New Rules for Fax Advertising
The federal Telephone Consumer Protection Act prohibits the transmission of an advertisement to a business's or individual's fax machine without the prior express permission or invitation of the recipient. The act directed the Federal Communications Commission to promulgate a rule implementing this and other provisions of the act. Until recently, the FCC's implementing rule provided a limited exception to the act's general prohibition on unsolicited fax ads: it allowed an advertiser to presume that a recipient had granted the necessary permission if it had an "existing business relationship" with the recipient and the recipient had not revoked the permission.
In July, following a public comment period, the FCC revised its rule, significantly changing the circumstances under which an advertiser may lawfully send an unsolicited fax advertisement. Most notably, the FCC decided to do away with the "existing business relationship" exception to the prohibition on fax advertising. It did so after determining that the mere existence of a business relationship between the fax sender and recipient does not necessarily evidence the "express permission or invitation" that the act requires. For this reason, the FCC's revised rule does not allow an advertiser to presume — ever — that an intended recipient has given his permission to receive fax advertising. Instead, the rule requires that an advertiser obtain the intended recipient's express written permission before transmitting an unsolicited fax advertisement to him.
As might be imagined, the new requirement resulted in an outcry from the business community. In early August, a number of associations petitioned the FCC to immediately stay the revised rule until the commission has fully reconsidered its revisions in light of the needs of the business community. In response, the FCC announced on August 18 that it had decided to extend the effective date of the applicable provisions until January 1, 2005, in order to give businesses more time to come into compliance, as well as to allow the commission to reconsider the revisions.
The FCC now has a number of options:
- by January 1, 2005, it could further extend the effective date for the unsolicited fax advertising provisions of the rule;
- it could reinstate the "established business relationship" exception (or a variation of that exception) to the no-fax rules; or,
- it could stick with the January 1, 2005, effective date and begin enforcement.
Doing Business Now
In the meantime, until January 1, 2005, a company may continue to send unsolicited fax ads to persons with whom it has an established business relationship. However, it must ensure that the relationship meets the definition contained in the revised rule (the amended definition of "established business relationship" goes into effect on August 25). A company may send unsolicited fax ads only to persons with whom its "established business relationship" meets the following criteria:
1.Â the relationship is based on the recipient's purchase or other transaction with the company within the 18-month period immediately preceding the date of the fax transmission; or,
2.Â the relationship is based on the recipient's inquiry or application regarding the company's products or services within the three months immediately preceding the date of the fax transmission; and
3.Â the company may not send unsolicited fax advertising to a person who has terminated its relationship with the company.
Planning for Compliance
In anticipation of the currently scheduled January 1, 2005, effective date, businesses may wish to begin planning how they will comply with the rule's requirements. As noted above, the revised rule would require that an advertiser obtain the intended recipient's express permission before transmitting an unsolicited fax advertisement to him. The rule requires that the permission be in writing and signed by the recipient. (The signature may be electronic or digital, as long as such a signature is valid under applicable law.) In addition, the permission must clearly indicate that the recipient consents to receiving faxed advertising from the sender, and it must state the fax number or numbers to which the advertising may be sent.
An advertiser may obtain the required consent for its faxes in a variety of ways, including online, through direct mail, and through other interactions with its customers, such as store visits. It must take care, however, that it does not presume that a recipient has granted permission. For instance, the consent may not take the form of a "negative option," in which the advertiser presumes the recipient's consent unless the recipient advises him otherwise. This means, for example, that an advertiser may not send a direct mail piece or unsolicited fax that directs the recipient to call or otherwise respond if the recipient does not want to receive fax advertising.
To fully comply with the rule, an organization may want to consider clearly including language giving it permission to send fax advertisements on a document that its clients, members, or prospective customers sign and return anyway in the course of their business dealings. Doing that — and maintaining the documents in the organization's records — would fully address the compliance responsibilities for sending fax advertisements to existing customers, prospects, and members.
As a final note, it is important to keep in mind that the rule applies only to unsolicited fax advertisements. This means that a company is required to receive the recipient's express written permission only if the fax discusses a product or service offered by it. Faxes that do not relate to product or service offerings — such as purely informational faxes — are not covered by the rule and may therefore be transmitted without worrying about compliance.