Fax Marketing

Appeals Court Affirms FCC’s Rule Repeal in Fax Marketing Decision

While traditional fax machines are less and less common today, litigation over fax marketing remains as rampant as ever. The Telephone Consumer Protection Act (“TCPA”) governs fax marketing and tasks the Federal Communications Commission (“FCC”) with creating rules for telemarketers to follow. One such rule required telemarketers to include detailed opt-out instructions on every fax, including solicited faxes (the “Solicited Fax Rule”). The FCC eventually repealed the Solicited Fax Rule after a federal appeals court found that the FCC lacked authority to regulate solicited faxes. 

Several businesses challenged the FCC’s repeal of the Solicited Fax Rule. In a recent case captioned Gorss Motels, Inc. v. Federal Communications Commission, the Second Circuit Court of Appeals upheld the FCC’s repeal. 

How does the Gorss Motels case impact fax marketing practices?

The FCC promulgated the Solicited Fax Rule in 2006. Years later, the D.C. Circuit Court of Appeals invalidated the Rule, holding that Congress only gave the FCC authority to regulate unsolicited faxes. In the wake of this ruling, the FCC repealed the Solicited Fax Rule. Gorss Motels and others challenged the legality of the FCC’s repeal order on procedural grounds, preferring that the Solicited Fax Rule remain in effect. 

First, Gorss Motels argued that the D.C. Circuit’s opinion was only binding law in Washington, D.C. Normally, one Circuit Court’s decision does not bind another Circuit. However, as the FCC argued, an uncommon federal statute requires that all challenges to a rule, such as that of Gorss Motels, be sent to one appellate court for evaluation. More recently, this same process was used to channel all challenges to the federal COVID-vaccine mandate to the Sixth Circuit Court of Appeals. As the Second Circuit explained, this “challenge consolidation” statute ensures uniformity and finality, avoiding different interpretations of the same rule which may depend on the location of a particular business or person. Accordingly, the Court rejected Gorss Motels’ argument and treated the D.C. Circuit’s decision as binding. 

Second, Gorss Motels argued that the FCC’s repeal order did not address the Solicited Fax Rule of 2006, but only addressed the FCC’s 2014 decision, which had reaffirmed its power to regulate solicited faxes. The Second Circuit disagreed, however. The Second Circuit found that the FCC’s repeal order necessarily applied to both the 2014 decision and the original 2006 Solicited Fax Rule. The Second Circuit went on to explain that the rationale for the repeal was to implement the D.C. Circuit’s decision that had invalidated the Solicited Fax Rule. Whatever the technical differences, the end result had to be the same: repeal of the Solicited Fax Rule. 

Why does the Gorss Motels decision matter to your business?

Today, email, text messages, and instant message apps are far more common means of communication than fax transmissions. However, many telemarketers continue to use fax marketing and, as such, need to understand the intricacies of the regulatory landscape. Although, the FCC repealed the Solicited Fax Rule, and the Second Circuit affirmed the repeal, telemarketers still need to remain vigilant. 

What is a solicited fax? Ostensibly, the answer is a fax that the recipient sought out in some way. TCPA fax litigation may now shift focus to whether a fax was truly solicited or not. If a court were to find that a fax was not solicited, then the telemarketer should have included a detailed opt-out notice. Absent that notice, telemarketers face hundreds of thousands of dollars (or more) in penalties, at $500-1,500 per fax violation. Best practices dictate including an opt-out notice in every fax to help avoid TCPA fax litigation. 

Hire experienced telemarketing attorneys.

The TCPA evolves almost weekly with each judicial or regulatory decision. Staying on top of these developments is a full-time job that takes away from focusing on how to grow your business and maximize profits. Hiring experienced telemarketing attorneys can help avoid TCPA pitfalls and keep your business out of TCPA litigation. The attorneys at Klein Moynihan Turco focus on all things telemarketing law and can provide you with industry best TCPA compliance advice and defend your business in the event of TCPA litigation. 

If you need assistance with updating your telemarketing practices or defending a TCPA lawsuit, email us at info@kleinmoynihan.com or call us at (212) 246-0900

The material contained herein is provided for informational purposes only and is not legal advice nor is it a substitute for seeking legal advice from an attorney. Each situation is unique, and you should not act or rely on any information contained herein without seeking the advice of an experienced attorney.

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