FCC Bureau Rejects “Strict Liability” Regime for Fax Advertisements
The TCPA prohibits any person from sending an unsolicited advertisement to a telephone facsimile machine. The Commission’s rules define “sender” as “the person or entity on whose behalf a facsimile unsolicited advertisement is sent or whose goods or services are advertised or promoted in the unsolicited advertisement.” 47 CFR 64.1200(f)(10).
The FCC’s Consumer and Governmental Affairs Bureau recently clarified that an advertiser is not a “sender” where a fax is sent without that advertiser’s approval. Specifically, the Bureau issued a Declaratory Ruling holding that where an advertiser is stripped of its ability to control the fax campaign or ensure compliance with the TCPA because of “deception, fraud, blatant contract violations, or misrepresentations,” the advertiser is not the “sender” of the fax. The Bureau explained that its ruling best advanced “the purposes of the statute” by deterring “fax broadcasters from sending unwanted faxes to consumers.”
The Bureau concluded that its order followed from the Commission’s 2006 Junk Fax Order, which held that the “sender” is not always the advertiser: “The sender is the person or entity on whose behalf the advertisement is sent. In most instances, this will be the entity whose product or service is advertised or promoted in the message.” However, “where the fax broadcaster’s deception or fraud leaves the advertiser unaware of and unable to prevent the unlawful faxes, sole liability for violations should rest with the fax broadcaster because the unauthorized faxes cannot reasonably be considered to be ‘on behalf of’ the advertiser.”
Helpfully too, the Bureau endorsed two Seventh Circuit decisions addressing this exact issue, Bridgeview Health Care Center v. Clark, 816 F.3d 935 (7th Cir. 2016) and Paldo Sign & Display Co. v. Wagener Equities, Inc., 825 F.3d 793 (7th Cir. 2016). Both decisions illustrate why the Bureau’s order pays proper fidelity to the TCPA’s language and policy, including properly limiting advertisers’ liability to faxes they control and approve.
In Bridgeview, the advertiser contracted with a fax broadcaster who approved faxes to be sent to 100 businesses within 20 miles of Terre Haute, Indiana, the advertiser’s location. Ignoring the advertiser’s instructions, the fax broadcaster sent 5,000 faxes across three different states, almost all of them well outside the 20-mile limit agreed to by the advertiser. The Seventh Circuit held that the faxes were not sent on behalf of the advertiser because the fax broadcaster sent the fax without the advertiser’s knowledge.
Likewise, in Paldo the Seventh Circuit held that “to be liable as a sender [of unauthorized fax advertisements], a person must have done something to advertise goods or services”; however, where the person neither “authorized nor approved the sending of the fax broadcast transmission, the person cannot be held liable because the ads were not sent “on [its] behalf.” In that case, the fax broadcaster sent 10,000 faxes without obtaining the company’s approval for either the ad copy or the recipients.
Finally, the Bureau rejected arguments from commenters seeking to impose a “strict liability” regime that would “always hold the advertiser liable.” The Bureau explained that “requiring advertisers to shoulder liability for fax broadcasters’ violations that advertisers do not authorize and cannot prevent would undermine the goals of the statute by reducing fax broadcasters’ incentives to avoid sending unwanted faxes.” And, moreover, the Bureau noted that “imposing liability on advertisers in such cases would lead to absurd and unreasonable results, and potentially incent fraudsters to ‘frame’ advertisers.”
The Bureau’s Order provides helpful guidance limiting advertisers’ liability for an over-eager (or dishonest) fax broadcaster who ignores clear guidance, contractual limits, or otherwise engages in conduct the advertiser did not approve.