| Re: | Order of Forfeiture, In the Matter of Business Discount Plan, Inc. Apparent Liabilityfor Forfeiture |
(rel. July 17, 2000).
Although I support today's result, I continue to object to the Commission's foraysinto advertising and marketing regulation. As I stated previously,(1) there is no doubt that theCommission has authority under § 258 to bring enforcement actions against "slamming"carriers. Moreover, I strongly support rigorous and aggressive enforcement of our slammingrules. In this regard, I believe today's forfeiture amount could be easily justified based solelyon the aggravating factors associated with the carrier's Section 258 violations.
However, I continue to believe that Section 201 alone does not provide anindependent basis for punishing carriers based on their marketing practices. This is aparticularly important distinction to make, in light of the Commission's recent decision toventure into the world of advertising regulation.(2) The FCC has neither the authority nor theability to be the "marketing police" of the telecommunications industry.(3) Two additionalfactors also support my reluctance for the FCC to regulate marketing practices under Section201: (1) States have the resources and ability to regulate such conduct, and (2) theCommission and the public are better served by expending the FCC's limited resources onissues more clearly within our statutory mandate. Thus, I dissent from the portion of today'sOrder that seeks to punish BDP for its unjust marketing practices on the basis of Section201.(4)
As I detailed in my dissenting statement regarding the Joint FTC/FCC AdvertisingGuidelines,(5) Section 201(b) forms a meager basis for the proposition that the FCC hasjurisdiction over advertising. The majority's justification in today's Order does little torelieve my concerns. Indeed, in promulgating the Guidelines, the majority pointed to onlytwo cases in support of its interpretation of Section 201. One of those cases was the NALin this proceeding. The other case, In re AT&T's Card Issuer Identification Cards,(6) focusedon disclosures associated with calling cards, and did not find any violation of Section 201. Today's decision invokes those cases as well as a third case, Telecommunications Researchand Action Center and Consumer Action (TRAC). Yet TRAC's analysis of 201(b) can bestbe read as primarily turning on the reasonableness of the charged rates--an issue thatsquarely fits within the FCC's authority. These precedents underscore the fragility of ourlegal authority.(7)
The plain meaning of the term "practices" taken in the context of Section 201 doesnot clearly reach advertising. Indeed, if "practices" includes advertising, then it is hard toimagine what it does not include. Furthermore, the legislative history of § 201(b) is silenton whether the FCC has authority to address these matters. If Congress wanted the FCC totake on these types of claims, it would have given us the express authority to do so.(8) In theface of congressional silence, this agency should be extremely reluctant to assume newregulatory responsibilities.
I earlier warned of the potential slippery slope associated with a broad reading of "practices"in 201(b).(9) Unfortunately today's decision validates that concern by not only punishingBusiness Discount Plans based on its marketing, but by further considering theappropriateness of the use of "Discount" in their corporate name. The Order states that"BDP's company name was just one of many factors we considered in our section 201(b)analysis."(10) The notion that this agency will now be policing the legitimacy of businessnames shows the dangerous road that a broad reading of Section 201 will take us down.
Even if our legal authority were more solid, there are sound reasons for theCommission to refrain from marketing regulation. First, misleading omissions inadvertising, misrepresentation, and consumer fraud claims are more effectively enforcedunder the appropriate state consumer protection laws. State regulatory authorities have therequisite resources and expertise to protect consumers far better than the FCC.(11) Second, theCommission's resources are better spent in resolving issues clearly within our statutorymandate. The FCC's budget is a zero sum game. Resources taken for these activities mustnecessarily result in lower funding levels for other initiatives. Biennial review, universalservice funding determinations for high cost areas and other core tasks should be fullyfunded before we explore programs on the edges of, or outside, our statutory mandate.
Justice may have been served in this matter, but the American consumer does notbenefit from our decision today to independently punish BDP for its marketing practicesunder Section 201. The majority's Section 201-based enforcement action is on the peripheryof our statutorily mandated domain, unnecessarily redundant with state efforts, and anunfortunate diversion of funds away from more integral activities.
For the foregoing reasons, I respectfully dissent in part.
1 See Statement of Commissioner Harold Furchtgott-Roth, Notice of Apparent Liability for Forfeiture, Inthe Matter of Business Discount Plan, Inc. Apparent Liability for Forfeiture, 14 FCC Rcd. 340 (1998). TheNAL raised Section 201 in concert with Section 258 violations. Subsequent assertions by the Commissionof free standing Section 201 authority over advertising have crystallized my opposition to the use ofSection 201 as an independent basis for advertising liability.
2 See In re Joint FCC/FTC Policy Statement for the Advertising of Dial-Around and Other Long DistanceServices to Consumers (Publication page references are not available in Westlaw for this document.) (2000WL 232230 (F.C.C.) (adopted by the FCC: Feb. 29, 2000) (hereinafter Advertising Guidelines)
3 See Dissenting Statement of Commissioner Harold Furchtgott-Roth In re Joint FCC/FTC Policy Statementfor the Advertising of Dial-Around and Other Long Distance Services to Consumers (2000 WL 232230(F.C.C.) http://www.fcc.gov/Speeches/Furchtgott_Roth/ Statements/2000/sthfr011.html> (hereinafterAdvertising Guidelines Dissenting Statement).
4 See In the Matter of Business Discount Plan, Inc. Apparent Liability for Forfeiture, Order of Forfeiture,File No. ENF 98-02 (hereinafter Order) at ¶ 1.
5 See Advertising Guidelines Dissenting Statement.
6 In re AT&T's Card Issuer Identification Cards, Letter, 7 FCC Rcd 7529 (1992).
7 I am particularly troubled by the majority's invocation of the Joint FCC/FTC Policy Statement RegardingAdvertising Guidelines. See Order at ¶ 15. This is particularly true based on the questionable legalfoundation of the guidelines. See Weiner v Sprint Corp, 165 F.R.D. 431 (D.N.J. 1996), appeal dismissed,Civ. No. 96354 (AMW)(May 23, 1996) (holding that there is no duty on carriers under theCommunications Act to make accurate and authentic representations in their promotional practices);Marcus v. AT&T Corp., 938 F.Supp. 1158 (S.D.N.Y. 1996) (finding that there is no deceptive advertising[read marketing] federal cause of action under the Act); and FTC v. Miller, 549 F.2d 452 (7th Cir. 1997)(stating that the FTC efforts to regulate advertising may reflect a desirable goal, it is not one Congressappears to have adopted.) Moreover, because the Advertising Guidelines were a part of a policy statementand not a product of formal rulemaking, they should not form the basis of any Enforcement Bureau action.
8 Congress has expressly given such regulatory authority to the FTC. Telephone Disclosure and DisputeResolution Act Pub. L. 102-556, 106 Stat. 4190, (codified at 15 U.S.C. §§ 5701, 5711-5714, 5721-5724(1994)).
9 See Advertising Guidelines Dissenting Statement.
10 See Order at ¶ 18
11 In fact, Section 414 Communications Act reads "[n]othing in this chapter shall in any away abridge oralter the remedies now existing at common law or by statute, but the provisions of this chapter are inaddition to such remedies." See 47 USC § 414 In my view, this "savings clause" preserves the vitality ofthese state fraud claims In fact, the majority states that it "[w]elcomes state efforts to deter slamming." SeeOrder at ¶ 15 n. 36. See also Southwestern Bell Mobile Systems, FCC 99-356 (Nov. 24, 1999). TheCommission has declined to preempt state "slamming" regulations in its Rules Concerning UnauthorizedChanges of Consumers' Long Distance Carriers. See In the Matter of Policies and Rules ConcerningUnauthorized Changes of Consumers' Long Distance Carriers. 10 FCC Rcd. 9560 P.43.