Can unsolicited fax ads be sent under federal and state law? The short answer is no, however there are exemptions for existing client relationships that provide some latitude to marketers.
The Telephone Communication Protection Act of 1991 (TCPA) prohibits the facsimile transmission of an unsolicited advertisement to another fax machine. However, fax advertisements to recipients that are in an established business relationship with the sender are not prohibited by the federal statute.
The TCPA prohibits the “use of any telephone facsimile machine, or other device to send unsolicited advertisements to a telephone facsimile machine.” The statute applies to interstate transactions. An entity that sends unsolicited advertisements via fax can be enjoined from making future transmissions, as well as suffer monetary damages in the amount of the actual loss suffered or $500 for each transmission, whichever is greater.
If the sender of the facsimile willfully or knowingly violates the statute, treble damages of $1,500 for each transmission can be awarded. (In other words, anybody reading and understanding this column has just qualified for the triple-dip club.)
The TCPA defines the term “unsolicited advertisement” as “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.”
While there is no case law that directly defines an “established business relationship,” the applicable Code of Federal Regulations defines the terms as “a prior or existing relationship formed by a voluntary two-way” communication between a person or entity. . . in which the relationship has not been previously terminated by either party.”
Eye on the states The TCPA grants state courts exclusive jurisdiction over private actions. In Chair King, Inc. v. Houston Cellular Corporation, the plaintiffs brought a private action in federal court under TCPA alleging that the defendant had sent them unsolicited advertisements through their fax machines and sought to recover on behalf of themselves and others in a class action. The Court held that the TCPA creates a private right of action for damages and injunctive relief by a person who suffers a violation of the statute but granted exclusive jurisdiction for such action to the state courts. The U.S. Court of Appeals for the 5th Circuit therefore held that individuals could only sue in state court and dismissed the cause of action.
The statute provides that “nothing in this section or in the regulations prescribed under this section shall preempt any state law that imposes more restrictive intrastate requirements or regulations or which prohibit . . . the use of telephone facsimile machines or other electronic devices to send unsolicited advertisements.” That raises the question whether the federal preempts all less restrictive state statutes that govern intrastate faxes.
In 1997, the court, in National Notary Association v. FSI Educational Seminars Inc., held that because the California statute was less restrictive than the TCPA, the federal law preempted state law. However, an earlier decision in the 8th Circuit interpreted the federal statutory language to not expressly preempt less restrictive intrastate requirements.
Only Florida, West Virginia, and Wisconsin have statutes that specifically address intrastate faxes, and only West Virginia’s law is actually less restrictive than the TCPA.
The more restrictive state requirements include slightly greater fines or additional penalties, such as reasonable attorney’s fees. Many states do not have statutes that specifically address unsolicited fax advertising. Therefore, depending on their interpretation of TCPA, intrastate but not interstate faxes may be allowed in the following states:
Alabama, Alaska, Arizona, Arkansas, Delaware, Hawaii, Indiana, Iowa, Kansas, Kentucky, Louisiana, Massachusetts, Mississippi, Missouri, Montana, New Hampshire, New Jersey, New Mexico, North Carolina, North Dakota, Pennsylvania, South Dakota, Tennessee, Vermont, Washington, and Wyoming.
Other states all vary in their regulations and penalties, so evaluate specific state and federal requirements before undertaking any fax-based promotion programs.
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