On June 1, 2011, the Federal Communications Commission (“FCC”) issued a Notice of Apparent Liability (“NAL”) proposing a $315,000 fine against The Street Map Company for unsolicited “junk” fax advertisements.

The FCC and the TCPA

The FCC imposing fines for junk faxing is nothing new.   The Telephone Consumer Protection Act of 1991 (“TCPA”) was enacted by Congress to address problems of abusive telemarketing, including junk faxes, which add insult to injury by imposing unwanted burdens on the called party, including costs of paper and ink, and making fax machines unavailable for legitimate business messages. Section 227(b)(1)(C) of the Act makes it “unlawful for any person within the United States, or any person outside the United States if the recipient is within the United States . . . to use any telephone facsimile machine, computer, or other device to send, to a telephone facsimile machine, an unsolicited advertisement.”

A Brief History of Faxing

While once prevalent, faxing unsolicited advertisements has fallen out of favor with marketers.  Although faxing worked from an ROI perspective, the practice led to unexpected compliance costs in the form of countless small claims actions filed against advertisers under the private right of action provision under the TCPA.  The statute allows individual recipients of unsolicited faxes to sue the advertiser in state court for as much as $1500 for each unwanted fax.  This generated a growing cottage industry of professional TCPA litigants, many of whom, like ticks, grew fat on the rich blood of hapless advertisers.

The FCC didn’t ignore junk faxing either.  It routinely issued NAL’s in response to consumer complaints, each of which proposed a standard fine of $4,500 per transmission. The often increased the standard fine to $10,000 for “egregious” violations; which generally involve instances where a junk faxer ignores requests to stop sending faxes to a particular recipient, or continues to send non-compliant faxes even after receipt of an NAL or imposition of penalties. The maximum fine the FCC can impose is $16,000 per fax.  Although these fines can be steep, if the company being cited responded properly and provided sufficient explanations and apologies, the fines were often reduced or even eliminated.

Since 2005, the number of junk faxes gradually diminished from a torrent to a trickle in favor of newer, more efficient means of direct marketing.  That doesn’t mean that the practice has faded away, however.  In fact, it appears to be enjoying somewhat of a resurgence, at least in the B2B marketplace.

No More Mr. Nice Guy

Based on the wording of the NAL issued against The Street Map Company, the FCC is no longer playing Mr. Nice Guy, at least when it comes to repeat offenders.

In its NAL against Street Map (which allegedly sent over 50 offending faxes), the FCC announced that it will start imposing “different and harsher penalties than … in the past,” in cases where “entities engage in a significant number violations.

With this explanation in hand, the FCC imposed an upward adjustment to the $4,500 fine for each offending fax the company initially sent to $6,000, justifying an additional $75,000 to the overall assessment as a punitive/deterrent measure.  The FCC justified this add-on as a “recognition of the greater power that Congress has given us, and that appears to need to be exercised in order to enforce [the] prohibition against unsolicited fax ads.”

What does the Street Map NAL mean for potential FCC fines in the future?  In announcing its plan to start using its upward adjustment authority in junk fax cases, the FCC said it intends to apply an appropriate upward adjustment on a case-by-case basis, and that in doing so it “may apply a higher forfeiture amount, including the $16,000 statutory maximum if the facts of a particular case warrant.”

In other words, think carefully before engaging in a fax campaign, and start by discussing the pros and cons with an experienced marketing attorney.

 

Seth Heyman
Seth D. Heyman is a California attorney with extensive experience in advertising and marketing law, corporate law, contracts, governmental regulations, international business, and Internet law. He has counseled numerous successful companies, both public and private, and was responsible for regulatory compliance, contract management, corporate governance, and HR best practices for multiple organizations in many diverse industries, including marketing, telecommunications, energy, and technology development. He offers insight and guidance on federal and state direct mail, TV, radio, telemarketing, and Internet marketing laws, as well as online promotions, Internet privacy, data protection regulations, and similar matters.

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