3 May 2006
-----------------------------------------------------------------------
[Federal Register: May 3, 2006 (Volume 71, Number 85)]
[Rules and Regulations]
[Page 25967-25979]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr03my06-16]
[[Page 25967]]
-----------------------------------------------------------------------
FEDERAL COMMUNICATIONS COMMISSION
47 CFR Part 64
[CG Docket Nos. 02-278 and 05-338; FCC 06-42]
Rules and Regulations Implementing the Telephone Consumer
Protection Act of 1991; Junk Fax Prevention Act of 2005
AGENCY: Federal Communications Commission.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: In this document, the Commission amends its rules on
unsolicited facsimile advertisements as required by the Junk Fax
Prevention Act of 2005 (the Junk Fax Prevention Act). In addition, the
Commission addresses certain issues raised in petitions for
reconsideration of the 2003 Report and Order concerning the Telephone
Consumer Protection Act's (TCPA) facsimile advertising rules.
DATES: Effective August 1, 2006 except for 47 CFR 64.1200(a)(3)(i),
(ii), (iii), (iv), and (vi) which contains information collection
requirements that must be approved by the Office of Management and
Budget (OMB). The Commission will publish a document in the Federal
Register announcing the effective date of these paragraphs. Written
comments on the new information collection(s) must be submitted by the
public, Office of Management and Budget (OMB) and other interested
parties on or before June 2, 2006. The Commission also lifts the stay
in 47 CFR 64.1200(f)(3) effective May 3, 2006.
FOR FURTHER INFORMATION CONTACT: Erica McMahon or Richard Smith,
Consumer & Governmental Affairs Bureau, (202) 418-2512.
SUPPLEMENTARY INFORMATION: This document contains modified information
collection requirements subject to the Paperwork Reduction Act of 1995
(PRA), Public Law 104-13. These will be submitted to the Office of
Management and Budget (OMB) for review under 3507(d) of the PRA. OMB,
the general public, and other Federal agencies are invited to comment
on the new information collection requirements contained in this
proceeding. This is a summary of the Commission's Report and Order and
Third Order on Reconsideration, CG Docket Nos. 02-278 and 05-338, FCC
06-42, adopted April 5, 2006, and released April 6, 2006 (Order). The
Order amends the Commission's rules on unsolicited facsimile
advertisements as required by the Junk Fax Prevention Act. The Order
also addresses issues raised in petitions for reconsideration arising
from the Rules and Regulations Implementing the Telephone Consumer
Protection Act of 1991, Report and Order, (2003 TCPA Order), CG Docket
No. 02-278, FCC 03-153, released July 3, 2003; published at 68 FR
44144, (July 25, 2003). This document also addresses issues raised in
the Junk Fax Prevention Act Notice of Proposed Rulemaking (JFPA NPRM),
CG Docket Nos. 02-278 and 05-338, FCC 05-206, released December 9,
2005; published at 70 FR 75070 (December 19, 2005), which proposed
modifications to the Commission's rules on unsolicited facsimile
advertisements, and sought comment on aspects of those rules. Copies of
any subsequently filed documents in this matter will be available for
public inspection and copying during regular business hours at the FCC
Reference Information Center, Portals II, Room CY-A257, 445 12th
Street, SW., Washington, DC 20054. The complete text of this document
may be purchased from the Commission's duplicating contractor at
Portals II, 445 12th Street, SW., Room CY-B402, Washington, DC 20554.
Customers may contact the Commission's duplicating contractor at its
Web site: http://www.bcpiweb.com or call 1-800-378-3160. To request materials
in accessible formats for people with disabilities (Braille, large
print, electronic files, audio format), send an e-mail to
fcc504@fcc.gov or call the Consumer & Governmental Affairs Bureau at
(202) 418-0530 (voice) or (202) 418-0432 (TTY). The document can also
be downloaded in Word and Portable Document Format (PDF) at http://www.fcc.gov/cgb/policy
.
Paperwork Reduction Act of 1995 Analysis
This document contains modified information collection
requirements. The Commission, as part of its continuing effort to
reduce paperwork burdens, invites the general public to comment on the
information collection requirements contained in the Order as required
by the PRA of 1995, Public Law 104-13. Public and agency comments are
due June 2, 2006. In addition, the Commission notes that, pursuant to
the Small Business Paperwork Relief Act of 2002, Public Law 107-198,
see 44 U.S.C. 3506(c)(4), the Commission previously sought specific
comment on how the Commission might ``further reduce the information
collection burden for small business concerns with fewer than 25
employees.'' In this present document, the Commission has assessed the
effect of rule changes and finds that there likely will be an increased
administrative burden on businesses with fewer than 25 employees. The
Commission has taken steps to minimize the information collection
burden for small business concerns, including those with fewer than 25
employees. The rules adopted in this Order do not to require the
maintenance of specific records for the sending of facsimile
advertisements. The Commission also declines to limit the duration of
the Established Business Relationship (EBR), which might have resulted
in an increase in recordkeeping burden for entities sending fax
advertisements on the basis of an EBR. These measures should
substantially alleviate any burdens on businesses with fewer than 25
employees.
Synopsis
In compliance with the requirements of the Junk Fax Prevention Act,
the Commission now amends Sec. 64.1200(a)(3) of the Commission's rules
to expressly recognize an EBR exemption from the prohibition on sending
unsolicited facsimile advertisements. (The Commission correspondingly
withdraws Sec. 64.1200(a)(3)(i) of its rules from its existing rules,
as facsimile senders will now be permitted to send facsimile
advertisements to recipients with whom they have an EBR without first
securing the recipient's written permission.)
To ensure that the EBR exemption is not exploited, the Commission
concludes that an entity that sends a facsimile advertisement on the
basis of an EBR should be responsible for demonstrating the existence
of the EBR. The entity sending the fax is in the best position to have
records kept in the ordinary course of business showing an EBR, such as
purchase agreements, sales slips, applications and inquiry records.
(Digitized documents would be acceptable if kept in the ordinary course
of business and if they established the existence of the EBR.) The
Commission does emphasize that it is not requiring any specific records
be kept by facsimile senders. Should a question arise, however, as to
the validity of an EBR, the burden will be on the sender to show that
it has a valid EBR with the recipient.
Recipient's Facsimile Number
As set forth in the Junk Fax Prevention Act, an EBR alone does not
entitle a sender to fax an advertisement to an individual consumer or
business. The telephone facsimile number must also be provided
voluntarily by the recipient. Specifically, under the new
[[Page 25968]]
rules, any person sending a fax advertisement under the EBR exemption
must have obtained the facsimile number directly from the recipient
within the context of the EBR, or ensure that the recipient voluntarily
agreed to make the number available in a directory, advertisement, or
site on the Internet which is accessible to the public. In accordance
with the Junk Fax Prevention Act, an exception to this requirement will
apply if the EBR was formed prior to July 9, 2005.
Facsimile Number Obtained Directly From Recipient
The provision of a telephone facsimile number to a business or
other entity reflects a willingness to receive faxes from that entity.
Accordingly, it would be permissible for the sender to fax an
advertisement to a recipient that had provided a facsimile number to
the sender, for example, on an application, information request,
contact information form, or membership renewal form. Similarly, a
business card containing a fax number that is provided by the recipient
to the sender would permit the sending of a facsimile advertisement. It
also would be permissible for the recipient to provide to the sender
its facsimile number orally over the telephone or through a Web site
maintained by the fax sender. In circumstances such as these, the
Commission concludes that the consumer has provided the facsimile
number in the context of an established business relationship with the
fax sender. In the event a recipient complains that its facsimile
number was not provided to the sender, the burden rests with the sender
to demonstrate that the number was communicated in the context of the
EBR.
Facsimile Number Obtained From Directory, Advertisement or Internet
Site
The Junk Fax Prevention Act requires that, if the sender relies on
an EBR and obtains the facsimile number from a directory, advertisement
or site on the Internet, the sender must ensure that the recipient
voluntarily agreed to make the number available for public
distribution. Commenters contend that it would be unduly burdensome for
senders of facsimile advertisements to verify that a consumer
voluntarily agreed to make the facsimile number public in every
instance. The Commission agrees. Therefore, the Commission determines
that a facsimile number obtained from the recipient's own directory,
advertisement, or internet site was voluntarily made available for
public distribution, unless the recipient has noted on such materials
that it does not accept unsolicited advertisements at the facsimile
number in question. For instance, if the sender obtains the number from
the recipient's own advertisement, that advertisement would serve as
evidence of the recipient's agreement to make the number available for
public distribution. (Another example might be a number obtained from
the recipient's own letterhead or fax cover sheet.) On the other hand,
if the sender obtains the number from sources of information compiled
by third parties--e.g., membership directories, commercial databases,
or internet listings--the sender must take reasonable steps to verify
that the recipient consented to have the number listed, such as calling
or e-mailing the recipient. The Commission agrees that membership
directories requiring a fee to use are limited in distribution and, as
such, the information included within the directory is made available
to subscribers and purchasers, not to the general public. The
Commission also reiterates that senders of facsimile advertisements
must have an EBR with the recipient in order to send the advertisement
to the recipient's facsimile number. The fact that the facsimile number
was made available in a directory, advertisement or Web site does not
alone entitle a person to send a facsimile advertisement to that
number.
Established Business Relationship Formed Prior to July 9, 2005
Finally, as the Commission noted in the JPFA NPRM, the Junk Fax
Prevention Act provides a third avenue for the sender to obtain the
facsimile number. Pursuant to the statute, the amended rules shall
provide that if the EBR was in existence prior to July 9, 2005, and the
sender also possessed the facsimile number before July 9, 2005, the
sender may send facsimile advertisements to that recipient without
demonstrating how the number was obtained or verifying it was provided
voluntarily by the recipient.
The Commission emphasizes that, to fall within this exception, a
valid EBR must have been formed between the sender and recipient before
July 9, 2005. For example, a business that sold a product to a consumer
in 2004 and secured that consumer's facsimile number in 2004, would be
permitted to fax an advertisement to the consumer regardless of how the
facsimile number was obtained. The Commission agrees with those
commenters that contend it would be burdensome for senders to prove a
facsimile number was in their possession prior to July 9, 2005.
Therefore, the Commission adopts a presumption that, if a valid EBR
existed prior to July 9, 2005, the sender had the facsimile number
prior to that date as well. (This presumption could be rebutted, for
example, with evidence that the recipient did not use the facsimile
number before July 9, 2005.) In the event the recipient alleges a
violation of these provisions, the sender will need to provide proof
that the EBR existed prior to July 9, 2005.
Definition of Established Business Relationship
As noted in the JFPA NPRM, the Junk Fax Prevention Act includes a
definition of an EBR to be used in the context of unsolicited facsimile
advertisements. The statute provides that ``[t]he term `established
business relationship,' * * * shall have the meaning given the term in
Sec. 64.1200 of Title 47 of the Commission's rules * * * as in effect
on January 1, 2003, except that such term shall include a relationship
between a person or entity and a business subscriber subject to the
same terms applicable under such section to a relationship between a
person or entity and a residential subscriber. * * *'' The January 1,
2003 definition did not include any time limitations on the EBR. The
Junk Fax Prevention Act, however, authorizes the Commission to limit
the duration of the EBR in the context of unsolicited facsimile
advertisements after a 3-month period beginning from the date of
enactment of the statute. Therefore, the Commission sought comment in
the JFPA NPRM on whether to limit the EBR. The Commission specifically
sought comment on whether it is appropriate to limit the EBR duration
for unsolicited facsimile advertisements in the same manner as
telephone solicitations.
EBR Definition
Based on the record, and in accordance with the Junk Fax Prevention
Act, the Commission adopts as part of the Commission's rules the
following definition of an EBR for purposes of sending unsolicited
facsimile advertisements:
For purposes of paragraph (a)(3) of this section, the term
established business relationship means a prior or existing
relationship formed by a voluntary two-way communication between a
person or entity and a business or residential subscriber with or
without an exchange of consideration, on the basis of an inquiry,
application, purchase or transaction by the business or residential
subscriber regarding
[[Page 25969]]
products or services offered by such person or entity, which
relationship has not been previously terminated by either party.
This definition extends the EBR exemption to faxes sent to both
business and residential subscribers. Once established, the EBR will
permit an entity to send facsimile advertisements to a business or
residential subscriber until the subscriber ``terminates'' it by making
a request not to receive future faxes. (The Commission notes that the
act of terminating the EBR exemption will only terminate the
relationship for purposes of receiving communications constituting
``unsolicited advertisements.'' A fax regarding collection of a debt
that does not contain an advertisement will not be subject to the
facsimile advertising rules.) This definition also clearly contemplates
that the EBR could be formed by any of the following: An inquiry,
application, purchase or transaction by the business or residential
subscriber. Consistent with the legislative history of the TCPA, an
inquiry by a consumer could form the basis of the EBR. However, the
definition makes clear that the inquiry or application must be about
products or services offered by the entity. Thus, the Commission
concludes that an inquiry about store location or the identity of the
fax sender, for instance, would not alone form an EBR for purposes of
sending facsimile advertisements. Merely visiting a Web site, without
taking additional steps to request information or provide contact
information, also does not create an EBR.
In addition, the Commission concludes that the EBR exemption
applies only to the entity with which the business or residential
subscriber has had a ``voluntary two-way communication.'' It would not
extend to affiliates of that entity, including a fax broadcaster which
is retained to send facsimile ads on behalf of that entity. While the
fax broadcaster may transmit an advertisement on behalf of an entity
that has an EBR with the recipient, it is not permitted to use that
same EBR to send a fax advertisement on behalf of another client. The
Commission finds that, unlike the national do-not-call registry, which
allows consumers to avoid most unwanted telemarketing calls by
registering a telephone number once every five years, the Junk Fax
Prevention Act requires a consumer to opt-out of unwanted fax
advertisements from each entity with which the consumer has an EBR. The
Commission believes that to permit companies to transfer their EBRs to
affiliates would place an enormous burden on consumers to prevent faxes
from companies with which they have no direct business relationship.
Limits on Duration of Established Business Relationship
As required by the Junk Fax Prevention Act, the Commission intends
to closely monitor implementation of the new EBR exemption and opt-out
policies adopted herein. Within one year of the effective date of this
Order, the Commission will evaluate the Commission's complaint data to
determine whether the EBR exception has resulted in a significant
number of complaints regarding facsimile advertisements, and whether
such complaints involve facsimile advertisements sent based on an EBR
of a duration that is inconsistent with the reasonable expectations of
consumers.
Notice of Opt-Out Opportunity
Section 2(c) of the Junk Fax Prevention Act adds language to the
TCPA that requires senders to include a notice on the first page of the
unsolicited advertisement that instructs the recipient how to request
that they not receive future unsolicited facsimile advertisements from
the sender. In accordance with the Junk Fax Prevention Act, the
Commission amends its rules to require that all unsolicited facsimile
advertisements contain a notice on the first page of the advertisement
stating that the recipient is entitled to request that the sender not
send any future unsolicited advertisements. This notice must include a
domestic contact telephone number and a facsimile machine number for
the recipient to transmit such a request to the sender and, as
discussed below, at least one cost-free mechanism for transmitting an
opt-out request. The Commission emphasizes that including an opt-out
notice on a facsimile advertisement alone is not sufficient to permit
the transmission of the fax; an EBR with the recipient must also exist.
Clear and Conspicuous
In the JFPA NPRM, the Commission sought comment on whether it was
necessary to set forth in our rules the circumstances under which the
opt-out notice will be considered ``clear and conspicuous.'' The
Commission is persuaded that rules specifying the font type, size and
wording of the notice might interfere with fax senders' ability to
design notices that serve their customers. However, the Commission
makes some additional determinations about the opt-out notice so that
facsimile recipients have the information necessary to avoid future
unwanted faxes.
Consistent with the definition in our truth-in-billing rules,
``clear and conspicuous'' for purposes of the opt-out notice means a
notice that would be apparent to a reasonable consumer. The Commission
also concludes that the notice must be separate from the advertising
copy or other disclosures and placed at either the top or bottom of the
fax. Many facsimile advertisements today contain text covering the
entire sheet of paper, making it difficult to see an opt-out notice
that is placed among the advertising material. Thus, the notice must be
distinguishable from the advertising material through, for example, use
of bolding, italics, different font, or the like. The Commission
clarifies that, in accordance with the Junk Fax Prevention Act, if
there are several pages to the fax, the first page of the advertisement
must contain the opt-out notice. (If a cover page accompanies the
advertisement, the Commission encourages senders to include the notice
on the cover page as well.)
Cost-Free Opt-Out Mechanism
The Junk Fax Prevention Act requires that the notice identify ``a
cost-free mechanism for a recipient to transmit a request pursuant to
such notice to the sender of the unsolicited advertisement[.]'' In
accordance with the statute, the Commission amends the rules to require
senders to identify a cost-free mechanism in their notices.
In an effort to balance the needs of consumers who wish to opt-out
of faxes with the interests of business, the Commission finds that a
Web site address, e-mail address, toll-free telephone number, or toll-
free facsimile machine number will constitute ``cost-free mechanisms''
for purposes of our rules. The Commission also concludes that a local
telephone number may be considered a cost-free mechanism so long as the
advertisements are sent to local consumers for whom a call to that
number would not result in long distance or other separate charges.
Senders of facsimile advertisements need make available only one of
these mechanisms to comply with this requirement. A Web site or e-mail
address will allow businesses, particularly small businesses, to avoid
excessive costs associated with maintaining a toll-free telephone
number. (Given that the Commission is not mandating that senders offer
a toll-free telephone number for consumers to make opt-out requests,
the Commission
[[Page 25970]]
finds no reason to exempt small business from the cost-free mechanism
requirement. As discussed above, businesses can use a Web site address,
local telephone number, or e-mail address for receiving such requests.
The record contains little empirical evidence that the costs associated
with setting up such processes would be unduly burdensome to a small
business given their revenues. The Commission also notes that a third
party could be retained to maintain any of these opt-out mechanisms,
although the sender remains liable for ensuring that opt-out requests
are honored timely.) If a sender uses a Web site for receiving opt-out
requests, it must describe the opt-out mechanism and procedures clearly
and conspicuously on the first page of the Web site.
As noted above, apart from the cost-free mechanism required by the
statute, the opt-out notice must contain a domestic contact telephone
number and facsimile machine number. If the cost-free mechanism offered
by the sender is either a domestic toll-free telephone number or toll-
free facsimile machine number, the sender will be in compliance with
both sets of requirements. The facsimile number should be a number that
is separate and distinct from the telephone number to ensure consumers
are less likely to find a busy line and can make opt-out requests
without delay. It is the responsibility of the sender to ensure that
the number(s) are available to accept opt-out requests. In accordance
with the statute, the new rules will require the sender to accept opt-
out requests 24 hours, 7 days a week at the number(s), Web site or e-
mail address identified in the opt-out notice.
Timeframe for Honoring Opt-Out Requests
In accordance with the Junk Fax Prevention Act, the Commission
concludes that senders must comply with an opt-out request within the
shortest reasonable time of such request. Taking into consideration
both large databases of facsimile numbers and the limitations on
certain small businesses to remove numbers for individuals that opt-
out, the Commission concludes that a reasonable time to honor such
requests must not exceed 30 days from the date such a request is made.
The record demonstrates that 30 days will provide a reasonable
opportunity for persons, including small businesses, to process
requests and remove the facsimile numbers from their lists or
databases. Consistent with our rules for company-specific do-not-call
requests, facsimile senders with the capability to honor do-not-fax
requests in less than 30 days must do so. The Commission believes that
any period greater than 30 days will likely impose additional costs and
burdens on consumers and businesses that have taken steps to avoid
facsimile messages by making opt-out requests. The Commission also
concludes that the sender must remove the facsimile number from its fax
lists within the 30-day period, regardless of whether it believes the
number may be used by more than one individual. The Commission believes
it is reasonable to presume that persons making opt-out requests on
behalf of a business's facsimile machine are authorized to do so.
Senders must honor such opt-out requests made by the business, even if
doing so restricts faxes sent to all employees of that business. This
determination is consistent with the Commission's findings in the do-
not-call context in which a do-not-call request applies to all persons
at the residence associated with that telephone number.
The Commission declines to limit the time period during which an
opt-out request remains in effect. The Commission recognizes that, like
telephone numbers, facsimile numbers change hands over time. However,
as noted above, the national do-not-call registry requires consumers to
re-register just once every five years to avoid most telemarketing
calls. In the absence of a similar do-not-fax list, a consumer would
need to make numerous--perhaps hundreds--of opt-out requests every five
years to avoid receiving unwanted faxes. Instead, the Commission
concludes that a consumer who wishes to receive faxes at a new number
or resume receiving faxes after previously opting out should notify the
sender of such changes by giving prior express permission to the
sender. The Commission also encourages facsimile senders to update
their facsimile number databases, when consumers subsequently transact
business, file applications or make inquiries.
Identification Requirements and Opt-Out Notice
As noted in the JFPA NPRM, the Commission's existing rules require
senders of facsimile messages to identify themselves on the message,
along with the telephone number of the sending machine or the business,
other entity, or individual sending the message. (The Commission notes
that the ``sender'' of the facsimile advertisement is the person on
whose behalf the advertisement is sent. Under the Commission's rules,
the fax broadcaster must also identify itself if it demonstrates a high
degree of involvement in the sender's facsimile messages, such as
supplying the numbers to which a message is sent.) The TCPA also
requires facsimile messages to include the date and time they are sent.
The Commission sought comment on the interplay between this
identification requirement and the opt-out notice requirement under the
Junk Fax Prevention Act. A few commenters identified additional burdens
associated with complying separately with both requirements. The
Commission concludes that senders that provide their telephone number
and facsimile number as part of the opt-out notice will satisfy the
Commission's identification rule so long as they also identify
themselves by name on the facsimile advertisement.
Request To Opt-Out of Future Unsolicited Advertisements
The Junk Fax Prevention Act requires that a request not to send
future unsolicited facsimile advertisements meet certain requirements.
In accordance with the statutory provisions, the Commission adopts
rules requiring that an opt-out request identify the telephone number
or numbers of the facsimile machines or machines to which the request
relates. In addition, the request must be made using the telephone
number, facsimile number, Web site address or e-mail address provided
by the sender in its opt-out notice. Most commenters argue that
permitting opt-out requests to be made through other avenues not
identified in the notice will impair an entity's ability to account for
all requests and process them in a timely manner. (The Commission
encourages senders that are on actual notice of a recipient's opt-out
request to honor the request even if not sent by the methods identified
in the sender's opt-out notice.) As discussed above, the sender is
required to include a telephone number and facsimile number on the
advertisement, and if neither numbers are cost-free (i.e., they are not
800 toll-free numbers or local numbers for local recipients), then the
sender must have a Web site or e-mail address to permit recipients to
opt-out of future facsimile messages. Requiring recipients to use one
of the methods identified on the facsimile should reasonably permit any
consumer to avoid future facsimile messages from the sender. Under the
new rules, the sender will be prohibited from sending facsimile
advertisements to a person that has submitted a request that complies
with these requirements.
[[Page 25971]]
Interplay Between Established Business Relationship Exemption and Opt-
Out Request
The Commission agrees with the majority of commenters that an opt-
out request should be honored irrespective of whether the recipient
continues to do business with the sender. Therefore, its rules will
reflect that a do-not-fax request will terminate the EBR exemption from
the prohibition on sending facsimile advertisements. This determination
is consistent with the Commission's rules on telephone solicitations,
whereby a telephone subscriber's seller-specific do-not-call request
terminates any EBR exemption with that company even if the subscriber
continues to do business with the seller.
As set forth in the statute, a sender may resume sending facsimile
advertisements to a consumer that has opted-out of such communications
if that consumer subsequently provides his express invitation or
permission to the sender. Of the comments received on this issue, most
agree that when a consumer has made an opt-out request of the sender,
it should be up to the sender to demonstrate that the consumer
subsequently gave his express permission to receive faxes. The
Commission's rules will permit such permission to be granted in writing
or orally. Senders that claim their facsimile advertisements are
delivered based on the recipient's prior express permission must be
prepared to provide clear and convincing evidence of the existence of
such permission.
Third Parties and Fax Broadcasters
The record reveals that fax broadcasters, which transmit other
entities' advertisements to telephone facsimile machines for a fee, are
responsible for a significant portion of the facsimile messages sent
today. The Commission sought comment in the JFPA NPRM on whether to
specify that if the entity transmitting the facsimile advertisement is
a third party agent or fax broadcaster, that any do-not-fax request
sent to that agent will extend to the underlying business on whose
behalf the fax is transmitted. The Commission concludes that the
sender--the business on whose behalf the fax advertisement is
transmitted--is responsible for complying with the opt-out notice
requirements and for honoring opt-out requests. Regardless of whether
the sender includes its own contact information in the opt-out notice
or the contact information of a third party retained to accept opt-out
requests, the sender is liable for any violations of the rules. This
determination is consistent with the Commission's telemarketing rules.
Third parties, including fax broadcasters, need only accept and forward
do-not-fax requests to the extent the underlying business contracts out
such responsibilities to them.
The Commission takes this opportunity to emphasize that under the
Commission's interpretation of the facsimile advertising rules, the
sender is the person or entity on whose behalf the advertisement is
sent. In most instances, this will be the entity whose product or
service is advertised or promoted in the message. As discussed above,
the sender is liable for violations of the facsimile advertising rules,
including failure to honor opt-out requests. Accordingly, the
Commission adopts a definition of sender for purposes of the facsimile
advertising rules.
Under the current rules, a fax broadcaster also will be liable for
an unsolicited fax if it demonstrates a high degree of involvement in,
or actual notice of, the unlawful activity and fails to take steps to
prevent such facsimile advertisements, and the Commission will continue
to apply this standard under our revised rules. If the fax broadcaster
supplies the fax numbers used to transmit the advertisement, for
example, the fax broadcaster will be liable for any unsolicited
advertisements faxed to consumers and businesses without their prior
express invitation or permission. The Commission finds that a fax
broadcaster that provides a source of fax numbers, makes
representations about the legality of faxing to those numbers or
advises a client about how to comply with the fax advertising rules,
also demonstrates a high degree of involvement in the transmission of
those facsimile advertisements. In addition, the Commission concludes
that a highly involved fax broadcaster will be liable for an
unsolicited fax that does not contain the required notice and contact
information. In such circumstances, the sender and fax broadcaster may
be held jointly and severally liable for violations of the opt-out
notice requirements. Based on its own enforcement experience, and the
fact that highly involved fax broadcasters will have firsthand
knowledge of the inclusion of the opt-out notice, the Commission
determines that such a fax broadcaster must, at a minimum, ensure that
the faxes it transmits on behalf of each sender contain the necessary
information to allow a consumer to opt out of a particular sender's
faxes in the future. Otherwise, the consumer may have no means of
stopping unwanted faxes transmitted by the fax broadcaster on behalf of
various advertisers.
Professional or Trade Organizations
The Junk Fax Prevention Act authorizes the Commission to consider
exempting nonprofit organizations from the opt-out notice requirements
discussed above. Specifically, the statute provides that the Commission
may, after receiving public comment, allow professional or trade
associations that are tax-exempt nonprofit organizations to send
unsolicited advertisements to their members in furtherance of the
association's tax-exempt purpose that do not contain the opt-out
notice. The statute requires that the Commission first determine that
such notice is not necessary to protect the ability of the members of
such associations to stop such associations from sending any future
unsolicited advertisements.
Most commenters that are themselves trade associations or
professional organizations argue that they exist to serve their
members, and that members of an association know how to contact those
associations should they no longer wish to receive fax messages. They
contend that most trade associations have a membership or customer
service department that can assist the member with an opt-out request.
Other commenters oppose an exemption for nonprofits, arguing that such
organizations should have no difficulty including an opt-out notice on
their facsimile advertisements.
The Commission is not persuaded that consumers will have the
necessary tools to easily opt-out of unwanted faxes from trade
associations if the faxes received do not contain information on how to
opt out. Moreover, the Commission believes the benefits to consumers of
having opt-out information readily available outweigh any burden in
including such notices. (The Commission notes that the opt-out notice
requirement only applies to communications that constitute unsolicited
advertisements.) Facsimile advertisements impose direct costs on
consumers for paper, toner, and time spent sorting and discarding
unwanted faxes. Should consumers not have access to opt-out contact
information, they may be forced to incur unacceptable costs associated
with faxes sent from nonprofit organizations. In addition, the record
reveals that trade associations already have mechanisms in place
through which members communicate with the organization. Therefore,
inclusion of an opt-out notice on their fax messages should not be
burdensome.
[[Page 25972]]
While neither the TCPA nor its amendments carve out an exemption
for nonprofits from the facsimile advertising rules, the Commission
agrees with those petitioners that argue that messages that are not
commercial in nature--which many nonprofits send--do not constitute
``unsolicited advertisements'' and are therefore not covered by the
facsimile advertising prohibition. (The Commission also emphasizes that
it is not carving out an exemption for tax-exempt nonprofits. Rather,
consistent with the language of the TCPA, the Commission does not
intend for the clarifications in this Order to result in the regulation
of noncommercial speech as commercial facsimile messages under the TCPA
regulatory scheme.) The Commission clarifies that messages that do not
promote a commercial product or service, including all messages
involving political or religious discourse, such as a request for a
donation to a political campaign, political action committee or
charitable organization, are not unsolicited advertisements under the
TCPA. (Under the Federal Election Commission's rules, when a person
pays a political committee for a commercially available product or
service, such as a dinner sponsored by a political campaign, the full
purchase price of the item or service is considered a contribution to
the campaign. Therefore, the fact that a political message contains an
offer to attend a fundraising dinner or to purchase some other product
or service in connection with a political campaign or committee
fundraiser does not turn the message into an advertisement for purposes
of the TCPA's facsimile advertising rules.) The Commission emphasizes
that, under the Junk Fax Prevention Act, even unsolicited
advertisements transmitted by tax-exempt nonprofit organizations may be
sent to persons with whom the senders have an established business
relationship, subject to the other statutory requirements.
Unsolicited Advertisement
Definition
The facsimile advertising rules apply to a fax communication that
constitutes an ``unsolicited advertisement'' as defined in the TCPA.
The Junk Fax Prevention Act amends the term ``unsolicited
advertisement'' by adding ``in writing or otherwise'' before the period
at the end of that section. The Commission proposed amending its rules
to reflect the change in the statutory language. No commenter opposed
the modification. Accordingly, the Commission amends Sec.
64.1200(f)(10) of its rules so that the definition reads as follows:
The term unsolicited advertisement means any material advertising
the commercial availability or quality of any property, goods, or
services which is transmitted to any person without the person's prior
express invitation or permission, in writing or otherwise.
Prior Express Invitation or Permission
The Commission clarifies that, as an initial matter, a sender that
has an EBR with a consumer may send a facsimile advertisement to that
consumer without obtaining separate permission from him. (A sender that
has received an opt-out request from a consumer must cease sending
facsimile advertisements regardless of whether there exists a business
relationship between them.) In the absence of an EBR, the sender must
obtain the prior express invitation or permission from the consumer
before sending the facsimile advertisement. Prior express invitation or
permission may be given by oral or written means, including electronic
methods. The Commission expects that written permission will take many
forms, including e-mail, facsimile, and internet form. Whether given
orally or in writing, prior express invitation or permission must be
express, must be given prior to the sending of any facsimile
advertisements, and must include the facsimile number to which such
advertisements may be sent. It cannot be in the form of a ``negative
option.'' (A facsimile advertisement containing a telephone number and
an instruction to call if the recipient no longer wishes to receive
such faxes, would constitute a ``negative option'' as the sender
presumes consent unless advised otherwise. However, a company that
requests a fax number on an application form could include a clear
statement indicating that, by providing such fax number, the individual
or business agrees to receive facsimile advertisements from that
company or organization.) (Trade and membership organizations could do
so on their membership renewal statements.)
The Commission is concerned that permission not provided in writing
may result in some senders erroneously claiming they had the
recipient's permission to send facsimile advertisements. Commenters
that discussed this issue agree that a sender should have the
obligation to demonstrate that it complied with the rules, including
that it had the recipient's prior express invitation or permission.
Senders who choose to obtain permission orally are expected to take
reasonable steps to ensure that such permission can be verified. In the
event a complaint is filed, the burden of proof rests on the sender to
demonstrate that permission was given. The Commission strongly suggests
that senders take steps to promptly document that they received such
permission. (An example of such documentation could be the recording of
the oral authorization. Other methods might include established
business practices or contact forms used by the sender's personnel.)
Express permission need only be secured once from the consumer in order
to send facsimile advertisements to that recipient until the consumer
revokes such permission by sending an opt-out request to the sender.
The Commission concludes that, in the absence of an EBR, facsimile
requests for permission to transmit faxed advertisements would not be
permissible, as they would impose costs on consumers who had not yet
consented to receive such communications.
Senders who claim they obtained a consumer's prior express
invitation or permission to send them facsimile advertisements prior to
the effective date of these rules will not be in compliance unless they
can demonstrate that such authorization met all the requirements
adopted herein. In addition, entities that send facsimile
advertisements to consumers from whom they obtained permission must
include on the advertisements their opt-out notice and contact
information to allow consumers to stop unwanted faxes in the future.
``Transactional'' Communications
The Commission agrees with those petitioners who argue that
messages whose purpose is to facilitate, complete, or confirm a
commercial transaction that the recipient has previously agreed to
enter into with the sender are not advertisements for purposes of the
TCPA's facsimile advertising rules. For example, a receipt or invoice,
the primary purpose of which is to confirm the purchase of certain
items by the facsimile recipient, is not an advertisement of the
commercial availability of such items. Similarly, messages containing
account balance information or other type of account statement which,
for instance, notify the recipient of a change in terms or features
regarding an account, subscription, membership, loan or comparable
ongoing relationship, in which the recipient has already purchased or
is currently using the facsimile sender's product or service, is not an
advertisement. Communications
[[Page 25973]]
sent to facilitate a loan transaction, such as property appraisals,
summary of closing costs, disclosures (such as the Good Faith Estimate)
and other similar documents are not advertisements when their purpose
is to complete the financial transaction. A travel itinerary for a trip
a customer has agreed to take or is in the process of negotiating is
not an unsolicited advertisement. Similarly, a contract to be signed
and returned by the agent or traveler that is for the purpose of
closing a travel deal is not an advertisement for purposes of the
prohibition. (However, the Commission finds that messages regarding
travel deals, bonus commission offers and other promotional information
are advertisements and would require the recipient's express permission
in the absence of an established business relationship.) A
communication from a trade show organizer to an exhibitor regarding the
show and her appearance will not be considered an unsolicited
advertisement, provided the exhibitor has already agreed to appear. The
Commission also concludes that a mortgage rate sheet sent to a broker
or other intermediary or a price list sent from a wholesaler to a
distributor (e.g., food wholesaler to a grocery store) for the purpose
of communicating the terms on which a transaction has already occurred
are not advertisements. (Commercial facsimile messages that advertise
the commercial availability or quality of property, goods, or services,
but purport to be ``price sheets'' or ``rate sheets'' in order to evade
the TCPA rules, are nevertheless unsolicited advertisements, if not
sent for the purpose of facilitating, completing, or confirming an
ongoing transaction.)
A subscription renewal notice would be considered ``transactional''
in nature, provided the recipient is a current subscriber and had
affirmatively subscribed to the publication. Finally, a notice
soliciting bid proposals on a construction project would not be subject
to the facsimile advertising prohibition, provided the notice does not
otherwise contain offers for products, goods, and services. Similarly,
bids in response to specific solicitations would not be covered by the
rules, as such communications are presumably to facilitate a commercial
transaction that the recipient has agreed to enter into by soliciting
the bids.
In order for such messages to fall outside the definition of
``unsolicited advertisement,'' they must relate specifically to
existing accounts and ongoing transactions. Messages regarding new or
additional business would advertise ``the commercial availability or
quality of any property, goods, or services * * *'' and therefore would
be covered by the prohibition. Thus, applications and materials
regarding educational opportunities and conferences sent to persons who
are not yet participating or enrolled in such programs are unsolicited
advertisements and require the recipient's permission or the existence
of an established business relationship before faxing the recipient
such information. Similarly, a rate sheet on financial products
transmitted to a potential borrower or potential brokers would not be
considered merely ``transactional'' in nature and would require the
sender to either have an established business relationship with the
recipient or first obtain express permission from the recipient.
In response to arguments that a de minimis amount of advertising
information should not convert a communication into an ``unsolicited
advertisement,'' the Commission concludes that a reference to a
commercial entity does not by itself make a message a commercial
message. For example, a company logo or business slogan found on an
account statement would not convert the communication into an
advertisement, so long as the primary purpose of the communication is,
for example, to relay account information to the fax recipient.
Offers for Free Goods and Services and Informational Messages
The Commission concludes that facsimile messages that promote goods
or services even at no cost, such as free magazine subscriptions,
catalogs, or free consultations or seminars, are unsolicited
advertisements under the TCPA's definition. In many instances, ``free''
seminars serve as a pretext to advertise commercial products and
services. Similarly, ``free'' publications are often part of an overall
marketing campaign to sell property, goods, or services. For instance,
while the publication itself may be offered at no cost to the fascimile
recipient, the products promoted within the publication are often
commercially available. Based on this, it is reasonable to presume that
such messages describe the ``quality of any property, goods, or
services.'' Therefore, facsimile communications regarding such free
goods and services, if not purely ``transactional,'' would require the
sender to obtain the recipient's permission beforehand, in the absence
of an EBR.
By contrast, facsimile communications that contain only
information, such as industry news articles, legislative updates, or
employee benefit information, would not be prohibited by the TCPA
rules. An incidental advertisement contained in such a newsletter does
not convert the entire communication into an advertisement. (In
determining whether an advertisement is incidental to an informational
communication, the Commission will consider, among other factors,
whether the advertisement is a bona fide ``informational
communication.'' In determining whether the advertisement is to a bona
fide ``informational communication,'' the Commission will consider
whether the communication is issued on a regular schedule; whether the
text of the communication changes from issue to issue; and whether the
communication is directed to specific regular recipients, i.e., to paid
subscribers or to recipients who have initiated membership in the
organization that sends the communication. The Commission may also
consider the amount of space devoted to advertising versus the amount
of space used for information or ``transactional'' messages and whether
the advertising is on behalf of the sender of the communication, such
as an announcement in a membership organization's monthly newsletter
about an upcoming conference, or whether the advertising space is sold
to and transmitted on behalf of entities other than the sender). Thus,
a trade organization's newsletter sent via facsimile would not
constitute an unsolicited advertisement, so long as the newsletter's
primary purpose is informational, rather than to promote commercial
products. The Commission emphasizes that a newsletter format used to
advertise products or services will not protect a sender from liability
for delivery of an unsolicited advertisement under the TCPA and the
Commission's rules. The Commission will review such newsletters on a
case-by-case basis.
Finally, the Commission concludes that any surveys that serve as a
pretext to an advertisement are subject to the TCPA's facsimile
advertising rules. The TCPA's definition of ``unsolicited
advertisement'' applies to any communication that advertises the
commercial availability or quality of property, goods or services, even
if the message purports to be conducting a survey.
Petitions for Reconsideration on EBR Exemption
The Commission also takes this opportunity to dismiss as moot, any
pending petitions, or parts thereof, that seek reconsideration of the
Commission's determination that an
[[Page 25974]]
established business relationship will no longer be sufficient to show
that an individual or business has given prior express permission to
receive unsolicited facsimile advertisements and those that seek
reconsideration of the written permission requirement in Sec.
64.1200(a)(3)(i) of the Commission's rules. The Junk Fax Prevention Act
codifies an established business relationship exception to the
prohibition on sending unsolicited facsimile advertisements; therefore,
such petitions are now moot.
Private Right of Action
The TCPA provides consumers with a private right of action in state
court for any violation of the TCPA's prohibitions on the use of
automatic dialing systems, artificial or prerecorded voice messages,
and unsolicited facsimile advertisements. One commenter raises concerns
about class action lawsuits brought under the TCPA, and asks the
Commission to clarify the parameters of the private right of action. As
the Commission has stated in previous orders, Congress provided
consumers with a private right of action, ``if otherwise permitted by
the laws or rules of court of a State.'' This language suggests that
Congress contemplated that such legal action was a matter for consumers
to pursue in appropriate state courts, subject to those state courts'
rules. The Commission continues to believe that it is for Congress, not
the Commission, either to clarify or limit this right of action.
Therefore, the Commission declines to make any determinations about the
specific contours of the private right of action.
Effective Date of Rules
The record reveals that facsimile senders may need additional time
beyond 30 days to comply with the rules adopted herein. For example,
senders will need to ensure that opt-out contact information is
provided on all facsimile advertisements. They also will need to put in
place mechanisms to allow recipients to opt-out of unwanted facsimile
advertisements and establish procedures for removing facsimile numbers
for individuals that have opted out of such advertisements. The
Commission believes it is important to provide adequate time for
senders to come into compliance with the rules adopted in this order.
Therefore, the amended facsimile advertising rules will become
effective August 1, 2006. (Those rules requiring OMB approval under the
Paperwork Reduction Act are not effective until approved by OMB).
Filings in Response to This Order
The Commission recently opened a new docket--CG Docket No. 05-338--
and asked that all filings addressing the facsimile advertising rules
be filed in the new docket. Any filings in response to this Report and
Order also should be filed in CG Docket No. 05-338.
Final Regulatory Flexibility Analysis (FRFA)
As required by the Regulatory Flexibility Act of 1980, as amended
(RFA), an Initial Regulatory Flexibility Analysis (IRFA) was
incorporated in the Notice of Proposed Rulemaking and Order (JFPA
NPRM). The Commission sought written public comment on the proposals in
the JFPA NPRM, including comment on the IRFA. The only comment received
on the IRFA from the Office of Advocacy, U.S. Small Business
Administration is discussed below. This present Final Regulatory
Flexibility Analysis (FRFA) conforms to the RFA.
Need for, and Objectives of, the Report and Order and Third Order on
Reconsideration
This Order is necessary to comply with Congress' mandate for the
Commission to issue regulations implementing the Junk Fax Prevention
Act of 2005. In this Order, and as set forth in the statute, the
Commission: (1) Codifies an established business relationship (EBR)
exemption to the prohibition on sending unsolicited facsimile
advertisements; (2) provides a definition of an EBR to be used in the
context of unsolicited facsimile advertisements that is not limited in
duration; (3) requires the sender of a facsimile advertisement to
provide specified notice and contact information on the facsimile that
allows recipients to ``opt-out'' of any future facsimile transmissions
from the sender; and (4) specifies the circumstances under which a
request to ``opt-out'' complies with the Act.
Specifically, in accordance with the Junk Fax Prevention Act, the
Order permits the sending of facsimile advertisements to recipients
with whom the sender has an EBR, provided certain conditions are met
regarding how the facsimile number was obtained. In addition, the
definition of EBR for purposes of sending facsimile advertisements
extends the EBR exemption to faxes sent to both businesses and
residential subscribers and is not be limited in duration. Under the
new rules, senders of facsimile advertisements must include a notice
describing the procedures for opting out of future faxes. The notice
must be clear and conspicuous and located on the first page of the
advertisement. The rules require that an opt-out notice include a cost-
free mechanism for the recipient to request not to receive future
faxes. The cost-free mechanism must include a toll-free telephone
number, toll-free facsimile number, Web site address, or e-mail
address. If the recipient makes a request not to receive future fax
advertisements, the sender must honor that request within the shortest
reasonable time, not to exceed 30 days.
In addition, the Order declines to exempt small businesses from the
cost-free mechanism requirement, in part because the Commission is not
requiring senders to provide toll-free telephone numbers for recipients
to make opt-out requests. Finally, the Order does not carve out an
exemption for tax-exempt nonprofit professional or trade associations
from the opt-out notice requirement, noting that the benefits to
consumers of having opt-out information readily available outweigh the
burden in including such notices. Finally, the Order addresses certain
issues raised in petitions for reconsideration of the 2003 TCPA Order
concerning the TCPA's facsimile advertising rules. Specifically, the
Order provides guidance to fax senders on what messages do not
constitute unsolicited advertisements for purposes of the fax rules and
therefore could be sent without the prior permission of the recipient.
The Order clarifies that messages that do not promote a commercial
product or service, including all messages involving political or
religious discourse, such as request for a donation to a political
campaign, political action committee or charitable organization, are
not unsolicited advertisements under the TCPA. The Order also concludes
that messages whose purpose is to facilitate, complete, or confirm a
commercial transaction that the recipient has previously agreed to
enter into with the sender are not advertisements. These might include
a receipt or invoice, the primary purpose of which is to confirm the
purchase of certain items by the facsimile recipient, an account
statement, or communications sent to facilitate a loan transaction
already entered into by the recipient. In addition, the Order
determines that facsimile communications that contain only information,
such as industry news articles, legislative updates, or employee
benefit information, would not be prohibited by the TCPA rules. An
incidental advertisement contained in such a facsimile does not convert
the
[[Page 25975]]
entire communication into an advertisement.
Summary of Significant Issues Raised by Public Comments in Response to
the Supplemental IRFA
The only comment filed directly in response to the IRFA was from
the Office of Advocacy of the U.S. Small Business Administration
(Advocacy).
In its comments, Advocacy identified five proposed rules that would
impact small businesses. First, Advocacy noted the Commission's
proposal to limit the duration of the EBR as it applies to unsolicited
fax advertisements. Advocacy contends that, as required by the Junk Fax
Prevention Act, the proposed rule does not include an analysis or
determination that the EBR has resulted in a significant number of
complaints. Advocacy does not believe that the Commission has gathered
the necessary information about complaints to limit the EBR. In
addition, Advocacy contends that for small businesses to keep track of
inquiries by customers would require a considerable increase in the
amount of recordkeeping and would impede the ability of small
businesses to respond to such inquiries.
Second, the Commission asked whether it was necessary to set forth
rules on what is to be considered ``clear and conspicuous'' for
purposes of an opt-out notice on a fax advertisement. Advocacy believes
that the clear and conspicuous requirement should be held to a
reasonable standard and that ``any further attempts by the Commission
to define the notice requirement would likely become mired in minutia
and would likely cause more confusion than guidance.''
Third, Advocacy believes that 30 days to comply with a do-not-fax
request is reasonable. Fourth, Advocacy recommends that the Commission
exempt small businesses from the cost-free mechanism requirement in the
Junk Fax Prevention Act. Advocacy contends that many small businesses
(particularly very small businesses) do not have toll-free numbers. If
the Commission determines not to exempt small businesses, Advocacy
recommends that the Commission allow them to use alternatives to toll-
free numbers because of the ``great expense associated with maintaining
toll-free numbers.'' They state that small businesses recommend e-mail,
web-based systems, or the designation of a third party as viable
alternatives. Advocacy also says that small businesses believe that
once a small business has chosen a means of receiving do-not-fax
requests, then opt-out requests should only be enforceable if they are
received in that manner. Finally, Advocacy indicates that small
businesses believe an exemption for tax-exempt nonprofit associations
from the opt-out notice requirement would be appropriate.
Description and Estimate of the Number of Small Entities to Which Rules
Will Apply
The RFA directs agencies to provide a description of, and, where
feasible, an estimate of, the number of small entities that may be
affected by the rules adopted herein. The RFA generally defines the
term ``small entity'' as having the same meaning as the terms ``small
business,'' ``small organization,'' and ``small governmental
jurisdiction.'' In addition, the term ``small business'' has the same
meaning as the term ``small business concern'' under the Small Business
Act. A ``small business concern'' is one which: (1) Is independently
owned and operated; (2) is not dominant in its field of operation; and
(3) satisfies any additional criteria established by the Small Business
Administration (SBA).
The IFRA stated that the Commission's rules on the sending of
unsolicited facsimile advertisements would apply to any entity,
including any telecommunications carrier, which uses the telephone
facsimile machine to advertise. Advocacy agreed, stating that ``since
what can be considered a commercial fax is so broad, it is appropriate
for the Commission to consider that its rule could potentially impact
almost all small businesses.'' Advocacy also noted that the U.S. Census
Bureau updated its estimates based upon census information from 2002,
which places the total number of small businesses in the United States
(which it defines as firms with fewer than 500 employees) at 5.68
million. Advocacy explains that ordinarily the SBA defines small
business on an industry-by-industry basis. However, Advocacy contends
that this is not practicable for the proposed rules because of its
``broad applicability across industry lines which would create
confusion on the part of small businesses' as to whether or not they
are covered by the rules. Accordingly, Advocacy recommends the
Commission consider adopting a new small business size standard for
this rule. Drawing from the input from small business groups, Advocacy
recommends that the Commission adopt a size standard of 100 employees
for this rulemaking. Based on the U.S. Census 2002 numbers, Advocacy
indicates that 5.6 million firms would then qualify as small
businesses. Given that the Commission is not exempting small businesses
from the requirement to identify a cost-free mechanism for fax
recipients to opt-out of future unwanted faxes, the Commission
concludes that it is not necessary at this time to adopt a new small
business size standard for this rule. Therefore, the Commission
estimates that, consistent with Advocacy's comments, the rules apply to
5.68 million small entities across all industries in the United States.
Description of Projected Reporting, Recordkeeping, and Other Compliance
Requirements
The Order will likely result in increases in projected reporting,
recordkeeping, and other compliance requirements for senders of
facsimile advertisements. The statutory and rule changes affect both
small and large companies. First, in accordance with the Junk Fax
Prevention Act, the Order adopts an EBR exemption for sending fax
advertisements. Should a question arise as to the validity of an EBR,
the burden will be on the sender to show that it has a valid EBR with
the recipient. However, the Commission emphasized that there is no
requirement that senders of fax advertisements maintain any specific
records demonstrating that an EBR exists. The Commission believes the
EBR can be demonstrated with records kept in the ordinary course of
business, such as purchase agreements, sales slips, applications and
inquiry records.
In accordance with the Junk Fax Prevention Act, the Commission
concludes that an EBR alone does not entitle a sender to fax an
advertisement to an individual consumer or business. The sender must
also ensure that the telephone facsimile number was provided
voluntarily by the recipient. The Commission finds that it would be
permissible for the sender to fax an advertisement to a recipient that
had provided a facsimile number directly to the sender, for example, on
an application, information request, contact information form, or
membership renewal form. In the event a recipient complains that its
facsimile number was not provided to the sender, the burden rests with
the sender to demonstrate, with such business records, that the number
was communicated in the context of the EBR. Similarly, if the facsimile
number was obtained from the recipient's own directory, advertisement,
or internet site, the Commission determined that it was voluntarily
made available for public distribution, unless the recipient has noted
on such materials that it does not accept unsolicited advertisements at
the facsimile number in question. In
[[Page 25976]]
such circumstances, the facsimile recipient's own advertisement would
serve as evidence of the recipient's agreement to make the number
available for public distribution. If the sender obtains the number
from sources of information compiled by third parties, the sender must
take reasonable steps to verify that the recipient consented to have
the number listed, such as calling or emailing the recipient. While the
Commission is not requiring that any specific records be kept, should a
question arise about how the facsimile number was obtained, the sender
would need to demonstrate that it was voluntarily provided. It is up to
senders to determine the best way to do so if that becomes necessary.
The Junk Fax Prevention Act requires facsimile senders to include a
notice on the first page of the unsolicited advertisement that
instructs the recipient how to request that they not receive future
unsolicited facsimile advertisements from the sender. In the Order, the
Commission requires that all unsolicited facsimile advertisements
contain a notice on the first page of the advertisement stating that
the recipient is entitled to request that the sender not send any
future unsolicited advertisements. The notice must be separate from the
advertising copy or other disclosures and placed at either the top or
bottom of the fax. The notice also must include a domestic contact
telephone number and a facsimile machine number, and at least one cost-
free mechanism for transmitting an opt-out request. In the Order, the
Commission concludes that a Web site address, e-mail address, toll-free
telephone number, or toll-free facsimile machine number will constitute
``cost-free mechanisms'' for purposes of the rules. For those facsimile
senders that do not already have one of these mechanisms in place, they
will need to implement one in order to give recipients a cost-free way
of opting-out of faxes. In accordance with the statute, the mechanism
must accept opt-out requests 24 hours, 7 days a week at the mechanisms
identified in the notice. The rules also require that highly involved
fax broadcasters must ensure that the faxes it transmits on behalf of
each sender contain the necessary information to allow a consumer to
opt-out of a particular sender's faxes in the future.
The new rules require that a facsimile sender that receives a
request not to send future unsolicited advertisements that complies
with the rules must honor that request within the shortest reasonable
time from the date of such request, not to exceed 30 days, and is
prohibited from sending unsolicited advertisements to the recipient
unless the recipient subsequently provides prior express invitation or
permission to the sender. Facsimile senders will need to take steps to
remove such facsimile numbers from their faxing databases, or maintain
do-not-fax lists to avoid sending advertisements to recipients that
have opted out, within the shortest reasonable time, not to exceed 30
days. If a recipient subsequently provides the sender with his express
permission to send advertisements, whether orally or in writing, the
burden of proof rests with the sender to demonstrate that permission
was given. Thus, the Commission suggests that senders take steps to
promptly document that they received such permission by, for instance,
recording the oral authorization, or using established business
practices or contact forms.
Steps Taken To Minimize Significant Economic Impact on Small Entities
and Significant Alternatives Considered
The RFA requires an agency to describe any significant alternatives
that it has considered in reaching its proposed approach, which may
include the following four alternatives (among others): (1) The
establishment of differing compliance or reporting requirements or
timetables that take into account the resources available to small
entities; (2) the clarification, consolidation, or simplification of
compliance or reporting requirements under the rule for small entities;
(3) the use of performance, rather than design, standards; and (4) an
exemption from coverage of the rule, or any part thereof, for small
entities.
In this Order, the Commission adopts rules in accordance with the
provisions in the Junk Fax Prevention Act. In doing so, the Commission
considers a number of alternatives to minimize the economic impact on
small entities that must comply with the rules. In this Order, the
Commission adopts an EBR exemption to the prohibition on sending
unsolicited facsimile advertisements. The exemption will permit all
entities, including small businesses, to send fax advertisements to
their EBR customers without having to secure written permission from
them first. In addition, the Commission was authorized by Congress to
consider limiting the duration of the EBR. In the Order, the Commission
determined not to limit the EBR and alternatively indicated it would
closely monitor implementation of the new EBR exemption and opt-out
policies adopted in the Order. Within one year of the effective date of
the Order, the Commission will evaluate the Commission's complaint data
to determine whether the EBR exception has resulted in a significant
number of complaints regarding facsimile advertisements and whether
such complaints involve fax advertisements sent based on an EBR of a
duration that is inconsistent with the reasonable expectations of
consumers.
In addition, the Junk Fax Prevention Act requires facsimile senders
to include a clear and conspicuous notice on the first page of the
unsolicited advertisement that instructs the recipient how to opt-out
of future unwanted faxes. As discussed in the Order, the Commission
considered defining clear and conspicuous to mean a notice that is on
the first page of the advertisement and apparent to a reasonable
consumer. Alternatively, the Commission considered providing additional
guidance to ensure that consumers are aware of their opt-out rights and
sending parties have standards by which they can comply with the law.
In the Order, the Commission determined that ``clear and conspicuous''
for purposes of the opt-out notice means a notice that would be
apparent to a reasonable consumer and located on the first page of the
fax advertisement. The Commission further clarified that the notice
must be separate from the advertising copy or other disclosures and
placed at either the top or bottom of the fax. However, the Commission
declined to adopt rules specifying the font type, size and wording of
the notice. The statute also requires that senders identify in their
notices a cost-free mechanism for recipients to transmit opt-out
requests to the senders. Rather than require senders to provide a toll-
free telephone number for consumers to request that no future faxes be
sent, the Commission alternatively adopted rules that permit senders to
use a Web site address, e-mail address, toll-free telephone number, or
toll-free facsimile number. Allowing senders to use Web sites and e-
mail addresses should minimize any burdens on them, particularly small
businesses for whom setting up a toll-free number might be costly. The
Commission also determined that recipients must use the opt-out
mechanisms identified by the senders in their notices so that such
businesses, including small businesses, can more easily account for all
opt-out requests and process them in a timely manner.
In the JFPA NPRM, the Commission sought comment on whether to
exempt small businesses from the requirement to provide a cost-free
mechanism for a recipient to transmit an opt-out request. As noted
above, the Commission
[[Page 25977]]
declined to require fax senders to offer a toll-free number for
recipients to request that no future faxes be sent. Given that the
Commission is not mandating the use of toll-free numbers, as well as
the support in the record for using Web sites and e-mail addresses by
small businesses, the Commission determined not to exempt small
businesses from the cost-free mechanism requirement. The Commission
found that the record contained little empirical evidence that the
costs associated with setting up a Web site or e-mail address would be
unduly burdensome to a small business given their revenues.
The Commission also considered the burdens to businesses of having
to comply with opt-out requests in the ``shortest reasonable time.''
The record revealed that some commenters support a period of 30 days
within which senders must comply with opt-out requests. Other
commenters support a shorter period of time for honoring do-not-fax
requests, such as 10 or 15 days. In the Order, the Commission
determined to require senders to honor requests within the shortest
reasonable time from the date of such request, not to exceed 30 days
from the date of such request. The Commission believes this will permit
both senders with large databases of facsimile numbers, as well as
small businesses with limited resources, to remove numbers for
individuals that opt-out of faxes.
Finally, the Order withdraws Sec. 64.1200(a)(3)(i) of the
Commission's rules which requires the recipient to obtain a signed,
written statement indicating the recipient's consent to receive
facsimile advertisements from the sender. The Commission determined
instead that prior express invitation or permission to send an
advertisement may be given by oral or written means, including
electronic methods. The Commission notes that written permission could
take many forms, including e-mail, facsimile, and internet form. The
Commission believes this determination will permit small entities to
obtain permission more easily from consumers who make inquiries, file
applications, or request information.
Congressional Review Act
The Commission will send a copy of the Report and Order and Third
Order on Reconsideration, including this FRFA, in a report to be sent
to Congress and the Government Accountability Office pursuant to the
Congressional Review Act, see 5 U.S.C. 801(a)(1)(A).
Ordering Clauses
Pursuant to the authority contained in sections 1-4, 201, 202, 217,
227, 258, 303(r), and 332 of the Communications Act of 1934, as
amended; 47 U.S.C. 151-154, 201, 202, 217, 227, 258, 303(r), and 332;
and Sec. Sec. 64.1200 and 64.318 of the Commission's rules, 47 CFR
64.1200 and 64.318, the report and order is adopted, and part 64 of the
Commission's rules, 47 CFR 64.1200, is amended.
The rules and requirements contained in this Report and Order and
Third Order on Reconsideration shall become effective August 1, 2006,
except for 47 CFR 64.1200(a)(3)(i), (ii), (iii), (iv), and (vi) which
contains information collection requirements under PRA are not
effective until approved by OMB. Certain petitions for reconsideration
and/or clarification of the facsimile advertising rules in CG Docket
No. 02-278 are denied in part, granted in part, and dismissed in part.
Specifically, those petitions filed by Air Conditioning Contractors of
America, American Association of Advertising Agencies, et al., American
Business Media, American Dietetic Association, American Society of
Association Executives, American Tire Distributors, Inc., America's
Community Bankers, Association of Small Business Development Centers,
California Association of Realtors, Chamber of Commerce of the U.S., et
al., Coalition for Healthcare Communication, Consumer Bankers
Association, Consumer Electronics Association, Copia International,
LTC, Faxts, Inc., Federal Election Commission, Financial Services
Coalition, Independent Insurance Agents and Brokers of America,
Independent Sector, Jobson Publishing, LLC, Maryland Association of
Nonprofit Organizations, John Mayhill, National Association of Chain
Drugstores, National Association of Realtors, National Retail
Federation, Newsletter & Electronic Publishers Association, Newspaper
Association of America, Presidential Classroom for Young Americans,
Inc., Produce Marketing Association, Proximity Marketing, Reed
Elsevier, Inc., Scholastic, Inc., State and Regional Newspaper
Associations, Travel Industry Group, Wells Fargo & Co., and Yellow
Pages Integrated Media Association are dismissed to the extent they
seek reinstatement of the established business relationship exemption.
The Commission's Consumer & Governmental Affairs Bureau, Reference
Information Center, shall send a copy of the Report and Order and Third
Order on Reconsideration to the Chief Counsel for Advocacy of the Small
Business Administration.
List of Subjects in 47 CFR Part 64
Communications common carriers, Telecommunications, Telephone.
Federal Communications Commission.
William F. Caton,
Deputy Secretary.
Final Rules
0
For the reasons discussed in the preamble, the Federal Communications
Commission amends 47 CFR part 64 as follows:
PART 64--MISCELLANEOUS RULES RELATING TO COMMON CARRIERS
0
1. The authority citation for part 64 continues to read as follows:
Authority: 47 U.S.C. 154, 254(k) secs. 403(b)(2)(B), (c), Pub.
L. 104-104, 110 Stat. 56. Interpret or apply 47 U.S.C. 201, 218,
222, 225, 226, 228, and 254(k) unless otherwise noted.
0
2. Revise the heading to part 64 subpart L to read as follows:
Subpart L--Restrictions on Telemarketing, Telephone Solicitation,
and Facsimile Advertising
0
3. Section 64.1200 is amended by revising paragraphs (a) and (f) to
read as follows:
Sec. 64.1200 Delivery restrictions.
(a) No person or entity may: (1) Initiate any telephone call (other
than a call made for emergency purposes or made with the prior express
consent of the called party) using an automatic telephone dialing
system or an artificial or prerecorded voice;
(i) To any emergency telephone line, including any 911 line and any
emergency line of a hospital, medical physician or service office,
health care facility, poison control center, or fire protection or law
enforcement agency;
(ii) To the telephone line of any guest room or patient room of a
hospital, health care facility, elderly home, or similar establishment;
or
(iii) To any telephone number assigned to a paging service,
cellular telephone service, specialized mobile radio service, or other
radio common carrier service, or any service for which the called party
is charged for the call.
(iv) A person will not be liable for violating the prohibition in
paragraph (a)(1)(iii) of this section when the call is placed to a
wireless number that has been ported from wireline service and such
call is a voice call; not knowingly made to a wireless number; and made
[[Page 25978]]
within 15 days of the porting of the number from wireline to wireless
service, provided the number is not already on the national do-not-call
registry or caller's company-specific do-not-call list.
(2) Initiate any telephone call to any residential line using an
artificial or prerecorded voice to deliver a message without the prior
express consent of the called party, unless the call;
(i) Is made for emergency purposes;
(ii) Is not made for a commercial purpose;
(iii) Is made for a commercial purpose but does not include or
introduce an unsolicited advertisement or constitute a telephone
solicitation;
(iv) Is made to any person with whom the caller has an established
business relationship at the time the call is made; or
(v) Is made by or on behalf of a tax-exempt nonprofit organization.
(3) Use a telephone facsimile machine, computer, or other device to
send an unsolicited advertisement to a telephone facsimile machine,
unless--
(i) The unsolicited advertisement is from a sender with an
established business relationship, as defined in paragraph (f)(5) of
this section, with the recipient; and
(ii) The sender obtained the number of the telephone facsimile
machine through--
(A) The voluntary communication of such number by the recipient
directly to the sender, within the context of such established business
relationship; or
(B) A directory, advertisement, or site on the Internet to which
the recipient voluntarily agreed to make available its facsimile number
for public distribution. If a sender obtains the facsimile number from
the recipient's own directory, advertisement, or Internet site, it will
be presumed that the number was voluntarily made available for public
distribution, unless such materials explicitly note that unsolicited
advertisements are not accepted at the specified facsimile number. If a
sender obtains the facsimile number from other sources, the sender must
take reasonable steps to verify that the recipient agreed to make the
number available for public distribution.
(C) This clause shall not apply in the case of an unsolicited
advertisement that is sent based on an established business
relationship with the recipient that was in existence before July 9,
2005 if the sender also possessed the facsimile machine number of the
recipient before July 9, 2005. There shall be a rebuttable presumption
that if a valid established business relationship was formed prior to
July 9, 2005, the sender possessed the facsimile number prior to such
date as well; and
(iii) The advertisement contains a notice that informs the
recipient of the ability and means to avoid future unsolicited
advertisements. A notice contained in an advertisement complies with
the requirements under this paragraph only if--
(A) The notice is clear and conspicuous and on the first page of
the advertisement;
(B) The notice states that the recipient may make a request to the
sender of the advertisement not to send any future advertisements to a
telephone facsimile machine or machines and that failure to comply,
within 30 days, with such a request meeting the requirements under
paragraph (a)(2)(v) of this section is unlawful;
(C) The notice sets forth the requirements for an opt-out request
under paragraph (a)(2)(v) of this section;
(D) The notice includes--
(1) A domestic contact telephone number and facsimile machine
number for the recipient to transmit such a request to the sender; and
(2) If neither the required telephone number nor facsimile machine
number is a toll-free number, a separate cost-free mechanism including
a Web site address or e-mail address, for a recipient to transmit a
request pursuant to such notice to the sender of the advertisement. A
local telephone number also shall constitute a cost-free mechanism so
long as recipients are local and will not incur any long distance or
other separate charges for calls made to such number; and
(E) The telephone and facsimile numbers and cost-free mechanism
identified in the notice must permit an individual or business to make
an opt-out request 24 hours a day, 7 days a week.
(iv) A facsimile advertisement that is sent to a recipient that has
provided prior express invitation or permission to the sender must
include an opt-out notice that complies with the requirements in
paragraph (a)(3)(iii) of this section.
(v) A request not to send future unsolicited advertisements to a
telephone facsimile machine complies with the requirements under this
subparagraph only if--
(A) The request identifies the telephone number or numbers of the
telephone facsimile machine or machines to which the request relates;
(B) The request is made to the telephone number, facsimile number,
Web site address or e-mail address identified in the sender's facsimile
advertisement; and
(C) The person making the request has not, subsequent to such
request, provided express invitation or permission to the sender, in
writing or otherwise, to send such advertisements to such person at
such telephone facsimile machine.
(vi) A sender that receives a request not to send future
unsolicited advertisements that complies with paragraph (a)(3)(v) of
this section must honor that request within the shortest reasonable
time from the date of such request, not to exceed 30 days, and is
prohibited from sending unsolicited advertisements to the recipient
unless the recipient subsequently provides prior express invitation or
permission to the sender. The recipient's opt-out request terminates
the established business relationship exemption for purposes of sending
future unsolicited advertisements. If such requests are recorded or
maintained by a party other than the sender on whose behalf the
unsolicited advertisement is sent, the sender will be liable for any
failures to honor the opt-out request.
(vii) A facsimile broadcaster will be liable for violations of
paragraph (a)(3) of this section, including the inclusion of opt-out
notices on unsolicited advertisements, if it demonstrates a high degree
of involvement in, or actual notice of, the unlawful activity and fails
to take steps to prevent such facsimile transmissions.
* * * * *
(f) As used in this section: (1) The terms automatic telephone
dialing system and autodialer mean equipment which has the capacity to
store or produce telephone numbers to be called using a random or
sequential number generator and to dial such numbers.
(2) The term clear and conspicuous for purposes of paragraph
(a)(3)(iii)(A) of this section means a notice that would be apparent to
the reasonable consumer, separate and distinguishable from the
advertising copy or other disclosures, and placed at either the top or
bottom of the facsimile.
(3) The term emergency purposes means calls made necessary in any
situation affecting the health and safety of consumers.
(4) The term established business relationship for purposes of
telephone solicitations means a prior or existing relationship formed
by a voluntary two-way communication between a person or entity and a
residential subscriber with or without an exchange of consideration, on
the basis of the subscriber's purchase or transaction with the entity
within the eighteen (18) months immediately preceding the date
[[Page 25979]]
of the telephone call or on the basis of the subscriber's inquiry or
application regarding products or services offered by the entity within
the three months immediately preceding the date of the call, which
relationship has not been previously terminated by either party.
(i) The subscriber's seller-specific do-not-call request, as set
forth in paragraph (d)(3) of this section, terminates an established
business relationship for purposes of telemarketing and telephone
solicitation even if the subscriber continues to do business with the
seller.
(ii) The subscriber's established business relationship with a
particular business entity does not extend to affiliated entities
unless the subscriber would reasonably expect them to be included given
the nature and type of goods or services offered by the affiliate and
the identity of the affiliate.
(5) The term established business relationship for purposes of
paragraph (a)(3) of this section on the sending of facsimile
advertisements means a prior or existing relationship formed by a
voluntary two-way communication between a person or entity and a
business or residential subscriber with or without an exchange of
consideration, on the basis of an inquiry, application, purchase or
transaction by the business or residential subscriber regarding
products or services offered by such person or entity, which
relationship has not been previously terminated by either party.
(6) The term facsimile broadcaster means a person or entity that
transmits messages to telephone facsimile machines on behalf of another
person or entity for a fee.
(7) The term seller means the person or entity on whose behalf a
telephone call or message is initiated for the purpose of encouraging
the purchase or rental of, or investment in, property, goods, or
services, which is transmitted to any person.
(8) The term sender for purposes of paragraph (a)(3) of this
section means the person or entity on whose behalf a facsimile
unsolicited advertisement is sent or whose goods or services are
advertised or promoted in the unsolicited advertisement.
(9) The term telemarketer means the person or entity that initiates
a telephone call or message for the purpose of encouraging the purchase
or rental of, or investment in, property, goods, or services, which is
transmitted to any person.
(10) The term telemarketing means the initiation of a telephone
call or message for the purpose of encouraging the purchase or rental
of, or investment in, property, goods, or services, which is
transmitted to any person.
(11) The term telephone facsimile machine means equipment which has
the capacity to transcribe text or images, or both, from paper into an
electronic signal and to transmit that signal over a regular telephone
line, or to transcribe text or images (or both) from an electronic
signal received over a regular telephone line onto paper.
(12) The term telephone solicitation means the initiation of a
telephone call or message for the purpose of encouraging the purchase
or rental of, or investment in, property, goods, or services, which is
transmitted to any person, but such term does not include a call or
message:
(i) To any person with that person's prior express invitation or
permission;
(ii) To any person with whom the caller has an established business
relationship; or
(iii) By or on behalf of a tax-exempt nonprofit organization.
(13) The term unsolicited advertisement means 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, in writing or
otherwise.
(14) The term personal relationship means any family member,
friend, or acquaintance of the telemarketer making the call.
* * * * *
[FR Doc. 06-4169 Filed 5-2-06; 8:45 am]
BILLING CODE 6712-01-P