FCC Gives Companies Six Months to Seek Retroactive Waiver of Fax Ad Rule
In a long-awaited decision, the Federal Communications Commission ("FCC") announced on October 30th that fax advertisements must include a detailed notice that describes the recipient's right to opt out of receiving future fax ads—even if the recipient consented to receive the fax. But, in an unusual concession, the agency also announced that it would retroactively waive the opt-out notice requirement for companies that had petitioned the agency for relief from the rule and any companies that did so within the next six months.
The opt-out notice requirement, which was first published in 2006, has been the centerpiece of hundreds of class-action lawsuits brought under the Telephone Consumer Protection Act ("TCPA"). With statutory damages of $500 to $1,500 per defective fax, and often thousands of faxes at issue, plaintiffs have sought massive recoveries. Prominent recent TCPA settlements have figured in the tens of millions of dollars. The TCPA expressly applies only to "unsolicited faxes" – faxes sent without consent. But the FCC issued regulations purporting to apply opt-out notice requirements to faxes sent with consent as well. Facing this potential exposure, some two dozen companies in the last two years petitioned the FCC to declare that sending a fax to a consenting recipient without an opt-out notice cannot be the basis for a private TCPA action. The companies argued that because the TCPA only authorized the FCC to regulate unsolicited faxes, the FCC could not invoke the TCPA to regulate faxes sent with the recipient's consent.
The FCC's decision is a mixed result for TCPA defendants. The agency's order concluded that the opt-out notice requirement applies to consented-to faxes, and that the source of its regulatory authority was the TCPA. But the agency also acknowledged that a confusing footnote in its original order promulgating the opt-out notice requirement—combined with the fact that FCC had not given notice that it intended to regulate consented-to faxes during the rulemaking process—warranted a retroactive waiver of the requirement.
The FCC announced that the retroactive waiver would be available to companies that properly petition the FCC, indicating that it "expect[s] that parties will make every effort" to file petitions within the next six months. Significantly, the FCC's announcement of the waiver is not only a statement of the agency's intent to refrain from enforcing past violations. The decision makes clear that the FCC intends the waiver to affect any TCPA claims brought by private plaintiffs as well. Indeed, the order explains that the waiver is being granted largely to ensure that defendants are not unfairly subjected to massive liability exposure in class actions based on a reasonable interpretation of their obligations under the law.
Two of the five FCC commissioners would have gone further and provided petitioners all of relief they had requested. Those commissioners explained that, in their view, the FCC has no authority to regulate consented-to faxes. The dissents' reasoning may well figure into appeals of the agency's decision, which, if taken, will be brought before a federal Court of Appeals. In the meantime, companies that have sent fax ads that did not contain a compliant opt-out notice may wish to consider petitioning the FCC for the retroactive waiver. Every company should review its prior fax marketing as the opt-out language required is very specific and well-meaning companies have often fallen short of technical compliance.
Please feel free to contact any us if you have questions about this advisory or need assistance in reviewing the compliance of any past fax advertising. Wiggin and Dana's class action practitioners represent clients in TCPA litigation as well as matters before the FCC.
The FCC's decision is captioned In the Matter of Rules & Regulations Implementing the Telephone Consumer Protection Act of 1991, CG Docket Nos. 02-278 & 05-338.