SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Telephone Slamming Prevention Act of 
1998''.

SEC. 2. IMPROVEMENTS OF PROTECTIONS AGAINST UNAUTHORIZED CHANGES OF 
              PROVIDERS OF TELEPHONE SERVICE.

    (a) Clarification of Verification Procedures.--Subsection (a) of 
section 258 of the Communications Act of 1934 (47 U.S.C. 258) is 
amended to read as follows:
    ``(a) Prohibition.--
            ``(1) In general.--No telecommunications carrier shall 
        submit or execute a change in a subscriber's selection 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.
            ``(2) Verification.--The procedures prescribed by the 
        Commission to verify a subscriber's selection of a telephone 
        exchange service or telephone toll service provider shall--
                    ``(A) preclude the use of negative option letters 
                of agency as a verification method; and
                    ``(B) require the retention of the verification of 
                a subscriber's selection in such manner and form and 
                for such time as the Commission considers 
                appropriate.''.
    (b) Liability for Charges.--Subsection (b) of such section is 
amended--
            (1) by striking ``(b) Liability for Charges.--Any 
        telecommunications carrier'' and inserting the following:
    ``(b) Liability for Charges.--
            ``(1) In general.--Any telecommunications carrier'';
            (2) by designating the second sentence as paragraph (3) and 
        inserting at the beginning of such paragraph, as so designated, 
        the following:
            ``(3) Construction of remedies.--''; and
            (3) by inserting after paragraph (1), as designated by 
        paragraph (1) of this subsection, the following:
            ``(2) Subscriber payment option.--
                    ``(A) In general.--A subscriber whose telephone 
                exchange service or telephone toll service is changed 
                in violation of the procedures prescribed under 
                subsection (a) may elect to pay the carrier previously 
                selected by the subscriber for any such service 
                received after the change in full satisfaction of 
                amounts due from the subscriber to the carrier 
                providing such service after the change.
                    ``(B) Payment rate.--Payment for service under 
                subparagraph (A) shall be at the rate for such service 
                charged by the carrier previously selected by the 
                subscriber concerned.''.
    (c) Additional Penalties.--Such section is further amended by 
adding at the end the following:
    ``(c) Civil Penalties.--
            ``(1) In general.--Unless the Commission determines that 
        there are mitigating circumstances, any telecommunications 
        carrier who submits or executes a change in a provider of 
        telephone exchange service or telephone toll service in 
        violation of the procedures prescribed under subsection (a) 
        shall be fined a minimum of $50,000 for the first offense and 
        shall be fined a minimum of $100,000 for any subsequent 
        offense.
            ``(2) Penalties for activities of agents and resellers.--
        The Commission may assess penalties for violations of the 
        procedures prescribed under subsection (a) in the case of a 
        carrier that submits or executes unauthorized changes on behalf 
        of its agents or resellers if the carrier meets such conditions 
        as the Commission shall prescribe in regulations.
    ``(d) Criminal Penalties.--Any person who submits or executes a 
change in a provider of telephone exchange service or telephone toll 
service in willful violation of the procedures prescribed under 
subsection (a)--
            ``(1) shall be fined in accordance with title 18, United 
        States Code, imprisoned not more than 1 year, or both; but
            ``(2) if previously convicted under this subsection at the 
        time of a subsequent offense, shall be fined in accordance with 
        title 18, United States Code, imprisoned not more than 5 years, 
        or both, for such subsequent offense.
    ``(e) Disqualification From Certain Activities.--
            ``(1) Disqualification of persons.--Subject to paragraph 
        (3), any person convicted under subsection (d), in addition to 
        any fines or imprisonment under that subsection, may not carry 
        out any activities covered by section 214.
            ``(2) Disqualification of companies.--Subject to paragraph 
        (3), any company substantially controlled by a person convicted 
        under subsection (d) may not carry out any activities covered 
        by section 214.
            ``(3) Reinstatement.--
                    ``(A) In general.--The Commission may terminate the 
                application of paragraph (1) or (2) of this subsection 
to a person or company, as the case may be, if the Commission 
determines that the termination would be in the public interest.
                    ``(B) Effective date.--The termination of the 
                applicability of paragraph (1) or (2) to a person or 
                company, as the case may be, under subparagraph (A) may 
                not take effect earlier than 5 years after the date on 
                which the applicable paragraph applied to the person or 
                company.
    ``(f) Actions by States.--Whenever the attorney general of a State, 
or an official or agency designated by a State, has reason to believe 
that any person has engaged or is engaging in a pattern or practice of 
unauthorized changes in providers of telephone exchange service or 
telephone toll service of residents in such State in violation of the 
procedures prescribed under subsection (a), the State may bring a civil 
action on behalf of its residents to enjoin such practices, to recover 
damages equal to the actual monetary loss suffered by such residents, 
or both. If the court finds the defendant executed such changes in 
willful and knowing violation of such procedures, the court may, in its 
discretion, increase the amount of the award to an amount equal to not 
more than 3 times the amount awardable under the preceding sentence.
    ``(g) No Preemption of State Law.--Nothing in this section shall 
preempt the availability of relief under State law for unauthorized 
changes of providers of intrastate telephone exchange service or 
telephone toll service.
    ``(h) Reports on Complaints.--
            ``(1) Reports required.--Each telecommunications carrier 
        shall submit to the Commission, as frequently as the Commission 
        shall require, a report on the number of complaints of 
        unauthorized changes in providers of telephone exchange service 
        or telephone toll service that are submitted to the carrier by 
        its subscribers. Each report shall specify each provider of 
        service complained of and the number of complaints relating to 
        such provider.
            ``(2) Utilization.--The Commission shall use the 
        information submitted in reports under this subsection to 
        identify telecommunications carriers that engage in patterns 
        and practices of unauthorized changes in providers of telephone 
        exchange service or telephone toll service.''.
    (d) Treatment of Regulations.--The Federal Communications 
Commission may treat the regulations prescribed under section 258 of 
the Communications Act of 1934 before the date of enactment of this Act 
as regulations prescribed under such section 258, as amended by this 
section, but only to the extent that the regulations prescribed before 
such date of enactment are not inconsistent with the requirements of 
such section, as so amended.
    (e) Report on Slamming Violations.--
            (1) In general.--Not later than October 31, 1998, the 
        Federal Communications Commission shall submit to Congress a 
        report on its enforcement actions against carriers for 
        violations of the procedures prescribed under section 258(a) of 
        the Communications Act of 1934, as in effect on the day before 
        the date of enactment of this Act.
            (2) Elements.--The report shall--
                    (A) set forth the number of complaints against each 
                telecommunications carrier that was subject to more 
                than 100 complaints in 1997 for violation of the 
                procedures referred to in paragraph (1); and
                    (B) describe the penalties assessed against each 
                such carrier for violations of such procedures.

SEC. 3. REVIEW OF ADEQUACY OF LICENSING REQUIREMENTS AND PROCEDURES.

    Not later than 6 months after the date of enactment of this Act, 
the Federal Communications Commission shall submit to Congress a report 
that--
            (1) assesses the adequacy and effectiveness of the 
        licensing requirements and procedures of the Commission under 
        section 214 of the Communications Act of 1934 (47 U.S.C. 214) 
        in determining whether or not a carrier is suitable for 
        licensing under that section; and
            (2) identifies additional actions that the Commission could 
        take under that section in order to ensure that new licenses 
        are not issued under that section to persons or carriers that 
        have previously lost their licenses for violations of section 
        258 of that Act (47 U.S.C. 258) or have otherwise engaged in 
        egregious violations of such section 258.
Output: Telephone Slamming Prevention Act of 1998 - Amends the Communications Act of 1934 (the Act) to require procedures prescribed by the Federal Communications Commission (FCC) to verify a subscriber's selection of a provider of telephone exchange or toll service to:  (1) preclude the use of negative option letters of agency; and (2) require the retention of a subscriber's selection verification. 
Allows a subscriber whose provider is changed in violation of such Act to pay the former provider for all services provided by the unauthorized provider. 
Authorizes civil penalties:  (1) of a minimum of $50,000 for the first offense and $100,000 for any additional offense by carriers who submit or execute an unauthorized change of provider service; and (2) in the case of a carrier that submits or executes unauthorized changes on behalf of its agents or resellers.  Prescribes criminal penalties of a fine and up to one year in prison for a first offense and up to five years in prison for a subsequent offense for such a willful violation by any person. 
Prohibits any person or company convicted of such violations from participating in the provision of universal telecommunications service and related activities authorized under the Act.  Authorizes reinstatement of such participation, but no earlier than five years after such prohibition, if found by the FCC to be in the public interest. 
Authorizes a State to bring an action on behalf of its residents when it has reason to believe that a carrier has or is engaging in a pattern or practice of making such unauthorized changes in service providers. 
Requires each carrier to report to the FCC on the number of complaints of unauthorized provider changes submitted to such carrier by its subscribers.  Directs the FCC to utilize such information to identify carriers that engage in patterns and practices of unauthorized provider changes. 
Directs the FCC to report to the Congress on:  (1) its enforcement against carriers for violations of this Act; (2) the adequacy and effectiveness of carrier licensing requirements and procedures in determining whether a carrier is suitable for such license; and (3) additional actions the FCC could take to ensure that new licenses are not issued to persons or carriers that have previously lost such license due to violations covered by this Act or that have engaged in egregious violations covered by this Act.