After multiple enforcement actions totaling hundreds of thousands of dollars in penalties against importers and retailers of LED signs last year, it appears that the message has not been fully received. To the contrary, the FCC is back at it in enforcing its equipment marketing rules against importers and retailers of LED signs in 2019. In a recent Enforcement Advisory, the FCC again warned companies marketing noncompliant LED displays that they may be subject to costly investigations and significant monetary penalties. As we previously reported, these warnings should put all importers and retailers of LED signs – many of whom may not know FCC rules apply to them – on notice that their products should be authorized, properly labeled, and contain the required user disclosures before being marketed in the United States. The FCC often uses Enforcement Advisories to set the stage for future enforcement action and the agency appears poised to move forward with another wave of enforcement actions in the coming months. It is therefore critical that companies assess their equipment marketing compliance procedures now to avoid Commission enforcement later.
The Enforcement Advisory emphasizes the broad scope of the FCC marketing rules, which apply not only to equipment retailers but also any entity that imports, distributes, or advertises equipment for sale or lease. The Enforcement Advisory also highlights four key compliance requirements for marketers of LED signs:
- First, each LED sign panel must be tested for compliance with FCC rules. Accordingly, each panel that differs in design must be tested and authorized separately. The Enforcement Advisory notes that LED sign panels authorized before November 2, 2018 under existing FCC’s procedures remain compliant unless the party later modifies the equipment to require a new authorization. For modified LED panels (and for new LED panels entering the market), the party will need to obtain a new authorization under either the FCC’s certification procedures (i.e., the party submits equipment for testing by an FCC-approved laboratory) or its Supplier’s Declaration of Conformity (“SDoC”) procedures (i.e., the party certifies that it tested the equipment for compliance with technical standards).
- Second, each authorized LED sign panel must comply with all labeling requirements. In particular, equipment authorized through SDoC procedures should be labeled with a unique identifier and include a compliance information statement provided electronically or in some other form easily accessible to end users, while equipment authorized through certification procedures should carry an FCC-issued identifier.
- Third, marketers of LED signs should retain records demonstrating their compliance with the FCC’s equipment authorization rules, such as copies of test reports and compliance statements.
- Fourth, marketers of LED signs that rely on SDoC authorization procedures must ensure that the party responsible for compliance with the FCC’s equipment marketing rules is located in the United States. This allows the FCC to easily contact the appropriate party when the equipment was not subject to testing by an FCC-approved laboratory.
The Enforcement Advisory cautions that parties marketing noncompliant LED signs may be subject to penalties of over $20,000 per day for individual violations, and over $150,000 for “continuing” violations that occur over an extended period of time. As equipment marketing violations often involve online advertisements or other ongoing retail activities, violations can quickly pile up to reach the maximum fine. In addition, the FCC has taken a “per model” approach to equipment marketing violations that assesses penalties for each piece of unauthorized equipment, even when the pieces were marketed together. As a result, equipment marketing violations can lead to significant fines and the stranding of unauthorized inventory. Importers and retailers of LED signs therefore should take action now to evaluate their current equipment marketing compliance practices in line with the Enforcement Advisory and identify potential improvements. LED sign manufacturers and retailers would be well advised to contact experienced counsel to determine how to comply with the FCC’s rules.