“Free Offers” May be Advertising

The Forfeiture Order affirms a finding that AmericanWest’s messages constituted advertising, even though the pre-recorded messages did not offer anything for sale. In this instance, the recipients heard a message that they allegedly had won a free vacation package. The Commission noted in the NAL that according to the TCPA, “‘offers for free goods or services that are part of an overall marketing campaign to sell property, goods, or services’ also qualify as unsolicited advertisements and are ‘prohibited to residential telephone subscribers, if not otherwise exempted.’” Finding no exemption that would have allowed AmericanWest to make the calls in question, the FCC proposed a penalty of $4,500 per message, a rate that has been imposed in similar previous cases.

Statute of Limitations

The timing of the Forfeiture Order likely is motivated by the statute of limitations facing the FCC. Many communications carriers are aware of the FCC’s one-year statute of limitations for issuing a Notice of Apparent Liability. Once the FCC satisfies that limitations period, it faces a second one much later in the process: the time within which it must initiate an action to collect an unpaid forfeiture. That provision requires the FCC (technically, the Department of Justice) to commence an action to collect on a forfeiture within five years of when the violation occurred (not when the NAL was issued). Because the calls that violated the TCPA occurred in March 2010, the FCC must commence an action to collect a forfeiture by March 2015 – just two months from now.

Here at this blog, we have seen this pattern in enforcement cases at the FCC before. Typically, after the rush to satisfy the one-year statute of limitations for an NAL, an enforcement case can lie dormant for years. This is the case even when, as here, the respondent never even contests the proposed forfeiture. (But is also frequently happens when a respondent does contest the forfeiture, and then awaits an indication from the Commission that it is going to address the NAL.) Only as the FCC approaches its five-year limitations period on collections does the Commission address the “apparent” violations of the NAL. This also helps to explain the unusually short time period AmericanWest was given to pay the forfeiture – only 12 days. Once that time period passes, the Commission can proceed to commence a collection action against the company; the payment date is intended to provide the FCC time to do so before its March 2015 bar date.

In February 2010, ViaSat Inc. filed a space station application seeking to use spectrum overlapping the Galaxy KA application. Accordingly, it assumed a position behind Intelsat in the queue. On March 2, 2010, Intelsat amended its application to eliminate the overlap in such a way to allow ViaSat to assume a first in line position. Subsequently, on October 18, 2012, more than thirteen months prior to the Notice, Intelsat withdrew the March 2, 2010, amendment and assumed a place in the queue behind ViaSat. Then, on December 13, 2012, ViaSat withdrew its application, moving Intelsat back to its original first-in line position. Given that the NAL was adopted a year, minus a day, after ViaSat’s withdrawal, ViaSat’s withdrawal and Intelsat’s resumption of its position at the front of the queue apparently caused the one-year statute of limitations to run, at least from the Commission’s perspective.

Several important facts in the NAL are not made available to the public which, if known, might shed a different light on the subject for the public. A careful reading sheds a few details, as the Commission notes that “[a]n applicant’s identity is particularly material” and generally alludes to “undisclosed private transactions between applicants” and “surreptitious transactions.”

Page Plus also is noteworthy in two additional respects relevant to this blog. First, the FCC applies the base forfeiture of $3,000 for “failure to file a required report” to this violation. This contrasts with other types of forms, such as the Form 499-A and the annual CPNI certification, where the FCC has set an individual (and much higher) forfeiture for failing to file the required form. Here, the FCC applied the $3,000 base forfeiture to eight violations, adding an upward adjustment of $19,200 to the fine due to duration of the violations.

Second, FCC proposed a fine for eight failures to file the annual certification – dating back to 2003. The Commission apparently relied upon its controversial “continuing violation” theory for missed deadlines, in which the Commission considers a violation to continue until it is cured. In this instance, six of the eight alleged violations relate to forms that Page Plus has never filed. Two relate to late-filed forms, which were filed exactly one year prior to the release of the NAL. (A ninth year’s report was filed slightly more than one year prior to the NAL, and is not part of the FCC’s proposed forfeiture). We say that the FCC “apparently” relied upon the continuing violations theory because the NAL does not cite to or discuss the statute of limitations with respect to the eight violations found. In our opinion, the FCC action is vulnerable on statute of limitations grounds.