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Mr. Ray Horak Photo

In an effort to address a growing number of telephone marketing calls and certain other telemarketing practices thought to be invasions of privacy, Congress enacted the Telephone Consumer Protection Act of 1991 (TCPA), codified at 47 U.S.C. § 227. We all know about the restrictions on unsolicited telemarketing calls to consumers and the national do-not-call list that effectively ended those annoyances..or opportunities, depending on your perspective. Many of us also are aware that, with some enumerated exceptions, the TCPA made it unlawful "to use any telephone facsimile machine, computer, or other device to send, to a telephone facsimile machine, an unsolicited advertisement unless...." The TCPA defined a 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." This very specific language was later broadened in FCC regulations which themselves were codified in 2003 at 47 CFR Parts 64 and 68. These FCC rules added personal computers equipped with fax modems and fax servers to the list of devices covered by the law, but specifically exempted "fax sent as email over the Internet." There also is an exemption if you can prove an existing business relationship (EBR). It's not quite that simple, of course, as there remain technical arguments about the definitions of such critical terms as facsimile machine, transmit, email and regular telephone line, to name a few.

If a plaintiff can prove the transmission of a single unsolicited fax, the prescribed penalty is $500. If the violation can be proved to be willful, the penalty is trebled to $1,500. You may think that $500 or even $1,500 is trivial. After all, that's the sort of issue that a really irate business person takes to small claims court, which is exactly where Senator Hollings, sponsor of the TCPA in the House of Representatives, says the Congress intended these things to be resolved. But if you multiply those penalties by thousands, the numbers get real big and the matter becomes very serious, indeed. That's what happens if a law firm that specializes in suing businesses for huge recoveries prevails in a class action suit. Defending yourself can be a very expensive proposition and winning your case can be tough.

The scenario may go something like this. A fax broadcaster (i.e., fax blaster) approaches you with the idea of a $200 advertising campaign comprising faxes to 5,000 businesses of a certain size and SIC in the immediate ZIP code or area code. The fax blaster represents that it will select the fax recipients from a commercially available list of companies who have indicated their willingness to receive unsolicited advertisements. That sounds like a real bargain, so you, as the business owner or manager, agree and collaborate with the fax blaster to customize a simple ad template, offering a discounted dental exam, free insurance evaluation or something of the sort. Some of the recipients don't appreciate the unsolicited fax. One actually files a claim in small claims court or contacts an attorney, who files a claim on his behalf, subpoenas the transmitting fax logs, notes the fact that there were as many as 5,000 other faxes involved and seeks class action status on behalf of the one active and 5,000 or so passive plaintiffs. The fax broadcaster is no longer in business and nowhere to be found. That leaves you, the advertiser, holding the bag, i.e., separately liable. If my math is correct, the exposure is in the range of $2,500,000 or $7,500,000 if the violations are proved to be willful. Note: Such cases often involve thousands of faxes, thousands of passive plaintiffs across dozens of jurisdictions (Remember that we're talking federal law here, but there are overlapping state laws that can increase your exposure, affect the statute of limitations, etc.) and millions of dollars. If your ad happened to be one of a dozen on a page, multiply the aggregate risk times a factor of 12. A business liability insurance policy may cover some of that, but contemporary policies typically exclude TCPA matters. These cases rarely go to trial but rather are settled out of court and the records sealed to mask the strategies and settlement amounts. In any case, so to speak, the class action attorneys at the firm of Rumpelstiltskin LLP can spin 1 junk fax into bars of gold for themselves and pigs of lead for the unsuspecting business-to-business advertiser. Note: if the fax logs contain evidence of other clients of the same fax broadcaster, you may have lots of company, as if that were to bring you any solace.

There are preventions and defenses, of course. Perhaps the best advice is to scrutinize your fax marketing practices. Avoid faxing anything at all to any company or person with whom you do not have a provable existing business relationship (EBR) or permission, be sure to include an opt-out provision and maintain the EBR proof for at least 4 years, which is the TCPA statute of limitations. All unsolicited faxes must include a very specifically worded opt-out provision. The corollary here is to avoid using a third-party fax broadcaster-unless the company is absolutely rock solid ethically, operationally and financially. Also, avoid using a publically available list of fax numbers. Avoidance is the operative word.

There also are a variety of defenses that can be more or less successful, depending on the specifics of the case, the jurisdiction (state vs. federal) in which it is filed, and the skill and experience of the attorneys for the plaintiffs and defense. The attorneys representing the plaintiffs often are highly skilled and experienced in TCPA class action litigation. But there also are excellent attorneys who have successfully defeated class action junk fax claims and/or mitigated plaintiffs' damage claims. Attorneys for both the plaintiffs and the defendant typically engage an expert witness, a role that I sometimes play-for the defense.


Disclaimer: Ray Horak is not an attorney and does not offer legal advice. The legal information provided herein is, at best, of a general nature and cannot substitute for the advice of a competent, licensed professional with specialized knowledge who can apply it to the particular circumstances of your case. Please contact a local bar association, law society or similar organization in your jurisdiction to obtain a referral to a competent, licensed attorney.

The original version of this article initially appeared in the August 2008 issue of Telecom Reseller, The Newspaper for Telecom Networks, for which Ray is the Technology Editor.

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Mr. Ray Horak is an independent telecommunications consultant, lecturer, writer, columnist and author who is internationally recognized for his ability to translate complex technical matter into plain-English, commonsense terms. He provides litigation support services as a consulting and testifying expert across a wide range of telecom matters, including the TCPA. His latest books are Telecommunications and Data Communications Handbook and Webster's New World Telecom Dictionary, both published by John Wiley & Sons (2007). See the dictionary, in particular, for multiple authoritative definitions of analog, digital, channel, circuit, line, loop, trunk and more than 4,600 other telecom terms.

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