• Junk Faxes Can Cost Millions
  • January 30, 2004
  • Law Firm: Hall Dickler LLP - Office
  • The Federal Communications Commission has fined Fax.com $5.3 million dollars in the largest penalty ever imposed upon a telemarketer. In addition to the forfeiture, the Commission ordered Fax.com to file a report within 30 days indicating whether it has come into compliance with the Telephone Consumer Protection Act and FCC rules prohibiting junk faxes. The Commission indicated that this report, along with any consumer complaints, will be used to determine whether additional enforcement action should be taken against Fax.com, or the companies on behalf of whom Fax.com sends unsolicited fax advertisements.

    The amount of the penalty represents the maximum of $11,000 each for 489 alleged violations of the Telephone Consumer Protection Act of 2001 and 2002 (TCPA). Now, Fax.com must decide among paying the fine, waiting for the Justice Department to bring a collection action, or petition the FCC for reconsideration. The FCC's victory may be pyrrhic: Fax.com recently told the D.C. Superior Court that it was unable to post a bond to cover a $2.2 million judgment in an action brought by Covington & Burling for the alleged faxing of over 1,500 faxes in a three-hour period.

    The fine had been levied in August 2002, but its imposition was delayed by a court action, which upheld the TCPA. The FCC describes Fax.com as a "fax blaster," that blasts messages to fax numbers in its database for a fee. Several of Fax.com customers claim that Fax.com assured them that its services were in compliance with legal requirements. The FCC justifies the size of the fine by alleging that Fax.com's very business model " constitutes a massive on-going violation " of the law, and that Fax.com was aware of this.

    Why This Matters: While bulk faxes have fallen out of favor, this fine shows that the FCC takes the TCPA very seriously and that the statute is very much alive. Any telemarketer must be very careful in extending its efforts into the fax arena.