The case in question is Presidential Who's Who d/b/a Presidential Who's Who, Inc. The FCC proposed a $295,000 forfeiture for allegedly sending 31 unsolicited advertisements to consumers. This NAL follows a similar NAL issued in September 2010 against Presidential Who's Who for $345,000. The September 2010 NAL remains pending.

Using the Commission's customary proposed forfeitures of $4,500 for an ordinary violation, and $10,000 for a fax sent after a consumer requested removal, the NAL would be for $145,000. In addition to this penalty, the Commission proposed an "upward adjustment" of $150,000 in this instance. The Commission explained that:

It has become increasingly apparent, however, that the amount of our proposed forfeitures for apparent violations of the junk fax prohibitions has failed to deter the more persistent wrongdoers, as is evident in this case.

As a result, we believe that different and harsher penalties than those we have imposed in the past are now appropriate for entities who engage in a significant number of violations. ...

... weighing the facts before us, including the fact that Presidential Who's Who has engaged in a significant number of violations after warnings by the Commission, we impose an upward adjustment of $150,000 for the unsolicited faxes at issue here ...

This "significant number of offenses" penalty appears to be a new enforcement policy, as evidenced by an NAL issued earlier this month.

The rationale for this upward adjustment may violate Section 504(c) of the Communications Act. Section 504(c) prohibits the Commission from using the issuance of an NAL against a party to prejudice that party in another proceeding. While the Commission claims it may use the facts that underlie the NAL in another proceeding, in this case, Presidential Who's Who has disputed the underlying facts. (The NAL reports that Presidential Who's Who responded to the September 2010 NAL, claiming that the fax numbers were obtained legally). The Commission is not taking note of the fact that Presidential Who's Who sends facsimiles. That fact alone is lawful -- even if the entity sends hundreds (or more) of faxes. Instead, the Commission appears to be taking notice of the "fact" that Presidential Who's Who sent unlawful facsimile transmissions. Given that the entity disputes the asserted violation, the purpose of Section 504(c) -- to prevent the use of unadjudicated allegations -- is implicated here. Moreover, most of the 31 alleged instances occurred before the September 2010 NAL, which makes the connection to Presidential Who's Who's actions after this NAL tenuous.

That leaves only the original Citation as a possible basis for the claim that Presidential Who's Who engaged in a significant number of violations "after warnings by the Commission." But it is inconsistent to penalize other alleged junk faxers less, when they also received the same warnings (which are required by statute for non-licensees). There appears to be nothing more culpable on Presidential Who's Who's part than any of the other alleged unsolicited faxers.

Instead of relying on this questionable rationale, the Commission should have just increased the base forfeiture for fax violations based on its experience that the current levels are not a deterrent. It has done this in the past (most notably with slamming), and, as noted in the NAL, it has authority to penalize non-licensees up to $16,000 per violation, so it could have imposed a larger per fax penalty if it had chosen to do so.

USF Enforcement. The Enforcement Bureau entered into a consent decree with Allegiance Communications, LLC, a cable TV provider in Shawnee, Oklahoma. The Bureau's investigation concerned failures to pay Universal Service, TRS, NANPA and LNP fees, all of which are billed based on the FCC Form 499-A. The action is a settlement, so we do not know all of the facts. Nevertheless, it is clear that at one time Allegiance Communications had not paid these contributions, but "as of March 25, 2011," Allegiance had made its past due payments and submitted all required filings. In stark contrast to other USF actions where the Commission imposed substantial fines for such activities, here, the Enforcement Bureau agreed to a fine of $20,000, payable in two installments. Allegiance Communications is very fortunate, indeed.

"Robocall" Telemarketing Violations. In Security First of Alabama, the FCC proposed a $342,000 Notice of Apparent Liability for violations of the Telephone Consumer Protection Act of 1991 (TCPA). This case involved 43 unsolicited pre-recorded advertising messages ("robocalls") delivered to 33 consumers. For 16 of the calls, the FCC proposes its standard fine of $4,500 per call. However, it also concludes that Security First "spoofed" its caller ID display, which the FCC concluded was an egregious violation worthy of a $10,000 fine per call.

"Junk Fax" Forfeitures. The FCC continues to clear its decks of allegations that entities were engaging in unsolicited facsimile advertising ("junk" faxing). In two forfeiture orders released last week, the FCC fined Mexico Marketing and Travelcomm for sending unsolicited faxes to consumers. In Mexico Marketing, the Commission issued a fine of $1.6 million for 89 violations. In Travelcomm, the Commission issued a fine of $72,000 for 15 violations. These orders were resolutions of several Notices of Apparent Liability issued in 2007 and 2008 against the companies.

On December 8, the FCC released an order canceling a proposed fine against CyberData, Inc. The FCC concluded, based on the record before it, that CyberData presented a "reasonable case" that it was a fax broadcaster, not a sender under the FCC's junk fax rules. The Commission noted three factors that supported the conclusion that CyberData was not liable:

1. The ads were for services that CyberData does not provide and appeared to be transmitted on behalf of third parties;
2. No evidence contradicted CyberData's assertion that it did not have a "high degree of involvement" with the senders' transmissions.
3. CyberData took steps to prevent further transmission of unsolicited faxes. The FCC noted that CyberData maintained a do-not-fax database and that it terminated services to entities found by the FCC to have violated the junk fax rules.

In a few days, the Commission will list the Forfeiture Orders here. Notably, all but one of the alleged senders failed to respond to the FCC's Notices of Apparent Liability, and the FCC imposed the full forfeiture it had proposed.

As expected, this wave of enforcement orders included some very large fines against repeat offenders. The Hot Lead, Inc. received the largest fine, at $1.5 million. SMC, LLC received a fine of $806,500, while the remaining entities received fines between $27,000 and $250,000.

The only entity to respond to the NAL, Sunstar Travel and Tours, raised a number of defenses that the FCC rejected as unsupported by any evidence. However, the Commission concluded that Sunstar Travel lacked the "ability to pay" -- a statutory forfeiture criterion -- and reduced the proposed forfeiture from $305,500 to $50,000. This amount was between 2 and 7.6 percent of Sunstar Travel's average gross revenues, which the Commission found to be reasonable.

Clean Credit, Inc. received a $139,500 fine today, and an additional proposed fine of $528,000 in early September.

With the exception of Clean Credit's $528,000 proposed forfeiture, each of the forfeitures were calculated using the base forfeiture used in other unsolicited fax cases: $4,500 per unsolicited fax, with a base forfeiture of $10,000 if the customer had attempted to opt out of future faxes.

The Commission, rather than the Bureau, must vote on all proposed fines above $100,000, so one may presume that each item involves a significant fine. Significant fines also are likely because several of the subjects of the draft enforcement orders have histories of prior FCC enforcement actions. One company -- The Hot Lead LLC -- received a fine of $2.5 million in 2008 for junk faxes. Pending against it are four proposed fines, of $739,500, $695,000, $47,000 and $51,500. Another company -- Sunstar Travel and Tours -- received a fine of $169,500 in 2008 and has a proposed fine of $136,000 pending now.

In addition, one potential action appears to be against an alleged "fax broadcaster." If issued, it would be the first proposed forfeiture issued under the Commission's "high degree of involvement" standard for fax broadcaster liability.

Caveat: Circulation of an item does not necessarily indicate impending action by the FCC. Four apparent "junk fax" orders began circulating in June 2009. 14 months later, those orders remain under consideration.

UPDATE 9/3/10: The FCC is beginning to release the orders. On Thursday, it released a Notice of Apparent Liability against Clean Credit, Inc. in the amount of $528,000. The Commission imposed the statutory maximum penalty of $16,000 per violation because

"Clean Credit has exhibited a flagrant disregard for the TCPA and the Commission’s rules and orders, with a lengthy history of violations, and an ongoing pattern of violations extending to as recently as a few months ago."

If the Commission similarly applies the $16,000 maximum forfeiture to the remaining investigations, multi-million dollar forfeitures are on the way.