 engage in patterns and practices of unauthorized

21 changes in providers of telephone exchange service

22 or telephone toll service.’’.

23 (d) TREATMENT OF REGULATIONS.—The Federal

24 Communications Commission may treat the regulations

25 prescribed under section 258 of the Communications Act
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1 of 1934 before the date of enactment of this Act as regula2 tions prescribed under such section 258, as amended by

3 this section, but only to the extent that the regulations

4 prescribed before such date of enactment are not incon5 sistent with the requirements of such section, as so

6 amended.

7 (e) REPORT ON SLAMMING VIOLATIONS.—

8 (1) IN GENERAL.—Not later than October 31,

9 1998, the Federal Communications Commission

10 shall submit to Congress a report on its enforcement

11 actions against carriers for violations of the proce12 dures prescribed under section 258(a) of the Com13 munications Act of 1934, as in effect on the day be14 fore the date of enactment of this Act.

15 (2) ELEMENTS.—The report shall—

16 (A) set forth the number of complaints

17 against each telecommunications carrier that

18 was subject to more than 100 complaints in

19 1997 for violation of the procedures referred to

20 in paragraph (1); and

21 (B) describe the penalties assessed against

22 each such carrier for violations of such proce23 dures.
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1 SEC. 3. REVIEW OF ADEQUACY OF LICENSING REQUIRE2 MENTS AND PROCEDURES.

3 Not later than 6 months after the date of enactment

4 of this Act, the Federal Communications Commission shall

5 submit to Congress a report that—

6 (1) assesses the adequacy and effectiveness of

7 the licensing requirements and procedures of the

8 Commission under section 214 of the Communica9 tions Act of 1934 (47 U.S.C. 214) in determining

10 whether or not a carrier is suitable for licensing

11 under that section; and

12 (2) identifies additional actions that the Com13 mission could take under that section in order to en14 sure that new licenses are not issued under that sec15 tion to persons or carriers that have previously lost

16 their licenses for violations of section 258 of that

17 Act (47 U.S.C. 258) or have otherwise engaged in

18 egregious violations of such section 258.

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