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Federal Appeals Court Invalidates FCC “Solicited Fax” Regulations

WASHINGTON, D.C., April 6, 2017 — In a split decision, the U.S. Court of Appeals for the District of Columbia Circuit has invalidated Federal Communication Commission regulations, promulgated under the federal Telephone Consumer Protection Act of 1991 (TCPA), that required fax advertisements sent with a recipient’s prior permission to include an “opt-out” notice.

"This decision will be of greatest interest to broker-agents who use -- or who have any policyholders who use -- the fax machine for solicitation of new business," IIABCal General Counsel Steve Young said. "Because the ruling in Anda, Inc. v FCC, et al. comes from an intermediate court, we won't know its ultimate impact until we know whether the decision is appealed, how that appeal (or appeals) may be decided, and perhaps even more importantly what changes the Trump FCC may make to change prior law and practice."

In 2006, the FCC issued an order, known as the “Solicited Fax Rule.”  The TCPA had been enacted, in part, to permit consumers to prohibit unsolicited, or “junk” faxes, and senders were required to permit recipients to “opt out” of future unsolicited faxes.  The FCC then decided it wanted to require senders to include the “opt-out” notification even on “solicited,” or “non-junk” fax messages. It was the extension of the “opt-out” notification requirement to “solicited” faxes that was challenged in this case. 

Two of the three justices on the panel found that the statutory authority within the TCPA for requiring “opt-out’ options in unsolicited fax messages could not be read to authorize the same requirement in fax messages that the consumer had expressly given its consent to receive.  The decision of this particular court, issued last week, is significant because the District of Columbia Circuit in the federal appellate court system is authorized to bind appellate courts in every other circuit to its decisions on federal administrative agency law—and also because it is generally regarded as “first among equals” in the federal judicial system.  The only higher court is the US Supreme Court, many of whose members have traditionally served on the DC Circuit.

The decision is likely to be appealed.  A large number of class action suits have been brought against companies that continue to solicit business through fax machines.  The case before that appellate court, Anda, was brought by a group of class action defendants, led by Anda, a seller of generic drugs facing $150 million in liability for sending solicited faxes that failed to include the opt-out notice.

To read the appellate court’s holding, click here.

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