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Federal Register / Vol. 86, No. 179 / Monday, September 20, 2021 / Rules and Regulations
sales contract or to physically transfer devices, while for imported devices, the burden is on the device manufacturer, developer, importer or ultimate consignee, or their designated customs broker. In both instances, this will ensure that the party in legal ownership of the devices, regardless of the devices physical location, will be responsible for maintaining and implementing a process for retrieval if the applicable equipment authorization cannot be successfully completed. The language the Commission adopts in the importation provision, which was limited to the manufacturer in the Commissions proposal, is consistent with party designations referenced in the Commissions other existing importation conditions.
F. Recordkeeping In the NPRM, the Commission proposed a recordkeeping requirement for devices imported prior to equipment authorization that would require manufacturers to maintain, for a period of 5 years, records identifying the recipient of the devices along with information about the devices and the shipping. The Commission asked several questions related to the need for recordkeeping and related reporting and responsibility issues. The Commissions recordkeeping questions were informed by its concerns about situations where pre-ordered devices are not ultimately authorized and enforcement actions may be required. Commenters generally recommend either no new recordkeeping or minimal requirements.
No commenter supports additional reporting requirements. Samsung states that adopting new record retention requirements is not necessary because manufacturers regularly retain records related to equipment authorization that must be presented to the Commission upon request. Amazon states that an overly prescriptive approach or burdensome reporting and recordkeeping requirements are not necessary to protect consumers.
The Commission finds that the recordkeeping requirement proposed in the NPRM is the minimal required to ensure that, should it become necessary, the Commission will have access, as needed for enforcement or other purposes, to information regarding devices imported prior to authorization.
The Commission therefore adopts the recordkeeping requirement with a change to the party responsible for recordkeeping. Specifically, recordkeeping will be the responsibility of the device manufacturer, developer, importer or ultimate consignee, or their designated customs broker. In addition
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to being consistent with other importation recordkeeping requirements in the Commissions rules, this change also acknowledges that entities other than a device manufacturer may be responsible for the importation of these devices.
Because the new marketing exception the Commission adopts here expressly prohibits the delivery to end users any of the subject devices prior to authorization, it follows that compliant entities would maintain legal or physical possession, as appropriate, of the pre-ordered devices as provided in the Commissions rules. Thus, the Commission does not see a benefit to imposing reporting requirements, as they would not directly further the Commissions underlying goal of keeping unauthorized devices from becoming available to the general public. Further, the Commission believes that it is good business practice to maintain sales documentation and thoroughly track customers, particularly when, as with the Commissions marketing exception, sales are conducted through conditional sales contracts. The Commission expects that sellers, through the normal course of business, will maintain records of the conditional sales contract permitted by the marketing rule the Commission is adopting through this Report and Order.
So, the Commission is not adopting any new reporting requirements, but the it is adopting a recordkeeping requirement consistent with that adopted for devices imported prior to equipment authorization. The party initiating a conditional sales contract or physically transferring devices under the Commissions new marketing exception must maintain, for a period of five years, records identifying each entity to whom a device is conditionally sold or physically transferred, the device name and product identifier, the quantity conditionally sold or physically transferred, the date on which the device authorization was submitted, and the expected FCC ID number. The party initiating the conditional sales contract or physically transferring devices must provide these records upon the request of Commission personnel.
G. Enforcement In the NPRM, the Commission asked several questions about the appropriate enforcement actions that should be taken in the event of non-compliance with any of the new importation requirements and the effect the marketing proposal would have on enforcement activities. It specifically asked questions about appropriate sanctions for instances where
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unauthorized devices are delivered to consumers prior to receipt of the equipment authorization, including, for example, whether the base forfeiture for such violations should be based on the number of units delivered and whether the Commission should deny future equipment authorization applications from grantees who deliver unauthorized devices to consumers. Additionally, the Commission asked about how to hold online vendors accountable and what penalties would apply to any consumer who operates an unauthorized device that was obtained through a violation of the Commissions conditional sale procedure.
Commenters did not specifically address enforcement related to the importation proposal. While some commenters expressed concerns about risks to consumers in the event that equipment authorization is not ultimately obtained, none cited this concern as a reason to not adopt the proposed rule. No commenters provided specific recommendations regarding the consideration of violations or the determination of appropriate penalties.
Any comments that addressed enforcement generally stated that existing enforcement tools would provide sufficient means to address compliance issues without any modification.
Commenters generally concurred that the FTC and state agencies and courts would be appropriate venues for consumer contractual complaints.
Information Technology and Innovation Foundation states that there is always a risk of bad actors knowingly flouting regulations or small, unsophisticated parties unknowingly failing to comply, but that the risk of non-compliant radios becoming publicly available does not seem to increase with the Commissions proposed rule changes. However, Information Technology and Innovation Foundation recommends that the Commission should always view enforcement as a primary concern.
Information Technology Industry Council notes existing safeguards that are currently in place via not only the Commission, but also the FTC and states attorneys general, and argues that new Commission enforcement mechanisms are not necessary.
Similarly, CTA argues that consumer redress mechanisms are in place, if necessary, and that if a manufacturer does not deliver a device where a customer remitted some consideration, the FTC and state consumer protection agencies are experts in redressing such harms.
The Commission finds that other agencies, including the Federal Trade
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