3rd Circuit Finds Paid Market Surveys Are "Advertisements" Under TCPA

For the last few years, the Telephone Consumer Protection Act's (TCPA) prohibition on "unsolicited advertisements" sent via fax has been the subject of numerous statutory interpretation battles. As of late, the "unsolicited advertisement" cases have been favorable to fax senders, with multiple courts finding that faxes offering to purchase products from recipients and requesting recipient participation in paid market research surveys are not "advertisements" within the TCPA's definition.

However, a recent 3rd Circuit Court of Appeals decision has flipped the script, concluding that faxes offering cash payments in return for research survey responses are "advertisements," further blurring the line as to the types of faxes for which the sender can face TCPA liability.

Background

Fischbein v. Olson Research Group, Inc. brought before the 3rd Circuit a pair of lower court decisions out of the United States District Court for the Eastern District of Pennsylvania. In both cases, the plaintiffs – each a medical practice – received faxes from market research companies offering them between $60 and $200 in exchange for their participation in telephone/online surveys related to various medical topics. Thereafter, each medical practice brought suit against the market research companies that sent the faxes, claiming each company violated the TCPA's prohibition against unsolicited advertisements by fax.

In each case, the trial court dismissed the medical practices' claims, concluding that the surveys were not advertisements within the TCPA's scope because they did not attempt to sell anything to the fax recipients. Both of the trial judges' conclusions relied on the 3rd Circuit's 2019 decision in Mauthe v. Optum, Inc., where the appeals court held that faxes containing a survey regarding a customer's experience with the fax sender's quality of service were not "advertisements." The plaintiff medical practices thereafter appealed, contesting the lower court's interpretation of the Mauthe decision and its applicability to the present circumstances.

The Appeal

At the time of appeal and up until the 3rd Circuit's ruling, the defendant market research companies appeared to have the upper hand, with numerous favorable precedents on their side. Indeed, the 3rd Circuit's Mauthe decision provided an advantageous backdrop to the defendants' cases.

Also on their side were recent rulings out of the Eastern District of Michigan and the Southern District of New York. In those cases the courts had relied on the FCC's interpretation of telephone- and text-based market surveys as being beyond the TCPA's reach to conclude that fax-based surveys offering gift cards for survey participation were not "unsolicited advertisements." The 3rd Circuit, however, soundly rejected the applicability of each of these rulings.

Addressing its prior decision in Mauthe first, the 3rd Circuit stated that Mauthe did not stand for the proposition that market research surveys are per se outside of the TCPA's "unsolicited advertisement" definition. Rather, Mauthe held that to be an "unsolicited advertisement," there must be "a nexus between the fax and the purchasing decisions of an ultimate purchaser," and that the mention or implication of any "commercial transaction" can bring the fax within the TCPA's scope, no matter which way the transaction flows. Such a "commercial transaction" was clearly present here, the court held, because the fax had offered payment in exchange for a "property, good, or service" from the recipient – i.e., the recipient's survey responses. As the court explained:

"We do not doubt that a recipient of a fax offering to buy goods or services from the recipient would consider the fax to be an advertisement. After all, a fax attempting to buy goods or services is no less commercial than a fax attempting to sell goods or services to the recipient…. Any fax announcing the availability of an opportunity for the recipient to exchange goods or services for compensation is "material advertising the commercial availability or quality of any property, goods, or services," within the TCPA. We reiterate that a fax offering the opportunity to sell is just as commercial in character as a fax offering the recipient the opportunity to buy property, goods or services."

The 3rd Circuit was also not persuaded by the district court decisions finding paid market surveys to be outside of the "unsolicited advertisement" definition, reasoning that the FCC interpretation upon which those decisions relied pertained to surveys conducted via telephone rather than via fax. And the difference between surveys conducted via telephone and fax was "material," the court said, because "whereas consumers can easily and quickly end telemarketing [survey] phone calls by hanging up, rarely do fax recipients end a fax 'call' prematurely."

Takeaways

The Fischbein decision was not without controversy, with Judge Kent Jordon issuing a lengthy dissent critiquing the majority for reading the words "commercial transaction" into the TCPA and overly expanding the TCPA's application. Nevertheless, Fischbein creates dangerous precedent in the 3rd Circuit, expanding the TCPA's definition of "unsolicited advertisement" and providing repeat TCPA plaintiffs more ammunition in filing lawsuits against fax senders.

Importantly, with respect to market research surveys, Fischbein expands the TCPA to prohibit the faxing of paid surveys but permits fax senders to still issue traditional market survey requests that do not provide recipients with an incentive to actually complete or participate in the survey. The 3rd Circuit appears to have left unanswered whether its decision is limited only to fax-based surveys offering cash for participation or also applies to non-cash incentives, such as gift cards or entry in a lottery.

Fischbein's more lasting impact will likely be felt outside the faxed-based survey field, though, as the 3rd Circuit has also determined that any fax offering to purchase goods or services from the fax recipient are "advertisements" for which the fax sender must obtain the recipient's consent. This is critical, because up until Fischbein, courts had traditionally found faxes offering to purchase goods from the fax recipient not to be "unsolicited advertisements."

Moving forward, fax senders should look carefully at any unsolicited survey requests or purchase offers they intend to send – especially if they or the intended recipients are located within the 3rd Circuit – as they may be deemed "unsolicited advertisements," potentially subjecting the sender to costly TCPA liability.

This article was originally featured as a communications advisory on DWT.com on May 20, 2020. Our editors have chosen to feature this article here for its coinciding subject matter.