Because they haven't been doing the 91.413 transponder inspections.
§ 91.413 ATC transponder tests and inspections.
(a) No persons may use an ATC transponder that is specified in 91.215(a), 121.345(c), or §
135.143(c) of this chapter
unless, within the preceding 24 calendar months, the ATC transponder has been tested and inspected and found to comply with appendix F of part 43 of this chapter; and
(b) Following any installation or maintenance on an ATC transponder where data correspondence error could be introduced, the integrated system has been tested, inspected, and found to comply with paragraph (c), appendix E, of part
43 of this chapter.
Here is the airspace reference
91.215 ATC transponder and altitude reporting equipment and use. (a)
All airspace: U.S.-registered civil aircraft. For operations not conducted under part
121 or
135 of this chapter, ATC transponder equipment installed must meet the performance and environmental requirements of any class of TSO-C74b (Mode A) or any class of TSO-C74c (Mode A with altitude reporting capability) as appropriate, or the appropriate class of TSO-C112 (Mode S).
(b)
All airspace. Unless otherwise authorized or directed by ATC, no person may operate an aircraft in the airspace described in paragraphs (b)(1) through (b)(5) of this section, unless that aircraft is equipped with an operable coded radar beacon transponder having either Mode 3/A 4096 code capability, replying to Mode 3/A interrogations with the code specified by ATC, or a Mode S capability, replying to Mode 3/A interrogations with the code specified by ATC and intermode and Mode S interrogations in accordance with the applicable provisions specified in TSO C-112, and that aircraft is equipped with automatic pressure altitude reporting equipment having a Mode C capability that automatically replies to Mode C interrogations by transmitting pressure altitude information in 100-foot increments. This requirement applies—
(1)
All aircraft. In Class A, Class B, and Class C airspace areas;
(2)
All aircraft. In all airspace within 30 nautical miles of an airport listed in appendix D, section 1 of this part from the surface upward to 10,000 feet MSL;
(3) Notwithstanding paragraph (b)(2) of this section, any aircraft which was not originally certificated with an engine-driven electrical system or which has not subsequently been certified with such a system installed, balloon or glider may conduct operations in the airspace within 30 nautical miles of an airport listed in appendix D, section 1 of this part provided such operations are conducted—
(i) Outside any Class A, Class B, or Class C airspace area; and
(ii) Below the altitude of the ceiling of a Class B or Class C airspace area designated for an airport or 10,000 feet MSL, whichever is lower; and
(4) All aircraft in all airspace above the ceiling and within the lateral boundaries of a Class B or Class C airspace area designated for an airport upward to 10,000 feet MSL; and
(5) All aircraft except any aircraft which was not originally certificated with an engine-driven electrical system or which has not subsequently been certified with such a system installed, balloon, or glider—
(i) In all airspace of the 48 contiguous states and the District of Columbia at and above 10,000 feet MSL, excluding the airspace at and below 2,500 feet above the surface; and
(ii) In the airspace from the surface to 10,000 feet MSL within a 10-nautical-mile radius of any airport listed in appendix D, section 2 of this part, excluding the airspace below 1,200 feet outside of the lateral boundaries of the surface area of the airspace designated for that airport.
I've never heard of placarding the transponder like that tho. The IA guide from the FAA says to just advise the owner they are due for 91.413 inspections.