CUNA Regulatory Comment Call
December 19, 2005
FCC’s Junk Fax Regulation
EXECUTIVE SUMMARY
The Federal Communications Commission (FCC) has issued a proposal to amend its rules to implement the requirements of the Junk Fax Prevention Act (Act), signed into law on July 9, 2005. The Act covers unsolicited facsimile (fax) advertisements. It allows organizations to continue to send unsolicited commercial faxes to customers, members, and vendors as long as they have an established business relationship (EBR) with those recipients. Faxes are also allowed when a new business relationship is established as long as the fax number was provided by the recipient or published in a directory, advertisement, or website. (The Act does not preempt state laws on the sending of unsolicited faxes, which may impose additional restrictions in some states.) The Act requires the FCC to issue regulations to implement the Act’s provisions by April 5, 2006. The FCC is seeking comments on how best to implement these requirements and update its rules accordingly.
- In general, the Act:
- Codifies an EBR exemption to the prohibition on sending unsolicited facsimile advertisements;
- Provides a definition of an established business relationship to be used in the context of unsolicited facsimile advertisements;
- Requires the sender of a facsimile advertisement to provide specified notice and contact information on the facsimile that allows recipients to “opt-out” of any future facsimile transmissions from the sender; and
- Specifies the circumstances under which a request to “opt-out” complies with the Act.
- The Act also authorizes the Commission, after a period of three months from the date of enactment of the Act, to consider limits on the duration of an EBR. According to the Act, before the FCC can impose time limits on an EBR, the agency must first determine that there are a significant number of complaints about unsolicited faxes specifically sent under an EBR. There are further hurdles designed to make sure that time limits are not easy to impose. The FCC must evaluate the costs to the sender of proving the EBR and the benefits to the recipients, and determine that the cost to small business would not be burdensome.
- If the FCC decided to go forward with a limitation on the EBR, it is very likely that the members of a coalition of businesses and trade associations known as the Fax Ban Coalition would provide ample comment on the cost and difficulty or recordkeeping that a time limit would impose. The Coalition would also likely challenge the assertion that significant numbers of abusive faxes were in fact sent by legitimate businesses to established customers. In fact, the Coalition has petitioned the FCC for a declaratory ruling that the agency has exclusive authority to regulate interstate commercial faxes and that states lack such jurisdiction. In the past, CUNA has worked closely with the Fax Ban Coalition in its efforts to ensure that the businesses and trade associations that have joined the group will not be forced to obtain written consent before sending commercial faxes to members/customers.
- In conjunction with the issuance of this proposal, the FCC has decided to delay the effective date of the requirement that senders of fax advertisements obtain prior written permission from the recipient, currently scheduled to go into effect on January 9, 2006. The effective date is also delayed for the FCC’s rule limiting the EBR exception to eighteen months after the recipient’s last purchase or transaction, or three months after of the recipient’s last application or inquiry. The effective date is stayed until the conclusion of this rulemaking.
- Comments on the proposal are due to the FCC by January 18, 2006. Please send your comments to
CUNA by January 10, 2006. Please feel free to fax your responses to CUNA at 202-638-7052; e-mail them
to Associate General Counsel Mary Dunn at
mdunn@cuna.com or to Senior Regulatory Counsel Catherine Orr at
corr@cuna.com; or mail them to Mary or Catherine in c/o CUNA's Regulatory Advocacy Department, 601
Pennsylvania Avenue, NW, 6th Floor - South Building, Washington, DC 20004-2601. You may also contact us
if you would like a copy of the FCC’s proposal, or you may access it on the Internet at the following
address:
http://a257.g.akamaitech.net/7/257/2422/01jan20051800/edocket.access.gpo.gov/2005/pdf/05-24211.pdf
BACKGROUND
- On December 20, 1991, Congress enacted the Telephone Consumer Protection Act (TCPA) to address a growing number of telephone marketing calls and certain telemarketing practices thought to be an invasion of consumer privacy. The TCPA prohibits the use of any telephone, fax, computer, or other device to send an “unsolicited advertisement” to a fax machine. The TCPA also requires those sending any messages via fax to identify themselves to message recipients. The TCPA did not expressly exempt persons with whom the sender has an EBR or tax exempt nonprofit organizations from the prohibition on sending unsolicited facsimile advertisements, although it did create such exemptions from the definition of “telephone solicitation.”
- In 1992, the Commission adopted rules implementing the TCPA, including restrictions on the transmission of unsolicited advertisements by fax. The rules stated that fax transmissions from persons or entities that have an EBR with the recipient can evidence the necessary invitation or permission of the recipient to receive the fax advertisement.
- Under an FCC rule change, businesses and organizations (including CUNA, state leagues and credit unions) would have been forced to obtain written consent before sending commercial faxes to members. The rule was originally slated to take effect on January 1, 2005, but the FCC granted a petition of stay that delayed implementation until July 1, 2005. A second petition of stay granted while the Act was under consideration by Congress delays implementation until January 9, 2006. CUNA has actively advocated reconsideration of the FCC rule and passage of the Act.
DESCRIPTION OF THE PROPOSAL
Recognition of an EBR Exemption
- The FCC’s proposal would modify its rules to expressly recognize an EBR exemption. Specifically, the proposal would remove the section of the rules which provides that a facsimile advertisement is unsolicited unless “the recipient has granted the sender prior express invitation or permission to deliver the advertisement, as evidenced by a signed, written statement that . . . clearly indicates the recipient’s consent to receive such facsimile advertisements from the sender.”
- In the context of an EBR, such prior express permission may be formed by means other than a signed, written statement that indicates the recipient’s consent to receive facsimile advertisements
Definition of EBR
- The FCC is proposing to incorporate into its rules on fax advertisements the following definition of an EBR:
- …the term established business relationship means a prior or existing relationship formed by a voluntary two-way communication between a person or entity and a business or residential subscriber with or without an exchange of consideration, on the basis of an inquiry, application, purchase or transaction by the business or residential subscriber regarding products or services offered by such person or entity, which relationship has not been previously terminated by either party.
- This proposed EBR definition differs from the definition in the FCC rules for telephone solicitations in that it expressly extends the exemption to faxes sent to both business and residential subscribers, rather than just residential subscribers.
Notice of Opt-Out Opportunity
- The Act requires that fax recipients must be notified about their options for opting out of receiving commercial faxes on the first page of every fax.
- The notice must be “clear and conspicuous”.
- The method for opting-out must be free to the recipient, such as the use of a local or toll-free telephone number.
- The FCC is proposing to amend its rules to comply with those specific notice requirements.
Request to Opt-Out of Future Unsolicited Advertisements
- The FCC proposes to amend its rules to adopt the Act’s provisions concerning the making of a request not to receive future unsolicited fax advertisements.
- According to the Act, a request not to send future unsolicited advertisements to a fax machine must identify that fax number.
- Further, the person making that request must not have, subsequent to their request, provided an express invitation or permission to the sender to send such advertisements to that fax machine.
Authority to Establish a Nonprofit Exception
- The Commission is authorized by the Act to allow professional or trade associations that are tax-exempt nonprofit organizations to send unsolicited fax advertisements to the members in furtherance of the association’s tax-exempt purpose that do not contain the “opt-out” notice described above.
Definition of Unsolicited Advertisement
- The FCC’s rules would be modified to define an “unsolicited advertisement” as “…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, in writing or otherwise.”
QUESTIONS REGARDING THE PROPOSAL
The FCC has requested comments on these specific issues. Please feel free to answer only those questions about which you have a strong opinion.
Recognition of an EBR
1. Should the FCC’s rules recognize an EBR, as proposed?
Yes ______ No ______
If not, why not?
2. Should the FCC establish parameters defining what it means for a person to provide a facsimile number “within the context of [an] established business relationship”? Under what circumstances should the FCC recognize that a person has voluntarily agreed to make a facsimile number available for public distribution? Should the burden rest with the sender to establish that the recipient has agreed to make the number publicly available? When the sender obtains the facsimile number from a directory, advertisement, or site on the Internet, should the sender be required to make reasonable efforts to confirm with the entity that compiled the numbers that the recipients have “voluntarily” agreed to allow them to be made publicly available?
3. The FCC proposes amending its rules to permit senders to send fax advertisements to persons with whom an EBR was formed prior to July 9, 2005, provided the facsimile number was in the sender’s possession before July 9, 2005, as well. If the FCC adopts this proposal, how should the FCC verify that a sender had an EBR and recipient’s facsimile number prior to July 9, 2005?
Definition of EBR
4. The Act authorizes the FCC, after a period of three months from the date of enactment of the Act, to consider limits on the duration of an EBR. In a previous decision, the FCC limited the duration of the EBR for telephone solicitations to 18 months following a purchase or transaction and three months after an application or inquiry. Is it appropriate to limit the EBR duration for unsolicited fax advertisements in the same manner as telephone solicitations. (The Federal Trade Commission’s rule on telephone solicitations imposes this 18/3-month limitation reasoning that the right to call consumers becomes more tenuous over time.) Do you believe (empirical evidence) telephone solicitations are distinguishable from fax solicitations in this regard?
Yes ______ No ______
Please explain.
5. Are there benefits to facsimile recipients of limits on the EBR? Are there direct costs to consumers associated with receiving facsimile advertisements, such as costs for paper, toner, and time spent collecting and sorting faxes that weighs in favor of limiting the facsimile EBR? Are there direct benefits to consumers of having an EBR that is not limited in duration? Please describe the costs to senders of demonstrating the existence of an EBR that is limited in duration. Would these costs be overly burdensome, particularly for credit unions/small businesses?
Please explain.
Notice of Opt-Out Opportunity
6. Is it necessary to set forth in the FCC’s rules under what circumstances an opt-out notice will be considered “clear and conspicuous”?
Yes ______ No ______
If yes, please describe those circumstances under which a notice should be
considered “clear and conspicuous.”
7. The FCC’s rules require that persons or entities making calls for telemarketing purposes must honor a do-not-call request within a reasonable time. The FCC’s rules provide that this reasonable period “may not exceed thirty days from the date of such request.” As directed by Congress, the FCC also seeks comment on the “shortest reasonable time” within which a sender of unsolicited facsimile advertisements must comply with a request not to receive future facsimile advertisements from the sender. Is this 30-day limitation for telemarketing calls the shortest reasonable period in which to expect senders of unsolicited facsimile advertisements to honor a do-not-fax request. If not, the FCC seeks empirical evidence from commenters to support proposals for longer or shorter periods.
8. The FCC’s rules currently require senders of facsimile messages to identify themselves on the message, along with the telephone number of the sending machine or the business, other entity, or individual sending the message. The FCC seeks comment on the interplay between this identification requirement and the notice requirement described above for senders of unsolicited facsimile advertisements. Are there ways to minimize the burdens associated with complying with these separate requirements that are consistent with the goals of the TCPA and its recent amendments?
9. Should the FCC exempt certain classes of small business senders from the requirement to provide a cost-free mechanism for a recipient to transmit a request not to receive future facsimile advertisements? In particular, the FCC is looking for empirical information as to whether the costs to such small businesses are unduly burdensome given the revenues generated by such small businesses. Should the FCC decide to exempt certain classes of small businesses from the requirement, the agency would like specific information on how such “classes” of small businesses may be defined. Do the Small Business Administration’s (SBA’s) Standard Industrial Classification regulations provide any useful guidance? Would such an exemption for small business senders have any adverse impact on consumers and businesses who receive facsimile advertisements from small businesses? Are there alternative mechanisms available so that recipients are able to request of any small business that it not send future unsolicited advertisements?
10. Does the FCC need to enumerate specific “cost-free” mechanisms for a recipient to transmit a do-not-fax request? If so, what should those specific mechanisms be? For instance, should the provision of a toll-free telephone number, website, or email address for receiving do-not-fax requests, comply with this requirement? Should a local telephone number be considered a “cost-free” mechanism if the unsolicited facsimile advertisements are sent only to local consumers?
Request to Opt-Out of Future Unsolicited Advertisements
11. Should the FCC’s rules reflect that a do-not-fax request terminates the EBR exemption with the sender of the fax even if the recipient continues to do business with the sender?
Yes ______ No ______
Please explain.
12. Should the final rules specify that if the sender of the facsimile advertisement is a third party agent or fax broadcaster that any do-not-fax request sent to that sender will extend to the underlying business on whose behalf the fax is transmitted?
Yes ______ No ______
Please explain.
13. Are there any other methods of communication that the FCC should prescribe for making a do-not-fax request other than those required in the notice section discussed above (i.e. a domestic contact telephone and facsimile number and a cost-free mechanism)? Should, for instance, a sender be required to honor a request made by mail or e-mail even if such addresses are not necessarily provided by the sender in the facsimile communication’s “opt-out” notice? For situations in which a consumer that has made a do-not-fax request of a sender subsequently provides express invitation or permission to receive fax advertisements from that entity, should the fax sender bear the burden of proof to demonstrate that it had the consumer’s express invitation or permission to send the fax advertisement?
Authority to Establish Nonprofit Exception
14. Should the FCC allow professional or trade associations that are tax-exempt nonprofit organizations (such as CUNA, credit union leagues and credit unions themselves) to send unsolicited advertisements to their members in furtherance of the associations’ tax-exempt purpose that do not contain the “opt-out” notice required by the Act? Is such an opt-out notice necessary to protect the ability of members of such associations to stop the sending of any future unsolicited advertisements? For example, how will members of such associations obtain the necessary information to opt-out if associations are not required to provide such information? What benefits, if any, are there to nonprofit organizations if the FCC exempts them from this requirement? How should the agency determine whether an unsolicited advertisement is sent “in furtherance of the association’s tax-exempt purpose”?
Definition of Unsolicited Advertisement
15. In addition to written permission, what other forms of permission should be allowed by the rules? If permission is given orally, for instance, should the fax sender bear the burden of proof to demonstrate that it had the consumer’s prior express invitation or permission?
16. Other comments?
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Eric Richard • General Counsel • (202) 508-6742 • erichard@cuna.com Mary Mitchell Dunn • SVP & Associate General Counsel • (202) 508-6736 • mdunn@cuna.com Jeffrey Bloch • Assistant General Counsel • (202) 508-6732 • jbloch@cuna.com Lilly Thomas • Assistant General Counsel • (202) 508-6733 • lthomas@cuna.com Catherine Orr • Senior Regulatory Counsel • (202) 508-6743 • corr@cuna.com |
