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Court Vacates Rule Requiring Opt-Out Notices on Solicited Fax Ads

Tue 04 Apr, 2017  /  by   /   Client Alerts

04/04/17—On March 31, a Federal appellate court overturned a Federal Communications Commission (FCC) rule requiring opt-out notices on solicited fax advertisements.

Under the court’s decision, if a company sends a fax advertisement to a person who has asked for the advertisement, the FCC cannot require the company to include an opt-out notice in the fax advertisement.

The Junk Fax Prevention Act (the Act), enacted in 2005, generally prohibits the use of a fax to send unsolicited advertisements. It defines unsolicited advertisement as an advertisement that is sent to a person “without that person’s prior express invitation or permission . . . .”

However, the Act has some exceptions. If the sender of the fax has an established business relationship with the recipient and the recipient’s fax number is a listed number, then unsolicited fax advertisements may be sent if they contain an opt-out notice.

In 2006, the FCC implemented this law by requiring that both unsolicited and solicited fax advertisements contain the opt-out notice.

Several businesses complained to the FCC, asking it to remove the opt-out notice requirement with respect to solicited advertisements. They argued that because the text of the Act did not apply any restrictions on solicited fax advertisements, the FCC did not have the authority to require opt-out notices on solicited fax advertisements.

According to the appellate court, the FCC’s position was “that the Act’s requirement that businesses include opt-out notices on unsolicited fax advertisements grants the FCC the authority to also require businesses to include opt-out notices on solicited fax advertisements . . . .”

The appellate court disagreed with the FCC.

The court wrote, “Although the Act requires an opt-out notice on unsolicited fax advertisements, the Act does not require a similar opt-out notice on solicited fax advertisements . . . . Nor does the Act grant the FCC authority to require opt-out notices on solicited fax advertisements.”

In discussing the FCC’s rationale for finding the authority to place restrictions on solicited fax advertisements, the court seemed perplexed.

“If you are finding the FCC’s reasoning on this point difficult to follow, you are not alone[,]” the court said. “We do not get it either.”

“[T]he fact that the agency believes its Solicited Fax Rule is good policy does not change the statute’s text. . . . The text of the Act does not grant the FCC authority to require opt-out notices on solicited faxes.”

The court then vacated the FCC’s rule.

The FCC has the opportunity to seek a rehearing before the appellate court en banc—meaning that the case would be reheard in front of all active appellate court judges (this ruling came out of a hearing in front of a three-judge panel of the appellate court)—or to ask the Supreme Court to consider the case.

The case is Bais Yaakov of Spring Valley v. Federal Communications Commission, No. 14-1234, in the United States Court of Appeals for the District of Columbia Circuit.

Opinion.