FCC Affirms Junk Fax Requirement, But Grants Waivers

Granting the waivers retroactively, while the companies are involved in ongoing civil cases for allegedly violating those laws is unusual, attorney Brian Wanca told us. “It’s disturbing that the commission ruled in favor of a few large well-funded corporations with lobbyists and ignored hundred and hundreds of complaints about these kinds of advertisements,” said Wanca, who said he’s exploring avenues for appeal. Wanca declined to say how the order might affect those cases because he said the agency lacks the constitutional authority to grant waivers to the congressionally approved Junk Fax Protection Act in 2005, which amended the Telephone Consumer Protection Act.

The order is a “win for certain companies facing class-action litigation,” said Loeb & Loeb partner Christine Reilly, who spoke on a panel about TCBA class-action lawsuits earlier this month (see 1410210061). “The ruling has the potential to shut down or curtail existing litigation that seeks to extort millions -- if not billions -- of dollars from unsuspecting companies that were not aware of, or did not believe, that these requirements applied to them."

Commission staff “had the tough job of reconciling language in an order that seemed to send mixed or at least confusing direction to entities trying to comply,” said Patton Boggs partner Monica Desai, a former FCC Consumer and Governmental Affairs Bureau chief who represents one of the petitioners seeking relief, Cannon & Associates.

At the same time, the reaffirmation of the opt-out notice requirement by a majority of commissioners drew fire from Commissioners Mike O’Rielly and Ajit Pai, who concurred and dissented in part to the order.

“While some have argued that the rule is a good policy that benefits consumers, it suffers from a fundamental flaw: the FCC lacked authority to adopt it.” O’Reilly said in a statement. The law prohibits sending “’unsolicited fax advertisements -- ads that are sent ‘without … prior express invitation or permission, in writing or otherwise’ except in the context of an established business relationship,” O’Rielly noted. “Thus, on its face, the provision” does not apply to ads sent with prior invitation or permission, O’Rielly argued.

O'Reilly concurred with granting waivers for petitioners and similarly situated companies, and said the commission at his request agreed to contact companies that don't ordinarily follow FCC provisions to let them know “similarly situated” companies should apply for waivers by April 30. Companies that had petitioned for and were granted waivers have until Oct. 30 to come into compliance with the law, the order said.

The commission’s reasoning is “convoluted gymnastics,” Pai said in a statement. To ”the extent that our rules require solicited fax advertisements to contain a detailed opt-out notice, our regulations are unlawful. And to the extent that they purport to expose businesses to billions of dollars in liability for failing to provide detailed opt-out notices on messages that their customers have specifically asked to receive, they depart from common sense,” Pai said.

Reilly agreed with O’Rielly and Pai, saying the “statutory scheme created by Congress, and to which the commission is bound, concerns unsolicited fax advertisements, not solicited ones. The commission’s attempt to find statutory authority where none exists is disappointing.” From a policy standpoint, “it is difficult to understand why fax senders that have been provided permission to send faxes should be required to include the litany of technical opt-out requirements,” she said.

The order also denied several requests for a declaratory ruling that the commission lacked statutory authority to require the notice be sent with prior permission, or that the Communications Act’s Section 27(b) was not the statutory basis for the requirement. The section allows relief in court, according to petitions.

The order comes amid a sharp increase of class-action suits about robo calls and junk faxes filed under the TCPA, said panelists at an FCBA event Oct. 20. A number of other petitions involving robocalls are pending before the commission, the panelists said.

The order responds to a 2012 petition for reconsideration from Anda, Inc., a pharmaceutical company facing junk fax suits in Florida federal court and Missouri state court, after the Consumer and Governmental Affairs Bureau denied its 2010 request for a declaratory ruling. The order also responds to “multiple” other petitions “seeking various forms of relief,” the order said. The commission said the phrase “‘prior express invitation or permission’ … was not defined by Congress,” the order said. Anda’s attorney was still reviewing the order and had no comment.

To implement the junk fax law, the commission in its 2006 order said express permission from the consumer need be secured only once to send them fax advertisements, unless the consumer revoked permission by sending an opt-out request, Thursday’s order said. The question then is whether the consumer still agrees to get the ads, the order said. Whether the consumer still agrees to get the ads is important, the order said. “Some fax recipients, after initially consenting to receive fax ads, will decide they no longer wish to receive future faxes,” the order said. Without the opt-out requirement, “recipients could be confronted with a practical inability to make senders aware that their consent is revoked,” the order said. “At worst, it would effectively lock in their consent.”

The commission, though, granted the waivers, saying a footnote in the commission’s junk fax order caused confusion because it said “the opt-out notice requirement only applies to communications that constitute unsolicited advertisements,” which "may have caused some parties to misconstrue the commission’s intent to apply the opt-out notice to fax ads sent with the prior express permission of the recipient.”

Wanca disagreed, saying, “I don’t think the footnote negated the plain language” of the law. “If some element of it was confusing, then why is it none of the deep-pocketed defendants didn’t ask for clarification? All of a sudden, they’re sued and there’s something confusing about it.”