Last week, the Federal Communications Commission’s (FCC) Enforcement Bureau issued a Notice of Apparent Liability for Forfeiture and Order (NAL) against RevTel Communications, for failing to respond to directives from USAC to provide documentation supporting information reported in its annual telecommunications reporting worksheets for the 2020 through 2022 period. The Enforcement Bureau (EB) proposed a forfeiture penalty of $100,000 against RevTel for its repeated and willful failure to cooperate with documentation requirements in apparent violation of Section 54.711(a) of the FCC’s rules.
According to the NAL, between February 1, 2021 and May 22, 2022, USAC repeatedly requested supporting documentation from RevTel (directly and/or through its outsourced compliance vendor/agent) in order to verify the accuracy of the Company’s 2020, 2021, and 2022 annual Form 499 worksheets. However, over the course of a nearly 16-month period, the Company (directly and/or through its outsourced compliance vendor/agent) apparently either failed to respond or submitted non-responsive and late replies. To this date, the Company has still not provided USAC the documentation necessary to verify the accuracy of RevTel’s 499-As for 2020 through 2022.
The Commission and the entities responsible for administering the Universal Service Fund (USF) and other programs must rely on carriers’ compliance with FCC rules. Document retention and production rules were adopted to ensure the accuracy of each Form 499 and as a result ensure compliance with the USF, TRS, LNP, NANP and federal regulatory fee cost recovery requirements. For the violations at issue, Section 503(b)(2)(B) of the Act authorizes the FCC to assess a forfeiture against a service provider, such as RevTel, of up to $237,268 for each violation or each day of a continuing violation, up to a statutory maximum of $2,372,677 for a single act or failure to act. The FCC has imposed a $50,000 base forfeiture for a contributor’s failure to maintain documentation that supports information reported in Form 499s and provide it to USAC or the FCC upon request. As such, the FCC proposed a $50,000 base forfeiture against RevTel. In assessing forfeiture amounts, the FCC considers the nature, extent and gravity of the failure to comply with service provider documentation requirements to be very serious; it also takes into account the Company’s culpability. Based on the seriousness of the alleged failures and RevTel’s degree of culpability, the Enforcement Bureau doubled the proposed base forfeiture to reach the proposed $100,000 amount. It also indicated that additional forfeitures may be forthcoming, noting that the Commission is authorized to assess a forfeiture in amounts up to $237,268 for each violation or each day of a continuing violation, up to a statutory maximum of $2,372,677 for a single act or failure to act.
We have said it before and will say it again, the FCC’s rules hold the service provider subject to its jurisdiction responsible for compliance with applicable rules and regulations. While it is common practice for service providers to outsource many compliance duties to third party agents, it is imperative for those who elect to do so to ensure their agents are acting responsibly and in their best interests. Because at the end of the day, the buck stops with the service provider (as far as the FCC is concerned).
Has your company been damaged by, or concerned about, potential exposures arising from the acts or omissions of an outsourced compliance agent?
If your company currently outsources (or has outsourced in the recent past) its compliance to a third-party vendor and either: (A) believes it has incurred damages or (B) is concerned and seeking to mitigate against future economic harm, arising from the acts and/or omissions of a third-party compliance vendor and/or agent, please contact Jonathan S. Marashlian at email@example.com to receive an initial consultation at no cost.