BILL ANALYSIS S.B. 1644 By: Henderson Jurisprudence 4-20-95 Committee Report (Amended) BACKGROUND Current regulations by the Federal Communications Commission's for the changing of a consumer's long-distance carrier by an interexchange carrier apply only to changes generated by telemarketing and do not apply to written solicitations. Despite current safeguards, consumers continue to have their long-distance carriers changed without their permission. The techniques for changing the carriers include deceptive marketing in which consumers are induced to sign a form document that does not clearly advise the consumers that they are authorizing a change in their long-distance carrier. Letter of authorization forms may be disguised as contest entry forms, prize claim forms, solicitations for charitable contributions, or checks made payable to the consumer. All these marketing practices combine the inducement with the letter of authorization and the inducement language is prominently displayed on the inducement/letter of authorization form, while the long-distance carrier change language may not be. For example, inducement checks, which consumers must sign in order to cash, typically contain a statement near the signature line purporting to authorize a long-distance carrier. In addition, interexchange carriers are also using "negative option letter of authorization" forms. These forms offer prizes to consumers if they return the forms and may "require" consumers to check a box at the end of the form if they do not want to change their long-distance carrier. PURPOSE As proposed, S.B. 1644 prohibits an interexchange carrier from initiating a primary long distance carrier change without a letter of agency from the subscriber; provides criminal penalties. RULEMAKING AUTHORITY It is the committee's opinion that this bill does not grant any additional rulemaking authority to a state officer, institution, or agency. SECTION BY SECTION ANALYSIS SECTION 1. Amends Title IIIG, Public Utility Regulatory Act of 1995, as enacted by S.B. 319, 74th Legislature, 1995 (PURA 1995), by adding Section 3.308, as follows: Sec. 3.308. CHANGE OF LONG DISTANCE CARRIER. (a) Requires a telecommunications provider to obtain from the subscriber a letter of agency that conforms to this section if the provider is required by the rules and regulations of the Federal Communications Commission to obtain a written authorization from a subscriber to initiate a primary long distance carrier change. Provides that a letter of agency that does not conform to this section is invalid. (b) Provides that a letter of agency is a document authorizing an interexchange carrier (carrier) to initiate a primary long distance carrier change. Requires the subscriber requesting the change to sign and date the letter. (c) Sets forth requirements for the form and content of the letter of agency. (d) Prohibits a letter of agency from purporting to instruct the subscriber to take an action to retain the subscriber's current carrier. (e) Provides that a carrier is liable for any act in violation of this section that is committed by an employee or independent contractor acting on behalf of the carrier. (f) Provides that a person commits a third degree felony if the person knowingly violates this section. Provides that the offense is a first degree felony if it is shown that the person was previously convicted of an offense under this subsection within five years preceding the offense for which the person is being tried. SECTION 2. Effective date: September 1, 1995. Makes application of this Act prospective. SECTION 3. Emergency clause.