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Before the
Federal Communications Commission
Washington, D.C. 20554
In the Matter of )
)
WebNet Communications, Inc. ) File No. EB-01-TC-064
) NAL/Acct. No. 200232170002
Apparent Liability for ) FRN: 0006272553
Forfeiture
ORDER OF FORFEITURE
Adopted: March 26, 2003 Released:
March 31, 2003
By the Commission:
I. INTRODUCTION
In this Order, we assess a forfeiture of $1,200,000 against
WebNet Communications, Inc. (WebNet) for willful or repeated
violations of the Communications Act of 1934, as amended (the
``Act''), and our rules and orders. For the reasons set forth
below, we find that WebNet willfully or repeatedly violated
section 258 of the Act1 and the Commission's rules2 and orders3
by changing the preferred carriers for 20 consumers' telephone
lines without the consumers' authorization, a practice commonly
referred to as ``slamming.''4
II. BACKGROUND
The facts and circumstances surrounding this case are set forth
in the Notice of Apparent Liability (NAL) previously issued by
the Commission, and need not be reiterated at length.5 In 2001,
after receiving a high number of consumer complaints against
WebNet, the Enforcement Bureau and 14 state agencies launched a
joint investigation of WebNet's slamming activities. 6 The
Commission, with the help of the state agencies, reviewed 185
consumer complaints alleging slamming by WebNet. This proceeding
is based on 20 of those complaints. Each of the complainants
asserted that WebNet had converted his or her designated
preferred carrier without authorization.
Following the joint federal?state investigation of the above
complaints, the Commission issued the WebNet NAL. There the
Commission determined that WebNet had apparently failed to obtain
authorization before submitting 20 preferred carrier change
requests, in violation of section 258 of the Act and the
Commission's rules and orders against slamming. The Commission
also stated that the gross deficiencies in WebNet's verification
procedures suggested that WebNet apparently intentionally and
egregiously violated Section 64.1120 of the Commission's rules.
As a result, the Commission determined that WebNet was apparently
liable for a proposed forfeiture of $60,000 for each of the 20
violations, for a total proposed forfeiture of $1,200,000.7
III. DISCUSSION
In its response to the WebNet NAL, WebNet contests the
Commission's determination of apparent liability and proposal of
a forfeiture penalty, as well as the amount of the proposed
forfeiture. WebNet argues that it should not be found liable
because: 1) the WebNet NAL is the equivalent of a conviction
against which WebNet never had an opportunity to defend itself;
2) states have already handled the complaints with the
Commission's adjudication rules; and 3) the Commission is too
restrictive in its analysis of WebNet's verification process.8
WebNet also argues that the amount of the proposed forfeiture is
excessive because: 1) the decision to increase the forfeiture
amount is arbitrary and unsupported by precedent; 2) the
forfeiture amount is disproportionately higher than that imposed
on other carriers; and 3) the Commission did not take WebNet's
remedial steps into consideration.9 We find none of WebNet's
arguments to be persuasive.
A. WebNet is Liable for Slamming
WebNet claims that the issuance of the WebNet NAL is equal to a
``conviction'' against which it never had the opportunity to
defend itself.10 This claim reflects a fundamental
misunderstanding of the statutory framework under which the
Commission issues an NAL, and the nature of an NAL itself.
Section 503(b) of the Act allows the Commission to assess a
forfeiture penalty only after it releases a notice of apparent
liability,11 which cannot be the basis for imposing a forfeiture
penalty unless and until the recipient is afforded an opportunity
to respond in writing.12 That section 503(b) does not require
the Commission to give a carrier an opportunity to address
allegations in consumer complaints before issuing an NAL is,
therefore, of no legal significance.13 Here, in accordance with
the Act, the Commission gave WebNet adequate notice of its
apparent violations in the WebNet NAL. WebNet has responded to
that NAL, thereby availing itself of the statutorily prescribed
process for defending against the charges raised by the NAL.
Now, pursuant to section 503(b), we are deciding whether to
assess a forfeiture.
WebNet also argues that the allegations in the complaints would
have been better addressed through the adjudication of the
slamming complaints instead of the forfeiture process.14 WebNet
criticizes the WebNet NAL for not discussing whether WebNet
complied with the Commission's adjudication rules to address the
complaints in this case.15 WebNet misunderstands the distinction
between a slamming adjudication under our rules and an
enforcement action pursuant to section 503(b) of the Act.16
Sections 64.1150 through 64.1170 of the Commission's rules
authorize adjudicatory proceedings to bring financial restitution
to a consumer who has been slammed.17 Although each slamming
allegation is adjudicated under those rules,18 that does not
shield a carrier from separate enforcement action like this one,
which stems from WebNet's willful or repeated violations of
section 258 of the Act and section 64.1120 of our rules.19 Thus,
this action, taken under authority of section 503(b) of the Act,
is not undermined by any adjudication of the individual
complaints.
In addition, WebNet argues that the WebNet NAL fails to take into
account the restitution it has already paid to complainants at
the state level.20 WebNet further argues that, because the
Commission has delegated enforcement power to the states, this
joint federal-state investigation violates the constitutional
prohibitions against double jeopardy.21 We disagree. In the
Slamming Reconsideration Order, the Commission gave states the
option to adjudicate consumer complaints pursuant to our slamming
rules.22 As we have established above, whether the adjudication
happens on a state or federal level, the adjudication of slamming
complaints does not shield a carrier from separate liability for
separate enforcement action based on those same complaints.23 In
fact, in the Slamming Reconsideration Order the Commission
anticipated that the states adjudicating slamming cases pursuant
to our rules would assist us in our enforcement actions:
To fulfill our responsibilities under section 258
of the Act and to assist our enforcement efforts,
we will require states that choose to administer
the Commission's rules to regularly file
information with the Commission that details
slamming activity in their regions. . . . Such
reports will help the Commission to identify
appropriate targets for slamming enforcement
actions, such as forfeiture or section 214
revocation proceedings.24
The WebNet NAL was based on consumer slamming complaints, some of
which were adjudicated by states under our rules to give
financial restitution to the consumers. The forfeiture proposed
by the WebNet NAL, however, is separate and distinct from the
restitution WebNet has already paid to complainants (whether at
the state or federal level). Thus, contrary to WebNet's
argument,25 this proceeding does not ``disavow'' our goal of
allowing states to adjudicate our slamming rules. Furthermore,
because state adjudication of slamming complaints is separate
from federal enforcement action on the same complaints,26 this
proceeding does not place WebNet in double jeopardy¾a concept
which, in any case, does not apply to civil administrative
procedures such as this monetary forfeiture process.27
WebNet argues that the WebNet NAL constitutes government
censorship because it prescribes specific verification language
without a rulemaking, and interprets WebNet's verification script
in the most negative manner possible.28 We disagree, and uphold
the WebNet NAL's tentative conclusion that WebNet's verification
method falls egregiously short of the requirements in our
rules.29 Section 64.1120 requires that an independent
third?party verification confirm at least six things:
the identity of the subscriber; confirmation that the
person on the call is authorized to make the carrier
change; confirmation that the person on the call wants
to make the change; the names of the carriers affected
by the change; the telephone numbers to be switched;
and the types of service involved.30
As the WebNet NAL discussed, WebNet's sample tapes revealed a
verification method that effectively confirmed only the identify
of the consumer¾just one of the six elements required by our
rules. 31
In its Response, WebNet did not provide any evidence to refute
the Commission's tentative conclusions that its verification
method did not satisfy Commission requirements. Instead, WebNet
criticizes the Commission's interpretation of its verification
script. For example, WebNet claims that the following is
adequate confirmation that a consumer is authorized and wants to
make a carrier change: ``Are you the decision-maker choosing
WebNet as your long distance and local long distance provider?
Please say `yes' at the tone.''32 The Commission struck down
similar verification language in the ATNC Forfeiture because it
presumed that the consumer had already authorized a preferred
carrier change during the sales portion of the call: ``Are you
authorized to choose America's Tele-Network as your long distance
and local long distance provider? Please say ``YES'' at the
tone.''33 Furthermore, we disagree that the verification script
must be evaluated in the context of the sales call and other
elements in WebNet's telemarketing process.34 Our verification
rules require that consumers be provided an opportunity, separate
from solicitation, to confirm their intention to change
long?distance providers.35
WebNet also argues that the WebNet NAL fails to look at its
verification script ``as a whole,'' and instead ``scrutinize[s]
each sentence separately'' and judges the script ``in the most
critical way possible.''36 As the Commission found with a
similar script in the ATNC Forfeiture, however, even looking ``on
the whole'' reveals a verification script that improperly
assumes, without ever asking, that a subscriber has already
chosen WebNet as his or her long?distance carrier.37 WebNet's
verification script reads as follows:
Thank you for choosing WebNet as your long distance
and local long distance provider. You have been
selected to receive $100 just for trying our new 7
cent calling plan for all your interstate calls in
the continental United States for 180 days.
Restrictions may apply, void where prohibited.
Please answer the following questions. Please
state your name and address. Are you the decision-
maker choosing WebNet as your long distance and
local long distance provider? Please say ``yes''
at the tone. For security purposes, state your
date of birth or your mother's maiden name at the
tone. 38
We now confirm the Commission's tentative finding in the WebNet
NAL that this verification script, as well as the other scripts
used by WebNet,39 reveal ``a pattern of verification that falls
egregiously short of the requirements in our rules.''40
WebNet asserts that the WebNet NAL violates the First Amendment
by dictating the specific content for verification scripts.41 At
the same time, WebNet complains that the Commission has not
explained specifically how to meet the requirement that
verifications be ``clear and conspicuous.''42 Prior to
establishing minimum content requirements, the Commission defined
and effectively applied the requirement that third?party
verifications must be clear and conspicuous. For example, in the
ATNC case, the Commission found that a verification script
similar to WebNet's did not obtain a clear and conspicuous
confirmation of a carrier change, ``i.e. an unambiguous,
definitive, direct response from the consumer that he or she is
confirming a [change in] telephone service.''43 At the time of
WebNet's alleged slamming violations, the Commission had added
minimum content requirements to the verification rules.44 As
stated above,45 at a minimum, third?party verifications must
confirm six things. Hence, the Commission has not dictated the
exact language that needs to appear in third?party?verification
scripts;46 rather, the Commission has simply set forth the
minimum information that third?party verifications need to
confirm. The record here confirms that WebNet's script did not
provide this minimum information, as required by our rules.47
These minimum information requirements do not, therefore, inhibit
WebNet's speech in an unconstitutional manner.48
B. The Amount of the Forfeiture is Proper
As discussed in the WebNet NAL,49 Commission rules establish a
standard forfeiture amount of $40,000 for violations of our rules
and orders regarding unauthorized changes of preferred
interexchange carriers. 50 Furthermore, based on the Act, our
rules and guidelines allow an upward adjustment of the forfeiture
amount based on the particular facts and circumstances of the
violation(s).51 These include the egregiousness of the
misconduct, ability or inability to pay, whether the violation
was intentional, whether substantial harm resulted from the
violations, history of compliance with Commission requirements,
whether the violator realized substantial economic gain from the
misconduct, and whether the violation is repeated or
continuous.52
WebNet contends that the WebNet NAL fails to adequately show the
factual analysis that led to the upward adjustment of the
forfeiture amount.53 WebNet also points to its delivery of some
verification tapes as proof that it complied with Commission
rules.54 We disagree, and find that the WebNet NAL properly
applied the factors for the upward adjustment of the forfeiture
amount. As the WebNet NAL pointed out, the absence of
verification tapes in 16 of the 20 cases demonstrated that WebNet
either failed to verify those supposed authorizations or failed
to keep audio records of the verification for the two years
required by our rules.55 Failure to meet any of these
requirements demonstrates a disregard for the Commission's entire
verification process.56 The four tapes WebNet delivered revealed
a verification method that fell grossly short of the requirements
in our rules??confirming only one of the six elements that our
rules require.57 The tapes also revealed a verification method
seemingly designed to confuse consumers about whether or not they
were making a preferred carrier change.58 Accordingly, we affirm
the WebNet NAL's tentative conclusion that WebNet's intentional
and egregious failure to comply with our verification rules
justifies an increase in the forfeiture amount to $60,000 for
each of the 20 violations, for a total forfeiture of
$1,200,000.59
WebNet further argues that the ``excessive'' penalty proposed in
the NAL violates due process because the Commission did not
disclose how it decided which complaints to use.60 WebNet
misunderstands our forfeiture process. Section 503(b) of the Act
neither requires us to issue a forfeiture for every violation we
receive, nor requires us to reveal how we select complaints for
an enforcement action.61 Nevertheless, WebNet received due
process in this case. The WebNet NAL listed the complaints that
support this action,62 stated the proposed fine for WebNet's
apparent violations of the Act and our rules,63 and gave WebNet a
chance to respond.64 In its response, WebNet neither identified
any facts or circumstances to persuade us to reconsider the
WebNet NAL, nor showed what complaints the Commission should have
used in the WebNet NAL. Accordingly, we are not persuaded that
we should reduce or rescind the forfeiture amount on this
basis.65
WebNet also contends that the decision to increase the proposed
forfeiture is inconsistent with Commission precedent. First,
WebNet argues that the Commission has typically increased
forfeitures only in cases involving forged Letters of
Authorization (LOAs) or evidence of deceptive marketing
practices.66 This is simply not true. The ATNC case involved
neither deceptive marketing practices, nor forged LOAs.
Nevertheless the Commission increased the forfeiture because, as
in Webnet's case, it found a deficient verification process
indicative of an intentional failure to follow our verification
rules.67 WebNet further asserts that in situations similar to
this case, where deficiencies were found in the verification
process, the Commission did not increase the forfeiture.68
However, the facts of WebNet's case are different from the two
cases it cites.69 Because the details of the violations in these
two cases differ from those in WebNet's case, they do not provide
a basis to challenge the proposed forfeiture here.70
In addition, WebNet asserts that the WebNet NAL fails to take
into account WebNet's gross revenues as representative of its
ability to pay compared to larger carriers.71 We disagree with
WebNet's argument. First, section 503(b) of the Act does not
require that the financial impact of forfeiture for one carrier
be equal to or even proportionate to that of other carriers.72
Furthermore, although WebNet is correct that a carrier's gross
revenues should be taken into account to determine the total
forfeiture amount,73 it has not produced any evidence that it
will not be able to pay the total forfeiture proposed in the
WebNet NAL.74 Our rules require that any request to reduce or
remove a forfeiture must include a detailed factual statement,
plus other documentation and affidavits that may be relevant.75
WebNet has not, however, produced any tax returns or other
documentation to prove that it will not be able to pay the
forfeiture.76 Accordingly, we find no basis for reducing the
total forfeiture amount on these grounds.77
Finally, WebNet argues that we should decrease the forfeiture
because of the remedial steps it has taken to address its
unauthorized preferred carrier changes, and because it has ceased
all marketing activities to re-assess its telemarketing and
verification procedures.78 We disagree. As the Commission has
previously found, 79 WebNet's remedial steps, such as training
and monitoring telemarketing employees, and instituting a
validation department,80 are not so different from standard
industry practice that they warrant a decrease in the forfeiture
amount. Thus, as the Commission found in the Coleman Forfeiture
and ATNC Forfeiture, 81 we find no basis for reducing the total
forfeiture amount on these grounds.
IV. CONCLUSION
After reviewing the information filed by WebNet in its Response,
we find that WebNet has failed to identify facts or circumstances
to persuade us that there is any basis for reconsidering the
WebNet NAL. Further, WebNet has not shown any mitigating
circumstances sufficient to warrant a reduction of the forfeiture
penalty.
V. ORDERING CLAUSES
Accordingly, IT IS ORDERED pursuant to section 503(b) of the Act,
47 U.S.C. § 503(b), and section 1.80(f)(4) of the Commission's
rules, 47 C.F.R. § 1.80(f)(4), that WebNet Communications, Inc.
SHALL FORFEIT to the United States Government the sum of
$1,200,000 for violating section 258 of the Act, 47 U.S.C. § 258,
as well as the Commission's rules and orders governing preferred
carrier conversions.82
IT IS FURTHER ORDERED that a copy of this Order of Forfeiture
SHALL BE SENT by certified mail to WebNet Communications, Inc. in
care of Charles H. Helein, Esq., The Helein Law Group, P.C., 8180
Greensboro Drive, Suite 700, McLean, Virginia 22102, and to 8260
Greensboro Drive, Suite 240, McLean, VA 22102, attention:
Moleaka Williams, Regulatory Department.
FEDERAL COMMUNICATIONS COMMISSION
Marlene H. Dortch
Secretary
_________________________
1 Section 258 states in pertinent part that ``no
telecommunications carrier shall submit . . . a change in a
subscriber's selection of a provider of telephone exchange
service or telephone toll service except in accordance with such
verification procedures as the Commission shall prescribe.'' 47
U.S.C. § 258.
2 See 47 C.F.R. §§ 64.1120.
3 See Implementation of the Subscriber Carrier Selection
Changes Provisions of the Telecommunications Act of 1996;
Policies and Rules Concerning Unauthorized Changes of Consumers'
Long Distance Carrier, Second Report and Order and Further Notice
of Proposed Rulemaking, 14 FCC Rcd 1508 (1998) (Slamming Second
Report and Order).
4 ``Slamming'' is the submission or execution of an
unauthorized change in a subscriber's selection of a provider of
telecommunications service. See generally 47 C.F.R.
§§ 64.1100?64.1195.
5 In the Matter of WebNet Communications, Inc., Notice of
Apparent Liability for Forfeiture and Order, 17 FCC Rcd 11,603
(2002) (WebNet NAL).
6 Agencies in the following states participated in the
investigation: Alabama, Delaware, Florida, Illinois, Maine,
Maryland, Missouri, Montana, Ohio, South Carolina, South Dakota,
Washington, Washington, D.C., and Wisconsin. See WebNet NAL, 17
FCC Rcd at 11,604, n.6.
7 WebNet NAL, 17 FCC Rcd at 11,604.
8 Response at 3-16.
9 Response at 16-24.
10 Response at 3-5, 18-19.
11 47 U.S.C. § 503(b)(4)(A).
12 47 U.S.C. § 503(b)(4)(C).
13 See In the Matter of AT&T Communications, Inc., Order of
Forfeiture, 16 FCC Rcd 8978, 8982 (2001) (Section 503(b) of the
Act does not require that a carrier be given opportunity to
address allegations prior to issuance of an NAL).
14 Response at 5-6.
15 Response at 6.
16 See 47 U.S.C. § 503(b)(1).
17 See 47 C.F.R. §§ 64.1150 - 64.1170. The Commission enacted
the rules in keeping with the Congressional intent of the Act
that the Commission's rules should strive to make slamming
victims whole. Slamming Second Report and Order, 14 FCC Rcd at
1531. See also id. at 1521 (consumers deserve some compensation
for the inconvenience and confusion they experience from being
slammed).
18 Consumer slamming complaints are adjudicated as informal
complaints under section 1.719 of the Commission's rules. 47
C.F.R. § 1.719.
19 See 47 U.S.C. § 258; 47 C.F.R. § 64.1120.
20 Response at 8-9, 50.
21 Response at 7-8.
22 Implementation of the Subscriber Carrier Selection Changes
Provisions of the Telecommunications Act of 1996; Policies and
Rules Concerning Unauthorized Changes of Consumers' Long Distance
Carriers, First Order on Reconsideration, 15 FCC Rcd 8158, 8169-
72 (2000) (Slamming Reconsideration Order). Consequently, our
rules now provide for the referral of informal complaints to the
appropriate state commission where that commission has opted to
administer our slamming rules. 47 C.F.R. § 64.1150(b); Slamming
Reconsideration Order, 15 FCC Rcd at 8172. To date, 36 states,
the District of Columbia, and Puerto Rico have opted to
administer our slamming adjudication rules. See
http://www.fcc.gov/slamming/.
23 See supra para. 6.
24 Slamming Reconsideration Order, 15 FCC Rcd at 8175.
25 Response at 8.
26 See supra text accompanying note 23.
27 Private Coast Station KXP96 and Maritime Mobile Station
WAD7029 Joe Harlan Kokiak, AK, Order, 8 FCC Rcd 7957 (Field Op.
Bur., 1993). See also New York Times Co. v. Sullivan, 376 U.S.
254, 278 (1964) (``there is no double?jeopardy limitation
applicable to civil lawsuits''); U.S. v. Payne, 2 F.3d 706, 710
(``the application of double jeopardy in a civil context would
work an absurd result''). Double jeopardy applies only in
criminal proceedings; it is a second prosecution after a first
trial for the same offense. Application of Normar Vizcarrondo for
Renewal of Amateur Radio Station License NP4H and Amateur Extra
Class Operator License, et. al, Order of Revocation and
Affirmation, 4 FCC Rcd 1432 (Spec. Serv. Div., 1989).
28 Response at 10-13.
29 The WebNet NAL used the four verification tapes provided to
analyze WebNet's verification method. WebNet NAL,
17 FCC Rcd at 11,607-08.
30 47 C.F.R. § 64.1120(c)(3)(iii). See also WebNet NAL,
17 FCC Rcd at 11,606. Subsequent to WebNet's slamming
violations, the Commission determined in the Third Order on
Reconsideration that a third?party verification need not elicit
the name of the displaced carrier. See in the Matter of
Implementation of the Subscriber Carrier Selection Changes
Provisions of the Telecommunications Act of 1996, Policies and
Rules Concerning Unauthorized Changes of Consumers' Long Distance
Carriers, CC Docket No. 94-129, Third Order on Reconsideration
and Second Further Notice of Proposed Rulemaking, FCC 03-42,
para. 57 (rel. March 17, 2003).
31 See WebNet NAL, 17 FCC Rcd at 11,606-07.
32 See Response at 11; See also WebNet NAL, 17 FCC Rcd at
11,605. We note that, by lumping ``long distance and local long
distance'' into the same sentence, this verification script does
not effectively obtain separate authorization for each service
sold, as required by our rules. See 47 CFR § 64.1120(b). Another
verification script that WebNet apparently uses for
``confirmation'' is even more deficient: ``Are you authorized to
make decisions for your telephone? Please say `yes' at the
tone.'' See WebNet NAL, 17 FCC Rcd at 11,607.
33 See In the Matter of America's Tele-Network Corp., Order of
Forfeiture, 16 FCC Rcd 22,350, 22,352 (2001) (ATNC Forfeiture).
34 Response at 12.
35 See In the Matter of America's Tele-Network Corp., Notice of
Apparent Liability for Forfeiture and Order, 16 FCC Rcd 5788,
5796 (2001) (ATNC NAL).
36 Response at 14.
37 See ATNC Forfeiture, 16 FCC Rcd at 22,353.
38 See WebNet NAL, 17 FCC Rcd at 11,605.
39 See WebNet NAL, 17 FCC Rcd at 11,607.
40 See WebNet NAL, 17 FCC Rcd at 11,607-08.
41 Response at 14-16. WebNet cites no legal authority, and
provides no legal analysis for this argument.
42 Response at 15.
43 See ATNC NAL, 16 FCC Rcd at 5795-96; ATNC Forfeiture, 16
FCC Rcd at 22,353. This ``clear and conspicuous'' requirement
was previously codified at 47 C.F.R. § 64.1120(c)(3). See 64 FR
47691 (Aug. 3, 2000).
44 In the Slamming Third Report and Order, the Commission
adopted minimum content requirements to provide guidance for
third?party verifiers, and to assist the Commission in evaluating
carriers' verification methods. Implementation of the Subscriber
Carrier Selection Changes Provisions of the Telecommunications
Act of 1996; Policies and Rules Concerning Unauthorized Changes
of Consumers' Long Distance Carriers, Third Report and Order and
Second Order on Reconsideration, 15 FCC Rcd 15,996, 16,016 (2000)
(Slamming Third Report and Order). These requirements went into
effect on April 2, 2001--before any of the violations for which
WebNet is liable. Compare 66 Fed. Reg. 12,892 (2001) ( effective
date of minimum content requirements: April 2, 2001) with WebNet
NAL, 17 FCC Rcd at 11,612 (Appendix A, earliest conversion date:
June 21, 2001).
45 See supra para. 8.
46 While adopting the minimum content requirements, the
Commission expressly declined to mandate specific language to be
used in third?party verifications. Slamming Third Report and
Order, 15 FCC Rcd at 16,016.
47 See WebNet NAL, 17 FCC Rcd at 11,606-07.
48 See Policies and Rules Concerning Unauthorized Changes of
Consumers' Long Distance Carriers, 10 FCC Rcd 9560, 9568-69
(1995) (finding that it is permissible government regulation of
commercial speech under the First Amendment for our rules to
specify the minimum information that a letter of agency must
include).
49 See WebNet NAL, 17 FCC Rcd at 11,608-09.
50 47 CFR § 1.80(b)(4).
51 See 47 U.S.C. § 503(b)(2)(D). See also The Commission's
Forfeiture Policy Statement and Amendment of Section 1.80 of the
Commission's Rules, 12 FCC Rcd 17087, 17100-01 (1997) (Forfeiture
Policy Statement); recon denied 15 FCC Rcd 303 (1999). As
provided by the Commission's rules, the Commission and its staff
retain the discretion to issue a higher or lower forfeiture, as
permitted by statute. See 47 C.F.R. § 1.80(b)(4).
52 See 47 C.F.R. § 1.80(b)(4).
53 Response at 16-18.
54 Response at 18.
55 WebNet NAL, 17 FCC Rcd at 11,608, 11,609-10.
56 WebNet NAL, 17 FCC Rcd at 11,609-10.
57 See WebNet NAL, 17 FCC Rcd at 11,606-07, 11,609-10. See
also ATNC Forfeiture Order, 16 FCC Rcd at 22,355 (verification
tapes produced by ATNC merely underscored the confusion inherent
in its defective verification process).
58 WebNet NAL, 17 FCC Rcd at 11,609.
59 See WebNet NAL, 17 FCC Rcd at 11,610.
60 Response at 19.
61 See, e.g., 47 USCA § 503(b)(3)(A) (``At the discretion of
the Commission, a forfeiture penalty may be determined against a
person under this subsection after notice and an opportunity for
a hearing before the Commission . . .'') (emphasis added).
Furthermore, because of the broad prosecutorial discretion we
have in enforcement proceedings, we are under no obligation to
reveal our decision-making process. See Heckler v. Chaney, 470
U.S. 821, 831 (1985) (noting that an agency's decision not to
prosecute or enforce, whether through civil or criminal process,
is a decision generally committed to an agency's absolute
discretion.); New York State Dept. of Law v. F.C.C., 984 F.2d
1209, 1213 (D.C.Cir. 1993) (``As a general matter, the FCC is
best positioned to weigh the benefits of pursuing an adjudication
against the costs to the agency (including financial and
opportunity costs) and the likelihood of success''); In re:
Notices of Apparent Liability for Forfeitures Of Emery Telephone,
Order, 15 FCC Rcd 7181, 7186 (1999) (the Commission is a
regulatory agency with broad prosecutorial discretion in
enforcement proceedings).
62 See WebNet NAL, 17 FCC Rcd at 11,612.
63 See WebNet NAL, 17 FCC Rcd at 11,610.
64 See WebNet NAL, 17 FCC Rcd at 11,611.
65 In addition, we retain discretion to pursue further action
on any other complaints received against WebNet. See, e.g., In
the Matter of Vista Group International, Inc, Apparent Liability
for Forfeiture, 14 FCC Rcd. 13,814, 13,816 (1999) (while choosing
18 complaints for enforcement action, the Commission retains
discretion to pursue further action with respect to any of the
complaints it has received against Vista).
66 Response at 19-22.
67 ATNC Forfeiture, 16 FCC Rcd at 22,354. Furthermore, the fact
that WebNet's case does not involve deceptive marketing practices
or forged LOAs does not weaken the Commission's rationale for
increasing the forfeiture consistent with factors set out in the
statute, the Commission's rules, and the Forfeiture Policy
Statement, i.e., that WebNet egregiously failed to follow our
verification rules. Id.
68 Response at 20-22.
69 See In the Matter of Minimum Rate Pricing, Inc., Notice of
Apparent Liability, 12 FCC Rcd 17,638 (1997) (MRP NAL); in the
Matter of Minimum Rate Pricing, Inc., Order Adopting Consent
Decree, 13 FCC Rcd 24,525 (1998); in the Matter of Long Distance
Direct, Inc., Memorandum Opinion and Order, 15 FCC Rcd 3297
(2000) (LDDI MO&O). Neither Minimum Rate Pricing, Inc. nor Long
Distance Direct, Inc involved a grossly deficient verification
process like the one WebNet designed and/or implemented. The MRP
proceeding involved a carrier's failure to secure an LOA prior to
changing a consumer's preferred long-distance carrier, as well as
tariff provisions that enabled the carrier to engage in slamming.
MRP NAL, 12 FCC Rcd at 17,644-45. LDDI involved consumers being
switched to an unauthorized long-distance carrier and incurring
unauthorized charges after the consumers called The Psychic
Friends Network (a joint marketing partner with the unauthorized
long-distance carrier). LDDI MO&O, 15 FCC Rcd at 3298-99.
70 See ATNC Forfeiture, 16 FCC Rcd at 22,355 (unreasonable to
expect the Commission to handle forfeitures in the same way where
the details of the violations are different).
71 Response at 22-23.
72 See, e.g., 47 USCA § 503(b)(3)(A) (``At the discretion of
the Commission, a forfeiture penalty may be determined against a
person under this subsection after notice and an opportunity for
a hearing before the Commission . . .'') (emphasis added). See
also in the Matter of Amer-I-Net Services Corporation, Order of
Forfeiture, 15 FCC Rcd 3118, 3122-23 (2000) (rejecting the
argument that a forfeiture fine should be reduced because it is
disproportionate compared to other Commission orders).
73 See, e.g., LDDI MO&O, 15 FCC Rcd at 3305 (``[w]e have
repeatedly held that a carrier's gross revenues are the best
indicator of its ability to pay a forfeiture'').
74 See ATNC Forfeiture, 16 FCC Rcd at 22,357 (no basis for
reducing small carrier's forfeiture amount where carrier failed
to produce evidence of its inability to pay).
75 47 C.F.R. § 1.80(f)(3). The rules give respondents ``a
reasonable period of time (usually 30 days from the date of the
notice[of apparent liability])'' to produce this evidence. Id.
Moreover, the WebNet NAL specifically indicated that WebNet would
``have the opportunity to submit further evidence and arguments .
. . to show that no forfeiture should be imposed or that some
lesser amount should be assessed.'' WebNet NAL, 17 FCC Rcd at
11,610 (emphasis added).
76 The Commission has viewed tax returns as adequate indicators
of gross revenues. See In the Matter of Coleman Enterprises, Inc.
d/b/a Local Long Distance, Inc., Order of Forfeiture, 15 FCC Rcd
24,385, 24,389 (2000) (Coleman Forfeiture).
77 We observe that the proposed upward adjustment per egregious
violation was actually greater in the AT&T NAL and Qwest NAL than
in the WebNet NAL. In both the AT&T NAL and Qwest NAL, the
Commission proposed adjusting the forfeiture amount for the
egregious violations (involving forgery) to $80,000 per violation
(a 100% increase). See In the Matter of AT&T Communications,
Inc., Notice of Apparent Liability, 16 FCC Rcd 438, 452 (2000)
(AT&T NAL) (proposed $640,000 forfeiture: $80,000 for each of
the 2 egregious violations, and $40,000 for each of the 12
remaining violations); In the Matter of Qwest Communications
International, Notice of Apparent Liability, 14 FCC Rcd 18,202,
18,215-16 (1999) (Qwest NAL) (proposed $2,080,000 forfeiture:
$80,000 for each of the 22 egregious violations, and $40,000 for
each of the 8 remaining violations). In the WebNet NAL, by
contrast, the Commission proposed increasing the forfeiture
amount for WebNet's egregious violations by only 50%, for a total
forfeiture of $1,200,000 for 20 violations, or $60,000 per
violation. WebNet NAL, 17 FCC Rcd at 11,610. Unlike in the AT&T
NAL and Qwest NAL, all of WebNet's violations were found to be
egregious. See also ATNC Forfeiture, 16 FCC Rcd at 22,356-57
(finding that ATNC received a lower ``per-slam'' fine for
egregious violations than AT&T and Qwest).
78 Response at 23-24.
79 See Coleman Forfeiture, 15 FCC Rcd at 24,388 (finding
remedial steps to address unauthorized preferred carrier changes
and cessation of telemarketing services insufficient to reduce
forfeiture). See also ATNC Forfeiture, 16 FCC Rcd at 22,355-56
(citing Coleman Forfeiture, finding remedial measures to be an
insufficient basis to reduce forfeiture).
80 In addition, WebNet has revised its telemarketing scripts to
eliminate possible confusion, and has terminated problem
telemarketing employees. Response at 24.
81 Coleman Forfeiture, 15 FCC Rcd at 24,388. ATNC Forfeiture,
16 FCC Rcd at 22,355-56.
82 The forfeiture amount should be paid by check or money order
drawn to the order of the Federal Communications Commission.
WebNet should include the reference ``NAL/Acct. No.
200232170002'' on WebNet's check or money order. Such remittance
must be mailed to Forfeiture Collection Section, Finance Branch,
Federal Communications Commission, P.O. Box. 73482, Chicago,
Illinois 60673-7482. Requests for full payment under an
installment plan should be sent to: Chief, Credit and Debt
Management Center, 445 12th Street, S.W., Washington, D.C. 20554.
See 47 C.F.R. § 1.1914.