[co-author: Amanda Oliveira]
On December 9, 2019, the Federal Communications Commission (FCC or Commission)
1 released a
declaratory ruling2 in which it found that online fax services that receive unsolicited fax advertisements “sent as email over the Internet” and that cannot transcribe faxes onto paper like traditional fax machines are not telephone facsimile machines under the Telephone Consumer Protection Act (TCPA). Thus, a party receiving a fax via such an online fax service cannot claim that receipt of such fax violates the TCPA’s statutory prohibition against unsolicited facsimile advertisements.
3 This finding reduces the number of devices that fall within the telephone facsimile machine definition under the TCPA and could curtail the number of class actions arising from the receipt of unsolicited faxes.
How do online fax services work?
An online fax service sends faxes to recipients digitally over the Internet. Online faxes are stored in a digital format on a cloud-based service, which permits customers to access the content via email. Unlike traditional faxing that transmits electronic signals and codes over telephone lines resulting in a printed message, online faxing transmits documents and images over the Internet, thereby allowing recipients to determine how (and to what extent) they wish to store, print, or otherwise save the message.
Backdrop:
The TCPA generally prohibits anyone from using a “telephone facsimile machine, computer, or other device to send, to a telephone facsimile machine, an unsolicited advertisement . . . .”4 The TCPA defines a telephone facsimile machine as “equipment which has the capacity (A) to transcribe text or images, or both, from paper into an electronic signal and to transmit that signal over a regular telephone line, or (B) to transcribe text or images (or both) from an electronic signal received over a regular telephone line onto paper.”5
In 2003, the FCC found that equipment such as personal computers attached to printers and modems that allow electronic documents to be sent and received as faxes that can be transcribed onto paper are effectively “telephone facsimile machines.”6 But, the FCC clarified that unsolicited faxes sent as email over the Internet are not subject to the TCPA. In 2015, the Consumer and Governmental Affairs Bureau within the FCC again confirmed that where efaxes are sent to equipment that can receive an electronic signal over a phone line and transcribe that signal into text and/or images onto paper, the equipment was a “telephone facsimile machine” within the meaning of the TCPA.7
Amerifactors was sued in a TCPA putative class action in 2016 over a one-page fax advertisement. After moving to dismiss the lawsuit, Amerifactors filed a petition with the FCC in 2017 in which it sought clarification that the TCPA does not prohibit faxes that are sent to online fax services. Amerifactors relied upon the plain meaning in the TCPA’s definition to argue that unsolicited faxes are prohibited only if sent to (or in other words, received by) a device that constitutes a “telephone facsimile machine.” Therefore, the question before the FCC was whether an unsolicited fax sent as an email to an online fax service is the equivalent of an unsolicited fax sent to a “telephone facsimile machine.” Amerifactors also asserted in its petition that applying the TCPA to devices other than telephone facsimile machines would restrict commercial speech in violation of the First Amendment. Industry comments on the petition mostly supported Amerifactors’ position,8 while commenters in opposition argued that consumers are still harmed by the time and resources spent to review faxes sent in email format.
FCC Ruling:
The FCC granted Amerifactors’ petition and found that where a fax is sent to a service, which “receives faxes ‘sent as email over the Internet,’” and does not itself have the capacity to transcribe the message onto paper, that service is not a “telephone facsimile machine” under the TCPA.9 The FCC reasoned that online fax services differ from telephone facsimile machines in the following critical ways:
- They operate differently. For example, the FCC relied on the fact that an online fax service cannot print a fax because it requires users to connect to a printer. Therefore, applying the TCPA’s plain language, the FCC found that online fax services are not the equivalent of “equipment which has the capacity . . . to transcribe text or images (or both) from an electronic signal received over a regular telephone line onto paper.”10
- Consumers have tools to manage messages that they receive from an online fax service the same way that consumers would manage emails, such as the option to view, print, or delete the messages. Telephone facsimile machines, on the other hand, are designed to automatically print all messages received without the recipient’s election.
- Similarly, the FCC acknowledged that messages sent to online fax services are held in digital form, and the recipient incurs printing costs only when the consumer chooses to print the message. According to the FCC, such online fax services do not cause the harm Congress aimed to address in the TCPA, including printing costs. In the FCC’s estimation, more generalized harms such as time spent going through unwanted faxes stored by online fax services are not the harms Congress identified when passing the TCPA.
The FCC did not address whether prohibiting faxes sent to a machine other than a “telephone facsimile machine” is a violation of commercial speech under the First Amendment.
Although the FCC made clear that its decision is limited to the online fax services that were at issue in Amerifactors’ petition, the Ruling provides ammunition to companies defending putative class actions for fax advertisements sent electronically. Nonetheless, the Ruling may be subject to review by the full Commission if the plaintiffs in the Amerifactors suit file an application for review by January 8, 2020, and the Commission subsequently grants the application.
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1 The Consumer and Governmental Affairs Bureau within the FCC issued the declaratory ruling. Rulings issued by the Consumer and Governmental Affairs Bureau may be appealed to the Commission by filing an application for review within 30 days of issuance of the ruling.
2 Amerifactors Financial Group, LLC Petition for Expedited Declaratory Ruling Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991, 2019 WL 6712128 (Dec. 9, 2019) [hereinafter, Ruling].
3 Ruling at *1.
4 47 U.S.C. § 227(b)(1)(C).
5 Id. § 227(a)(3).
6 Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991, 18 FCC Rcd. 14014, 14133 (2003).
7 Westfax, Inc. Petition for Consideration and Clarification, 30 FCC Rcd. 8620, 8623 (2015).
8 We submitted comments in support of Amerifactors’ petition on behalf of a client.
9 Ruling at *2.
10 Id. at *3.
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