Verification Fax Found to Be Advertising

by Manatt, Phelps & Phillips, LLP
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Do faxes that were sent to verify the contact information of recipients constitute advertising under the Telephone Consumer Protection Act (TCPA)? Yes, an Illinois federal court recently declared, denying the defendant’s motion to dismiss.

After receiving three form fax messages from Enclarity Inc., the Florence Mussat medical practice sued Enclarity for violating the TCPA as amended by the Junk Fax Prevention Act. The plaintiff alleged the faxes were unsolicited advertisements prohibited by the statute.

Enclarity countered that the faxes were not ads and only sought to verify or validate location, practice and contact information about the medical office. A healthcare data and information solutions company owned by LexisNexis, Enclarity sends the form faxes to healthcare providers requesting the data to maintain LexisNexis’ database of medical provider business and professional demographic data in the United States.

When the Mussat practice received the first fax in 2015, its attorney reached out with a cease and desist letter, asking Enclarity to stop sending the faxes. The following year, however, the practice received another fax. Dr. Mussat visited the website listed at the bottom of the fax, which featured an “opt out” box to check as well as a menu of links with multiple products offered by LexisNexis.

The defendant moved to dismiss the lawsuit. Ruling on the “sole issue” of whether the faxes sent by Enclarity constituted advertisements within the meaning of the TCPA, U.S. District Judge John J. Tharp Jr. of the Northern District of Illinois sided with the plaintiff.

“A fax need not make an overt sales pitch to its recipient for a TCPA claim to exist,” the court noted. Nor does a fax need to explicitly mention a commercially available product or service, or express an intent by the defendant to market its products or services.

“The form fax at issue here, on its face, declares the commercial availability of LexisNexis’ services,” the court said. “While the fax is not an ‘overt sales pitch,’ it does make clear that one can purchase from LexisNexis access to health care provider information that minimizes the potential for privacy risks because it is verified and updated on an annual basis. … [A] fax like the one at issue here, which declares the availability of the defendant’s services by listing those services and providing the defendant’s contact information, may constitute an advertisement under the TCPA. The fact that the fax also seeks to verify the recipient’s contact information does not eliminate its utility as an advertisement.”

Mussat’s alternative argument—that the Enclarity fax violated the TCPA because it served as a pretext to an advertisement—also persuaded the court not to dismiss the suit. The only way to stop future unwanted faxes was to visit the website listed on the fax, where LexisNexis’ products and services were offered, the plaintiff argued, making the form faxes part of an “overall marketing plan” to promote the availability of LexisNexis’ services.

These allegations “are sufficient to allege that the fax was a pretext to an advertisement,” Judge Tharp said. “Repeat faxing of a form that provides a website and a phone number but no other information on how to unsubscribe or opt-out from receiving the form would logically drive the recipient to call the phone number or visit the website. It is plausible that Enclarity used the form faxes as part of its marketing operations to get health care providers like Mussat to traffic the LexisNexis website, where its products and services were advertised.”

The court rejected Enclarity’s argument that the fax could not be a pretext because it did not offer free goods or services.

“The point of the pretext doctrine is that a fax that prompts a recipient to take action that necessarily exposes the recipient to advertising of the sender’s goods or services falls within the ambit of the communications prohibited by the statute, even if that fax does not itself provide information about the commercial availability or quality of the sender’s goods or services,” the court wrote. “Accordingly, the Court will not rule at this stage of the case that the Enclarity fax cannot be a pretext to an advertisement simply because it does not offer a free good or service.”

To read the memorandum opinion and order in Florence Mussat, M.D.S.C. v. Enclarity, Inc., click here.

Why it matters: The court found two reasons to deny the defendant’s motion to dismiss the TCPA class action: first, the form fax at issue constituted an advertisement within the meaning of the statute because it declared the commercial availability of the defendant’s services on its face. As an alternative holding, the court found the fax served as a pretext to an advertisement as it required the plaintiff to access a website advertising the defendant’s services in order to stop the faxes.

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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