Accountability and Oversight

Federal Register
July 25, 2003 (Volume 68, Number 143), Page 44143-44179

Rules and Regulations Implementing the Telephone Consumer
Protection Act (TCPA) of 1991

Federal Communications Commission
Final Rule

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Unsolicited Facsimile Advertisements

Prior Express Invitation or Permission

130. The Commission has determined that the TCPA requires a person
or entity to obtain the prior express invitation or permission of the
recipient before transmitting an unsolicited fax advertisement. This
express invitation or permission must be in writing and include the
recipient's signature. The term ``signature'' in the amended rule shall
include an electronic or digital form of signature, to the extent that
such form of signature is recognized as a valid signature under
applicable federal law or state contract law. The recipient must
clearly indicate that he or she consents to receiving such faxed
advertisements from the company to which permission is given, and
provide the individual or business's fax number to which faxes may be
sent.

131. Established Business Relationship. The TCPA does not act as a
total ban on fax advertising. Persons and businesses that wish to
advertise using faxes may, under the TCPA, do so with the express
permission of the recipients. In the 2002 Notice, we sought comment on
whether an established business relationship between a fax sender and
recipient establishes the requisite consent to receive telephone
facsimile advertisements. The majority of industry commenters support
the finding that facsimile transmissions from persons or entities that
have an established business relationship with the recipient can be
deemed to be invited or permitted by the recipient. These commenters
maintain that eliminating the EBR exemption for facsimile advertisements would
interfere with ongoing business relationships, raise business costs,
and limit the flow of valuable information to consumers. They urge the
Commission to amend the rules to provide expressly for the EBR
exemption. Conversely, the majority of consumer advocates argue that
the TCPA requires companies to obtain express permission from
consumers--even their existing customers--before transmitting a fax to
a consumer. Some consumer advocates maintain that the Commission erred
in its 1992 determination that a consumer, by virtue of an established
business relationship, has given his or her express invitation or
permission to receive faxes from that company. They urge the Commission
to eliminate the EBR exemption, noting that Congress initially included
in the TCPA an EBR exemption for faxes, but removed it from the final
version of the statute.

132. We now reverse our prior conclusion that an established
business relationship provides companies with the necessary express
permission to send faxes to their customers. As of the effective date
of these rules, the EBR will no longer be sufficient to show that an
individual or business has given their express permission to receive
unsolicited facsimile advertisements. The record in this proceeding
reveals consumers and businesses receive faxes they believe they have
neither solicited nor given their permission to receive. Recipients of
these faxed advertisements assume the cost of the paper used, the cost
associated with the use of the facsimile machine, and the costs
associated with the time spent receiving a facsimile advertisement
during which the machine cannot be used by its owner to send or receive
other facsimile transmissions.

133. The legislative history indicates that one of Congress'
primary concerns was to protect the public from bearing the costs of
unwanted advertising. Certain practices were treated differently
because they impose costs on consumers. For example, under the TCPA,
calls to wireless phones and numbers for which the called party is
charged are prohibited in the absence of an emergency or without the
prior express consent of the called party. See 47 U.S.C. 227(b)(1).
Because of the cost shifting involved with fax advertising, Congress
similarly prohibited unsolicited faxes without the prior express
permission of the recipient. 47 U.S.C. 227(b)(1)(C) and (a)(4). Unlike
the do-not-call list for telemarketing calls, Congress provided no
mechanism for opting out of unwanted facsimile advertisements. Such an
opt-out list would require the recipient to possibly bear the cost of
the initial facsimile and inappropriately place the burden on the
recipient to contact the sender and request inclusion on a ``do-not-
fax'' list.

134. Instead, Congress determined that companies that wish to fax
unsolicited advertisements to customers must obtain their express
permission to do so before transmitting any faxes to them. See 47
U.S.C. 227(b)(1)(C) and (a)(4). Advertisers may obtain consent for
their faxes through such means as direct mail, Web sites, and
interaction with customers in their stores. Under the new rules, the
permission to send fax advertisements must be provided in writing,
include the recipient's signature and facsimile number, and cannot be
in the form of a ``negative option.'' A facsimile advertisement
containing a telephone number and an instruction to call if the
recipient no longer wishes to receive such faxes, would constitute a
``negative option.'' This option (in which the sender presumes consent
unless advised otherwise) would impose costs on facsimile recipients
unless or until the recipient were able to ask that such transmissions
be stopped. For example, a company that requests a fax number on an
application form could include a clear statement indicating that, by
providing such fax number, the individual or business agrees to receive
facsimile advertisements from that company. Such statement, if
accompanied by the recipient's signature, will constitute the necessary
prior express permission to send facsimile advertisements to that
individual or business. We believe that even small businesses may
easily obtain permission from existing customers who agree to receive
faxed advertising, when customers patronize their stores or provide
their contact information. The Commission believes that given the cost
shifting and interference caused by unsolicited faxes, the interest in
protecting those who would otherwise be forced to bear the burdens of
unwanted faxes outweighs the interests of companies that wish to
advertise via fax.

135. Membership in a Trade Association. In its 1995 Reconsideration
Order, the Commission determined that mere distribution or publication
of a telephone facsimile number is not the equivalent of prior express
permission to receive faxed advertisements. The Commission also found
that given the variety of circumstances in which such numbers may be
distributed (business cards, advertisements, directory listings, trade
journals, or by membership in an association), it was appropriate to
treat the issue of consent in any complaint regarding unsolicited
facsimile advertisements on a case-by-case basis. In the 2002 Notice,
we sought comment specifically on the issue of membership in a trade
association or similar group and asked whether publication of one's fax
number in an organization's directory constitutes an invitation or
permission to receive an unsolicited fax. The American Business Media
argued that those willing to make fax numbers available in directories
released to the public do so with an expectation that such fax numbers
will be used for advertising. Consumer advocates, however, contend that
publicly listing a fax number is not a broad invitation to send
commercial faxes. TOPUC asserted that businesses often publish their
fax numbers for the convenience of their customers, clients and other
trade association members, not for the benefit of telemarketers.

136. The Commission agrees that fax numbers are published and
distributed for a variety of reasons, all of which are usually
connected to the fax machine owner's business or other personal and
private interests. The record shows that they are not distributed for
other companies' advertising purposes. Thus, a company wishing to fax
ads to consumers whose numbers are listed in a trade publication or
directory must first obtain the express permission of those consumers.
Express permission to receive a faxed ad requires that the consumer
understand that by providing a fax number, he or she is agreeing to
receive faxed advertisements. We believe the burden on companies to
obtain express permission is warranted when balanced against the need
to protect consumers and businesses from bearing the advertising costs
of those companies. Finally, the Commission affirms that facsimile
requests for permission to transmit faxed ads, including toll-free opt-
out numbers, impose unacceptable costs on the recipients. This kind of
``negative option'' is contrary to the statutory requirement for prior
express permission or invitation.

Fax Broadcasters

137. The Commission explained in the 2002 Notice that some fax
broadcasters, who transmit other entities' advertisements to a large
number of telephone facsimile machines for a fee, maintain lists of
facsimile numbers that they use to direct their clients'
advertisements. We noted that this practice, among others, indicates a
fax broadcaster's close involvement in sending unlawful fax
advertisements and may subject such entities to enforcement action
under the TCPA and our existing rules. We then sought comment on
whether the Commission should address specifically in the rules the
activities of fax broadcasters. Companies and organizations whose members
hire fax broadcasters to transmit their messages argue that the fax broadcaster
should be liable for violations of the TCPA's faxing prohibition.
American International Automobile Dealers Association maintains this
should be the case, even if the fax broadcaster uses the list of fax
numbers provided by the company doing the advertising. Nextel argues
that liability ought to lie with the party controlling the destination
of the fax; that fax broadcasters who actively compile and market
databases of fax numbers are the major perpetrators of TCPA fax
violations. Nextel specifically urges the Commission to find that
companies whose products are advertised by independent retailers should
not be liable for TCPA violations when they have no knowledge of such
activities. Fax broadcasters disagree that they should be liable for
unlawful faxes, maintaining that many of them do not exercise any
editorial control or discretion over the content of the messages, and
do not provide the list of fax numbers to which the ads are
transmitted. Many industry as well as consumer commenters agree that
only those fax broadcasters who are closely involved in the
transmission of the fax should be subject to liability. Reed asserts
that liability should rest with the entity on whose behalf a fax is
sent; that fax broadcasters are not in a position to know firsthand
whether, for example, an established business relationship exists
between the company and consumer.

138. The Commission's rulings clearly indicate that a fax
broadcaster's exemption from liability is based on the type of
activities it undertakes, and only exists ``[i]n the absence of `a high
degree of involvement or actual notice of an illegal use and failure to
take steps to prevent such transmissions.''' 1992 TCPA Order, 7 FCC Rcd
at 8780, para. 54 (quoting Use of Common Carriers, 2 FCC Rcd 2819, 2820
(1987)). The Commission believes that, based on the record and our own
enforcement experience, addressing the activities of fax broadcasters
will better inform both consumers and businesses about the prohibition
on unsolicited fax advertising. The Commission has determined to amend
the rules to state explicitly that a fax broadcaster will be liable for
an unsolicited fax if there is a high degree of involvement or actual
notice on the part of the broadcaster. The new rules provide that if
the fax broadcaster supplies the fax numbers used to transmit the
advertisement, the fax broadcaster will be liable for any unsolicited
advertisement faxed to consumers and businesses without their prior
express invitation or permission. We agree, however, that if the
company whose products are advertised has supplied the list of fax
numbers, that company is in the best position to ensure that recipients
have consented to receive the faxes and should be liable for violations
of the prohibition. Therefore, the fax broadcaster will not be
responsible for the ads, in the absence of any other close involvement,
such as determining the content of the faxed message. A high degree of
involvement might be demonstrated by a fax broadcaster's role in
reviewing and assessing the content of a facsimile message. In such
circumstances where both the fax broadcaster and advertiser demonstrate
a high degree of involvement, they may be held jointly and severally
liable for violations of the unsolicited facsimile provisions. In
adopting this rule, the Commission focuses on the nature of an entity's
activity rather than on any label that the entity may claim. We believe
the rule will better inform the business community about the
prohibition on unsolicited fax advertising and the liability that
attaches to such faxing. And, it will better serve consumers who are
often confused about which party is responsible for unlawful fax
advertising. For the same reasons, the new rules define ``facsimile
broadcaster'' to mean a person or entity that transmits messages to
telephone facsimile machines on behalf of another person or entity for
a fee. See 47 CFR 64.1200(f)(4).

139. Some commenters ask the Commission to clarify the extent of
common carriers' liability for the transmission of unsolicited faxes.
Cox specifically urges the Commission to distinguish the obligations of
fax broadcasters from ``traditional common carriers.'' As noted above,
the Commission has stated that ``[i]n the absence of `a high degree of
involvement or actual notice of an illegal use and failure to take
steps to prevent such transmissions,' common carriers will not be held
liable for the transmission of a prohibited facsimile message.'' 1992
TCPA Order, 7 FCC Rcd at 8780, para. 54 (quoting Use of Common
Carriers, 2 FCC Rcd 2819, 2820 (1987)). We reiterate here that if a
common carrier is merely providing the network over which a subscriber
(a fax broadcaster or other individual, business, or entity) sends an
unsolicited facsimile message, that common carrier will not be liable
for the facsimile.

140. Nextel urges the Commission to clarify that section 217 of the
Communications Act does not impose a higher level of liability on
common carriers than on other entities for violations of the TCPA.
Section 217 provides that ``[i]n construing and enforcing the
provisions of this Act, the act, omission, or failure of any officer,
agent, or other person acting for or employed by any common carrier or
user, acting within the scope of his employment, shall in every case be
also deemed to be the act, omission, or failure of such carrier or user
as well as that of the person.'' 47 U.S.C. 217. The Commission declines
to address the scope of section 217 in this rulemaking, which was not
raised in the 2002 Notice or in subsequent notices in this proceeding.

Fax Servers

141. The TCPA makes it unlawful for any person to use any telephone
facsimile machine, computer, or other device to send an unsolicited
advertisement to a telephone facsimile machine. 47 U.S.C. 227(b)(1)(C).
The TCPA defines the term ``telephone facsimile machine'' to mean
``equipment which has the capacity (A) to transcribe text or images, or
both, from paper into an electronic signal and to transmit that signal
over a regular telephone line, or (B) to transcribe text or images (or
both) from an electronic signal received over a regular telephone line
onto paper.'' 47 U.S.C. 227(a)(2). The Commission sought comment on any
developing technologies, such as computerized fax servers, that might
warrant revisiting these rules.

142. Commenters who addressed this issue were divided on whether
fax servers should be subject to the unsolicited facsimile provisions.
Some industry representatives urged the Commission to clarify that the
TCPA does not prohibit the transmission of unsolicited fax
advertisements to fax servers and personal computers because these
transmissions are not sent to a ``telephone facsimile machine,'' as
defined in the statute. Nextel maintains that such faxes do not
implicate the harms Congress sought to redress in the TCPA, as they are
not reduced to paper and can be deleted from one's inbox without being
opened or examined. Other commenters disagree, noting that there are
other costs associated with faxes sent to computers and fax servers.
They note that the TPCA only requires that the equipment have the
capacity to transcribe text or messages onto paper, and that computer
 fax servers and personal computers have that capacity.

143. We conclude that faxes sent to personal computers equipped
with, or attached to, modems and to computerized fax servers are
subject to the TCPA's prohibition on unsolicited faxes. However, we
clarify that the prohibition does not extend to facsimile messages sent
as email over the Internet. The record confirms that a conventional
stand-alone telephone facsimile machine is just one device used for
this purpose; that developing technologies permit one to send and
receive facsimile messages in a myriad of ways. Today, a modem attached
to a personal computer allows one to transmit and receive electronic
documents as faxes. ``Fax servers'' enable multiple desktops to send
and receive faxes from the same or shared telephony lines.

144. The TCPA's definition of ``telephone facsimile machine''
broadly applies to any equipment that has the capacity to send or
receive text or images. The purpose of the requirement that a
``telephone facsimile machine'' have the ``capacity to transcribe text
or images'' is to ensure that the prohibition on unsolicited faxing not
be circumvented. Congress could not have intended to allow easy
circumvention of its prohibition when faxes are (intentionally or not)
transmitted to personal computers and fax servers, rather than to
traditional stand-alone facsimile machines. As the House Report
accompanying the TCPA explained, ``facsimile machines are designed to
accept, process and print all messages which arrive over their
dedicated lines. The fax advertiser takes advantage of this basic
design by sending advertisements to available fax numbers, knowing that
it will be received and printed by the recipient's machine.'' H.R. Rep.
No. 102-317 at 10 (1991). However, Congress also took account of the
``interference, interruptions, and expense'' resulting from junk faxes,
emphasizing in the same Report that ``[i]n addition to the costs
associated with the fax advertisements, when a facsimile machine is
receiving a fax, it may require several minutes or more to process and
print the advertisement. During that time, the fax machine is unable to
process actual business communications. H.R. Rep. No. 102-317 at 25
(1991).''

145. Facsimile messages sent to a computer or fax server may shift
the advertising costs of paper and toner to the recipient, if they are
printed. They may also tie up lines and printers so that the
recipients' requested faxes are not timely received. Such faxes may
increase labor costs for businesses, whose employees must monitor faxes
to determine which ones are junk faxes and which are related to their
company's business. Finally, because a sender of a facsimile message
has no way to determine whether it is being sent to a number associated
with a stand-alone fax machine or to one associated with a personal
computer or fax server, it would make little sense to apply different
rules based on the device that ultimately received it.

Identification Requirements

146. The TCPA and Commission rules require that any message sent
via a telephone facsimile machine contain the date and time it is sent
and an identification of the business, other entity, or individual
sending the message and the telephone number of the sending machine or
of such business, other entity, or individual. 47 U.S.C. 227(d)(1)(B);
47 CFR 68.318(d). In the 2002 Notice, the Commission asked whether
these rules have been effective at protecting consumers' rights to
enforce the TCPA. The Commission determined in its Rules and
Regulations Implementing the Telephone Consumer Protection Act of 1991,
CC Docket No. 92-90, Order on Further Reconsideration, 12 FCC Rcd 4609,
4613, para. 6 (1997) (1997 TCPA Reconsideration Order) that a facsimile
broadcast service must ensure that the identifying information of the
entity on whose behalf the provider sent messages appear on facsimile
messages. In its discussion, the Commission clarified that the sender
of a facsimile message is the creator of the content of the message,
finding that Section 227(d)(1) of the TCPA mandates that a facsimile
include the identification of the business, other entity, or individual
creating or originating a facsimile message, and not the entity that
transmits the message. The Commission believes that if a fax
broadcaster is responsible for the content of the message or for
determining the destination of the message (i.e., supplying the list of
facsimile numbers to which the faxes are sent), it should be identified
on the facsimile, along with the entity whose products are advertised.
Therefore, we amend the rules to require any fax broadcaster that
demonstrates a high degree of involvement in the transmission of such
facsimile message to be identified on the facsimile, along with the
identification of the sender. This will permit consumers to hold fax
broadcasters accountable for unlawful fax advertisements when there is
a high degree of involvement on the part of the fax broadcaster.
Commenters suggested the Commission clarify what constitutes an
adequate identification header. Consistent with our amended
identification rules for telemarketing calls, senders of fax
advertisements will be required under the new rules to use the name
under which they are officially registered to conduct business. Use of
a ``d/b/a'' (``doing business as'') or other more widely recognized
name is permissible; however, the official identification of the
business, as filed with state corporate registration offices or
comparable regulatory entities, must be included, at a minimum.

*************************************************
Final Rules

2. Subpart L is amended by revising the subpart heading to read as
follows:
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Subpart L--Restrictions on Telemarketing and Telephone Solicitation
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3. Section 64.1200 is revised to read as follows:

Sec. 64.1200 Delivery restrictions.

(a) No person or entity may: ….

…. (3) Use a telephone facsimile machine, computer, or other device to
send an unsolicited advertisement to a telephone facsimile machine,
(i) For purposes of paragraph (a)(3) of this section, a facsimile
advertisement is not ``unsolicited'' if the recipient has granted the
sender prior express invitation or permission to deliver the
advertisement, as evidenced by a signed, written statement that
includes the facsimile number to which any advertisements may be sent
and clearly indicates the recipient's consent to receive such facsimile
advertisements from the sender.
(ii) A facsimile broadcaster will be liable for violations of
paragraph (a)(3) of this section if it demonstrates a high degree of
involvement in, or actual notice of, the unlawful activity and fails to
take steps to prevent such facsimile transmissions.

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(f) As used in this section…

…. (8) The term telephone facsimile machine means equipment which has
the capacity to transcribe text or images, or both, from paper into an
electronic signal and to transmit that signal over a regular telephone
line, or to transcribe text or images (or both) from an electronic
signal received over a regular telephone line onto paper.

(10) 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.

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6. Section 68.318 is amended by revising paragraph (d) to read as
follows:
Sec. 68.318 Additional limitations.

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(d) Telephone facsimile machines; Identification of the sender of
the message. It shall be unlawful for any person within the United
States to use a computer or other electronic device to send any message
via a telephone facsimile machine unless such person clearly marks, in
a margin at the top or bottom of each transmitted page of the message
or on the first page of the transmission, the date and time it is sent
and an identification of the business, other entity, or individual
sending the message and the telephone number of the sending machine or
of such business, other entity, or individual. If a facsimile
broadcaster demonstrates a high degree of involvement in the sender's
facsimile messages, such as supplying the numbers to which a message is
sent, that broadcaster's name, under which it is registered to conduct
business with the State Corporation Commission (or comparable
regulatory authority), must be identified on the facsimile, along with
the sender's name. Telephone facsimile machines manufactured on and
after December 20, 1992, must clearly mark such identifying information
on each transmitted page.
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47 CFR Parts 64 and 68
[CG Docket No. 02-278, FCC 03-153]