[Senate Report 105-183]
[From the U.S. Government Publishing Office]



                                                       Calendar No. 356
105th Congress                                                   Report
                                 SENATE

 2d Session                                                     105-183
_______________________________________________________________________


 
                       CONSUMER ANTI-SLAMMING ACT

                               __________

                              R E P O R T

                                 OF THE

           COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION

                                   on

                                S. 1618


 


                  May 5, 1998.--Ordered to be printed


       SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION

                       one hundred fifth congress

                             second session

                     JOHN McCAIN, Arizona, Chairman

TED STEVENS, Alaska                  ERNEST F. HOLLINGS, South Carolina
CONRAD BURNS, Montana                DANIEL K. INOUYE, Hawaii
SLADE GORTON, Washington             WENDELL H. FORD, Kentucky
TRENT LOTT, Mississippi              JOHN D. ROCKEFELLER IV, West 
KAY BAILEY HUTCHISON, Texas            Virginia
OLYMPIA SNOWE, Maine                 JOHN F. KERRY, Massachusetts
JOHN ASHCROFT, Missouri              JOHN B. BREAUX, Louisiana
BILL FRIST, Tennessee                RICHARD H. BRYAN, Nevada
SPENCER ABRAHAM, Michigan            BYRON L. DORGAN, North Dakota
SAM BROWNBACK, Kansas                RON WYDEN, Oregon

                       John Raidt, Staff Director

                       Mark Buse, Policy Director

     Ivan A. Schlager, Democratic Chief Counsel and Staff Director

             James S. W. Drewry, Democratic General Counsel



105th Congress                                                   Report
                                 SENATE

 2d Session                                                     105-183
_______________________________________________________________________


                       CONSUMER ANTI-SLAMMING ACT

                                _______
                                

                  May 5, 1998.--Ordered to be printed

_______________________________________________________________________


       Mr. McCain, from the Committee on Commerce, Science, and 
                Transportation, submitted the following

                              R E P O R T

                         [To accompany S. 1618]

    The Committee on Commerce, Science, and Transportation, to 
which was referred the bill (S. 1618), a Bill To amend the 
Communications Act of 1934 to improve the protection of 
consumers against ``slamming'' by telecommunications carriers, 
and for other purposes, reports favorably thereon with 
amendments and recommends that the bill (as amended) do pass.

                          purpose of the bill

  The purpose of the bill is to provide additional protection 
for consumers against the unauthorized changing of their 
provider of telephone exchange service or telephone toll 
service.

                          background and needs

  ``Slamming'' is the unauthorized changing of a consumer's 
provider of telephone exchange service or telephone toll 
service. It is a problem that affects thousands of consumers 
across the country, and one that is expected to grow if 
stringent anti-slamming measures are not developed.
  Consumers who are slammed often receive lower-quality service 
or are charged higher rates by their new carrier. Sometimes 
consumers are not even aware that they have been slammed until 
after they see their bills. Once they discover the problem, 
they often have no choice but to go through the aggravation of 
getting their service switched back to their original carrier 
and having their bills adjusted. During this process, many 
consumers find it difficult to secure compensation for any 
additional damages they may have suffered as a result of the 
slamming.
  There are many ways in which a carrier can slam a consumer. 
Some long distance companies misrepresent themselves by 
claiming that they are calling on behalf of another company or 
are working with the local telephone company to consolidate 
local and long distance phone bills. Other companies use false 
third-party verification or negative option packages, with 
deceptive telemarketing practices, as a way to obtain 
authorization for carrier changes. Still others just claim 
falsely that they received the consumer's verbal consent for 
the switch.
  The Federal Communications Commission (FCC) first established 
safeguards to deter slamming when equal access was implemented 
in 1985. Equal access allowed consumers to select their 
preferred provider of long distance service and required local 
telephone companies to program their network switches to 
automatically route long distance calls from consumers' homes 
or businesses to their carrier of choice. The FCC's initial 
slamming rules required long distance carriers to take steps to 
obtain signed Letters of Agency (LOA) from consumers before 
initiating a carrier change.
  As the long distance market grew more competitive, additional 
slamming rules were needed. In 1992, in response to a petition 
by AT&T and MCI, the Commission adopted procedures for 
verifying carrier-initiated telemarketing calls. 
Notwithstanding this verification requirement, slamming 
problems persisted. Responding to continuing consumer 
complaints, the Commission instituted a rulemaking and adopted 
rules to deter misleading LOAs in 1995.
  Despite these measures, aggressive long distance 
telemarketers continue to mislead consumers by, for example, 
obtaining a consumer's signature to accept a check, card or 
promotional item and then using the signature to have their 
long distance service changed.
  In its Fall 1996 Common Carrier Scorecard, the FCC said that 
more than one-third of the written complaints submitted to the 
FCC's Consumer Protection Branch in 1995 related to slamming. 
This problem is continuing to grow at a troubling rate. 
Slamming complaints are the fastest-growing category of 
complaints reported to the FCC, having more than tripled in 
number since 1994. In 1997, 44,000 consumers wrote slamming 
complaints to the FCC. This is a 175 percent increase from the 
16,000 complaints received in 1996.
  The scope of the slamming problem is even broader 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 largest single consumer 
complaint received by many state consumer advocates, and as 
many as one million consumers are switched annually to a 
different provider without their knowledge or consent.
  With the enactment of the Telecommunications Act of 1996, 
which added a new section 258 to the Communications Act of 
1934, the FCC is again reexamining its rules. Section 258 
includes provisions to reduce slamming. Among other things, it 
provides that no telecommunications carrier shall submit or 
execute a change in a consumer's selection of a provider of 
telephone exchange service or telephone toll service except in 
accordance with the FCC's verification procedures.
  The law also provides that any telecommunications carrier 
that violates the FCC's verification procedures and that 
collects charges for telephone exchange service or telephone 
toll service from a consumer shall be liable to the consumer's 
original preferred carrier for an amount equal to all charges 
paid by the consumer to the unauthorized carrier. The FCC is 
now in the process of adopting rules to implement these 
provisions.
  Notwithstanding this succession of regulatory and statutory 
attempts to deter slamming, it remains a serious and growing 
problem. One reason is that it is often difficult to prove that 
a provider switched a consumer to its service without the 
consumer's consent. Without this evidence, slammers often go 
unpunished. Another reason is that the majority of consumers 
who have been fraudulently denied the services of their chosen 
carrier do not turn to the FCC for assistance because the 
Commission's processes are confusing and the available 
sanctions inadequate.
  S. 1618 is a bill designed to provide more effective ways to 
stop slamming. This legislation establishes stringent anti-
slamming safeguards, as well as additional remedies and fines, 
that will discourage carriers from engaging in this practice. 
It prescribes definitive procedures for companies to follow in 
making carrier changes, provides alternative ways for consumers 
to obtain redress for having been slammed, and gives federal 
and nonfederal authorities the power to impose tough sanctions, 
including high fines and compensatory and punitive damages. 
These measures, in addition to those that the FCC and/or the 
states may develop, will ensure that consumers are afforded 
adequate protection against slamming.

                          legislative history

  On August 12, 1997, the Subcommittee on Communications held a 
hearing on slamming in Billings, Montana. Witnesses at the 
hearing included federal and state government representatives, 
federal and state trade associations, industry representatives, 
and consumers whose long distance carriers were switched 
without consent.
  On October 14, 1997, the Subcommittee on Communications held 
a hearing on slamming in Denver, Colorado. Witnesses at this 
hearing included federal and state government representatives, 
industry representatives, a Colorado telecommunications trade 
association, and consumers whose long distance carriers were 
switched without consent.
  Senator John McCain, the Chairman of the Committee on 
Commerce, Science, and Transportation, introduced S. 1618 on 
February 9, 1998. The bill's cosponsors are Senators Hollings, 
Frist, Snowe, Reed, Bryan, Dorgan, Johnson, Harkin, Kerry, 
Inouye, Abraham, Baucus, Smith, Gorton, Lott, and Bob Smith.
  Other slamming bills introduced in the 105th Congress are: 
H.R. 2112, introduced by Representative Franks on July 8, 1997; 
H.R. 2120, introduced by Representative DeFazio on July 9, 
1997; H.R. 3050, introduced by Representative Dingell on 
September 13, 1997; S. 1051, introduced by Senator Campbell on 
July 22, 1997; S. 1137, introduced by Senator Durbin on July 
31, 1997; S. 1410, introduced by Senator Reed on September 7, 
1997; and S. 1740, introduced by Senator Collins on March 10, 
1998.

                    MARCH 12, 1998 EXECUTIVE SESSION

  In open executive session on March 12, 1998, after adopting 
amendments offered by the Chairman, the Committee, by a voice 
vote, ordered S. 1618 reported.

                            estimated costs

  In accordance with paragraph 11(a) of rule XXVI of the 
Standing Rules of the Senate and section 403 of the 
Congressional Budget Act of 1974, the Committee provides the 
following cost estimate, prepared by the Congressional Budget 
Office:

                                     U.S. Congress,
                               Congressional Budget Office,
                                     Washington, DC, April 7, 1998.
Hon. John McCain,
Chairman, Committee on Commerce, Science, and Transportation, U.S. 
        Senate, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for S. 1618, a bill to 
amend the Communications Act of 1934 to improve the protection 
of consumers against ``slamming'' by telecommunications 
carriers, and for other purposes.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contacts are Kim Cawley 
(for federal costs), Alyssa Trzeszkowski (for revenues), and 
Jean Wooster (for the private-sector impact).
            Sincerely,
                                         June E. O'Neill, Director.
    Enclosure.

               congressional budget office cost estimate

S. 1618--A bill to amend the Communications Act of 1934 to improve the 
        protection of consumers against ``slamming'' by 
        telecommunications carriers, and for other purposes

    Summary: S. 1618 would amend the Communications Act of 1934 
to prohibit telecommunications carriers or service resellers 
from submitting or executing changes in a subscriber's 
selection of a provider of telephone exchange or toll service 
except in accordance with procedures prescribed by the Federal 
Communications Commission (FCC). Under this bill, consumers 
would have the right to file a complaint with the FCC if 
concerns regarding an unauthorized change in providers cannot 
be resolved by the carrier or service reseller within 120 days. 
The commission would be required to follow simplified 
procedures in reviewing these cases, and to issue an order 
resolving the complaint within 150 days. If violations are 
identified, the commission would be authorized to award damages 
to the customer of $500 or more and to impose additional 
penalties on carriers or service resellers. The bill also would 
direct the FCC to issue various rules and reports related to 
industry practices and implementation of the bill.
    CBO estimates that the net budgetary impact of implementing 
this bill would not be significant. Because the bill would 
establish new penalties that could affect receipts, pay-as-you-
go procedures would apply. S. 1618 contains no 
intergovernmental mandates as defined in the Unfunded Mandates 
Reform Act of 1995 (UMRA) and would not affect the budgets of 
state, local, or tribal governments. S. 1618 would impose new 
private-sector mandates, but CBO estimates the costs would fall 
below the statutory threshold.
    Estimated cost to the Federal Government: CBO estimates 
that the FCC would spend about $6 million annually to implement 
this bill, assuming appropriation of the necessary amounts. 
Because the commission is authorized under current law to 
collect fees from the telecommunications industry sufficient to 
offset the cost of its enforcement program. CBO assumes that 
these additional costs would be offset by an increase in 
collections credited to annual appropriations for the FCC. 
Hence, we estimate that the net effect on discretionary 
spending would be negligible.
    The FCC's gross administrative costs would increase 
primarily because it would be required to issue a formal order 
for each complaint. In 1997, the agency received over 20,000 
such complaints, most of which were resolved without issuing 
orders. CBO expects that the FCC's caseload would decline as a 
result of the bill's incentives for industry to resolve 
complaints voluntarily, but that its total workload would grow 
because of the time involved in issuing an order for each case. 
Based on information provided by the FCC, we estimate that 
issuing orders for 12,000 cases would cost an additional $6 
million per year and that preparing the regulations and reports 
required by the bill would cost less than $500,000.
    The bill also would amend the Communications Act of 1934 to 
impose penalties on those who make unauthorized changes in a 
subscriber's provider of telephone services. CBO estimates that 
this provision would have a negligible effect on revenues.
    Pay-as-you-go considerations: Section 252 of the Balanced 
Budget and Emergency Deficit Control Act of 1985 sets up pay-
as-you-go procedures for legislation affecting direct spending 
and receipts. Enacting S. 1618 could affect receipts because 
the bill would authorize civil penalties, but CBO estimates 
that this provision would have little or no budgetary impact.
    Estimated impact on State, local, and tribal governments: 
S. 1618 contains no intergovernmental mandates as defined in 
UMRA and would impose no costs on state, local, or tribal 
governments.
    Estimated impact on the private sector: S. 1618 would 
impose new private-sector mandates, as defined by UMRA, on 
telephone carriers and resellers. The most significant burden 
would fall on those carriers and resellers when they process a 
customer's request to change providers. CBO estimates that the 
annual direct costs of complying with private-sector mandates 
in the bill would probably not exceed the statutory threshold 
($100 million in 1996, adjusted annually for inflation).
    Current regulations specify the verification process 
required for any change in a subscriber's choice of provider of 
telephone toll service (long-distance) generated by 
telemarketing. S. 1618 would expand the current verification 
procedures, and extend those procedures to include providers of 
telephone exchange (local) service and customer-initiated 
changes. The bill would also require that the carrier or 
reseller respond in writing to unresolved complaints within a 
prescribed time. Although the verification process could lead 
to substantial aggregate costs because it would apply to 
providers of both local and long-distance service and to both 
telemarketing and customer-initiated changes, it is unlikely 
that the incremental costs attributable to the new mandate 
would reach the statutory threshold for private-sector 
mandates. In response to a FCC Notice of Proposed Rulemaking 
released on July 15, 1997, implementing provisions in the 
Telecommunications Act of 1996 concerning unauthorized changes 
of consumers' long-distance carriers, three major telephone 
carriers claimed that the cost of requiring verification of 
customer-initiated changes would total nearly $60 million 
annually. Information provided by the FCC, however, suggests 
that those costs represented total costs and not the 
incremental costs of the proposed rule. Similarly, CBO has 
concluded the incremental costs of other requirements relating 
to verification--responding to complaints and adding local 
service providers--would be relatively small.
    Estimate prepared by: Federal costs: Kim Cawley, revenues: 
Alyssa Trzeszkowski, and impact on the private sector: Jean 
Wooster.
    Estimate approved by: Robert A. Sunshine, Deputy Assistant 
Director for Budget Analysis.

                      regulatory impact statement

  In accordance with paragraph 11(b) of rule XXVI of the 
Standing Rules of the Senate, the Committee provides the 
following evaluation of the regulatory impact of the 
legislation, as reported:

                       number of persons covered

  This legislation establishes expedited procedures for 
resolution of slamming complaints and authorizes the FCC to 
impose additional penalties against telecommunications carriers 
found guilty of slamming. It will have no effect on the number 
of individuals regulated.

                            economic impact

  This legislation authorizes the FCC to impose additional 
penalties on telecommunications carriers for slamming. However, 
it is expected to have little economic impact.

                                privacy

  This legislation will not have any adverse impact on the 
personal privacy of the individuals affected.

                               paperwork

  This bill requires the FCC to resolve slamming complaints 
within 150 days. However, it is expected to reduce the number 
of slamming complaints that the FCC will receive. Therefore, 
any additional paperwork requirements associated with this bill 
should be minimal.

                      section-by-section analysis

Section 1. Improved protection for consumers

  Section 1(a) establishes minimum verification requirements 
for submitting or executing a change in a subscriber's provider 
of telephone exchange service or telephone toll service. This 
section requires telecommunications carriers to have the 
subscriber: acknowledge the type of service to be changed; 
affirm the subscriber's intent to select the provider; affirm 
that the subscriber is authorized to select the provider for 
the telephone number in question; acknowledge that the 
selection of the provider will result in a changein the 
provider of that service; and provide such other information as the 
Commission considers appropriate for protection of the subscriber.
  A Committee amendment to S. 1618 provides that resellers, not 
the underlying telecommunications carriers, are liable for the 
resellers' slamming violations. Resellers therefore must comply 
with the verification requirements outlined in section 1(a). 
They are also liable for the damages and penalties described in 
section 1(b). This change will ensure that resellers are held 
responsible for their own slamming activities.
  Wherever it appears in the bill, the phrase ``carrier'' is 
intended to refer to all telecommunications carriers including, 
but not limited to, resellers. The use of the phrase ``carrier 
or reseller'' does not in any way suggest that a reseller is 
not a carrier or is otherwise distinguishable from a carrier 
under the Communications Act of 1934 as amended by the 
Telecommunications Act of 1996.
  Another amendment would change the verification procedures in 
the original bill by eliminating a provision that required a 
consumer agreeing to a carrier change to acknowledge that he is 
the subscriber and by adding language that would only require a 
person to affirm that he is the subscriber or is otherwise 
authorized to make the change. Many times spouses or parents 
are authorized to switch carriers, but their names are not on 
the billing statements. This provision would provide more 
flexibility for both consumers and carriers in making carrier 
changes.
  Another amendment also provides that the verification 
procedures that apply to changes in carrier selection will also 
apply when consumers establish service for the first time. 
Consumers are exposed to the risk of being slammed when they 
make their initial carrier selection as well as when they 
switch their carrier.
  Section 1(a) establishes that additional requirements 
prescribed by the Commission shall preclude the use of negative 
option marketing; provide for verification of a change in the 
telephone exchange service or the telephone toll service 
provider in oral, written, or electronic form; and require the 
retention of such verification for such time that the 
Commission considers appropriate. These procedures are expected 
to help the Commission and other relevant parties to determine 
whether a slamming incident has taken place. Evidence of an 
authorized switch or the absence of such evidence can resolve 
the issue of whether or not consent was given to switch 
carriers.
  Under section 1(a), state commissions are not precluded from 
enforcing the procedures provided in this bill with respect to 
the provision of intrastate services.
  This Act does not apply to providers of commercial mobile 
services, as that term is defined in section 332(d)(1) of the 
Communications Act of 1934. The Committee intends to exempt 
such providers from section 258 of the Communications Act 
because, within the commercial mobile service industry, the 
number of slamming complaints has been negligible.
  Section 1(b) provides that when there is a change in a 
subscriber's selection of a provider of telephone exchange 
service or telephone toll service, the telecommunications 
carrier selected shall notify the subscriber of the change, in 
writing, not more than 15 days after the change is made. The 
Committee's amendment to section 1(b) provides that the 15-day 
period that carriers have to notify subscribers of their 
carrier change would begin running after the change is 
processed by the long distance carrier after dealing with the 
subscriber rather than after the change is executed by the 
local exchange carrier after the local exchange carrier 
receives notice of the change by the long distance carrier. 
This approach recognizes that long distance carriers are often 
unaware of when the change is actually executed by the local 
company.
  In addition, with the amendment, carriers will only have to 
notify subscribers that they may request information regarding 
when the carrier change was made and the name of the person who 
made the change. In the original version of the bill, carriers 
were required to provide this information automatically.
  Section 1(b) requires the Commission to prescribe a period of 
time, not exceeding 120 days, for a telecommunications carrier 
to resolve a complaint by a subscriber concerning an 
unauthorized change in the subscriber's selection of a provider 
of telephone exchange service or telephone toll service. The 
amendment adopted by the Committee provides that the period of 
time to resolve the complaint will begin running after the 
carrier receives notice of the complaint.
  If a carrier fails to resolve a complaint within the time 
period prescribed by the Commission, then, within 10 days after 
the end of that period, the carrier must notify the subscriber 
in writing of the subscriber's right to file a complaint with 
the Commission concerning the unresolved complaint, the 
subscriber's other rights under this section, and the other 
remedies available to the subscriber concerning unauthorized 
changes. The carrier also must inform the subscriber in writing 
of the procedures prescribed by the Commission for filing a 
complaint and provide the subscriber a copy of any evidence in 
the carrier's possession showing that the change in the 
subscriber's provider was submitted or executed in accordance 
with the verification procedures prescribed by the bill as 
reported. Failure to comply with these requirements amounts to 
a violation of section 1(a).
  Section 1(b) also requires the Commission to establish a 
simplified process for resolving complaints that does not 
increase the expense, formality, and time involved in the 
process. The bill requires the Commission to issue an order 
resolving a complaint no later than 150 days after the date on 
which it received the complaint, with respect to violations of 
the law, and 90 days after it resolves a complaint, with 
respect to penalties and damages issues.
  When a violation is found, the Commission may award damages 
equal to the greater of $500 or the amount of actual damages. 
The Commission may, at its discretion, award treble damages. 
This provision anticipates that the Commission will award 
damages where there is fault on the part of the carrier and 
will use discretion to not award or mitigate damages in cases, 
for example, where the complaint was a result of customer 
confusion, carrier error, or an unauthorized change by a 
carrier's unaffiliated reseller (in which case the reseller, 
but not the underlying carrier, may be liable for damages), an 
error by the local exchange carrier or interexchange carrier in 
keying in a change, or some other error. Likewise, the 
Commission may consider these, and any other mitigating 
circumstances, when determining whether to impose treble 
damages under this section.
  This bill gives a considerable amount of discretion to the 
Commission and to the courts in determining fault and imposing 
penalties and damages on carriers who make unauthorized changes 
of telephone service providers. Discretion is critical because 
it allows the Commission and the courts to focus on punishing 
fraudulent carriers who seek to profit from changing a 
consumer's telephone provider without permission, while 
dispensing with complaints that have been brought in error or 
are unfounded. Section 1(b) of the bill provides that, unless 
there are mitigating circumstances, a violation of the 
verification procedures 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. The consideration of circumstances 
mitigating an apparent violation of the Commission's rules is a 
customary practice by the FCC in assessing fines and other 
penalties. For purposes of assessing fines under this statute, 
mitigating circumstances may include instances in which an 
unauthorized change is made by a carrier's unaffiliated 
reseller, a complaint is served in error, a complaint is caused 
by a local exchange carrier or interexchange carrier's 
unintentional error in keying in a change or by unintended 
customer confusion (e.g., where one individual in a household 
or office authorizes a change but fails to communicate this to 
anyone else), or in which a simple billing error is 
misperceived as slamming. Because the penalties authorized 
under this section of the bill are severe, the Commission 
should use its discretion to punish wrongful behavior and 
should not misapply the penalties in cases where a slamming 
complaint turns out to be the result of circumstances such as 
those listed here.
  Likewise, the above situations, and any similar 
circumstances, may be considered by a court when determining 
whether to award $500 or actual damages or treble damages under 
section 1(c) of the bill.
  The bill gives the Commission authority to take action on its 
own behalf to collect any fines it imposes under this section, 
and on behalf of any subscriber, to collect any damages awarded 
to the subscriber. This provision empowers the Commission to 
prosecute slammers who refuse to pay fines or damages. The 
Commission no longer has to go through the Department of 
Justice to collect the fines or damages it levies.
  Section 1(c) provides that whenever a state has reason to 
believe that a carrier has engaged in a pattern or practice of 
changing telephone exchange service or telephone toll service 
providers without authority from subscribers in that state in 
violation of 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 $500 in 
damages for each violation, or both such actions. If the court 
finds willful or knowing action on the part of carriers to 
violate this legislation, the court may increase the award to 
an amount equal to not more than treble the amount available 
above.
  The district courts of the United States have exclusive 
jurisdiction over all civil actions brought under this section. 
Such courtsalso have jurisdiction, upon proper application, to 
issue writs of mandamus, or similar orders, directing the defendant to 
comply with section 258 of the Communications Act. The bill also 
stipulates that courts have the authority to grant a permanent or 
temporary injunction or restraining order upon a proper showing.
  Section 1(c) requires a state to serve prior written notice 
of any civil action upon the Commission and provide the 
Commission with a copy of its complaint. The Commission has the 
right to intervene in the action; upon so intervening, to be 
heard on all matters arising therein; and to file petitions for 
appeal.
  Any civil action brought under this section may be brought in 
the U.S. district court where the defendant is found or is an 
inhabitant or transacts business, or where the violation 
occurred. The bill establishes that nothing in section 258 of 
the Communications Act prevents the attorney general of a state 
from exercising the power to conduct investigations or to 
administer oaths or affirmations or to compel the attendance of 
witnesses or the production of documentary and other evidence. 
Moreover, nothing in this bill prohibits 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.
  When the Commission has instituted a civil action for 
violation of regulations prescribed under this section, no 
state may, during the pendency of such action, institute a 
civil action against the same defendant named in the complaint 
before the Commission for the same violations alleged in the 
complaint before the Commission. However, the state may 
institute a civil action against the same defendant for a 
violation different from that alleged in the complaint before 
the Commission.
  Section 1(c) defines the term ``attorney general'' as the 
chief legal officer of a state.
  Section 1(c) states that nothing in section 258 of the 
Communications Act shall preempt any state law that imposes 
more restrictive intrastate requirements regarding changes in a 
subscriber's selection of a provider of telephone exchange 
service or telephone toll service.
  Section 1(d) of the bill requires the Commission to submit a 
report to Congress no later than October 31, 1998, on 
unauthorized changes of subscribers' providers of telephone 
exchange service or telephone toll service. The report must 
include a list of the 10 carriers that, during the one-year 
period ending on the date of the report, were subject to the 
highest number of slamming complaints when compared with the 
total number of subscribers served by such carriers. The report 
also must identify the carriers, if any, assessed fines under 
section 1(c) of this bill, during the one-year period, 
including the amount of each fine and whether the fine assessed 
was as a result of a court judgment, a Commission order, or a 
consent decree.
  The purpose of the Commission's report to Congress under 
section 1(d) is to inform Congress of the most egregious 
violators of Section 258 of the Communications Act. To fulfill 
this goal, the Commission should focus on reporting complaints 
that reflect wrongdoing on the part of a carrier. To that end, 
the Commission, in preparing its reports to Congress, should 
verify the identity of the alleged slammers in the consumers' 
complaints and use those verified complaints as the basis for 
its final report citing the 10 carriers that have been the 
object of the highest number of complaints. Complaints that 
have been fully investigated, found to have merit, and 
attributed to the actual wrongdoer will provide Congress 
factual information on those carriers who slam consumers.
  For purposes of this section, instances in which it would be 
an error to attribute a complaint to the carrier to which it 
was originally addressed are generally the same as those 
enumerated above that the FCC should consider in mitigation of 
apparent liability for forfeiture.

Section 2. Report on telemarketing practices

  Section 2 requires the FCC to issue a report within 180 days 
after enactment of this bill on the telemarketing practices 
used by carriers or their agents or employees for the purpose 
of soliciting carrier changes by subscribers. As part of the 
report, the Commission must include findings on the extent to 
which imposing penalties on telemarketers would deter slamming; 
the need for rules requiring third-party verification of 
changes in a subscriber's selection of a provider; and whether 
wireless carriers should continue to be exempt from the 
verification and retention requirements.
  If the Commission determines that particular telemarketing 
practices are being used with the intention to mislead, 
deceive, or confuse subscribers, then the Commission must 
initiate a rulemaking to prohibit the use of such practices 
within 120 days after the completion of its report.

                        changes in existing law

  In the opinion of the Committee, it is necessary to dispense 
with the requirements of paragraph 12 of Rule XXVI of the 
Standing Rules of the Senate in order to expedite the business 
of the Senate.

                               
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