II

105TH CONGRESS

2D SESSION S. 1618

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,

and Mr. BRYAN) 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

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,

3 SECTION 1. IMPROVED PROTECTION FOR CONSUMERS

4 AGAINST ‘‘SLAMMING’’ BY TELECOMMUNI5 CATIONS CARRIERS.

6 (a) VERIFICATION OF AUTHORIZATION.—Subsection

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

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

9 ‘‘(a) PROHIBITION.—
2

S 1618 IS

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

2 carrier shall submit or execute a change in a sub3 scriber’s selection of a provider of telephone ex4 change service or telephone toll service except in ac5 cordance with this section and such verification pro6 cedures as the Commission shall prescribe.

7 ‘‘(2) VERIFICATION.—

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

9 subscriber’s selection of a telephone exchange

10 service or telephone toll service provider under

11 this section, the telecommunications carrier

12 shall, at a minimum, require the subscriber—

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

14 to be changed as a result of the selection;

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

16 to select the provider as the provider of

17 that service;

18 ‘‘(iii) to affirm that the subscriber is

19 authorized to select the provider of that

20 service for the telephone number in ques21 tion;

22 ‘‘(iv) to acknowledge that the selection

23 of the provider will result in a change in

24 providers of that service;
3

S 1618 IS

1 ‘‘(v) to acknowledge that the individ2 ual making the oral communication is the

3 subscriber; and

4 ‘‘(vi) to provide such other informa5 tion as the Commission considers appro6 priate for the protection of the subscriber.

7 ‘‘(B) ADDITIONAL REQUIREMENTS.—The

8 procedures prescribed by the Commission to

9 verify a subscriber’s selection of a provider

10 shall—

11 ‘‘(i) preclude the use of negative op12 tion marketing;

13 ‘‘(ii) provide for verification of a

14 change in telephone exchange service or

15 telephone toll service provider in oral, writ16 ten, or electronic form; and

17 ‘‘(iii) require the retention of such

18 verification in such manner and form and

19 for such time as the Commission considers

20 appropriate.

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

22 section shall preclude any State commission from en23 forcing such procedures with respect to intrastate

24 services.
4

S 1618 IS

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

2 This section does not apply to a provider of commer3 cial mobile service, as that term is defined in section

4 332(d)(1) of this Act.’’.

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

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

7 amended by adding at the end thereof the following:

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

9 change in a subscriber’s selection of a provider of tele10 phone exchange service or telephone toll service, the tele11 communications carrier selected shall notify the subscriber

12 in writing, not more than 15 days after the change is exe13 cuted, of the change, the date on which the change was

14 effected, and the name of the individual who authorized

15 the change.

16 ‘‘(d) RESOLUTION OF COMPLAINTS.—

17 ‘‘(1) PROMPT RESOLUTION.—

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

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

20 days, for a telecommunications carrier to re21 solve a complaint by a subscriber concerning an

22 unauthorized change in the subscriber’s selec23 tion of a provider of telephone exchange service

24 or telephone toll service.
5

S 1618 IS

1 ‘‘(B) UNRESOLVED COMPLAINTS.—If a

2 telecommunications carrier fails to resolve a

3 complaint within the time period prescribed by

4 the Commission, then, within 10 days after the

5 end of that period, the telecommunications car6 rier shall—

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

8 the subscriber’s right to file a complaint

9 with the Commission concerning the unre10 solved complaint, the subscriber’s rights

11 under this section, and all other remedies

12 available to the subscriber concerning un13 authorized changes;

14 ‘‘(ii) inform the subscriber in writing

15 of the procedures prescribed by the Com16 mission for filing such a complaint; and

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

18 any evidence in the carrier’s possession

19 showing that the change in the subscriber’s

20 provider of telephone exchange service or

21 telephone toll service was submitted or exe22 cute in accordance with the verification

23 procedures prescribed under subsection (a).

24 ‘‘(2) RESOLUTION BY COMMISSION.—The Com25 mission shall provide a simplified process for resolv-
6

S 1618 IS

1 ing complaints under paragraph (1)(B). The sim2 plified procedure shall preclude the use of interrog3 atories, depositions, discovery, or other procedural

4 techniques that might unduly increase the expense,

5 formality, and time, involved in the process. The

6 Commission shall issue an order resolving any such

7 complain at the earliest date practicable, but in no

8 event later than—

9 ‘‘(A) 150 days after the date on which it

10 received the complaint, with respect to liability

11 issues; and

12 ‘‘(B) 90 days after the date on which it re13 solves a complaint, with respect to damages

14 issues, if such additional time is necessary.

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

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

17 Commission may award damages equal to the great18 er of $500 or the amount of actual damages. The

19 Commission may, in its discretion, increase the

20 amount of the award to an amount equal to not

21 more than 3 times the amount available under the

22 preceding sentence.

23 ‘‘(e) PENALTY.—

24 ‘‘(1) IN GENERAL.—Unless the Commission de25 termines that there are mitigating circumstances,
7

S 1618 IS

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

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

3 not less than $150,000 for each subsequent offense.

4 ‘‘(2) FAILURE TO NOTIFY TREATED AS VIOLA5 TION OF SUBSECTION (a).—If a telecommunications

6 carrier fails to comply with the requirements of sub7 section (d)(1)(B), then that failure shall be treated

8 as a violation of subsection (a).

9 ‘‘(f) RECOVERY OF FINES.—The Commission may

10 take such action as may be necessary—

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

12 section; and

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

14 awarded the subscriber under this section.’’.

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

16 Communications Act of 1934 (47 U.S.C. 258), as amend17 ed by subsection (b), is amended by adding at the end

18 thereof the following:

19 ‘‘(g) ACTIONS BY STATES.—

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

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

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

23 telecommunications carrier has engaged or is engag24 ing in a pattern or practice of changing telephone

25 exchange service or telephone toll service provider
8

S 1618 IS

1 without authority from subscribers in that State in

2 violation of this section or the regulations prescribed

3 under this section, the State may bring a civil action

4 on behalf of its residents to enjoin such unauthor5 ized changes, an action to recover for actual mone6 tary loss or receive $500 in damages for each viola7 tion, or both such actions. If the court finds the de8 fendant willfully or knowingly violated such regula9 tions, the court may, in its discretion, increase the

10 amount of the award to an amount equal to not

11 more than 3 times the amount available under the

12 preceding sentence.

13 ‘‘(2) EXCLUSIVE JURISDICTION OF FEDERAL

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

15 the United States courts of any territory, and the

16 District Court of the United States for the District

17 of Columbia shall have exclusive jurisdiction over all

18 civil actions brought under this subsection. Upon

19 proper application, such courts shall also have juris20 diction to issue writs of mandamus, or orders afford21 ing like relief, commanding the defendant to comply

22 with the provisions of this section or regulations pre23 scribed under this section, including the requirement

24 that the defendant take such action as is necessary

25 to remove the danger of such violation. Upon a prop-
9

S 1618 IS

1 er showing, a permanent or temporary injunction or

2 restraining order shall be granted without bond.

3 ‘‘(3) RIGHTS OF COMMISSION.—The State shall

4 serve prior written notice of any such civil action

5 upon the Commission and provide the Commission

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

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

8 the State shall serve such notice immediately upon

9 instituting such action. The Commission shall have

10 the right—

11 ‘‘(A) to intervene in the action;

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

13 all matters arising therein; and

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

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

16 action brought under this subsection in a district

17 court of the United States may be brought in the

18 district wherein the defendant is found or is any in19 habitant or transacts business or wherein the viola20 tion occurred or is occurring, and process in such

21 cases may be served in any district in which the de22 fendant is an inhabitant or where the defendant may

23 be found.

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

25 of bringing any civil action under this subsection,
10

S 1618 IS

1 nothing in this section shall prevent the attorney

2 general of a State, or an official or agency des3 ignated by a State, from exercising the powers con4 ferred on the attorney general or such official by the

5 laws of such State to conduct investigations or to

6 administer oaths or affirmations or to compel the

7 attendance of witnesses or the production of docu8 mentary and other evidence.

9 ‘‘(6) EFFECT ON STATE COURT PROCEED10 INGS.—Nothing contained in this subsection shall be

11 construed to prohibit an authorized State official

12 from proceeding in State court on the basis of an al13 leged violation of any general civil or criminal stat14 ute of such State.

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

16 has instituted a civil action for violation of regula17 tions prescribed under this section, no State may,

18 during the pendency of such action instituted by the

19 Commission, subsequently institute a civil action

20 against any defendant named in the Commission’s

21 complaint for any violation as alleged in the Com22 mission’s complaint.

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

24 the term ‘attorney general’ means the chief legal of25 ficer of a State.
11

S 1618 IS

1 ‘‘(h) STATE LAW NOT PREEMPTED.—Nothing in this

2 section or in the regulations prescribed under this section

3 shall preempt any State law that imposes more restrictive

4 intrastate requirements or regulations on, or which pro5 hibits unauthorized changes in, a subscriber’s selection of

6 a provider of telephone exchange service or telephone toll

7 service.’’.

8 SEC. 2. REPORT ON TELEMARKETING PRACTICES.

9 (a) IN GENERAL.—The Federal Communications

10 Commission shall issue a report within 180 days after the

11 date of enactment of this Act on the telemarketing prac12 tices used by telecommunications carriers or their agents

13 or employees for the purpose of soliciting changes by sub14 scribers of their telephone exchange service or telephone

15 toll service provider.

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

17 under subsection (a), the Commission shall include find18 ings on—

19 (1) the extent to which imposing penalties on

20 telemarketers would deter unauthorized changes in a

21 subscriber’s selection of a provider of telephone ex22 change service or telephone toll service;

23 (2) the need for rules requiring third-party ver24 ification of changes in a subscriber’s selection of

25 such a provider; and
12

S 1618 IS

1 (3) whether wireless carriers should continue to

2 be exempt from the verification and retention re3 quirements imposed by section 258(a)(2)(B)(iii) of

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

5 258(a)(2)(B)(iii)).

6 (c) RULEMAKING.—If the Commission determines

7 that particular telemarketing practices are being used with

8 the intention to mislead, deceive, or confuse subscribers

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

10 subscribers, then the Commission shall initiate a rule11 making to prohibit the use of such practices within 120

12 days after the completion of its report.

Æ