In an important decision concerning the Junk Fax portions of the Telephone Consumer Protection Act (“TCPA”), the Federal Communications Commission (“FCC”) recently issued a declaratory ruling clarifying the scope of the TCPA fax exemption. The ruling came in response to a petition filed by Amerifactors Financial Group, LLC (“Amerifactors”) requesting clarification from the FCC as to whether certain fax services can be fairly classified as fax machines within the meaning of the TCPA.

Like many other companies operating in the fax-based marketing space, Amerifactors utilizes online fax services to transmit its marketing communications. Such online fax services operate through use of “‘a cloud-based service consisting of a fax server or similar device that is used to send or receive documents, images and/or electronic files in digital format over telecommunications facilities’ that allows users to ‘access faxes the same way that they do email by logging into a server over the Internet or by receiving a pdf attachment [as] an email.’”

How did the FCC clarify the TCPA fax exemption?

The FCC’s declaratory ruling clarified that “an online fax service that effectively receives faxes ‘sent as email over the Internet’” is not a telephone facsimile machine for the purposes of the TCPA. The TCPA defines such machines as “equipment which has the capacity . . . to transcribe text or images (or both) from an electronic signal received over a regular telephone line onto paper.” In reaching its decision, the FCC deemed it materially important to distinguish between a machine that sends the fax (which might violate the TCPA if sent from a telephone facsimile machine or computer) from the machine that receives the fax (in which case, a violation of the TCPA will only occur if received by a telephone facsimile machine).

Because the FCC likened a fax received by an online fax service to an electronic message sent over the Internet, it concluded that the harms that the TCPA seeks to protect (specifically the cost and/or lost time associated with a fax machine’s processing of unsolicited advertisements) are not implicated by such category of fax advertisements.

As technological advancements continue to make communication easier and more cost efficient for marketers, those operating in the space should expect regulators and courts to weigh in on the relative legality of these new forms of communication. While the FCC’s online fax services ruling is a clear positive for the industry, not all new communications technology has been as favorably received by regulators. The ever-changing regulatory landscape for facsimile marketing mandates vigilance from companies that work in the sector. Given the potentially devastating cost of non-compliance with the technical and nuanced rules governing fax marketing, such vigilance should, at a minimum, prioritize working closely with knowledgeable counsel prior to engaging in any fax marketing campaign.