Court Victory for Unsolicited Fax Advertising

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The government's ban on unsolicited fax advertising is unconstitutional, a federal judge ruled in a lawsuit by the state of Missouri against a company accused of issuing "junk faxes," the American Teleservices Association said last week.


The U.S. District Court for the Eastern District of Missouri, located in St. Louis, ruled against the Missouri Attorney General's office in its suit against American Blast Fax, a Texas firm that has been the subject of much litigation concerning its fax advertising activities.


In June 2000, Missouri accused American Blast Fax of sending unsolicited commercial faxes to more than 125,000 people in St. Louis. Unsolicited commercial faxes are banned under the Telephone Consumer Protection Act, under which the Federal Communications Commission regulates telemarketing.


According to the ATA, the judge used an established legal test to determine whether the ban on unsolicited fax advertising was justified. The judge asked whether the faxes were protected by the First Amendment, and whether the government had a substantial interest in regulating the activity in question.


The judge ruled that the faxes were protected by the First Amendment, and further ruled that that state had failed to prove its substantial interest in regulating the faxes. The state's arguments that its interest in regulating the faxes was substantial because they unfairly place the cost of advertising on consumers was rejected for lack of evidence, the ATA said.


The Missouri Attorney General's office said it would appeal the judge's decision. For now, the decision will affect only the Eastern District of Missouri, or the eastern half of the state, but if upheld could have broader significance.


"We're disappointed," said Scott Holste, spokesman for the Attorney General's office. "This could mean that consumers and small business would have to bear the costs of advertising they didn't ask for and did not want to receive."


In its announcement, the ATA did not express an opinion on unsolicited fax advertising. However, it said the judge's ruling could be relevant in a bigger battle -- the Federal Trade Commission's effort to create a national do-not-call list and impose stricter restrictions on telemarketers.


Much like the American Blast Fax case, the FTC has failed to prove that the government has a substantial interest in regulating telemarketing, which is a form of free speech, the ATA said. Just like the Missouri Attorney General, the FTC has failed to provide hard evidence, according to the ATA.


"There has been no demonstration that telemarketing calls constitute a real harm or are a 'serious problem,' " the ATA said in a statement. "The remedies being proposed do not represent a 'close fit.' Other remedies, such as disclosures, should suffice."


Several state and private entities have sued American Blast Fax, including Texas and the Dallas Cowboys football team. Company owner Robert M. Horne told the New York Times last year that his company was facing litigation in excess of $1 billion.


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