Why are fines not tied to a percent of revenue for a given time period?
These flat-fee fines look big to the little folks but typically are pocket change for these big companies, it should actually hurt (see punishment) when they do something wrong.
It's not like there isn't precedent for percent-revenue-over-time penalties in the law (albeit perhaps not by the FCC). For example, Google was ordered to pay 1.36% of AdWords revenue to Vringo[0] (though this was later overturned).
The issue is that they advertised other Verizon services to customers without giving them an option to opt-out. They effectively paid $4 per sales lead, and for leads to customers they already did business with, that's a pretty phenomenal deal considering the breadth of services they could then try to sell.
Figure 1/10 of those customers got a $10 monthly service and kept it for a year. That's $24m in revenue on a conservative estimate.
I agree in principle with the idea that the fine should always be more than the potential profit, but I think it would be really hard to implement such a rule.
Anyway, I don't agree with your math. Surely many/most of the affected customers would not have bothered opting out even if they had been given proper notice. Opting out is kind of a hassle. And a 10% sales conversion is ridiculously generous by like three orders magnitude. I'd be surprised if 10% of people even open their messages.
How much do you think is appropriate? What Verizon did is clearly wrong and I'm glad the FCC is on top of it... but this ain't exactly the crime of the century.
True, but it seems like this is not much a disincentive compared to the revenue potential in that data. Having worked at a number of companies that have acquired data (legally) from a fraction of this many people, one should easily be able to turn those around for a comparable amount of money. I'm not saying there's $100M of revenue here (for 2 million folks). But It seems like the penalty must be much worse than the upside to make the risk adjusted expected value work out in favor of following laws and regulations.
I might agree with you if I thought the bad press Verizon is getting was actually quite costly. But I don't.
FWIW, I'm pretty sure Verizon lost quite a bit of money on this. Especially since most people don't bother to opt-out even when given proper notice so the illegal act netted them far less than 2 million people.
I'm no legal expert, but I'm pretty sure this is the same legal system that dolled out $1,920,000 to a non-wealthy individual for sharing some Gloria Estefan songs. Justice?
Another comment says that it's about $4 per affected customer. Fines for this sort of thing are typically hundreds or thousands of dollars per incident.
The initial fine is not always the biggest cost to the company. I am not a lawyer and have not read the consent decree in this case, but typically the cost of compliance to the consent decree is significantly larger than the initial fine.
These flat-fee fines look big to the little folks but typically are pocket change for these big companies, it should actually hurt (see punishment) when they do something wrong.