FCC Expands Upward Adjusted Forfeiture Regime from Faxes to Prerecorded Calls

Building on last summer’s orders in two separate cases (discussed here and here) announcing it will make “upward adjustments” to fines against repeat violators of the “junk fax” law and rules, the Federal Communications Commission has now issued a notice of apparent liability (NAL) expanding that approach to prerecorded call violations, which are regulated under the same law and rules. In proposing to fine Travel Club Marketing Inc. and related entities nearly $3 million, the FCC makes clear its intolerance for repeat offenders, particularly when they attempt to mislead the agency and consumers. In the present Travel Club case, the FCC proposes forfeitures for the delivery of 185 prerecorded messages, made for commercial purposes and falling outside any potentially applicable exemption in the rules, to 142 phone numbers assigned either to cell phones or residential phone lines. As in the fax cases, the present NAL states that, rather than imposing fines at the “base” forfeiture rate of $4,500 per violation, the FCC will, where it has already put a company on notice, substantially increase fine amounts. Here, Travel Club received two citations notifying the company the FCC had received complaints about unwanted prerecorded calls, and warning it that future violations could result in fines. The 185 calls at issue all came over the course of the ensuing 12 months. Citing its upward-adjustment unsolicited fax cases, the Commission determined that the delivery of that volume of allegedly violative calls, after not only one but two warnings that the conduct was unlawful suggested that Travel Club consciously and deliberately disregarded – and therefore intentionally violated – FCC rules. Moreover, the FCC noted, Travel Club’s response to the citation appeared “to have been deceptive, evasive, and misleading – if not completely false” in stating the entities cited were “deceased and no longer functioning” and “out of business since 2010.” The NAL pointed to facts suggesting that, instead, the unlawful activities continued, simply under different business names. Accordingly, the FCC concluded, the fact that Travel Club’s principal appeared to be creating and shutting down different businesses to conduct the same or similar unlawful activities suggested a degree of culpability that had to be reflected in the proposed forfeiture. The FCC thus proposed in the NAL a total forfeiture of $2.96 million, reflecting the maximum penalty of $16,000 for each of the 185 apparent violations. This represents the highest fine the FCC is authorized by statute to impose, and goes even beyond the junk fax upward adjustment cases. There, the FCC raised the per-violation forfeiture to $10,000 in cases of repeat offenses, and tacked on additional amounts as punitive/deterrent measures. But even with those “add-ons,” the fines in those cases, divided across the number of violations, still came in under the $16,000 per-offense maximum. Here, the fact that the Travel Club appeared to have sought to purposefully mislead the Commission (and general public) seems to have motivated the push to the maximum. Hence, the Travel Club case is at least in part a warning about being less than honest with the FCC and engaging in related underhanded practices generally. But just as the first of the two junk fax cases we wrote about quickly served as the foundation for the second, there is little reason to doubt the FCC’s new practice of upward adjustments for repeat violations, now that it has been applied to prerecorded calls, will be followed in appropriate prerecorded call cases in the future. Just another reminder to ensure all “robo-calling” comports with the applicable statute and rules, and that FCC warnings that practices appear to be unlawful be taken seriously.