FCC Seeks Comment on Petitions Concerning the FCC’s Rule on Opt-Out Notices for Fax Advertisements

On July 25, 2014, the FCC issued a Public Notice seeking comment on five petitions, filed by American Caresource Holdings, Inc. (“ACH”), CARFAX, Inc.(“CARFAX”), UnitedHealth Group, Inc. (“UnitedHealth”), MedLearning, Inc. and Medica, Inc. (“Medica”), and Merck and Company, Inc.(“Merck”) (collectively, the “Petitioners”) requesting a declaratory ruling and/or a waiver of section 64.1200 (a)(4)(iv) of the FCC’s rules. This rule requires certain fax advertisements to include an opt-out notice. ((See 47 C.F.R. § 64.1200 (a)(4)(iv).)) Comments in response to this Public Notice must be filed by August 8, 2014; reply comments are due August 15, 2014.

In the petitions included in this Public Notice, the Petitioners—all of which are currently defending TCPA lawsuits—argue that there is legitimate uncertainty regarding the scope and application of the rule to solicited faxes. The Petitioners ask the FCC to clarify that section 64.1200(a)(4)(iv) of its rules does not apply to fax advertisements sent with “prior express invitation or permission.” The Petitioners assert that the FCC does not have authority to regulate “solicited” faxes because Section 227(b) of the Communications Act (the “Act”), as amended, solely addresses unsolicited fax advertisements. The Petitioners also allege that confusion regarding the applicability of the rule was created by a footnote to Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991; Junk Fax Prevention Act of 2005, the order in which this rule was adopted. ((See ACH Petition at 5-6; CARFAX Petition at 6; Medica Petition at 7; Merck Petition at 5; UnitedHealth Petition at 5. See Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991; Junk Fax Prevention Act of 2005, Report and Order and Third Order on Reconsideration, 21 FCC Rcd 3787, 3810 n. 154, 3812 (2006).)) Four of the Petitioners (Medica, CARFAX, Merck and UnitedHealth) contend that the regulation of solicited faxes raises First Amendment concerns. In the alternative, the Petitioners request that the FCC clarify that the statutory basis for section 64.1200(a)(4)(iv) is not Section 227(b) of the Act, which would have the effect of removing the statutory basis of a private lawsuit. In the event that the FCC declines these requests, the Petitioners seek a retroactive waiver of the opt-out notification requirement for fax advertisements sent with the prior express consent of the recipient.

As the Petitioners state, the applicability of section 64.1200(a)(4)(iv) of the FCC’s rules to solicited faxes was addressed in a recent Eighth Circuit Court of Appeals decision, Nack v. Walburg, 715 F.3d 680 (8th Cir. 2013), cert. denied by Walburg v. Nack, 134 S. Ct. 1539 (2014). In this decision, the Eighth Circuit, based upon the FCC’s interpretation of its regulation (in an amicus brief), reversed summary judgment for the defendant, who asserted class-action claims on behalf of persons who received a fax that lacked the opt-out language required by the FCC rule. The Eighth Circuit noted, however, that “it is questionable whether the regulation at issue . . . properly could have been promulgated under the statutory section that authorizes a private cause of action.” Id. at 682. It also expressed some skepticism over whether the opt-out notice requirement, as applied to solicited faxes, would survive a constitutional challenge if it were properly before the Court. See id. at 687. We reported on the Supreme Court’s denial of the petition for certiorari in a previous post titled “Supreme Court Denies Petition for Certiorari of Eight Circuit Decision holding that Defendant Cannot Collaterally Attack FCC TCPA Rule in Federal Court Under the Hobbs Act.”

This is not the first time the FCC has sought comment on opt-out notices on fax advertisements in response to petitions for declaratory ruling. See previous Public Notices from January 31, 2014, March 28, 2014, April 25, 2014, May 30, 2014, and July 27, 2014.See also a previous post titled “TCPA Petitions Keep Pouring Into the FCC” where we discussed, among other things, the petition on which the FCC sought comment in the March 28, 2014 Public Notice. The FCC has issued Public Notices asking for comments on petitions:

  • requesting that the FCC clarify that the FCC lacks the statutory authority to adopt section 64.1200 (a)(4)(iv) of the FCC’s rules;
  • requesting that the FCC clarify that section 64.1200 (a)(4)(iv) does not apply to faxes sent with express permission because the FCC lacks the statutory authority to regulate solicited faxes;
  • requesting that the FCC clarify that the rule does not apply to fax advertisements sent with prior express consent because such faxes constitute “solicited” faxes that cannot be required to include opt-out notices;
  • requesting that the FCC initiate a rulemaking to repeal the rule;
  • requesting that the FCC confirm that a substantially compliant opt-out notice would satisfy the FCC’s rules;
  • claiming that the rule’s application to solicited faxes raises First Amendment concerns; and
  • other related issues.

The FCC has also sought comments on specific requests for retroactive waivers “and whether, alternatively, a broader waiver should be granted to all affected parties and, if so, on what basis.” With each Public Notice, the FCC has also sought comment on the petitioners’ alternative request that the FCC clarify that Section 227 of the Act is not the basis for the rule. ((The June 27, 2014 Public Notice and the July 25, 2015 Public Notice discussed in this post specifically refer to Section 227(b).))

While a waiver would be helpful to the petitioners, and a broader waiver to “all affected parties” would certainly be welcome, many hope that after six Public Notices on the subject, the FCC will issue a declaratory ruling providing certainty on the scope and applicability of section 64.1200(a)(4)(iv). At the most basic level, a clear statement that fax advertisements sent to a consumer who has provided prior express consent do not have to include an opt-out notice would go a long way in limiting the threat of massive class action lawsuits. It would also bring much needed clarity to the many cases that are already pending. The alternative ruling sought by the petitioners, identifying a statutory source of authority for the opt-out notice requirement other than Section 227 of the Act, would enable the FCC to enforce the rule without subjecting companies to class action litigation and aggregate statutory damages under the TCPA. The FCC appears to be carefully considering the implications of any ruling but there is no question that greater certainty in the short term would be beneficial to business and consumers alike, and allow consumers to continue to receive the fax advertisements they want, request, and expect.


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