Fax Rule Facts: Complying with the New Fax Rule Under the Telephone Consumer Protection Act

Although changes may be made to the New Fax Rule before January 2005, this article will serve as an early warning to alert affected businesses and to provide information that should be pondered by readers who will need to consider compliance strategies. For convenience, affected businesses are collectively referred to in this article as “the Company.”

Determine Whether a Fax Involves an Unsolicited Advertisement

Unsolicited Advertisement. The New Fax Rule prohibits the use of any telephone fax machine, computer or other device to send an “unsolicited advertisement” to a telephone fax machine. The first step is to determine whether a fax involves an unsolicited advertisement. An unsolicited advertisement means “any material advertising the commercial availability or quality of any property, goods, or services which is transmitted to any person without that person's prior express invitation or permission.” Unsolicited advertisements include notices and other communications:

• to customers, vendors, suppliers, and other business partners of the Company;
• that relate to any product or service of the Company; and
• that constitute a written solicitation.

Examples. The following are examples of Company documents that may constitute unsolicited advertisements under the broad definition of the New Fax Rule as it is currently being interpreted by most commentators:

• lists or descriptions of available rental properties;
• listing contracts (to be signed or already signed);
• lease agreements;
• subordination and nondisturbance agreements;
• estoppel certificates;
• owners' association dues statements and reports;
• contracts with tenants, customers, vendors, suppliers, and other business partners;
• purchase orders, invoices of all types, and receipts for payment;
• price sheets;
• lists of tenants, customers, vendors, suppliers, and other business partners;
• requests for proposals to vendors; and
• information sheets (regarding services or products).

Moreover, even if a person or entity orally requests that the Company send these materials by fax, these materials would nonetheless constitute an unsolicited advertisement subject to the New Fax Rule.

What is Not an Unsolicited Advertisement. Materials that do not involve a commercial purpose or commercial transaction do not constitute unsolicited advertisements and are not subject to the New Fax Rule. Because of the uncertainties in the application of the rule, unless further clarification is received from the FCC, if there is any doubt as to whether a fax involves an unsolicited advertisement, it would be prudent to assume that the fax is subject to the New Fax Rule and to proceed accordingly.

Determine Whether the Transmission is an Unsolicited Fax

Fax Transmission. The next step is to determine whether the mode of transmission is by fax. Fax transmissions occur when a telephone fax machine, personal computer or other device is used to send the unsolicited advertisement to:

• a conventional stand-alone telephone fax machine; or
• personal computers equipped with, or attached to, modems and to computerized fax servers or other devices that have the capacity to transcribe text or images onto paper.

However, the New Fax Rule does not extend to fax messages sent as e-mail over the Internet.

Obtain Prior Written Consent

Written Consent. Once a determination has been made that the communication constitutes an unsolicited advertisement to be sent by fax, the prior written consent of the person or entity to which the Company proposes to fax the unsolicited advertisement must be obtained. The prior written consent must contain:

• the name of such person or entity and their fax number(s);
• the signature of such person or, if an entity, the signature of a person duly authorized to act on behalf of such entity; and
• an affirmative statement that by providing their fax number(s), such person or entity agrees to receive fax advertisements from the Company.

This affirmative statement may not be in the form of a “negative option” such as an election to opt out of receiving fax advertisements. The prior written consent also should contain:

• the telephone number, mailing address and e-mail address of such person or entity; and
• the date on which the consent is signed.

The prior written consent can be in hard copy, electronic copy or interactive copy, utilizing either handwritten or electronic signatures.

Hard Copy. The prior written consent can be provided to the person or entity at a Company office, retail or retail facility, or warehouse. In addition, the prior written consent may be mailed (but not faxed after the effective date of the rule) to the person or entity whose prior written consent is required.

Electronic Copy. The person or entity can be directed to the Company's Web site where they can download an electronic copy of the prior written consent and print and return it to the Company by mail or fax fully completed and dated with a handwritten signature. In addition, an electronic copy of the prior written consent can be e-mailed to the person or entity, which they can open and print and return to the Company by mail or fax fully completed and dated with a handwritten signature.

Interactive Copy. Finally, the person or entity can be directed to the Company Web site where they can complete, sign electronically, date, and submit to the Company an interactive copy of the prior written consent.

Record Keeping

Duration. The written consent of such person or entity remains in effect until such person or entity notifies the Company of the revocation or withdrawal of this written consent, or adopts a different fax number. The Company must keep the submitted written consents in hard copy or in electronic format or both for as long as the written consent remains in effect.

Fax Cover Sheet

Under existing FCC Rules, a fax cover sheet must contain:

• the identification of the sender, which includes the full name of a corporation or other business entity which is the sender;
• the telephone number of the sending machine or of the sender;
• the date of distribution; and
• the time of distribution.

In fact, the Telephone Consumer Protection Act requires that telephone fax machines manufactured on or after Dec. 20, 1992 clearly mark this identifying information on each transmitted page. The Company may also wish to include a section on its fax cover sheet indicating whether the prior written consent of the recipient was required and obtained.

Violations

Fines and Private Actions. The FCC has the authority to impose a fine up to $11,000 per violation. In addition, a person or entity has a private right of action against the sender of a nonpermitted fax; damages of $500 per fax and damages up to a total of $1,500 can be awarded.

Conclusion

2005 seems like a long time away. However, given the extensive use of fax transmissions, affected business owners need to begin to monitor the status of the New Fax Rule and consider how it will affect their operations so that cost-efficient compliance steps can be implemented.

Have you ever sent a fax containing a lease agreement, listing agreement, property informational brochure or estoppel certificate? What about a fax with a purchase order, invoice or a request for a proposal from a vendor of property-related services or goods? In the leasing world, who hasn't? At the same time, have you ever considered obtaining prior written consent from the recipient to authorize your transmission of that fax? In many, if not all, cases, the answer is likely to be “who has?” In the not-too-distant future, that answer probably will need to be changed. Read on to find out why ' and whether you will be among the crowd that must obtain that prior authorization before turning on your fax machine.

Recent headlines have focused attention upon the new “Do Not Call List” and rules of the Federal Communications Commission (FCC) related to telemarketing. Although of considerably less interest to consumers generally, the new FCC restrictions issued on July 3, 2003 concerning other forms of telephone contact will also need to be carefully considered by a wide range of business operators, including leasing brokers and agents, property managers, landlords and tenants. One of the changes included in the FCC's July 3 Report and Order covers the use of any telephone fax machine, computer or other device to send an unsolicited advertisement to a telephone fax machine (the “New Fax Rule”). In its current form, the New Fax Rule is far more sweeping and has a potentially greater impact on day-to-day communications than may be apparent from a cursory examination of the New Fax Rule.

The effective date of certain aspects of the New Fax Rule was recently extended to Jan. 1, 2005. Until that time, leasing brokers, agents and other business operators may send unsolicited advertisements to any person or entity with which the transmitting person or entity has an established business relationship. On and after Jan. 1, 2005, under the New Fax Rule as currently written, a business operator would have to obtain the prior written consent of every person or entity to which that business operator sends an unsolicited advertisement that will be received by telephonic fax, regardless of whether there is an established business relationship.

Although changes may be made to the New Fax Rule before January 2005, this article will serve as an early warning to alert affected businesses and to provide information that should be pondered by readers who will need to consider compliance strategies. For convenience, affected businesses are collectively referred to in this article as “the Company.”

Determine Whether a Fax Involves an Unsolicited Advertisement

Unsolicited Advertisement. The New Fax Rule prohibits the use of any telephone fax machine, computer or other device to send an “unsolicited advertisement” to a telephone fax machine. The first step is to determine whether a fax involves an unsolicited advertisement. An unsolicited advertisement means “any material advertising the commercial availability or quality of any property, goods, or services which is transmitted to any person without that person's prior express invitation or permission.” Unsolicited advertisements include notices and other communications:

• to customers, vendors, suppliers, and other business partners of the Company;
• that relate to any product or service of the Company; and
• that constitute a written solicitation.

Examples. The following are examples of Company documents that may constitute unsolicited advertisements under the broad definition of the New Fax Rule as it is currently being interpreted by most commentators:

• lists or descriptions of available rental properties;
• listing contracts (to be signed or already signed);
• lease agreements;
• subordination and nondisturbance agreements;
• estoppel certificates;
• owners' association dues statements and reports;
• contracts with tenants, customers, vendors, suppliers, and other business partners;
• purchase orders, invoices of all types, and receipts for payment;
• price sheets;
• lists of tenants, customers, vendors, suppliers, and other business partners;
• requests for proposals to vendors; and
• information sheets (regarding services or products).

Moreover, even if a person or entity orally requests that the Company send these materials by fax, these materials would nonetheless constitute an unsolicited advertisement subject to the New Fax Rule.

What is Not an Unsolicited Advertisement. Materials that do not involve a commercial purpose or commercial transaction do not constitute unsolicited advertisements and are not subject to the New Fax Rule. Because of the uncertainties in the application of the rule, unless further clarification is received from the FCC, if there is any doubt as to whether a fax involves an unsolicited advertisement, it would be prudent to assume that the fax is subject to the New Fax Rule and to proceed accordingly.

Determine Whether the Transmission is an Unsolicited Fax

Fax Transmission. The next step is to determine whether the mode of transmission is by fax. Fax transmissions occur when a telephone fax machine, personal computer or other device is used to send the unsolicited advertisement to:

• a conventional stand-alone telephone fax machine; or
• personal computers equipped with, or attached to, modems and to computerized fax servers or other devices that have the capacity to transcribe text or images onto paper.

However, the New Fax Rule does not extend to fax messages sent as e-mail over the Internet.

Obtain Prior Written Consent

Written Consent. Once a determination has been made that the communication constitutes an unsolicited advertisement to be sent by fax, the prior written consent of the person or entity to which the Company proposes to fax the unsolicited advertisement must be obtained. The prior written consent must contain:

• the name of such person or entity and their fax number(s);
• the signature of such person or, if an entity, the signature of a person duly authorized to act on behalf of such entity; and
• an affirmative statement that by providing their fax number(s), such person or entity agrees to receive fax advertisements from the Company.

This affirmative statement may not be in the form of a “negative option” such as an election to opt out of receiving fax advertisements. The prior written consent also should contain:

• the telephone number, mailing address and e-mail address of such person or entity; and
• the date on which the consent is signed.

The prior written consent can be in hard copy, electronic copy or interactive copy, utilizing either handwritten or electronic signatures.

Hard Copy. The prior written consent can be provided to the person or entity at a Company office, retail or retail facility, or warehouse. In addition, the prior written consent may be mailed (but not faxed after the effective date of the rule) to the person or entity whose prior written consent is required.

Electronic Copy. The person or entity can be directed to the Company's Web site where they can download an electronic copy of the prior written consent and print and return it to the Company by mail or fax fully completed and dated with a handwritten signature. In addition, an electronic copy of the prior written consent can be e-mailed to the person or entity, which they can open and print and return to the Company by mail or fax fully completed and dated with a handwritten signature.

Interactive Copy. Finally, the person or entity can be directed to the Company Web site where they can complete, sign electronically, date, and submit to the Company an interactive copy of the prior written consent.

Record Keeping

Duration. The written consent of such person or entity remains in effect until such person or entity notifies the Company of the revocation or withdrawal of this written consent, or adopts a different fax number. The Company must keep the submitted written consents in hard copy or in electronic format or both for as long as the written consent remains in effect.

Fax Cover Sheet

Under existing FCC Rules, a fax cover sheet must contain:

• the identification of the sender, which includes the full name of a corporation or other business entity which is the sender;
• the telephone number of the sending machine or of the sender;
• the date of distribution; and
• the time of distribution.

In fact, the Telephone Consumer Protection Act requires that telephone fax machines manufactured on or after Dec. 20, 1992 clearly mark this identifying information on each transmitted page. The Company may also wish to include a section on its fax cover sheet indicating whether the prior written consent of the recipient was required and obtained.

Violations

Fines and Private Actions. The FCC has the authority to impose a fine up to $11,000 per violation. In addition, a person or entity has a private right of action against the sender of a nonpermitted fax; damages of $500 per fax and damages up to a total of $1,500 can be awarded.

Conclusion

2005 seems like a long time away. However, given the extensive use of fax transmissions, affected business owners need to begin to monitor the status of the New Fax Rule and consider how it will affect their operations so that cost-efficient compliance steps can be implemented.