Circuit City fights FCC fines

BY LOUIS LLOVIO
Times-Dispatch Staff Writer
Published: May 14, 2008

Circuit City Stores Inc. yesterday appealed a $712,000 fine the Federal Communications Commission imposed, claiming the agency lacks the authority to issue such fines.

The Henrico County-based chain was one of seven retailers fined a total of $3.9 million for not properly alerting customers that analog television sets cannot by themselves receive digital broadcast signals.

Federal law mandates that broadcasters begin beaming digital broadcast signals by Feb. 17. Owners of analog TVs must fit them with converters or connect them to a pay service, such as cable, to continue receiving the signals.

By law, retailers selling analog TV sets must alert consumers at the display that the sets are not ready.

In its 30-page response to the April 10 fine, Circuit City argues that the process used to levy the fines is flawed. It also said that, even if the regulatory agency has the jurisdiction, the retailer should never have been fined because it was acting in good faith at its stores.

Carl W. Tobias, a professor of law at the University of Richmond School of Law, said Circuit City’s argument is not likely to hold water.

He said it is doubtful that the FCC would tackle the issue unless it was confident it had the authority.

“My hunch is that they’ll reject this,” Tobias said.

Circuit City spokesman Jim Babb said yesterday afternoon that the filing spoke for itself.

In the filing detailing the charges, the FCC said the retailer was fined after inspections between June 19, 2007, and March 14 found 25 stores did not properly disclose that the sets were not ready for digital broadcasts.

The chain, the FCC wrote, had been warned 32 times before it was penalized. The FCC fined it $8,000 for each set not properly marked.

Sears Holdings Corp., which operates Sears and Kmart stores, received the largest fine, $1 million.

An FCC spokesman yesterday confirmed that several of the retailers fined at the same time filed appeals, which are under review.

If the FCC’s enforcement bureau rejects the arguments, the fight could end up in federal court, Clyde Ensslin said.

The spokesman declined to elaborate on the appeals process and would not give a time frame as to when it would respond.

The commission’s Web site shows two possible outcomes if the fine was upheld. The FCC and Circuit City could reach a settlement or the FCC could demand payment.