Federal regulators on Thursday fined Wal-Mart Stores Inc., Best Buy Co., and other retailers $3.9 million combined for failing to properly label that analog-only televisions will need to be retrofitted after the switch to digital TV next year.
The Federal Communications Commission also handed down $2.7 million in fines to other companies for violating other digital TV rules that involve shipping analog equipment and blocking technologies such as the V-chip.
An FCC rule, adopted last May, requires retailers to display or affix "consumer alert" labels to analog-only TV equipment - including TVs, DVDs, videocassette recorders and digital video recorders - that says it will not receive signals after the nationwide digital transition without a special converter box.
The rule is to keep consumers from buying TV equipment that will not work after the digital switch by Feb. 17, 2009. After that, if the TV doesn't get cable or satellite service or isn't hooked up to the converter box that translates over-the-air digital broadcasts, it won't work.
The FCC, which conducted numerous inspections last June, said it initially issued warnings to companies, whose stores and Web sites across the country were in violation of the rule. The agency said it gave each company "a reasonable opportunity" to respond.
Sears Holdings Corp., which operates Sears and Kmart retail stores, was fined nearly $1.1 million for the labeling violation, while Wal-Mart was given a $992,000 fine and Circuit City Stores Inc. was handed a $712,000 fine. Target Corp., Best Buy, Fry's Electronics Inc. and CompUSA Inc., which has since been acquired by Systemax Inc., were assessed fines between $168,000 to $384,000.
Sears - fined for 15 of its stores, its Web site and 20 Kmart stores - said in an e-mail statement that it was "surprised" by the FCC's action and had eliminated analog inventory from its stores last fall and will soon offer converter boxes.
The company said it hasn't decided whether to appeal or pay the fine.
Best Buy, which was fined for 18 stores selling various models of analog-only equipment, said it was "extremely disappointed" by the FCC's action to what it called a "relatively small number of instances."
"Best Buy voluntarily pulled all analog-only tuner products from our stores on Oct. 1, 2007, in a proactive effort to prevent confusion and to help jump start consumer awareness," the company said in an e-mailed statement.
The company said it did not believe it violated the FCC rule "in any willful or repeated manner."
Wal-Mart spokeswoman E.R. Anderson said in a statement that all the products sold by the company comply with FCC regulations. Wal-Mart has "voluntarily invested millions of dollars in new technology, training, new product and consumer education" for the transition, she said.
The FCC says that after inspecting 2,272 retail stores and 36 Web sites, it issued 349 citations, or warnings, to retailers for failing to comply with the labeling requirement.
The FCC also fined two companies - Syntax-Brillian Corp. and Precor Inc. - a combined $1.6 million for violating another digital TV rule for manufacturing, importing or shipping any device that only contains an analog tuner. The agency mandated that all new TVs must include digital tuners as of March 1, 2007.
Additionally, the agency fined Polaroid Corp. and Proview Technology Inc. nearly $1.1 million combined for failing to ensure their equipment with a V-chip technology can "respond to changes in the content advisory rating system."
All the companies have 30 days to appeal the fines.
The Consumer Electronics Association, a trade group whose members include Circuit City and Best Buy, said late last year that more than 50 percent of U.S. households now own a digital TV and expect nearly 32 million digital TVs will be shipped this year.
The federal government this year launched a $1.5 billion coupon program to help defray cost of converter boxes for viewers of analog sets that rely on antennas to watch TV. Each U.S. household is entitled to get two $40 coupons.
As of April 7, the government has accepted more than 5.2 million household requests for nearly 9.9 million coupons. So far, more than 280,000 coupons have been used to purchase converter boxes.
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