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Update on Faxes and Child Protection Registries

Federal Junk Fax Prevention Act Signed into Law

President Bush signed the Junk Fax Prevention Act (S. 714) into law, which took effect July 9, 2005.

The law amends the Telephone Consumer Protection Act, 47 U.S.C. § 227 (“TCPA”), to allow marketers to send unsolicited commercial faxes to those with whom they have an established business relationship, as long as the fax complies with certain notice and opt-out requirements. Specifically, the fax must provide clear and conspicuous notice on the first page of the fax that the recipient may opt-out of receiving future unsolicited advertisements. The notice must also provide a domestic telephone number and fax number as well as a cost-free mechanism for opting-out, all of which must be available 24 hours a day, 7 days a week.

An established business relationship ("EBR") is defined as a prior or existing relationship formed by a voluntary two-way communication between a person or entity and a residential or business subscriber with or without an exchange of consideration, on the basis of an inquiry, application, purchase or transaction by the residential or business subscriber regarding products or services offered by such person or entity, as long as the relationship has not been previously terminated by either party. The new law also authorizes (but does not require) the FCC to implement rules that would establish a time limitation on an EBR. Keep in mind that, while the EBR exception in the federal Do Not Call law is subject to time restrictions (it only lasts for 18 months after a transaction or 3 months after an inquiry), the EBR exemption in the Junk Fax Prevention Act is unlimited in duration, unless and until the FCC implements rules that limit the duration of the EBR exemption.

The law is a response to the FCC’s decision in 2003 to interpret the Telephone Consumer Protection Act to require prior written consent before sending an unsolicited commercial fax, even if the sender has an established business relationship with the recipient. The FCC delayed the enforcement of its 2003 interpretation several times, most recently on June 27 by delaying enforcement to January 9, 2006. In a practical sense, the new Junk Fax Prevention Act pre-empts the FCC’s 2003 decision to require prior written consent to send an unsolicited commercial fax. The bottom line for marketers is that they may continue to send unsolicited commercial faxes to those with whom they have an established business relationship, without first obtaining written consent, as long as the marketer complies with the new notice and opt-out requirements.

The Junk Fax Prevention Act does not pre-empt state laws and many states have laws and regulations regulating telemarketing and unsolicited faxes that are stricter than the TCPA (for example, some states do not recognize an EBR exemption or impose a shorter time period). Industry groups have asked the FCC to issue a ruling to pre-empt state law, but state Attorneys General and consumer groups are urging the FCC to allow stricter state laws to remain in effect. For now, marketers should keep in mind that some state telemarketing laws may impose more restrictions on unsolicited faxes than the Junk Fax Prevention Act.

Utah and Michigan Launch “Child Protection Registries”

Last year, Utah and Michigan enacted laws creating “child protection registries.” The laws are designed to prevent marketers from sending email, text messages, faxes and telephone solicitations to minors that advertise products or services that registered minors are prohibited by law from purchasing, such as tobacco, firearms, pornography, and alcohol. Michigan’s registry become operational on July 1 and Utah’s registry became operational on July 15.

Both laws authorize the creation of a registry of “contact points” (including email address, telephone or fax number, instant message identity, pager number, cell phone or personal digital assistant number, or other electronic address) that can be accessed by or controlled by a minor. Schools and other organizations that provide services to minors can register entire domain names. Registering a contact point is free.

Both states will charge marketers a fee to access the registry. To comply, marketers will have to scrub their lists with the registries every 30 days. Violations can result in substantial fines and/or criminal conviction. Consent from a minor to receive prohibited messages is not a defense; therefore, marketers will be liable for sending prohibited messages to a registered minor even if the minor previously opted-in to receive such messages.

Michigan’s law prohibits a marketer from sending a message to anyone on the registry “if the primary purpose of the message is to, directly or indirectly, advertise or otherwise link to a message that advertises a product or service that a minor is prohibited by law from purchasing, viewing, possessing, participating in, or otherwise receiving.” Prohibited products and services include alcohol, tobacco, pornography, gambling and lotteries, illegal drugs, and firearms.

Utah’s law prohibits a marketer from sending a message to anyone on the registry if the message “(a) advertises a product or service that a minor is prohibited by law from purchasing; or (b) contains or advertises material that is harmful to minors...” Harmful to minors is defined in the state obscenity statute as “that quality of any description or representation, in whatsoever form, of nudity, sexual conduct, sexual excitement, or sadomasochistic abuse when it: (a) taken as a whole, appeals to the prurient interest in sex of minors; (b) is patently offensive to prevailing standards in the adult community as a whole with respect to what is suitable material for minors; and (c) taken as a whole, does not have serious value for minors. Serious value includes only serious literary, artistic, political or scientific value for minors.”

In a policy statement available on the Utah child registry web site, Utah clarified that the law does not prohibit sending advertisements for products or services that a minor can purchase under certain circumstances, such as a prescription drug with a valid prescription, and the law does not prohibit sending advertisements for products or services that involve entering into a contract (such as credit cards or rental car agreements) even though such contracts may not be enforceable against a minor.

Although the laws are designed to protect minors in Utah and Michigan, they may have a national reach because it is difficult to know where the owner of a cell phone number or email address is located, unless the marketer's database contains that information.

This client alert is a publication of Loeb & Loeb and is intended to provide information on recent legal developments. This client alert does not create or continue an attorney client relationship nor should it be construed as legal advice or an opinion on specific situations.

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