On October 30, 2014, the FCC issued a much-anticipated ruling (“FCC Order”) resolving several petitions seeking clarification of the opt-out notice requirement regarding advertisements faxed to consumers, contained in the Telephone Consumer Protection Act, section 227 of the Communications Act (“TCPA”). The FCC ruled that all such faxes, even those sent with the recipient’s prior express permission or invitation – in other words, “solicited” fax advertisements – must include both notice of the recipient’s right to opt-out of receiving future faxed ads and notice of the mechanism recipients can use to exercise such opt-out right.

However, in light of the apparent confusion that existed before the FCC’s clarification regarding the applicability and scope of the TCPA’s opt-out notice requirement, the Commission granted 24 individual petitioners limited retroactive waivers, giving them six months to come into compliance with the rule. Importantly, the FCC also announced in its ruling that it will allow similarly situated entities to seek their own retroactive waivers on the same grounds. Any business that did not include an opt-out notice on fax advertisements it sent to recipients who had previously provided permission or an invitation to send them should take advantage of this rare opportunity provided by the FCC to seek a retroactive waiver.

A little history: the TCPA prohibits sending unsolicited fax advertisements. The TCPA was amended in 2005 by the Junk Fax Prevention Act, which codified an established business relationship exemption to the prohibition and required the sender of an unsolicited fax advertisement to provide specific notice and contact information on the fax that would allow recipients to “opt out” of any future fax transmissions from the sender. In 2006, the Commission issued additional regulations (the “Junk Fax Order”), including the following: “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)(4)(iii) of this section.” 47 CFR § 64.1200(a)(4)(iv) (the “Challenged Regulation”). However, that Order also contained a footnote, which read in relevant part, “the opt-out notice requirement only applies to communications that constitute unsolicited advertisements.” Junk Fax Order, 21 FCC Rcd at 3810, n.154.

In 2010, Anda, Inc. filed a request for declaratory ruling on the validity of the Challenged Regulation and its applicability to solicited fax ads. Anda argued that the Commission did not have the authority to promulgate the Challenged Regulation because the TCPA applies only to unsolicited fax advertisements. Alternatively, Anda argued that the TCPA was not the statutory basis of the Challenged Regulation, and thus, there is no private right of action to enforce that provision.

The Consumer and Government Affairs Bureau (“Bureau”) denied Anda’s petition in 2012 on procedural grounds. First, the Bureau ruled that Anda had identified no controversy because the Junk Fax Order identified section 227 as the statutory basis for the Challenged Regulation. In addition, any challenge to the Commission’s authority to adopt the rule itself was a collateral challenge that should have been raised within 30 days of the date of public notice of such action, which was in May 2006. Because Anda waited until 2010 to challenge the regulation, it was untimely. Anda sought review of this ruling by filing an Application for Review of the Bureau Order on May 14, 2012.

Dozens of petitions have been filed since Anda submitted its Application for Review. Those petitions parallel the arguments Anda raised in its original petition and its request for review. In addition, several of those petitions sought from the FCC a ruling that opt-out notices that “substantially complied” with the Challenged Regulation’s requirements, but did not track the language from the regulation exactly, were sufficient under the law. Some petitioners also challenged the regulation as an unconstitutional limitation on free speech.

The recently released FCC Order denies much of the relief requested by Anda and the other petitioners. Specifically, the FCC Order:

  • Affirms the Bureau’s holding that the Anda petition was an improper and untimely collateral attack on the Challenged Regulation
  • Affirms that the Commission relied on section 227 of the Communications Act to promulgate the opt-out requirement for solicited fax ads
  • Affirms that the Commission had authority to adopt the Challenged Regulation
  • Denies one petitioner’s request to repeal the Challenged Regulation on First Amendment grounds
  • Denies petitioners’ requests to allow for “substantial compliance” with the opt-out notice requirements, instead requiring full compliance

Commissioners Ajit Pai and Michael O’Rielly concurred in part and dissented in part to the order. Their statements offer a roadmap of sorts to petitioners who want to appeal this FCC ruling to the federal court of appeals, which has jurisdiction to review FCC orders. Commissioner Pai stated that “to the extent our rules require solicited fax advertisements to contain a detailed opt-out notice, our regulations are unlawful. And to the extent that they purport to expose businesses to billions of dollars in liability for failing to provide detailed opt-out notices on messages that their customers have specifically asked to received they depart from common sense.” Commissioner O’Rielly concurred with the relief granted, but dissented, like Commissioner Pai, from the ruling that the Commission has statutory authority to require opt-out notices on solicited faxes. He said that though the agency has the right to fill gaps in a statute, “it is not entitled to invent gaps in order to fill them with the agency’s own policy goals, no matter how well intentioned.”

The FCC Order acknowledges that petitioners and other entities may not have complied with the opt-out notice requirements for solicited faxes as the result of “reasonable confusion or misplaced confidence” that the opt-out notice did not apply to those fax ads. This confusion could have been the result of two things: (1) the contradictory footnote in the Junk Fax Order, referenced above; and/or (2) the lack of explicit notice, at the time the Challenged Regulation was adopted, that the Commission was contemplating an opt-out requirement on solicited fax ads. The FCC thus concluded that this reasonable confusion and misplaced confidence provided good cause for it to grant individual retroactive waivers to the petitioners, and to open up that opportunity to other similarly situated businesses.

On a practical level, this means that a business that sent fax ads with the recipient’s permission that did not include an opt-out notice, or included an opt-out notice that was not in full compliance with the language in the regulation, should lose no time seeking a retroactive waiver from the FCC. Such a waiver would protect that business from lawsuits based on past behavior, but would not apply to conduct that occurs after April 30, 2015, which is six months from the release date of the FCC Order.

All businesses sending out fax advertisements should reach out to experienced counsel to review their marketing practices and, if necessary, petition the FCC for a retroactive waiver regarding the inclusion of opt-out language and an opt-out mechanism in their solicited fax ads. All requests for waivers are to be submitted by April 30, 2015. For more information, join the authors of this alert for a webinar Wednesday, November 19, 2014, or contact the authors or any member of Reed Smith’s TCPA team for assistance in filing a waiver request.