What the FCC's New Do Not Fax Rules Mean For Your Business

Date: Aug 04, 2003

Do you send price lists, product descriptions, order forms, and invoices by fax to business customers? Are you a for-profit or not-for-profit entity? If so, the new "Do Not Fax" rules adopted by the Federal Communications Commission ("FCC") could dramatically affect the way you conduct business.

The Federal Trade Commission (FTC) issued regulations establishing a national "Do Not Call" registry some months ago. On June 26, 2003, the FCC adopted rules under the Telephone Consumer Protection Act of 1991 covering Do Not Call requirements (the two agencies will coordinate on the national registry), as well as some specific telephone techniques that consumers find annoying. The rules were published in the Federal Register on July 25, 2003 (68 Fed. Reg. 44144). The FCC rules, however, include new rules on faxing that will affect a broad range of business-to-business faxed communications, including faxed communications on products and services from trade associations to their members. Those rules are slated to go into effect on August 25, 2003.

The new fax rule prohibits any person or entity from sending "unsolicited advertisements" via fax to business customers or consumers absent a signed, written consent from the recipient. The FCC has so broadly defined the term "unsolicited advertisements," and linked the definition to mandatory written, prior consent, that the rule will likely apply to most routine business fax communications. The FCC staff view is that faxes containing product and service offerings, price lists, invoices, and purchase orders would likely be prohibited as "unsolicited advertisements" without prior written consent. Even a trade association or non-profit organization's newsletter would likely be deemed an "unsolicited advertisement" if it contains a text box promoting an "early bird" conference registration fee, or otherwise includes an "advertisement" for association products or services. Contacts to solicit contributions for an association political action committee, or charitable solicitations, are also covered by the rules, according to FCC staffers. Agency staffers thus far appear to be defining the term "unsolicited advertisement" quite broadly. Moreover, the rule eliminates an exemption for "existing business relationships" and treats communications from non-profit and for-profit organizations the same.

After the new rule takes effect on August 25th, all intended recipients of any fax communication that constitutes an "unsolicited advertisement" - even existing customers - must provide a signed, written consent. Digital signatures will be acceptable under the rule, but oral requests (in person or by phone) and website opt-in or opt-out checkboxes will no longer be an acceptable consent mechanism for faxes. The FCC staff has publicly taken the position that to be valid, a consent form must list every fax number to which a recipient agrees to receive faxes. Even if a customer calls in a request for an order form or price list, the rule prohibits companies from faxing any information that constitutes "unsolicited advertising" absent a valid consent, a position that suggests an utter lack of understanding of what the term "unsolicited" means. Getting consents from large companies who operate multiple fax machines at multiple locations will thus be a complex task. As noted above, the FCC also eliminated the "established business relationship" exception for faxes, and did not create the type of other exceptions for fax communications that it recognizes for telephone solicitations, even for transmissions made in error.

The new rules pose new challenges for businesses around the world. Laws have been enacted in the United States and abroad to address unsolicited commercial communications, including telephone, fax, and e-mail. Several states have Do-Not-Call laws, and some state laws also govern unsolicited faxes. With respect to e-mails, some 23 states have laws governing spam, and the Congress is considering federal legislation in this area. European companies face the impending implementation of the new Electronic Communications Directive, slated to go into effect on October 1, 2003. Implementing national legislation has already been enacted in some countries.

Some 200 organizations, many of them non-profit associations, have filed comments on the Do Not Fax rules since they were published. The American Society of Association Executives (ASAE) has filed a petition seeking a stay of enforcement as to non-profit organizations and a petition for emergency clarification that unsolicited communications are not prohibited when issued by non-profit organizations in pursuit of their recognized and authorized non-profit purpose; however, if ASAE is successful in its petitions, the resulting relief may apply only to non-profit entities. The business community should also weigh in to ask the FCC to stay the effective date and reconsider this ill-advised rule to avoid burdening businesses with mountains of written consent forms. If the Do Not Fax rules are not altered, however, they will have a profound impact on both for-profit and non-profit entities.

For training materials, suggested consent forms, or for information on how to file challenges to the rules, contact Sheila A. Millar at (202) 434-4143, or by e-mail at millar@khlaw.com, or Tracy P. Marshall at (202) 434-4234, or by e-mail at marshall@khlaw.com. Keller and Heckman LLP also has additional information available on state telemarketing, "Do Not Call," "Do Not Fax," and spam laws.