I. INTRODUCTION
Congress passed the Telephone Consumer Protection Act (TCPA) in 1991 and the Junk Fax Prevention Act in 2005 to address, in part, abuses associated with the sending of unsolicited advertisements by fax. These federal laws expressly prohibit unsolicited commercial phone calls and faxes. Congress directed the Federal Communications Commission (FCC) to issue regulations to implement the junk fax law which took effect on August 1, 2006.
The new “junk fax” rules attempt to strike a balance between the desires of consumers to curb unsolicited junk faxes and the needs of businesses that rely heavily on sending and receiving vital information via fax. As a result, the new rules contain an “established business relationship” (EBR) exception to the do-not-fax rules. While the final rules provide businesses with additional flexibility in communicating with established customers, financial institutions must still ensure that they are complying with the detailed requirements associated with the EBR and the opt-out notice requirement.
II. RESTRICTIONS ON UNSOLICITED COMMERCIAL FAX ADVERTISEMENTS
The TCPA and the final rules implemented by the FCC provide that it is unlawful to send unsolicited advertisements to any fax machine, including those at both businesses and residences, without the recipient’s prior express invitation or permission. The rules permit a business to send fax advertisements to recipients with whom the sender has an EBR, as long as the fax number was provided voluntarily by the recipient.
A. Unsolicited Advertisements
An unsolicited advertisement is any material advertising the commercial availability or quality of any property, goods, or services that is transmitted to any person without the person’s prior express invitation or permission, in writing, or otherwise. Prior express invitation or permission may be given by oral or written means, including electronic means. The permission must include the facsimile number to which such advertisements may be sent. The permission requirement cannot be satisfied by a fax sent that includes a telephone number and an instruction to call if the recipient no longer wishes to receive faxes. However, a company that requests a fax number on an application form could include a clear statement indicating that by providing such fax number, the individual or business agrees to receive facsimile advertisements for that company or organization.
B. Established Business Relationship (EBR)
An EBR is the “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.
An EBR with a customer is deemed to exist if the sender obtains the fax number: (a) directly from the recipient, through, for example, an application, contact information, membership renewal form, or orally via the telephone or through use of a Website; (b) from the recipient’s own directory, advertisement or site on the Internet, unless the recipient has noted on such materials that it does not accept unsolicited advertisements at the fax number in question; or (c) from directories and other sources of information compiled by third parties, in which case the sender must take reasonable steps to verify that the recipient consented to have a number listed.
If the EBR existed prior to July 9, 2005, and the sender also possessed the fax number prior to that date, the sender may send the fax advertisements without demonstrating how the number was obtained. The burden of proving the existence of the business relationship is on the entity sending the fax and examples of the documentation suggested include purchase agreements, sales slips, applications and inquiry records. While no specific record is required, financial institutions must maintain sufficient evidence to meet the burden of proof that an EBR exists.
Unlike the “Do Not Call” segment of the FCC rule, the EBR for fax transmissions currently does not have a set time limitation. However, the FCC does have authority to create a time limit, so companies should proceed reasonably when claiming the existence of an EBR based on a dormant or inactive relationship.
The EBR only extends to the entity with which there is the two-way communication – not affiliates. This restriction prohibits fax broadcasters from acquiring EBRs by extension or agency from an entity that has an EBR with the recipient.
C. Opt-Out Notice Requirements
Fax advertisements sent with the recipient’s prior express permission must include an opt-out notice. The final rules require senders of permissible fax advertisements (those sent under an EBR or with the recipient’s prior express permission) to provide specified notice and contact information on the fax that allow recipients to opt-out of future faxes from the sender.
The required notice must: (a) be clear and conspicuous (separate from the advertising copy or other disclosures and placed at either the top or bottom of the fax) and on the first page of the fax advertisement; (b) state that the recipient may make a request to the sender not to send any future faxes and that failure to comply with the request within 30 days is unlawful; and (c) include a domestic contact telephone number and a fax machine number for the recipient to send the request to opt-out of future faxes. In addition, there must be at least one cost-free mechanism (Website address-Email address, toll-free telephone number, or toll-free fax number) to opt-out which must be accessible 24 hours a day, 7 days a week.
Senders that receive a request not to send further faxes that meets the requirements for opting-out, must honor that request within the shortest reasonable time from the date of such request, not to exceed 30 days. To stop unwanted advertisements, an opt-out request must identify the telephone number or numbers of the fax machines to which the request relates and must be delivered in the manner identified in the opt-out notice (i.e., sent to the telephone number, fax number, Website address or Email address identified in the fax advertisement). Senders are also prohibited from sending future fax advertisements to the consumer once he or she has opted-out, unless the consumer subsequently provides prior express permission to the sender.
D. Damages/Private Right of Action
Consumers are granted a private right of action in state court for any violation of the TCPA’s prohibitions on the use of unsolicited facsimile advertisements. In addition, recipients of unsolicited facsimile advertisements can either recover the actual monetary loss resulting from the TCPA violation, or receive up to $500 in damages for each violation whichever is greater. The court may triple the damages for each violation if it finds that the sender willingly or knowingly committed the violation.
III. CONCLUSION
Financial institutions sending advertisements via fax should ensure that they have a procedure in place to document EBRs; establish a mechanism to process opt-out requests and ensure placement of those electing to opt-out on an internal list within no more than 30 days from receipt of the request; and ensure that the required notices and language appear on the first page of all fax advertisements.