"Do Not Fax" Rule

On May 3, 2006 the Federal Communications Commission adopted a final rule (PDF) for determining when faxed advertisements may be sent within an established business relationship (EBR). The rule implements changes made by the Junk Fax Prevention Act that was enacted in July 2005. The EBR exemption relieves fax senders from obtaining prior permission from a recipient in order to fax an unsolicited advertisement, as long as an opt-out notice and opportunity to opt-out are provided to fax recipients. Nonprofits will not have to first to obtain a member's permission in order to send faxes promoting conferences, publications, or membership solicitations, for example. The new rules became effective on August 1, 2006.

Independent Sector filed comments (PDF) with the FCC in January, 2006 as the Commission was considering the proposed rule on EBRs. Among other comments, IS recommended that the Commission allow email and websites as cost-free methods for recipients to opt-out of future faxes. Fax senders are required to provide a cost-free method for recipients to opt out, such as a toll-free number. IS argued that the cost of maintaining a toll-free number would be prohibitive for many nonprofit organizations. IS also recommended that the rule allow a fax recipient’s permission to be given orally as well as in writing. We are pleased to see that both of these provisions were adopted in the final rule.

The main provisions of the final rule are summarized below.

Unsolicited Advertisement
The term “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, in writing or otherwise.” The Commission clarified in the final rule that permission to fax advertisements may be given orally. The rule also confirms that the Commission does not consider requests for donations to political campaigns or charitable organizations to be unsolicited advertisements.

Definition of Established Business Relationship
The final rule defines an EBR as a “prior or existing relationship formed by a voluntary two-way communication….on the basis of an inquiry, application, purchase or transaction regarding products or services.” If the question arises, the burden will be on the fax sender to show that a valid EBR with the recipient exists; however, the FCC is not requiring that any specific records be kept by fax senders. The sender can demonstrate a valid EBR by documents and records kept in the ordinary course of business such as member application forms, for example. Additionally, even though an EBR exists, the sender must have obtained the recipient’s fax number voluntarily. This includes obtaining the fax number through an application form.

Duration of the EBR
There is no time limit on the duration of an EBR for fax purposes. Once established, the EBR exemption lasts until the fax recipient terminates the exemption by requesting not to receive future faxed advertisements from the sender. Within one year of the effective date (August 1, 2006), the FCC will evaluate any complaints filed by fax recipients to determine whether the duration of the EBR is reasonable based on consumer expectations. The commission intends to “closely monitor” the new EBR exemption and opt-out policies.

Opt-Out Notice
All faxed advertisements will be required to contain a “clear and conspicuous” notice on the first page explaining how the recipient can opt out of future faxed advertisements from the sender, a domestic contact telephone number, a fax machine number, and at least one cost-free method of sending the opt-out request. The cost-free method may be a local telephone number, a website address or an email address. Senders must be able to accept opt-out requests 24 hours a day, 7 days a week.

In order to be “clear and conspicuous” the notice must be separate and distinguishable from the advertising copy and placed at either the top or the bottom of the page. The FCC encourages senders to include the notice on both the cover page and on the first page of the ad, if a cover page is used.

Opt-Out Compliance
Fax senders must honor opt-out requests within the shortest reasonable time from the date the request is made, not to exceed 30 days. In the explanation of the rule, the Commission adds that if senders have the capability to honor opt-out requests in less than 30 days, they must do so.

Professional or Trade Associations
The FCC decided not to exempt nonprofit professional or trade associations from the opt-out notice requirements. The Commission was not convinced that members of an association would have the necessary opportunity to easily opt-out if the faxed advertisements do not contain opt-out information. It also concludes that inclusion of the opt-out notice would not be burdensome for such organizations.

Background

Proposed Rule on Established Business Relationship
In December 2005, the Federal Communications Commission issued a proposed rule to implement the exemption that Congress enacted in July 2005 for fax advertisements sent within the context of an established business relationship (EBR). The EBR exemption relieves fax senders from obtaining a prior written permission from a recipient in order to fax an advertisement.

The FCC asked for comments on its proposed regulatory definition for EBR. Under the proposed rule, EBRs would consist of relationships formed by voluntary two-way communication between persons or entities on the basis of an inquiry, application, purchase or transaction regarding products or services offered by the person or entity. The exemption would apply to any fax numbers received voluntarily within the context of an EBR as well as to any fax numbers that were obtained through an EBR that was in existence before enactment of the Junk Fax Prevention Act on July 9, 2005.

The FCC asked for comments on:

• whether the duration of the EBR should be limited to 18 months as it is for telephone solicitations;
• whether regulations are needed to set forth specifics on when an opt-out notice will be considered "clear and conspicuous" as required by the Junk Fax Prevention Act (more on opt-out requirement);
• whether 30 days is the "shortest reasonable time" for honoring a do-not-fax request;
• whether small businesses should be exempt from having to provide a cost-free mechanism for a fax recipient to transmit a do-not-fax request;
• whether the opt-out notice requirement is necessary for nonprofit professional or trade associations sending faxed advertisements in furtherance of their tax-exempt purpose;
• whether prior express permission needs to be in writing.

Read Comments (PDF) filed by Independent Sector...1/18/06
Text of the proposed rule (PDF)


Federal District Court Rules on California Fax Law
In a February 2006 opinion, a Federal District Court in California found that California’s fax law is preempted by federal law as it pertains to interstate faxes. California’s law would have barred both interstate and intrastate faxes without prior consent. The federal law, the Junk Fax Prevention Act, which was signed into law in July 2005, makes an exception for faxes that are sent in the context of an established business relationship. The Court found that the California law conflicts with federal law since it does not contain the established business relationship exception. As a result of this ruling, nonprofits outside of California now will be able to fax to recipients in California with whom they have an established business relationship. California’s law still applies to intrastate faxes, that is faxes to and from parties within that state. Read the Court's Ruling on the California Law (PDF)...2/27/06

FCC Considers California Fax Law Conflict with Federal Law
In a related matter, the FCC also requested comments on a petition to preempt a California fax law that conflicts with federal law. The California fax law, scheduled to go into effect on January 1, 2006, conflicts with federal law in that it does not exempt faxed advertisements sent in the context of an established business relationship. The FCC is currently considering a petition, which was filed by the Fax Ban Coalition led by the American Society of Association Executives (ASAE), asking the FCC to affirm its exclusive authority to regulate interstate commercial fax messages and that all state laws attempting to regulate interstate faxes are preempted by federal law.

The petition argues that the California law illegally infringes interstate commerce because it is not limited to intrastate faxes and that compliance will become extremely burdensome if every state enacts conflicting fax laws.

IS Comments (PDF)
Notice in the Federal Register (PDF)
ASAE Petition (PDF)


Legislative History

Fax Bill Signed by the President
President Bush has signed S. 714, a bill to amend the 2003 Federal Communications Commission's proposed "do not fax" rule by restoring the "established business relationship" exception for faxed communications. Following the Senate's passage on June 24, the House on June 28, 2005 passed the bill, which was introduced by Senator Gordon Smith (R-OR). In response to approximately 500 complaints about the rule, the FCC also responded by issuing its third order on June 30 staying the effective date of the rule from July 1 to January 9, 2006. Once the President signed S. 714 on July 9, 2005 it rendered the FCC rule moot.

The FCC "do not fax" rule would have eliminated the current "established business relationship" exception and instead required prior written permission from all fax recipients (including members, donors, former book purchasers, or conference attendees) for faxes that contain advertisements. Nonprofits that send faxes promoting conferences, publications, or membership solicitations, for example, would have first needed to obtain a recipient's written permission.

S. 714 overrides the above provisions by permitting businesses, associations, and charities to continue to send faxed advertisements to their customers and members without receiving prior written permission, as long as the organizations provide a chance for recipients to opt out of receiving future documents. The bill stipulates, however, that unsolicited messages may only be sent to fax numbers obtained directly from a recipient or a public source, such as a website.

Action in the 108th Congress
During the 108th Congress, the House passed on July 20, 2004 the Junk Fax Prevention Act (H.R. 4600) by voice vote. The companion bill (S. 2603) was passed by the Senate on December 8, 2004. Unfortunately, the Senate bill contained additional legislation that was unacceptable to the House, and it was not enacted before the end of the 108th Congress. Similar to the legislation offered in 2005, the bills would have restored the "established business relationship" exemption repealed by the FCC 2003 rule.

The FCC "do not fax" rule was originally approved to go into effect on August 25, 2003. In response to concerns raised by many nonprofit and for-profit organizations, however, the FCC issued two orders (prior to the most recent) extending the effective date: the first order, issued August 18, 2003, extended it to January 1, 2005, and an order issued October 1, 2004 extended it to July 1, 2005. Independent Sector joined with a broad coalition in petitioning for the July 1 stay to allow time for the formulation of a legislative solution.

According to its 2003 rule, the FCC defines 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." This action encompasses faxes such as membership dues renewals and advertisements for seminars or conferences for which a fee is charged, even if they are sent to organization members or previous meeting attendees. It is not clear whether charitable solicitations would be considered unsolicited advertisements; however, it is clear that legislative updates and newsletters without advertisements do not fall under this definition.

During the stay of the rule, the FCC has been reconsidering its 2003 determination. According to the FCC's most recent order, in the interim, existing law remains in place. Current law allows nonprofit and for-profit organizations that either have express permission from or an established business relationship with an individual to send solicitations or advertisements by fax. Organizations may still be subject to legal action from individuals who receive unwanted fax solicitations, however, if the organization cannot show that it had an "established business relationship" with that individual.

Nonprofit organizations should establish clear procedures for handling complaints or threatened lawsuits from anyone who has received an unwanted fax solicitation. Be careful to determine the facts and the nature of a claim before responding to it. Independent Sector is continuing to work with the FCC to clarify the definition of "established business relationship."

The FCC's new fax regulations were included in a broader update of rules and regulations that revised the Telephone Consumer Protection Act of 1991 and made FCC regulations consistent with the new Federal Trade Commission "Do Not Call" rule.

Last updated: January 12, 2007