United States: Federal Communications Commission Amends Rules Relating to Junk Fax Prevention Act of 2005

On April 6, 2006, the Federal Communications Commission (FCC) released its "Report and Order and Third Order on Reconsideration," (the Order)¹ which revises the Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991 (Rule)² as mandated by the Junk Fax Prevention Act of 2005 (JFPA).³ The JFPA, enacted on July 9, 2005, makes four notable amendments to the facsimile advertising provisions of the Telephone Consumer Protection Act. The JFPA: 1) codifies an established business relationship (EBR) exemption to the unsolicited facsimile advertisement (UFA) prohibition, 2) defines the EBR for purposes of the exemption, 3) requires the sender of a facsimile advertisement to provide specific notice and contact information creating an "opt out" right for the recipient, and 4) creates compliance guidelines for such "opt out" requests.

The JFPA required that the FCC create regulations implementing its amendments by April 5, 2006 and also grants the FCC authority to consider three related issues: 1) determine the "shortest reasonable time" that a sender must comply with an "opt out" request, 2) consider exempting certain classes of small business senders from the requirements to provide a "cost-free" mechanism for transmission of "opt out" requests, and 3) consider whether to allow tax-exempt organizations to send UFAs in furtherance of their tax exempt purpose that do not contain the "opt out" notice.⁴ Accordingly, the Order makes the following revisions to the Rule:

The FCC amends Section 64.1200(a)(3) of the Rule to recognize the EBR exemption, in order to maintain consistency with the federal statute, and removes the existing rule provision requiring express written permission to send facsimile advertisements.⁵ The burden to show the existence of a valid EBR will be on the sender, should the question arise.⁶ In order for an EBR to exist, the recipient must voluntarily provide the facsimile number either directly or through publication in a publicly accessible directory, advertisement or website.⁷

The FCC adopts as part of the Rule the following definition of EBR, in order to maintain consistency with the federal statute:

Any such inquiry must relate to the products or services offered by the entity, rather than, for example, store location.⁹ It is also noted that the exemption applies only to entities with which the business or entity has had a "voluntary two-way communication," and does not extend to affiliates of that entity.¹⁰ This is a notable difference from the scope of the EBR under the national do-not-call registry, which the FCC explains based upon the fact that there exists no national registry to simplify the "opt out" procedures with respect to all potential senders of UFAs. Rather, recipients must "opt out" of UFAs separately for each entity with which the recipient has an EBR.¹¹ The FCC also expresses its intent to evaluate the complaint data within one year of the date of the Order to determine whether the EBR exemption has resulted in a significant number of complaints relating to use of an EBR of a duration that is "inconsistent with the reasonable expectations of consumers."¹²

The FCC amends the Rule to expressly require a notice on the first page of the advertisement stating the recipient’s right to "opt out" of future advertisements, in order to maintain consistency with the federal statute.¹³ The notice must be "clear and conspicuous," meaning "apparent to a reasonable consumer," and must be located at the top or bottom of the fax, separate from the advertising copy and any other disclosures.¹⁴ In order to minimize the burden on businesses, the cost free mechanism required for transmission of the "opt out" may be any of the following: website address, email address, toll-free telephone number or toll-free facsimile machine number, or local telephone number, so long as the advertisements are sent to local consumers so that use of the mechanism would not result in additional charges.¹⁵ The "reasonable time" permitted to honor such requests must be thirty days or less from receipt of the request,¹⁶ and the FCC has declined to limit the time period during which an "opt-out" request remains in effect.¹⁷

In accordance with the JFPA, the FCC requires that an "opt out" request identify the telephone number(s) of the facsimile machine to which the request relates, and be transmitted via the toll-free mechanism provided by the sender in the "opt out" notice.¹⁸ Such a request terminates the sender's EBR exemption.¹⁹ The sender, rather than any third party facsimile broadcaster, is ultimately responsible for compliance with "opt out" requests.²⁰

The FCC does not exempt nonprofits from the UFA rules, but clarifies that messages that are not commercial in nature, such as messages involving political or religious discourse or soliciting donations, are not "unsolicited advertisements" per the TCPA.²¹

The JFPA amends the term "unsolicited advertisement" under the TCPA by adding the phrase "in writing or otherwise" to the definition. The FCC adopts as part of the Rule the following definition of "unsolicited advertisement," in order to maintain consistency with the federal statute:

In the absence of an EBR, the sender must obtain "prior express invitation or permission" to send an unsolicited advertisement, which may be given by oral or written means, including electronic methods.²³ A negative option does not constitute prior express invitation or permission.²⁴ The invitation or permission must include the facsimile number to which such advertisements may be sent, and should be reasonably verifiable.²⁵ Advertisements sent with permission must include the "opt out" notice.²⁶ Messages relating specifically to existing accounts and ongoing transactions and messages containing only information (such as newsletters) are not "unsolicited advertisements."²⁷ However, messages promoting free goods and services or surveys that serve as a pretext to advertisements are "unsolicited advertisements."²⁸

The Rule amendments will be effective within 90 days of the date of publication in the Federal Register.²⁹

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