FCC Grants Time to Comply with No Fax Ad Rule

Over the last month or so, the Federal Communications Commission's (FCC) changes to its rule regulating unsolicited faxes has been generating some high-volume buzz.

The original rule, in place for more than a decade, stems from the federal Telephone Consumer Protection Act, which prohibits sending an advertisement to a business' or individual's fax machine without the prior express permission of, or an invitation from, the recipient.

The act required the FCC to draft a rule implementing this prohibition and, in 1992, the FCC did so. Its rule contained the act's general prohibition but provided one limited exception: It allowed a company to send an unsolicited fax advertisement to a person or business with whom it had an “existing business relationship,” as long as the recipient had not terminated the relationship.

New Game Rules

In July, the FCC revised the rule. Among its changes was a scrapping of the “established business relationship” exception. The FCC determined in its rule-making that the mere existence of a business relationship between fax sender and recipient does not necessarily demonstrate the “express permission or invitation” the act requires. Now, the FCC decided, a company cannot send an unsolicited advertisement by fax to any person or business unless the company has the recipient's prior express written permission to send the fax.

Not surprisingly, the FCC's new requirement caused an uproar in the business community. A number of industry associations quickly petitioned the commission to stay the revised rule and reconsider its revisions. The FCC responded on Aug. 18 by extending the effective date of the unsolicited fax advertising provisions from Aug. 25, 2003, to Jan. 1, 2005. It explained that the extension would not only give businesses more time to comply with the rule, but would also allow the commission to reconsider its revisions. It isn't clear what the FCC will do following the January 2005 deadline, but it has several options. It could:

• Extend again the effective date for the rule's fax advertising provisions;
• Reinstate the “established business relationship” exception (or a variation of it) to the rule's general prohibition on unsolicited fax advertising; or
• Keep the Jan. 1, 2005, effective date and begin enforcement.

But Until Then …

What should companies do in the meantime? Even though the FCC's extension allows a company to continue sending unsolicited fax ads to people with whom the company has an established business relationship until Jan. 1, 2005, senders of ads must be aware that the FCC in its July revision modified the rule's definition of “established business relationship.”

The new definition was not extended along with the no-fax provision and went into effect Aug. 25. This means that fax advertisers must ensure that their “established business relationships” meet the definition contained in the revised rule. Specifically, a company may send unsolicited fax ads only to people with whom its “established business relationship” meets the following criteria:

• The relationship is based on the recipient's transaction (such as a purchase) with the company within 18 months of the date of the fax transmission; or
• The relationship is based on the recipient's inquiry or application regarding the company's products or services within three months of the fax transmission.

Also, a company cannot send unsolicited fax advertising to anyone who has terminated a relationship with the company – for example, by requesting that the company not contact him or her with fax advertising or other marketing materials.

In light of the planned Jan. 1, 2005, effective date for the rule's fax provisions, companies might want to begin planning how they will comply. As explained previously, the revised rule would require that an advertiser obtain the recipient's express permission before sending him or her an unsolicited fax advertisement. Keep in mind that this permission must be in writing and signed by the recipient. The signature may be electronic or digital, as long as such a signature is legally valid. In addition, the permission must clearly indicate that the recipient consents to receiving faxed advertising from the sender, and state the fax number or numbers to which the advertising may be sent.

Obtaining Permission

A company can obtain required permission in a number of ways, including by e-mail, direct mail or other interactions with customers, such as store visits. A company may, for example, consider including language that would give it permission to send fax advertisements on a document that its clients, members or prospective customers normally sign and return in the course of regular business dealings. Doing that – and maintaining the documents in the company's records – would meet the rule's requirements.

A company must never presume that a recipient has granted permission. Express written permission is always required. For example, the permission may not take the form of a “negative option,” in which a company presumes the recipient's consent unless the recipient advises otherwise. A company, in other words, may not send a direct mail piece or unsolicited fax that instructs the recipient to respond if he does not want to receive fax advertising.

Finally, remember that the FCC's rule applies only to unsolicited fax advertisements. This means that a company is required to receive the recipient's express written permission for sending an unsolicited fax only if the fax discusses the commercial availability of a product or service. Faxes that do not relate to product or service offerings – such as purely informational faxes – are not covered by the rule and so can be transmitted without the sender worrying about whether he or she is violating the rule.

Over the last month or so, the Federal Communications Commission's (FCC) changes to its rule regulating unsolicited faxes has been generating some high-volume buzz.

The original rule, in place for more than a decade, stems from the federal Telephone Consumer Protection Act, which prohibits sending an advertisement to a business' or individual's fax machine without the prior express permission of, or an invitation from, the recipient.

The act required the FCC to draft a rule implementing this prohibition and, in 1992, the FCC did so. Its rule contained the act's general prohibition but provided one limited exception: It allowed a company to send an unsolicited fax advertisement to a person or business with whom it had an “existing business relationship,” as long as the recipient had not terminated the relationship.

New Game Rules

In July, the FCC revised the rule. Among its changes was a scrapping of the “established business relationship” exception. The FCC determined in its rule-making that the mere existence of a business relationship between fax sender and recipient does not necessarily demonstrate the “express permission or invitation” the act requires. Now, the FCC decided, a company cannot send an unsolicited advertisement by fax to any person or business unless the company has the recipient's prior express written permission to send the fax.

Not surprisingly, the FCC's new requirement caused an uproar in the business community. A number of industry associations quickly petitioned the commission to stay the revised rule and reconsider its revisions. The FCC responded on Aug. 18 by extending the effective date of the unsolicited fax advertising provisions from Aug. 25, 2003, to Jan. 1, 2005. It explained that the extension would not only give businesses more time to comply with the rule, but would also allow the commission to reconsider its revisions. It isn't clear what the FCC will do following the January 2005 deadline, but it has several options. It could:

• Extend again the effective date for the rule's fax advertising provisions;
• Reinstate the “established business relationship” exception (or a variation of it) to the rule's general prohibition on unsolicited fax advertising; or
• Keep the Jan. 1, 2005, effective date and begin enforcement.

But Until Then …

What should companies do in the meantime? Even though the FCC's extension allows a company to continue sending unsolicited fax ads to people with whom the company has an established business relationship until Jan. 1, 2005, senders of ads must be aware that the FCC in its July revision modified the rule's definition of “established business relationship.”

The new definition was not extended along with the no-fax provision and went into effect Aug. 25. This means that fax advertisers must ensure that their “established business relationships” meet the definition contained in the revised rule. Specifically, a company may send unsolicited fax ads only to people with whom its “established business relationship” meets the following criteria:

• The relationship is based on the recipient's transaction (such as a purchase) with the company within 18 months of the date of the fax transmission; or
• The relationship is based on the recipient's inquiry or application regarding the company's products or services within three months of the fax transmission.

Also, a company cannot send unsolicited fax advertising to anyone who has terminated a relationship with the company – for example, by requesting that the company not contact him or her with fax advertising or other marketing materials.

In light of the planned Jan. 1, 2005, effective date for the rule's fax provisions, companies might want to begin planning how they will comply. As explained previously, the revised rule would require that an advertiser obtain the recipient's express permission before sending him or her an unsolicited fax advertisement. Keep in mind that this permission must be in writing and signed by the recipient. The signature may be electronic or digital, as long as such a signature is legally valid. In addition, the permission must clearly indicate that the recipient consents to receiving faxed advertising from the sender, and state the fax number or numbers to which the advertising may be sent.

Obtaining Permission

A company can obtain required permission in a number of ways, including by e-mail, direct mail or other interactions with customers, such as store visits. A company may, for example, consider including language that would give it permission to send fax advertisements on a document that its clients, members or prospective customers normally sign and return in the course of regular business dealings. Doing that – and maintaining the documents in the company's records – would meet the rule's requirements.

A company must never presume that a recipient has granted permission. Express written permission is always required. For example, the permission may not take the form of a “negative option,” in which a company presumes the recipient's consent unless the recipient advises otherwise. A company, in other words, may not send a direct mail piece or unsolicited fax that instructs the recipient to respond if he does not want to receive fax advertising.

Finally, remember that the FCC's rule applies only to unsolicited fax advertisements. This means that a company is required to receive the recipient's express written permission for sending an unsolicited fax only if the fax discusses the commercial availability of a product or service. Faxes that do not relate to product or service offerings – such as purely informational faxes – are not covered by the rule and so can be transmitted without the sender worrying about whether he or she is violating the rule.