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FCC Issues Declaratory Ruling Holding Faxes Sent to Online Fax Services Are Not Subject to TCPA FCC Issues Declaratory Ruling Holding Faxes Sent to Online Fax Services Are Not Subject to TCPA

FCC Issues Declaratory Ruling Holding Faxes Sent to Online Fax Services Are Not Subject to TCPA

On December 9, 2019 the Federal Communications Commission (FCC) issued an order on a Petition for Declaratory Relief filed by Amerifactors Financial Group, LLC on July 13, 2017. The FCC held that: “[A]n online fax service that effectively receives faxes ‘sent as email over the Internet’ and is not itself ‘equipment which has the capacity . . . to transcribe text or images (or both) from an electronic signal received over a regular telephone line onto paper’ is not a ‘telephone facsimile machine’ and thus falls outside the scope of the statutory prohibition.” FCC Dec. 9, 2019 Amerifactors Order at ¶2. The FCC’s order may be found at: https://docs.fcc.gov/public/attachments/DA-19-1247A1.pdf. The FCC’s order states that it is limited to an analysis of the record before it regarding online fax services “and does not prejudge whether we would arrive at the same conclusion for other types of equipment and services.” FCC Dec. 9, 2019 Amerifactors Order at ¶8.

The record before the FCC established that a “fax received by an online fax service as an electronic message is effectively an email” and noted the FCC had previously ruled that faxes sent as email over the internet are not subject to the TCPA. 2003 TCPA Order, 14 FCC Rcd at 14133, ¶200. The FCC noted that faxes sent via an online fax service that the user can delete without printing are effectively the same as an email and are not subject to the TCPA.

What Is An Online Fax Service?

The FCC defined an online fax service as follows:
[O]nline fax services hold inbound faxes in digital form on a cloud-based server, where the user accesses the document via the online portal or via an email attachment and has the option to view, delete or print them as desired. Faxes sent to online fax services use paper and ink only when the recipient chooses to print it using their own separately provided equipment.

FCC Dec. 9, 2019 Amerifactors Order at ¶12. The FCC agreed with commenters on the Amerifactors’ petition that online fax services do not cause the specific harms Congress intended to address in enacting the TCPA—namely shifting the cost of advertising from the advertiser to the recipient who bears the cost of printing the fax advertisement. Id. 
 
The FCC’s order also distinguished its prior order in WestFax where the FCC held that the mere conversion of a conventional fax into an email at some point in the transmission chain did not remove the fax from regulation under the TCPA.  WestFax Declaratory Ruling, 30 FCC Rcd at 8624 ¶12 or at: https://www.fcc.gov/document/westfax-inc-petition-consideration-and-clarification. The FCC’s rationale is that based on the record in the WestFax Petition, the efax in question was sent to a computer with an attached fax modem that had the capacity to print the fax as required under the Act. FCC Dec. 9, 2019 Amerifactors Order at ¶15.
 
Genesis of the Amerifactors Petition
 
Amerifactors Financial Group was named as a defendant in a putative TCPA unsolicited fax ad class action filed against it on September 2, 2016 in the United States District Court for the District of South Carolina (Columbia), Career Counseling, Inc. v. Amerifactors Financial Group, LLC et al., No. 16 CV 3013. Plaintiff’s counsel in the case is Anderson + Wanca. The fax at issue in the litigation is a one page fax promoting business loans. Amerifactors filed a Motion to Dismiss on October 28, 2016. While its Motion to Dismiss was pending, on July 13, 2017, Amerifactors filed a Petition for Expedited Declaratory Ruling before the FCC. (See: https://ecfsapi.fcc.gov/file/107132729420021/AmeriFactors%20Petition%20For%20Expedited%20Declaratory%20Ruling%2007132017.pdf). On July 14, 2017, Amerifactors filed a Motion to Stay the case pending the FCC’s decision on its Petition for Expedited Declaratory Ruling. The District Court granted the stay, which was most recently extended to December 23, 2019. 
 
The FCC Declined to Address First Amendment Arguments Raised by Amerifactors
 
Amerifactors’ Petition also requested the FCC to declare that the government’s interest in regulating faxes sent via online fax services is not substantial under the Central Hudson[1] standard and therefore violates the First Amendment. (See: Amerifactors Petition at pp. 29-31). Amerifactors submitted an extensive white paper to the FCC on the first amendment issue.[2] The FCC declined to address this argument. FCC Dec. 9, 2019 Amerifactors Order at ¶16.
 
Potential Implications of the FCC’s Order
 
The FCC’s order may have significant implications on TCPA fax class action litigation beyond the Career Counseling case filed against Amerifactors. For example, the order creates the potential for an argument against class certification in TCPA fax cases, namely that individual questions of fact exist that preclude class certification where a defendant can adduce evidence that a substantial number of class members received faxes sent via online fax services. It is probably safe to assume that Plaintiff’s counsel will seek full review by the FCC of the order issued by the Consumer and Governmental Affairs Bureau. 

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This publication is intended for general information purposes only and does not and is not intended to constitute legal advice. The reader should consult with legal counsel to determine how laws or decisions discussed herein apply to the reader’s specific circumstances.
 
The authors are members of Ice Miller’s TCPA defense team which is one of the most experienced TCPA defense teams in the country and has been defending TCPA class action cases since the late 1990s. The team has successfully defended clients in over 300 TCPA class action cases in courts across the country. You may contact the authors at: bart.murphy@icemiller.com; isaac.colunga@icemiller.com or martha.kohlstrand@icemiller.com
 
[1]  Central Hudson Gas & Elec. Corp. v. Public Service Commission, 447 U.S. 557 (1980). 
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