Will the D.C. Circuit Overturn Fax Opt-Out Requirement?

Bass, Berry & Sims PLC

Bass, Berry & Sims PLC

Though not as common as they once were, fax advertisements continue to be used in several industries, particularly healthcare, where providers and manufacturers rely on faxes to comply with regulatory obligations. Earlier this month, the U.S. Court of Appeals for the D.C. Circuit heard oral argument in a case that may ease some of the regulatory burden associated with faxes under the Telephone Consumer Protection Act (TCPA). 

Yaakov v. Federal Communications Commission (FCC) is a consolidation of 13 cases challenging the FCC's ability to regulate permissive faxes under the TCPA. The TCPA expressly authorizes the FCC to issue rules regulating unsolicited fax advertisements, but makes no mention of faxes sent with the recipient's permission. 

Yaakov arose from a 2006 FCC order requiring every fax advertisement to include opt-out notices, even when the sender had permission from, or an established business relationship with, the recipient. In 2014, the FCC issued a second order reaffirming the 2006 rule. Because of past uncertainty as to how broadly the 2006 order applied, the 2014 order also gave companies six months to apply for retroactive waivers to excuse any previous non-compliance. Together, the 2006 and 2014 FCC orders have led to numerous class action lawsuits with plaintiffs alleging that (1) companies failed to include opt-out notices on commercial faxes, and (2) the FCC lacked authority to issue retroactive waivers that, according to plaintiffs, permitted non-compliance with a federal statute.

In Yaakov, parties challenging the FCC orders have argued that Congress only granted the agency the power to regulate unsolicited fax advertisements and that the 2006 and 2014 FCC orders are therefore improper. While orders issued by federal government agencies like the FCC can have the force of law, agencies cannot adopt rules outside the scope of their congressional authorization. Because the TCPA only expressly authorizes the FCC to regulate unsolicited faxes, the rule challengers argue that the FCC exceeded the scope of its authority when it issued a rule requiring opt-out language in every fax advertisement. Conversely, attorneys for the FCC have argued that the agency's actions were proper because the statute does not expressly prohibit the FCC from regulating solicited faxes. 

The D.C. Circuit's decision in Yaakov may have a significant impact on healthcare companies' and other industries' fax communications. The Consumer Financial Services Group at Bass, Berry & Sims will continue to monitor this case and provide an update when the case is decided.

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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