In 1991, Congress enacted the Telephone Consumer Protection Act (“TCPA”) to curtail the growing number of telemarketing calls and certain telemarketing practices that many considered to be an invasion of privacy. Part of the TCPA was the ban on “unsolicited advertisements” delivered to telephone facsimile machines. The TCPA is part of the Communications Act of 1934, as amended,[1] and authorizes the FCC to promulgate regulations implementing its provisions and to enforce the TCPA’s prohibitions.[2]

Despite the TCPA, junk fax transmissions remain commonplace. To some degree the ineffectiveness of the TCPA may be laid at the doorsteps of the FCC. Historically, the FCC rarely assessed monetary forfeitures against violators of the junk fax law, instead largely limiting itself to the issuance of “Citations.” Citations do not propose or assess monetary forfeitures against putative violators; rather, they advise the putative violator of allegations that it has sent unsolicited fax advertisements and invites the putative violator to address the allegations. During the first half of 2007, the FCC issued 65 Citations for junk fax violations, but assessed no monetary forfeitures for those violations. In the 6 years preceding 2007, the FCC issued 347 Citations for junk fax violations, but issued only 9 “Notices of Apparent Liability” or “NALs” proposing monetary forfeitures.[3]

In June of 2007 and without warning, the FCC began to issue a stream of NALs proposing significant monetary forfeitures for junk fax violations. In the last six months of 2007,[4] the FCC issued 3 times as many NALs for monetary forfeitures as it had issued in the prior 6 and 1/2 years.[5] Monetary forfeitures imposed for junk fax violations can be extremely severe, one forfeiture being in the eye-popping amount of $5,339,000. And the historical forfeiture amounts reflect restraint by the FCC. For example, in one instance the FCC could have assessed a forfeiture of $3,916,000 under the TCPA, which allows the FCC to assess a forfeiture as high as $11,000 per unsolicited fax, but limited the proposed forfeiture to $2,168,500.

In view of the FCC’s new emphasis on junk fax law enforcement and the severity of the penalties the FCC may propose, we believe it is important that those who use direct marketing by fax review their fax marketing practices to ensure compliance with the TCPA, including changes to the TCPA enacted in 2005. To assist in this review, this legal alert provides a high level summary of the junk fax law and FCC regulations implementing that law. We caution that this summary cannot and does not address the more narrow issues that frequently arise under the junk fax law or any one advertiser’s specific practices, and should only be used as a starting point in an internal compliance audit or in designing a fax advertisement program.

As is implied by the foregoing, fax advertisement is not banned; rather, it restricted. Whether an advertisement is a violation of the TCPA is determined by the means of transmission, the nature of the message, the relationship between the recipient and the sender, how the sender obtained the recipient’s facsimile telephone number and the existence of certain opt-out disclosures and procedures.

The means of communication subject to the ban is the use of any telephone facsimile machine, computer or other device to send a message to a telephone facsimile machine. An advertiser cannot escape the prohibitions of the TCPA by using a third party “broadcast fax” service provider; the advertiser is responsible for the misconduct of the “broadcast fax” service provider. Moreover, a sender cannot avoid the operation of the TCPA by sending facsimile advertisements to the United States from offshore points.

For the transmission to come within the ambit of the junk fax ban, it must be an “advertisement,” which means it must include “material advertising the commercial availability or quality of any property, goods, or services ….” The fact that the property, goods or services may be offered free of charge does not exclude the advertisement from the TCPA, nor is there any exclusion for the transmission to facsimile machines used by businesses. Facsimile communications that contain only noncommercial information, such as industry newsletters and employee benefits information, are not prohibited by the TCPA, and “incidental advertisement” contained in such communications generally will not render them commercial and, hence, subject to the TCPA. But advertisers are cautioned that the definition of “incidental” is subjective and the FCC’s view of what constitutes “incidental advertisement” in any particular circumstances may be difficult to predict. Accordingly, advertisers are encouraged to ask the FCC to review their informational newsletters if the “incidental” nature of such advertisement could reasonably be called into question.

Similarly, “transactional communications” describing, confirming or facilitating an agreed transaction between a buyer and a seller are not “advertisements” subject to the TCPA, but may lose that exemption if they advertise the commercial availability or quality of any property, goods or services.

In 2005, Congress enacted the Junk Fax Prevention Act which amended the TCPA by codifying an exemption for the transmission of fax advertisements to a recipient who has an established business relationship (“EBR”) with the sender, who has voluntarily provided its facsimile telephone number to the sender and who is provided by the sender with a means to opt not to receive further fax advertisements from the sender.

FCC Rules define an EBR as “a prior or existing relationship formed by a voluntary two-way communication between a person or entity and a business or residential subscriber with or without an exchange of consideration, on the basis of an inquiry, application, purchase or transaction by the business or residential subscriber regarding products or services offered by such person or entity, which relationship has not been previously terminated by either party.” For an EBR to exist based upon an inquiry by the consumer, the inquiry must be about products or services offered by the entity and cannot be formed just because the consumer, for example, inquired about store locations or the identity of the seller, or merely visited a store’s website. In instances in which the existence of an EBR is questioned, the FCC will place the burden of proof on the advertiser and, while the FCC does not mandate that the advertiser keep any particular types of records to meet this burden, the FCC encourages advertisers to keep records such as sales slips, applications and inquiry records to assist the advertiser in meeting this burden.

As stated above, merely having an EBR with a recipient is not enough to exempt a faxed advertisement from the TCPA. The telephone facsimile number also must be voluntarily provided by the recipient. The number may be obtained directly from the recipient or from a directory, advertisement or web site accessible to the public which publishes the recipient’s telephone facsimile number with the permission of the recipient. For EBRs established after July 8, 2005, the FCC requires the sender to bear the burden of proof that a facsimile number was provided voluntarily by the recipient. As an example, the sender must take steps to determine that the publication of a recipient’s facsimile number in a third party directory or web site represents the recipient’s voluntary agreement to make that number available for general distribution. For EBRs established prior to July 9, 2005, the FCC presumes that the recipient’s facsimile number was voluntarily given to the sender.

There is one final requirement for a fax advertisement to comply with the TCPA: the sender must provide the recipient with certain opt-out rights and follow certain procedures to ensure and to inform the recipient of those rights. The fax must contain a clear and conspicuous notice on the first page stating that the recipient is entitled to request that the sender cease sending the recipient unsolicited fax advertisements. The notice must include domestic telephone and facsimile numbers for the recipient to transmit the opt-out request, and at least one cost-free mechanism for transmitting the request. Cost-free mechanisms include toll-free telephone and facsimile numbers, email addresses and website addresses. Opt-out requests must be accepted 24 hours a day, 7 days a week and must be honored within 30 days in most circumstances and in under 30 days in certain circumstances. In addition, the name of the sender and the fax number from which the fax is sent must appear along the top or the bottom of the page. 

What should you do if you receive a junk fax violation Citation from the FCC? In every case in which the FCC has issued a NAL for a monetary forfeiture, the FCC has preceded it with a Citation setting forth the recipient complaints of unsolicited fax delivery and advising the putative offender that it can respond to the FCC in writing or schedule an interview with the FCC. In almost every case, the target of the Citation did not respond to the FCC and in all cases the target continued the prohibited practices.

Ignoring the FCC is not in the putative violator’s best interests. We encourage advertisers to work with the FCC in the event that you receives a Citation, or worse, a NAL. Resolving the problem at the Citation stage is the best alternative as it avoids the issuance of a NAL and the costs of responding to it. Even if the sender is the subject of a NAL, the sender still has the right to dispute the proposed finding of misconduct and to make showings to convince the FCC to reduce or eliminate the proposed monetary forfeiture.

The still better course is to proactively take measures to better ensure that sales representatives do not violate the TCPA, including an active program of advising them of TCPA requirements and keeping those records required to meet the burden to show that facsimile transmissions are being sent to recipients with whom the advertiser has an EBR and to telephone facsimile numbers that may be used consistent with the requirements of the TCPA. In the event that a advertiser violates the TCPA, but has implemented measures designed to thwart such violations, we would expect the FCC to acknowledge those measures by either reducing or eliminating a proposed monetary forfeiture.