July 28, 2003

FCC Issues New Unsolicited Fax Rules: Prior Written Consent Now Required for Most Faxes Sent to Members and Others

17 min

Starting August 25, 2003, associations will no longer be able to fax out a meeting or conference promotion, program registration form, new book advertisement, membership renewal invoice, or other “unsolicited advertisements” – even to members – without first obtaining the signed, written consent of the recipient for the specific fax number to which the fax is sent.  This is the result of new regulations just issued by the Federal Communications Commission (“FCC”) that will take effect before Labor Day.  These rules are sending shockwaves through the association community, and will require wholesale changes by associations, their business partners, and association members that market by fax.  

On July 3, 2003, the FCC issued a Report and Order amending the regulations that implement the federal Telephone Consumer Protection Act (“TCPA”).  The regulations were published in the Federal Register on July 25, 2003 and will take effect on August 25, 2003.  Most of the attention directed to this high-profile rulemaking was aimed at the do-not-call list, which generally should not impact trade and professional associations.  However, the FCC made significant changes to the rules governing unsolicited faxes, which will have a direct and substantial impact on associations – and everyone else – that engages in marketing by fax.  In short, by eliminating the “established business relationship” exception to the general ban on sending unsolicited advertisements by fax, the new rules will prohibit associations from sending most faxes to members and others without first obtaining signed, written consent.  

This article discusses the new fax rules and the significant, immediate marketing challenges they pose for associations, and then briefly addresses several telemarketing issues raised by the new regulations.  While this article focuses on the practical impact on association marketing, these rules apply to everyone who markets by fax in the United States.  Many associations are in the process of assessing not only their own compliance, but also educating their members as to their obligations.  

Finally, note that while the prohibition on sending “unsolicited” fax advertisements without “prior express” consent is in effect already (as it is mandated by the TCPA itself), and while the FCC-created “established business relationship” exception will be eliminated on August 25, 2003, the section of the new regulations that defines “unsolicited” by reference to prior express consent that is “evidenced by a signed, written statement” will not take effect until sometime after August 25.  This is because this section (alone) is covered by the federal Paperwork Reduction Act (due to the “information collection requirements” it would impose) and therefore must undergo a separate procedure involving public comment (due by September 23, 2003) and a right of disapproval by the federal Office of Management and Budget before taking effect.  The FCC has yet to announce an effective date for this section.  At this point, it is very unclear how the regulations will be applied and enforced in the days following August 25 with this particular section held in abeyance.  Presumably, however, until the complete regulations take effect, a “signed, written statement” will not be required to establish that a fax advertisement is “unsolicited”; whether implied consent or express-but-non-written consent would be sufficient during this interim period is unclear.  This article presumes the ultimate effectuation of this section of the regulations.  The analysis and recommendations contained herein are based on this premise.

The Existing Fax Rules

The TCPA generally prohibits any person or entity from sending any fax that contains an “unsolicited advertisement,” which is defined 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.”  (The FCC has interpreted this term very broadly to include everything from educational conference promotions to association membership solicitations; it is unclear at this point whether it includes solicitations for donations to charities or solicitations for association PAC contributions, for instance.)
In 1992, when the FCC first created regulations under the TCPA, it determined that an “established business relationship” (“EBR”) generally provided the necessary prior express invitation or permission to send faxes that contain unsolicited advertisements.  An EBR was defined 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 an exchange of consideration, on the basis of the subscriber’s inquiry, application, purchase or transaction by the residential subscriber regarding products or services offered by such person or entity, which relationship has not been previously terminated by either party.”  (This definition was later modified to impose a three-month limit on inquiry calls and an 18-month limit on calls relating to a purchase.)  

Thus, the EBR exemption allowed associations to send faxes – regardless of content – to members, individuals who had purchased a publication from the association or attended an association meeting, those who had inquired about the association, and those with whom the association had done business (such as vendors and sponsors), among others.  Because an EBR existed based on only an inquiry, in reality the EBR was a substitute for express consent.  That is, a person who inquired about the association and provided a fax number to receive more information had not only given express consent but also had entered into an EBR with the association.

The New Fax Rules

The FCC radically altered this framework with the revisions to the TCPA regulations.  The new rules will require signed, written consent in order to send any fax that contains an “unsolicited advertisement” – even to association members.  The consent must include the specific fax number(s) to which faxes may be sent.  Thus, a consent from a company for one fax number will not suffice for another fax number within the same company; a separate consent will be required (or a consent that lists all applicable fax numbers).  And if a company moves and obtains a new fax number(s), a new consent is required.  Moreover, it appears that a consent from a particular company employee (if not in the name of the company itself) for a particular fax number may not suffice if a replacement employee later assumes that same fax number; a consent from the new employee would be required.  

The FCC Report states that electronic and digital signatures (that meet the requirements of federal or state law) will suffice, thus allowing online and email consent.  However, to constitute a “digital signature” under the law, something more than simply checking a box on a Web site will be required; keying in the person or company’s name, fax number(s), and then clicking a box reflecting consent to receive faxes should suffice.  (If consenting on behalf of the company, the person should represent their authority to do so.)  In addition, according to the FCC Report, while sending faxes to seek consent will be prohibited, the consent can be returned via fax (although some have alleged that the Report is ambiguous as to whether the faxing of a mere consent form would be disallowed).   

Thus, the FCC has not only eliminated the EBR exemption, it has eliminated the ability to obtain consent without a signed written document.  In other words, according to the FCC, a verbal consent or request no longer constitutes the “prior express invitation or permission” required by the TCPA; a written or electronic consent is mandated in all circumstances.  The FCC also noted that merely including an “opt-out” notice (e.g., “let us know if you do not wish to receive more faxes from the association”) is not sufficient; a person must provide written consent before being faxed.  Finally, once a consent is provided, it can later be revoked at any time.  To this end, while including an “opt-out” notice on faxes to those who have provided written consent is not required (although the inclusion of the telephone or fax number of the sender is mandated, as discussed below), it may be prudent in certain circumstances.  

As under the prior rules, the fax ban applies not only to stand-alone fax machines, but also to computer fax boards or modems that can send a fax from a personal computer.  It also applies to faxes received directly on the recipient’s computer.  

To understand how broad this prohibition is, imagine that a person calls an association and asks to be faxed a membership application or a registration form for an upcoming seminar.  The association would be violating the TCPA – and subject to penalty – if it faxes the requested document without first obtaining signed written consent.  Similarly, if an association sends its members a reminder by fax that it is time to pay next year’s membership dues, but does not have signed consent from each member, it would be violating the rules.  Doing so would subject the association to potential FCC enforcement, state enforcement, and more importantly, a private lawsuit for up to $1,500 per violation ($500 per violation, which can trebled if the violation is knowing and willful).  Class actions also are permitted.  As past experience has demonstrated, this private right of action can and does incentivize many people to file suit upon receipt of unsolicited faxes.

Scope of the Rules  

One of the most important considerations under the rules is what type of faxes are covered.  As noted above, the rules apply to any fax sent without prior written consent that contains “any material advertising the commercial availability or quality of any property, goods, or services.”  Thus, for example, a legislative update – even containing a “call to action” to contact your Member of Congress – would not fit within the rules and may be sent without obtaining prior written consent.  Nor would a mere notice regarding an upcoming board of directors election or annual meeting fit within this definition (so long as the notice does not also contain a meeting registration form).  A survey that does not solicit a purchase of any goods or services also should be exempt.  At this point, it is unclear whether faxes that contain solicitations to members for contributions to the association’s affiliated PAC, or for voluntary contributions to the association’s related foundation (where no goods or services are provided in return), would be exempt.  The FCC has even questioned whether a faxed offer for a free newsletter or a free educational seminar would be exempt from the rules; in other contexts in the past, the FCC has found such free offers to be covered by the fax ban.  These questions – and the dividing line between an advertisement and an informational fax – may or may not be clarified by the FCC in response to the numerous Petitions for Clarification and Petitions for Reconsideration that are expected to be filed prior to August 25, 2003.  

Membership dues renewal notices, promotions for upcoming meetings and seminars for which there is a fee charged (and perhaps even if there is not), solicitations to sponsor an association activity or event, and an RFP for paid services all would fall within this definition and be prohibited without prior consent.  Dual-purposes faxes (i.e., those that contain both an unsolicited advertisement and other material) are covered under the fax ban; in other words, a fax that is, in any part, an advertisement will “taint” the rest of the document under these rules.

Complying with the Rules  

As a result of the new rules, associations will have to obtain express written permission to send faxes in many contexts.  There are several ways that this may be possible.  First, until the fax ban rules become effective on August 25, 2003, it is permissible to send faxes to members and others seeking their written consent (e.g., to those with whom there is an EBR).  Second, all membership application and renewal forms should be modified to obtain express consent.  Similarly, Web-based forms should be updated to include the ability to obtain the requisite consent.  Third, because the do-not-call rules do not apply to tax-exempt nonprofit organizations, associations can call to remind individuals to provide written consent (but cannot obtain the consent over the telephone as it must be in writing).  Fourth, associations should modify their procedures to obtain consent at the point at which they obtain fax numbers.  For example, for all orders or purchases (whether online, by mail, or in person), the association should seek to obtain the fax number and signed consent on the order form.  Similarly, for meetings where attendees must register in advance, the registration form should include the fax number and consent.  Following is a (non-exhaustive) list of some additional practical tips to keep in mind as the compliance process moves forward under this new regulatory scheme:  
  • Obtain express written consent not only for the association to fax to the recipient, but for all subsidiaries (including foundations, for-profit subsidiaries, insurance trusts, PACs, etc.) and affiliated entities (including chapters, regions and other subdivisions) of the association as well (list each subsidiary and affiliate separately by name); 
  • If applicable, obtain the consent in the name of the company or organization, not merely in the name of an individual (this will provide the association with broad authority to fax to anyone in the company/organization and will eliminate the need to obtain additional consents for other employees in the company/organization);
  • Obtain consent for all fax numbers in the company or organization for which consent is desired (this can be done on a single form), and ensure that the form is signed by someone with the authority to provide such consent (along with a representation to that effect);
  • Any time the association receives a notification of change of address or fax number, a new contact person at a member company, or a change of company/organization name, procedures should be in place to ensure that a new consent form is sent out, completed and returned;
  • Seek consent from everyone in the association’s database for whom the association has a fax number, not just members of the association; and
  • For online consent (e.g., on the association’s Web site), be sure that those providing consent are required to manually key in their company/organization name (if applicable), their name (with a representation that they are authorized to act on behalf of the company/organization), all fax numbers for which consent is being provided, and to click a box or otherwise affirmatively indicate the company/organization’s consent to receive faxes from the association.  

Regarding the “rental” or “swapping” of membership lists that contain fax numbers, in order to avoid potential liability, associations should either not rent membership or other lists containing fax numbers or they should include a prominent notice with the list that it is illegal under federal law to send faxes without first obtaining the express written consent of all recipients.  Presuming it is not a violation of the association’s privacy policy to disclose member fax numbers, the latter should be sufficient to avoid liability under the TCPA (unless there is a “high degree of involvement” in the subsequent fax activity by the association supplying the numbers or unless the association has actual notice of unlawful fax activity and fails to take corrective action).  The publication of fax numbers in the association’s printed or online membership directory should be accompanied by the same prominent notice and warning.  

Regarding joint marketing with other entities – including both affinity partners and outsourced marketing firms – the association must be careful to structure the fax to make it clear that it is coming “from” the entity to whom the recipient has provided consent.  (In most cases, the affinity partner or marketing firm will not have received – and likely would have difficulty obtaining – consent from the association’s members.)  This does not mean that the fax has to originate from the association’s telephone equipment, but the content of the fax should leave no question as to who originated the fax, and the fax header (see below), in certain cases, should reflect the names of both the association and the other entity.  It is unclear exactly how this will apply, for instance, in the association affinity program context where – for unrelated business income tax purposes – it is the affinity partner that frequently sends the fax or other marketing material (with the association sometimes avoiding marketing altogether), and whether a conflict between these cross-purposes can be avoided.  It also is unclear whether it would be permissible for the association’s consent form to include a blanket consent for all specified affinity or marketing partners of the association, or, alternatively, whether the FCC will permit consent provided by members to the association to constitute sufficient authorization for faxes to be sent by affinity or marketing partners to members.

Fax Identification  

In addition to the changes in the fax ban, the FCC also modified the rules for identifying the sender of faxes.  First, it should be noted that the prior rules remain in place that require every fax (not just unsolicited advertisements) to identify – in the top or bottom margin on each page or on the first page – the date and time it is sent, the sender’s identity (the originator of the fax, not the name of the broadcast fax service), and the fax number of the machine sending the transmission or the telephone number of the sender.  If a broadcast fax service (which likely includes an outside marketing firm retained for such purposes) is used and the fax broadcaster is responsible for the content of the fax or for supplying the fax numbers to which the faxes are sent, then the fax broadcaster’s name also must be identified in the header.  According to the FCC, this is because fax broadcasters (and, presumably, outside marketing firms engaged in the fax activity) can be held liable for unlawful faxes when there is a “high degree of involvement” on the part of the broadcaster (or marketing firm) or when there is actual notice of unlawful fax activity without corrective action being taken.  

Under the new rules, the FCC requires the sender (and the broadcast fax service, if applicable) to identify its legal name “under which they are officially registered to conduct business” (i.e., the name registered with a state corporation commission or comparable regulatory authority).  The FCC Report notes that this would preclude using merely a “doing business as” name – such as an association’s acronym – without also listing the corporate name registered with a state.  Of course, many states allow (and in some cases require) entities to register any “doing business as” name with the state.  If such a DBA name (or acronym) is registered with a state, it should satisfy the rule.  It is not clear in which state(s) the FCC believes an entity must register its name (merely sending a fax into a state does not require registration with that state), but presumably, registration with at least one state should be sufficient.

Other Telemarketing Issues  

In addition to the fax rules, there are several other changes to the TCPA rules that directly impact associations.  First, calls to wireless numbers are prohibited if made with automatic dialing equipment.  Automatic dialing equipment is more likely to be used by large call centers making calls on behalf of associations.  If such equipment is used, the association should take steps (or require the call center to take steps) to prevent calls to wireless numbers.   

Second, although the do-not-call provisions of the rule do not apply to tax-exempt nonprofit entities or those calling on their behalf, the FCC explained that if “a for-profit organization is delivering its own commercial message as part of a telemarketing campaign (i.e., encouraging the purchase or rental of, or investment in, property, goods, or services), even if accompanied by a donation to a charitable organization or referral to a tax-exempt nonprofit organization, that call is not by or on behalf of a tax-exempt nonprofit organization.”  The FCC explained that the rules regarding telephone solicitations “apply already to messages that are predominantly commercial in nature.”  Thus, in any marketing arrangement with a for-profit company to sell goods or services, an association must be careful to properly structure the call so that the association is the entity making the call, rather than the marketing partner, and the contract between the two should reflect this arrangement.  It is not clear how these rules will work in the context of association affinity programs.  

There is also a conflict between the telemarketing rules implemented by the Federal Trade Commission (“FTC”) and the FCC’s rules in the nonprofit arena.  The FTC has taken the position that calls made by for-profit call centers on behalf of nonprofit clients must maintain a company-specific do-not-call list and comply with certain provisions regarding abandoned calls.  The FCC, however, has specifically exempted those calling on behalf of nonprofits from these rules.  The two agencies are attempting to reach an understanding as to how to enforce their respective rules and a final resolution of this issue will have to await that agreement.


The FCC’s revisions to the TCPA rules extend much further than the new do-not-call list.  The new fax rules will significantly impact associations and their ability to communicate with members, prospective members, vendors, and others.  They also will impact how association business partners communicate with associations, and how association members communicate with their current and prospective customers and clients.  The required changes will be, for some, fundamental, and for many, accompanied by substantial cost, headaches and problems.  And with the regulation of email marketing under active consideration by Congress, marketing by mail not a cost- or time-efficient option, and telemarketing not a practical alternative, the marketing challenges facing associations – and the rest of the business community – have just taken a steep turn for the worse.

For more information, contact Mr. Tenenbaum or Mr. Jacobs at 202/ 962-4800, or at jstenenbaum@venable.com or rmjacobs@venable.com .

On August 18, 2003, the FCC issued a stay of its new fax rules.  Please see While FCC Delays New Fax Rules, Significant New Requirements Remain for Associations for the latest information.