On March 31, 2017, the D.C. Circuit struck down the FCC’s Solicited Fax Rule in Bais Yaakov of Spring Valley, et. al. v. Federal Communications Commission (Case No. 14-1234).  This is a significant decision that will limit the spate of class action suits brought pursuant to the Telephone Consumer Protection Act (TCPA) and, more specifically, the Junk Fax Prevention Act of 2005 (JFPA), 47 U.S.C. 227, et. seq.  The JFPA bans most unsolicited fax advertisements.  Where an unsolicited fax advertisement is allowed, the JFPA requires specifically defined opt-out notices to be included conspicuously on the faxes.  In 2006, the FCC went a step farther and required businesses to include opt-out notices on faxes that were solicited as well. In other words, faxes sent with express permission of the recipient.  That latter ruling from 2006 is known in the industry as the “Solicited Fax Rule.” 

In the Yakoov case, the petitioners challenged the Solicited Fax Rule alleging it was outside of the scope of authority granted to the FCC by Congress in passing the TCPA and the JFPA (collectively, the Act). The authority was provided in Section 227(b)(2) of the Act.  The Act provides for $500 in statutory damages for each violation.  Those statutory damages are subject to trebling where a knowing and willful violation is proven. Petitioner Anda was facing $150 million in statutory damages for failing to include an opt-out notice on faxes it sent largely to persons with whom it had permission to send the faxes.  The significance of the case was not lost on the D.C. Circuit.

The D.C. Circuit opined, “Although the Act requires an opt-out notice on unsolicited fax advertisements, the Act does not require a similar opt-out notice on solicited fax advertisements – that is, those fax advertisements sent with the recipient’s prior express invitation or permission.  Nor does the Act grant the FCC authority to require opt-out notices on solicited fax advertisements.”  The DC Circuit held the Solicited Fax Rule unlawful to the extent it requires opt-out notices on solicited faxes. 

This is a significant victory for businesses who fax advertisements to existing customers and referral sources.