Industry Beware! Key Conditions Apply To The FCC’s New Pre-Sale Equipment Authorization Rules

New FCC rules (further summarized here) allow for the marketing and conditional sale of radio frequency (RF) devices to consumers prior to securing FCC equipment authorization if certain conditions are met. The new rules provide innovators with more flexibility to engage in crowdfunding and other marketing campaigns and may help consumers access new devices more quickly. For example, the new rules permit limited pre-authorization importation of RF devices into the United States and allow certain pre-sale activities like packaging and delivering devices to retail locations. 

Although the new rules present an important opportunity to better gauge consumer interest and expedite the rollout of new products upon authorization, industry must be diligent in complying with the FCC’s various conditions, summarized below, before engaging in any pre-sale activities.  Failure to comply with the conditions could result in the receipt of a Letter of Inquiry (LOI) from the FCC’s Enforcement Bureau, ultimately leading to a civil forfeiture or voluntary contribution to the U.S. Treasury.

Product Delivery. Devices may not be delivered to an end user until fully authorized under applicable FCC equipment authorization procedures (i.e., Certification, which involves testing by an FCC-recognized test lab, Certification grant by a Telecommunications Certification Body (TCB), and device listing in a Commission database, and/or Supplier’s Declaration of Conformity (SDoC), which is a self-certification process).

Devices subject to the FCC’s Certification procedure may, however, be delivered to distribution centers or retailers for pre-sale activities after compliance testing and the submission of a Certification application with a TCB. Devices subject to the SDOC procedure must complete authorization before they may be transferred for pre-sale activities. 

Customer Disclosure. Prospective buyers must be notified: (1) that equipment is subject to FCC rules and delivery to the end user is conditional upon successful completion of the applicable authorization process; (2) that FCC rules do not address the applicability of consumer protection, contractional, or other provisions under federal or state law; and (3) of any responsibility of the seller to the buyer in the event that the applicable equipment authorization process is not successfully completed, including information on any refund policy.

FCC Label. Devices subject to the Certification procedure that are physically transferred for the purpose of pre-sale activities must include either on the device itself or its package a temporary, removable label stating:

“This device cannot be delivered to end users, displayed, or operated until the device receives certification from the FCC. Under penalty of law, this label must not be removed prior to receiving an FCC certification grant.”

Tracking and Retrieval. The seller must have a process in place to track and, in the event the equipment is not successfully Certified, retrieve any device that is physically transferred for pre-sale activities. Retrieval must occur immediately upon determination that the device Certification cannot be completed.

Legal Responsibility. Legal responsibility for the device must remain with the device manufacturer, developer, importer or ultimate consignee, or their designated customs broker until the device has been fully authorized.

Record Keeping. For a 5-year period, the seller must maintain records of each conditional sales contract. Such records must identify: the device name and product identifier, the quantity conditionally sold, the date on which the device authorization was sought, the expected FCC ID number, and the identity of the conditional buyer, including contact information. These records must be provided to the FCC upon request.   

Wiley has ample legal and engineering experience on equipment authorization matters.  For guidance on how these new rules may apply to your business, please reach out to either of the above-listed authors.