Some Unsolicited Faxing Allowed Under New Junk Fax Law

By Mike Wilson

The Junk Fax Prevention Act of 2005 was signed into law by President Bush on July 9, 2005. It has some features that will please businesses and some that consumer advocates will like.

Under the new law, unsolicited advertisements can be faxed to recipients with whom the business has an “established business relationship” (EBR). What is an EBR? Federal regulations define EBR to include “a prior or existing relationship formed by a voluntary two-way communication” between the sender and recipient “on the basis of an inquiry, application, purchase or transaction” by the recipient “regarding products or services offered” by the sender.

The regulations do not require that the recipient have purchased a product or service through the communication. Since the regulations speak of “a” communication, multiple communications are not required. If you do not have an EBR with the recipient, you must obtain written permission from the recipient before sending an unsolicited fax. The existence of an EBR is sufficient to permit unsolicited faxes unless the EBR has “been previously terminated by either party.”

Once an EBR has been established, does it exist forever even if there is no further two-way communication between recipient and sender? The issue of how long an EBR, once established, continues to exist is one that has a long history of contention and is important to fax advertisers.

How Long Does an EBR Last? In July of 2003, the federal regulations defining EBR were amended to allow unsolicited faxing only if the EBR was formed by a transaction within 18 months preceding the unsolicited fax or was formed by an inquiry or application regarding products or services within three months preceding the unsolicited fax. However, on October 14, 2003, the provision creating the 18-month and three-month time limitations on EBRs was stayed (temporarily made not effective).

Then, legislation introduced in 2004 that would have allowed the FCC to create time limitations on EBRs by regulation, but prohibited the FCC from creating limits shorter than five years. In addition, time limits could only be imposed if the FCC made certain fact findings that justified limiting EBRs and the FCC also would not have been allowed even to begin the fact-finding process to justify time limits until 2007, guaranteeing those who opposed time limits on EBRs at least a three-year period where no time limits would apply. Those who favor lengthy or no time limits on EBRs would have been pleased had this legislation passed, but it did not.

EBR Time Limits Under the New Act: The Junk Fax Act of 2005 does not favor fax advertisers as much as the 2004 legislation would have, but it does not set time limits for EBRs. The law states that EBR shall have the meaning it had under federal regulations that were in effect on January 1, 2003, before the FCC adopted the three-month and 18-month time limits on EBRs. This provision of the new law effectively nullifies prior regulations establishing time limits on EBRs. For now, there are no regulations setting time limits for EBRs.

However, that does not mean EBR time limits cannot be adopted in the future. The new law permits the FCC to adopt regulations placing time limits on EBRs, but only after determining that there are significant complaints about unsolicited faxes based upon EBRs that were created an unreasonably lengthy time prior to the unsolicited fax, weighing costs and benefits of putting time limits on EBRs, and evaluating whether the cost of time limits would unduly burden small businesses. The FCC will be permitted to begin proceedings to make these determinations as early as October 9, 2005, and the new law does not set a minimum or maximum time period for EBRs that could be adopted by the FCC.

Opt-Out Provisions: The new law requires that unsolicited fax advertisements to a recipient with whom you have an EBR include a clear and conspicuous opt-out notice on the first page of every such fax. The opt-out notice must explain that the recipient has the right to ask the sender not to send any future unsolicited advertisements and that “failure to comply, within the shortest reasonable time” with such request is unlawful (the FCC is charged with responsibility for determining what “shortest reasonable time” means). The opt-out notice must explain to the recipient the legal requirements for making such a request.

The notice also must provide domestic contact telephone and fax numbers of the sender and must also provide a cost-free mechanism for the recipient to request that unsolicited faxes not be sent. The FCC is to issue rules regarding such cost-free mechanisms (will toll-free numbers attached to answering machines or an email address suffice?) and will have authority to exempt certain classes of small business senders if the FCC determines the cost of maintaining the cost-free mechanism is unduly burdensome. The sender’s phone number, fax number, and cost-free mechanism for requesting that faxes not be sent must allow the recipient to make such a request at any time of day on any day of the week.

Fax advertisers will want to keep abreast of the FCC’s actions regarding time limits for EBRs. Also, the FCC is required to issue rules no later than 270 days after the enactment date of July 9, 2005. The rules should clarify what must be included in the opt-out language and what cost-free mechanisms will be acceptable.

Mike Wilson is an attorney and author. He teaches at Sullivan University in Lexington, Kentucky.

[From Connection Magazine October 2005]

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