FCC Seeks Comment on Petitions Seeking Clarity for Opt-Out Notices on Fax Ads Sent with the Recipient Consent

By Ronald G. London The FCC issued a Public Notice seeking comments on nine petitions that request clarification of the agency’s rule governing opt-out notices on fax advertisement – and in particular, those where sender previously obtained the recipient’s consent.  The petitions seek to resolve uncertainty that has arisen from tension between the Telephone Consumer Protection Act’s (TCPA) Junk Fax Prevention Act provisions that require “unsolicited” fax ads to include such opt-out notices, and the recent Eighth Circuit decision in Nack v. Walburg that held, relying on an FCC amicus brief, such opt-out notices also are required for fax ads sent with express consent.  The stakes are high for resolving this technical compliance point, given that TCPA class action activity has exploded in recent years, with settlements and judgments reaching the tens or hundreds of thousands of dollars, and even into the millions. Under the TCPA’s fax provisions and implementing rules, those who send unsolicited faxes advertising goods or services must provide on the first page a clear and conspicuous notice of how to opt out of future faxes from the sender.  The FCC’s initial statements on this mandate’s application were somewhat inconsistent.  Specifically, in its 2006 order adopting Junk Fax Prevention Act rules, the FCC said that “the opt-out notice requirement only applies to communications that constitute unsolicited advertisements,” but elsewhere stated that “entities that send facsimile advertisements to consumers from whom they obtained permission, must include … their opt-out notice and contact information to allow consumers to stop unwanted faxes.”  The former statement that appears to express a narrower view of the opt-out notice requirement arguably hews closer to the statute, which requires such notices for “unsolicited advertisements,” a term defined elsewhere in the statute as those that both promote the commercial availability or quality of property, goods, or services, and are sent without the recipient’s prior express invitation or permission. The issue presented itself squarely in Nack, with the defendant relying on the statutory language and more favorable statement from the FCC, while the FCC came out before the court on the side of its more sweeping 2006 pronouncement.  Though the court noted that “it is questionable whether the regulation at issue (thus interpreted) properly could have been promulgated under the statutory section” at issue, it held it could not revisit the FCC’s 2006 ruling, as the Hobbs Act prevented challenging it other than in a petition for judicial review from the ruling itself (the time for which had long passed).  However, in remanding to the district court, the Eighth Circuit noted the defendant could seek a stay of proceedings while it pursued administrative remedies. Facing TCPA class action lawsuits and potentially enormous statutory damages, the defendant followed the Eighth Circuit’s advice, and has been joined by others in similar straits, including Staples, Forest Pharmaceuticals, Gilead Sciences and Purdue Pharma.  The companies’ petitions argue that the FCC exceeded its statutory authority to promulgate the broader opt-out notice rule, because Congress intended to regulate only unsolicited faxes.  Alternatively, a number of the petitioners seek a declaratory ruling that the TCPA is not the statutory basis for the regulation, since no regulation brought under the TCPA could apply to faxes sent with the recipient’s permission or invitation.  Several petitioners also seek retroactive waivers of the rule, arguing that class action lawsuits targeting the absence of opt-out notices on solicited faxes are an abuse of the TCPA’s private right of action. The FCC is seeking comment, including on whether individual waivers should be granted to the petitioners, or whether, alternatively, a broader waiver should be granted.  Comments are due on February 14, 2014 and reply comments are due on February 21, 2014.