FCC Revisions Could Undo Fax Advertising

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New rules governing fax advertising have imposed some of the most stringent regulations yet on a direct marketing channel and have left the fax industry worried about the medium's future as a marketing tool.


Under the old Federal Communications Commission rules, marketers could send fax advertising only to consumers with whom they had an existing business relationship, under threat of an $11,000 per violation penalty. However, according to the new rules, an existing business relationship is not enough, and marketers must obtain express written consent -- including a signature -- before sending faxes.


An FCC spokeswoman said the new rules would take effect 30 days after they are published in the Federal Register, which she expected to occur this week.


Nowhere else in its telemarketing rules does the FCC impose such a rigid limitation, said Andrew Lustigman, New York advertising attorney and DM News columnist. For traditional voice telemarketing, the FCC and Federal Trade Commission allow calls to an existing business relationship, defined as any consumer who has made a purchase within the past 18 months or an inquiry or application within the past three months.


In its July 3 report on changes to the Telephone Consumer Protection Act rules, of which the new fax rules are a part, the FCC said that consumers felt "besieged" by unsolicited commercial faxes and complained that the faxes increased their costs for paper and toner.


But members of the fax industry fear that the new rules will go beyond punishing unscrupulous "junk faxers" and turn simple marketing transactions, such as faxing a menu or price list in response to a customer request, into complicated processes.


"Basically, it renders faxing between businesses almost impossible," said Chem Cohen, president of fax technology provider Rainbow Software, Richmond, British Columbia.


Cohen's company makes broadcast fax software called BroadFax and provides fax network infrastructure for businesses. He said he and others in the broadcast fax industry were baffled by the FCC's new rules.


"Anything I send you can be construed as fax advertising," he said. "To me, it's an unworkable decision. I don't think they will be able to enforce it."


Faxes in a marketing setting generally are used for one-to-one communications, such as when a customer asks for product and pricing information from a vendor, Cohen said.


Now, many in the fax industry wonder whether companies have to keep records of written permissions they have received to fax customers, even those who verbally request to be faxed with marketing materials. The requirement could be a record-keeping debacle for companies that rely on faxes for business communications, Lustigman said.


"It creates an enormous record-keeping obligation and imposition on business when one is not really necessary," he said.


However, Michael Worsham, a Forest Hills, MD, attorney who has represented consumers in junk fax cases, said the new rules clarify some ambiguities about what constitutes permission to fax. He recalled a case in which he represented a consumer against a small-business owner who collected business cards in a contest, thinking that represented permission.


In another case involving Fax.com, an Aliso Viejo, CA, fax broadcaster, Worsham recalled a deposition in which Fax.com said it would send faxes giving recipients the opportunity to opt out from future faxes. If the recipient didn't respond in seven days, Fax.com would take that as permission, Worsham said.


Fax.com representatives did not respond to phone or e-mail messages last week. The company made headlines last year when Silicon Valley entrepreneur Steve Kirsch, co-founder of the Infoseek Internet search engine and current president of Propel Software, filed a $2.2 trillion lawsuit against it. Representatives of Kirsch's company and his attorney in the case also did not respond to calls for comment.


In requiring signed, written permission for fax advertising, the FCC is creating a definite standard, Worsham said. Further, it's unlikely legitimate fax marketers will get burned by the new rules because if they are faxing materials that have been requested verbally by a customer, it's unlikely the customer will complain, he said.


However, Richard Keyt, a Phoenix attorney who also handles junk fax cases, said he thinks the new FCC rules don't get to the heart of the problem with junk faxes. Fax advertisers who know the rules will change their practices, but to enforce the rules on unscrupulous junk faxers, consumers need the power to protect themselves, he said.


Keyt said he advocates increasing the maximum amount of money for which a consumer can sue for junk-fax violations, now at $500 per violation or $1,500 per violation committed willfully and knowingly. Consumers also should be allowed to sue for attorney fees so more lawyers would be willing to take private junk-fax cases, he said.


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