FCC fines retailers over digital TV

As US broadcasters prepare for the government-ordered switch to digital television next year, federal regulators sent their own signal Thursday: Retailers and manufacturers face stiff penalties if they try to take advantage of consumer confusion.

The Federal Communications Commission announced plans to levy more than $3.9 million in fines against seven major retailers, including Sears Holdings Corp., Wal-Mart Stores Inc. and Circuit City Stores Inc., for not alerting customers that the analogue TVs they sold wouldn't receive over-the-air stations after the digital transition on Feb. 17, 2009. The agency proposed an additional $2.7 million in fines against manufacturers for violating other related rules.

The FCC also announced that LG Electronics Inc., Vizio Inc. and five other leading TV manufacturers had agreed to pay a total of $3.4 million to resolve investigations into their alleged violations. "Swift enforcement of our DTV-related rules is critical to protecting consumers and reducing potential confusion," FCC Chairman Kevin J. Martin told a Senate committee this week.

The government is offering two $40 coupons to each U.S. household to help purchase converter boxes that can translate the digital signal for analog TVs. It also is trying to ease the transition by requiring stores to put notices on or next to TVs that don't include digital tuners.

FCC inspectors visited more than 2,100 stores and monitored 36 websites last spring to make sure consumers were not being duped into buying sets that would be incapable of picking up broadcast signals after the transition. The FCC said the retailers had sometimes failed to include the required warning labels at dozens of stores. Each set found without a label subjects retailers to an $8,000 fine.

Sears was hit with $1.1 million in proposed fines, Wal-Mart $992,000, Circuit City $712,000, Fry's Electronics $384,000, Target Corp. $296,000, Best Buy Co. $280,000 and CompUSA Inc. $168,000. The agency's rules give the companies a chance to appeal before the fines are assessed. Some retailers said they were surprised by the fines. "We eliminated analogue inventory from our stores last fall and we'll soon be offering customers digital converter boxes," said Kimberly Freely, a Sears spokeswoman. The company is considering an appeal.

Wal-Mart said it had "voluntarily invested millions of dollars" to train employees and inform customers about the transition. Best Buy said it had taken "immediate steps" to correct problems in "a relatively small number of instances."

The other companies did not respond to requests for comment.

In addition, the FCC proposed a $1.3-million fine against Syntax-Brillian Corp. and $358,000 against Precor Inc. for importing and shipping analogue TVs after deadlines set by the agency. And it proposed a $775,000 fine against Polaroid Corp. and $300,000 against Proview Technology Inc. for shipping TVs that did not include a new version of the V-chip, which allows viewers to block programs based on ratings to protect children from material deemed to be offensive.

The V-chip violations also were the focus of the settlements. LG agreed to pay $1.7 million, Philips Consumer Electronics North America $450,000, Sanyo Corp. $375,000, Vizio $370,000, Panasonic Corp. of North America $320,000, Westinghouse Digital Electronics $210,000 and Audiovox Corp. $20,000.