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FCC’s Enforcement Dragnet Expands: Two LED Sign Manufacturers Caught, Sanctioned, and Subjected to Substantial Fines

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FCC’s Enforcement Dragnet Expands: Two LED Sign Manufacturers Caught, Sanctioned, and Subjected to Substantial Fines

April 25, 2018

The Federal Communications Commission (“FCC”) last week issued two Orders and Consent Decrees against LED sign manufacturers for violating the its RF equipment rules.  The first decree, involving a Canadian company, resulted in, among other things, a $19,500 civil penalty.  The second decree implicating a U.S. company, led to a $39,500 fine.  In addition to the fines, the terms of the Consent Decrees require the manufacturers to admit liability, implement strict compliance plans (including drafting compliance manuals and commence training programs), and provide periodic reports to the FCC on the progress of those plans.

In the Orders, the FCC again issued its now-common threat that RF equipment manufacturers or other responsible parties could have their equipment authorizations revoked if they violate the FCC’s rules.  If this threat is carried out, RF equipment companies found in violation would be effectively banned from selling their products in the U.S.

These cases are virtually identical.  After reviewing a complaint against each of the companies, the FCC opened the investigations by sending them a Letter of Inquiry (“LOI”), requiring them to submit sworn responses to questions about their LED marketing practices.  After receiving replies to the LOIs, the FCC continued the investigations, which revealed that the companies had violated the rules against marketing RF devices without proper authorization, labeling, user manual disclosures, and in one of the cases, failing to retain required test records.

The specific rules the manufacturers violated are:
  1. Marketing and advertising RF devices without FCC authorization applicable to the specific equipment. 47 C.F.R. § 2.803.
  2. Failure to retain design drawings and testing records showing compliance with the FCC’s technical specifications. 47 C.F.R. § 2.955.
  3. Neglecting to label the LED signs in conformity with the FCC’s rules. 47 C.F.R. § 15.19.
  4. User manuals missing the required notification that modifying the LED signs without approval can void the user’s authority to operate the equipment.  47 C.F.R. § 15.21.
  5. Failure to follow the FCC’s rules concerning authorization of the LED signs and their component parts. 47 C.F.R. § 15.101.
  6. No cautionary information provided to the user regarding harmful interference and the conditions under which the LED signs may be operated. 47 C.F.R. §15.105.  
These are just some of the rules that apply to the authorization, marketing, and operation of RF equipment in the U.S.  The FCC has a myriad of other rules that apply to RF equipment.  Moreover, the compliance requirements increase when RF devices are imported, experimental devices are deployed, component parts are categorized differently (requiring unique authorizations for each part), certain frequencies are chosen, equipment is installed as part of a system, and when RF devices are refurbished.  

Investigations into RF equipment violations are easily commenced.  All it takes is a complaint from an interested party or the FCC finding a possible rule violation while conducting its now-required post-market surveillance, and a lengthy proceeding will begin. 

As illustrated by these cases and other recent enforcement actions, the FCC is aggressively prosecuting RF equipment manufacturers (and other responsible parties) suspected of rule violations. The FCC is not shy about imposing severe penalties on parties responsible for major and minor infractions of its RF equipment authorization and marketing rules. 

Because the FCC is watching RF equipment suppliers like a hawk, they are well advised to employ regulatory best practices to ensure FCC compliance and market their products without fear of FCC enforcement. Best practices include:
  • Understanding and complying with all pertinent FCC rules.
  • Correctly categorizing and equipment and properly testing and authorizing same.
  • Vendor contract procedures.
  • Advertising & marketing practices.
  • Importation and working with foreign components.
  • Efficient legal guidance before the FCC Enforcement Bureau & mitigating legal liability.
  • Legally expanding markets overseas.
  • Privacy protection.
Marashlian & Donahue has recently published the second edition of its  Global Guide to RF Equipment Compliance, containing best practice information regarding authorizing and marketing RF equipment in the U.S. and many countries around the world.  This book is also useful as a guide for companies that are required to draft and distribute compliance manuals, such as the companies discussed in this article.  All RF equipment stakeholders would benefit from this comprehensive reference book.

If you would like additional information about the FCC’s RF equipment rules, including the Global Guide and further suggestions for best practices to ensure compliance, please contact IoT attorney Ronald E. Quirk, Jr. at (703) 714-1305 or req@commlawgroup.com. Further information about Marashlian & Donahue’s Internet of Things and Connected Devices practice is available here.