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Federal Communications Commission
Washington, D.C. 20554
In the Matter of )
File No. EB-10-TC-394
STi Telecom Inc. )
NAL/Acct. No. 201132170024
(formerly Epana Networks, Inc.) )
Apparent Liability for Forfeiture )
NOTICE OF APPARENT LIABILITY FOR FORFEITURE
Adopted: August 26, 2011 Released: September 1, 2011
By the Commission:
1. In this Notice of Apparent Liability for Forfeiture ("NAL"), we find
that Epana Networks, Inc., now known as STi Telecom Inc., (referred to
herein as "Epana" or "Company"), has apparently willfully and
repeatedly violated section 201(b) of the Communications Act of 1934,
as amended ("Communications Act" or "Act"), by deceptively marketing
prepaid calling cards. Based upon our review of the facts and
surrounding circumstances, Epana appears to target its marketing to
immigrants with claims that, for a card costing just a few dollars,
buyers can make hundreds if not thousands of minutes of calls to their
native countries - when in fact, for that price, they will be able to
use only a fraction of those minutes, due to Epana's assessment of
multiple fees and surcharges that are not clearly and conspicuously
disclosed to consumers. Accordingly, we find that Epana has apparently
violated section 201(b) of the Act, and is apparently liable for a
proposed forfeiture in the amount of five million dollars
2. A prepaid calling card is a retail product for which the consumer pays
a specific dollar amount and which enables that customer to make
domestic and/or international telephone calls. Such cards are
frequently marketed to immigrant communities for calling a variety of
international destinations and are especially popular with these
communities, where many depend on prepaid calling cards to stay in
touch with family and friends in their home countries. The cards are
typically sold at retail in denominations of $2, $3, and $5 at
newsstands and in grocery and convenience stores. Companies often
market prepaid cards under a variety of brand names and advertise them
to consumers primarily using posters displayed in retail locations,
and in some cases, through radio and television advertising.
3. The Enforcement Bureau began its investigation of Epana by directing a
letter of inquiry to the Company requesting information and documents
relating to its prepaid calling card services. According to its
initial response, Epana provides telecommunications services through
the use of prepaid calling cards, which are used by consumers
primarily to make international calls, and it establishes the rates
for its calling cards, including the rate at which minutes are
deducted from the cards. Epana's calling cards are distributed to
retail vendors by Epana's affiliate Kare Distribution, LLC, as well as
by independent distributors. The retail vendors sell the cards to
consumers using marketing posters that Epana designs and distributes.
4. As part of its LOI response, Epana provided samples of the posters and
calling cards it sold in 2009 and 2010. A typical poster designed and
distributed by Epana includes the name of the calling card (e.g.,
"O.M.A.F.," "la Cruda," "el Chavo," and "el Gorrion"), the name of the
telecommunications provider whose network carries the calls, and
representations about the number of minutes a consumer will receive
when calling various countries and/or cities. The number of calling
minutes listed on the sample of posters provided by Epana usually
appears in large font size and/or bright colors. Additionally, the
posters contain a large box listing various calling destinations,
along with the number of calling minutes a consumer will receive to
those destinations using the advertised calling card of a specified
dollar value (e.g., "Guadalajara 1305 minutes $5;" "783 minutes $3").
Appearing on the bottom of the posters is a disclosure in very small
font size relating to certain fees and surcharges that may apply when
using the cards, including connection and disconnection fees, daily
maintenance fees, and other fees assessed when using toll-free access
numbers or calling from payphones.
5. Epana's calling cards themselves generally come in two parts: a top
portion (or "hang tag") and a bottom portion, the size of a credit
card, that can be separated from the top. The front of the cards
identifies the name of and value of the card (e.g., $2, $3, $5). The
back of the top portion of the cards includes a disclosure about
fees-the same disclosure that typically appears on its posters. For
example, the disclosure on Epana's $3 O.M.A.F. calling card reads as
Card is for international calls only; may not be used for domestic calling
in the USA. Maximum rate per minute is $5. A minimum rate of $0.001 per
minute will apply. Up to $1.99 connection or disconnection fee will apply
to certain destinations. Regional and local phone company charges may
apply. Daily maintenance fee of up to $1.99 will apply. Calls may be
rounded up to 3 minutes (except calls made from Florida, which may be
rounded up to 1 minute only). Access from a payphone will incur an
additional surcharge at a minimum of $0.99 per call. Calls to cellular
phones, calls originating from outside the continental U.S., and calls
using 800 numbers are billed at higher rates. Rates and fees are subject
to change without notice. Announced minutes are based on use of entire
card in a single call. Fees and surcharges shall affect actual number of
minutes delivered, can equal the amount of the rate of a call, and can
substantially reduce the gross minutes available. Advertised minutes are
gross minutes based on initial promotional rates, which will change over
time. Net minutes equal gross minutes less deductions for service fees and
surcharges. This card expires 30 days after the first use of the card.
The back of the bottom portion of the card includes directions on how to
use the card, a scratch off area that hides the Personal Identification
Number ("PIN") necessary to use the card, as well as a series of local
access numbers, a toll-free access number, and a customer service number.
A. Apparent Violation of Section 201(b) of the Act
6. Section 201(b) of the Act states, in pertinent part, that "[a]ll
charges, practices, classifications, and regulations for and in
connection with [interstate or foreign] communication service, shall
be just and reasonable, and any such charge, practice, classification,
or regulation that is unjust or unreasonable is declared to be
unlawful." The Commission has found that unfair and deceptive
marketing practices by interstate common carriers constitute unjust
and unreasonable practices under section 201(b). A practice that
"convey[s] insufficient information as to the company's identity,
rates, practices, and range of services" may constitute a violation of
section 201(b). Thus, a carrier that fails sufficiently to convey
material information, such as rates, about its prepaid calling card
services violates section 201(b) of the Act.
7. We find that Epana has apparently violated section 201(b) of the Act
because it deceptively represents that buyers of its cards can use
hundreds if not thousands of minutes to make calls to foreign
countries for just a few dollars. In truth and in fact, buyers can use
only a fraction of those minutes for calls, because Epana applies a
variety of fees and surcharges that quickly deplete the card. Epana
purports to disclose these fees and surcharges, but the fine print
"disclosures" contradict the express and much more prominent claims in
the main portion of the marketing materials. Moreover, even if the
disclosures of the various fees and surcharges were not contradictory,
they are in small print and not clear or conspicuous in relation to
the claim of total available minutes that the disclosure is intended
to modify, and the disclosure otherwise "convey[s] insufficient
information as to the company's identity, rates, practices, and range
8. Epana uses posters displayed in retail locations as its primary
vehicle for marketing its prepaid calling card services to consumers.
As indicated above, Epana represents on its posters that consumers who
purchase its cards will receive a specified number of calling minutes
to specific countries or cities for a set price (e.g., to Guadalajara,
1305 minutes for $5; 783 minutes for $3). Although Epana's prepaid
cards are often marketed as providing hundreds of minutes, the total
number of minutes actually received by the consumer is significantly
less once the various fees are applied, and if the consumer attempts
to use the card to make multiple calls.
9. Epana's marketing materials and cards make certain disclosures about
these fees, but they conflict with the express statements of how many
calling minutes are available, and they are not adequate to counter
the express and otherwise unqualified claim that consumers will be
able to make hundreds if not thousands of minutes of calls for the
marketed rate. As a preliminary matter, the font size of the
advertised minutes and rate information completely dwarfs the
disclosure. As described above, Epana's posters typically advertise
the number of calling minutes offered to certain countries in large,
colorful, simple text, which is prominently displayed at the top or
center of the poster. This information is not qualified in any way;
i.e., there is no suggestion that the consumer will receive "up to"
the specified number of minutes, and no indication that the consumer
must read the small print at the bottom in order to determine what he
or she is actually purchasing. The main part of the poster stands in
stark contrast to the disclosures regarding additional fees and
surcharges, which are at the bottom of the posters in significantly
smaller type and easily overlooked, and in some cases, are blurred and
indecipherable. While this same language is usually printed on the top
portion (or "hang tag") of Epana's cards, it is similarly printed in
extremely small font and difficult to read. Further, because the
calling card is meant to be torn away from the hang tag for ease of
carrying the card in a wallet and customer use, the disclosures on the
hang tag afford the consumer little information at the actual point of
use. Disclosures in fine print and in materials that reasonable
consumers may not read or use are ineffective to ensure that consumers
have an accurate and informed understanding of an advertising claim.
We therefore conclude that Epana's disclosures are not clear and
conspicuous to the average consumer.
10. Additionally, even if Epana's disclosures were more prominent, we find
that they do not provide the information necessary for a consumer to
determine what fees apply, the amounts of those fees, and when and how
they will affect the number of calling minutes offered. To illustrate
this point, we use the disclosure example in paragraph 5 above for
Epana's $3 O.M.A.F. card, which is typical of the disclosures found in
Epana's marketing materials. First, despite advertising on its posters
a specific number of minutes for a set price, Epana includes a
disclosure that refers to a possible range of rates-the maximum being
$5 per minute and the minimum being $0.0001 per minute. There is no
meaningful explanation of how this range relates to the initial
advertised rate or how it is applied. The card also refers to a range
of possible connection or disconnection fees of "up to $1.99" that
will apply to "certain" destinations, but does not indicate exactly
how much the fee will be, whether the fee applies when initiating a
call or terminating a call, or both, or to which destinations it
applies. Similarly, the disclosure includes an additional daily
maintenance fee of "up to $1.99" but does not specify the exact amount
or when Epana will begin assessing the fee. The explanation of the
range of fees and variety of other terms, conditions, and charges is
so vague that it is impossible for a consumer to know when purchasing
the prepaid card what fees will actually apply or how the fees will
impact the number of calling minutes received. Thus, the disclosures
are not in the "clear and unambiguous language" that the Commission
has said is needed to ensure that they are effective.
11. We also find Epana's description of fees associated with using 800
access numbers unclear and misleading. Epana's disclosures state that
"calls using 800 numbers are billed at higher rates." The card does
not specify what "higher" rates will apply. In addition, Epana
highlights its 800 access number in bold, effectively encouraging the
consumer to dial that number to access service, rather than dial the
local access numbers provided. Given that a typical consumer would
expect the 800 access number, like other 800 numbers, to be toll-free,
this lack of clarity is particularly misleading. We therefore find
that Epana does not convey sufficient information about its rates for
the use of its 800 access numbers.
12. According to Epana, any discrepancies between the minutes advertised
in its marketing materials and the minutes delivered to a customer are
specifically addressed in Epana's disclaimers. Epana explains that the
fees indicated on the cards are the maximum fees which may be charged.
"Fees start out at the bare minimum and over time they are added but
do not exceed what is disclosed in the disclaimer." Epana's O.M.A.F.
card disclosure notes that "[f]ees and surcharges shall affect actual
number of minutes delivered, can equal the amount of the rate of a
call, and can substantially reduce the gross minutes available." The
disclosure also states that "announced minutes are based on use of
entire card in a single call." We find that these statements are
inadequate to inform consumers fully about the possible reduction in
the number of advertised minutes, the circumstances under which those
minutes will not be received, or how to calculate the actual number of
13. To give context to why these disclosures are inadequate and the extent
of the gulf between a consumer's reasonable expectation (based on
Epana's marketing materials) and the consumer's actual experience
(based on application of Epana's fees), consider the card that one of
Epana's posters advertises as offering 783 minutes of calling to
Guadalajara for $3. If a consumer makes a 60-minute call to
Guadalajara, one would reasonably expect there to be 723 minutes
remaining on the card. However, the card disclosure suggests that once
the initial call is completed, a connection fee or disconnection fee
of "up to $1.99" applies. In addition, a daily maintenance fee of "up
to $1.99" applies. Thus, after one 60-minute call, potential post-call
fees of $3.98 would exhaust a card that was advertised to provide 783
minutes. According to Epana, the advertised "number of minutes are
based on use of entire card in a single call." In other words, the
only possible way a consumer could use all of the 783 advertised
minutes would be to make a single 13-hour call from a local access
number - a duration so lengthy as to make such calls highly improbable
by the typical consumer. Even if the maximum post-call fees were not
charged, because Epana's disclosure only contains a range of possible
fees, it would be impossible for the consumer to determine at the
point of sale what amount will apply to each destination.
14. Information regarding the existence, amount, and application of fees
that affect the value of a calling card is material to consumers when
deciding to purchase cards. The failure to provide such information
clearly and conspicuously, because it deprives consumers of material
information needed to make a purchasing decision, is a deceptive
marketing practice. As the Commission stated in NOS, if a consumer
must take a series of complicated and confusing steps to try to
calculate the charges and calling time based on the disclosure
provided, such disclosure almost certainly would be misleading to
consumers. Such a practice, then, would be unjust and unreasonable
under section 201(b).
15. We find that the marketing materials used by Epana to sell its prepaid
calling cards are misleading and deceptive regarding the rates and
charges applicable to its service offerings. In addition, we find that
Epana failed to disclose, in any meaningful way, material information
about its rates, charges and practices at the point of sale, resulting
in substantial harm to consumers who purchased its prepaid calling
cards. Accordingly, we find that Epana has apparently engaged in
unjust or unreasonable marketing practices in violation of section
201(b) of the Act.
A. Proposed Forfeiture Pursuant to Section 503(b) of the Act
16. Section 503(b)(1) of the Act states that any person who willfully or
repeatedly fails to comply with any provision of the Act or any rule,
regulation, or order issued by the Commission, shall be liable to the
United States for a forfeiture penalty. Section 503(b)(2)(B) of the
Act authorizes the Commission to assess a forfeiture of up to $150,000
for each violation, or each day of a continuing violation, up to a
statutory maximum of $1,500,000 for a single act or failure to act by
common carriers. In determining the appropriate forfeiture amount, we
consider the factors enumerated in section 503(b)(2)(E) of the Act,
including "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." Although the forfeiture
guidelines do not establish a forfeiture amount for unjust or
unreasonable practices, such as deceptive marketing practices, the
guidelines do state that, ". . . any omission of a specific rule
violation from the. . . [forfeiture guidelines]. . . should not signal
that the Commission considers any unlisted violation as nonexistent or
unimportant." The Commission retains the discretion to depart from the
guidelines and issue forfeitures on a case-by-case basis, under its
general forfeiture authority contained in section 503 of the Act.
17. In NOS, the Commission found that unfair and deceptive marketing
practices by interstate common carriers constitute unjust and
unreasonable practices within the meaning of section 201(b) of the
Act," and concluded that each instance of such practices constituted a
separate violation of section 201(b). The Commission noted that it had
previously assessed a forfeiture amount of $40,000 for each instance
in which a carrier engaged in an unjust and unreasonable telemarketing
practice in violation of section 201(b). It explained, however, that
"a straightforward application of a $40,000 base forfeiture amount
would likely produce a proposed forfeiture in the millions of
dollars." Rather, taking into account the number of violations
attributed to the two companies involved in the case, the Commission
determined that a $500,000 forfeiture amount per company was
sufficient to protect the interests of consumers and to deter future
violations of the Act.
18. We find that each card that Epana marketed using deceptive advertising
constitutes an independent unjust and unreasonable practice, and thus
a separate and distinct apparent violation of section 201(b) of the
Act. Given the thousands of cards that Epana appears to have marketed,
there is an extensive number of apparent violations in this case for
which the Commission is empowered to propose a penalty. While the
proposed forfeiture is higher than the proposed forfeiture in NOS,
weighing the facts before us, and taking into account the extent and
gravity of Epana's egregious conduct, as well as its culpability and
information in the current record about its revenues, we find that a
total proposed forfeiture amount of $5,000,000 is appropriate under
the specific circumstances of this case. The proposed forfeiture
clearly must protect the interests of consumers and serve as an
adequate deterrent. A lesser penalty would be inappropriate in light
of Epana's failure to adequately provide material information about
its rates to thousands of consumers who purchased the Company's
prepaid cards. Moreover, in determining the amount of a proposed
penalty, we seek to "guarantee that forfeitures issued against large
or highly profitable entities are not considered merely an affordable
cost of doing business." While we could propose a higher forfeiture
based on Epana's 2010 revenues, we believe the forfeiture we propose
today is sufficient to protect the interests of consumers and serve as
an adequate deterrent. In the event Epana continues to engage in
conduct that apparently violates section 201(b)'s prohibition against
unjust and unreasonable practices, such apparent violations could
result in future NALs proposing substantially greater forfeitures and
revocation of Epana's operating authority. Other prepaid calling card
providers are also on notice that practices such as those engaged in
by Epana are unjust and unreasonable, and that we may propose more
significant forfeitures in the future as high as is necessary, within
the range of our statutory authority, to ensure that such companies do
not engage in deceptive marketing practices.
19. We have determined that STi Telecom Inc. (formerly Epana Networks,
Inc.) apparently violated section 201(b) of the Act. We have further
determined that STi Telecom Inc. (formerly Epana Networks, Inc.) is
apparently liable for a forfeiture in the amount of five million
V. ORDERING CLAUSES
20. Accordingly, IT IS ORDERED that, pursuant to section 503(b)(2)(B) of
the Communications Act of 1934, as amended, 47 U.S.C. S: 503(b)(2)(B),
and section 1.80 of the Commission's rules, 47 C.F.R. S: 1.80, STi
Telecom Inc. (formerly Epana Networks, Inc.) is hereby NOTIFIED of
this APPARENT LIABILITY FOR FORFEITURE in the amount of $5,000,000,
for willful and repeated violations of section 201(b) of the Act, 47
U.S.C. S: 201(b).
21. IT IS FURTHER ORDERED that, pursuant to section 1.80 of the
Commission's rules, within thirty (30) days of the release date of
this Notice of Apparent Liability for Forfeiture, STi Telecom Inc.
(formerly Epana Networks, Inc.) SHALL PAY the full amount of the
proposed forfeiture or SHALL FILE a written statement seeking
reduction or cancellation of the proposed forfeiture.
22. 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 Number 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-C2-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 23A (call sign/other ID), and enter the letters "FORF" in
block number 24A (payment type code). STi Telecom Inc. (formerly Epana
Networks, Inc.) will also send electronic notification to
Johnny.Drake@fcc.gov on the date said payment is made. 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.
23. The response, if any, must be mailed both to: Marlene H. Dortch,
Secretary, Federal Communications Commission, 445 12th Street, SW,
Washington, DC 20554, ATTN: Enforcement Bureau - Telecommunications
Consumers Division; and to Richard A. Hindman, Division Chief,
Telecommunications Consumers Division, Enforcement Bureau, Federal
Communications Commission, 445 12th Street, SW, Washington, DC 20554,
and must include the NAL/Acct. No. referenced in the caption.
Documents sent by overnight mail (other than United States Postal
Service Express Mail) must be addressed to: Marlene H. Dortch,
Secretary, Federal Communications Commission, Office of the Secretary,
9300 East Hampton Drive, Capitol Heights, MD 20743. Hand or
messenger-delivered mail should be directed, without envelopes, to:
Marlene H. Dortch, Secretary, Federal Communications Commission,
Office of the Secretary, 445 12th Street, SW, Washington, DC 20554
(deliveries accepted Monday through Friday 8:00 a.m. to 7:00 p.m.
only). See www.fcc.gov/osec/guidelines.html for further instructions
on FCC filing addresses.
24. The Commission will not consider reducing or canceling a proposed
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.
25. IT IS FURTHER ORDERED that a copy of this Notice of Apparent Liability
for Forfeiture shall be sent by Certified Mail Return Receipt
Requested and First Class mail to STi Telecom Inc. (formerly Epana
Networks, Inc.), Attention: John Prinner, President and CEO; David
Duncan, Chief Financial Officer, Treasurer and Assistant Secretary;
and Daniel Marlo, Vice President, General Counsel and Secretary, 1250
Broadway, 30th Floor, New York, NY 10001; and to Mitchell F. Brecher,
Counsel for STi Telecom Inc. (formerly Epana Networks, Inc.),
Greenberg Traurig, LLP, 2101 L Street, N.W., Suite 1000, Washington,
FEDERAL COMMUNICATIONS COMMISSION
Marlene H. Dortch
On August 9, 2011, Epana represented to the Commission that it remains the
same entity, but has changed its corporate legal name to STi Telecom Inc.
See letter from Roberta Kraus, General Counsel STi Telecom Inc., to Ms.
Marlene H. Dortch, Secretary, Federal Communications Commission, August 8,
2011. The record developed in this case refers generally to Epana;
accordingly, for clarity, we use the company's former name herein. Epana
is a New York corporation, whose principal address is 1250 Broadway, 30th
Floor, New York, NY 10001. John Prinner, President and CEO; David Duncan,
Chief Financial Officer, Treasurer and Assistant Secretary; and Daniel
Marlo, Vice President, General Counsel and Secretary, are listed as
contact persons for Epana. Accordingly, all references in this NAL to
Epana, Company, or STi Telecom also encompass the foregoing individuals
and all other principals and officers of Epana, now known as STi Telecom
47 U.S.C. S: 201(b).
See Letter from Colleen Heitkamp, Chief, Telecommunications Consumers
Division, Enforcement Bureau, Federal Communications Commission, to Epana
Networks, Inc., April 2, 2010 ("LOI").
See Letter from Mitchell F. Brecher, Counsel for Epana Networks, Inc., to
Ms. Marlene H. Dortch, Secretary, Federal Communications Commission, May
20, 2010 ("Response").
See Response at 3. Epana supplemented its initial response on July 29,
2010. See Letter from Mitchell F. Brecher, Counsel for Epana Networks,
Inc., to Ms. Marlene H. Dortch, Secretary, Federal Communications
Commission, July 29, 2010, at 4 ("Supplemental Response").
Epana also provided a handful of audio and video advertisements for its
cards. Epana further supplemented its response on December 13, 2010. See
Letter from Mitchell F. Brecher, Counsel for Epana Networks, Inc., to Ms.
Marlene H. Dortch, Secretary, Federal Communications Commission, Dec. 13,
2010 ("Second Supplemental Response").
O.M.A.F. is the acronym for the Organizacion Mundial de Adictos Al Futbol.
See, e.g., O.M.A.F. Poster, Second Supplemental Response at EPN 000868 and
Eroika Poster, Second Supplemental Response at EPN 000870.
See Second Supplemental Response at EPN 000867.
47 U.S.C. S: 201(b).
See, e.g., NOS Communications, Inc., Notice of Apparent Liability for
Forfeiture, 16 FCC Rcd 8133 (2001) ("NOS") (finding that the companies
engaged in deceptive marketing of their interstate communication services
by failing to disclose clearly and conspicuously material facts regarding
their promotional plan offerings and pricing methodology, in violation of
section 201(b)); Business Discount Plan, Inc., Order of Forfeiture, 15 FCC
Rcd 14461 (2000) ("BDP"), recon. granted in part and denied in part, 15
FCC Rcd 24396 (2000) (finding that the company violated section 201(b) by
using unjust and unreasonable telemarketing practices such as
misrepresenting the nature of its service offerings); Telecommunications
Research & Action Center & Consumer Action, Memorandum Opinion and Order,
4 FCC Rcd 2157 (Com.Car.Bur. 1989) ("TRAC") (recognizing that section
201(b) provides a cause of action against carriers for failing to convey
sufficient information about their rates, practices and range of
services). See also Joint FCC/FTC Policy Statement For the Advertising of
Dial-Around And Other Long Distance Services To Consumers, 15 FCC Rcd 8654
(2000) ("Joint Advertising Statement").
See TRAC, 4 FCC Rcd at 2159. The full Commission has approvingly cited
this passage from TRAC as indicating that such conduct violates section
201(b) of the Act. BDP, 15 FCC Rcd at 14469.
TRAC, 4 FCC Rcd at 2159.
A card is exhausted when either its face value has been used up (e.g.,
$2), or when all of the available minutes have been used. For a discussion
of how the fees may impact the value of the card as it is used, see infra
Both academic research and the Commission's experience with consumer
issues have demonstrated that the manner in which providers display
material information, including the charges, classifications, and terms of
use, can have as much impact on a consumer's decision to make a purchase
as the information itself. See generally Colin Camerer, Samuel
Issacharoff, George Loewenstein, Ted O'Donoghue & Matthew Rabin,
Regulation for Conservatives: Behavioral Economics and the Case for
"Asymmetric Paternalism," 151 U. Penn. L. Rev. 1211 (2003) (surveying
regulatory strategies to address problems arising from systematic errors
in consumer decision-making); Richard H. Thaler and Cass R. Sunstein,
Nudge, Yale University Press 2008 (concluding that information buried deep
in the "fine print" is far less useful to consumers than information
displayed clearly and prominently). See also Joint Advertising Statement,
15 FCC Rcd at 8654-55 (finding that if consumers are deceived by
advertising claims, they cannot make informed purchasing decisions);
Truth-in-Billing and Billing Format, First Report and Order and Further
Notice of Proposed Rulemaking, 14 FCC Rcd 7492 (1999) (noting that the
proper functioning of competitive markets is predicated on consumers
having access to accurate, meaningful information in a format that they
See, e.g., O.M.A.F. poster, Second Supplemental Response at EPN 000868;
Las Gemelas poster, Second Supplemental Response at EPN 000865; and Pedro
Infante poster, Second Supplemental Response at EPN 000860. See also
See, e.g., O.M.A.F. calling card, Second Supplemental Response at EPN
Joint Advertising Statement, 15 FCC Rcd at 8663 (noting that prominence,
proximity, and placement of disclosure in comparison to advertising
representation affect effectiveness of disclosure); id. at 8659 (noting
that disclosure about limitations on advertised long-distance rate likely
ineffective when advertised rate appeared on peel-off stickers, without
disclosure, that consumers were supposed to put on telephones).
Id. at 8662.
See, e.g., Second Supplemental Response at EPN 000867.
Dialing a local access number could result in charges to the consumer by
the consumer's telephone company (if, for example, the number was a
regional toll number), but would not reduce the available minutes on the
See Supplemental Response at 4.
O.M.A.F. calling card, Second Supplemental Response at EPN 000867.
See O.M.A.F. poster, Second Supplemental Response at EPN 000868.
In the case of an accidental disconnection, if the maximum fees are
applied, the card could be exhausted after a single minute.
See supra P: 5.
See NOS, 16 FCC Rcd at 8138 (2001).
47 U.S.C. S: 503(b)(1)(B). See also 47 C.F.R. S: 1.80(a)(2).
47 U.S.C. S: 503(b)(2)(B). See also 47 C.F.R. S: 1.80(b)(2). In 2008, the
Commission amended section 1.80(b)(2) of the rules, 47 C.F.R. S:
1.80(b)(2), to increase the maximum forfeiture amounts in accordance with
the inflation adjustment requirements contained in the Debt Collection
Improvement Act of 1996, 28 U.S.C. S: 2461. See Amendment of Section 1.80
of the Commission's Rules and Adjustment of Forfeiture Maxima to Reflect
Inflation, Order, 23 FCC Rcd 9845, 9847 (2008) (adjusting the maximum
statutory amounts for common carriers from $130,000/$1,300,000 to
47 U.S.C. S: 503(b)(2)(E).
See Forfeiture Policy Statement and Amendment of Section 1.80 of the Rules
to Incorporate Guidelines, Report and Order, 12 FCC Rcd 17087, 17099, P:
22 (1997) ("Forfeiture Policy Statement"); recon. denied, 15 FCC Rcd 303
See NOS, 16 FCC Rcd at 8133, 8142.
See id. at 8141-8142 (citing Business Discount Plan, Inc., Apparent
Liability for Forfeiture, 15 FCC Rcd 14461 at 14471-72 (2000)).
Id. at 8142.
In NOS, the Commission found that "each rate sheet sent to consumers
constitutes a separate violation of section 201(b)." NOS, 16 FCC Rcd at
8133. Consistent with NOS, we find that the marketing of each card to
consumers constitutes a separate apparent violation of section 201(b). See
also BDP, 15 FCC Rcd at 14471-72 (assessing a forfeiture amount of $40,000
for each instance in which the carrier engaged in an unjust and
unreasonable telemarketing practice in violation of section 201(b)).
See Grupo Marcatel Becomes the Largest Pre-Paid Calling Card Company in
the World, Financial Tech Spotlight (October 27, 2010) (stating that once
Group Marcatel acquired Epana "the combined sales of both companies reach
over 260 million cards per year."
The $5 million penalty we propose is equivalent to applying a $40,000
penalty to only 125 apparent violations that occurred within one year of
this NAL. See supra note 40.
See Forfeiture Policy Statement, 12 FCC Rcd 17087, 17099.
See Epana 2011 FCC Form 499-A (Telecommunications Reporting Worksheet
(Reporting Calendar 2010 Revenues)).
47 C.F.R. S: 1.80.
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Federal Communications Commission FCC 11-129
Federal Communications Commission FCC 11-129