Junk Fax Prevention Act of 2005 - History of Junk Fax Legislation

History of Junk Fax Legislation

Congress first addressed the issue of junk faxes in the Telephone Consumer Protection Act of 1991, or TCPA. Although this legislation dealt broadly with larger issues of nuisance telemarketing tactics, it included provisions making it illegal for any person to send an unsolicited advertisement to a fax machine. 47 U.S.C. 227(b)(1)(C). The law further authorized the recipient of a fax sent in violation of the statute (or a regulation promulgated under the statute) to sue the sender in state court to enjoin further violation, recover for actual monetary losses from such a violation, $500 in statutory damages for each violation (whichever is greater), or both. 47 U.S.C. 227(b(3). The law also allows the court, in its discretion, to treble these damages if it finds the defendant violated the statute "willfully" or "knowingly."

After the bill was enacted, many companies that continued to send junk faxes were sued, often for substantial sums. The most well-known sender of junk faxes, fax.com, was repeatedly sued by government agencies and private individuals. Most notably, the company found itself faced with a $2.2 trillion suit filed by anti-junk fax crusader Steve Kirsch. The company was eventually forced out of business, though the fax.com website has since been purchased by an unrelated company. As a result, many companies moved across the border into Canada or Mexico, or set up operations overseas to continue broadcasting into the United States.

To counter this, Congress made a small but significant amendment to the statute in the CAN-SPAM Act of 2003 (Public Law No. 108-187). This amendment made it illegal for sending junk faxes from within the United States, but also if they were sent into the United States from outside the country.

The FCC also promulgated regulations under the TCPA. Most of these regulations were designed to reduce the liability of senders of junk faxes. For instance, the FCC created an exemption for fax broadcasters similar to the "common carrier" exceptions created for telephone companies, 47 C.F.R. 64.1200, and an exemption for advertisements sent to recipients with whom the sender had an existing business relationship ("EBR") if the sender included a proper opt out clause. While many defendants in junk fax suits attempted to rely on these regulations, they were almost uniformly unsuccessful because courts repeatedly ruled that the FCC had been without statutory authority to create such exceptions. For examples, see Texas v. American Blastfax, Inc., 121 F. Supp. 2d 1085 (W.D. Texas 2000); Covington & Burling v. Int'l Marketing and Research, Inc., 2003 D.C. Super. LEXIS 29, *8-11; Accounting Outsourcing, L.L.C. v. Verizon Wireless Personal Communications, L.P., 329 F. Supp. 2d 789 (M.D. La Aug. 5, 2004); Rodriguez v. United States, 480 US 522 (1987); and Altman v. Inside Edge, Inc., 2004 TCPA Rep 1291, *2 (Mo. Cir. Aug. 2, 2004).

The Junk Fax Prevention Act of 2005 made small but significant changes to the TCPA. Most notably, it amended the statute to legislate the EBR exemption previously promulgated by the FCC. However, the bill was not amended to authorize the FCC's so-called "common carrier" exemption.