But Grants Retroactive Waivers to Petitioners Who Sent Permission-Based Faxes Without Opt-Out Notices

The Federal Communications Commission has issued an Order sustaining its rule that even ads faxed with the permission of the recipient must include a notice with instructions for how to opt out of future faxes. The Order responds to a passel of petitions that argued the Telephone Consumer Protection Act’s (TCPA) “junk fax” provision and attendant opt-out requirement apply only to “unsolicited” fax advertisements, and thus do not cover faxes “solicited” by those who consent to receive the faxed ads. However, while staunchly defending its statutory authority to adopt an opt-out notice rule for permission-based faxes, and that it was a logical outgrowth of its rulemaking notice, the FCC recognized that its order adopting the rule may have been confusing on this point. It accordingly granted retroactive waivers to petitioners with temporary relief from any past obligation to have opt-out notices on permission-based faxes. The waivers give petitioners who received them a six-month window to come into compliance with the opt-out requirement, and the FCC invited similarly situated parties to seek similar waivers, strongly suggesting that such requests must be on file within the next six months. The TCPA has since 1992 prohibited using any fax machine, computer, or other device to send “unsolicited advertisements” and authorized the FCC to adopt implementing rules. In doing so, the FCC created an exemption for unsolicited fax ads sent pursuant to an established business relationship (EBR). The TCPA provides for both FCC enforcement and a private cause of action by recipients of faxes that fail to comply with the statute and/or rules. In 2005, the Junk Fax Protection Act codified the FCC’s EBR exemption, defined EBR vis-à-vis unsolicited fax ads, required their senders to provide notice and contact information on the fax to allow recipients to “opt out” of future faxes, and specified how opt-out requests must comply with the Act in order to be honored. In implementing the 2005 Act, the FCC also adopted a rule requiring fax ads sent to recipients who provided prior permission to the sender to also include opt-out notices. Since that time, private actions brought under the TCPA have exploded, especially class action litigation that can expose senders to substantial potential liability under the TCPA’s allowance for statutory damages of up to $1,500 per offending fax. Among claims typical in “junk fax” cases are that the ads were faxed without the requisite opt-out notice. In response to the new rules and increased exposure, the last few years have seen a number of petitioners ask the FCC to clarify that faxed ads sent pursuant to prior consent do not need opt-out notices, and/or to revisit or rescind the rule requiring same. Petitioners argued that the FCC lacked statutory authority to adopt a rule requiring an opt-out notice on fax ads sent with the recipient’s express prior consent, or in the alternative asked it to clarify that the TCPA fax provision was not the statutory basis for the rule (thus removing permission-based fax ads lacking opt-out notices from the scope of the TCPA’s statutory damages). Petitions contended in particular that the TCPA authorizes the FCC to adopt restrictions only for unsolicited fax ads, defined to exclude any fax ad sent with the recipient’s prior invitation or permission. The current Order rejects those arguments. The FCC stated that the TCPA grants it authority to prescribe regulations to implement the fax ad provisions, and in doing so defines unsolicited fax ads as those “transmitted … without … prior express invitation or permission.” Noting that the phrase “prior express invitation or permission” was not defined, the FCC claimed the statute required it to construe the term in order to adopt implementing rules. In doing so, it held that “express permission need only be secured once from the consumer in order to send fax ad[s] to that recipient until the consumer revokes such permission by sending an opt-out request.” As a result, the FCC states, prior permission remains in place only if not revoked, which made it necessary for rules to establish a means of revocation. Having the same out-out notice requirement as applies to “unsolicited” fax ads therefore made sense. The Order thus denied the petitions seeking a ruling that the FCC lacked statutory authority to require opt-out information on fax ads sent with prior permission, as well as those seeking an alternative ruling that the TCPA is not the statutory basis for the rule. At the same time, it held good cause exists to grant a “limited retroactive waiver” to the petitioners, citing two grounds that “led to confusion among affected parties (or misplaced confidence that the opt-out notice rule did not apply to fax ads sent with prior express permission of the recipient).” First, the FCC found that the record formed by the petitions and public comments received in response to them indicates that a footnote in the order implementing the Junk Fax Prevention Act caused confusion on the applicability of opt-out notices for permission-based faxes. Citing a footnote stating that “the opt-out notice requirement only applies to communications that constitute unsolicited advertisements,” the FCC observed that use of the word “unsolicited” may have caused some parties to misconstrue the intent to apply the opt-out notice to fax ads sent with prior permission of the recipient. Second, the notice of intent to adopt the opt-out notice rule for permission-based faxes did not make explicit that the FCC contemplated an opt-out requirement for such fax ads. While that requirement was a “logical outgrowth,” the FCC claimed, of the proposal to impose an opt-out notice requirement on fax ads sent pursuant to an EBR, and of the interplay of proposed opt-out notice requirements with existing fax ad identification requirements, the lack of explicit notice “may have contributed to confusion or misplaced confidence about this requirement.” The FCC thus found that granting a retroactive waiver would serve the public interest, especially insofar as the noted “reasonable confusion or misplaced confidence” could subject those sending permission-based faxes to potentially substantial damages. Given the FCC’s responsibility to balance legitimate business and consumer interests under the TCPA, a waiver was thus granted to petitioners who have sought such relief to date. The waiver reaches back to adoption of the Junk Fax Protection Act rules and its opt-out requirement for permission-based fax ads, and extends six months after adoption of the current Order. After that time, all senders of fax ads – including those based on prior permission from the recipient – must be in compliance with the opt-out notice requirement. The FCC also invited other, similarly situated parties to seek waivers such as those presently granted, and stated an expectation that parties seeking similar waivers will “make every effort to file within six months of the release of the present Order.” The FCC noted that all future waiver requests will be adjudicated on a case-by-case basis, and expressly disavowed any intent to “prejudge the outcome of future waiver requests.” However, under prevailing waiver law, the FCC is required to afford similar treatment to similarly situated parties, so it would have to find distinguishing circumstances or characteristics to deny follow-on waivers. The FCC additionally stressed that the waiver does not (and will not) extend to the requirement to include opt-out notices on fax ads sent pursuant to an EBR. The current Order should serve as welcome relief for those who filed petitions leading up to it, as well as to those who will now follow in their footsteps. The ruling could effectively wipe out the basis for TCPA liability in the FCC rules in any number of pending “junk fax” cases that target faxed ads sent under prior consent or permission. Going forward, however, all those who fax advertising materials – whether pursuant to consent or an EBR – will have to be sure to provide an opt-out notice that satisfies all requirements in the FCC rules.