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The Journal
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Channel Marketing via
Fax?
Updated Fax Law Has Some Benefits for Marketers
A Special Contribution by Lisa Lilly, Esq., Sonnenschein Nath
& Rosenthal |
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The Benefits of the Junk Fax Prevention Act of 2005
Despite its name, the Junk Fax Prevention Act of 2005 will ease
certain restrictions on businesses that send unsolicited faxes.
The U.S. Senate passed the Act, S. 714, on June 24, 2005, the
House of Representatives approved it on June 28, 2005, and President
Bush signed it into law July 9, 2005. The Act provides that
companies that have an “established business relationship”
with a customer or potential customer may fax that person or
entity unsolicited advertisements despite the general ban on
such faxes.
The Established Business Relationship Exception
The Telephone Consumer Protection Act, which became federal
law in 1991, and which is still in effect, prohibits businesses
from using fax machines to send unsolicited advertisements.
An unsolicited advertisement is “any material advertising
the commercial availability or quality of any property, goods,
or services which is transmitted to any person without that
person’s prior express invitation or permission.”
The Federal Communications Commission issued rules implementing
the TCPA in 1992. Those rules provided that if a business had
an “established business relationship” or “EBR”
with someone, that person could be deemed to have consented
to receive unsolicited advertisements. The FCC defined an EBR
as a “prior or existing relationship formed by a voluntary
two-way communication” between the sender and receiver
of the fax, on the basis of an “inquiry, appreciation,
purchase or transaction” by the fax recipient regarding
products or services the sender offered, so long as the relationship
had not been terminated by either party. From 1992 through July,
2003, the FCC enforced the TCPA with this understanding.
Eventually, though, the FCC changed its position on EBR, mainly
in response to public comments about unsolicited facsimile advertisements.
Consumers felt “besieged,” the FCC stated, by unsolicited
faxes. Consumers also complained about bearing the cost of fax
paper and toner and incurring the opportunity costs of time
spent reading and disposing of faxes, as well as the loss of
use of their fax machines when advertisements were printing.
So, on July 3, 2003, in the same report that established the
national Do-Not-Call registry, the FCC reversed its earlier
conclusion that an EBR between a fax sender and recipient establishes
the consent needed to permit businesses to send unsolicited
faxes to their customers. Instead, the FCC concluded the sender
must obtain the fax recipient’s express invitation or
permission to fax in writing. Under the FCC’s new rule,
the writing had to include the recipient’s signature,
contain a clear indication that he or she consented to receiving
such faxed advertisements, and provide the fax number to which
faxes could be sent.
The July, 2003, Order also modified the FCC definition of an
EBR in the context of telephone solicitations, limiting the
duration to a maximum of 18 months following a purchase or transaction,
or a maximum of three months following an inquiry or application.
Before that, no limit had been placed on the EBR’s duration,
but the FCC concluded time limits were “necessary to minimize
confusion and frustration for consumers who receive calls from
companies they have not contacted or patronized for many years.”
Many industry petitioners challenged the FCC’s view that
eliminating the EBR exception for faxes would benefit consumers,
pointing out potential harmful consequences of it. For example,
a restaurant would not be able to fax a menu to a customer who
called and requested one unless the caller provided a written
consent in advance. Similarly, realtors would be effectively
prevented from faxing potential new home buyers listing information
requested by phone, adding unnecessary hurdles and delays even
when consumers clearly wanted to receive the faxes quickly.
In light of these concerns, on August 18, 2003, the FCC stayed
the effective date of the order eliminating the EBR exception
and requiring written consent to faxes until January 1, 2005,
and later until June 30, 2005. The FCC justified the stays because
“the public interest would best be served by allowing
senders of such advertisements additional time to obtain such
express permission before the new rules become effective.”
Recently, the FCC further extended the stay until January 9,
2006, mainly to allow time for the fate of the Junk Fax Prevention
Act of 2005 to be determined.
Effect of the Junk Fax Prevention Act on EBR
Now that President Bush signed the Act into law, the EBR exception
will continue. Under the Act, even after January 9, 2006, businesses
are allowed to fax unsolicited advertisements to individuals
without prior express invitation or permission if the business
has an established business relationship with the fax recipient.
The Act does not set a time limit on the duration of the EBR
and, further, prohibits the FCC from setting a time limit for
the first three months after the Act becomes law. Following
this three-month period, though, the FCC can create a time limit
once it: (1) determines whether the existence of the EBR exception
has resulted in a significant number of complaints regarding
unsolicited fax advertisements; (2) determines whether a significant
number of those complaints involve faxes sent based on an EBR
longer than the FCC believes is consistent with consumers’
reasonable expectations; (3) evaluates both the costs to senders
of demonstrating the existence of an EBR within a specified
time period and the benefits to recipients of limiting the EBR;
and (4) determines whether, for small businesses, the costs
would not be unduly burdensome.
Another positive aspect of the Junk Fax Act for businesses is
that it amends the definition of “unsolicited advertisement”
to mean advertising “which is transmitted to any person
without that person’s prior express invitation or permission,
in writing or otherwise.” This change statutorily prohibits
the FCC from promulgating a rule requiring prior express permission
to fax be in writing.
Duties Under the Act
The Act creates certain additional duties for businesses. Unsolicited
fax advertisements must include a clear, conspicuous notice
on the first page that informs recipients that, at any time,
they can opt out of receiving future faxes and that the sender
must comply with any opt-out request within the shortest reasonable
time. The opt-out notice must include “a domestic contact
telephone and facsimile machine number for the recipient to
transmit such a request to the sender; and a cost-free mechanism
for a recipient to transmit a request.” The cost-free
mechanism can be a toll-free or a local telephone number.
The notice also must explain the proper requirements for a valid
opt-out, which are that the opt-out must: (1) identify the telephone
or fax numbers subject to the request; (2) be made to the telephone
or fax number of the sender or by any other method as determined
by the FCC; and (3) be made by a person who did not later provide
an express invitation or permission to receive unsolicited advertisements.
Finally, any unsolicited fax must contain in the margins at
the top or bottom of each page the date and time it is sent,
the identification of the sender of the message, and the telephone
number of the sending machine.
To minimize the possible financial consequences to businesses
of certain provisions, the Act gives the FCC the authority to
exempt some classes of small business senders from providing
the additional cost-free opt-out mechanism if the FCC determines
the costs are unduly burdensome given the revenues generated
by those types of small businesses. The FCC also has the authority
to establish an exemption from the opt-out notice requirements
for tax-exempt, nonprofit trade or professional associations
if the faxes further a group’s tax-exempt purpose.
Conclusion
The Junk Fax Prevention Act of 2005 maintains the established
business relationship exception to the ban on unsolicited advertisements,
eliminates the requirement that, where there is no EBR, prior
consent to receiving such faxes must be in writing, and requires
businesses that send faxes to comply with opt-out notice requirements.
Please Note:
This article should not be considered as, or as a substitute
for, legal advice and is not intended to nor does it create
an attorney-client relationship. Because the information included
in it is general, it may not apply to your individual legal
or factual circumstances. You should not take (or refrain from
taking) any action based on the information you obtain from
this document without first obtaining professional counsel.
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