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FCC Issues Citation to Canadian Company for Marketing Unauthorized Devices in US

07/06/2011

On July 6, the FCC issued a Citation to New Generation Hobbies of Woodbridge, Ontario, Canada, for marketing unauthorized radio frequency devices in the United States that operate on restricted frequencies. This is in violation of Section 302(b) of the Communications Act and Sections 2.803 and 15.205(a) of the FCC’s rules. In the Citation, the FCC advised New Generation Hobbies to “take immediate steps to come into compliance and to avoid any recurrence of this misconduct. As explained [in the Citation] and as provided in the Communications Act, future violations of the Rules in this regard may subject [the] company to substantial monetary penalties, seizure of equipment and criminal sanctions.”

The FCC acted in response to a complaint alleging that New Generation was marketing certain video transmitters that operate on restricted frequencies in the 2.4 GHz band. In September 2009, the FCC sent a Letter of Inquiry to New Generation. At that time, the FCC Spectrum Enforcement Division observed that New Generation was marketing two 2.4 GHz transmitters on its website: the LawMate 500 mW 2.4 GHz transmitter and the LawMate 1 W 2.4 GHz transmitter. The Amateur Radio Service is allocated portions of the 2.4 GHz band on a primary basis. As of July 6, the LawMate 500 mW 2.4 GHz transmitter was still available on the store’s website.

New Generation responded to the FCC’s Letter of Inquiry in October 2009, saying that it began marketing these devices on its website in 2008 and has sold 25 units each of the LawMate 500 mW 2.4 GHz transmitter and the LawMate 1 W 2.4 GHz transmitter to customers in the United States. According to the Citation, New Generation told the FCC that both devices are capable of operating on 2410 MHz, 2430 MHz, 2450 MHz, 2470 MHz, 2370 MHz, 2390 MHz, 2490 MHz and 2510 MHz. In its response, New Generation indicated that it purchases these two devices from a manufacturer in Taiwan. New Generation claims that it sells the devices in question online via its website and maintains that “the customer who makes the purchase is the importer.”

The FCC noted in the Citation that New Generation claims that it does not target United States customers with any of its products: “In this regard, it states that it does not advertise or promote any of its products in the United States and that its website is ‘located in Canada and not in the United States.’ Further, it asserts that ‘[a]s a Canadian company that does not have any affiliates, agents, distributors or resellers in the United States,’ it is ‘not required to be aware of or follow United States and FCC regulations when listing products’ on its website.”

Even so, New Generation told the FCC that beginning in 2009, it placed “notes and warnings next to product descriptions informing customers to be aware of the legality of their respective purchases and importing such products to the United States.” New Generation also indicated to the FCC that there is a warning next to the two devices in question that a US Amateur Radio license is required to operate the devices due to their power output. New Generation also told the FCC that it has “placed additional warnings for the channel numbers which are outside of the allowed US frequency spectrum.”

According to the Citation, based on the information provided in New Generation’s response to the FCC’s Letter of Inquiry, the LawMate 500 mW 2.4 GHz transmitter and the LawMate 1 W 2.4 GHz transmitter are both ineligible for a grant of certification. “New Generation’s response confirms that both transmitters operate within restricted frequency bands listed in section 15.205(a) of the rules,” the Citation reads. “As such, these devices cannot comply with the FCC’s technical standards and therefore cannot be certified as required by Commission Rules or marketed in the United States.”

The FCC disagreed with New Generation’s claims that it is not targeting its marketing to customers in the United States and that, as a Canadian company, as it does not have any affiliates, agents, distributors or resellers in the United States, it is not required to be familiar with or follow FCC regulations: “Section 302(b) of the Communications Act and Section 2.803 of the rules apply to radio frequency devices marketed in the United States regardless of whether the devices are marketed by a domestic or foreign company. ‘Marketing’ includes ‘sale or lease, or offering for sale or lease, including advertising for sale or lease, or importation, shipment or distribution for the purpose of selling or leasing or offering for sale or lease.’ New Generation admits that it offered for sale (via its website), sold and shipped the devices at issue to customers located in the United States. While New Generation claims that it included warnings on its website informing customers that it may not be legal to operate these devices in the United States, these warnings do not negate New Generation’s violations of the Communications Act and the Commission’s Rules.”

While Amateur Radio Service equipment is exempt from the FCC’s equipment certification requirement, it is a “violation of the Commission’s rules to market in the United States a transmitter that is designed or intended to operate on frequencies outside of the authorized Amateur Radio Service bands if such equipment has not been issued a grant of equipment certification,” the Citation noted. “The LawMate 500 mW 2.4 GHz and 1 W 2.4 GHz transmitters operate on frequencies outside of the authorized Amateur Radio Service bands, including restricted frequencies listed in section 15.205(a). Thus, these devices are not Amateur Radio devices exempt from the equipment certification requirements.”

Furthermore, the FCC emphasized that it is “insufficient and misleading for manufacturers and retailers, like New Generation, to include a disclaimer on their websites stating or implying that US consumers bear sole responsibility for complying with the applicable legal obligations.” The FCC noted that such disclaimers are misleading “because they fail to disclose that entities offering unauthorized devices are also violating the Communications Act and the Rules. In this regard, we note that section 2.803 of the Rules is specifically directed at, and enforceable against, persons selling, leasing, offering for sale or lease, importing, shipping, or distributing for the purpose of sale or lease, noncompliant radio devices in the United States. Consequently, New Generation violated the Rules both by offering the device for sale to US customers and completing the sale transaction, and its use of a disclaimer does not absolve it of liability.”

If, after receipt of the Citation, New Generation violates the Communications Act or the Rules continuing these actions, the FCC may impose monetary forfeitures of up to $16,000 for each such violation or each day of a continuing violation, and up to $112,500 for any single act or failure to act. In addition, violations of the Communications Act or the Rules can result in seizure of equipment through in rem forfeiture actions, as well as criminal sanctions, including imprisonment.

New Generation has until August 5 to respond to the Citation, either through a personal interview at the FCC office in Detroit or via a written statement.



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