The FCC taketh away AND giveth

If your company contacts customers via fax, the latest FCC ruling should be of interest to you. There are different forms of fax:

• Faxes sent by conventional fax machine
• Faxes sent by conventional fax but converted to email
• Faxes sent as an email over the Internet

In their recent decision “In the Matter of Westfax, Inc., Petition for Consideration and Clarification”(Westfax ruling), the FCC addressed a petition from Westfax seeking clarification regarding liability for commercial (e.g., advertisement) efaxes. The FCC clarified that efaxes submitted by a conventional fax machine are subject to The Telephone Consumer Protection Act of 1991 (TCPA), requiring in most cases prior express consent or an existing business relationship even though the transmission was converted into an email. Critically, the FCC also determined that fax messages that begin as emails (e.g., desktop faxing) are not subject to the TCPA.

The sending and receiving of certain faxes are subject to the provisions of The Junk Fax Prevention Act of 2005, Pub. L. No. 109-21, 119 Stat. 359 (2005) (JFPA), codified as 47 U.S.C. § 227(b)(1)(C). The JFPA amended the TCPA, which also restricts telemarketing, the use of automated telephone dialing systems, prerecorded voice messages, and text messages.

The FCC taketh away: eFaxes submitted by conventional fax machine are subject to the TCPA

With respect to faxes submitted by a conventional fax machine, the FCC ruled:

The TCPA and the Commission’s rules make it unlawful for any person to use any telephone fax machine, computer, or other device to send an unsolicited advertisement to a telephone fax machine unless there is an [Established Business Relationship] between the sender and recipient, the sender has obtained the recipient’s fax number through an acceptable method, and the sender provides certain notices on the fax transmission. The Commission’s rules define “telephone facsimile machine” to mean “equipment which has the capacity to transcribe text or images, or both, from paper into an electronic signal and to transmit that signal over a regular telephone line, or to transcribe text or images (or both) from an electronic signal received over a regular telephone line onto paper.” (Westfax Ruling at Para. 8).

Accordingly faxes sent via conventional machines, though converted into emails sent to the recipient

[A]re sent as faxes over telephone lines, which satisfies the statutory requirement that the communication be a fax on the originating end. Efaxes also satisfy the statutory requirements to be a fax on the receiving end. The definition of “telephone facsimile machine” sweeps in the fax server and modem, along with the computer that receives the efax because together they by necessity have the capacity to “transcribe text or images (or both) from an electronic signal received over a telephone line onto paper.” (Westfax Ruling at Para. 9).

In addition, the FCC made clear that

[T]he “recipient” of a fax is the consumer for whom the fax’s content is intended and to whom the fax’s content is sent by dialing that consumer’s fax number. The TCPA and the Commission’s rules are designed to protect consumers for whom unwanted faxes represent annoyance and wasted resources. Entities that convert faxes to email are not “recipients” of such faxes under the TCPA because they are not the intended audience for the fax. Instead … such entities provide a service to the recipient that requires them to become part of the communications pathway between the sender and the recipient. Thus, while they expect to be part of the fax communication, they are neither the intended recipient nor the ultimate recipient of the document sent as a fax any more than would be the telephone company providing a telephone line to a consumer’s traditional fax machine. (Westfax Ruling at Para. 10).

The FCC giveth: “Desktop faxing” and its equivalents are NOT subject to the TCPA

Given recent FCC decisions, its decision with respect to efaxes sent from a conventional fax machine is not surprising. However, immediately after reaffirming that the way a fax is initiated determines whether it runs afoul of the TCPA, the FCC made this critical distinction and re-established that desktop faxing and its equivalent are not governed by the TCPA:

The TCPA applies to a fax that is sent as a fax over a telephone line to a device that meets the statutory definition of “telephone facsimile machine,” which, as discussed above, is the case here. There is an end-to-end communication that starts when the faxed document is sent over a telephone line and ends when the converted document is received on a computer

****

By contrast, a fax sent as an email over the Internet – e.g., a fax attached to an email message or a fax whose content has been pasted into an email message – is not subject to the TCPA. While we understand that the harm to recipients may be the same whether the efax begins as a fax or email, the Commission has previously interpreted the TCPA to apply only to those that begin as faxes. The Commission’s statements address separate factual situations – one involving a communication originating as a fax over a telephone line and another communication originating as an email over the Internet. Westfax raises no questions regarding a document sent as an email over the Internet. (Westfax Ruling at Para. 10)(emphasis added).

Junk fax lawsuits on the rise

Since the use of desktop faxing as opposed to traditional fax machines is ever-increasing, the scope of this ruling will certainly be debated in the courts and before the FCC in future proceedings. And as penalties for non-compliant faxes can range between $500-$2500 per fax depending on the state, the upward trend of new junk fax lawsuits (including multi-million dollar class actions) continues, this ruling will be a boon to many defendants.

As with most situations, effective planning and strategy can greatly  minimize exposure and avoid costly litigation that could put the company at risk. Companies that contact customers through faxes should engage a TCPA specialist to ensure effective compliance and to defend high exposure cases.

For additional information, please contact an attorney in McDonald Hopkins litigation department.