Yesterday, the FCC released another Notice of Apparent Liability in a “junk fax” case. The NAL employs the Commission’s standard proposed penalties for each alleged unlawful fax. What is significant, however, is that the FCC also imposed a $150,000 penalty to deter a “more persistent wrongdoer.” This increased penalty may in fact be unlawful.

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.

Junk Fax NAL Includes $150,000 Penalty for Multiple Offenses