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New Junk Fax Law

Everyone hates junk faxes, myself included, but the Congressional ban on fax advertising in the Telephone Consumer Protection Act is a cure that may have been worse than the disease. An amendment to the TCPA, which became law on July 9, may be just a little of what the doctor ordered.

Since the early 1990s, the TCPA has prohibited the transmission of unsolicited commercial advertisements by fax, authorizing the courts to award damages of $500 per violation (trebled for a finding of willfulness). Two developments, however, conspired to make the enforcement of this law both complicated and a cottage industry for some plaintiffs' lawyers.

Always on the lookout to right the wrongs of the world, crafty plaintiffs' lawyers had used the TCPA to assemble putative classes of fax recipients, turning what Congress had envisioned as a small claims action for $500 into multi-million dollar claims. Because of the difficulties of disproving the elements of a TCPA claim, many businesses that used fax advertising with their existing customers were forced to settle cases like this, even though many of the putative class members were perfectly happy to have received the fax in question.

The second complicating development under the TCPA, as Eric Sinrod explains is his column today, was the FCC's adoption of regulations that permitted businesses with an "established business relationship" to send faxes to their customers without violating the TCPA.

In 2003, however, following a rule-making, the FCC reversed itself, issuing an order that would have eliminated the "established business relationship" exemption. The FCC's reversal, however, was never implemented as the FCC delayed the implementation date several times, as recently as June 25, 2005.

In the June 25th Order, the FCC noted pending legislation in Congress that would have statutorily created an "established business relationship" exception and determined that this pending legislation merited a delay in the regulation.

Congress came through, in the form of S. 714, which was adopted by both houses in late June and signed by the President on July 9, becoming Public Law No. 109-021.

This amendment should go a long way towards eliminating the confusion that surrounded the FCC's "established business relationship," reducing suits against companies that use facsimiles to communicate with their customers.



Rafael Mangual
Project Manager,
Legal Policy

Katherine Lazarski
Manhattan Institute


Published by the Manhattan Institute

The Manhattan Insitute's Center for Legal Policy.