[Congressional Record Volume 144, Number 59 (Tuesday, May 12, 1998)]
[Senate]
[Pages S4683-S4709]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
CONSUMER ANTI-SCAMMING ACT OF 1998
Mr. McCAIN. Mr. President, I ask unanimous consent that the Senate
proceed to the consideration of S. 1618. I ask further consent there be
2 hours of general debate on the bill, equally divided in the usual
form.
I further ask consent that the only first-degree amendments, other
than committee amendments, be the following, and that the first-degree
amendments be subject to relevant second-degree amendments: Manager's
amendment; Collins-Durbin amendment--No. 1, liability, No. 2,
penalties, No. 3, report slamming complaints; a Rockefeller amendment
on Telecom; a Reed amendment on slamming; Levin amendment on billing
information, surety bonds switchless; Feingold amendment on CB
interference; Feinstein amendment on telephone privacy; McCain
amendment that is relevant; a Harkin amendment on telemarketing fraud;
and a Hollings amendment that is relevant.
The PRESIDING OFFICER. Is there objection? Without objection, it is
ordered.
Mr. McCAIN. Upon disposition of all amendments, the bill be read a
third time and the Senate then proceed to vote on passage of S. 1618
with no intervening action or debate; provided further that Senator
Bryan be recognized further to speak on the bill.
The PRESIDING OFFICER. Is there objection?
Mr. DORGAN. Reserving the right to object, did the Senator from
Arizona note Senator Murray in his list of amendments?
Mr. McCAIN. I say to my friend that Senator Murray and Senator Coats
both agreed to drop their amendments on the assurance that these
respective pieces of legislation will be brought up at a later date.
Mr. DORGAN. I have no objection.
The PRESIDING OFFICER. Without objection, it is so ordered.
The clerk will report.
The bill clerk read as follows:
A bill (S. 1618) to amend the Communications Act of 1934 to
improve the protection of consumers against ``slamming'' by
telecommunications carriers, and for other purposes.
The Senate proceeded to consider the bill which had been reported
from the Committee on Commerce, Science, and Transportation, with
amendments, as follows:
(The parts of the bill intended to be stricken are shown in boldface
brackets, and the parts of the bill intended to be inserted are shown
in italic.)
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.]
CONSUMERS.
(a) Verification of Authorization.--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]
carrier or reseller of telecommunications services 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 or reseller 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] the consumer is the
subscriber or 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; and
[``(v) to acknowledge that the individual making the oral
communication is the subscriber; and]
``[(vi)] (v) 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:
``(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 telecommunications
carrier or reseller selected shall notify the subscriber in
writing, not more than
[[Page S4684]]
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.] processed by the
telecommunications carrier or the reseller--
(1) of the subscriber's new carrier; and
(2) that the subscriber may request information regarding
the date on which the change was agreed to 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] days after a
telecommunications carrier or reseller receives notice, for
the telecommunications carrier or reseller 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 or reseller 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 or reseller 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 or reseller'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 or reseller 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.''.] section.
(g) Change Includes Initial Selection.--For purposes of
this section, the initiation of service to a subscriber by a
telecommunications carrier or a reseller shall be treated as
a change in a subscriber's selection of a provider of
telephone exchange service or telephone toll service.
(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)] (h) 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 or
reseller 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 pendency 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)] (i) 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.''.
(d) Report on Carriers Executing Unauthorized Changes of
Telephone Service.--
(1) Report.--Not later than October 31, 1998, the Federal
Communications Commission shall submit to Congress a report
on unauthorized changes of subscribers' selections of
providers of telephone exchange service or telephone toll
service.
(2) Elements.--The report shall include the following:
(A) A list of the 10 telecommunications carriers that,
during the 1-year period ending on the date of the report,
were subject to the highest number of complaints of having
executed unauthorized changes of subscribers from their
selected providers of telephone exchange service or telephone
toll service when compared with the total number of
subscribers served by such carriers.
(B) The telecommunications carriers, if any, assessed fines
under section 258(e) of the Communications Act of 1934 (as
added by subsection (c)), during that period, including the
amount of each such fine and whether the fine was assessed as
a result of a court judgment or an order of the Commission or
was secured pursuant to a consent decree.
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 resellers 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 subscriber'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
[[Page S4685]]
shall initiate a rulemaking to prohibit the use of such
practices within 120 days after the completion of its report.
Mr. McCAIN addressed the chair.
The PRESIDING OFFICER. The Senator from Arizona.
Mr. McCAIN. Mr. President, today the Senate begins consideration of a
series of bills dealing with critical issues raised by the
transformation and rapid growth of the telecommunications industry.
This transformation in telecommunications is being driven by constant
changes in telecommunications technology. The small mass media universe
of fifty years ago, occupied by a few large AM radio stations, has
given way to an electronic marketplace teeming with alternative sources
of information and entertainment. FM radio, TV, cable and satellite
television, and the Internet have become sometimes competing, and
sometimes complementary, mass media outlets. In the world of
telecommunications, the days of Ma Bell were numbered by the advent of
microwave radio and satellite technology. First there was competition
for long-distance service; then wireless services appeared and
exploded. Cellular radio, paging, and now personal communications
services--all are now an indispensable part of everyday American life.
For those of you old enough to remember back twenty years--and I
think the Presiding Officer can do that--think of how different your
life is today than it was then. Most of these changes were due to the
growth of telecommunications. For those of you too young to remember
that far back, I can assure you that twenty years from now, you will
look back on today and marvel at the changes you will have seen.
Today the driving force in telecommunications is digital technology.
Digital technology has not only made some of today's new services
possible--it is also causing formerly different services to converge,
and it is promising Americans new and exciting services in the future.
The convergence of your television and your computer is on the horizon.
So also is a telephone that can simultaneously translate conversations
held in different languages.
We need no longer talk about the Information Age in the future tense.
It's here and now, and it's reshaping our world.
As telecommunications technology changes the way we live, our laws
must change to keep pace. The growth of competition in the long-
distance industry now gives consumers over 500 companies to choose
from. Because of that competition, the consumer is better off. But the
growth in long-distance competition has also given rise to cut-throat
marketing practices.
The first bill we will consider and debate today is S. 1618, the
Consumer Anti-Slamming Act of 1998. It is offered by myself and my good
friend and distinguished colleague Senator Fritz Hollings of South
Carolina, the distinguished Ranking Democrat on the Commerce Committee.
Joining us as cosponsors are the distinguished Majority Leader, Senator
Lott, and Senators Frist, Bryan, Johnson, Kerry, Abraham, Shelby,
Snowe, Feingold, and Bob Smith.
The Consumer Anti-Slamming Act is designed to put a stop, once and
for all, to inexcusable marketing tactics that lead to a consumers'
long-distance telephone company being switched without consent. Right
now two consumers are ``slammed'' every minute of every day, which
makes slamming far and away the most pervasive consumer problem in
telecommunications today.
We will then shift our focus to Internet-related issues. The
information technology industry is estimated to account for one-third
of our real economic growth. Currently, electronic commerce is in the
neighborhood of several billion dollars per year, but that figure is
expected to skyrocket into hundreds of billions in only a few years
more.
The growth and continued expansion of the information technology
industry has vastly increased the need for highly-skilled individuals
to work in this industry. We need these workers, and their skills, to
retain our nation's leadership in Information Age technology.
Unfortunately, however, our country isn't producing them in the numbers
needed. Therefore, temporary solutions must be found to enable our
high-tech industries to remain competitive, while we address problems
in the educational system that have led to our inability to produce the
needed workforce in this country.
S. 1723, The American Competitiveness Act of 1998, will increase the
yearly cap on H-1B immigration visas for skilled workers, while
creating new educational opportunities for Americans to join the
information technology workforce that is now so critically short of the
skilled personnel we need.
Mr. President, I am proud to be a cosponsor of this measure. I
commend my colleague, Senator Abraham, for his leadership on this
issue, and I am proud to be a cosponsor of this bill in company with
Senators Hatch, DeWine, Specter, Grams, Brownback, Ashcroft, Hagel,
Bennett, Mack, Coverdell, Lieberman, Burns, Senator Bob Graham of
Florida, and Senator Gordon Smith of Oregon. I would also like to
compliment Senator Feinstein for her efforts at reaching a consensus on
this issue with her fellow members of the Judiciary Committee.
Should we fail to pass this measure, our industry will not be able to
access the wealth of talent not currently available here at home. This
reality will have a quantifiable negative impact on American jobs and
American industry. Without passage of this bill, we are forcing
companies to shift jobs overseas.
A letter signed by the CEOs of fourteen leading companies, including
Microsoft's Bill Gates, Netscape's James Barksdale, and Texas
Instruments' Thomas Engibous, put this point well:
Failure to increase the H-1B cap and the limits that will
place on the ability of American companies to grow and
innovate will also limit the growth of jobs available to
American workers * * * Failure to raise the H-1B cap will aid
our foreign competitors by limiting the growth and innovation
potential of U.S. companies while pushing talented people
away from our shores * * * [this] could mean a loss of
America's high technology leadership in the world.
Mr. President, our competitors abroad are waiting for the opportunity
to surpass us. They can only do this if we allow them to. We cannot
allow our high-tech industries to be hamstrung by an arbitrary cap on
immigration of skilled workers.
The Internet has provided widespread access to enormous quantities of
information. This in turn has made it necessary to update our copyright
laws to protect the rights of copyright holders in the Information Age.
S. 2037, The Digital Millennium Copyright Act, is aptly named. As
digitization of commerce, education, entertainment, and a host of other
online applications proceeds, international copyright agreements have
to be maintained and updated. In addition, the rights of copyright
owners need to be assured as technology progresses. That not only
safeguards the copyright holder's rights, but also assures that new
material will be freely produced and made available to all Internet
users.
Finally, Mr. President, while information technology has opened up
whole new avenues for commerce, learning, and education, it has also
opened up whole new approaches to shady dealings and unfair business
practices, and the public should be protected from these. And while we
continue to work to prevent these occurrences, we must also work to
ensure that existing consumer protection laws function as they were
intended, and do not produce unintended or unfair results against
either consumers or companies.
My colleague, Senator Gramm, has taken a keen interest in these
issues as they are embodied in the Private Security Litigation Reform
Act signed into law during the 104th Congress. Senator Gramm has led
the Securities Subcommittee in reviewing the effectiveness of this law,
and he and his fellow Subcommittee members have found it to be
insufficient in some areas dealing with class-action suits,
particularly those brought in state rather than federal courts, and
those in which a valid cause of action has been fraudulently or
inadequately presented.
Although frivolous security class actions are a particular problem
for the high-tech industry, to the extent consumers have been harmed
the industry must be held accountable. Therefore, the issue of
securities reform is deserving of debate in the Senate.
[[Page S4686]]
Mr. President, these four bills, although apparently so different, do
have a unifying thread just as old and new methods of communicating are
united by a common concern. Whether we are talking about telephones or
advanced computer technology, analog or digital, data or video, our
laws must be sure that all segments of the telecommunications industry
respond to the consumers' needs, respect consumers' rights, and provide
the services America needs to take us into the unimaginably exciting
and challenging future that lies before us.
These bills are the first of a series of legislative initiatives the
Senate will consider this session that together are intended to achieve
these goals.
Mr. President, with that, I conclude the overview of these four
bills.
Mr. President, concerning S. 1618, the Consumer Anti-Slamming Act,
consumers across the country are unfortunately all too familiar with a
practice known as ``slamming.'' Slamming is the unauthorized changing
of a consumer's long-distance telephone company. It is a problem that
continues to harm consumers despite efforts at the Federal and State
level to fight it. That is why we need to ensure the passage of the
slamming legislation that I have introduced. The distinguished Senator
from South Carolina, Senator Hollings, who serves as the ranking member
of the Senate Commerce Committee, joins me in cosponsoring this bill. I
thank him for his invaluable assistance in developing this important
piece of legislation to restore and safeguard consumer rights. I also
thank the other cosponsors of this bill: Senators Lott, Snowe, Reed,
Frist, Bryan, Dorgan, Johnson, Harkin, Kerry, Inouye, Abraham, Baucus,
Smith, and Bob Smith, for joining me in this effort.
Mr. President, slamming isn't just persisting, it is increasing.
Slamming complaints are the fastest growing category of complaints
reported to the Federal Communications Commission, having more than
tripled in numbers since 1994. Last year, 44,000 consumers filed
slamming complaints with the FCC. That is a 175 percent increase from
the 16,000 complaints the FCC received in 1996.
The extent of the slamming problem is even worse than indicated by
the number of complaints filed at the FCC. According to the National
Association of State Utility Consumer Advocates, slamming is now the
most common consumer complaint received by many State consumer
advocates. It has been estimated that as many as 1 million consumers
are switched annually to a different long-distance telephone company
without their consent. The severity of the slamming problem was
exemplified just days ago by a new report that 4,800 residents of one
small town in Washington State, about 70 percent of the town, were
slammed at one time.
For several years, the FCC has attempted unsuccessfully to deter
slamming, yet aggressive long-distance telemarketers continue to
mislead consumers.
On April 21st, the Federal Communications Commission imposed a $5.7
million fine on a small long-distance company that had been slamming
consumers for years. While this is by far the largest fine the FCC has
ever levied for this offense, the FCC took action only after receiving
over 1,400 complaints about this company over the course of 2 years,
and by now the slammer has disappeared. This instance shows yet again
that the FCC's current rules are completely ineffective in preventing
slamming.
S. 1618 is a bill designed to stop slamming once and for all. This
legislation establishes stringent antislamming safeguards as well as
stringent civil and criminal penalties that will discourage this
practice. It prescribes definitive procedures for carriers to follow
when making carrier changes, provides a menu of remedies for consumers
that have been slammed and gives Federal and State authorities the
power to impose tough sanctions, including high fines and compensatory
punitive damages.
Mr. President, these measures, in addition to those that the States
may develop, will ensure that consumers are afforded adequate
protection against slamming. In light of the seriousness and scope of
the slamming problem, I urge my colleagues to support this legislation.
Mr. President, I ask unanimous consent that a letter from the AARP,
along with a Monday, May 11 article in USA Today be printed in the
Record.
There being no objection, the material was ordered to be printed in
the Record, as follows:
AARP,
Washington, DC, May 11, 1998.
Hon. John McCain,
Russell Senate Office Building,
Washington, DC.
Dear Senator McCain: The American Association of Retired
Persons (AARP) commends you for introducing S. 1618, a bill
to improve the protection of consumers against the
unauthorized switching of long distance telephone service
providers. According to the FCC, this practice known as
``slamming,'' is the fastest growing consumer complaint in
telecommunications. We believe that the provisions in your
bill to amend the Communications Act of 1934 to curtail
``slamming'' are good for consumers.
S. 1618 includes most of the elements necessary to close
off loopholes in the existing law that make telephone
subscribers vulnerable to fraudulent or deceptive practices.
Key provisions would:
Define switching verification procedures--requiring the
telecommunications carrier to receive a series of
affirmations from the subscriber prior to verifying the
switch;
Preclude the use of negative option marketing--ending this
onerous practice of switching subscribers for failure to tell
the carrier that they are not interested;
Require a detailed, written notice of change to
subscriber--notify the subscriber in writing, within 15 days
after the change, of the change, the date on which the change
was effected and the name of the individual who authorized
the change;
Award treble damages to wronged parties--providing the FCC
with authority in resolving a complaint to increase the
amount of the original award times three; and
Punish violating carriers with severe first and second
offense fines--imposing fines of not less than $40,000 for
the first offense and not less than $150,000 for each
subsequent offense, a substantial deterrent to violating
carriers.
AARP believes that, as competition develops throughout the
telecommunications industry, all telephone carriers should be
subject to provisions similar to these. We also believe that
the issues attendant to the practice of ``cramming'' need to
be addressed in the near future. We look forward to working
with you toward that goal. In the meantime, the provisions of
this bill move consumer protections in the right direction.
The Association stands ready to work with you as you seek
final passage of this important piece of legislation.
Sincerely,
Horace B. Deets,
Executive Director.
____
[From USA TODAY, May 11, 1998]
Callers Fall Victim to Telcom War
complaints of slamming, phony charges skyrocket
(By Steve Rosenbush)
New York.--Jean Franklin, a Salem, Ore., homemaker, was
billed last year for several hundred dollars worth of adult-
chat phone calls.
American Billing & Collection sent the invoices to her
home, but the calls--which eventually totaled $1,100--were
billed to a telephone number she and her husband, Kenneth,
canceled years earlier when they moved.
She'd been ``crammed''--billed for a phone service she
never bought.
``I was surprised, but I thought it was a mistake that
could be easily corrected,'' Franklin says. Instead, American
Billing, which declined to comment for this story, eventually
turned the matter over to a collection agency.
Her credit report marred by reported bad debt, Franklin
complained to the California attorney general's office and
the Federal Trade Commission. Last month, regulators filed
charges in U.S. District Court in Los Angeles accusing
American Billing and two other phone companies of using
deceptive and unfair practices to bill people for adult-chat
services. But the bad debt is still on Franklin's record.
It's a tale from the trenches of the telecom wars, where
millions of consumers like Franklin are suffering the
collateral damage. Armies of companies have poured into the
increasingly deregulated $200 billion U.S. market,
overwhelming the limited resources of regulators with
aggressive and sometimes illegal practices.
Desperate for a tactical advantage, other companies are
rushing to market with innovative products and services that
sometimes don't work. Make an evening phone call on a
congested network, such as the one in Los Angeles, and seven
times out of 100 it won't go through on the first attempt,
says Bellcore, a telecommunications research company. AT&T
says users of its directory assistance get the number they
ask for only nine out of 10 times. Buy a prepaid calling
card, and there's a good chance the call won't go through.
Many of the basic services and products that people took for
granted in the monopoly era simply don't work--or don't work
well--today. Annual telephone-related complaints and
inquiries have soared more than tenfold since 1990; the
Federal Communications Commission logged 44,035 in 1997
alone.
[[Page S4687]]
``Here is the dark side of competition and choice,'' says
FCC Chairman William Kennard. ``Sure, life was easier when
they had no choice,'' Kennard says. ``But that is not what
consumers want.''
Or is it?
Long-distance rates have fallen 60% since the 1984
dismantling of AT&T, and consumers can choose from hundreds
of new carriers. ``But it was a lot easier to use the phone
before they broke up AT&T. And I don't think you really save
that much money now because companies charge you for other
things,'' says Alan Kohn of Woodbridge, N.J., who was
dismayed when he couldn't find a pay phone that accepted his
calling card.
Statistics from phone companies, consumer advocates and
state and federal regulators don't begin to capture the depth
of consumer frustration with phone services.
headaches everywhere
Directory assistance costs more, often requires a wait, and
increasingly provides wrong numbers. The toll on callers is
more than $50 million a year if just 5% of the 1.5 billion
long-distance information calls are inaccurate. Not to
mention the frustration of dealing with computer-generated
voices instead of operators. Carriers like AT&T blame local
phone companies that won't share their databases of names and
phone numbers.
Prepaid calling cards, ``On the whole, they are worth it,''
says Dan Singhani, 45, a newsstand owner in Manhattan who
uses them several times a week to call relatives in India and
Hong Kong. ``But some cards don't work. . . . Or you are
talking and the line is disconnected.''
Pay phone charges. Muriel Flore thought she was using her
calling card when she stopped during an interstate trip to
call her vet and check on her sick cat. She was stunned
several weeks later when Oncor Communications billed her more
than $12 for the five-minute call. Oncor agreed to cancel the
bill after Flore complained to the FCC. The company did not
return phone calls for this story.
Fragile phones. A micro-processor-driven telephone ruined
by just a drop of water that seeps through the keypad.
``slammed''
By far, the bulk of consumer complaints to the FCC are
about slamming: switching a customer's long-distance service
without permission. Last year, the FCC received more than
20,000 complaints. But the actual incidence of slamming is
much higher. AT&T alone says 500,000 of its 80 million
residential customers were slammed last year.
``I resented the fact that I had been changed without
notice,'' says Jim Pringle of Pittsboro, N.C. ``But what I
resented almost more was that somebody benefited from the lag
between when it occurred and when I realized it.''
Ronald J. Carboni thinks a disgruntled neighbor, playing a
prank, switched his phone service from Sprint to National
Telephone & Communications. Carboni, 52, was charged $8.92, a
fee National immediately dropped once notified of the
problem. Records show someone had forged Carboni's name as
``Batboni.'' National never confirmed the order.
Lawmakers and regulators are cracking down, though slamming
complaints represent only a fraction of the 50 million
changes that consumers made in their long-distance service
last year. Last month the FCC levied the biggest slamming
fine in history, a $5.7 million penalty against the Fletcher
Cos., run by a 30-year-old fugitive named Daniel Fletcher.
The FCC has vowed to increase penalties and force companies
to return money they collect from slamming victims. In
California, a new law requires long-distance carriers to hire
a third party to authenticate every request for service
changes.
The phone companies are policing themselves, too. AT&T
filed lawsuits in March against three independent sales
agents it suspected of the problem. AT&T says agents who
account for less than 5% of the company's consumer long-
distance sales were responsible for about two-thirds of
slamming complaints against AT&T.
billed and bilked
Scams are multiplying as deregulation spreads. Complaints
of cramming--cases like that of Jean Franklin--are the newest
twists, and they are soaring.
A host of small, independent companies are billing
customers--sometimes on their local phone bills--for
information services, such as horoscopes and sports scores,
that they didn't order. Some people are billed at random;
others are the victims of carelessness and error by carriers
and billing companies.
The FCC has processed 1,123 complaints of cramming since it
began tracking them last December. And last week, Bell
Atlantic cracked down on cramming, in effect saying that it
would no longer allow 20 smaller companies to place their
charges on Bell Atlantic bills.
The company, which serves more than 41 million customers
from Virginia to Maine, said it is receiving hundreds of
complaints a day and that more than 80% are legitimate.
Floyd Brown's cramming case is typical. Brown, 76, of
Carlsbad, Calif., said American billing charged his mother
earlier this year for $44.55 worth of information services it
said she had purchased over the phone. ``She had been dead
for a year and a half,'' Brown says.
And Franklin and her husband are still struggling to
resolve their dispute with the company. The bad debt remains
on their credit reports, and shame has kept them from
applying for loans to buy a new car and a new house. ``It's
not going to be over until that item is removed from our
credit report,'' Franklin says.
Mr. McCAIN. The AARP writes:
The American Association of Retired Persons (AARP) commends
you for introducing S. 1618, a bill to improve the protection
of consumers against the unauthorized switching of long
distance telephone service providers. According to the FCC,
this practice, known as ``slamming'' is the fastest growing
consumer complaint in telecommunications. We believe that the
provisions in your bill to amend the Communications Act of
1934 to curtail ``slamming'' are good for consumers.
* * * * *
AARP believes that, as competition develops throughout the
telecommunications industry, all telephone carriers should be
subject to provisions similar to these. We also believe that
the issues attendant the practice of ``cramming'' need to be
addressed in the near future. We look forward to working with
you toward that goal. In the meantime, the provisions of this
bill move consumer protections in the right direction. The
Association stands ready to work with you as you seek final
passage of this important piece of legislation.
Mr. President, yesterday there was an article in the USA Today which
is included in the Record, and it says: ``Callers fall victim to
telecom war, complaints of slamming, phony charges skyrocket.''
Jean Franklin, a Salem, Ore., homemaker, was billed last
year for several hundred dollars worth of adult-chat phone
calls.
American Billing & Collection sent the invoices to her
home, but the calls--which eventually totaled $1,100--were
billed to a telephone number she and her husband, Kenneth,
canceled years earlier when they moved.
She'd been ``crammed''--billed for a phone service she
never bought.
* * * * *
Long-distance rates have fallen 60% since the 1984
dismantling of AT&T, and consumers can choose from hundreds
of new carriers. ``But it was a lot easier to use the phone
before they broke up AT&T . . .,'' says Allan Kohn . . . who
was dismayed when he couldn't find a pay phone that accepted
his calling card.
Mr. President, by far the bulk of consumer complaints at the FCC are
about slamming, switching consumers long-distance service without
permission. And it goes on to talk about the 20,000 complaints.
AT&T alone says 500,000 of its 80 million residential customers were
slammed last year.
``I resented the fact that I had been changed without
notice,'' says Jim Pringle of Pittsboro, N.C. ``But what I
resented almost more was that somebody benefited from the lag
between when it occurred and when I realized it.''
Mr. President, I recognize on the floor Senator Collins who has been
heavily involved in this issue. And after Senator Dorgan speaks, I
think she will seek to address her amendment. But I want to thank her
for her involvement in this issue, the hearings that she held in her
subcommittee and the enormous contributions she has made in causing
this bill to progress.
I yield the floor.
Mr. DORGAN addressed the Chair.
The PRESIDING OFFICER (Mr. Smith of Oregon). The Senator from North
Dakota.
Mr. DORGAN. Mr. President, let me add my congratulations to Senator
Collins on the work that she has done, and certainly to the Senator
from Arizona, Senator McCain, and Senator Hollings. Senator Hollings
has asked me to be present for him. He is tending to other Senate
business at the moment.
This is an important piece of legislation. We appreciate very much
the bipartisan work that was done to bring it to the floor of the
Senate.
I would like to just, for a couple of moments, give an overview of
where we are and then bring it to this piece of legislation--and I will
be rather brief--after which I will be interested in hearing from the
Senator from Maine as well.
The breathtaking changes in telecommunications and in the
telecommunications industry in recent years have been quite remarkable.
No one could have anticipated what we would see in technology and in
opportunities that exist from the changing technology.
I, in a speech some while ago, held up a vacuum tube, a small vacuum
tube that we are all familiar with, and then I held up next to it a
little computer
[[Page S4688]]
chip that was about one-half the size of my little fingernail, and I
said, ``The little computer chip equals 5 million vacuum tubes.''
Sometimes we forget to equate what is happening in these little chips
and in their power and in their capability, but it is really quite
remarkable what has happened to speed, storage density, memory and all
the other things that relate to these breakthroughs.
The CEO of one of the large companies, IBM as a matter of fact, in a
report to the annual meeting that I had read, I guess, about 6 or 8
months ago, talked about the research they are doing in the area of
storage density, which kind of relates to all this technology. And I
was struck by what he said. He said we were on the verge of a
breakthrough with respect to storage density, such that the time was
near, he thought, when we would be able to store all of the volumes of
work at the Library of Congress, which represents the largest volume of
recorded human history anywhere on Earth--we would be able to store all
of that, 14 million volumes of work, on a wafer the size of a penny.
Think of that--carrying around in your pocket to slip into a laptop a
wafer the size of a penny that contains 14 million volumes of work.
Unthinkable? No. It is where technology is heading.
In my little high school, where I graduated in a class of nine, we
had a library the size of a coat closet. That high school now has
access to the largest libraries in the world through the Internet. All
of this is made possible by the breakthroughs in technology and the
telecommunications industry and the development of the information
superhighway. Many of us are very concerned, as public policy develops
in all of these areas, that we make certain that the benefits of all of
this are available to all Americans, that the on-ramps and off-ramps
for the information superhighway, yes, stop even in my hometown, in my
small county.
So as we develop legislation such as the Telecommunications Act,
which Congress passed a couple years ago, and try to evaluate what
kinds of policy guidance we can give as this industry grows, it is very
important that we do this right.
I might say, as I begin, that I am concerned about universal service,
about the availability of universal service--especially in telephone
service--in the years ahead, in the high-cost areas and rural areas of
our country. I hope very much that the Federal Communications
Commission will make a U-turn with respect to some of the policy
decisions they have made which I think threaten universal service in
the future. There is still time for them to make some recalculations
and some different policy judgments. I have met with Chairman Kennard
and others, and I hope very much that they will make some different
judgments than what we saw from the previous Chairman of the FCC, which
I think will implement the Telecommunications Act, which is very
detrimental to high-cost areas and rural areas of the country. We are
going to debate that more in the months and years ahead.
Let me talk specifically about the telecommunications area that does
work and works well. One of the areas that works and provides the
fruits and benefits of competition to virtually every American is the
competition in long-distance telephone service. This is an area--long-
distance telephone service--in which there is robust, aggressive
competition. Anywhere you look, you will find a telephone company
engaged in selling long-distance service. If you don't think so, just
sit down for dinner some night, and somebody will give you a cold call
from an office somewhere in a State far away, and they will be trying
to sell you their long-distance service. They apparently only dial at
mealtime--at least into our home. But I think every American is
familiar with these telephone calls--``Won't you take our long-distance
service?'' As I indicated, up to 500 companies are robustly competing
for the consumer dollar. What has happened to the cost of long-distance
service? It has gone down, down, down. That represents the fruit and
the benefit of good competition.
But one other thing has happened with respect to this competition. As
is the case where there is robust competition, there are also some bad
actors. In this case, ``bad actors'' means that people get involved in
this business of trying to sell a long-distance service to a customer
that already has a long-distance provider but decides they are going to
sell it the shortcut way--they are not even going to ask the consumer
whether they want to change providers. Through sleight of hand, they
are going to engage in a technological stealing of sorts; they are
going to switch someone's long-distance service and not tell them about
it. That is, in fact, stealing; that is, in fact, a criminal act. One
might ask, is that happening a lot? Yes, it is happening a lot.
Here is a story about the king of slammers. I was trying to evaluate
where this word ``slammer'' came from. Frankly, nobody knows where the
word ``slammer'' came from. But the definition of ``slammer,'' as it is
used in this context, is someone who goes in and changes someone else's
long-distance carrier without telling them and without authorization.
It is stealing. It is criminal.
The king of slammers is Daniel Fletcher. Let me cite him as an
example. The head of the FCC, William Kennard, said, ``This is truly a
bad actor. He is a felon who clearly had intent to violate the FCC's
rules, and we're hitting him hard.'' But not too hard, because they
haven't found him. He changed a half-million people's long-distance
carrier, and he, apparently, made $20 million. Is that stealing? Yes.
Is that petty cash? No; that is grand theft. The fact is, that goes on
across the country all too often.
Yesterday, Mr. President, on the floor, I held a clipping from the
newspaper in North Dakota. It just so happened that, coincidentally,
the North Dakota papers had a story that said that the North Dakota
Attorney General had been the victim of slamming. Someone had decided
to change the attorney general's long-distance carrier without asking
her.
Now, am I suggesting that slammers are stupid? Well, not always. They
certainly seem to steal a lot of money. But is it a stupid slammer that
decides they are going to change the long-distance service of an
attorney general of a State without telling them? Yes, that is pretty
stupid. But this is not about being stupid or funny, it is about
stealing. The hearings that were held by Senator Collins, and others,
and the work done has been to respond to a very real problem that is
significant.
Now, the FCC complaints about this slamming--the unauthorized change
of a long-distance service--increased from 2,000 five years ago, to
20,000 last year. The FCC indicates that there is a substantial amount
of slamming going on, evidenced by the complaints to the FCC. The GAO
did a report that, in fact, was rather critical of the FCC's
enforcement on these slamming issues, saying that the antislamming
measures ``do little to protect the consumers from slamming.''
We have a problem; yet, we are not able to solve that problem with
the regulatory agency, either because it is not doing what it ought to
do, it doesn't exert enough energy, or perhaps it doesn't have enough
authority. But whatever the reason--and it might be a combination of
all of those reasons --this problem is not going away; it is growing
much, much worse.
In 1997, with 20,000 complaints, the FCC obtained only 9 consent
decrees from companies nationwide that paid a total of $1.2 million in
fines because of slamming. In the same year, California, by comparison,
suspended one firm for 3 years because of slamming, and fined it $2
million, and ordered it to repay another $2 million to its customers.
One State, the State of California, did far more than the FCC. I hope
that this piece of legislation we will pass will give the FCC the
authority, energy, and resources to join us and do what we must do to
respond to this slamming.
Now, let me read what the legislation does. It strengthens the
antislamming laws and requires the FCC to establish the following
consumer protections:
One, it prohibits a carrier from changing a local subscriber's long-
distance service, unless the carrier follows the minimum verification
procedures prescribed by the FCC--sets up specific procedures that must
be followed.
Two, it requires carriers to keep an oral, written, or electronic
record of a subscriber authorizing a change in their carrier.
[[Page S4689]]
Three, it requires a carrier to send a written notification to the
consumer informing them of the changed service within 15 days of the
change in service.
Four, it requires carriers to provide consumers with the information
and procedures necessary to file a complaint at the FCC.
Five, it requires carriers to provide slammed customers with any
evidence that authorized that change.
It allows the complaint process to impose stiff penalties, up to
$150,000, and a range of other important issues that I think will give
us much more enforcement against this slamming process and the slamming
practice across the country.
Once again, let me conclude by saying that this is not some minor
nuisance issue; this is an issue in which some have taken advantage of
consumers who are the victims. It is true that the company that has
been changed is also a victim, a company that was serving a customer
and is now not serving the customer.
But the ultimate victim here are the consumers who only understand
later after they have taken a look at a bill somewhere and discover
they are the ones that have been victimized.
This bill also, incidentally, would prohibit some other practices
that are deceptive. There are a whole range of practices that have
allowed people or persuaded people to sign a coupon in exchange for
having an opportunity or a chance to get something, or get a free door
prize, or get some sort of free gift. So you sign this little coupon.
On the bottom in tiny little script it tells you that despite the fact
that you have never read it, you have just signed away and changed your
long-distance carrier. That is cheating. Where I come from, and I think
where all of us come from, when you cheat and steal, somebody ought to
be after you to get you.
That is exactly what we want to have happen with respect to the
enforcement against this kind of behavior and practice that is making
victims of millions of Americans all across the country.
This one fellow took one-half million households, changed their long-
distance carrier, got $20 million into an income stream into shell
corporations that he set up, and now he is gone. What does this mean?
It means that one-half million Americans were cheated. This fellow
stole from not only the companies but especially the Americans who
expected to have a long-distance service they had contracted for and
discovered someone else changed it.
Let me again, as I began, say thank you to Senator Collins to Senator
McCain, and to Senator Hollings and so many other. I am a cosponsor of
this, as are a good number of our colleagues in the Senate, because it
is good legislation and will do the right thing for consumers in this
country.
I yield the floor.
Mr. McCAIN addressed the Chair.
The PRESIDING OFFICER. The Senator from Arizona is recognized.
Mr. McCAIN. Mr. President, I thank Senator Dorgan for his kind
remarks but also for his very clear and concise depiction of the issue
that we are addressing. I think it is important that the record reflect
the entirety of his remarks.
Mr. President, I ask unanimous consent that the pending committee
amendments be agreed to and considered as original text for purpose of
further amendments.
The PRESIDING OFFICER. Without objection, it is so ordered.
The committee amendments were agreed to.
Mr. McCAIN. Mr. President, I yield the floor.
Mr. HOLLINGS. Mr. President, I rise today in support of legislation
that is necessary to stem the tide of one of the most annoying anti-
consumer practices, known as slamming. Slamming occurs when a preferred
telecommunications service provider of the consumer is changed without
the consent of the consumer. This legislation enhances the verification
and other procedures that carriers must use to ensure that the consumer
consents to the change in its service provider. It also enhances the
enforcement authority of the FCC, the Department of Justice, and the
State attorneys general and imposes greater penalties and fines to
address the problem of slamming.
Slamming is not a new problem. Many consumers have been victims of
slamming, suddenly discovering that their phone service is no longer
being provided by their carrier of choice. Instead, it is being
provided by an unauthorized carrier. We've all had the sales calls
interrupt us at the dinner table. Regardless of what the FCC does, the
problem persists.
In a recent USA TODAY article, the FCC said it received 12,000
consumer complaints about slamming during the first half of 1997. In
1996, it received more than 16,000 total slamming complaints. In its
Fall 1996 Common Carrier Scorecard, the FCC stated that slamming was
the top consumer complaint category handled by the Enforcement
Division's Consumer Protection Branch. It also stated that slamming
complaints were the fastest-growing category of complaints, increasing
more than six-fold between 1993 and 1995. In its 1997 Common Carrier
Scorecard, the FCC indicated that nine companies accused of slamming
have entered into consent decrees and have agreed to make payments to
the United States Treasury totaling $1,245,000. The FCC has also issued
two Notices of Forfeitures with combined forfeiture penalties of
$160,000. Nonetheless, slamming continues to be a significant problem.
The provisions we introduce today will hopefully stop this practice
of slamming once and for all. The legislation places new
responsibilities on carriers for the benefit of consumers. For example,
often times, a consumer is slammed and does not know it until the next
telephone bill arrives. Sometimes, unscrupulous carriers provide
service to slammed customers for a considerable time before the
customer becomes aware of the unauthorized switch. To prevent this, the
legislation requires that whenever there is a change in the
subscriber's carrier, the carrier must notify the subscriber of the
change within 15 days. A carrier has 120 days to resolve a slamming
complaint. If the carrier is unable to resolve the complaint within the
required timeframe, then the carrier must notify the consumer of his or
her right to file a complaint with the FCC. The FCC is required to
resolve a slamming complaint it receives within 150 days.
The bill also requires a carrier to retain evidence of the consumer's
authorization to switch carriers and to inform the consumer of their
rights to pursue a resolution of the matter with the Federal
Communications Commission and with State authorities. Requiring
carriers to store information will make it easier to resolve slamming
disputes that arise between the consumer and the carrier. Armed with
information on how to resolve slamming disputes, we hope that consumers
will pursue their available recourse and help us hold carriers
accountable for their illegal actions.
In addition, the bill creates a variety of causes of actions and
imposes still penalties on carriers. If a carrier violates FCC rules,
the FCC can award the greater of actual damages or $500 and has the
discretion to award treble damages. If there are no mitigating
circumstances, the FCC is required to impose on the carrier a
forfeiture of $40,000 or more for the first offense and not less than
$150,000 for each subsequent offense. If a company fails to pay a
forfeiture, the FCC can limit, deny, or revoke the company's operating
authority. Where the slammer's actions have been willful, the
Department of Justice can bring an action to impose fines in accordance
with Title 18, United States Code and imprison the person who submits
or executes a change in willful violation of Section 258. In addition,
State attorneys general can bring actions in federal court to: impose
criminal sanctions and penalties under Title 18 U.S. Code; recover
actual damages or $500 in damages; and recover fines of $40,000 or more
for first offenses and not less than $150,000 for subsequent offenses
unless there are mitigating circumstances. Finally, this bill gives the
FCC authority to pursue billing agents when they place charges on a
consumers bill that they know the consumer has not authorized.
Slamming is a troublesome problem. Slamming eliminates a consumer's
ability to chose his or her service provider. It distorts
telecommunications markets by enabling companies engaged in misleading
practices to increase their customer base, revenues,
[[Page S4690]]
and profitability through illegal means. Today hundreds of long
distance carriers compete for a consumer's business. If slamming is not
addressed effectively today, it could become much more worrisome. The
changes in the telecommunications industry will probably result in a
future in which local and long distance phone services are provided by
an even greater number of carriers.
It is therefore important that we eliminate the practice of slamming.
Consumers have the right to choose their own phone companies when they
choose. A consumer's choice should not be curtailed by the illegal
actions of bad industry actors and a consumer should not have to spend
a significant amount of time addressing issues of slamming. I expect
that requirements placed by this bill will help to eliminate slamming.
My actions with respect to slamming reflect my continued efforts to
protect consumers as I have in the past supported legislation which
successfully addressed the problem of junk fax and ensure that
companies engage in proper telemarketing practices.
I welcome my colleagues in joining Senator McCain and I as we address
the problem of slamming and ensure that no one is allowed to curtail a
consumer's choice of phone service provider.
Ms. COLLINS addressed the Chair.
The PRESIDING OFFICER. Who yields time?
Mr. McCAIN. I yield such time to the Senator from Maine as she may
consume.
The PRESIDING OFFICER. The Senator from Maine is recognized.
Ms. COLLINS. Mr. President, I want to start by complimenting the
chairman of the Commerce Committee for his outstanding leadership in
dealing with a very important consumer issue, and that is telephone
slamming.
I also want to commend the Senator from North Dakota for his very
eloquent explanation of the problem and the solutions.
Mr. President, I rise to express my strong support for S. 1618,
legislation that will provide America's consumers with much needed
protection against a fraudulent practice known as slamming--the
unauthorized switching of a customer's telephone service provider. I
want to commend Senator McCain and Hollings for taking steps to attack
this rapidly growing problem.
Telephone slamming is spreading like wildfire. In Maine, complaints
increased by 100 percent from 1996 to 1997. Nationwide, slamming is the
number one telephone-related complaint. While the FCC received more
than 20,000 slamming complaints in 1997, a significant increase over
the previous year, estimates from phone companies indicate that as many
as one million people were slammed during that 12-month period.
Last fall, the Permanent Subcommittee on Investigations, which I
chair, undertook an extensive investigation of this problem. At a field
hearing this past February in Portland, Maine, at which I was joined by
Senator Durbin, one of the leaders in the fight against slamming, we
heard from several consumers who were victimized by this practice.
Their words reflect the public attitude toward the intentional slammer,
as they described what happened to them as ``stealing,'' ``criminal,''
and ``break-in.''
My Subcommittee recently held a second hearing, which revealed that a
number of what are known as switchless resellers were responsible for a
large percentage of the intentional slamming incidents. These
operations use deceptive marketing practices and outright fraud to
switch consumers' long distance service without their consent.
One recent victim was a hospital in western Maine. This demonstrates
that no one is immune from this despicable practice.
Mr. President, our hearings presented a case that dramatically shows
the need for tougher sanctions to deal with this problem. I refer to an
individual by the name of Daniel Fletcher, who fraudulently operated as
a long distance reseller under at least eight different company names,
slamming thousands of consumers, and billing them for at least $20
million in long distance charges. While we were struck by the ease with
which Mr. Fletcher carried out his activities and evaded detection, we
were shocked to learn about the absence of adequate criminal sanctions
to deal with his activities.
Mr. Fletcher bilked America's telephone customers out of millions of
dollars by charging them for services they did not authorize and
obtaining from them money to which he was not entitled. Yet, we lack a
statute that expressly makes intentional slamming a crime, and unless
that is corrected, we can expect many more Fletchers. Mr. President,
the time has come for the United States Congress to disconnect the
telephone slammers.
Given our concern about this problem, Senator Durbin and I introduced
slamming legislation, and I want to thank Senators McCain and Hollings
for agreeing to incorporate its three main provisions into a Manager's
Amendment to their bill. These additions will help make a good bill
even better.
The first of these provisions will get tough with the outright scam
artists by establishing new criminal penalties for intentional
slamming. I should emphasize that these penalties will apply only to
those who know that they are acting without the customer's
authorization and not to those who make an honest mistake or even act
carelessly. It's time we sent the deliberate slammer to the slammer. In
addition, anyone convicted of intentional slamming will be disqualified
from being a telecommunications service provider, thereby enabling us
not only to punish past conduct but also to prevent future violations.
The second provision is designed to remove the financial incentive
for companies to engage in slamming by giving slammed customers the
option to pay their original carrier at their previous rate. Under
current law, it appears that customers are obligated to pay the slammer
even after they discover they have been switched without their consent.
That hardly acts as a deterrent, something that must be changed.
The third provision will improve enforcement by requiring all
telecommunications carriers to report slamming violations on a
quarterly basis to the FCC. To avoid putting a burden on the carriers,
the report need only be summary in nature, but it will enable the FCC
to identify and move against the frequent slammer.
Deregulation of the telephone industry may produce many benefits for
consumers but it also has given rise to fraud where it did not
previously exist. It was Congress who decided to deregulate the
industry, and it is Congress that must act to stop this fraud. Senate
bill 1618 will move us in that direction by putting a big dent in
telephone slamming and by protecting the right of the American people
to choose with whom they wish to do business.
Again, I very much appreciate the cooperation of the distinguished
chairman of the Commerce Committee and his willingness to accept the
Collins-Durbin amendments.
I thank the Senator, and I yield the floor.
Mr. McCAIN. Mr. President, I thank Senator Collins again. We look
forward to working with her on other issues that are as
noncontroversial as these, as opposed to campaign finance reform which
generated much more concern. But I seriously want to note the hard work
that Senator Collins devoted in her subcommittee to this issue. It was
very important. I thank the Senator.
Amendment No. 2389
(Purpose: To provide a substitute that incorporates the Committee
amendments and additional changes in the bill as reported by the
committee)
Mr. McCAIN. Mr. President, I ask for the incorporation at this time
of the managers' amendment to S. 1618. I ask unanimous consent that it
be adopted.
The PRESIDING OFFICER. The clerk will report.
The assistant legislative clerk read as follows:
The Senator from Arizona [Mr. McCAIN], for himself and Mr.
Hollings, proposes an amendment numbered 2389.
Mr. McCAIN. Mr. President, I ask unanimous consent that reading of
the amendment be dispensed with.
The PRESIDING OFFICER. Without objection, it is so ordered.
(The amendment (No. 2389) is printed in today's Record under
``Amendments Submitted.'')
Mr. McCAIN. Mr President, this amendment defines ``subscriber'' in a
way that allows the person named on the billing statement or account,
or
[[Page S4691]]
those authorized by such a person, to consent to carrier changes.
It clarifies that the time period the FCC prescribes for a carrier to
resolve a slamming complaint, which is not to exceed 120 days, applies
when a carrier receives notice directly from the subscriber of the
complaint.
It makes clear that if a carrier does not resolve a complaint within
the period prescribed by the Commission, it must notify the subscriber
in writing of the subscriber's rights and remedies only under Section
258 of the Communications Act, not under any other law.
It clarifies that the FCC may dispose of a slamming complaint within
the 150-day period established in the bill by issuing a ``decision or
ruling.'' The FCC will not be required to issue a formal ``order'' each
time it resolves a complaint. It also clarifies that the 150-day period
in the bill is intended to be used by the FCC to determine if slamming
has occurred, and if slamming has occurred, the FCC has another 90
days, if such additional time is necessary, to determine what damages
and penalties should be assessed.
In discussing the amount of damages that may be awarded by the FCC,
the original bill referred to the FCC as ``resolving a complaint.''
This change removes that language and the implication that ``resolving
a complaint'' requires a finding of a violation of the slamming rules.
It states that the FCC may award damages only if slamming has occurred.
It allows state Attorneys General to bring an action for each alleged
slamming violation to enjoin unauthorized changes and to recover
damages, to bring an action to seek criminal sanctions for willful
violations, and to bring an action to seek a penalty of not less than
$40,000 for the first slamming offense and not less than $150,000 for
each subsequent offense. A court may reduce the amount of these
penalties if it determines that there are mitigating circumstances
involved. The district courts shall have exclusive jurisdiction over
all of these actions.
It clarifies that states are not preempted from imposing more
restrictive requirements, regulations, damages, and penalties on
unauthorized changes in a subscriber's telephone exchange service or
telephone toll service provider than are imposed under Section 258 of
the Communication Act, as amended by this bill.
It clarifies that when the FCC is resolving slamming complaints, it
is not instituting a ``civil action.'' In addition, while a particular
slamming compliant involving a particular carrier is pending before the
FCC, no state may institute a civil action against the same carrier for
the same alleged violation.
It allows the FCC to use the fact of a carrier's nonpayment of a
forfeiture for a slamming or billing violation as a basis for revoking,
denying or limiting that carrier's operating authority.
It imposes duties on all billing agents, both those that are
telecommunications carriers that render bills to consumers and those
that operate as billing clearinghouses for carriers. It requires any
billing agent that issues telephone bills to follow a certain format
for the bill. The bill must list telecommunications services separately
from other services and must identify the names of each provider and
the services they have provided. Billing agents also must provide
information to enable a consumer to contact a service provider about a
billing dispute. This provision also prohibits billing agents from
submitting charges for a consumer's bill if they know or should know
that the consumer did not authorize such charges or if the charges are
otherwise improper.
It given the Commission jurisdiction over billing agents that are not
telecommunications carriers but provide billing services for such
carriers or for other companies whose charges appear on telephone
bills.
It instructs the FCC to include in the report required by Section 6
of the bill an examination of telemarketing and other solicitation
practices, such as contests and sweepstakes, used by carriers to obtain
carrier changes. The FCC also is required to study whether a third
party should verify carrier changes and whether an independent third
party should administer carrier changes. This provision will address
concerns about the possibility of anti-competitive behavior by the
local phone companies once they start to provide long-distance service.
Enforcement of slamming rules will remain the responsibility of the
FCC.
Mr. McCAIN. Mr. President, I send, on behalf of Senator Feingold, an
amendment to the desk and ask for its immediate consideration.
The PRESIDING OFFICER. Is the amendment to the substitute amendment?
Mr. McCAIN. Mr. President, before asking for the reading of the
amendment, I ask unanimous consent that the managers' amendment be
considered as original text.
The PRESIDING OFFICER. Without objection, it is so ordered. The
amendment is agreed to.
The amendment (No. 2389) was agreed to.
Amendment No. 2390
(Purpose: To authorize the enforcement by State and local governments
of certain Federal Communications Commission regulations regarding use
of citizens band radio equipment)
Mr. McCAIN. I ask now for consideration of the amendment by Senator
Feingold.
The PRESIDING OFFICER. The clerk will report.
The assistant legislative clerk read as follows:
The Senator from Arizona [Mr. McCAIN], for Mr. Feingold,
proposes an amendment numbered 2390.
Mr. McCAIN. Mr. President, I ask unanimous consent that reading of
the amendment be dispensed with.
The PRESIDING OFFICER. Without objection, it is so ordered.
The amendment is as follows:
At the appropriate place, insert the following:
SEC. __. ENFORCEMENT OF REGULATIONS REGARDING CITIZENS BAND
RADIO EQUIPMENT.
Section 302 of the Communications Act of 1934 (47 U.S.C.
302) is amended by adding at the end the following:
``(f)(1) Except as provided in paragraph (2), a State or
local government may enforce the following regulations of the
Commission under this section:
``(A) A regulation that prohibits a use of citizens band
radio equipment not authorized by the Commission.
``(B) A regulation that prohibits the unauthorized
operation of citizens band radio equipment on a frequency
between 24 MHz and 35 MHz.
``(2) Possession of a station license issued by the
Commission pursuant to section 301 in any radio service for
the operation at issue shall preclude action by a State or
local government under this subsection.
``(3) The Commission shall provide technical guidance to
State and local governments regarding the detection and
determination of violations of the regulations specified in
paragraph (1).
``(4)(A) In addition to any other remedy authorized by law,
a person affected by the decision of a State or local
government enforcing a regulation under paragraph (1) may
submit to the Commission an appeal of the decision on the
grounds that the State or local government, as the case may
be, acted outside the authority provided in this subsection.
``(B) A person shall submit an appeal on a decision of a
State or local government to the Commission under this
paragraph, if at all, not later than 30 days after the date
on which the decision by the State or local government
becomes final.
``(C) The Commission shall make a determination on an
appeal submitted under subparagraph (B) not later than 180
days after its submittal.
``(D) If the Commission determines under subparagraph (C)
that a State or local government has acted outside its
authority in enforcing a regulation, the Commission shall
reverse the decision enforcing the regulation.
``(5) The enforcement of a regulation by a State or local
government under paragraph (1) in a particular case shall not
preclude the Commission from enforcing the regulation in that
case concurrently.
``(6) Nothing in this subsection shall be construed to
diminish or otherwise affect the jurisdiction of the
Commission under this section over devices capable of
interfering with radio communications.''.
Mr. McCAIN. Mr. President, I have reviewed the amendment with Senator
Dorgan, and it is acceptable on both sides. I encourage its adoption.
The PRESIDING OFFICER. Without objection, the amendment is agreed to.
The amendment (No. 2390) was agreed to.
Mr. McCAIN. Mr. President, I move to reconsider the vote.
Mr. DORGAN. I move to lay that motion on the table.
The motion to lay on the table was agreed to.
Mr. FEINGOLD. Mr. President, as we take up this important anti-
slamming bill, which of course deals with consumer problems with
telephone service,
[[Page S4692]]
I am pleased that the Senate has agreed to this amendment to provide a
practical solution to the all too common problem of interference with
residential home electronic equipment caused by unlawful use of
citizens band [CB] radios. I want to thank the Chairman of the
Committee, Senator McCain, and the ranking member, Senator Hollings,
for agreeing to include this amendment in the slamming bill.
The problem of CB radio interference can be extremely distressing for
residents who cannot have a telephone conversation, watch television,
or listen to the radio without being interrupted by a neighbor's
illegal use of a CB radio. Unfortunately, under the current law, those
residents have little recourse. The amendment I offered today will
provide those residents with a practical solution to this problem.
Up until recently, the FCC has enforced its rules outlining what
equipment may or may not be used for CB radio transmissions, how long
transmissions may be broadcast, what channels may be used, as well as
many other technical requirements. FCC also investigated complaints
that a CB radio enthusiast's transmissions interfered with a neighbor's
use of home electronic and telephone equipment. FCC receives thousands
of such complaints annually.
For the past 3 years, I have worked with constituents who have been
bothered by persistent interference of nearby CB radio transmissions in
some cases caused by unlawful use of radio equipment. In each case, the
constituents have sought my help in securing an FCC investigation of
the complaint. And in each case, the FCC indicated that due to a lack
of resources, the Commission no longer investigates radio frequency
interference complaints. Instead of investigation and enforcement, the
FCC is able to provide only self-help information which the consumer
may use to limit the interference on their own.
I suppose this situation is understandable given the rising number of
complaints for things like slamming. The resources of the FCC are
limited, and there is only so much they can do to address complaints of
radio interference.
Nonetheless, this problem is extremely annoying and frustrating to
those who experience it. In many cases, residents implement the self-
help measures recommended by FCC such as installing filtering devices
to prevent the unwanted interference, working with their telephone
company, or attempting to work with the neighbor they believe is
causing the interference. In many cases these self-help measures are
effective.
However, in some cases filters and other technical solutions fail to
solve the problem because the interference is caused by unlawful use of
CB radio equipment such as unauthorized linear amplifiers.
Municipal residents, after being denied investigative or enforcement
assistance from the FCC, frequently contact their city or town
government and ask them to police the interference. However, the
Communications Act of 1934 provides exclusive authority to the Federal
Government for the regulation of radio, preempting municipal ordinances
or State laws to regulate radio frequency interference caused by
unlawful use of CB radio equipment. This has created an interesting
dilemma for municipal governments. They can neither pass their own
ordinances to control CB radio interference, nor can they rely on the
agency with exclusive jurisdiction over interference to enforce the
very Federal law which preempts them.
Let me give an example of the kind of frustrations people have
experienced in attempting to deal with these problems. Shannon Ladwig,
a resident of Beloit, WI has been fighting to end CB interference with
her home electronic equipment that has been plaguing her family for
over a year. Shannon worked within the existing system, asking for an
FCC investigation, installing filtering equipment on her telephone,
attempting to work with the neighbor causing the interference, and so
on. Nothing has been effective.
Here are some of the annoyances Shannon has experienced. Her
answering machine picks up calls for which there is no audible ring,
and at times records ghost messages. Often, she cannot get a dial tone
when she or her family members wish to place an outgoing call. During
telephone conversations, the content of the nearby CB transmission can
frequently be heard and on occasion, her phone conversations are
inexplicably cut off. Ms. Ladwig's TV transmits audio from the CB
transmission rather than the television program her family is watching.
Shannon never knows if the TV program she taped with her VCR will
actually record the intended program or whether it will contain
profanity from a nearby CB radio conversation.
Shannon did everything she could to solve the problem and a year
later she still feels like a prisoner in her home, unable to escape the
broadcasting whims of a CB operator using illegal equipment with
impunity. Shannon even went to her city council to demand action. The
Beloit City Council responded by passing an ordinance allowing local
law enforcement to enforce FCC regulations--an ordinance the council
knows is preempted by Federal law. Last year, the Beloit City Council
passed a resolution supporting legislation I introduced, S. 608, on
which my amendment is modeled, which will allow at least part of that
ordinance to stand.
The problems experienced by Beloit residents are by no means isolated
incidents. I have received very similar complaints from at least 10
other Wisconsin communities in the last several years in which whole
neighborhoods are experiencing persistent radio frequency interference.
Since I have begun working on this issue, my staff has also been
contacted by a number of other congressional offices who are also
looking for a solution to the problem of radio frequency interference
in their States or districts caused by unlawful CB use. The city of
Grand Rapids, MI, in particular, has contacted me about this
legislation because they face a persistent interference problem very
similar to that in Beloit. In all, FCC receives more than 30,000 radio
frequency interference complaints annually--most of which are caused by
CB radios. Unfortunately, FCC no longer has the staff, resources, or
the field capability to investigate these complaints and localities are
blocked from exercising any jurisdiction to provide relief to their
residents.
My amendment attempts to resolve this Catch-22, by allowing States
and localities to enforce existing FCC regulations regarding authorized
CB equipment and frequencies while maintaining exclusive Federal
jurisdiction over the regulation of radio services. It is a commonsense
solution to a very frustrating and real problem which cannot be
addressed under existing law. Residents should not be held hostage to a
Federal law which purports to protect them but which cannot be
enforced.
Now this amendment is by no means a panacea for the problem of radio
frequency interference. It is intended only to help localities solve
the most egregious and persistent problems of interference--those
caused by unauthorized use of CB radio equipment and frequencies. In
cases where interference is caused by the legal and licensed operation
of any radio service, residents will need to resolve the interference
using FCC self-help measures that I mentioned earlier.
In many cases, interference can result from inadequate home
electronic equipment immunity from radio frequency interference. Those
problems can only be resolved by installing filtering equipment and by
improving the manufacturing standards of home telecommunications
equipment.
The electronic equipment manufacturing industry, represented by the
Telecommunications Industry Association and the Electronics Industry
Association, working with the Federal Communications Commission, has
adopted voluntary standards to improve the immunity of telephones from
interference. Those standards were adopted by the American National
Standards Institute last year. Manufacturers of electronic equipment
should be encouraged to adopt these new ANSI standards. Consumers have
a right to expect that the telephones they purchase will operate as
expected without excessive levels of interference from legal radio
transmissions. Of course, Mr. President, these standards assume legal
operation of radio equipment and cannot protect residents from
interference from illegal operation of CB equipment.
This amendment also does not address interference caused by other
[[Page S4693]]
radio services, such as commercial stations or amateur stations. Mr.
President, last year, I introduced S. 2025, a bill with intent similar
to that of the amendment I am offering today. The American Radio Relay
League [ARRL], an organization representing amateur radio operators,
frequently referred to as ``ham'' operators, raised a number of
concerns about that legislation. ARRL was concerned that while the bill
was intended to cover only illegal use of CB equipment, FCC-licensed
amateur radio operators might inadvertently be targeted and prosecuted
by local law enforcement. ARRL also expressed concern that local law
enforcement might not have the technical abilities to distinguish
between ham stations and CB stations and might not be able to determine
what CB equipment was FCC-authorized and what equipment is illegal.
I have worked with the ARRL and amateur operators from Wisconsin to
address these concerns. As a result of those discussions, this
amendment incorporates a number of provisions suggested by the league.
First, the amendment makes clear that the limited enforcement authority
provided to localities in no way diminishes or affects FCC's exclusive
jurisdiction over the regulation of radio. Second, the amendment
clarifies that possession of an FCC license to operate a radio service
for the operation at issue, such as an amateur station, is a complete
protection against any local law enforcement action authorized by this
amendment. Amateur radio enthusiasts are not only individually licensed
by FCC, unlike CB operators, but they also self-regulate. The ARRL is
very involved in resolving interference concerns both among their own
members and between ham operators and residents experiencing problems.
Third, the amendment also provides for an FCC appeal process by any
radio operator who is adversely affected by a local law enforcement
action under this amendment. FCC will make determinations as to whether
the locality acted properly within the limited jurisdiction this
legislation provides. The FCC will have the power to reverse the action
of the locality if local law enforcement acted improperly. And fourth,
my legislation requires FCC to provide States and localities with
technical guidance on how to determine whether a CB operator is acting
within the law.
Again, Mr. President, my amendment is narrowly targeted to resolve
persistent interference with home electronic equipment caused by
illegal CB operation. Under my amendment, localities cannot establish
their own regulations on CB use. They may only enforce existing FCC
regulations on authorized CB equipment and frequencies. This amendment
will not resolve all interference problems and it is not intended to do
so. Some interference problems need to continue to be addressed by the
FCC, the telecommunications manufacturing industry, and radio service
operators. This amendment merely provides localities with the tools
they need to protect their residents while preserving FCC's exclusive
regulatory jurisdiction over the regulation of radio services.
I am very pleased that this amendment has been accepted, and I hope
it will become law along with the anti-slamming bill.
Mr. McCAIN. Mr. President, we have, according to my understanding, an
amendment by Senator Feinstein, that Senator Dorgan has not had a
chance to look at but I will ask that he review, which is acceptable.
And I understand we have an amendment by Senator Rockefeller. I do not
believe that there are any other amendments that we need to consider
because we have dispensed with, according to the unanimous consent
agreement, the Collins-Durbin amendment. We have dispensed with the
Reed amendment, the Levin amendments, Feingold amendment, and McCain
amendment, a Hollings amendment, a Harkin amendment, which leaves us
with the Rockefeller amendment after we dispense with the Feinstein
amendment.
So I yield the floor.
Mr. DORGAN. Mr. President, I yield 10 minutes to the Senator from
Rhode Island, Mr. Reed.
The PRESIDING OFFICER. The Senator from Rhode Island is recognized.
Mr. REED. I thank the Chair.
I rise in strong support of S. 1618, the Consumer Anti-Slamming Act
of 1998, and I particularly commend Chairman McCain and ranking member
Hollings for the bipartisan and professional manner in which they have
considered this legislation. I am pleased to have been part of this
process, and I thank them very much for considering my suggestions to
improve this legislation.
Last July 24, again with the assistance of Senators McCain and
Hollings, I offered a sense-of-the-Senate resolution which outlined the
issue involving slamming and proposed several suggested solutions. That
resolution passed unanimously. Today, I support S. 1681 because it goes
forward from that resolution to incorporate very pragmatic resolutions
to the problem of slamming that is confronting so many consumers across
this country.
I would also like to thank the National Association of Attorneys
General as well as the National Association of Regulatory Utilities
Commissioners for their assistance. These organizations and their
members are fighting this epidemic of slamming at the State level. They
are doing a remarkable job, and they were very helpful to me in
preparing my legislation and helping me understand the scope of this
problem.
We have taken great strides in our economy by deregulating many of
our formerly regulated utilities, particularly the telephone companies,
but all of that deregulation is for naught if we cannot give consumers
real valid choice. And the problem with slamming is it denies consumers
real choice. In effect, it tricks them into making choices that are not
beneficial to them or collectively to our society and our economy. We
have to do something about it.
I am very pleased that this legislation takes very pragmatic and
effective steps to stop this curse of slamming, the illegal switching
of telephone services. And this is an enormous problem throughout our
economy. It threatens to rob many, many consumers of the benefits of
deregulation and of a free market for services like telephone service.
The Federal Communications Commission indicates that slamming is their
No. 1 reported fraud. In my home State of Rhode Island, it is the top
consumer issue in terms of telephone service and other consumer issues.
Yet all of these very impressive statistics may be just the tip of
the iceberg, because press reports indicate that many, many more people
are victims of slamming, but they do not have either the knowledge or
the inclination under present rules and regulations to report these
cases of slamming. Indeed, one regional telephone carrier estimated
that 1 in 20 changes of telephone service is a result of fraud.
Slamming is a multimillion-dollar fraud problem, and today, under the
leadership of Senator McCain and Senator Hollings, we are addressing
this problem head on.
One of the aspects of the issue is that there are numerous consumers
who are unaware of the fact that they are victims. Forty-one percent of
these individuals, of those who have been affected by slamming, do not
report the incidents to regulatory authorities or anyone. When a
complaint is logged, it is usually logged with a local telephone
carrier; in my case, in upper Rhode Island, it is Bell Atlantic. Now,
these local carriers do try to resolve the problem, but often they do
not have the tools or the ability to do so, and as a result, the
consumer is left a victim of the slammer.
When consumers do report these problems and try to take action, under
the present regime it is usually a long and frustrating process to get
any relief, if you get any relief at all.
Now, State attorneys general and public utility commissions
throughout this country are annually receiving hundreds of thousands of
complaints. More than half the State attorneys general have tried to
take steps to go to court to bring to justice these slammers using the
fraud laws of their State. Unfortunately, these legal actions are
cumbersome, lengthy, and often do not really reach the heart of the
matter and bring the culprits to justice.
A smaller percentage of victims of slamming will seek relief not at
the State level but they will go to the Federal Communications
Commission. Last year, 44,000 individuals brought slamming complaints
to the FCC. That is a 175 percent increase over complaints in 1996. You
can see this is an
[[Page S4694]]
epidemic that needs to be dealt with decisively, and I am pleased that
we are doing that.
Now, the FCC does investigate these complaints, but they are hampered
by a lack of proof concerning slamming. They are hampered by not having
the kind of record that is necessary to prove definitively that an
individual has been a victim of slamming. This legislation goes a long
way to ensure that all of our regulatory authorities at every level of
Government have the tools to ensure that they can root out slamming in
our economy.
First, this legislation places a more stringent requirement on phone
companies before they can switch a consumer's service. The bill
requires verification that the consumer, first, understands service
will be changed; second, the consumer affirms his or her intent to
change service and also indicates that he or she is authorized to
switch service.
We have heard lots of evidence of phone companies--slammers, really--
calling up, finding a 12- or 13-year-old child in the house, and
talking to that child and using that as what they claim is appropriate
authorization to switch service. Under this legislation, those types of
practices will not be allowed. Also, the legislation requires that the
entire verification process must be recorded and also provided to the
consumer upon request, so that if it is a 12-year-old in the house that
is giving the OK to switch, the parent can quickly determine that from
the recorded record and make a correction.
Now, the other protection that is provided here is that the bill
requires that carriers inform a consumer in clear and unambiguous
language within 15 days that a switch has been authorized. Many times,
consumers do not realize their phone service has been switched until
they get, 30 days later, a bill from a company that they have never
heard of claiming that they are now their primary telephone carrier.
Now, this whole verification process will go a very long way in
preventing the abuses that we have seen. No longer can slammers use
ambiguous or fraudulent verification scripts, essentially tricking
consumers into agreeing. Additionally, slammers can't go ahead and
conjure up and splice together different bits of pieces of an
authorization or conversation to say, ``That is the proof you agreed to
switch your service.'' Because of the requirement for a recorded
record, that will not be possible.
This bill clearly says and makes as a clear standard that without
proper verification, without a record, the carrier is in violation of
law if they switch services and there cannot be any more assertions by
these carriers that, ``Well, someone told us it was OK in the house,
but we don't have the record. Someone authorized it, but we don't know
who it was.'' They are now in a position where they have to show
clearly that they have the verification.
Also, this legislation provides for avenues of redress for consumers.
First, the consumer can take the issue up with the unauthorized
carrier, and they are required to respond appropriately, within at
least 4 months, in terms of justifying the switch or making some type
of amends to the consumer. Second, a slamming victim can take their
case to the Federal Communications Commission. Now, the FCC has
additional authority to fine and to penalize slamming. Finally, a
consumer who is frustrated can, once again, take his petition under
State law to State commissions. Indeed, one aspect of the legislation
that is very positive is, there is no preemption of State laws. We
recognize that attorneys general and utility commissioners can and must
have the ability to work hand and hand with the Federal Government to
root out this problem of slamming.
Altogether, this is very important legislation that provides the
necessary consumer protections, that makes the goal and objective of
deregulation in a market where consumers choose a reality, and puts up
strong barriers against those who would trick consumers and rob them of
the choice that deregulation offers, the choice of the best service for
them, their free choice.
Once again, let me commend Chairman McCain and ranking member
Hollings for their work on this. I am hopeful that we can move
expeditiously to passage and that this bill will shortly be law and we
can protect the American consumer against slamming.
I yield my time.
Mr. McCAIN addressed the Chair.
The PRESIDING OFFICER. The Senator from Arizona.
Mr. McCAIN. I yield myself 1 minute.
Senator Hollings and I incorporated an amendment in the managers'
amendment on behalf of Senator Snowe.
This amendment prevents the FCC from taking any actions that would
jeopardize the current ability of consumers to ``freeze'' their long-
distance carrier in place. Once the consumer elects to use a freeze,
the long-distance carrier of choice can only be changed by the express
authorization of the consumer to the local phone company.
Long-distance carriers are concerned about how this amendment might
affect their marketing efforts. But reports now show that two consumers
are slammed every minute. Given the severity of the slamming problem,
the interest we have in preserving safeguards that will project
consumers against any unauthorized carrier changes certainly overrides
any concerns the industry may have about their marketing efforts.
I thank Senator Snowe for her amendment.
I reserve the remainder of my time.
The PRESIDING OFFICER. The Senator from North Dakota.
Amendment No. 2391
(Purpose: To modify the exception to the prohibition on the
interception of wire, oral or electronic communications to require that
all parties to communications with health insurance providers consent
to their interception)
Mr. DORGAN. Mr. President, on behalf of Senator Feinstein, I send an
amendment to the desk and ask for its immediate consideration.
The PRESIDING OFFICER. The clerk will report.
The assistant legislative clerk read as follows:
The Senator from North Dakota [Mr. Dorgan], for Mrs.
Feinstein proposes an amendment numbered 2391.
Mr. McCAIN. Mr. President, I ask unanimous consent that reading of
the amendment be dispensed with.
The PRESIDING OFFICER. Without objection, it is so ordered.
The amendment is as follows:
At the appropriate place, insert the following:
SEC. __. MODIFICATION OF EXCEPTION TO PROHIBITION ON
INTERCEPTION OF COMMUNICATIONS.
(a) Modification.--Section 2511(2)(d) of title 18, United
States Code, is amended by adding at the end the following:
``Notwithstanding the previous sentence, it shall not be
unlawful under this chapter for a person not acting under the
color of law to intercept a wire, oral, or electronic
communication between a health insurance issuer or health
plan and a subscriber of such issuer or plan, or between a
health care provider and a patient, only if all of the
parties to the communication have given prior express consent
to such interception. For purposes of the preceding sentence,
the term `health insurance issuer' has the meaning given that
term in section 733 of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1191b), the term `health
plan' means a group health plan, as defined in such section
of such Act, an individual or self-insured health plan, the
medicare program under title XVIII of the Social Security Act
(42 U.S.C. 1395 et seq.), the medicaid program under title
XIX of such Act (42 U.S.C. 1396 et seq.), the State
children's health insurance program under title XXI of such
Act (42 U.S.C. 1397aa et seq.), and the Civilian Health and
Medical Program of the Uniformed Services under chapter 55 of
title 10, and the term `health care provider' means a
physician or other health care professional.''.
(b) Recording and Monitoring of Communications With Health
Insurers.--
(1) Communication without recording or monitoring.--
Notwithstanding any other provision of law, a health
insurance issuer, health plan, or health care provider that
notifies any customer of its intent to record or monitor any
communication with such customer shall provide the customer
the option to conduct the communication without being
recorded or monitored by the health insurance issuer, health
plan, or health care provider.
(2) Definitions.--In this subsection:
(A) Health care provider.--The term ``health care
provider'' means a physician or other health care
professional.
(B) Health insurance issuer.--The term ``health insurance
issuer'' has the meaning given that term in section 733 of
the Employee Retirement Income Security Act of 1974 (29
U.S.C. 1191b).
(C) Health plan.--The term ``health plan'' means--
(i) a group health plan, as defined in section 733 of the
Employee Retirement Income Security Act of 1974 (29 U.S.C.
1191b);
[[Page S4695]]
(ii) an individual or self-insured health plan;
(iii) the medicare program under title XVIII of the Social
Security Act (42 U.S.C. 1395 et seq.);
(iv) the medicaid program under title XIX of such Act (42
U.S.C. 1396 et seq.);
(v) the State children's health insurance program under
title XXI of such Act (42 U.S.C. 1397aa et seq.); and
(vi) the Civilian Health and Medical Program of the
Uniformed Services under chapter 55 of title 10, United
States Code.
Mrs. FEINSTEIN. Mr. President, I offer a very simple amendment to S.
1618 that will protect the critical area of consumer health care
privacy. This amendment provides that in communications with health
care insurers or providers, patients have the right not to have their
confidential conversations recorded or monitored.
This amendment fills a loophole in existing law. Federal law
currently provides that at least one party must consent to the taping
or monitoring of a private conversation. The federal law allows states
to provide even more stringent restrictions, and require that all
parties to a conversation must consent to their taping or monitoring.
However, this law provides no protection to patients against
unauthorized taping or monitoring. Even when, as in my State of
California, the state law requires all parties to consent for taping or
monitoring, the law fails to protect them. Patients are construed to
consent to taping or monitoring, whether they expressly consent or not,
if they are informed of the taping or monitoring. This is most often
accomplished by a recording at the beginning of the telephone call. If
patients refuse to have their calls monitored, they are told to simply
take their business elsewhere. But there is nowhere else to go.
The confidentiality of details about our health is one of the most
sensitive topics imaginable. Physician-patient confidentiality is a
bedrock principle that goes back literally thousands of years.
Not only is this an ethical issue, it is a health imperative. In
fact, it can be a matter of life and death. Anything less than full
confidentiality compromises the willingness of patients to provide the
full information that treating physicians need to treat them properly.
It can literally jeopardize their health and their life.
We naturally assume that intimate details that we share with our
doctor and health care professionals are strictly confidential. But
they are not. Today, any communication we have with a health care
professional may be taped and monitored.
This problem is exacerbated by the rising role of health insurance
companies in treatment. Oftentimes, it is a health insurance company,
rather than a trusted doctor, with whom the patient must share intimate
personal health details. That health insurance company may not have the
same ethical and legal confidentiality obligations as the patient's
treating physician.
When my office contacted the top 100 health insurance providers in
this country, we learned that most health insurance companies who
responded tape or monitor calls from patients.
I want to share briefly some of the responses we received. Kaiser
Permanente is a health insurance provider that operates in 19 states
and the District of Columbia, and provides care to more than 9 million
members. Its practices vary from state to state, depending on
applicable state laws.
Among other things, Kaiser Permanente may: Monitor randomly selected
calls, in which case it may or may not notify patients in advance; or
tape record all or randomly selected calls, in which case it may or may
not notify patients in advance.
United HealthCare wrote that they did not believe that recording or
monitoring calls presented a privacy issue. Their rationale was that
they only randomly record calls and only after advising the caller that
the call may be recorded.
Great-West responded that a patient has the option of communicating
in writing if the patient does not want to be recorded. Well, let me
say simply--that's not good enough for me.
Despite the two-party consent rule in my own State of California, NYL
Care Health Plans, Inc., responded that no violation of California law
occurs in the absence of a ``confidential communication.'' Under
California law, the definition of a ``confidential communication'' does
not include communications where the parties may reasonably expect that
the call may be recorded. NYL Care asserted that, since patients were
told that their call could be monitored, their calls were not
confidential calls.
In my view, NYL Care's interpretation of ``confidentiality'' turns
its commonly understood meaning on its head. In fact, I doubt whether
any of my colleagues would agree that communications about one's own
health problems are not confidential.
Finger Lakes Blue Cross-Blue Shield of Upstate New York randomly
tapes records calls from patients and is in the process of implementing
a front-end message to patients.
In the case of Blue Cross Blue Shield of the National Capital Area, a
patient receives no notice that the call may be monitored. Their
Associate General Counsel stated that in both Maryland and the District
of Columbia, no consent was required.
Not only is unauthorized taping or monitoring of telephone calls just
plain wrong, it is simply unnecessary. None of the health insurers who
responded to my office could provide a valid reason for monitoring or
taping incoming calls from patients.
The standard response I received from health insurers was that they
monitored or tape recorded calls for ``quality control.'' Yet no one
could explain how the health insurer's record of the information
discussed protects the patient. It's easy to see, I think, how the
industry's practice leaves the patient disadvantaged.
My amendment is simple. First, it requires express consent from
patients in order to be taped or monitored by health insurance
companies or health care providers.
Second, it requires health insurance companies or health care
providers to give patients the option not to be taped or monitored.
Third, it applies only to health insurance companies or health care
providers. It does not affect the remaining companies that tape or
monitor customer communications.
Mr. President, this amendment simply ensures a basic right that most
patients believe they already enjoy. I urge its adoption.
Mr. DORGAN. Mr. President, my understanding is the amendment has been
cleared on both sides. I urge the amendment be agreed to.
THE PRESIDING OFFICER. If there be no further debate, the question is
on agreeing to the amendment.
The amendment (No. 2391) was agreed to.
Mr. McCAIN. Mr. President, I move to reconsider the vote.
Mr. DORGAN. I move to lay that motion on the table.
The motion to lay on the table was agreed to.
Mr. DORGAN. I yield 5 minutes to the Senator from Illinois, Senator
Durbin.
Mr. DURBIN. I thank the Senator from North Dakota. I thank my
colleague, the Senator from Arizona, for cosponsoring this bill with
Senator Hollings.
A little over a year ago, I received a letter in my Senatorial office
in Illinois from a young woman who owned a business right outside the
City of Chicago. She told a story of having her long-distance carrier
changed without her permission, how it ended up costing her over
$1,000, and she came to learn there was virtually nothing she could do
about it. The recourse under the law currently available was not
practical--that she would somehow hire an attorney and go to Federal
court over $1,000. That wasn't going to happen. She asked me what could
we do about it, so I prepared a piece of legislation, and a large part
of it has been incorporated in this good bill, and I am happy to
support this bill.
Since then, I have come to learn that hers was not an isolated
example. Any group of people you talk to, regardless of their walk of
life, who have a telephone at home, will generally tell you that they
know somebody or they personally have been victims of slamming. How do
they end up having their long-distance carrier changed? Some of them
might have been unsuspecting. They went to a carnival or county fair or
neighborhood picnic, and they had a little thing handed to them. It
said, ``Win a free trip to Hawaii. Fill in your name and address and
check the box in
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the bottom.'' They didn't flip it over to see the other side that said,
``You just changed your long-distance carrier.''
It would happen time and time again. Folks would get these
interminable telephone calls at night saying, ``Would you consider
moving to this new service?'' They say, ``No, no, there is no way.'' It
turns out they were being taped. People were splicing together the
tapes. When it was all said and done, they took the spliced tapes, and
said the person said ``yes'' when they asked about the long-distance
service, but the person said ``yes'' when they asked about the name.
It turns out a lot of people were being defrauded, and it cost a lot
of money, not just for the lady who came to see me and her business,
but many others. This is theft. This is stealing. This is not gaming we
are dealing with here; it is a situation where a lot of people are
making money without the permission of those whose long-distance
service is being changed.
I went up to the State of Maine with my colleague, Senator Collins,
who spoke earlier on the floor, for a hearing on the subject and found
it was literally a national problem. From the coast of Maine to
California and everything in between, people were going through this
and we didn't have the laws in place to protect the consumers. That is
why this bill is so important--because this bill finally gives to the
consumer an opportunity to say to the person who is slamming them,
``You are not going to get away with it.''
One of the amendments which Senator McCain was nice enough to adopt
and make part of the bill was offered by Senator Collins and myself. It
said you will never be charged more than what your original long
distance carrier would have charged you. So if somebody comes along and
doubles your rate without your permission, you still don't have to pay
anything more than what was in the original rate structure with your
original long-distance carrier. I think that makes sense. I think it is
only fair.
The other amendment which we pushed for, the second amendment,
creates criminal penalties which are necessary for the most egregious
slammers. These are not little companies with little ideas; these are
devious groups with a network of information which are trying to set up
a network of people across the United States who will be changed to
their long-distance service just long enough for them to make some
money.
You should have seen the hearing that Senator Collins had before the
Government Affairs Committee, where she presented a bill from one of
these companies to the Chairman of the Federal Communications
Commission. She posted it up on the board, and she said to the
Chairman: ``Take a look at this long-distance bill from a slamming
company and tell me one thing. What is the name of the company?''
The Chairman took a look at it, and he said, ``I don't see any name
of the company up there.'' You know what? The name of the company was
Long Distance Charges. So, when you are going through your telephone
bill and you are looking at your local carrier who sent it to you, and
you get to a page which reads ``Long Distance Charges,'' it never dawns
on you that you are no longer receiving long-distance service from your
old carrier. You have a new carrier called Long Distance Charges, and
you didn't notice that your long-distance bill just went up. That is
the kind of chicanery and trickery these people are guilty of. They
make millions of dollars at it. As a consequence, we have to treat them
with the criminal penalty which is included in this bill.
I want to make an additional point about the criminal penalties
amendment. Creating a criminal statute for slamming in no way lessens
the applicability of existing laws such as wire fraud or mail fraud
that can help combat slamming, too. Rather, this criminal statute for
slamming will make it easier for prosecutors, because it applies
specifically to this crime.
Finally, a third amendment agreed to by Senator McCain will require
telecommunications carriers to report the number of slamming complaints
they receive about each company to the FCC. We know the incidence of
slamming is on the rise. We have no way of tracking them. This will
establish it. Slamming has already caused telephone customers to become
angry and disillusioned with the entire telecommunications industry.
These consumers have voiced their concerns to their local phone
companies, to their State regulatory bodies, to the FCC. But they feel
their complaints have not been heard.
With this legislation, we can begin to restore confidence in the
industry and assure consumers that the deceptive practice of slamming
will be stopped. Long-distance telephone consumers should be able to
stand up for themselves and fight back against slammers, to let them
know their actions will not pay.
You have heard, during the course of this debate, lengthy statistics
about the nature of the problem. I will not repeat them, only to tell
you that it is a serious problem addressed in a serious way by this
legislation.
In closing, one small footnote: The outrage of slamming has now been
replaced in complaints to my office by the outrage of cramming. It
turns out in the lengthy telephone bill you received there may be an
item which looks innocent enough for two or three dollars for something
you never ordered. Who is going to go through the telephone bill and
analyze every line? But unless you do, you may find yourself in a
predicament where they are cramming in charges you never asked for.
You are paying three bucks a month every month of the year for
something you didn't ask for. How are you going to find it? You have to
take the time to read through it. We want to make sure we address that
abuse as well.
Today, though, we are addressing in a responsible way a very serious
problem that affects consumers across America. I salute Senator McCain,
as well as Senator Hollings, who have joined me in this effort through
investigations, as well as in preparation of amendments to this very
good bill. I am happy to support it. I yield back the remainder of my
time.
Mr. CAMPBELL. Mr. President, today I want to express my support for
the Consumer Anti-Slamming Act, S. 1618, which addresses the
unauthorized switching of telephone service carriers by competing
service providers. This abusive practice has become an increasing
problem in my home state of Colorado where slamming has grown at an
alarming rate. Last October, Chairman Burns of the Communications
Subcommittee of the Commerce, Science, and Transportation Committee
held a field hearing in Denver on this issue. In addition to this
hearing, anti-slamming legislation has recently passed the Colorado
State Legislature. With Colorado as one of the nation's top five states
in complaints-per-million customers, I intend to vote for this anti-
slamming legislation.
I also am pleased that S. 1618 incorporates provisions from my Anti-
Slamming Bill, S. 1051 which I introduced on July 22, 1997. This
language requires that the FCC annually report to Congress the ``Top
Ten'' slammers for each year, as well as carriers assessed fines or
penalties during the same period. The ``Top Ten'' list identifies those
carriers subject to the highest number of subscriber slamming
complaints compared to the total number of subscribers they serve. This
ratio approach ensures that large companies are not automatically
singled out by virtue of having a large customer base. The focus of my
``Top Ten'' amendment is on those companies with the highest percentage
of slamming complaints relative to their total customer base.
This ``Top Ten'' list will give Congress an annual opportunity to
review and publicly comment on this serious problem known as
``slamming''. I am convinced that this approach coupled with the
language in S. 1618, will prove valuable in deterring carriers from
engaging in illegal tactics.
Ms. SNOWE. Mr. President, I rise today to speak in favor of the
legislation now before the Senate--S. 1618, the Consumer Anti-Slamming
Act--and to urge for its adoption and enactment.
This legislation--which was crafted by the distinguished Chairman of
the Commerce Committee, John McCain, and the Ranking Member of the
Committee, Ernest Hollings--will help eliminate a reprehensible
practice of unscrupulous telephone companies, and I congratulate them
for their leadership on this issue. As a member of the Senate Commerce
Committee, I am pleased that my friend and colleague,
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Chairman McCain, has moved rapidly to address the slamming epidemic
that is occurring in Maine by bringing this legislation to the floor of
the Senate.
In addition, I would also like to thank my colleague from Maine,
Senator Collins, for highlighting this issue by holding oversight
hearings in her capacity as Chair of the Governmental Affairs
Subcommittee on Permanent Investigations, including a recent hearing in
the State of Maine--and she has also offered legislation that is
designed to combat slamming. In case there is any doubt about the
importance of this issue in Maine, the involvement of both Senators
should put that to rest!
Mr. President, as many of my colleagues are aware, ``slamming'' is a
term that has been used to describe any practice that changes a
consumer's long-distance carrier without the consumer's knowledge or
consent. A variety of tactics and techniques can be used to accomplish
this goal, including vague or inaccurate phone solicitations;
unsolicited ``welcome packages'' that look like an advertisement but
automatically lead to a consumer changing phone companies unless the
individual returns a rejection card; and ``drawings'' for giveaways
that also serve as a means of unwittingly changing services.
Regardless of the tactic used to slam a customer, the bottom line is
that it's an unfair and illegal practice--and it's one that must be
brought to a halt.
Mr. President, phone customers expect high-quality phone service for
a fair price. If a phone company is going to ``reach out and touch
someone,'' it must be done legally and with fairness to the customer.
Consumers who are slammed often receive lower-quality service or higher
rates, and sometimes they are not even aware that they have been
slammed until they get their bills. This is an outrageous practice and
I think we can all agree that its demise is long overdue.
Last year, in my home state of Maine, the number of slamming
complaints doubled to a total of 1,000 between 1996 and 1997.
Nationwide, more than 20,000 consumers filed slamming complaints with
the FCC, the largest category of complaints the agency received. In
1996, it received more than 16,000 total slamming complaints. As a
result of these complaints, the FCC has taken enforcement action
against 15 companies for slamming violations over the past two years,
while assessing more than $1 million in forfeitures and consent decrees
with another $500,000 in additional penalties pending.
Mr. President, as these numbers clearly indicate, this is a serious
problem that is only going to get worse. In particular, the threat
exists that--as competition develops in other communications markets--
slamming could extend into new services and become an even more onerous
consumer problem if it is left unchecked.
As has been indicated, the Federal Communications Commission (FCC)
already has the authority to combat this practice by assessing fines
against telephone carriers that slam. But with a 25 percent increase in
the number of slamming complaints that were filed in just the past
year--and even with the level of fines and penalties that have already
been imposed on companies--it is obvious that the FCC's current
approach is not working. And it is for this reason that the legislation
before this body is so critical.
Mr. President, S. 1618 will put this reprehensible practice to an end
by providing definitive procedures for telephone companies to follow in
changing a customers's telephone service; giving federal and non-
federal authorities the power to impose tough sanctions on companies
that are guilty of slamming; and providing measures to ensure that
slamming victims are fully-compensated.
Specifically, to ensure that changes in phone service are made in a
verifiable manner, the bill requires phone companies to obtain written,
verbal, or electronic verification from a consumer who is changing
providers.
To ensure that customer complaints are dealt with in a timely manner,
carriers accused of slamming will be required to defend their actions
in no more than 120 days, and the FCC will have no more than 150 days
to resolve any outstanding disputes.
If slamming has occurred, the bill gives the FCC the authority to
provide compensatory or punitive damages to consumers that companies
would be required to pay within 90 days. In addition, provide a strong
disincentive to potential slammers, the FCC would be required to impose
fines on phone companies that are guilty of slamming of at least
$40,000 for a first-time offense and $150,000 for repeat offenses. And
If a company refuses to pay these fines, the bill provides that the FCC
will also have the authority to prosecute slammers.
Finally, if a consumer wishes to pursue redress through means other
than the FCC, this bill allows consumers to pursue their grievances in
court through state class-action lawsuits instead of through the FCC.
And in the event a specific state does not believe these penalties are
strong enough, the bill specifically retains the rights of each state
to impose stiffer sanctions.
This bill and the provisions it contains are based on common sense
and good policy, and I urge my colleagues to join me in supporting it.
Mr. President, while this bill is a very sound approach to addressing
the slamming epidemic, there is one additional technique that consumers
already have at their disposal to prevent slamming from occurring, and
I believe we should seek to fully-protect this consumer option in this
bill.
Specifically, if customers are concerned that they will be
unwittingly tricked--or unknowingly forced--into changing their phone
company, they can now ``freeze'' into place the long distance carrier
of their choice at the local phone company. As a result, no order to
change phone companies can be completed without the express, direct
authorization of the customer to the local phone company.
To ensure that this option is in no way impeded in the future, I have
prepared an amendment that would ensure that no subsequent action by
the FCC can be undertaken to restrict or impede the customer's ability
to ``freeze'' in place the carrier of their choice. I understand that
this amendment is acceptable to the manager's of the bill, and has now
been included in the manager's amendment. Therefore, I would like to
thank the Chairman and Ranking member for addressing this issue and
accepting my provision.
Mr. President, the bottom line is, slamming is a serious crime, and
this is a serious solution. Companies engaged in slamming will no
longer be able to hide behind the anonymity of the phone lines. Phone
companies and their customers should reach agreements on phone
services, but slamming destroys that relationship. Therefore, this bill
will restore an element of trust that has been lost through this
abhorrent practice.
Mr. President, slamming is nothing less than high-tech extortion, and
the law must be changed to deal with this new criminal threat, and I
hope my colleagues will join me in supporting this important
legislation.
Mr. HARKIN. Mr. President, every year thousands of Americans are
victimized by fraudulent telemarketing promotions. And, unfortunately,
these scam artists prey most often on our senior citizens. The losses
every year are estimated to be in the billions of dollars. My amendment
will help law enforcement to more effectively combat these abuses.
Today, its all too easy for telemarketing rip-off artists to profit
from the current system. How do these rip-offs occur? Advertisements
regarding sweepstakes, contests, loans, credit reports and other
promotions appear in newspapers, magazines, and other direct mail and
telephone solicitations. The operators of many of these phoney
promotions set up a telephone boiler room for a few months in which a
number of phones are operated to receive calls responding to their ads.
They steal thousands--even millions--of dollars from innocent victims
and then they simply disappear. They take the money and run--moving on
to another location to start all over again.
Here's just one example. Not too long ago, 30,000 Iowans received
postcards from an organization calling itself Sweepstakes
International, Inc. The postcard enticed recipients to call a 900-
number and they were charged $9.95 on their phone bill.
Based on a Postal Service investigation, civil action was initiated
in U.S. District Court in Iowa. As a result, the promotion was halted
and $1.7 million was frozen. This represented just one
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and a half month's revenue from the scam!
My amendment will protect telemarketing victims by providing law
enforcement the authority to more quickly obtain the name, address, and
physical location of businesses suspected of telemarketing fraud. Phone
companies would have to provide law enforcement officials only the
name, address and physical location of a telemarketing business holding
a phone number if the officials submitted a formal written request for
this information relevant to a legitimate law enforcement
investigation. It will make it easier for officers to identify and
locate these operations. This is similar to the procedure that is
already in place for post office box investigations.
Mr. President, it is necessary to crack down on serious consumer
fraud. With this change, we will have many more successful efforts to
shut down these rip-offs artists like several recent cases in my home
state of Iowa.
Mr. FEINGOLD. Mr. President, today I rise to speak in support of the
anti-slamming bill, S. 1618. I want to commend Senator McCain, Senator
Hollings, and the rest of the Commerce Committee for bringing this bill
to the floor, and I am proud to be a cosponsor of the bill.
Slamming is an important and widespread consumer problem, and it is
high time that the Congress takes action to stop it. Slamming, as most
people now know, is a practice carried out by some telecommunications
companies to switch a consumer's long distance or local exchange
carrier without the consumer's knowledge or consent. Only a few years
ago this practice, while persistent and frustrating for some consumers,
appeared limited in scope. However, in more recent years this type of
consumer fraud appears to have grown into a common profit-making scheme
of some telecommunications companies carried out at the consumer's
expense.
The rise in slamming complaints has been absolutely astonishing. The
Federal Communications Commission reports that the 11,000 slamming
complaints they received in 1995 represented a sixfold increase in the
number of complaints received in 1993. By 1996, slamming complaints
rose by an additional 42 percent over 1995, with the FCC receiving more
than 16,000 complaints. And in 1997, the FCC received 44,000 complaints
from consumers, nearly triple the 1996 total.
But these numbers only begin to tell the story. In Wisconsin,
slamming is the number one telecommunications complaint, and
telecommunications is the single largest category of consumer
complaints that the Wisconsin Department of Agriculture, Trade and
Consumer Protection received last year. That agency reports that
slamming complaints were up 400 percent in 1997. The National
Association of State Utility Consumer Advocates estimates that as many
as one million consumers each year have their long distance carrier or
local provider switched without consent.
In September of 1997, the National Consumers League polled
telecommunications consumers in Milwaukee, Wisconsin, Chicago,
Illinois, and Detroit/Grand Rapids, Michigan. The poll showed that of
the 1500 individuals surveyed, three out of 10 reported that they, or
someone they know, had been slammed. In Milwaukee, of those who said
they had experience with slamming, 41% said their own telephone carrier
had been changed without their consent. Even more disturbing, the
survey provided evidence that slammers appear to be targeting consumers
who have high long distance bills, raising privacy concerns regarding
billing information.
Mr. President, this is consumer fraud of monstrous proportions. It
causes extra cost and inconvenience to consumers, and it also distorts
telecommunications markets and discourages legitimate competitive
practices. The prevalence of slamming and the lack of any strong
disincentives against it rewards companies that use this fraudulent
practice and penalizes those that seek new customers through legitimate
and honest means.
The 1996 Telecommunications Act recognized the slamming problem and
broadened the scope of FCC's regulatory authority over slamming to
cover all telecommunications carriers rather than just long distance
service providers. The Act also provided that a carrier that violates
the FCC's verification requirements is liable to the customer's
original carrier for all charges paid by the customer after he or she
had been slammed.
The FCC now has rules prohibiting slamming and requires companies to
verify the customer's authorization of any switch in carriers, but
these rules obviously haven't done the trick. For one thing, the
penalties for slamming just aren't tough enough. While the FCC has
taken enforcement action against a number of telecommunications
companies, the tremendous profit opportunities from slamming overwhelm
the threat of FCC enforcement.
The Consumer Anti-Slamming Act should be an effective antidote to
this problem. It establishes minimum verification requirements for
submitting changes in local or long distance telephone service. The
requirements apply when service is first requested as well. The bill
also bans so-called ``negative option'' marketing--this is where a
company sends you a letter that says your service will be switched
unless you send back a reply card to say no. With all the junk mail
that people now receive, this is a particularly reprehensible business
practice, and I am pleased that this bill outlaws it.
The bill also addresses the problem that many people do not even know
that when they have been slammed by requiring the new
telecommunications company to notify a consumer within 15 days of a
change in service. The notification must indicate the name of the
person who requested the change and inform the consumer that he or she
may request further information about when and how the change was
authorized. It must also contain information about how to pursue a
complaint if the customer believes he or she has been slammed.
Penalties are also significantly increased in this bill. The FCC may
award damages of $500 or the actual damages incurred, whichever is
greater, directly to the consumer. And the FCC can fine carriers who
violate the anti-slamming regulations $40,000 for a first offence and
$150,000 for additional offences. These significant penalties should
eliminate the economic incentives to engage in these illegal practices.
Mr. President, the information age has now arrived. Technological
advances hold out great promise for making our daily lives easier and
more enjoyable. Competition is the driving force in bringing those
advances to the consumer at ever more affordable prices. Allowing
consumers to choose between competing long distance and local service
providers should improve service and lower prices. But when
irresponsible or even criminal elements seek to take advantage of
unsuspecting consumers through activities like slamming, forceful
regulation is necessary.
The unethical and illegal practices of companies who seek to
victimize consumers to enhance their own profits must not be tolerated.
Protecting consumers from those who engage in these practices is one of
my most important responsibilities as a United States Senator. I
believe that this bill gives the FCC the tools it needs to crack down
on the slamming problem once and for all. I am proud to vote for it.
Ms. SNOWE. Mr. President, S. 1618 is a well-crafted bill that is
designed to prevent the unauthorized transferring of a customer's phone
carrier. This is accomplished through a variety of provisions,
including the threat of strong penalties on telephone companies that
engage in slamming.
While I strongly believe that the penalties established in this
legislation should be fully-enforced, I would like to clarify the type
of conduct that these penalties are being targeted to address.
Specifically, is it the Chairman's intent that the significant
financial penalties contained in Section 1(f) be imposed for all cases
of unauthorized carrier changes, including changes that are accidental
or innocent mistakes, such as when an order to change service providers
in improperly keyed-in by a customer service agent? Or are these
penalties designed to address cases of slamming that involve willful or
intentional misconduct on the part of companies?
Mr. McCain. I appreciate the questions of the Senator from Maine, and
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believe it is important that the intent of this legislation be fully
understood. This bill is designed to ensure that companies are deterred
from the reprehensible practice of slamming, and that harsh penalties
are imposed as a form of punishment if the practice is undertaken by an
unscrupulous company. However, the penalties in this bill are not
intended to be used for cases of innocent or accidental changes of
carriers, such as the situation described by my colleague, Senator
Snowe--and the language of this bill has been crafted accordingly.
Specifically, the bill provides that the Commission can waive the
minimum penalties if they determine that there are mitigating
circumstances, which would include cases of innocent or accidental
changes of carriers.
Ms. SNOWE. I thank the Chairman for clarifying this important issue
and for crafting language that reflects this intent. I am very
appreciative for your leadership and efforts to curb the practice of
slamming, and commend the Senator for crafting legislation that will
forcefully attack this growing problem.
Mr. BURNS. Mr. President, I rise to support the Consumer Anti-
Slamming Act, as it addresses a severe problem that has arisen as an
unintended consequence of additional competition in the
telecommunications marketplace: the unauthorized switching of
customers' telephone service providers. I also understand that the
managers' amendment of the bill includes language that addresses
another serious, unintended problem posed by the growth of information
technology: the explosion of junk e-mail, or ``spamming.''
I congratulate Senators Murkowski and Torricelli for their hard work
on dealing with the issue of spamming. S. 1618 as amended includes
language that would require commercial e-mailers to identify
themselves. This language is simply a ``Truth in Advertising
Amendment.'' As any of us who use e-mail are finding out, millions of
junk e-mails are sent out with fake e-mail addresses which prevent
citizens from requesting that they not be sent any further clutter from
the same sources. The amendment also requires that a junk e-mailer must
honor requests from individuals to be deleted from mailing lists.
I should add that the problem of junk e-mail is particularly
important to customers in rural areas such as Montana. Often, rural
residents must pay long distance charges to receive these unwanted
solicitations, many of which contain fraudulent messages. ``Spamming''
is truly the bane of the information age. This problem has become so
pervasive that entire new networks have had to be constructed to deal
with it, when resources would be far better spent on educational or
commercial needs. I welcome the inclusion of this language as a much-
needed step forward in dealing with this increasingly serious problem.
I would now like to speak on an issue involving more traditional
communications, that of slamming. I have held two field hearings in the
Communications Subcommittee on this important topic, one in Billings
last August and one in Denver last October.
During the field hearing in Billings, I heard from consumers,
industry representatives and regulators on a variety of slamming
issues. I learned in Billings that slamming is not confined to big
cities. It is reaching every part of our country. Consumers are falling
prey every day to companies that intentionally mislead and deceive.
Today, I look forward to building on the record we started in Montana.
I should also recognize that Senator Ben Nighthorse Campbell has
shown real leadership on this issue through his introduction of an
anti-slamming bill, particularly at the field hearing in Denver, which
he attended. The bill before the Chamber today, S. 1618, incorporates
language from S. 1051, Senator Campbell's slamming bill. The amendment
including Senator Campbell's language was passed unanimously out of the
Commerce Committee on March 12 of this year.
This language requires that the FCC will annually report to Congress
the ``Top Ten'' slammers for that year, as well as carriers assessed
fines or penalties during the same period. The ``Top Ten'' list would
identify those carriers subject to the highest number of subscriber
slamming complaints compared to the total number of subscribers they
serve. This ratio approach ensures that large companies are not
automatically singled out by virtue of having a large customer base.
The focus is on those companies with the highest percentage of slamming
complaints relative to their total customer base.
This ``Top Ten'' list represents the core of Senator Campbell's anti-
slamming bill. Having held two field hearings in the Communications
Subcommittee on this important topic, I am convinced that Senator
Campbell's approach will prove very valuable in deterring carriers from
engaging in illegal tactics.
As competition develops in new communications markets, we could see
slamming migrate to new areas and become an even bigger problem.
Clearly, something must be done soon to protect consumers and to
protect good, clean competition.
I am confident that the Consumer Anti-Slamming Act as amended will
accomplish this goal and I urge my colleagues to support it.
Mr. LEVIN. Mr. President, the mangers' amendment included two
amendments to S. 1618 which I authored and which I appreciate the
managers of the bill accepting. I am joined in offering these
amendments by cosponsors Senator Glenn and Senator Durbin.
These amendments are the product of hearings held on slamming in the
Permanent Subcommittee on Investigations (PSI), chaired by Senator
Collins. Slamming, the practice of changing a consumer's long distance
carrier without the consumer's knowledge and express consent, is the
number one complaint received by the Federal Communications Commission
(FCC). And those FCC slamming complaints are on the rise--increasing
almost 50% from 1995 through 1997. Slamming is also the number one
complaint received by the Michigan Public Service Commission. And,
Michigan has the unfortunate distinction of being in the top ten
states, nationwide, for the number of consumers who have been slammed.
A Louis Harris survey taken in September 1997 ranked Detroit and Grand
Rapids among the hardest hit cities in the country. About 25% of
telephone customers in Detroit and Grand Rapids have either had their
telephone carrier switched without their permission or know someone who
was illegally switched.
Slamming leaves consumers feeling vulnerable and angry. Consumers
have the right to use any long distance carrier they choose and to
change carriers whenever they wish. But they want to be in control.
Slamming takes choices away from consumers without their knowledge, and
rewards companies that engage in deceptive and misleading marketing
practices.
Slammers use deceptive marketing practices such as getting
subscribers to sign a misleading authorization form, falsifying tape
recordings to make it appear that the consumer has verbally agreed to
the change, or posing as the subscriber's currently authorized carrier.
Unscrupulous carriers have been known to forge letters of authorization
or even pull subscribers' numbers from a telephone book and submit them
to the local exchange carrier for a long distance carrier change.
Unscrupulous resellers generally bill higher rates once the subscriber
is switched.
In one case in Michigan, the slammer used the device of a contest--
the opportunity to win a trip or a car--to get consumers to sign a card
that would then be used to change the long distance service. The
Michigan consumer who filed a complaint with the Michigan Attorney
General reported that her 14 year old daughter was approached several
times in a shopping mall to sign the card under the auspices of
participating in the contest. The daughter kept trying to resist--
telling the slammer that she was underage for the contest. The slammer
finally prevailed, and the 14 year old daughter entered what she
thought to be a contest or drawing. However, a week or so later, this
constituent was notified that her long distance carrier had been
changed--unbeknownst to her. She wrote in her letter to the Attorney
General: ``I am very upset that this is happening not only to me but to
others as well. It's a scam and it needs to stop now!''
Although the large telecommunications companies, called facilities
[[Page S4700]]
based carriers because they own extensive telephone lines and
equipment, have engaged in slamming, according to a recent GAO report,
most intentional slamming is perpetrated by switchless resellers.
Switchless resellers have no equipment; they purchase network
facilities from large long distance companies at a bulk rate and resell
the service either to consumers or to other resellers. Currently a
switchless reseller can enter into the telecommunications business
without any proof of financial capability. All a person has to do is
strike a deal with a long distance carrier to use that carrier's lines
and facilities, get a billing company to provide billing services and
develop a customer base. The switchless reseller is then in business
and can use unscrupulous practices to switch the long distance
providers of innocent consumers from the carrier the consumer has been
using to the switchless reseller. The reseller then charges higher long
distance rates.
Many switchless resellers operate legitimately; but there are a
surprising number who don't. Currently there is nothing in the law that
screens out the scam artists from the legitimate resellers. S. 1618
increases civil penalties, creates new criminal penalties and includes
disincentives to eliminate the profit for slammers. I am supportive of
those provisions and ask unanimous consent that I be added as a
cosponsor.
But, Mr. President, we also need to try to keep the scam artists out
of the system--to keep consumers from being slammed in the first place.
My amendment would require switchless resellers--those resellers who
have no switching facilities under their ownership or control--to post
a bond with the FCC before they can engage in the business of selling
long distance service. The bond would be in an amount set by the FCC,
and the amendment would prohibit a billing agent of a switchless
reseller from billing subscribers of long distances services on behalf
of the switchless reseller unless the billing agent has confirmed that
the reseller has furnished the bond. In this way, a switchless reseller
cannot get someone to bill on its behalf unless it has posted a bond
with the FCC. The proceeds of that bond can be used to pay for any
damages to a consumer awarded by the Commission to reimburse the
consumer for excess charges incurred as a result of slamming. The
requirement for a bond should keep the unscrupulous resellers out of
the business. Take for example, David Fletcher, possibly the most
notorious slammer. He started his slamming business, apparently, with
no resources and managed to bill up to $20 million in long distance
services. He couldn't start his business and no billing agent or phone
company could have contracted with him to do his billing unless he had
posted a bond with the FCC, under my amendment.
The other amendment which the Managers have incorporated in their
substitute requires full disclosure of the long distance services and
providers on the local phone bill. We learned, Mr. President, in the
hearing on slamming that some switchless resellers go to great lengths
to disguise the fact that they have taken over a consumer's long
distance service. One reseller, for example, incorporated under the
name ``Phone Calls.'' Another used the name, ``Long Distance
Services.'' Those names, then, appeared on the consumers' phone bills,
and no one would have paid attention to those names. Anyone looking at
such a phone bill would have assumed those were not the names of the
unexpectedly new long distance carriers, but the identification of the
item being listed below --the phone calls. The consumer would continue
to assume that his or her long distance carrier had not been switched.
To make it perfectly clear to consumers who their long distance
provider is, the provision requires that the local telephone bill
explicitly state the name, address and toll-free number of the long
distance telephone provider and the specific services provided. This
hopefully will address the problem of hidden or disguised switching--
where a consumer gets a bill and can't tell that his or her long
distance carrier has been switched. This provision gives the FCC the
authority to make telephone bills absolutely clear so slammers can't
hide behind vague or confusing phone bills.
Mr. President, I want to commend Senator McCain and Senator Hollings
for their good work in getting this important piece of consumer
legislation to the floor so quickly. I also want to commend Senator
Collins and Senator Durbin from the PSI subcommittee for their energy
and commitment to publicizing and helping to solve this problem.
S. 1618, with my amendments, will provide important consumer
safeguards, Mr. President, to help keep slammers out of the system.
Legitimate resellers will be able to conduct their businesses without
ruthless slammers tarnishing the reseller business.
Mr. McCAIN addressed the Chair.
The PRESIDING OFFICER. The Senator from Arizona.
Mr. McCAIN. Mr. President, I yield myself such time as I may consume.
We have one amendment remaining of Senator Rockefeller. We are
awaiting his arrival on the floor. I hope that Senator Rockefeller will
arrive pretty quickly, because we have another bill to do tonight. In
the meantime, I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The legislative clerk proceeded to call the roll.
Mr. ABRAHAM. Mr. President, I ask unanimous consent that the order
for the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. ABRAHAM. Thank you, Mr. President. I rise today to address the
antislamming legislation before us. I believe that this bill, S. 1618,
is a bill that we must act on quickly and decisively. I am happy that
when the Senate concludes its business today, we will have passed the
legislation and for good reason. The problem which this legislation
seeks to address described, I guess, by the euphemism ``slamming,'' is
one that is a growing concern to people in my State and, I suspect, to
almost all the other States represented in this body.
In Michigan, during the last year, complaints about this practice,
which is the changing of an individual's or customer's long-distance
service without their knowledge and approval, has risen from relative
obscurity to becoming, next to billing problems, the second largest
source of complaints received by Michigan's Public Service Commission.
The nature of the complaints are, of course, pretty obvious and have
been depicted very well by Chairman McCain and others in the discussion
so far today. People find that through no act of their own, or
certainly no intentional act of their own, they have had their long-
distance service changed usually with negative consequences. In our
State, the negative consequences usually fall into two categories,
often both happen simultaneously: On the one hand, people find that
their service level and quality is diminished; on the other hand, they
find that their bills are getting higher.
The latter happens for a variety of reasons. First, because
frequently the new company, in fact, just simply has higher bills and
charges higher rates. In addition, they find it happens because they
have found themselves the victim of slamming on several separate
occasions during a billing period. They have moved from one company to
a second and sometimes to even a third and fourth. Many of the current
rate practices engaged in with respect to long-distance rates give
people a reduced rate if they stay with a service a certain period of
time.
However, as a result of slamming, people change from one to a second
to a third to even a fourth company during a billing period or a period
during which a rate is being determined based on continuity of service.
Individuals discover that their long-distance calls that they expect to
have been charged at a very low rate are, in fact, being billed at very
high rates.
For all of these reasons, we need to take action now. I mentioned
that in our State, the slamming practice has become the second most
widely voiced complaint heard by our Public Service Commission. Our
local telephone service carrier, Ameritech, the principal carrier in
Michigan, reports that they are receiving complaints. People think
somehow they are responsible. Last year alone they received 37,000 such
complaints of slamming practices occurring.
[[Page S4701]]
In order to find out more about this, I went back to Michigan during
a recent recess and began meeting with individuals who were themselves
the victims of slamming. What I discovered was that, in fact, the
practices used by these long-distance companies border on outright
fraud, and in some cases, go over the line to actual fraud.
People have been called up and asked if they want ``direct billing''
for their long-distance service. They answer yes and find the ``Direct
Billing'' is, in fact, the name of a new long-distance service company
and that their answer is being used as a basis for the changing of
their service.
In other cases, people engage in a conversation of someone calling
over the telephone, an innocuous conversation, but find the information
has been rescripted in such a fashion as to give a basis for changing
the long-distance service.
The bottom line, Mr. President, is that this practice is wrong. It is
hurting consumers across America, and we have an obligation to stop it.
I believe the legislation before us now does so.
I am glad we were able to pass it so quickly and so overwhelmingly
through the Commerce Committee, and I look forward to the vote today
where I am confident we will, once again, send a signal that we are not
going to tolerate these practices any longer. The additional penalties
that are part of this legislation, in my judgment, set us in the right
direction. Not only will they send a strong message, but I believe they
dramatically deter anyone from engaging in these practices. The
procedures in this legislation should hopefully provide those who are
victims with a relatively quick resolution of their problems.
For these reasons, I rise in support of the legislation. I am a
cosponsor and am pleased to be part of it. I thank Senator McCain and
his staff for working not only on this legislation but other technology
bills that we will be addressing over the next day or so. I close by
expressing my support, once again, for S. 1618. I look forward to its
passage today and ultimately for its passage through the Congress in
general and it being signed into law by the President.
I yield the floor and suggest the absence of a quorum.
The PRESIDING OFFICER (Mr. Brownback). The clerk will call the roll.
The legislative clerk proceeded to call the roll.
Mr. McCAIN. Mr. President, I ask unanimous consent that the order for
the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. McCAIN. Mr. President, as I mentioned earlier, we are still
waiting for the final amendment. I hope we can get it done very
quickly. We have another bill to address tonight, and we are still
working on that.
So I again suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The legislative clerk proceeded to call the roll.
Mr. MURKOWSKI. Mr. President, I ask unanimous consent that the order
for the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. MURKOWSKI. I ask unanimous consent that I may be allowed to speak
for about 2\1/2\ minutes.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. MURKOWSKI. I thank the chair.
Junk E-Mail
Mr. MURKOWSKI. Mr. President, I am pleased that the chairman is
including in the manager's amendment language that I offered along with
my colleague, Senator Torricelli.
Mr. President, one of the downsides of the technological revolution
that is symbolized by communications today on the Internet is the
growing multitude of junk e-mail. Junk e-mail has quickly become the
scourge of the Internet. It clogs America's inboxes and raises costs to
all Internet users. Among those who are regular e-mail users, junk e-
mail is known as ``spam,'' which many suggest is an insult to the
Hormel Corporation. I originally recognized spam as a spinoff of the
Second World War where food was given to soldiers, commonly referred to
as C rations, that implied a mixture of food products. In any event, it
is the name that has been adopted for junk e-mail.
Rural residents of our Nation and my State of Alaska are forced to
pay long-distance charges to receive these unwanted solicitations, the
majority of which contain fraudulent or pornographic messages. Not only
are these junk e-mails objectionable, but they so clog the transmission
network that Internet service providers are forced to spend tens of
millions of dollars to expand their networks to handle all of these
messages.
America Online reports that up to 30 percent of daily incoming e-mail
is junk e-mail. This volume has forced it and other Internet service
providers, the ISPs, to buy more equipment and divert staff to handle
users' complaints. These resources could be better spent by ISPs on
improving service or even reducing monthly fees.
My provision, Mr. President, is a modified version of legislation
that I introduced last year--S. 771. When I introduced the bill, I put
it up on the Web and asked for e-mail comments on the bill. So far, I
have received over 1,500--the vast majority of which have been
supportive of my efforts.
So this provision is really a Truth in Advertising provision. It will
simply require commercial e-mailers to identify who they are, their
addresses, and their telephone numbers. The reason we have included
this provision is that millions of junk e-mails are sent out with phony
e-mail addresses which make it impossible for citizens to request that
the sender stop cluttering their e-mail boxes. Under this provision,
citizens will know exactly who the sender is and have the option of
turning that sender away from their inbox.
The provision further requires that a junk e-mailer must honor the
request of an individual who asks that his or her name be deleted from
the mailing list permanently. It's as simple as that. I doubt if there
is anyone among us here today who would argue against someone's wish to
simply be left alone by junk e-mailers.
The amendment permits the Federal Trade Commission, the State
Attorneys General, and Internet service providers to protect consumers
from Internet junk e-mail by allowing them to sue those junk e-mailers
who fail to identify themselves properly or refuse to remove a person's
name from a mailing list.
Mr. President, junk e-mail has become so pervasive that some have
suggested a complete ban on such unsolicited advertisements. I believe
that Internet users should control what comes into their electronic
mailboxes, not the government. And I wish to emphasize that. This
debate should not be about the government controlling the content of
individual electronic mailboxes, but about individual users taking
control of their own mailboxes. I think my provision will sufficiently
reduce the problems of junk e-mail, and thus show that banning is
unnecessary.
Finally, I thank the floor managers for their attention to this
issue, as well as the efforts of America Online and the Center for
Democracy and Technology.
Mr. TORRICELLI. Mr. President, I want to thank Senator McCain and
Senator Hollings for agreeing to include the Murkowski-Torricelli junk
E-mail amendment to this bill. And I want to thank my distinguished
colleague from Alaska for join with me in this effort.
Last year, Senator Murkowski and I each recognized the growing threat
to Internet commerce posed by the proliferation of unsolicited
commercial e-mail, known by its Internet slang as ``Spam.'' Although we
initially had somewhat different approaches to this problem, we
recognized that something had to be done.
The amendment we have today is the product of a good faith effort
involving privacy groups, marketers, online service providers, and
others to achieve a result that will rein in these destructive e-mail
practices, while protecting the first amendment rights of all who wish
to send and receive legitimate e-mail. Before I address what our
amendments does, I want to briefly discuss the problem of unsolicited
commercial junk e-mail.
Junk E-mail, or so called spamming, is an unfortunate side effect of
the burgeoning world of Internet communication and commerce. Like many
other Americans, I have an account on America Online and am inundated
with unsolicited messages, peddling every item
[[Page S4702]]
under the sun. Similarly, I receive junk e-mail daily at my official
Senate e-mail address, as well as the complaints of dozens of
constituents who forward me the Spam that they are sent.
The incentive to abuse the Internet is obvious, E-mailing ten million
people can cost as little as a couple of hundred dollars. And because
the senders of these e-mails are generally unknown, they avoid any
possible retribution for consumers.
Today, unsolicited commerical e-mailers are hiding their identities,
falsifying their return addresses and refusing to accept complaints or
removal requests. Their actions approach fraud, but our current law
doesn't seem strong enough to stop them.
I have long been concerned about excessive--indeed any--government
regulation of the Internet. Many of the best qualities of American life
are represented and enhanced by the Internet, and I fear government
regulation has the possibility to stifle the creativity and development
of cyberspace.
However, a failure to address this problem now poses a greater threat
to the Internet than do these minimal requirements. Junk e-mail is
estimated to take up 30 percent of all Internet traffic and is
increasingly responsible for slowdowns, and even breakdowns, of
Internet services. Let me be clear, this legislation is not a de facto
regulation of the Internet. In fact, it does not go as far as some have
suggested. It does not ban all unsolicited e-mail because we wanted to
avoid any inference of government interference. However, it is a first
and needed step in making cyberspace saner.
The Murkowski-Torricelli amendment takes some important and necessary
steps. First, it requires senders of unsolicited commercial e-mail to
identify themselves and provide a valid return e-mail address. Second,
it requires senders to inform recipients that they have the right to
reply and stop any future messages by typing ``remove'' on the subject
line. Third, it requires junk e-mail to honor any request to remove
someone from their mailing list. Fourth, it authorizes the FTC to
enforce these requirements with civil fines and injunctive relief. And
finally, it requires the FTC to establish a web site to accept consumer
complaints and list its enforcement actions.
Put simply, our amendment strikes a balance that will help consumers
prevent unwanted and unsolicited electronic mail, without creating a
burdensome regulatory system or unnecessarily restricting free speech.
It recognizes that the government should not hastily and haphazardly
regulate pass legislation to regulate the Internet. However, it also
recognizes that some practices are simply too destructive to ignore.
Mr. President, I urge my colleagues to support this amendment.
Mr. President, I yield the floor and suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The legislative clerk proceeded to call the roll.
Mr. DORGAN. Mr. President, I ask unanimous consent that the order for
the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
Amendment No. 2392
(Purpose: Require truth in billing procedures for telecommunications
carriers)
Mr. DORGAN. Mr. President, on behalf of Senator Rockefeller, Senator
Snowe, Senator Kerrey, and myself, Senator Dorgan, I send an amendment
to the desk.
The PRESIDING OFFICER. The clerk will report.
The legislative clerk read as follows:
The Senator from North Dakota [Mr. Dorgan], for Mr.
Rockefeller, for himself, Ms. Snowe, Mr. Kerrey and himself,
proposes an amendment numbered 2392.
Mr. McCAIN. I ask unanimous consent reading of the amendment be
dispensed with.
The PRESIDING OFFICER. Without objection, it is so ordered.
The amendment is as follows:
At the appropriate place, insert the following:
SEC. . CONSUMER TRUTH IN BILLING DISCLOSURE ACT.
(a) Findings.--Congress makes the following findings--
(1) Billing practices by telecommunications carriers may
not reflect accurately the cost or basis of the additional
telecommunications services and benefits that consumers
receive as a result of the enactment the Telecommunications
Act of 1996 (Public Law 104-104) and other Federal regulatory
actions taken since the enactment of that Act.
(2) The Telecommunications Act of 1996 was not intended to
allow providers of telecommunications services to
misrepresent to customers the costs of providing services or
the services provided.
(3) Certain providers of telecommunications services have
established new, specific charges on customer bills commonly
known as ``line-item charges''.
(4) Certain providers of telecommunications services have
described such charges as ``Federal Universal Service Fees''
or similar fees.
(5) Such charges have generated significant confusion among
customers regarding the nature of and scope of universal
service and of the fees associated with universal service.
(6) The State of New York is considering action to protect
consumers by requiring telecommunications carriers to
disclose fully in the bills of all classes of customers the
fee increases and fee reductions resulting from the enactment
of the Telecommunications Act of 1996 and other regulatory
actions taken since the enactment of that Act.
(7) The National Association of Regulatory Utility
Commissioners adopted a resolution in February 1998
supporting action by the Federal Communications Commission
and the Federal Trade Commission to protect consumers of
telecommunications services by assuring accurate cost
reporting and billing practices by telecommunications
carriers nationwide.
(b) Requirements.--Any telecommunications carrier that
includes any change resulting from Federal regulatory action
shall specify in such bill--
(1) the reduction in charges or fees for each class of
customers (including customers of residential basic service,
customers of other residential services, small business
customers, and other business customers) resulting from any
regulatory action of the Federal Communications Commission;
(2) total monthly charges, usage charges, percentage
charges, and premiums for each class of customers (including
customers of residential basic service, customers of other
residential services, small business customers, and other
business customers);
(3) notify consumers one billing cycle in advance of any
charges in existing charges or imposition of new charges; and
(4) disclose, upon subscription, total monthly charges,
usage charges, percentage charges, and premiums for each
class of customers (including residential basic service,
customers of other residential service, small business
customers, and other business customers).
Ms. SNOWE. Mr. President, I rise today to join my good friend and
colleague from West Virginia Jay Rockefeller, in offering the Consumer
Protection Act as an amendment to the Consumer Anti-Slamming bill.
Just as the slamming bill is designed to protect consumers from
unscrupulous phone companies that change a customer's phone service
without consent, this amendment will protect consumers from misleading
or inaccurate billing practices by phone companies. Therefore, I urge
that my colleges support this pro-consumer amendment that complements
the underlying pro-consumer Anti-Slamming Act.
Mr. President, our nation's $260 billion telecommunications industry
is undergoing a period of rapid growth and change. This change is being
driven by the enactment and progressive implementation of the
Telecommunications Act of 1996--a law that is gradually shifting the
industry from being one that is heavily-regulated to one that is open
and competitive.
As would be expected for an industry of this size, the transition
from a regulated environment to a competitive environment has not been
entirely smooth, nor has it been as rapid as many of us would prefer.
To date, there have been countless proceeding at the FCC to
restructure the way that services are delivered to consumers and the
way that telecommunications companies pay each other for these
services. In response to these restructuring efforts, there have been a
variety lawsuits filed in court by telecommunications companies, and
members of Congress have weighed-in when they believe the new rules do
not accurately reflect the intent of the law.
And--as would be expected in an emerging competitive market--there is
non-stop haggling between the telecommunications companies that are now
able to tread on each other's turf after years of being statutorily
limited to their own market niche. But don't get me wrong . . . that's
not a bad thing--that's what competition is all about.
Mr. President, during this time of rapid transition and daunting
change,
[[Page S4703]]
it is critical that we not forget the individuals for whom the
Telecommunications Act of 1996 was crafted in the first place: the
American consumers. Afterall, this landmark law was not passed because
Congress simply wanted to deregulate an industry--rather, it was passed
because competition will bring consumers a wide array of new and
advanced telecommunications services at lower prices.
The amendment we are offering today is specifically designed to
protect consumers during this time of transition in the
telecommunications industry. Specifically, the Consumer Protection Act
will require ``truth-in-billing''--a guarantee to consumers that what
they see on their phone bills is thorough and accurate.
Mr. President, as my colleagues have undoubtedly heard from their
constituents--and may be experiencing themselves--there is a great deal
of confusion being generated by new line-item charges that have been
added to phone bills in recent months. Since January, many telephone
companies have started to place new line-item charges on customer phone
bills for a variety of purposes and under a variety of names, including
``national access charges,'' ``universal service charges,'' or both.
While the descriptions for these charges vary, the central theme is
that these new fees are being imposed because of recent federal actions
stemming from the Telecommunications Act of 1996.
In response to these new charges, telephone customers are
understandably confused and angry, and want to know why Congress would
pass a law--and the President would sign a law--that imposed a host of
new costs on them with no apparent benefits. They were told that this
legislation would bring competition and lower prices, but all they see
is new charges on their phone bills. They want to know what happened to
the benefits of deregulation!
Mr. President, customers deserve an answer to these questions and
they deserve to know that what they see on their phone bills is
accurate. And the simple fact is that the implementation of the
Telecommunications Act has brought--and will continue to bring--
countless benefits to consumers, and they deserve to know about them.
For instance, in July 1997, access charges--which are the fees paid
by long distance companies to local phone companies for use of their
networks--were reduced by $1.7 billion. The long distance companies
state that these reductions have been passed on to consumers in the
form of reduced rates, and I won't dispute their contention. The
problem is that their customers don't know the first thing about this
federal action to benefit customers--all they know is that new line-
items for various charges prescribed to the federal government have
been added to their bills!
By the same token, consumers have no idea that the phone companies
stand to reap substantial benefits as new markets are opened for
competition. As companies are allowed to enter the markets that were
previously closed to them, those that are competitive will reap
substantial profits that can greatly benefit their customers--but you'd
never know this from reading a company's bill.
To remove the confusion that these line-items have generated--and to
ensure that companies exercise full disclosure on the impact of
deregulation--the amendment we are offering does three things.
First, it directs the Federal Trade Commission (FTC) and the Federal
Communications Commission (FCC) to investigate the billing practices of
the telecommunications industry to ensure that all fees are being
fairly described on bills. If any company is found to be using
misleading billing practices, these agencies would be directed to
consider disciplinary actions against that company.
Second, the bill ensures that if a company puts a new line-item
charge on a phone bill that are attributed to federal actions, it must
also include line-items that delineate the benefits of federal actions
as well. Customers deserve to know the whole story when it comes to
federal regulatory actions--not just the side of the story that is in
the company's best interests.
Third, to ensure that the federal regulator of telephone service has
all relevant documents available for review, the bill requires that
companies submit the same financial disclosure forms to the FCC that
they now submit to the Securities and Exchange Commission (SEC). This
requirement won't impose a new, excessive burden on phone companies--
rather, it simply requires that they make a photocopy of the forms that
are already being sent to the SEC and mail them to the FCC.
Overall, this bill ensures that accurate information is being
depicted on phone bills--and that customers are told the whole story
about federal actions, not just the side that companies would like to
tell.
The bottom line is that changes are occurring as part of the
transition to a more competitive telecommunications market that will
bring substantial benefits to consumers and phone companies alike--but
some companies would only like to tell their customers half of the
story. That's simply not fair.
The amendment that we are offering is fair. It is a fair for
companies, and fair for consumers.
Of critical importance, our amendment does not re-regulate the
telecommunications industry--the companies will still decide for
themselves if they want to use line items. Our amendment simply ensures
that if a company does want to use a line-item for costs, it also will
include line-items for benefits. In addition, it ensures that the
billing practices of companies are properly examined and improper
practices are eliminated.
I would like to thank my friend from West Virginia for offering this
amendment today, and urge that my colleagues support this bipartisan,
pro-consumer amendment.
Mr. KERREY. Mr. President, the Telecommunications Act of 1996 was
clear; competition and consumer choice are to be the hallmarks of the
new telecommunication's market. However, the transition to competition
has been anything but clear to consumers. The growing pains of the
telecommunications industry have proved to be very confusing to
customers who lack full information about the various costs associated
with telecommunications services.
This lack of information is very troublesome for customers who are
trying to make sense of the telecommunications market. In order to help
consumers through this confusing morass of information, I recently
joined Senators Rockefeller and Snowe to introduce S. 1897 the Consumer
Protection Act. Today, Senator Dorgan joins us as cosponsor of this
legislation in the form of an amendment to S. 1618 the Consumer Anti-
Slamming Protection Act.
Under the provisions of this amendment, if a company chooses to
depict charges that are linked to federal policy on their bills, then
the company will be required to depict the benefits of that action on
the same bill. This requirement allows customers to see what they are
paying for so that they can gain a better understanding of the costs
associated with a national telecommunications network.
As we transition from the rigid world of monopoly to a competitive
market where consumers have choice, we must make sure that customers
have all of the facts. Competition depends upon free flowing
information and the Consumer Protection Act gives consumers the facts
they need to make good choices in a competitive market.
I strongly urge my colleagues to support this amendment.
Mr. McCAIN. Mr. President, I must respectfully oppose the amendment
offered by my good friend and colleague, Senator Rockefeller.
Let me explain why I am opposed. I take no issue with the Senator's
commitment to the principles of universal telephone service. And I most
certainly take no issue with the principle that consumers have a right
to clear and correct information about material adjustments to their
bills. I also believe that companies have an absolute right to inform
consumers about increases to their bills that companies have made in
response to federal and nonfederal requirements.
But, with all due respect, that's not what's really at issue here.
Mr. President, what's really at issue here is an attempt to
rationalize the rate adjustments imposed by the Telecommunications Act
of 1996. Unlike Senator Rockefeller, I didn't vote for that act, in
part because I thought it
[[Page S4704]]
would produce precisely the result it is producing--little competition,
lots of consolidation, and lots of bill adjustments--mostly increases.
If my colleague's amendment wants to give consumers facts, let's talk
about those facts. The telephone industry is built on a very complex
system of implicit internal subsidies. Making them explicit, while at
the same time adjusting them for the advent of competition, makes
adjustments in consumer bills inevitable. Now add these further facts:
the Telecom Act creates a whole new multibillion-dollar subsidy, and it
requires local telephone companies and interexchange companies to
expend billions of dollars to implement the Act's supposedly pro-
competitive provisions.
So here are the bottom-line facts. First of all, given this hideously
convoluted situation, complete ``truthful'' disclosure of all the
adjustments inherent in a consumer's monthly phone bill would add pages
and pages to a bill without necessarily doing much to enlighten the
consumer. For example, if a requirement like this were currently in
effect, a consumer might today be reading something like this:
Your long-distance bill might have been lower if your long-
distance carrier's reduction in access charge payments to
your local carrier had been reflected in your long-distance
bill instead of being used to help pay for the schools' and
libraries' wiring subsidy. Then again, of course, the FCC,
your long-distance carrier, and your local carrier disagree
on whether your long-distance carrier is really lowering your
bills as much as it might, and maybe someday we'll know the
answer--or maybe not. In the meantime, you're being assessed
a per-subscriber line charge which may or may not reflect the
real cost of your service, but the FCC's working on it. Of
course, if you live in the suburbs you should also know that
a portion of your bill goes to subsidize rural areas and
another portion subsidizes low-income subscribers. And be
aware that starting next year there's going to be another
substantial increase in some local phone bills as local phone
companies start passing along the costs of implementing local
number portability, which may or may not accurately reflect
all their true costs, which will otherwise be recovered by *
* *.
And on and on and on.
I would also note that the Senator's bill would require the FCC to
examine the bills of all telecommunications carriers. This would not
only require the FCC to investigate the bills of the over 500 long-
distance telephone companies that currently exist; it would also
require them to investigate the bills rendered by the thousands upon
thousands of wireless paging, cellular telephone, and PCS companies
too. This would require an enormous expansion of the current FCC
bureaucracy.
Mr. President, you get the picture: given the complexities of pricing
offsets in changing telephone industry economics, this attempt at so-
called truthful disclosure won't work. It will only confuse the
consumer to no useful purpose and wind up involving the FCC and the FTC
in neverending regulatory micromanagement in an effort to ascertain the
unascertainable.
If those who voted for the 1996 Telecom Act are now concerned that
the act is unexpectedly driving prices upward, the way to solve the
problem is to change the Act--not to present attempted excuses in the
form of confusing additions to consumers' bills.
Having said why it's unrealistic to try and explain every single
thing that has an impact on every single consumer telecom bill, I
emphatically endorse the proposition that consumers have a right to be
told why their bills have gone up--especially when an increase is
results from a federal or State levy. I would like to offer my own
amendment to assure consumers have access to that information.
The PRESIDING OFFICER. The question is on agreeing to the amendment.
The amendment (No. 2392) was agreed to.
Mr. ROCKEFELLER. Mr. President, first of all, I want to thank the
chairman of the Commerce Committee for accepting this amendment which I
was rushing to the floor to eloquently and brilliantly explain, and it
has been accepted. That is really what one prays for in this
institution. I hope it survives the conference. I am sure that it will.
Basically, the theory of it was--and I think that the chairman
understood it as well as the Senator from North Dakota--that we should
be honest with consumers. A lot of people don't know what a lot of the
prices are on the telephone long-distance bill. Charges have gone down
from an average of 34 cents per minute since deregulation of AT&T to
about 16 cents per minute now. We should tell them when we bill them,
if the prices go up on certain items, they also go down on others.
As an example, recently there was a $1.5 billion access charge
reduction, so actually the cost to the consumer on their residential
rate bill was going to go down, but the companies only wanted to show
the part that had a $675 million increase--$675 million increase, $1.5
billion decrease; obviously, the net of the decrease wins big time, but
they are not going to be told that.
I think this is a very useful amendment that the chairman of the
Commerce Committee has accepted. It isn't about reregulation, it is
about treating consumers fairly. It is also, frankly, about something
which is very complicated that consumers don't understand, nor should
they be expected to understand, nor do many of us understand as we
should--things like prescribed interchange carrier charge, called PICC.
That is a very big thing in all of this.
Even where universal service protects high-cost areas, the whole
concept of universal service is not understood by most voters or many
in the Congress itself.
We have to be fair. We have to level with them. We have to be
straight and honest. That is what this amendment attempts to do. That
is one of the reasons I am so glad this amendment has been accepted.
I thank, once again, the chairman of the Commerce Committee, the
Senator from Arizona, and also my friend from North Dakota, Senator
Dorgan.
I yield the floor.
Mr. McCAIN. That completes our amendments. I ask for the yeas and
nays.
The PRESIDING OFFICER. Is there a sufficient second? There is a
sufficient second.
The yeas and nays were ordered.
The PRESIDING OFFICER. The question is on the engrossment and third
reading of the bill.
The bill was ordered to be engrossed for a third reading and was read
the third time.
The PRESIDING OFFICER. The question is, Shall the bill pass? On this
question, the yeas and nays have been ordered.
The clerk will call the roll.
Mr. FORD. I announce that the Senator from Delaware (Mr. Biden) is
necessarily absent.
The result was announced--yeas 99, nays 0, as follows:
The result was announced--yeas 99, nays 0, as follows:
[Rollcall Vote No. 130 Leg.]
YEAS--99
Abraham
Akaka
Allard
Ashcroft
Baucus
Bennett
Bingaman
Bond
Boxer
Breaux
Brownback
Bryan
Bumpers
Burns
Byrd
Campbell
Chafee
Cleland
Coats
Cochran
Collins
Conrad
Coverdell
Craig
D'Amato
Daschle
DeWine
Dodd
Domenici
Dorgan
Durbin
Enzi
Faircloth
Feingold
Feinstein
Ford
Frist
Glenn
Gorton
Graham
Gramm
Grams
Grassley
Gregg
Hagel
Harkin
Hatch
Helms
Hollings
Hutchinson
Hutchison
Inhofe
Inouye
Jeffords
Johnson
Kempthorne
Kennedy
Kerrey
Kerry
Kohl
Kyl
Landrieu
Lautenberg
Leahy
Levin
Lieberman
Lott
Lugar
Mack
McCain
McConnell
Mikulski
Moseley-Braun
Moynihan
Murkowski
Murray
Nickles
Reed
Reid
Robb
Roberts
Rockefeller
Roth
Santorum
Sarbanes
Sessions
Shelby
Smith (NH)
Smith (OR)
Snowe
Specter
Stevens
Thomas
Thompson
Thurmond
Torricelli
Warner
Wellstone
Wyden
NOT VOTING--1
Biden
The bill (S. 1618), as amended, was passed, 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. SHORT TITLE.
This Act may be cited as the ``Anti-slamming Amendments
Act''.
TITLE I--SLAMMING
SEC. 101. IMPROVED PROTECTION FOR CONSUMERS.
(a) Verification of Authorization.--Subsection (a) of
section 258 of the Communications Act of 1934 (47 U.S.C. 258)
is amended to read as follows:
[[Page S4705]]
``(a) Prohibition.--
``(1) In general.--No telecommunications carrier or
reseller of telecommunications services 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 or reseller shall, at a minimum, require the
subscriber--
``(i) to affirm that the subscriber is authorized to select
the provider of that service for the telephone number in
question;
``(ii) to acknowledge the type of service to be changed as
a result of the selection;
``(iii) to affirm the subscriber's intent to select the
provider as the provider of that service;
``(iv) to acknowledge that the selection of the provider
will result in a change in providers of that service; and
``(v) 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 a complete copy of verification of a
change in telephone exchange service or telephone toll
service provider in oral, written, or electronic form;
``(iii) require the retention of such verification in such
manner and form and for such time as the Commission considers
appropriate;
``(iv) mandate that verification occur in the same language
as that in which the change was solicited; and
``(v) provide for verification to be made available to a
subscriber on request.
``(3) Action by unaffiliated reseller not imputed to
carrier.--No telecommunications carrier may be found to be in
violation of this section solely on the basis of a violation
of this section by an unaffiliated reseller of that carrier's
services or facilities.
``(4) Freeze option protected.--The Commission may not take
action under this section to limit or inhibit a subscriber's
ability to require that any change in the subscriber's choice
of a provider of interexchange service not be effected unless
the change is expressly and directly communicated by the
subscriber to the subscriber's existing telephone exchange
service provider.
``(5) Application to wireless.--This section does not apply
to a provider of commercial mobile service.''.
(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 or
reseller of telecommunications services'';
(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 provisions of this section, or the procedures prescribed
under subsection (a), may elect to pay the carrier or
reseller 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 or reseller
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 or reseller previously selected by the subscriber
concerned.''.
(c) 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:
``(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 telecommunications
carrier or reseller selected shall notify the subscriber in a
specific and unambiguous writing, not more than 15 days after
the change is processed by the telecommunications carrier or
the reseller--
``(1) of the subscriber's new carrier or reseller; and
``(2) that the subscriber may request information regarding
the date on which the change was agreed to 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 for a telecommunications carrier or reseller 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 not in excess of 120 days after the
telecommunications carrier or reseller receives notice from
the subscriber of the complaint. A subscriber may at any time
pursue such a complaint with the Commission, in a State or
local administrative or judicial body, or elsewhere.
``(B) Unresolved complaints.--If a telecommunications
carrier or reseller 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 or reseller shall--
``(i) notify the subscriber in writing of the subscriber's
right to file a complaint with the Commission and of the
subscriber's rights and remedies under this section;
``(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 or reseller'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.--
``(A) Determination of violation.--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 determine whether there has been a violation of
subsection (a) and shall issue a decision or ruling at the
earliest date practicable, but in no event later than 150
days after the date on which it received the complaint.
``(B) Determination of damages and penalties.--If the
Commission determines that there has been a violation of
subsection (a), it shall issue a decision or ruling
determining the amount of the damages and penalties at the
earliest practicable date, but in no event later than 90 days
after the date on which it issued its decision or ruling
under subparagraph (A).
``(3) Damages awarded by commission.--If a violation of
subsection (a) is found by the Commission, the Commission may
award damages equal to the greater of $500 or the amount of
actual damages for each violation. 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) Disqualification and Reinstatement.--
``(1) Disqualification from certain activities based on
conviction.--
``(A) Disqualification of persons.--Subject to subparagraph
(C), any person convicted under section 2328 of title 18,
United States Code, in addition to any fines or imprisonment
under that section, may not carry out any activities covered
by section 214.
``(B) Disqualification of companies.--Subject to
subparagraph (C), any company substantially controlled by a
person convicted under section 2328 of title 18, United
States Code, in addition to any fines or imprisonment under
that section, may not carry out any activities covered by
section 214.
``(C) Reinstatement.--
``(i) In general.--The Commission may terminate the
application of subparagraph (A) to a person, or subparagraph
(B) to a company, if the Commission determines that the
termination would be in the public interest.
``(ii) Effective date.--The termination of the
applicability of subparagraph (A) to a person, or
subparagraph (B) to a company, under clause (i) may not take
effect earlier than 5 years after the date on which the
applicable subparagraph applied to the person or company
concerned.
``(2) Certification requirement.--Any person described in
subparagraph (A) of paragraph (1), or company described in
subparagraph (B) of that paragraph, not reinstated under
subparagraph (C) of that paragraph shall include with any
application to the Commission under section 214 a
certification that the person or company, as the case may be,
is described in paragraph (1)(A) or (B), as the case may be.
``(f) Civil Penalties.--
``(1) In general.--Unless the Commission determines that
there are mitigating circumstances, violation of subsection
(a) is punishable by a forfeiture 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 or reseller fails to
comply with the requirements of subsection (d)(1)(B), then
that failure shall be treated as a violation of subsection
(a).
``(g) Recovery of Forfeitures.--The Commission may take
such action as may be necessary--
``(1) to collect any forfeitures it imposes under this
section; and
``(2) on behalf of any subscriber, to collect any damages
awarded the subscriber under this section.
``(h) Change Includes Initial Selection.--For purposes of
this section, the initiation of service to a subscriber by a
telecommunications carrier or a reseller shall be treated as
a change in a subscriber's selection of a provider of
telephone exchange service or telephone toll service.''.
(d) Criminal Penalty.--
[[Page S4706]]
(1) In general.--Chapter 113A of title 18, United States
Code, is amended by adding at the end thereof the following:
``Sec. 2328. Slamming
``Any person who submits or executes a change in a provider
of telephone exchange service or telephone toll service not
authorized by the subscriber in willful violation of the
provisions of section 258 of the Communications Act of 1934
(47 U.S.C. 258), or the procedures prescribed under section
258(a) of that Act--
``(A) shall be fined in accordance with this title,
imprisoned not more than 1 year, or both; but
``(B) if previously convicted under this paragraph at the
time of a subsequent offense, shall be fined in accordance
with this title, imprisoned not more than 5 years, or both,
for such subsequent offense.''.
(2) Conforming amendment.--The chapter analysis for chapter
113A of title 18, United States Code, is amended by adding at
the end thereof the following:
``2328. Slamming''.
(e) State Right-of-Action.--Section 258 of the
Communications Act of 1934 (47 U.S.C. 258), as amended by
subsection (c), is amended by adding at the end thereof the
following:
``(i) Actions by States.--
``(1) In general.--The attorney general of a State, or an
official or agency designated by a State--
``(A) may bring an action on behalf of its residents to
recover damages on their behalf under subsection (d)(3);
``(B) may bring a criminal action to enforce this section
under section 2328 of title 18, United States Code; and
``(C) may bring an action for the assessment of civil
penalties under subsection (f),
and for purposes of such an action, subsections (d)(3) and
(f)(1) shall be applied by substituting `the court' for `the
Commission'.
``(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 actions brought under this section.
When a State brings an action under this section, the court
in which the action is brought has pendant jurisdiction of
any claim brought under the law of that State. 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 subscriber
or 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.
``(j) State Law Not Preempted.--
``(1) In general.--Nothing in this section or in the
regulations prescribed under this section shall preempt any
State law that imposes more restrictive requirements,
regulations, damages, costs, or penalties on changes in a
subscriber's service or selection of a provider of telephone
exchange service or telephone toll services than are imposed
under this section.
``(2) Effect on state court proceedings.--Nothing contained
in this section 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 or any specific civil or criminal statute of
such State not preempted by this section.
``(3) Limitations.--Whenever a complaint is pending before
the Commission involving a violation of regulations
prescribed under this section, no State may, during the
pendency of such complaint, institute a civil action against
any defendant party to the complaint for any violation
affecting the same subscriber alleged in the complaint.
``(k) Reports on Complaints.--
``(1) Reports required.--Each telecommunications carrier or
reseller shall submit to the Commission, quarterly, 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 or reseller by its
subscribers. Each report shall specify each provider of
service complained of and the number of complaints relating
to such provider.
``(2) Limitation on scope.--The Commission may not require
any information in a report under paragraph (1) other than
the information specified in the second sentence of that
paragraph.
``(3) Utilization.--The Commission shall use the
information submitted in reports under paragraph (1) to
identify telecommunications carriers or resellers that engage
in patterns and practices of unauthorized changes in
providers of telephone exchange service or telephone toll
service.
``(l) Definitions.--For purposes of this section:
``(1) Attorney general.--The term `attorney general' means
the chief legal officer of a State.
``(2) Subscriber.--The term `subscriber' means the person
named on the billing statement or account, or any other
person authorized to make changes in the providers of
telephone exchange service or telephone toll service.''.
(f) Report on Carriers Executing Unauthorized Changes of
Telephone Service.--
(1) Report.--Not later than October 31, 1998, the Federal
Communications Commission shall submit to Congress a report
on unauthorized changes of subscribers' selections of
providers of telephone exchange service or telephone toll
service.
(2) Elements.--The report shall include the following:
(A) A list of the 10 telecommunications carriers or
resellers that, during the 1-year period ending on the date
of the report, were subject to the highest number of
complaints of having executed unauthorized changes of
subscribers from their selected providers of telephone
exchange service or telephone toll service when compared with
the total number of subscribers served by such carriers or
resellers.
(B) The telecommunications carriers or resellers, if any,
assessed forfeitures under section 258(f) of the
Communications Act of 1934 (as added by subsection (d)),
during that period, including the amount of each such
forfeiture and whether the forfeiture was assessed as a
result of a court judgment or an order of the Commission or
was secured pursuant to a consent decree.
SEC. 102. ADDITIONAL ENFORCEMENT AUTHORITY.
Section 504 of the Communications Act of 1934 (47 U.S.C.
504) is amended by adding at the end thereof the following:
``Notwithstanding the preceding sentence, the failure of a
person to pay a forfeiture imposed for violation of section
258(a) may be used as a basis for revoking, denying, or
limiting that person's operating authority under section 214
or 312.''.
SEC. 103. OBLIGATIONS OF BILLING AGENTS.
(a) In General.--Part I of title II of the Communications
Act of 1934 (47 U.S.C. 201 et seq.) is amended by adding at
the end thereof the following:
``SEC. 231. OBLIGATIONS OF TELEPHONE BILLING AGENTS.
``(a) In General.--A billing agent, including a
telecommunications carrier or reseller, who issues a bill for
telephone exchange service or telephone toll service to a
subscriber shall--
``(1) state on the bill--
``(A) the name and toll-free telephone number of any
telecommunications carrier or reseller for the subscriber's
telephone exchange service and telephone toll service;
``(B) the identity of the presubscribed carrier or
reseller; and
``(C) the charges associated with each carrier's or
reseller's provision of telecommunications service during the
billing period;
``(2) for services other than those described in paragraph
(1), state on a separate page--
``(A) the name of any company whose charges are reflected
on the subscriber's bill;
``(B) the services for which the subscriber is being
charged by that company;
``(C) the charges associated with that company's provision
of service during the billing period;
``(D) the toll-free telephone number that the subscriber
may call to dispute that company's charges; and
``(E) that disputes about that company's charges will not
result in disruption of telephone exchange service or
telephone toll service; and
``(3) show the mailing address of any telecommunications
carrier or reseller or other company whose charges are
reflected on the bill.
``(b) Knowing Inclusion of Unauthorized or Improper Charges
Prohibited.--A billing agent may not submit charges for
telecommunications services or other services to a subscriber
if the billing agent knows, or should know, that the
subscriber did not authorize the charges or that the charges
are otherwise improper.''.
(b) Effective Date.--The amendment made by subsection (a)
applies to bills to subscribers for telecommunications
services sent to subscribers more than 60 days after the date
of enactment of this Act.
[[Page S4707]]
SEC. 104. FCC JURISDICTION OVER BILLING SERVICE PROVIDERS.
Part III of title II of the Communications Act of 1934 (47
U.S.C. 271 et seq.) is amended by adding at the end thereof
the following:
``SEC. 277. JURISDICTION OVER BILLING SERVICE PROVIDERS.
``The Commission has jurisdiction to assess and recover any
penalty imposed under title V of this Act against an entity
not a telecommunications carrier or reseller to the extent
that entity provides billing services for the provision of
telecommunications services, or for services other than
telecommunications services that appear on a subscriber's
telephone bill for telecommunications services, but the
Commission may assess and recover such penalties only if that
entity knowingly or willfully violates the provisions of this
Act or any rule or order of the Commission.''.
SEC. 105. REPORT; STUDY.
(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 and other
solicitation practices used by telecommunications carriers or
resellers or their agents or employees for the purpose of
changing the telephone exchange service or telephone toll
service provider of a subscriber.
(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 subscriber's selection of such a provider and
independent third party administration of presubscribed
interexchange carrier changes; and
(3) whether wireless carriers should continue to be exempt
from the requirements imposed by section 258 of the
Communications Act of 1934 (47 U.S.C. 258).
(c) Rulemaking.--If the Commission determines that
particular telemarketing or other solicitation 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.
SEC. 106. DISCLOSURE OF CERTAIN RECORDS FOR INVESTIGATIONS OF
TELEMARKETING FRAUD.
Section 2703(c)(1)(B) of title 18, United States Code, is
amended by--
(1) striking ``or'' at the end of clause (ii);
(2) striking the period at the end of clause (iii) and
inserting ``; or''; and
(3) adding at the end the following:
``(iv) submits a formal written request relevant to a law
enforcement investigation concerning telemarketing fraud for
the name, address, and place of business of a subscriber or
customer of such provider, which subscriber or customer is
engaged in telemarketing (as such term is in section 2325 of
this title).''.
TITLE II--SWITCHLESS RESELLERS
SEC. 201. REQUIREMENT FOR SURETY BONDS FROM
TELECOMMUNICATIONS CARRIERS OPERATING AS
SWITCHLESS RESELLERS.
Part I of title II of the Communications Act of 1934 (47
U.S.C. 201 et seq.), as amended by section 103 of this Act,
is amended by adding at the end the following:
``SEC. 232. SURETY BONDS FROM TELECOMMUNICATIONS CARRIERS
OPERATING AS SWITCHLESS RESELLERS.
``(a) Requirement.--Under such regulations as the
Commission shall prescribe, any telecommunications carrier
operating or seeking to operate as a switchless reseller
shall furnish to the Commission a surety bond in a form and
an amount determined by the Commission to be satisfactory for
purposes of this section.
``(b) Surety.--A surety bond furnished pursuant to this
section shall be issued by a surety corporation that meets
the requirements of section 9304 of title 31, United States
Code.
``(c) Claims Against Bond.--A surety bond furnished under
this section shall be available to pay the following:
``(1) Any fine or penalty imposed against the carrier
concerned while operating as a switchless reseller as a
result of a violation of the provisions of section 258
(relating to unauthorized changes in subscriber selections to
telecommunications carriers).
``(2) Any penalty imposed against the carrier under this
section.
``(3) Any other fine or penalty, including a forfeiture
penalty, imposed against the carrier under this Act.
``(d) Resident Agent.--A telecommunications carrier
operating as a switchless reseller that is not domiciled in
the United States shall designate a resident agent in the
United States for receipt of service of judicial and
administrative process, including subpoenas.
``(e) Penalties.--
``(1) Suspension.--The Commission may suspend the right of
any telecommunications carrier to operate as a switchless
reseller--
``(A) for failure to furnish or maintain the surety bond
required by subsection (a);
``(B) for failure to designate an agent as required by
subsection (d); or
``(C) for a violation of section 258 while operating as a
switchless reseller.
``(2) Additional penalties.--In addition to suspension
under paragraph (1), any telecommunications carrier operating
as a switchless reseller that fails to furnish or maintain a
surety bond under this section shall be subject to any
forfeiture provided for under sections 503 and 504.
``(f) Billing Services for Unbonded Switchless Resellers.--
``(1) Prohibition.--No common carrier or billing agent may
provide billing services for any services provided by a
switchless reseller unless the switchless reseller--
``(A) has furnished the bond required by subsection (a);
and
``(B) in the case of a switchless reseller not domiciled in
the United States, has designated an agent under subsection
(d).
``(2) Penalty.--
``(A) Penalty.--Any common carrier or billing agent that
knowingly and willfully provides billing services to a
switchless reseller in violation of paragraph (1) shall be
liable to the United States for a civil penalty not to exceed
$50,000.
``(B) Applicability.--For purposes of subparagraph (A), the
provision of services to any particular reseller in violation
of paragraph (1) shall constitute a separate violation of
that paragraph.
``(3) Commission authority to assess and collect
penalties.--The Commission shall have the authority to assess
and collect any penalty provided for under this subsection
upon a finding by the Commission of a violation of paragraph
(1).
``(g) Return of Bonds.--
``(1) Review.--
``(A) In general.--The Commission may from time to time
review the activities of a telecommunications carrier that
has furnished a surety bond under this section for purposes
of determining whether or not to retain the bond under this
section.
``(B) Standards of review.--The Commission shall prescribe
any standards applicable to its review of activities under
this paragraph.
``(C) First review.--The Commission may not first review
the activities of a carrier under subparagraph (A) before the
date that is 3 years after the date on which the carrier
furnishes the bond concerned under this section.
``(2) Return.--The Commission may return a surety bond as a
result of a review under this subsection.
``(h) Definitions.--In this section:
``(1) Billing agent.--The term `billing agent' means any
entity (other than a telecommunications carrier) that
provides billing services for services provided by a
telecommunications carrier, or other services, if charges for
such services appear on the bill of a subscriber for
telecommunications services.
``(2) Switchless reseller.--The term `switchless reseller'
means a telecommunications carrier that resells the switched
telecommunications service of another telecommunications
carrier without the use of any switching facilities under its
own ownership or control.
``(i) Detariffing Authority Not Impaired.--Nothing in this
section is intended to prohibit the Commission from adopting
rules providing for the permissive detariffing of long-
distance telephone companies, if the Commission determines
that such permissive detariffing would otherwise serve the
public interest, convenience, and necessity.''.
TITLE III--SPAMMING
SEC. 301. REQUIREMENTS RELATING TO TRANSMISSIONS OF
UNSOLICITED COMMERCIAL ELECTRONIC MAIL.
(a) Information To Be Included in Transmissions.--
(1) In general.--A person who transmits an unsolicited
commercial electronic mail message shall cause to appear in
each such electronic mail message the information specified
in paragraph (2).
(2) Covered information.--The following information shall
appear at the beginning of the body of an unsolicited
commercial electronic mail message under paragraph (1):
(A) The name, physical address, electronic mail address,
and telephone number of the person who initiates transmission
of the message.
(B) The name, physical address, electronic mail address,
and telephone number of the person who created the content of
the message, if different from the information under
subparagraph (A).
(C) A statement that further transmissions of unsolicited
commercial electronic mail to the recipient by the person who
initiates transmission of the message may be stopped at no
cost to the recipient by sending a reply to the originating
electronic mail address with the word ``remove'' in the
subject line.
(b) Routing Information.--All Internet routing information
contained within or accompanying an electronic mail message
described in subsection (a) must be accurate, valid according
to the prevailing standards for Internet protocols, and
accurately reflect message routing.
(c) Effective Date.--The requirements in this section shall
take effect 30 days after the date of enactment of this Act.
SEC. 302. FEDERAL OVERSIGHT OF UNSOLICITED COMMERCIAL
ELECTRONIC MAIL.
(a) Transmissions.--
(1) In general.--Upon notice from a person of the person's
receipt of electronic mail in violation of a provision of
section 301 or 305, the Commission--
(A) may conduct an investigation to determine whether or
not the electronic mail was transmitted in violation of such
provision; and
(B) if the Commission determines that the electronic mail
was transmitted in violation of such provision, may--
[[Page S4708]]
(i) impose upon the person initiating the transmission a
civil fine in an amount not to exceed $15,000;
(ii) commence in a district court of the United States a
civil action to recover a civil penalty in an amount not to
exceed $15,000 against the person initiating the
transmission;
(iii) commence an action in a district court of the United
States a civil action to seek injunctive relief; or
(iv) proceed under any combination of the authorities set
forth in clauses (i), (ii), and (iii).
(2) Deadline.--The Commission may not take action under
paragraph (1)(B) with respect to a transmission of electronic
mail more than 2 years after the date of the transmission.
(b) Administration.--
(1) Notice by electronic means.--The Commission shall
establish an Internet web site with an electronic mail
address for the receipt of notices under subsection (a).
(2) Information on enforcement.--The Commission shall make
available through the Internet web site established under
paragraph (1) information on the actions taken by the
Commission under subsection (a)(1)(B).
(3) Assistance of other federal agencies.--Other Federal
agencies may assist the Commission in carrying out its duties
under this section.
SEC. 303. ACTIONS BY STATES.
(a) In General.--Whenever the attorney general of a State
has reason to believe that the interests of the residents of
the State have been or are being threatened or adversely
affected because any person is engaging in a pattern or
practice of the transmission of electronic mail in violation
of a provision of section 301 or 305, the State, as parens
patriae, may bring a civil action on behalf of its residents
to enjoin such transmission, to enforce compliance with such
provision, to obtain damages or other compensation on behalf
of its residents, or to obtain such further and other relief
as the court considers appropriate.
(b) Notice to Commission.--
(1) Notice.--The State shall serve prior written notice of
any civil action under this section on the Commission and
provide the Commission with a copy of its complaint, except
that if it is not feasible for the State to provide such
prior notice, the State shall serve written notice
immediately on instituting such action.
(2) Rights of commission.--On receiving a notice with
respect to a civil action under paragraph (1), the Commission
shall have the right--
(A) to intervene in the action;
(B) upon so intervening, to be heard in all matters arising
therein; and
(C) to file petitions for appeal.
(c) Actions by Commission.--Whenever a civil action has
been instituted by or on behalf of the Commission for
violation of a provision of section 301 or 305, no State may,
during the pendency of such action, institute a civil action
under this section against any defendant named in the
complaint in such action for violation of any provision as
alleged in the complaint.
(d) Construction.--For purposes of bringing a civil action
under subsection (a), nothing in this section shall prevent
an attorney general from exercising the powers conferred on
the attorney general by the laws of the State concerned to
conduct investigations or to administer oaths or affirmations
or to compel the attendance of witnesses or the production of
documentary or other evidence.
(e) Venue; Service of Process.--Any civil action brought
under subsection (a) in a district court of the United States
may be brought in the district in which the defendant is
found, is an inhabitant, or transacts business or wherever
venue is proper under section 1391 of title 28, United States
Code. Process in such an action may be served in any district
in which the defendant is an inhabitant or in which the
defendant may be found.
(f) Actions by Other State Officials.--Nothing in this
section may be construed to prohibit an authorized State
official from proceeding in State court on the basis of an
alleged violation of any civil or criminal statute of the
State concerned.
(g) Definitions.--In this section:
(1) Attorney general.--The term ``attorney general'' means
the chief legal officer of a State.
(2) State.--The term ``State'' means any State of the
United States, the District of Columbia, Puerto Rico, Guam,
American Samoa, the United States Virgin Islands, the
Commonwealth of the Northern Mariana Islands, the Republic of
the Marshall Islands, the Federated States of Micronesia, the
Republic of Palau, and any possession of the United States.
SEC. 304. INTERACTIVE COMPUTER SERVICE PROVIDERS.
(a) Exemption for Certain Transmissions.--
(1) Exemption.--Section 301 or 305 shall not apply to a
transmission of electronic mail by an interactive computer
service provider unless--
(A) the provider initiates the transmission; or
(B) the transmission is not made to its own customers.
(2) Construction.--Nothing in this subsection may be
construed to require an interactive computer service provider
to transmit or otherwise deliver any electronic mail message.
(b) Actions by Interactive Computer Service Providers.--
(1) In general.--In addition to any other remedies
available under any other provision of law, any interactive
computer service provider adversely affected by a violation
of a provision of section 301 or 305 may, within 1 year after
discovery of the violation, bring a civil action in a
district court of the United States against a person who
violates such provision. Such an action may be brought to
enjoin the violation, to enforce compliance with such
provision, to obtain damages, or to obtain such further and
other relief as the court considers appropriate.
(2) Damages.--
(A) In general.--The amount of damages in an action under
this subsection for a violation specified in paragraph (1)
may not exceed $15,000 per violation.
(B) Relationship to other damages.--Damages awarded for a
violation under this subsection are in addition to any other
damages awardable for the violation under any other provision
of law.
(C) Cost and fees.--The court may, in issuing any final
order in any action brought under paragraph (1), award costs
of suit, reasonable costs of obtaining service of process,
reasonable attorney fees, and expert witness fees for the
prevailing party.
(3) Venue; service of process.--Any civil action brought
under paragraph (1) in a district court of the United States
may be brought in the district in which the defendant or in
which the interactive computer service provider is located,
is an inhabitant, or transacts business or wherever venue is
proper under section 1391 of title 28, United States Code.
Process in such an action may be served in any district in
which the defendant is an inhabitant or in which the
defendant may be found.
(c) Interactive Computer Service Provider Defined.--In this
section, the term ``interactive computer service provider''
has the meaning given the term ``interactive computer
service'' in section 230(e)(2) of the Communications Act of
1934 (47 U.S.C. 230(e)(2)).
SEC. 305. RECEIPT OF TRANSMISSIONS BY PRIVATE PERSONS.
(a) Termination of Transmissions.--A person who receives
from any other person an electronic mail message requesting
the termination of further transmission of commercial
electronic mail shall cease the initiation of further
transmissions of such mail to the person making the request.
(b) Affirmative Authorization of Transmissions.--
(1) In general.--Subject to paragraph (2), a person may
authorize another person to initiate transmissions of
unsolicited commercial electronic mail to the person.
(2) Availability of termination.--A person initiating
transmissions of electronic mail under paragraph (1) shall
include, with each transmission of such mail to a person
authorizing the transmission under that paragraph, the
information specified in section 301(a)(2)(C).
(c) Constructive Authorization of Transmissions.--
(1) In general.--Subject to paragraphs (2) and (3), a
person who secures a good or service from, or otherwise
responds electronically to, an offer in a transmission of
unsolicited commercial electronic mail shall be deemed to
have authorized the initiation of transmissions of
unsolicited commercial electronic mail from the person who
initiated the transmission.
(2) No authorization for requests for termination.--An
electronic mail request to cease the initiation of further
transmissions of electronic mail under subsection (a) shall
not constitute authorization for the initiation of further
electronic mail under this subsection.
(3) Availability of termination.--A person initiating
transmissions of electronic mail under paragraph (1) shall
include, with each transmission of such mail to a person
deemed to have authorized the transmission under that
paragraph, the information specified in section 301(a)(2)(C).
(d) Effective Date of Termination Requirements.--
Subsections (a), (b)(2), and (c)(3) shall take effect 30 days
after the date of enactment of this Act.
SEC. 306. DEFINITIONS.
In this title:
(1) Commercial electronic mail.--The term ``commercial
electronic mail'' means any electronic mail that--
(A) contains an advertisement for the sale of a product or
service;
(B) contains a solicitation for the use of a telephone
number, the use of which connects the user to a person or
service that advertises the sale of or sells a product or
service; or
(C) promotes the use of or contains a list of one or more
Internet sites that contain an advertisement referred to in
subparagraph (A) or a solicitation referred to in
subparagraph (B).
(2) Commission.--The term ``Commission'' means the Federal
Trade Commission.
(3) the term ``initiate the transmission'' in the case of
an electronic mail message means to originate the electronic
mail message, and does not encompass any intervening
interactive computer service whose facilities may have been
used to relay, handle, or otherwise retransmit the electronic
mail message, unless the intervening interactive computer
service provider knowingly and intentionally retransmits any
electronic mail in violation of section 301 or 305.
[[Page S4709]]
TITLE IV--MISCELLANEOUS PROVISIONS
SEC. 401. ENFORCEMENT OF REGULATIONS REGARDING CITIZENS BAND
RADIO EQUIPMENT.
Section 302 of the Communications Act of 1934 (47 U.S.C.
302) is amended by adding at the end the following:
``(f)(1) Except as provided in paragraph (2), a State or
local government may enforce the following regulations of the
Commission under this section:
``(A) A regulation that prohibits a use of citizens band
radio equipment not authorized by the Commission.
``(B) A regulation that prohibits the unauthorized
operation of citizens band radio equipment on a frequency
between 24 MHz and 35 MHz.
``(2) Possession of a station license issued by the
Commission pursuant to section 301 in any radio service for
the operation at issue shall preclude action by a State or
local government under this subsection.
``(3) The Commission shall provide technical guidance to
State and local governments regarding the detection and
determination of violations of the regulations specified in
paragraph (1).
``(4)(A) In addition to any other remedy authorized by law,
a person affected by the decision of a State or local
government enforcing a regulation under paragraph (1) may
submit to the Commission an appeal of the decision on the
grounds that the State or local government, as the case may
be, acted outside the authority provided in this subsection.
``(B) A person shall submit an appeal on a decision of a
State or local government to the Commission under this
paragraph, if at all, not later than 30 days after the date
on which the decision by the State or local government
becomes final.
``(C) The Commission shall make a determination on an
appeal submitted under subparagraph (B) not later than 180
days after its submittal.
``(D) If the Commission determines under subparagraph (C)
that a State or local government has acted outside its
authority in enforcing a regulation, the Commission shall
reverse the decision enforcing the regulation.
``(5) The enforcement of a regulation by a State or local
government under paragraph (1) in a particular case shall not
preclude the Commission from enforcing the regulation in that
case concurrently.
``(6) Nothing in this subsection shall be construed to
diminish or otherwise affect the jurisdiction of the
Commission under this section over devices capable of
interfering with radio communications.''.
SEC. 402. MODIFICATION OF EXCEPTION TO PROHIBITION ON
INTERCEPTION OF COMMUNICATIONS.
(a) Modification.--Section 2511(2)(d) of title 18, United
States Code, is amended by adding at the end the following:
``Notwithstanding the previous sentence, it shall not be
unlawful under this chapter for a person not acting under the
color of law to intercept a wire, oral, or electronic
communication between a health insurance issuer or health
plan and a subscriber of such issuer or plan, or between a
health care provider and a patient, only if all of the
parties to the communication have given prior express consent
to such interception. For purposes of the preceding sentence,
the term `health insurance issuer' has the meaning given that
term in section 733 of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1191b), the term `health
plan' means a group health plan, as defined in such section
of such Act, an individual or self-insured health plan, the
medicare program under title XVIII of the Social Security Act
(42 U.S.C. 1395 et seq.), the medicaid program under title
XIX of such Act (42 U.S.C. 1396 et seq.), the State
children's health insurance program under title XXI of such
Act (42 U.S.C. 1397aa et seq.), and the Civilian Health and
Medical Program of the Uniformed Services under chapter 55 of
title 10, and the term `health care provider' means a
physician or other health care professional.''.
(b) Recording and Monitoring of Communications with Health
Insurers.--
(1) Communication without recording or monitoring.--
Notwithstanding any other provision of law, a health
insurance issuer, health plan, or health care provider that
notifies any customer of its intent to record or monitor any
communication with such customer shall provide the customer
the option to conduct the communication without being
recorded or monitored by the health insurance issuer, health
plan, or health care provider.
(2) Definitions.--In this subsection:
(A) Health care provider.--The term ``health care
provider'' means a physician or other health care
professional.
(B) Health insurance issuer.--The term ``health insurance
issuer'' has the meaning given that term in section 733 of
the Employee Retirement Income Security Act of 1974 (29
U.S.C. 1191b).
(C) Health plan.--The term ``health plan'' means--
(i) a group health plan, as defined in section 733 of the
Employee Retirement Income Security Act of 1974 (29 U.S.C.
1191b);
(ii) an individual or self-insured health plan;
(iii) the medicare program under title XVIII of the Social
Security Act (42 U.S.C. 1395 et seq.);
(iv) the medicaid program under title XIX of such Act (42
U.S.C. 1396 et seq.);
(v) the State children's health insurance program under
title XXI of such Act (42 U.S.C. 1397aa et seq.); and
(vi) the Civilian Health and Medical Program of the
Uniformed Services under chapter 55 of title 10, United
States Code.
SEC. 403. CONSUMER TRUTH IN BILLING DISCLOSURE ACT.
(a) Findings.--Congress makes the following findings:
(1) Billing practices by telecommunications carriers may
not reflect accurately the cost or basis of the additional
telecommunications services and benefits that consumers
receive as a result of the enactment of the
Telecommunications Act of 1996 (Public Law 104-104) and other
Federal regulatory actions taken since the enactment of that
Act.
(2) The Telecommunications Act of 1996 was not intended to
allow providers of telecommunications services to
misrepresent to customers the costs of providing services or
the services provided.
(3) Certain providers of telecommunications services have
established new, specific charges on customer bills commonly
known as ``line-item charges''.
(4) Certain providers of telecommunications services have
described such charges as ``Federal Universal Service Fees''
or similar fees.
(5) Such charges have generated significant confusion among
customers regarding the nature of and scope of universal
service and of the fees associated with universal service.
(6) The State of New York is considering action to protect
consumers by requiring telecommunications carriers to
disclose fully in the bills of all classes of customers the
fee increases and fee reductions resulting from the enactment
of the Telecommunications Act of 1996 and other regulatory
actions taken since the enactment of that Act.
(7) The National Association of Regulatory Utility
Commissioners adopted a resolution in February 1998
supporting action by the Federal Communications Commission
and the Federal Trade Commission to protect consumers of
telecommunications services by assuring accurate cost
reporting and billing practices by telecommunications
carriers nationwide.
(b) Requirements.--Any telecommunications carrier that
includes any change resulting from Federal regulatory action
shall specify in such bill--
(1) the reduction in charges or fees for each class of
customers (including customers of residential basic service,
customers of other residential services, small business
customers, and other business customers) resulting from any
regulatory action of the Federal Communications Commission;
(2) total monthly charges, usage charges, percentage
charges, and premiums for each class of customers (including
customers of residential basic service, customers of other
residential services, small business customers, and other
business customers);
(3) notify consumers one billing cycle in advance of any
changes in existing charges or imposition of new charges; and
(4) disclose, upon subscription, total monthly charges,
usage charges, percentage charges, and premiums for each
class of customers (including residential basic service,
customers of other residential service, small business
customers, and other business customers).
The PRESIDING OFFICER. Who seeks recognition?
Mr. LEAHY addressed the Chair.
The PRESIDING OFFICER. The Senator from Vermont.
____________________