[Pages S517-S518]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. McCAIN (for himself, Mr. Hollings, Ms. Snowe, Mr. Frist, 
        Mr. Reed, and Mr. Bryan):
  S. 1618. A bill to amend the Communications Act of 1934 to improve 
the protection of consumers against ``slamming'' by telecommunications 
carriers, and for other purposes; to the Committee on Commerce, 
Science, and Transportation.


                 the consumer anti-slamming act of 1998

  Mr. McCAIN. Mr. President, today I am introducing the Consumer Anti-
Slamming Act of 1998. This legislation is aimed at putting an end to an 
abusive and unscrupulous practice that affects thousands and thousands 
of consumers every year. Joining me as a co-sponsor of this legislation 
are Senator Fritz Hollings, the Ranking Member of the Senate Commerce 
Committee, and Senator Frist and Senator Snowe, also Members of the 
Committee. I am most grateful for their support in this important 
effort.
  ``Slamming'' is the unauthorized changing of a consumer's long-
distance carrier. A consumer who is slammed often receives lower-
quality service or is charged higher rates. Sometimes consumers are not 
even aware that they have been slammed until they get their bills. When 
they realize what has happened, they have to go through the aggravation 
of getting their service switched back to their original carrier and 
having their bills adjusted. And they often find it difficult to secure 
compensation for any additional damages they may have incurred.
  Mr. President, last year alone over 20,000 consumers filed slamming 
complaints with the FCC. This is by far the largest category of 
complaints the FCC received. When you stop to consider that only a 
small fraction of all consumers who are slammed actually file 
complaints about it with the Commission, the real dimensions of the 
problem become apparent. And those dimensions are growing: last year's 
20,000 complaints represented a 25 percent increase in the number of 
complaints filed in 1996, despite the fact that the FCC adopted new 
rules to discourage slamming.
  The reality we face is that unless Congress supplements by law what 
the FCC can do by regulation, this already bad problem will only get 
worse. This legislation will attack slamming in two ways: it will 
establish stringent anti-slamming safeguards to deter slamming from 
happening in the first place, and it will enlarge the remedies 
available to punish slammers and make consumers whole if it does. The 
bill does this by prescribing definitive procedures for telephone 
companies to follow, providing alternative ways for consumers to obtain 
redress for having been slammed, and giving federal and nonfederal 
authorities the power to impose tough sanctions, including high fines 
and compensatory and punitive damages.
  The bill takes a straightforward approach. It prohibits a telephone 
company from changing a consumer's telephone service unless the company 
obtains a verbal, written, or electronic verification from the 
subscriber showing that the subscriber has consented to the change. The 
company making the change will be required to retain this verification. 
If a consumer charges a company with slamming, the company has 120 days 
in which to satisfy the consumer's complaint. If it does not do so, the 
company must promptly advise the consumer of that fact, and give the 
consumer a copy of the verification and information about how to pursue 
the complaint with the FCC and about all other available remedies. If a 
company ignores a consumer's slamming complaint, it will be subject to 
the penalty for slamming.

  The bill then provides for simple, streamlined complaint resolution 
procedures at the FCC, requiring the Commission to issue a decision on 
the carrier's liability within 150 days. It broadens the Commission's 
enforcement powers by authorizing it to award both compensatory and 
punitive damages, and requires that damages be awarded within 90 days 
of the liability determination. It directs the FCC not to levy a fine 
of less than $40,000 against first-time offenders and $150,000 for 
repeat offenders absent mitigating circumstances, and it empowers the 
FCC to prosecute slammers who refuse to pay their fines. The bill also 
enables consumers to go after slammers in court instead of at the FCC 
through a state class-action suit. These alternatives--consumer action 
at the FCC and state action in court, backed up by stiff monetary 
penalties--will provide both a sword against past slamming and a shield 
against future slamming.
  Finally, Mr. President, the bill assures that the FCC will detect and 
deter other problems that might result in slamming. It requires the 
Commission to report to Congress on telephone companies' telemarketing 
practices, to recommend whether it would be in the public interest to 
levy penalties directly on telemarketers or on other entities not 
currently subject to the bill's provisions, and to promptly adopt rules 
proscribing any deliberately deceptive or misleading telemarketing 
practices disclosed by the report.
  The bottom line here, Mr. President, is that slamming has to stop, 
once and for all, and this bill means to stop it.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1618

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. IMPROVED PROTECTION FOR CONSUMERS AGAINST 
                   ``SLAMMING'' BY TELECOMMUNICATIONS CARRIERS.

       (a) Verification of Authorization.--Subsection (a) 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.--
       ``(A) In general.--In order to verify a subscriber's 
     selection of a telephone exchange service or telephone toll 
     service provider under this section, the telecommunications 
     carrier shall, at a minimum, require the subscriber--
       ``(i) to acknowledge the type of service to be changed as a 
     result of the selection;
       ``(ii) to affirm the subscriber's intent to select the 
     provider as the provider of that service;
       ``(iii) to affirm that the subscriber is authorized to 
     select the provider of that service for the telephone number 
     in question;
       ``(iv) to acknowledge that the selection of the provider 
     will result in a change in providers of that service;
       ``(v) to acknowledge that the individual making the oral 
     communication is the subscriber; and
       ``(vi) to provide such other information as the Commission 
     considers appropriate for the protection of the subscriber.
       ``(B) Additional requirements.--The procedures prescribed 
     by the Commission to verify a subscriber's selection of a 
     provider shall--
       ``(i) preclude the use of negative option marketing;
       ``(ii) provide for verification of a change in telephone 
     exchange service or telephone toll service provider in oral, 
     written, or electronic form; and
       ``(iii) require the retention of such verification in such 
     manner and form and for such time as the Commission considers 
     appropriate.
       ``(3) Intrastate services.--Nothing in this section shall 
     preclude any State commission from enforcing such procedures 
     with respect to intrastate services.
       ``(4) Section not to apply to wireless.-- This section does 
     not apply to a provider of commercial mobile service, as that 
     term is defined in section 332(d)(1) of this Act.''.
       ``(b) Resolution of Complaints.--Section 258 of the 
     Communications Act of 1934 (47 U.S.C. 258) is amended by 
     adding at the end thereof the following:

[[Page S518]]

       ``(c) Notice to Subscriber.--Whenever there is a change in 
     a subscriber's selection of a provider of telephone exchange 
     service or telephone toll service, the telecommunication 
     carrier selected shall notify the subscriber in writing, not 
     more than 15 days after the change is executed, of the 
     change, the date on which the change was effected, and the 
     name of the individual who authorized the change.
       ``(d) Resolution of Complaints.--
       ``(1) Prompt resolution.--
       ``(A) In general.--The Commission shall prescribe a period 
     of time, not in excess of 120 days, for a telecommunications 
     carrier to resolve a complaint by a subscriber concerning an 
     unauthorized change in the subscriber's selection of a 
     provider of telephone exchange service or telephone toll 
     service.
       ``(B) Unresolved complaints.--If a telecommunications 
     carrier fails to resolve a complaint within the time period 
     prescribed by the Commission, then, within 10 days after the 
     end of that period, the telecommunications carrier shall--
       ``(i) notify the subscriber in writing of the subscriber's 
     right to file a complaint with the Commission concerning the 
     unresolved complaint, the subscriber's rights under this 
     section, and all other remedies available to the subscriber 
     concerning unauthorized changes;
       ``(ii) inform the subscriber in writing of the procedures 
     prescribed by the Commission for filing such a complaint; and
       ``(iii) provide the subscriber a copy of any evidence in 
     the carrier's possession showing that the change in the 
     subscriber's provider of telephone exchange service or 
     telephone toll service was submitted or executed in 
     accordance with the verification procedures prescribed under 
     subsection (a).
       ``(2) Resolution by commission.--The Commission shall 
     provide a simplified process for resolving complaints under 
     paragraph (1)(B). The simplified procedure shall preclude the 
     use of interrogatories, depositions, discovery, or other 
     procedural techniques that might unduly increase the expense, 
     formality, and time involved in the process. The Commission 
     shall issue an order resolving any such complaint at the 
     earliest date practicable, but in no event later than--
       ``(A) 150 days after the date on which it received the 
     complaint, with respect to liability issues; and
       ``(B) 90 days after the date on which it resolves a 
     complaint, with respect to damages issues, if such additional 
     time is necessary.
       ``(3) Damages awarded by commission.--In resolving a 
     complaint under paragraph (1)(B), the Commission may award 
     damages equal to the greater of $500 or the amount of actual 
     damages. The Commission may, in its discretion, increase the 
     amount of the award to an amount equal to not more than 3 
     times the amount available under the preceding sentence.
       ``(e) Penalty.--
       ``(1) In general.--Unless the Commission determines that 
     there are mitigating circumstances, violation of subsection 
     (a) is punishable by a fine of not less than $40,000 for the 
     first offense, and not less than $150,000 for each subsequent 
     offense.
       ``(2) Failure to notify treated as violation of subsection 
     (a).--If a telecommunications carrier fails to comply with 
     the requirements of subsection (d)(1)(B), then that failure 
     shall be treated as a violation of subsection (a).
       ``(f) Recovery of Fines.--The Commission may take such 
     action as may be necessary--
       ``(1) to collect any fines it imposes under this section; 
     and
       ``(2) on behalf of any subscriber, any damages awarded the 
     subscriber under this section.''.
       (c) State Right-of-Action.--Section 258 of the 
     Communications Act of 1934 (47 U.S.C. 258), as amended by 
     subsection (b), is amended by adding at the end thereof the 
     following:
       ``(g) Actions by States.--
       ``(1) Authority of states.--Whenever the attorney general 
     of a State, or an official or agency designated by a State, 
     has reason to believe that a telecommunications carrier has 
     engaged or is engaging in a pattern or practice of changing 
     telephone exchange service or telephone toll service 
     provider without authority from subscribers in that State 
     in violation of this section or the regulations prescribed 
     under this section, the State may bring a civil action on 
     behalf of its residents to enjoin such unauthorized 
     changes, an action to recover for actual monetary loss or 
     receive $500 in damages for each violation, or both such 
     actions. If the court finds the defendant willfully or 
     knowingly violated such regulations, the court may, in its 
     discretion, increase the amount of the award to an amount 
     equal to not more than 3 times the amount available under 
     the preceding sentence.
       ``(2) Exclusive jurisdiction of federal courts.--The 
     district courts of the United States, the United States 
     courts of any territory, and the District Court of the United 
     States for the District of Columbia shall have exclusive 
     jurisdiction over all civil actions brought under this 
     subsection. Upon proper application, such courts shall also 
     have jurisdiction to issue writs of mandamus, or orders 
     affording like relief, commanding the defendant to comply 
     with the provisions of this section or regulations prescribed 
     under this section, including the requirement that the 
     defendant take such action as is necessary to remove the 
     danger of such violation. Upon a proper showing, a permanent 
     or temporary injunction or restraining order shall be granted 
     without bond.
       ``(3) Rights of commission.--The State shall serve prior 
     written notice of any such civil action upon the Commission 
     and provide the Commission with a copy of its complaint, 
     except in any case where such prior notice is not feasible, 
     in which case the State shall serve such notice immediately 
     upon instituting such action. The Commission shall have the 
     right--
       ``(A) to intervene in the action;
       ``(B) upon so intervening, to be heard on all matters 
     arising therein; and
       ``(C) to file petitions for appeal.
       ``(4) Venue; service of process.--Any civil action brought 
     under this subsection in a district court of the United 
     States may be brought in the district wherein the defendant 
     is found or is an inhabitant or transacts business or wherein 
     the violation occurred or is occurring, and process in such 
     cases may be served in any district in which the defendant is 
     an inhabitant or where the defendant may be found.
       ``(5) Investigatory powers.--For purposes of bringing any 
     civil action under this subsection, nothing in this section 
     shall prevent the attorney general of a State, or an official 
     or agency designated by a State, from exercising the powers 
     conferred on the attorney general or such official by the 
     laws of such State to conduct investigations or to administer 
     oaths or affirmations or to compel the attendance of 
     witnesses or the production of documentary and other 
     evidence.
       ``(6) Effect on state court proceedings.--Nothing contained 
     in this subsection shall be construed to prohibit an 
     authorized State official from proceeding in State court on 
     the basis of an alleged violation of any general civil or 
     criminal statute of such State.
       ``(7) Limitation.--Whenever the Commission has instituted a 
     civil action for violation of regulations prescribed under 
     this section, no State may, during the tendency of such 
     action instituted by the Commission, subsequently institute a 
     civil action against any defendant named in the Commission's 
     complaint for any violation as alleged in the Commission's 
     complaint.
       ``(8) Definition.--As used in this subsection, the term 
     `attorney general' means the chief legal officer of a State.
       ``(h) State law not preempted.--Nothing in this section or 
     in the regulations prescribed under this section shall 
     preempt any State law that imposes more restrictive 
     intrastate requirements or regulations on, or which prohibits 
     unauthorized changes in, a subscriber's selection of a 
     provider of telephone exchange service or telephone toll 
     service.''.

     SEC. 2. REPORT ON TELEMARKETING PRACTICES.

       (a) In General.--The Federal Communications Commission 
     shall issue a report within 180 days after the date of 
     enactment of this Act on the telemarketing practices used by 
     telecommunications carriers or their agents or employees for 
     the purpose of soliciting changes by subscribers of their 
     telephone exchange service or telephone toll service 
     provider.
       (b) Specific Issues.--As part of the report required under 
     subsection (a), the Commission shall include findings on--
       (1) the extent to which imposing penalties on telemarketers 
     would deter unauthorized changes in a subscriber's selection 
     of a provider of telephone exchange service or telephone toll 
     service;
       (2) the need for rules requiring third-party verification 
     of changes in a subcriber's selection of such a provider; and
       (3) whether wireless carriers should continue to be exempt 
     from the verification and retention requirements imposed by 
     section 258(a)(2)(B)(iii) of the Communications Act of 1934 
     (47 U.S.C. 258(a)(2)(B)(iii)).
       (c) Rulemaking.--If the Commission determines that 
     particular telemarketing practices are being used with the 
     intention to mislead, deceive, or confuse subscribers and 
     that they are likely to mislead, deceive, or confuse 
     subscribers, then the Commission shall initiate a rulemaking 
     to prohibit the use of such practices within 120 days after 
     the completion of its report.
                                 ______