Enforcement Newsletter – July 14, 2014


This edition summarizes notable FCC-related enforcement matters during the second quarter of 2014. Questions or comments may be addressed to David H. Solomon at 202-383-3369 or dsolomon@wbklaw.com.

The “New” Enforcement Bureau

Highest Enforcement Action Ever: The Commission issued a $34.9 million Notice of Apparent Liability for Forfeiture (“NAL”) – the statutory maximum – against an equipment manufacturer/retailer for the unlawful marketing of 285 models of signal jamming devices to U.S. consumers.
More Aggressive Consent Decrees: The Enforcement Bureau is implementing new policies of generally requiring that Consent Decrees include (1) an admission of liability; and (2) payment of a “fine” or “penalty” rather than a “voluntary contribution” to the U.S. Treasury. These policies, if successful, will likely result in fewer Consent Decrees and more NALs.
Prosecutorial Orientation: In addition to the new Enforcement Bureau Chief being a former prosecutor, he hired former prosecutors as his Chief of Staff and to lead a new USF Strike Force to combat waste, fraud, and abuse in FCC funding programs.
Potential Criminal Penalties: In two $25,000 NALs for failure to respond to Letters of Inquiry, the Enforcement Bureau threatened that further failure to respond may subject the companies and their principals to criminal penalties, including fines and imprisonment.
Enforcement Priorities: In recent News Releases, the Enforcement Bureau has indicated that it particularly focuses on competition, consumer protection, communications funding programs, and public safety.

Consumer Protection

• The Enforcement Bureau entered into a $7.5 million Consent Decree with a major wireless carrier regarding compliance with the company-specific do-not-call rules. The payment is roughly 10 times higher than that resulting from any prior do-not-call enforcement action.

• The Commission released a $3.96 million NAL for slamming, cramming, misleading/deceptive marketing, and violations of the truth-in-billing rules. The company and its representatives appeared to have particularly targeted elderly and disabled consumers.
• The Commission released a $2.94 million NAL regarding the Telephone Consumer Protection Act prohibition against prerecorded calls to wireless numbers. The Commission also dismissed a petition for reconsideration of an earlier Citation against the same entity, holding that such petitions for reconsideration did not lie because the finding of a violation in a Citation is not final Commission action that can be challenged.
• The Federal Trade Commission filed a complaint in federal District Court against a major wireless carrier for inclusion of unauthorized third-party charges on its bills. The FTC complaint asserts that it and the FCC “have concurrent enforcement jurisdiction over mobile telephone companies’ billing and collection of third-party charges for non-telecommunications services.” The FCC announced that it is investigating the same carrier and that it is coordinating with the FTC.

USF and TRS Funds

• The Commission released an $11.9 million NAL against a provider of Telecommunications Relay Service (“TRS”) for improperly billing the TRS fund for ineligible recipients, the highest TRS-related enforcement action ever. The NAL says that the company failed to use a reasonable process to verify the names and addresses of users and failed to submit true and accurate data to the fund administrator. The Commission computed the amount of the NAL by multiplying the amount the company improperly received from the fund by a specific figure, but redacted as confidential both the amount and the multiplier.
• The Enforcement Bureau entered into a $90,000 Consent Decree with an audio bridging service provider that voluntarily disclosed that it had not registered with the Commission or filed Telecommunications Reporting Worksheets during its first nine months of service.
• The Department of Justice, with assistance from FCC staff, indicted three individuals for allegedly fraudulently submitting more than $32 million in false claims for support from the FCC’s Lifeline program for low-income persons.

Hearing Aid Compatibility

• The Enforcement Bureau entered into a $400,000 Consent Decree with a manufacturer regarding the HAC deployment rules.
• The Enforcement Bureau also entered into a $125,000 Consent Decree with a wireless carrier, settling a prior $51,000 NAL and an investigation regarding HAC compliance in a subsequent reporting period, and a $12,000 Consent Decree with a manufacturer regarding failure to file an annual HAC report.

Sponsorship ID
• The Enforcement Bureau entered into a $185,000 Consent Decree with an AM radio and FM translator licensee regarding compliance with the sponsorship identification rules. The Bureau had received and investigated a complaint that the station broadcast a daily talk show without disclosing that the guests on the show had paid the station to appear and promote their products and services. The Bureau also entered into a $15,000 Consent Decree regarding sponsorship ID (payment to station by program host) and indecency (broadcast of “vulgar” language).

Other Notable Actions

Retransmission Consent: The Commission imposed a $2.25 million forfeiture (the full amount of the NAL and the statutory maximum) for a cable operator’s violation of the retransmission consent rules with respect to six broadcast stations.
Class Actions: The Commission denied a petition for rulemaking requesting that it amend its rules to permit class actions against common carriers to be brought before the Commission. The Commission found there is no need for it to entertain class actions because such suits may be brought in federal district court and granting the petition would divert considerable resources from the Commission’s existing responsibilities. The Commission noted that if a court adjudicating a class action believes it would be aided by the Commission’s expertise or guidance on a particular issue, it can refer that issue to the Commission under the primary jurisdiction doctrine.
Equipment Marketing: As noted above, the Commission released a record $34.9 jamming NAL against a manufacturer/retailer of jamming equipment. The Enforcement Bureau also entered into Consent Decrees regarding the equipment marketing rules of $225,000 (professional audio and live sound products), $144,000 (smartphone and tablet prototypes), $80,000 (digital cameras and wireless accessories), and $14,000 (wireless parking meters).
Broadcast Station Inspection: The Commission released an $89,200 NAL against a Class A television station, of which $75,000 (the statutory maximum) was for two “direct, in-person” refusals to permit field agents to conduct on-the-spot inspections of the station. The Commission recognized that its forfeitures in the past for failures to permit inspection had been smaller but found that the facts in this case exhibited a “blatant disregard and contempt for” FCC authority.
Pirate Radio: The U.S. Attorney’s offices in New York City and Boston announced seizure of equipment relating to pirate FM radio operations in coordination with the FCC Enforcement Bureau. In a letter to a Member of Congress from New York, the Chairman reported that the New York Field Office shut down more than 64 pirate radio stations last year and that more than 60 percent of the Notices of Unauthorized Operation issued by all 23 field offices combined were against New York City pirate radio operators. The letter also notes that resource constraints have resulted in the Commission being unable to perform routine lifecycle replacement of essential enforcement equipment used by FCC field agents, and that the Commission has been unable to upgrade equipment to keep pace with developments in the field.
Other Unauthorized Operation: In a record high action against a private land mobile radio licensee, the Commission released an NAL of approximately $295,000 against a manufacturer for unauthorized operation after failing to renew eight private radio licenses used at its plant ($256,000) and unauthorized transfer of control of 12 private radio licenses ($38,400). The Commission also released a $48,000 NAL against an individual for unlawful operation of a cellphone jammer. The Enforcement Bureau released a $25,000 NAL for operation of unauthorized temporary satellite news gathering stations at two locations during the same week, and a $25,000 NAL for unauthorized operation of an Unlicensed National Information Infrastructure (“U-NII”) transmission system that interfered with Federal Aviation Administration weather radar.
RF Radiation: The Enforcement Bureau entered into a $50,000 Consent Decree with a major wireless carrier regarding radiofrequency radiation emission limits.
Zapple Doctrine: In response to complaints that broadcast stations had violated the “Zapple Doctrine” in refusing to provide air time to supporters of one candidate after providing airtime to supporters of a competing candidate, the Media Bureau announced that, in light of the fact that the Zapple Doctrine was based on an interpretation of the Fairness Doctrine, which the Commission eliminated 27 years ago, the Zapple Doctrine “has no current legal effect.”
Challenges to Consent Decrees: The Commission dismissed an Application for Review of an Enforcement Bureau Consent Decree for lack of standing. The Commission noted that third parties have no right to participate in or be notified of settlements.