Pillsbury’s communications lawyers have published the FCC Enforcement Monitor monthly since 1999 to inform our clients of notable FCC enforcement actions against FCC license holders and others. This month’s issue includes:
- FCC Proposes $8,000 Fine for Contest Rule Violations
- Business Communications Company Settles Business Radio Investigation by Agreeing to Compliance Plan and $100,000 Penalty
- FCC Issues $16,500 Fine to Alabama FM Translator for Multiple Rule Violations
California FM Station Receives $8,000 Proposed Fine for Contest Rule Violation
The FCC proposed a fine of $8,000 against the licensee of a California FM radio station for violating the FCC’s Contest Rule. Specifically, the FCC issued a Notice of Apparent Liability for Forfeiture (NAL) asserting that the licensee failed to conduct the contest substantially as announced.
Section 73.1216 of the FCC’s Rules requires a licensee to “fully and accurately disclose the material terms” of a contest it conducts or promotes and to conduct the contest “substantially as announced and advertised.” Material terms include, among other things, eligibility restrictions, the means of selecting winners, and the extent, nature, and value of prizes. Prizes must also be awarded promptly, and in the past the FCC has found Contest Rule violations where a station failed to award prizes in a manner consistent with the advertised rules.
The FCC received a complaint alleging that the station did not award a cash prize to the winner of a contest conducted in October 2019. To investigate the complaint, the FCC issued a Letter of Inquiry (LOI) to the station. In response, the station admitted that there had been “undue delay,” with the prize being awarded after the announced timeline. The station’s contest rules indicated prizes were to be awarded to winners “within thirty (30) business days of the date the winner completes all required Station documents.” The station acknowledged that it received all required documentation on January 16, 2020, and thus it should have issued the prize by March 2, 2020, but did not issue the prize until May 2021. The station cited three separate events as the cause of the undue delay: (1) difficulty accessing necessary files after the COVID-19 pandemic led to employees working from home; (2) a ransomware attack that affected corporate IT systems between October 2020 and March 2021; and (3) a lack of staff after the ransomware attack that prevented the station from completing work in a timely manner.
Despite these defenses, the FCC found that the station apparently willfully violated Section 73.1216 of the FCC’s Rules when it failed to award the prize in accordance with the advertised contest rules, and therefore failed to conduct the contest “fairly and substantially as represented to the public.” The FCC explained that “timely fulfillment of the prize” was a “material term of the Licensee’s own contest rules” and the station delayed issuing the prize for over a year. The FCC disagreed with the station’s justifications for the delay, finding that they did not excuse the failure to award the prize in compliance with the announced contest rules. In particular, the FCC pointed out that the station’s first justification for the delay (the pandemic transition to work-from-home) occurred in mid-March 2020 – after the station should have already issued the prize by March 2, 2020.
The FCC’s base fine for violations pertaining to licensee-conducted contests is $4,000. In this case, the FCC found a single violation of Section 73.1216 of the FCC’s Rules resulting from the station’s failure to issue the prize within the timeframe established by the contest rules. However, considering the totality of the circumstances, and in line with the FCC’s Forfeiture Policy Statement, the FCC determined an upward adjustment was warranted, emphasizing that “large or highly profitable companies should expect to pay higher forfeitures for violations of the Act and the Commission’s rules” to ensure that the fine is an “effective deterrent and not simply a cost of doing business.” The FCC therefore concluded that an upward adjustment of the proposed fine from $4,000 to $8,000 was appropriate. The station has 30 days from release of the NAL to pay the fine or file a written statement seeking reduction or cancellation of it.
Rule Violations by Business Communications Company Result in Consent Decree with Compliance Plan and Six-Figure Penalty
A nationwide business communications company settled an FCC investigation by admitting that it failed to seek approval from the FCC before transferring control of business radio licenses and that it conducted business radio operations without authorization. The company entered into a consent decree that requires implementation of a compliance plan and payment of a $100,000 civil penalty.