A recently adopted Consent Decree entered into between the Enforcement Bureau (“Bureau”) and Wal-Mart.com USA leaves no doubt that retailers are advised to be aware of their regulatory responsibilities for the electronics they offer for sale, whether on their physical shelves or on their website. Those responsibilities essentially require retailers to be the pro-active policemen of their suppliers’ compliance with the Commission’s equipment authorization rules. In return for selling wireless microphones without equipment authorization manufactured by ne vendor and for failing to provide a consumer alert regarding conditions of operation at the point of sale for these devices as required in the Federal Communications Commission’s (FCC’s) rules, the on-line retailer agreed to pay $120,000 and submitted to a three-year compliance plan regarding the offering for sale of all radio frequency devices within the United States.
The Consent Decree and adopting Order give little information regarding what prompted the Bureau to launch an investigation into the marketing of wireless microphones by Wal-Mart Stores in November 2010. Notably, the Bureau’s investigation commenced shortly after the FCC adopted new rules permitting operation of wireless microphones and low power auxiliary stations within the core TV bands pursuant to certain conditions on a non-interference basis. The Bureau may have been examining random websites of retailers offering wireless microphones for sale. While the number of unauthorized wireless microphones Wal-Mart.com USA sold or offered for sale was not revealed, the Consent Decree makes clear that none of the microphones the company offered for sale on its website operated within the prohibited 700 MHz band. Rather, Wal-Mart.com USA offered a device for sale which (presumably) was otherwise complaint with the rules but the supplier had not put it through the FCC’s equipment authorization process for intentional unlicensed transmitters – certification – before it was marketed, and only after the investigation commenced did Wal-Mart.com USA put the required consumer advisory regarding wireless microphones at “the point of sale.” For online sales, the FCC’s orders required that the advisory be “prominently displayed in close proximity to the images and descriptions” of each product, i.e., the online point of sale.
The three-year compliance plan Wal-Mart.com USA agreed to follows the same structure as other such plans that we have described in other recent blog posts, such as one regarding Skybeam Acquisition Corporation and Digis, LLC. Retailers may want to take note that the compliance plan extends to the marketing of all radiofrequency devices, not just wireless microphones. Wal-Mart.com USA must appoint a knowledgeable compliance officer, develop operating procedures to help ensure compliance as well as a compliance manual within 60 days (to be updated at least once annually), implement a compliance training program for all employees that perform or supervise, oversee, or manage those who perform duties that relate to Wal-Mart.com USA’s regulatory duties concerning the marketing of radiofrequency devices generally within 90 days and conduct annual training, report non-compliance with the law and rules regarding marketing of radiofrequency devices as well as with the consent decree itself, and provide more general compliance reports to the FCC four times over the thirty-six month compliance plan term. The marketing of any unauthorized or improperly labeled device would trigger internal and Commission notification obligations and may be considered a violation of the Consent Decree, as well as the rules, leading to potentially further enforcement action. For a company selling as many diverse electronic products as Wal-Mart.com USA, the compliance plan may require training of a large number of employees and require a close eye on the many electronic products that are sold on its website. And while Wal-Mart.com USA required its wholesalers and distributors to comply with all applicable FCC requirements, the Bureau’s investigation and the Consent Decree make clear that retailers can bear regulatory responsibility for the failures of their wholesalers and distributors.