Advertising Law Blog

Direct marketers who intend to rely on fax advertisements must have an established business relationship with the recipient prior to sending the fax, as well as having received the recipient's fax number pursuant to that relationship. As reported in DM News, under regulations that went into effect on August 1, 2006 implementing the Junk Fax Prevention Act of 2005, marketers must have an established business relationship and obtain the fax numbers from the recipient before a fax ad can be sent as long the sender otherwise complies with the regulation. The May 3, 2006 Federal Register Notice is available here. Marketers that intend to conduct fax marketing should read the entire regulation and its rulemaking history carefully before proceeding as the devil is certainly in the details.

What constitutes an established business relationship?

The FCC's definition of established business relationship here appears to be much broader than that utilized by the FTC in the Telemarketing Sales Rule for telephone calls, and can apply to solicitations to business as well as residential faxes. Here, the FCC's definition of "established business relationship" for fax marketing purposes is defined as "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." Currently, there is no time limit of the EBR, but the FCC advises that it intends to monitor the issue and report within one year.

How does a recipient provide its fax number?

Assuming the sender can demonstrate an established business relationship, a sender can obtain the fax number either from its customer directly or from a publicly available directory or Web site. Thus, under the current rulemaking, the FCC acknowledges that it is permissible to send a fax advertisement to someone who had provided a facsimile number to the sender, for example, by providing a business card, or submitting an application, information request, contact information form, or membership renewal form. This permission can be revoked, however, by the recipient indicating that it does not accept unsolicited advertisements at the facsimile number in question. The FCC cautions that in the event a recipient complains that its fax number was not provided to the sender, the burden is on the sender to demonstrate that the fax number was provided in the context of an existing business relationship.

Pre July 9, 2005 EBRs

For established business relationships that existed prior to July 9, 2005 where the sender also possessed the fax number at that time, the sender may send fax advertisements to that recipient without demonstrating how the number was obtained or verifying it was provided voluntarily by the recipient. 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 regardless of how the fax number was obtained.

Notice and Opt-Out

Regardless of whether the July 9, 2005 EBR exemption applies or not, the regulation requires that recipients be given notice of a cost-free method of opting out from future solicitations on the first page of the fax transmission. This includes a requirement on the outbound fax's first page a description as to how recipients can opt out of the company's distribution list through a cost-free method. The sender must be able to accept opt-out requests 24 hours, 7 days a week at the number, Web site or e-mail address identified in the opt-out notice. Fax advertisers then have 30 days to honor the opt-out requests.