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On October 7, 2005, California enacted a new law (CA Senate Bill No. 833, as amended) that will have a significant – and potentially adverse – effect on associations nationwide that send faxes.  The California law, which applies to all faxes sent to or from California, makes it a crime to send any “unsolicited advertisements” by fax without the recipient’s “prior express invitation or permission.”  This is what is commonly referred to as an “opt-in” law.  It takes effect on January 1, 2006.

The new law eliminates the “established business relationship” exemption for sending unsolicited faxes that Congress carefully crafted just this year (which preserved the Federal Communications Commission’s longstanding interpretation of the TCPA).  Consequently, it directly conflicts with the fax provisions of the federal Telephone Consumer Protection Act of 1991 (“TCPA”) and the federal Junk Fax Prevention Act of 2005 (“JFPA”), which amended the TCPA.  (For an article on the application of the TCPA and JFPA to associations, click here.)   Fortunately for trade and professional membership associations (but not other types of nonprofits), there is an exemption in the California law that negates some – but clearly not all – of the potential negative impact.

An unsolicited advertisement is defined much like it is under the TCPA to mean “any material advertising the commercial availability or quality of any property, goods, or services.”  The law does not specify how express invitation or permission must be obtained (notably, it is not required to be in writing) and express invitation “may be obtained for a specific or unlimited number of advertisements and may be obtained for a specific or unlimited period of time.”  In other words, a person may request one fax advertisement without consenting to receive future such faxes from the sender.

The California law includes an exemption that is very important for tax-exempt trade and professional membership associations.  It exempts from the law’s requirements faxes sent “by or on behalf of a professional or trade association [but not other types of tax-exempt nonprofit organizations such as charities or educational organizations] that is a tax-exempt nonprofit organization and in furtherance of the association’s tax-exempt purpose to a member of the association,” so long as three conditions are met.

First, the member must have voluntarily provided its/his/her fax number to the association.  In this regard, if a member company representative provides consent to a trade association (of which the company is a member) to send fax advertisements to one or more company fax numbers, it is advisable to obtain a representation from the individual that he/she has the authority to provide such consent on behalf of the company, and, if applicable, on behalf of multiple fax numbers at the company.

Second, the primary purpose of the fax must not be “advertising the commercial availability or quality of any property, goods, or services of one or more third parties.”  Thus, unless applicable express consent has been received (such as via the membership application or renewal form), any faxes to association members that include promotions for co-branded products or products or services offered by endorsed affinity providers, for-profit subsidiaries, and possibly even related foundations or chapters, must have a primary purpose other than those advertisements.  (It is unclear whether, even if express consent is provided to an association by its members, that consent would extend to affiliated entities such as related foundations, for-profit subsidiaries, and chapters; thus, any consent obtained from members generally should be crafted broadly to cover all such affiliates.)  Note that this second prong of the exception does not limit faxes sent by the association to members that merely promote the association’s products or services (if in furtherance of the association’s purpose); for example, a fax to members that solely promotes the association’s annual conference would still fit within this exemption.

Third, the member must not have requested that the association stop sending faxes containing the unsolicited advertisements of third parties.  Note that while the California law does not require the inclusion of opt-out notices, the JFPA does, and such opt-out notices must provide the recipient with the ability to opt-out of receiving all future unsolicited fax advertisements (not just those advertising the products or services of third parties).  Just as has been recommended for opt-out notices under the federal CAN-SPAM Act regulating e-mail (click here), associations should be careful to not utilize unnecessarily broad opt-out notices that, if exercised, would require the association to limit the transmission of faxes that may not constitute “advertisements” and are not regulated by either the federal or California laws, such as newsletters or legislative updates.

Like the federal law, the California law requires all faxes sent to or from the state to contain certain identifying information on either the first page or in the top or bottom margin of each page sent (i.e., date and time sent, and name and telephone or fax number of the sender (not the broadcast fax company, if one is used)).

Finally, in addition to possible injunctive relief, the new law imposes damages of up to $500 per violation, which a court may increase up to $1,500 per violation if it finds the violation to be willful or knowing.  The law makes clear that these damages are in addition to the $500 per violation available under the TCPA.  Notably, like the TCPA, the California law contains a private right of action, allowing recipients of illegal faxes to sue the sender for damages.  As with the TCPA, this provides the law with some real enforcement “teeth” that heighten the importance of compliance for all affected associations.

For more information, contact the authors at 202-344-8138 / jstenenbaum@venable.com, or at 202-344-8215 / rmjacobs@venable.com.