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A new federal law allows businesses to communicate with their customers quickly and easily by fax without obtaining prior written permission. The new law, which is an amendment to the federal Telephone Consumer Protection Act (TCPA), also removes the threat of liability in civil and enforcement litigation for sending information about goods, products or services to customers or those who have expressed interest in what a business offers. The new law, titled the Junk Fax Prevention Act of 2005, passed the Senate June 24 and passed the House of Representatives June 28. President Bush signed the bill into law July 9. This change in federal law clarifies that companies with bona fide business relationships may communicate by fax regarding their products or services. Specifically, the new law eliminates the requirement of prior, written consent to transmit faxes with commercial content where the sender and the recipient have an “established business relationship” as that term is defined in the amendment. Under the new federal legislation, companies may communicate by fax to solicit business if the sender and recipient transacted business within the 18 months preceding the fax transmission or if the fax recipient inquired about the sender’s business products or services in the three months preceding the fax transmission and if the sender gives the recipient the opportunity to decline future faxes. Accordingly, under federal law, businesses do not need to have customers sign documents to giving them permission to send faxes so long as these two conditions are met. State laws on the subject vary and should be considered as well. BACKGROUND In 1991, Congress enacted the TCPA in order to address interstate telemarketing practices. Among its other provisions, the TCPA prohibits “unsolicited advertisements” with commercial content transmitted by facsimile. Specifically, the statute provides, “It shall be unlawful for any person within the United States � to use any telephone facsimile machine, computer or other device to send an unsolicited advertisement to a telephone facsimile machine.” The TCPA defines “unsolicited advertisement” as “any material advertising the commercial availability or quality of any property, goods or services which is transmitted to any person without that person’s prior express invitation or permission.” In addition to authorizing enforcement by the Federal Communications Commission and state attorneys general, the TCPA creates a private right of action for individual recipients and permits the recovery of the recipient’s actual damages or $500 per violation, whichever is greater. Until the recent amendment, there was no exception in the TCPA to the requirement that the sender of a fax which fit the definition of an “unsolicited advertisement” have the recipient’s “prior express invitation or permission.” Under the provisions of the prior law, even a pre-existing business relationship would not suffice as an indication of consent or permission to send faxes if the fax was one “advertising the commercial availability or quality of any property, goods, or services.” Although the statute did contain an exception to other telemarketing regulations in the presence of an “established business relationship,” there was no statutory basis for such an exception for faxes. Accordingly, the prior version of the statute had been interpreted by many (including plaintiff’s counsel in individual suits and in class action litigation) as prohibiting the transmission of faxes with commercial content despite the existence of a business relationship. INTERPRETATIONS Notwithstanding the absence of any language in the TCPA for it, in 1992 the FCC determined that an “established business relationship” was sufficient evidence of permission or consent to send an “unsolicited advertisement” as that term was defined in the statute. However, in June 2003, the FCC reversed this conclusion and announced that any sender must obtain the recipient’s express invitation or permission in writing which must include the recipient’s signature. After a strong negative reaction from the business community, the FCC extended the effective date of the requirement that a sender of a facsimile with commercial content obtain a recipient’s prior express permission in writing until Jan. 1, 2005. The FCC then extended the effective date of the regulations codifying this new interpretation on two subsequent occasions. First, the Junk Fax Prevention Act amends the TCPA’s prohibition on the transmission of commercial faxes without express invitation or permission Section 227(b)(1)(C)) to include an established business relationship exception. In addition, the new law incorporates the FCC’s definition of an “established business relationship” set forth in the Code of Federal Regulations. Prior to the passage of the Junk Fax Prevention Act, the FCC defined an “established business relationship” as a prior or existing relationship formed by a voluntary two-way communication between a person or entity and a residential subscriber with or without and exchange of consideration, on the basis of the subscriber’s purchase or transaction with the entity within 18 months immediately preceding the date of the telephone call or on the basis of the subscriber’s inquiry or application regarding products or services offered by the entity within three months immediately preceding the date of the call, in which a relationship that has not been previously terminated by either party. Obviously, this definition limited the exception that had applied only to telemarketing phone calls to “residential subscribers” and did not include business subscribers. The Junk Fax Prevention Act also modifies the FCC’s definition to include “a relationship between a person or entity and a business subscriber.” Accordingly, to fall within the “established business relationship” exception to the TCPA’s prohibition on commercial faxes, a sender and a recipient must be parties to a “voluntary two-way communication” based on either: “the subscriber’s purchase or transaction” with the sender “within 18 months immediately preceding the date” of the fax transmission; or “the subscriber’s inquiry or application regarding products or services offered” by the sender “within three months immediately preceding the date of” the fax transmission, as long as the relationship has not been terminated by either party. Under the new law, the sender will also have to comply with FCC regulations on giving then recipient an opportunity to refuse future faxes. The new law also authorizes the FCC to study and issue regulations changing the time limitations on this aspect of the law. There are additional aspects of the Junk Fax Prevention Act which could substantially affect commercial communications by fax as well. For example, the new law allows the transmission of unsolicited advertisements by fax by senders who obtain the fax number of the recipient through “a directory, advertisement, or site on the Internet to which the recipient voluntarily agreed to make available its facsimile number for public distribution.” This change could have a substantial impact on the interpretation of the statute in future litigation. Other provisions of the law require “opt-out” opportunities and require reports on the issue of “junk fax” enforcement by the FCC and studies on the same subject by the General Accounting Office. Michael P. Broadhurst is an associate in Blank Rome’s commercial litigation practice group, concentrating his practice in business disputes, professional malpractice defense, class action defense and land use litigation.

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