Also Reinforces That Faxes Need Not Be Ads, But Only a "Prelude" to Marketing, to Violate Junk Fax Rules

Less than two weeks after we reported on the Federal Communications Commission’s announcement that it would henceforth make “upward adjustments” to its fines against repeat violators of the statute and rules governing unsolicited fax advertisements, the FCC has issued another enhanced forfeiture, this time adding $150,000 to more than double the fine that would have applied otherwise.  The nearly $300,000 proposed fine underscores how serious the FCC is about establishing an effective deterrent to repeated violations.  The proposed fine is also a reminder that even faxes offering things for free (in this case, listings in a directory) can fall within the “junk fax” ban if they are part of an “overall advertising campaign” to sell goods or services.

In the present notice of apparent liability (“NAL”) issued to Presidential Who’s Who, the publisher of a directory of professionals of the same name, the FCC proposed to fine the company at the usual rates of $4,500 per noncompliant fax to first-time recipients, and $10,000 for faxes sent to those who receive subsequent transmissions after previously having asked the sender to stop.  Applying this “base forfeiture” to 30 faxes sent in alleged violation of the statute and rules, and the higher amount to one additional fax, the FCC initially set Who’s Who’s liability at $145,000.   

However, noting that, as of this current NAL, the FCC has now taken three enforcement actions against Who’s Who, involving a total of more than 100 violations of the unsolicited fax statute and rules, the FCC adjusted the $145,000 upward to tack on an additional $150,000 penalty.  Obviously, this upward adjustment is more than the underlying fine for the violations at issue, and it is twice the $75,000 upward adjustment in the Street Map case, where the FCC recently announced its intent to impose these kind of repeat-violator enhanced fines.

Nonetheless, the Who’s Who NAL explains, the total forfeiture still falls under the $16,000-per-violation cap the Communications Act allows (which in this case would have been $496,000) in that, even with the upward adjustment, the total fine calculates out to $9,500 per fax.  While that’s still a pretty steep price for sending someone a piece of paper, the FCC claims such penalties are appropriate in cases where, as asserted here, the alleged violator “disregarded” previous FCC “warnings.”

In addition to serving notice that an honest, critical look at one’s fax practices is an absolute must if a you receive an FCC junk fax citation (which generally is a statutorily-required precursor to a fine), the Who’s Who NAL is also an important reminder to think carefully about the nature of faxes being sent, and whether they trigger the statute and rules. 

To wit, the “junk fax” rules apply to “unsolicited advertisements,” defined as “any material advertising the commercial availability or quality of any property, goods, or services.”  But here, some of the faxes at issue promoted only the ability of recipients to appear in Who’s Who’s directories, which listings are free of charge.  Nonetheless, the FCC claims the faxes are still ads because they are a “prelude to” those listed in the directory being offered a chance to purchase it upon publication.  Thus, the FCC asserts, Who’s Who’s attempts to sell the tome in follow-up calls make the initial faxes part of an “overall marketing campaign” to sell it. 

This underscores an important practice point:  when senders consider whether the FCC rules apply to their faxes, they cannot look only at the face of the fax for whether it includes an offer to sell or touts the qualities of a good or service available for purchase – rather, how the fax might fit in to related marketing efforts must also factor into the analysis.  With the FCC apparently on the warpath to “deter persistent wrongdoing” in this area, avoiding any inadvertent stumbling into a rules violation takes on added importance.