Unsolicited Faxing Can Be Costly

By Mike Wilson, J.D.

The practice of advertising goods or services through unsolicited faxes has been illegal since 1991, but a multi-million dollar industry in mass faxing nonetheless continued to send unsolicited faxes on behalf of its clients. In 1999, the Federal Communications Commission (FCC) announced it had received nearly 1,300 complaints from consumers about unsolicited faxes. As a result, the FCC declared that it would step-up enforcement of the law and educate consumers about their rights under the law. The efforts appear to be bearing fruit. During recent years, the FCC, state attorney generals, and consumer groups have initiated litigation against companies engaged in mass faxing of unsolicited advertising, resulting in some large verdicts and settlements.

The FCC imposed a $1.1 million fine against 21st Century Fax for willful and repeated violations of the law. In 1999, the Dallas Cowboys had to pay $1.73 million to settle a class action suit over violation of the law. And a Hooters restaurant in Augusta, Georgia had nearly $12 million in damages assessed against it. This should send a message to companies considering advertising through unsolicited faxes.

The Telephone Consumer Protection Act (TCPA), 47 U.S.C. section 277, prohibits unsolicited fax advertisements. The federal law also applies to automated telephone dialing systems and prerecorded voice messages. Damages are a minimum of $500 per fax and if the violation is willful, the damages can be up to $1,500 per fax. A court has held that a company cannot avoid the effect of the law by initiating the fax from outside the United States. Most Federal Circuit Courts have ruled that private lawsuits can only be brought in state court and subject to the consent of the state. However, state attorney generals can enforce the law in federal court. The Federal Communications Commission also can bring actions for enforcement. Remedies can include both monetary damages and injunctions against future unsolicited faxes. Not only can the fax sender be cited, but the entity transmitting the fax can be cited as well if the transmitter has “a high degree of involvement or actual notice of an illegal use and has failed to take steps to prevent such transmissions.”

Not all unsolicited faxes are prohibited by the law. The key is whether the unsolicited fax constitutes an “unsolicited advertisement.” There are two aspects to what constitutes an unsolicited advertisement. First, the fax must have been sent without the express prior invitation or consent of the recipient. The FCC has taken the position that an established business relationship constitutes prior consent. To be safe, document consent if it was given. Second, the fax must be “material advertising the commercial availability or quality of any property, goods, or services.” Would a company press release qualify? If you are considering engaging in a mass unsolicited faxing campaign but think it doesn’t constitute an advertisement, you may want to get an opinion from your attorney before proceeding.

In addition to the Federal law, many states have their own laws against unsolicited fax advertisements with comparable, and in some cases greater, penalties, including the right to court costs and attorney fees. So far, these laws have survived challenges on the First Amendment. Increased consumer awareness appears to be resulting in more complaints. The FCC recently reported that they had received nearly 6,000 complaints of violations of the TCPA (not all of which were for unsolicited faxes) during the first quarter of 2002.

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

[From Connection MagazineJuly/Aug 2002]