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Federal Communications Commission
Washington, D.C. 20554
In the Matter of File No. EB-08-TC-3704
Diamond Phone, Inc. NAL/Acct. No. 201032170352
Apparent Liability for Forfeiture FRN: 0009886268
ORDER OF FORFEITURE
Adopted: March 3, 2011 Released: March 3, 2011
By the Chief, Telecommunications Consumers Division, Enforcement Bureau:
I. INTRODUCTION and background
1. In this Order of Forfeiture, we assess a monetary forfeiture of twenty
thousand dollars ($20,000) against Diamond Phone Card, Inc. ("Diamond
Phone") for willfully or repeatedly violating section 222 of the
Communications Act of 1934, as amended (the "Communications Act" or
"Act"), section 64.2009(e) of the Commission's rules, and the
Commission's EPIC CPNI Order by failing to timely file an annual
compliance certification with the Enforcement Bureau ("Bureau") for
calendar year 2007 on or before March 1, 2008.
2. Diamond Phone is a telecommunications carrier located in Elmhurst, New
York providing prepaid phone card services. As a telecommunications
carrier, Diamond Phone is subject to the requirements of section 222
of the Act and section 64.2009 of the Commission's rules. Section 222
imposes the general duty on all telecommunications carriers to protect
the confidentiality of their subscribers' proprietary information.
Protection of CPNI is a fundamental obligation of all
telecommunications carriers as provided by section 222 of the Act. The
Commission required carriers to establish and maintain a system
designed to ensure that carriers adequately protected their
subscribers' CPNI. The Commission strengthened its privacy rules with
the release of the EPIC CPNI Order, requiring that all companies
subject to the CPNI rules file annually, on or before March 1, a
certification with the Commission pursuant to amended rule 47 C.F.R.
3. The Bureau sent a Letter of Inquiry ("LOI") to Diamond Phone on
September 2, 2008. In the LOI the Bureau asked Diamond Phone to
provide copies and evidence of its timely filed CPNI compliance
certificate for 2007, which was due by March 1, 2008, or an
explanation as to why no certification was filed. Diamond Phone
responded to the LOI by emailing a CPNI certification dated September
25, 2008. The Bureau concluded that Diamond Phone failed to submit
satisfactory evidence of its timely filing of the annual CPNI
compliance certification. On February 24, 2009, the Bureau released
the Omnibus NAL against numerous companies, including Diamond Phone,
proposing a monetary forfeiture of $20,000 for the apparent failure to
comply with section 64.2009(e) of the Commission's rules, and the
Commission's EPIC CPNI Order, and ordered Diamond Phone to either pay
the proposed forfeiture or file a written response within 30 days of
the release date stating why the proposed forfeiture should be reduced
or canceled. Diamond Phone did not submit a response to the Omnibus
4. Section 64.2009(e) of the Commission's rules requires
telecommunications carriers such as Diamond Phone to file annually
before March 1st a CPNI compliance certification signed by an officer
of the carrier. By its own admission, Diamond Phone failed to comply
with this Commission rule and is subject to forfeiture. Section 503(b)
of the Communications Act authorizes the Commission to assess a
forfeiture against a common carrier of up to $150,000 for each
violation of the Act or of any rule, regulation, or order issued by
the Commission under the Act. The Commission may assess this penalty
if it determines that the carrier's noncompliance is "willful or
repeated." For a violation to be willful, it need not be intentional.
In exercising our forfeiture authority, we are required to take into
account "the nature, circumstances, extent, and gravity of the
violation and, with respect to the violator, the degree of
culpability, any history of prior offenses, ability to pay, and such
other matters as justice may require." In addition, the Commission has
established guidelines for forfeiture amounts and, where there is no
specific base amount for a violation, retained discretion to set an
amount on a case-by-case basis.
5. The Commission's Forfeiture Policy Statement does not establish a base
forfeiture amount for the failure to timely file an annual CPNI
certification. The $3,000 base forfeiture amount suggested in the
Commission's Forfeiture Policy Statement for failure to file documents
generally is inadequate when applied to failure to file CPNI
certifications. The Commission adopted the annual CPNI certification
filing requirement to "ensure that carriers regularly focus their
attention on their duty to safeguard CPNI. . . [and] remind carriers
of the Commission's oversight and high priority regarding carrier
performance in this area." In the Omnibus NAL, the Commission took
into account the statutory factors for determining a forfeiture
amount, the gravity of the offense, FCC precedent involving violations
of our CPNI rules, and the fact that protection of a subscriber's CPNI
is an important carrier obligation and the certification filing is an
important part of that obligation. Taking these factors into account,
the Commission proposed a forfeiture amount in the Omnibus NAL of
$20,000 which is significantly lower than the maximum allowable
forfeiture under section 503(b) and is also much lower than the
$100,000 forfeitures assessed against carriers in prior Commission
actions involving violations of our CPNI rules. Further, pursuant to
the statutory factors, our rules, and the Forfeiture Policy Statement
and find that no further downward adjustment from the $20,000
forfeiture amount is warranted.
6. As a preliminary matter, Diamond Phone's failure to timely file its
annual 2007 CPNI certification is not disputed. Diamond Phone
submitted the required certification only after the Commission
notified it that it was investigating Diamond Phone's compliance with
our rules and that it might be subject to enforcement action,
7. In addition, Diamond Phone failed to show past compliance with the
Commission's CPNI certification requirements. Prior to the annual
certification filing requirement, carriers were required to have a
CPNI compliance plan and keep an annual CPNI compliance certificate in
their files (i.e., carriers were required to annually certify but were
not required to file the certification with the Commission). In lieu
of an annual filing requirement, carriers were required to produce
their annual certifications for inspection upon Commission request.
Diamond Phone has failed to show that it was in compliance with the
earlier certification requirement. Thus, the Commission cannot
consider past CPNI compliance as a mitigating factor.
8. Moreover, in a number of recent actions, the Commission has held that
the failure to file forms is a continuing violation until cured, i.e.,
Diamond Phone continued to violate the certification filing
requirement for calendar year 2007 until it filed the certification.
Failure to file the annual CPNI certification jeopardizes the
Commission's ability to effectively monitor and respond to violations
of consumer's privacy. The annual certification filing obligation is
specifically intended to "ensure that carriers regularly focus their
attention on their duty to safeguard CPNI" and allow the Commission to
"monitor the industry's response to CPNI privacy issues and to take
any necessary steps to ensure that carriers are managing customer CPNI
securely." As we discussed above, Diamond Phone has failed to show
that it maintained an annual, but unfiled, CPNI compliance
certification. Thus, no downward adjustment is warranted in this case
because Diamond Phone has failed to show that it has a history of
compliance with our CPNI rules.
9. With respect to inability to pay or hardship adjustment, we stated in
the Omnibus NAL:
The Commission will not consider reducing or canceling a forfeiture in
response to a claim of inability to pay unless the petitioner submits: (1)
federal tax returns for the most recent three year period; (2) financial
statements prepared according to generally accepted accounting practices;
or (3) some other reliable and objective documentation that accurately
reflects the petitioner's current financial status. Any claim of inability
to pay must specifically identify the basis for the claim by reference to
the financial documentation submitted.
Diamond Phone has not provided federal tax returns, financial statements,
or any other information to support an inability to pay adjustment. We
therefore conclude that Diamond Phone has not demonstrated an inability to
pay the proposed forfeiture amount of $20,000.
10. In the Omnibus NAL, the Bureau considered several factors including
the amount of forfeiture necessary to have the intended deterrent
effect. The Bureau concluded that the goal of deterring future
non-compliance would be met by issuing forfeitures consistent with the
proposed amount. We take noncompliance with our CPNI rules very
seriously. This forfeiture order should advise Diamond Phone and other
carriers that the protection of a subscriber's CPNI and the annual
CPNI compliance certification filing requirements are important
IV. ordering clauses
11. Accordingly, IT IS ORDERED, pursuant to section 503(b) of the
Communications Act of 1934, as amended, 47 U.S.C. S: 503(b), section
1.80 of the Commission's rules, 47 C.F.R. S: 1.80, that Diamond Phone
Card, Inc. SHALL FORFEIT to the United States government the sum of
$20,000 for willfully and repeatedly violating the Act and the
12. Payment of the forfeiture shall be made in the manner provided for in
section 1.80 of the rules within thirty (30) days of the release of
this Forfeiture Order. If the forfeiture is not paid within the period
specified, the case may be referred to the Department of Justice for
collection pursuant to section 504(a) of the Act. Payment of the
forfeiture must be made by check or similar instrument, payable to the
order of the Federal Communications Commission. The payment must
include the NAL/Account No. and FRN referenced above. Payment by check
or money order may be mailed to Federal Communications Commission,
P.O. Box 979088, St. Louis, MO 63197-9000. Payment by overnight mail
may be sent to U.S. Bank-Government Lockbox #979088, SL-MO-C 2-GL,
1005 Convention Plaza, St. Louis, MO 63101. Payment by wire transfer
may be made to ABA Number 021030004, receiving bank TREAS/NYC, and
account number 27000001. For payment by credit card, an FCC Form 159
(Remittance Advice) must be submitted. When completing the FCC Form
159, enter the NAL/Account Number in block number 24A. Diamond Phone
Card, Inc. will also send electronic notification on the date said
payment is made to firstname.lastname@example.org. Requests for full payment
under an installment plan should be sent to: Chief Financial Officer
-- Financial Operations, 445 12th Street, S.W., Room 1-A625,
Washington, D.C. 20554. Please contact the Financial Operations
Group Help Desk at 1-877-480-3201 or Email: ARINQUIRIES@fcc.gov with
any questions regarding payment procedures.
13. IT IS FURTHER ORDERED that a copy of this Order for Forfeiture shall
be sent by Certified Mail Return Receipt Requested and First Class
Mail to the company at 87-20 Queens Blvd., Elmhurst, NY 11373.
FEDERAL COMMUNICATIONS COMMISSION
Richard A. Hindman
Telecommunications Consumers Division
47 U.S.C. S: 503(b)(1). The Commission has the authority under this
section of the Communications Act to assess a forfeiture against any
person who has "willfully or repeatedly failed to comply with any of the
provisions of this [Act] or of any rule, regulation, or order issued by
the Commission under this [Act] ...." For a violation to be willful, it
need not be intentional. See Application for Review of Southern California
Broadcasting Co. Licensee, Radio Station KIEV (AM) Glendale, California,
Memorandum Opinion and Order, 6 FCC Rcd 4387, 4387-88, P: 5 (1991)
("Southern California Broadcasting"), recon. denied, 7 FCC Rcd 3454
47 U.S.C. S: 222.
47 C.F.R. S: 64.2009(e).
Implementation of the Telecommunications Act of 1996: Telecommunications
Carriers' Use of Customer Proprietary Network Information and Other
Customer Information; IP-Enabled Services, CC Docket No. 96-115; WC Docket
No. 04-36, Report and Order and Further Notice of Proposed Rulemaking, 22
FCC Rcd 6927, 6953, P: 51 (2007) ("EPIC CPNI Order"); aff'd sub nom. Nat'l
Cable & Telecom. Assoc. v. FCC, 555 F.3d 996 (D.C. Cir. 2009).
Section 222 of the Communications Act, 47 U.S.C S: 222, provides that:
"Every telecommunications carrier has a duty to protect the
confidentiality of proprietary information of, and relating to, other
telecommunications carriers, equipment manufacturers, and customers,
including telecommunication carriers reselling telecommunications services
provided by a telecommunications carrier."
47 C.F.R. S: 64.2009(e) is one such requirement.
EPIC CPNI Order, 22 FCC Rcd at 6953, P: 51. 47 C.F.R. S: 64.2009(e).
Specifically, pursuant to section 64.2009(e): A telecommunications carrier
must have an officer, as an agent of the carrier, sign and file with the
Commission a compliance certificate on an annual basis. The officer must
state in the certification that he or she has personal knowledge that the
company has established operating procedures that are adequate to ensure
compliance with our CPNI rules. The carrier must provide a statement
accompanying the certification explaining how its operating procedures
ensure that it is or is not in compliance with our CPNI rules. In
addition, the carrier must include an explanation of any actions taken
against data brokers and a summary of all customer complaints received in
the past year concerning the unauthorized release of CPNI. This filing
must be made annually on or before March 1 in EB Docket No. 06-36, for
data pertaining to the previous calendar year. See also Enforcement
Advisory No. 2011-02, 26 FCC Rcd 650 (Enf. Bur. 2011); Enforcement
Advisory No. 2010-01, 25 FCC Rcd 361 (Enf. Bur. 2010).
See email from David Rimas to Marcy Greene (Sept. 24, 2008). Diamond Phone
submitted its 2007 CPNI compliance certification (dated Sept. 25, 2008)
after it received notice from the Commission of this investigation of
potential non-compliance with section 222 of the Act and section 64.2009
of the Commission's rules. See Diamond Phone's "Annual 47 C.F.R. S:
64.2009(e) CPNI Certification," dated Sept. 25, 2008.
Annual CPNI Certification, Omnibus Notice of Apparent Liability for
Forfeiture, 24 FCC Rcd 2299 (Enf. Bur. 2009) ("Omnibus NAL").
47 C.F.R. S: 64.2009(e); see also EPIC CPNI Order, 22 FCC Rcd at 6953-54,
47 U.S.C. S: 503(b)(2)(B); see also 47 C.F.R. S: 1.80(b)(2); Amendment of
Section 1.80 of the Commission's Rules, Order, 12 FCC Rcd 1038
(1997)(inflation adjustment to $100,000/$1,100,000); Amendment of Section
1.80(b) of the Commission's Rules and Adjustment of Forfeiture Maxima to
Reflect Inflation, Order, 15 FCC Rcd 18221 (2000)(inflation adjustment to
$120,000/$1,200,000); Amendment of Section 1.80 of the Commission's Rules
and Adjustment of Forfeiture Maxima to Reflect Inflation, Order, 23 FCC
Rcd 9845 (2008) (inflation adjustment to $150,000/$1,500,000). See also
FCC Enforcement Advisory No. 2011-02, 26 FCC Rcd 650 (Enf. Bur. 2011). At
the time the Omnibus NAL was released the maximum forfeiture was $130,000
for each violation of the Act or of any rule, regulation, or order issued
by the Commission. See Omnibus NAL, 24 FCC Rcd at 2301, P: 5.
See 47 U.S.C. S: 503(b)(1)(B).
See, e.g., Southern California Broadcasting, 6 FCC Rcd at 4387-88, P: 5.
See 47 U.S.C. S: 503(b)(2)(E); see also The Commission's Forfeiture Policy
Statement and Amendment of Section 1.80 of the Commission's Rules, 12 FCC
Rcd 17087, 17100-17101, P: 27 (1997) ("Forfeiture Policy Statement");
recon. denied, 15 FCC Rcd 303 (1999).
See Forfeiture Policy Statement, 12 FCC Rcd at 17098-99, P: 22.
EPIC CPNI Order, 22 FCC Rcd at 6953, P: 51
See Omnibus NAL, 24 FCC Rcd at 2302, P: 8; see also EPIC CPNI Order, 22
FCC Rcd at 6953, P: 51.
See Omnibus NAL, 24 FCC Rcd at 2299-2303, P:P: 5-8. The prior actions
involved violations of the Commission's CPNI rules in effect in 2006. See
id. at 2302, P: 7.
Omnibus NAL, 24 FCC Rcd at 2302, P: 7. This prior rule is discussed in the
EPIC CPNI Order: "each telecommunications carrier must have an officer, as
an agent of the carrier, sign a compliance certificate on an annual basis
stating that the officer has personal knowledge that the company has
established operating procedures that are adequate to ensure compliance
with the Commission's CPNI rules and to make that certification available
to the public." EPIC CPNI Order, 22 FCC Rcd at 6953, P: 52 (citation
Omnibus NAL, 24 FCC Rcd at 2302, P: 7.
The 2007 CPNI compliance certification Diamond Phone submitted to the
Bureau was dated Sept. 25, 2008. Diamond Phone has failed to show that it
had an earlier CPNI compliance certification.
Annual CPNI Certification, Omnibus Notice of Apparent Liability for
Forfeiture and Order, DA 11-371,P: 8 (Enf. Bur. Feb. 25, 2011); STI
Prepaid, LLC, Notice of Apparent Liability for Forfeiture, 25 FCC Rcd
17836, 17845, P: 20 (Enf. Bur. 2010); Champaign Telephone Company d/b/a CT
Communications, Inc., Order and Notice of Apparent Liability for
Forfeiture, 25 FCC Rcd 17814, 17818-18, P: 9 (Spec. Enf. Div. 2010);
Lightyear Network Solutions, LLC, Order and Notice of Apparent Liability
for Forfeiture, 25 FCC Rcd 16212, 16217, P: 12 (Spec. Enf. Div. 2010);
Alpheus Communications, LP, Notice of Apparent Liability for Forfeiture,
25 FCC Rcd 8993, 8998, P: 12 (Enf. Bur. 2010); Compass Global, Inc.,
Notice of Apparent Liability for Forfeiture, 23 FCC Rcd 6125, 6138-39, P:
31 (2008); Telrite Corp., Notice of Apparent Liability for Forfeiture and
Order, 23 FCC Rcd 7231, 7244, P: 30 (2008); VCI Company, Notice of
Apparent Liability for Forfeiture and Order, 22 FCC Rcd 15933, 15940, P:
EPIC CPNI Order, 22 FCC Rcd at 6953, P: 51.
Omnibus NAL, 24 FCC Rcd at 2304, P: 16.
See Long Distance Direct, Inc., Apparent Liability for Forfeiture,
Memorandum Opinion and Order, 15 FCC Rcd 3297, 3305-06, P:P: 22-23 (2000).
(Continued from previous page)
Federal Communications Commission DA 11-423
Federal Communications Commission DA 11-423