December 11, 2019 / Source: JD Supra

Significant FCC Ruling Distinguishes Online Fax Services Not in Violation of TCPA

In a welcome win to defendants fighting TCPA fax class actions, the Consumer and Governmental Affairs Bureau of the Federal Communications Commission (the Bureau) issued a declaratory ruling finding that a facsimile sent to an online fax service (as opposed to a traditional fax machine) is not covered under the Telephone Consumer Protection Act (TCPA).[1] This ruling now calls into question the continued viability of class actions brought under the TCPA based on the sending of an unsolicited fax.

The TCPA provides that it “shall be unlawful for any person . . . to use any telephone facsimile machine, computer, or other device to send, to a telephone facsimile machine, an unsolicited advertisement” unless certain conditions apply.^[2]  The TCPA defines a “telephone facsimile machine” as “equipment which has the capacity (A) to transcribe text or images, or both, from paper into an electronic signal and to transmit that signal over a regular telephone line, or (B) to transcribe text or images (or both) from an electronic signal received over a regular telephone line onto paper.”^[3] 

Until this ruling, the Bureau previously defined “telephone facsimile machine” to include e-faxes (documents sent as a conventional fax and then converted and delivered to the consumer as an e-mail attachment).[4]  The Bureau rationalized that the definition of “telephone facsimile machine” also included e-faxes because computers had the “capacity” to “transcribe text or images (or both) from an electronic signal received over a telephone line onto paper.”[5]  This decision of the Bureau virtually made all class actions certifiable because injury to the consumer no longer mattered; all that mattered was that an unsolicited facsimile was sent.

But, as argued in Amerifactors Financial Group, LLC’s  petition to the FCC, the Bureau’s past interpretation ignored the literal language of the TCPA.  The Bureau agreed and found in this ruling that “the TCPA’s language demonstrates that Congress did not intend the statute’s prohibition to apply to faxes sent to equipment other than a telephone facsimile machine.”  The Bureau found that a fax received by an online fax service as an electronic message is effectively an e-mail, and under FCC precedent, faxes “sent as email over the Internet” are not subject to the TCPA.[6]  Further, an online fax service cannot itself print a fax, and thus is not “equipment which has the capacity . . . to transcribe text or images (or both) from an electronic signal received over a regular telephone line onto paper” and is thus not a “telephone facsimile machine” under the TCPA.

The Bureau further found that online fax services do not cause the specific harms to consumers sought to be addressed by the TCPA, namely the shifting of advertising costs to the recipient in the form of automatic printing and the occupation of the facsimile machine with junk faxes so that it is unavailable for legitimate business messages.[7]  The Bureau found that online fax services, by contrast, hold inbound faxes in digital form on a cloud-based service where the user has the option to view, delete, or print the document as desired.

This decision of the Bureau has broad implications to all TCPA-fax class actions.  First, pursuant to the Hobbs Act, 28 U.S.C. § 2342, federal district courts are bound to follow the FCC’s rules, regulations, and orders relating to the TCPA.[8]  Thus, this declaratory ruling is now the law of the land when it comes to this issue in all district courts in the country. 

Second, this ruling now makes the method by which the fax was received key to determining whether any particular unsolicited facsimile violates the TCPA. This individualized determination will most certainly complicate any attempt to certify a TCPA-fax class action as the question of whether the facsimile was sent to an online fax service will predominate over any common issue.

The Bureau chose not to address the constitutional concerns raised by Amerifactors, including the argument that applying the TCPA to faxes sent to online fax services would violate the First Amendment, as it granted the relief requested based on the plain language of the statute. Likely, Amerifactors’ argument regarding the diminished market significance of faxing, the technological changes including the use of online fax services, and the due process considerations implicated by the prevalence of TCPA class actions, added further reasons for limiting the scope of the TCPA to the original concerns raised by the statute when enacted. 

The Bureau’s ruling is effective immediately.

Amerifactors Financial Group LLC was represented before the Federal Communications Commission by Douglas Brown and Samantha Duke from RumbergerKirk and Steven Augustino from Kelley Drye & Warren LLP.

[1] Amerifactors Financial Group, LLC Petition for Expedited Declaratory Ruling, Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991, CG Docket Nos. 02-278, 05-338, Declaratory Ruling, DA 19-1247 (rel. Dec. 9, 2019) (Amerifactors Order)

[2]  47 U.S.C. § 227(b)(1)(C). 

[3]  47 U.S.C. § 227(a)(3). 

[4] Westfax, Inc. Petition for Consideration and Clarification, Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991, Junk Fax Protection Act of 2005, CG Docket Nos. 02-278, 05-338, Declaratory Ruling, DA 15-977 (rel. Aug. 28, 2015) (Westfax Order). 

[5] Westfax Order, ¶ 15.

[6] Amerifactors Order, ¶ 11 (quoting 2003 TCPA Order, 14 FCC Rcd at 14133, para. 200).

[7] Amerifactors Order, ¶12.

[8] [8] The chief’s action has the same force and effect as actions of the Commission. 47 C.F.R. § 0.201(b).