Fixing the FCC’s Fax Faux Pas
It may have taken the better part of two years, but Congress and President Bush, by respectively passing and signing the Junk Fax Prevention Act of 2005 to make it law last month, reversed the 2003 change in Federal Communications Commission “junk fax” rules that otherwise would have required businesses to obtain written permission from recipients before sending unsolicited fax advertisements. Under the new law and rules the FCC will adopt to implement it, companies instead will be required to maintain and honor an in-house “do-not-fax” list, similar to the internal “do-not-call” list businesses that telemarket must keep, and must refrain from sending unsolicited commercial materials to recipients who have opted out of receiving such faxes.
The Junk Fax Prevention Act has its genesis in the FCC’s implementation of the Telephone Consumer Protection Act of 1991 (“TCPA”), which the new legislation amends. The TCPA’s fax provisions prohibit the transmission of “unsolicited advertisements” by any means to a recipient’s fax machine. When the FCC originally adopted rules implementing the TCPA, it reasoned that the prohibition on “unsolicited” faxes did not include those sent from a business to a recipient with whom it has an established business relationship, who at least implicitly might expect such faxes. This was significant since the fax rules, unlike the do-not-call rules that apply only to residential lines, restrict business-to-business communications as well.
In mid-2003, the FCC reconsidered the established business relationship (or “EBR”) exemption in its fax rules. It determined that, given the continuing prevalence of complaints that unwanted faxes were an invasion of privacy and wasteful of recipients’ paper, ink and time, it cannot be inferred that faxes under the EBR exemption were not “unsolicited.” Accordingly, the FCC attempted to require that all senders of fax ads, including trade associations’ communications with members, would have to obtain prior written consent, signed by the recipient, before sending faxes with ads in them. This was met with a general uproar by the business community, especially with regard to business-to-business fax practices that had been in place for over a decade, as well as by trade associations of all kinds. Thus, almost immediately after eliminating the fax EBR exemption in favor of prior written consent, the FCC suspended the effective date of the new rule for over a year, until January 1, 2005.
Scores of parties sought reconsideration by petitioning the FCC to restore the EBR exemption. Restorative legislation was introduced in the last Congress, but while it passed both chambers, the bills could not be reconciled and sent to the president for signature before the term expired. Nevertheless, the FCC further extended the suspension of the effective date for the rule change through June 30, 2005.
The Junk Fax Prevention Act was reintroduced in the current Congress and quickly passed. As noted, it amends the TCPA to include a company-specific do-not-fax requirement that provides recipients a 24/7 cost-free means of opting out of further faxes. At the same time it reinstates the fax EBR exemption, except in cases where there has been a do-not-fax request, so long as the fax bears a notice on the first page explaining the do-not-fax right and how to exercise it. However, the new law allows unsolicited fax ads only when there is an EBR and the sender obtains the fax number either directly from the recipient via voluntary communication within the context of the EBR, or from a directory, advertisement, or Internet site where it is clear the recipient intended that the number be publicly available. The Act also permits the FCC, in its discretion after conducting a rulemaking, to allow tax-exempt non-profit trade associations to send unsolicited fax ads without the do-not-fax notice to their members if it is in furtherance of the associations’ tax-exempt purpose.
In addition, the law includes a new fax-specific EBR definition that reflects the original fax EBR definition, i.e., it has no specified duration. This was necessary because the FCC, in adopting the National Do-Not-Call Registry, enacted a definition for “EBR” that did not exist prior to deletion of the fax EBR exemption, which limits EBRs to 18 months based on a purchase and 3 months based on an inquiry. There is a caveat on the no-duration fax EBR, however, in that the FCC can by rulemaking set a time limit based on “consumer expectations,” provided it first finds that the no-duration EBR exemption causes significant complaints, the complaints cite non-expiration of the EBR, and the cost to senders of demonstrating EBRs under a time limit would not outweigh the benefits of such a limitation.
The Junk Fax Prevention Act gives the FCC 270 days to adopt regulations implementing it, and would require the FCC to report on, and GAO to study, enforcement of the Act’s and the FCC’s junk fax provisions going forward. The FCC’s staff has acknowledged the requirement to undertake a rulemaking under the Act, but the agency has not issued a notice proposing new rules or disclosed exactly when a proceeding will likely commence. The FCC has, however, extended the stay of its prior rule change (now reversed by the new law) until the end of this year. Whenever they appear, the new rules, and the Junk Fax Prevention Act, should restore some balance by restoring the ability of businesses to engage in longstanding fax practices while now offering recipients a means of halting further unwanted transmissions short of forcing all businesses to obtain prior written permission for any commercial fax.
Posted by Ronald London