[Federal Register Volume 71, Number 85 (Wednesday, May 3, 2006)]
[Rules and Regulations]
[Pages 25967-25979]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 06-4169]



[[Page 25967]]

-----------------------------------------------------------------------

FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 64

[CG Docket Nos. 02-278 and 05-338; FCC 06-42]


Rules and Regulations Implementing the Telephone Consumer 
Protection Act of 1991; Junk Fax Prevention Act of 2005

AGENCY: Federal Communications Commission.

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: In this document, the Commission amends its rules on 
unsolicited facsimile advertisements as required by the Junk Fax 
Prevention Act of 2005 (the Junk Fax Prevention Act). In addition, the 
Commission addresses certain issues raised in petitions for 
reconsideration of the 2003 Report and Order concerning the Telephone 
Consumer Protection Act's (TCPA) facsimile advertising rules.

DATES: Effective August 1, 2006 except for 47 CFR 64.1200(a)(3)(i), 
(ii), (iii), (iv), and (vi) which contains information collection 
requirements that must be approved by the Office of Management and 
Budget (OMB). The Commission will publish a document in the Federal 
Register announcing the effective date of these paragraphs. Written 
comments on the new information collection(s) must be submitted by the 
public, Office of Management and Budget (OMB) and other interested 
parties on or before June 2, 2006. The Commission also lifts the stay 
in 47 CFR 64.1200(f)(3) effective May 3, 2006.

FOR FURTHER INFORMATION CONTACT: Erica McMahon or Richard Smith, 
Consumer & Governmental Affairs Bureau, (202) 418-2512.

SUPPLEMENTARY INFORMATION: This document contains modified information 
collection requirements subject to the Paperwork Reduction Act of 1995 
(PRA), Public Law 104-13. These will be submitted to the Office of 
Management and Budget (OMB) for review under 3507(d) of the PRA. OMB, 
the general public, and other Federal agencies are invited to comment 
on the new information collection requirements contained in this 
proceeding. This is a summary of the Commission's Report and Order and 
Third Order on Reconsideration, CG Docket Nos. 02-278 and 05-338, FCC 
06-42, adopted April 5, 2006, and released April 6, 2006 (Order). The 
Order amends the Commission's rules on unsolicited facsimile 
advertisements as required by the Junk Fax Prevention Act. The Order 
also addresses issues raised in petitions for reconsideration arising 
from the Rules and Regulations Implementing the Telephone Consumer 
Protection Act of 1991, Report and Order, (2003 TCPA Order), CG Docket 
No. 02-278, FCC 03-153, released July 3, 2003; published at 68 FR 
44144, (July 25, 2003). This document also addresses issues raised in 
the Junk Fax Prevention Act Notice of Proposed Rulemaking (JFPA NPRM), 
CG Docket Nos. 02-278 and 05-338, FCC 05-206, released December 9, 
2005; published at 70 FR 75070 (December 19, 2005), which proposed 
modifications to the Commission's rules on unsolicited facsimile 
advertisements, and sought comment on aspects of those rules. Copies of 
any subsequently filed documents in this matter will be available for 
public inspection and copying during regular business hours at the FCC 
Reference Information Center, Portals II, Room CY-A257, 445 12th 
Street, SW., Washington, DC 20054. The complete text of this document 
may be purchased from the Commission's duplicating contractor at 
Portals II, 445 12th Street, SW., Room CY-B402, Washington, DC 20554. 
Customers may contact the Commission's duplicating contractor at its 
Web site: www.bcpiweb.com or call 1-800-378-3160. To request materials 
in accessible formats for people with disabilities (Braille, large 
print, electronic files, audio format), send an e-mail to 
fcc504@fcc.gov or call the Consumer & Governmental Affairs Bureau at 
(202) 418-0530 (voice) or (202) 418-0432 (TTY). The document can also 
be downloaded in Word and Portable Document Format (PDF) at http://www.fcc.gov/cgb/policy.

Paperwork Reduction Act of 1995 Analysis

    This document contains modified information collection 
requirements. The Commission, as part of its continuing effort to 
reduce paperwork burdens, invites the general public to comment on the 
information collection requirements contained in the Order as required 
by the PRA of 1995, Public Law 104-13. Public and agency comments are 
due June 2, 2006. In addition, the Commission notes that, pursuant to 
the Small Business Paperwork Relief Act of 2002, Public Law 107-198, 
see 44 U.S.C. 3506(c)(4), the Commission previously sought specific 
comment on how the Commission might ``further reduce the information 
collection burden for small business concerns with fewer than 25 
employees.'' In this present document, the Commission has assessed the 
effect of rule changes and finds that there likely will be an increased 
administrative burden on businesses with fewer than 25 employees. The 
Commission has taken steps to minimize the information collection 
burden for small business concerns, including those with fewer than 25 
employees. The rules adopted in this Order do not to require the 
maintenance of specific records for the sending of facsimile 
advertisements. The Commission also declines to limit the duration of 
the Established Business Relationship (EBR), which might have resulted 
in an increase in recordkeeping burden for entities sending fax 
advertisements on the basis of an EBR. These measures should 
substantially alleviate any burdens on businesses with fewer than 25 
employees.

Synopsis

    In compliance with the requirements of the Junk Fax Prevention Act, 
the Commission now amends Sec.  64.1200(a)(3) of the Commission's rules 
to expressly recognize an EBR exemption from the prohibition on sending 
unsolicited facsimile advertisements. (The Commission correspondingly 
withdraws Sec.  64.1200(a)(3)(i) of its rules from its existing rules, 
as facsimile senders will now be permitted to send facsimile 
advertisements to recipients with whom they have an EBR without first 
securing the recipient's written permission.)
    To ensure that the EBR exemption is not exploited, the Commission 
concludes that an entity that sends a facsimile advertisement on the 
basis of an EBR should be responsible for demonstrating the existence 
of the EBR. The entity sending the fax is in the best position to have 
records kept in the ordinary course of business showing an EBR, such as 
purchase agreements, sales slips, applications and inquiry records. 
(Digitized documents would be acceptable if kept in the ordinary course 
of business and if they established the existence of the EBR.) The 
Commission does emphasize that it is not requiring any specific records 
be kept by facsimile senders. Should a question arise, however, as to 
the validity of an EBR, the burden will be on the sender to show that 
it has a valid EBR with the recipient.

Recipient's Facsimile Number

    As set forth in the Junk Fax Prevention Act, an EBR alone does not 
entitle a sender to fax an advertisement to an individual consumer or 
business. The telephone facsimile number must also be provided 
voluntarily by the recipient. Specifically, under the new

[[Page 25968]]

rules, any person sending a fax advertisement under the EBR exemption 
must have obtained the facsimile number directly from the recipient 
within the context of the EBR, or ensure that the recipient voluntarily 
agreed to make the number available in a directory, advertisement, or 
site on the Internet which is accessible to the public. In accordance 
with the Junk Fax Prevention Act, an exception to this requirement will 
apply if the EBR was formed prior to July 9, 2005.

Facsimile Number Obtained Directly From Recipient

    The provision of a telephone facsimile number to a business or 
other entity reflects a willingness to receive faxes from that entity. 
Accordingly, it would be permissible for the sender to fax an 
advertisement to a recipient that had provided a facsimile number to 
the sender, for example, on an application, information request, 
contact information form, or membership renewal form. Similarly, a 
business card containing a fax number that is provided by the recipient 
to the sender would permit the sending of a facsimile advertisement. It 
also would be permissible for the recipient to provide to the sender 
its facsimile number orally over the telephone or through a Web site 
maintained by the fax sender. In circumstances such as these, the 
Commission concludes that the consumer has provided the facsimile 
number in the context of an established business relationship with the 
fax sender. In the event a recipient complains that its facsimile 
number was not provided to the sender, the burden rests with the sender 
to demonstrate that the number was communicated in the context of the 
EBR.

Facsimile Number Obtained From Directory, Advertisement or Internet 
Site

    The Junk Fax Prevention Act requires that, if the sender relies on 
an EBR and obtains the facsimile number from a directory, advertisement 
or site on the Internet, the sender must ensure that the recipient 
voluntarily agreed to make the number available for public 
distribution. Commenters contend that it would be unduly burdensome for 
senders of facsimile advertisements to verify that a consumer 
voluntarily agreed to make the facsimile number public in every 
instance. The Commission agrees. Therefore, the Commission determines 
that a facsimile number obtained from the recipient's own directory, 
advertisement, or internet site was voluntarily made available for 
public distribution, unless the recipient has noted on such materials 
that it does not accept unsolicited advertisements at the facsimile 
number in question. For instance, if the sender obtains the number from 
the recipient's own advertisement, that advertisement would serve as 
evidence of the recipient's agreement to make the number available for 
public distribution. (Another example might be a number obtained from 
the recipient's own letterhead or fax cover sheet.) On the other hand, 
if the sender obtains the number from sources of information compiled 
by third parties--e.g., membership directories, commercial databases, 
or internet listings--the sender must take reasonable steps to verify 
that the recipient consented to have the number listed, such as calling 
or e-mailing the recipient. The Commission agrees that membership 
directories requiring a fee to use are limited in distribution and, as 
such, the information included within the directory is made available 
to subscribers and purchasers, not to the general public. The 
Commission also reiterates that senders of facsimile advertisements 
must have an EBR with the recipient in order to send the advertisement 
to the recipient's facsimile number. The fact that the facsimile number 
was made available in a directory, advertisement or Web site does not 
alone entitle a person to send a facsimile advertisement to that 
number.

Established Business Relationship Formed Prior to July 9, 2005

    Finally, as the Commission noted in the JPFA NPRM, the Junk Fax 
Prevention Act provides a third avenue for the sender to obtain the 
facsimile number. Pursuant to the statute, the amended rules shall 
provide that if the EBR was in existence prior to July 9, 2005, and the 
sender also possessed the facsimile number before July 9, 2005, the 
sender may send facsimile advertisements to that recipient without 
demonstrating how the number was obtained or verifying it was provided 
voluntarily by the recipient.
    The Commission emphasizes that, to fall within this exception, a 
valid EBR must have been formed between the sender and recipient before 
July 9, 2005. For example, a business that sold a product to a consumer 
in 2004 and secured that consumer's facsimile number in 2004, would be 
permitted to fax an advertisement to the consumer regardless of how the 
facsimile number was obtained. The Commission agrees with those 
commenters that contend it would be burdensome for senders to prove a 
facsimile number was in their possession prior to July 9, 2005. 
Therefore, the Commission adopts a presumption that, if a valid EBR 
existed prior to July 9, 2005, the sender had the facsimile number 
prior to that date as well. (This presumption could be rebutted, for 
example, with evidence that the recipient did not use the facsimile 
number before July 9, 2005.) In the event the recipient alleges a 
violation of these provisions, the sender will need to provide proof 
that the EBR existed prior to July 9, 2005.

Definition of Established Business Relationship

    As noted in the JFPA NPRM, the Junk Fax Prevention Act includes a 
definition of an EBR to be used in the context of unsolicited facsimile 
advertisements. The statute provides that ``[t]he term `established 
business relationship,' * * * shall have the meaning given the term in 
Sec.  64.1200 of Title 47 of the Commission's rules * * * as in effect 
on January 1, 2003, except that such term shall include a relationship 
between a person or entity and a business subscriber subject to the 
same terms applicable under such section to a relationship between a 
person or entity and a residential subscriber. * * *'' The January 1, 
2003 definition did not include any time limitations on the EBR. The 
Junk Fax Prevention Act, however, authorizes the Commission to limit 
the duration of the EBR in the context of unsolicited facsimile 
advertisements after a 3-month period beginning from the date of 
enactment of the statute. Therefore, the Commission sought comment in 
the JFPA NPRM on whether to limit the EBR. The Commission specifically 
sought comment on whether it is appropriate to limit the EBR duration 
for unsolicited facsimile advertisements in the same manner as 
telephone solicitations.

EBR Definition

    Based on the record, and in accordance with the Junk Fax Prevention 
Act, the Commission adopts as part of the Commission's rules the 
following definition of an EBR for purposes of sending unsolicited 
facsimile advertisements:
    For purposes of paragraph (a)(3) of this section, the term 
established business relationship means a prior or existing 
relationship formed by a voluntary two-way communication between a 
person or entity and a business or residential subscriber with or 
without an exchange of consideration, on the basis of an inquiry, 
application, purchase or transaction by the business or residential 
subscriber regarding

[[Page 25969]]

products or services offered by such person or entity, which 
relationship has not been previously terminated by either party.
    This definition extends the EBR exemption to faxes sent to both 
business and residential subscribers. Once established, the EBR will 
permit an entity to send facsimile advertisements to a business or 
residential subscriber until the subscriber ``terminates'' it by making 
a request not to receive future faxes. (The Commission notes that the 
act of terminating the EBR exemption will only terminate the 
relationship for purposes of receiving communications constituting 
``unsolicited advertisements.'' A fax regarding collection of a debt 
that does not contain an advertisement will not be subject to the 
facsimile advertising rules.) This definition also clearly contemplates 
that the EBR could be formed by any of the following: An inquiry, 
application, purchase or transaction by the business or residential 
subscriber. Consistent with the legislative history of the TCPA, an 
inquiry by a consumer could form the basis of the EBR. However, the 
definition makes clear that the inquiry or application must be about 
products or services offered by the entity. Thus, the Commission 
concludes that an inquiry about store location or the identity of the 
fax sender, for instance, would not alone form an EBR for purposes of 
sending facsimile advertisements. Merely visiting a Web site, without 
taking additional steps to request information or provide contact 
information, also does not create an EBR.
    In addition, the Commission concludes that the EBR exemption 
applies only to the entity with which the business or residential 
subscriber has had a ``voluntary two-way communication.'' It would not 
extend to affiliates of that entity, including a fax broadcaster which 
is retained to send facsimile ads on behalf of that entity. While the 
fax broadcaster may transmit an advertisement on behalf of an entity 
that has an EBR with the recipient, it is not permitted to use that 
same EBR to send a fax advertisement on behalf of another client. The 
Commission finds that, unlike the national do-not-call registry, which 
allows consumers to avoid most unwanted telemarketing calls by 
registering a telephone number once every five years, the Junk Fax 
Prevention Act requires a consumer to opt-out of unwanted fax 
advertisements from each entity with which the consumer has an EBR. The 
Commission believes that to permit companies to transfer their EBRs to 
affiliates would place an enormous burden on consumers to prevent faxes 
from companies with which they have no direct business relationship.

Limits on Duration of Established Business Relationship

    As required by the Junk Fax Prevention Act, the Commission intends 
to closely monitor implementation of the new EBR exemption and opt-out 
policies adopted herein. Within one year of the effective date of this 
Order, the Commission will evaluate the Commission's complaint data to 
determine whether the EBR exception has resulted in a significant 
number of complaints regarding facsimile advertisements, and whether 
such complaints involve facsimile advertisements sent based on an EBR 
of a duration that is inconsistent with the reasonable expectations of 
consumers.

Notice of Opt-Out Opportunity

    Section 2(c) of the Junk Fax Prevention Act adds language to the 
TCPA that requires senders to include a notice on the first page of the 
unsolicited advertisement that instructs the recipient how to request 
that they not receive future unsolicited facsimile advertisements from 
the sender. In accordance with the Junk Fax Prevention Act, the 
Commission amends its rules to require that all unsolicited facsimile 
advertisements contain a notice on the first page of the advertisement 
stating that the recipient is entitled to request that the sender not 
send any future unsolicited advertisements. This notice must include a 
domestic contact telephone number and a facsimile machine number for 
the recipient to transmit such a request to the sender and, as 
discussed below, at least one cost-free mechanism for transmitting an 
opt-out request. The Commission emphasizes that including an opt-out 
notice on a facsimile advertisement alone is not sufficient to permit 
the transmission of the fax; an EBR with the recipient must also exist.

Clear and Conspicuous

    In the JFPA NPRM, the Commission sought comment on whether it was 
necessary to set forth in our rules the circumstances under which the 
opt-out notice will be considered ``clear and conspicuous.'' The 
Commission is persuaded that rules specifying the font type, size and 
wording of the notice might interfere with fax senders' ability to 
design notices that serve their customers. However, the Commission 
makes some additional determinations about the opt-out notice so that 
facsimile recipients have the information necessary to avoid future 
unwanted faxes.
    Consistent with the definition in our truth-in-billing rules, 
``clear and conspicuous'' for purposes of the opt-out notice means a 
notice that would be apparent to a reasonable consumer. The Commission 
also concludes that the notice must be separate from the advertising 
copy or other disclosures and placed at either the top or bottom of the 
fax. Many facsimile advertisements today contain text covering the 
entire sheet of paper, making it difficult to see an opt-out notice 
that is placed among the advertising material. Thus, the notice must be 
distinguishable from the advertising material through, for example, use 
of bolding, italics, different font, or the like. The Commission 
clarifies that, in accordance with the Junk Fax Prevention Act, if 
there are several pages to the fax, the first page of the advertisement 
must contain the opt-out notice. (If a cover page accompanies the 
advertisement, the Commission encourages senders to include the notice 
on the cover page as well.)

Cost-Free Opt-Out Mechanism

    The Junk Fax Prevention Act requires that the notice identify ``a 
cost-free mechanism for a recipient to transmit a request pursuant to 
such notice to the sender of the unsolicited advertisement[.]'' In 
accordance with the statute, the Commission amends the rules to require 
senders to identify a cost-free mechanism in their notices.
    In an effort to balance the needs of consumers who wish to opt-out 
of faxes with the interests of business, the Commission finds that a 
Web site address, e-mail address, toll-free telephone number, or toll-
free facsimile machine number will constitute ``cost-free mechanisms'' 
for purposes of our rules. The Commission also concludes that a local 
telephone number may be considered a cost-free mechanism so long as the 
advertisements are sent to local consumers for whom a call to that 
number would not result in long distance or other separate charges. 
Senders of facsimile advertisements need make available only one of 
these mechanisms to comply with this requirement. A Web site or e-mail 
address will allow businesses, particularly small businesses, to avoid 
excessive costs associated with maintaining a toll-free telephone 
number. (Given that the Commission is not mandating that senders offer 
a toll-free telephone number for consumers to make opt-out requests, 
the Commission

[[Page 25970]]

finds no reason to exempt small business from the cost-free mechanism 
requirement. As discussed above, businesses can use a Web site address, 
local telephone number, or e-mail address for receiving such requests. 
The record contains little empirical evidence that the costs associated 
with setting up such processes would be unduly burdensome to a small 
business given their revenues. The Commission also notes that a third 
party could be retained to maintain any of these opt-out mechanisms, 
although the sender remains liable for ensuring that opt-out requests 
are honored timely.) If a sender uses a Web site for receiving opt-out 
requests, it must describe the opt-out mechanism and procedures clearly 
and conspicuously on the first page of the Web site.
    As noted above, apart from the cost-free mechanism required by the 
statute, the opt-out notice must contain a domestic contact telephone 
number and facsimile machine number. If the cost-free mechanism offered 
by the sender is either a domestic toll-free telephone number or toll-
free facsimile machine number, the sender will be in compliance with 
both sets of requirements. The facsimile number should be a number that 
is separate and distinct from the telephone number to ensure consumers 
are less likely to find a busy line and can make opt-out requests 
without delay. It is the responsibility of the sender to ensure that 
the number(s) are available to accept opt-out requests. In accordance 
with the statute, the new rules will require the sender to accept opt-
out requests 24 hours, 7 days a week at the number(s), Web site or e-
mail address identified in the opt-out notice.

Timeframe for Honoring Opt-Out Requests

    In accordance with the Junk Fax Prevention Act, the Commission 
concludes that senders must comply with an opt-out request within the 
shortest reasonable time of such request. Taking into consideration 
both large databases of facsimile numbers and the limitations on 
certain small businesses to remove numbers for individuals that opt-
out, the Commission concludes that a reasonable time to honor such 
requests must not exceed 30 days from the date such a request is made. 
The record demonstrates that 30 days will provide a reasonable 
opportunity for persons, including small businesses, to process 
requests and remove the facsimile numbers from their lists or 
databases. Consistent with our rules for company-specific do-not-call 
requests, facsimile senders with the capability to honor do-not-fax 
requests in less than 30 days must do so. The Commission believes that 
any period greater than 30 days will likely impose additional costs and 
burdens on consumers and businesses that have taken steps to avoid 
facsimile messages by making opt-out requests. The Commission also 
concludes that the sender must remove the facsimile number from its fax 
lists within the 30-day period, regardless of whether it believes the 
number may be used by more than one individual. The Commission believes 
it is reasonable to presume that persons making opt-out requests on 
behalf of a business's facsimile machine are authorized to do so. 
Senders must honor such opt-out requests made by the business, even if 
doing so restricts faxes sent to all employees of that business. This 
determination is consistent with the Commission's findings in the do-
not-call context in which a do-not-call request applies to all persons 
at the residence associated with that telephone number.
    The Commission declines to limit the time period during which an 
opt-out request remains in effect. The Commission recognizes that, like 
telephone numbers, facsimile numbers change hands over time. However, 
as noted above, the national do-not-call registry requires consumers to 
re-register just once every five years to avoid most telemarketing 
calls. In the absence of a similar do-not-fax list, a consumer would 
need to make numerous--perhaps hundreds--of opt-out requests every five 
years to avoid receiving unwanted faxes. Instead, the Commission 
concludes that a consumer who wishes to receive faxes at a new number 
or resume receiving faxes after previously opting out should notify the 
sender of such changes by giving prior express permission to the 
sender. The Commission also encourages facsimile senders to update 
their facsimile number databases, when consumers subsequently transact 
business, file applications or make inquiries.

Identification Requirements and Opt-Out Notice

    As noted in the JFPA NPRM, the Commission's existing rules require 
senders of facsimile messages to identify themselves on the message, 
along with the telephone number of the sending machine or the business, 
other entity, or individual sending the message. (The Commission notes 
that the ``sender'' of the facsimile advertisement is the person on 
whose behalf the advertisement is sent. Under the Commission's rules, 
the fax broadcaster must also identify itself if it demonstrates a high 
degree of involvement in the sender's facsimile messages, such as 
supplying the numbers to which a message is sent.) The TCPA also 
requires facsimile messages to include the date and time they are sent. 
The Commission sought comment on the interplay between this 
identification requirement and the opt-out notice requirement under the 
Junk Fax Prevention Act. A few commenters identified additional burdens 
associated with complying separately with both requirements. The 
Commission concludes that senders that provide their telephone number 
and facsimile number as part of the opt-out notice will satisfy the 
Commission's identification rule so long as they also identify 
themselves by name on the facsimile advertisement.

Request To Opt-Out of Future Unsolicited Advertisements

    The Junk Fax Prevention Act requires that a request not to send 
future unsolicited facsimile advertisements meet certain requirements. 
In accordance with the statutory provisions, the Commission adopts 
rules requiring that an opt-out request identify the telephone number 
or numbers of the facsimile machines or machines to which the request 
relates. In addition, the request must be made using the telephone 
number, facsimile number, Web site address or e-mail address provided 
by the sender in its opt-out notice. Most commenters argue that 
permitting opt-out requests to be made through other avenues not 
identified in the notice will impair an entity's ability to account for 
all requests and process them in a timely manner. (The Commission 
encourages senders that are on actual notice of a recipient's opt-out 
request to honor the request even if not sent by the methods identified 
in the sender's opt-out notice.) As discussed above, the sender is 
required to include a telephone number and facsimile number on the 
advertisement, and if neither numbers are cost-free (i.e., they are not 
800 toll-free numbers or local numbers for local recipients), then the 
sender must have a Web site or e-mail address to permit recipients to 
opt-out of future facsimile messages. Requiring recipients to use one 
of the methods identified on the facsimile should reasonably permit any 
consumer to avoid future facsimile messages from the sender. Under the 
new rules, the sender will be prohibited from sending facsimile 
advertisements to a person that has submitted a request that complies 
with these requirements.

[[Page 25971]]

Interplay Between Established Business Relationship Exemption and Opt-
Out Request

    The Commission agrees with the majority of commenters that an opt-
out request should be honored irrespective of whether the recipient 
continues to do business with the sender. Therefore, its rules will 
reflect that a do-not-fax request will terminate the EBR exemption from 
the prohibition on sending facsimile advertisements. This determination 
is consistent with the Commission's rules on telephone solicitations, 
whereby a telephone subscriber's seller-specific do-not-call request 
terminates any EBR exemption with that company even if the subscriber 
continues to do business with the seller.
    As set forth in the statute, a sender may resume sending facsimile 
advertisements to a consumer that has opted-out of such communications 
if that consumer subsequently provides his express invitation or 
permission to the sender. Of the comments received on this issue, most 
agree that when a consumer has made an opt-out request of the sender, 
it should be up to the sender to demonstrate that the consumer 
subsequently gave his express permission to receive faxes. The 
Commission's rules will permit such permission to be granted in writing 
or orally. Senders that claim their facsimile advertisements are 
delivered based on the recipient's prior express permission must be 
prepared to provide clear and convincing evidence of the existence of 
such permission.

Third Parties and Fax Broadcasters

    The record reveals that fax broadcasters, which transmit other 
entities' advertisements to telephone facsimile machines for a fee, are 
responsible for a significant portion of the facsimile messages sent 
today. The Commission sought comment in the JFPA NPRM on whether to 
specify that if the entity transmitting the facsimile advertisement is 
a third party agent or fax broadcaster, that any do-not-fax request 
sent to that agent will extend to the underlying business on whose 
behalf the fax is transmitted. The Commission concludes that the 
sender--the business on whose behalf the fax advertisement is 
transmitted--is responsible for complying with the opt-out notice 
requirements and for honoring opt-out requests. Regardless of whether 
the sender includes its own contact information in the opt-out notice 
or the contact information of a third party retained to accept opt-out 
requests, the sender is liable for any violations of the rules. This 
determination is consistent with the Commission's telemarketing rules. 
Third parties, including fax broadcasters, need only accept and forward 
do-not-fax requests to the extent the underlying business contracts out 
such responsibilities to them.
    The Commission takes this opportunity to emphasize that under the 
Commission's interpretation of the facsimile advertising rules, 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. As discussed above, 
the sender is liable for violations of the facsimile advertising rules, 
including failure to honor opt-out requests. Accordingly, the 
Commission adopts a definition of sender for purposes of the facsimile 
advertising rules.
    Under the current rules, a fax broadcaster also will be liable for 
an unsolicited fax if it demonstrates a high degree of involvement in, 
or actual notice of, the unlawful activity and fails to take steps to 
prevent such facsimile advertisements, and the Commission will continue 
to apply this standard under our revised rules. If the fax broadcaster 
supplies the fax numbers used to transmit the advertisement, for 
example, the fax broadcaster will be liable for any unsolicited 
advertisements faxed to consumers and businesses without their prior 
express invitation or permission. The Commission finds that a fax 
broadcaster that provides a source of fax numbers, makes 
representations about the legality of faxing to those numbers or 
advises a client about how to comply with the fax advertising rules, 
also demonstrates a high degree of involvement in the transmission of 
those facsimile advertisements. In addition, the Commission concludes 
that a highly involved fax broadcaster will be liable for an 
unsolicited fax that does not contain the required notice and contact 
information. In such circumstances, the sender and fax broadcaster may 
be held jointly and severally liable for violations of the opt-out 
notice requirements. Based on its own enforcement experience, and the 
fact that highly involved fax broadcasters will have firsthand 
knowledge of the inclusion of the opt-out notice, the Commission 
determines that such a fax broadcaster must, at a minimum, ensure that 
the faxes it transmits on behalf of each sender contain the necessary 
information to allow a consumer to opt out of a particular sender's 
faxes in the future. Otherwise, the consumer may have no means of 
stopping unwanted faxes transmitted by the fax broadcaster on behalf of 
various advertisers.

Professional or Trade Organizations

    The Junk Fax Prevention Act authorizes the Commission to consider 
exempting nonprofit organizations from the opt-out notice requirements 
discussed above. Specifically, the statute provides that the Commission 
may, after receiving public comment, allow professional or trade 
associations that are tax-exempt nonprofit organizations to send 
unsolicited advertisements to their members in furtherance of the 
association's tax-exempt purpose that do not contain the opt-out 
notice. The statute requires that the Commission first determine that 
such notice is not necessary to protect the ability of the members of 
such associations to stop such associations from sending any future 
unsolicited advertisements.
    Most commenters that are themselves trade associations or 
professional organizations argue that they exist to serve their 
members, and that members of an association know how to contact those 
associations should they no longer wish to receive fax messages. They 
contend that most trade associations have a membership or customer 
service department that can assist the member with an opt-out request. 
Other commenters oppose an exemption for nonprofits, arguing that such 
organizations should have no difficulty including an opt-out notice on 
their facsimile advertisements.
    The Commission is not persuaded that consumers will have the 
necessary tools to easily opt-out of unwanted faxes from trade 
associations if the faxes received do not contain information on how to 
opt out. Moreover, the Commission believes the benefits to consumers of 
having opt-out information readily available outweigh any burden in 
including such notices. (The Commission notes that the opt-out notice 
requirement only applies to communications that constitute unsolicited 
advertisements.) Facsimile advertisements impose direct costs on 
consumers for paper, toner, and time spent sorting and discarding 
unwanted faxes. Should consumers not have access to opt-out contact 
information, they may be forced to incur unacceptable costs associated 
with faxes sent from nonprofit organizations. In addition, the record 
reveals that trade associations already have mechanisms in place 
through which members communicate with the organization. Therefore, 
inclusion of an opt-out notice on their fax messages should not be 
burdensome.

[[Page 25972]]

    While neither the TCPA nor its amendments carve out an exemption 
for nonprofits from the facsimile advertising rules, the Commission 
agrees with those petitioners that argue that messages that are not 
commercial in nature--which many nonprofits send--do not constitute 
``unsolicited advertisements'' and are therefore not covered by the 
facsimile advertising prohibition. (The Commission also emphasizes that 
it is not carving out an exemption for tax-exempt nonprofits. Rather, 
consistent with the language of the TCPA, the Commission does not 
intend for the clarifications in this Order to result in the regulation 
of noncommercial speech as commercial facsimile messages under the TCPA 
regulatory scheme.) The Commission clarifies that messages that do not 
promote a commercial product or service, including all messages 
involving political or religious discourse, such as a request for a 
donation to a political campaign, political action committee or 
charitable organization, are not unsolicited advertisements under the 
TCPA. (Under the Federal Election Commission's rules, when a person 
pays a political committee for a commercially available product or 
service, such as a dinner sponsored by a political campaign, the full 
purchase price of the item or service is considered a contribution to 
the campaign. Therefore, the fact that a political message contains an 
offer to attend a fundraising dinner or to purchase some other product 
or service in connection with a political campaign or committee 
fundraiser does not turn the message into an advertisement for purposes 
of the TCPA's facsimile advertising rules.) The Commission emphasizes 
that, under the Junk Fax Prevention Act, even unsolicited 
advertisements transmitted by tax-exempt nonprofit organizations may be 
sent to persons with whom the senders have an established business 
relationship, subject to the other statutory requirements.

Unsolicited Advertisement

Definition
    The facsimile advertising rules apply to a fax communication that 
constitutes an ``unsolicited advertisement'' as defined in the TCPA. 
The Junk Fax Prevention Act amends the term ``unsolicited 
advertisement'' by adding ``in writing or otherwise'' before the period 
at the end of that section. The Commission proposed amending its rules 
to reflect the change in the statutory language. No commenter opposed 
the modification. Accordingly, the Commission amends Sec.  
64.1200(f)(10) of its rules so that the definition reads as follows:
    The term unsolicited advertisement means any material advertising 
the commercial availability or quality of any property, goods, or 
services which is transmitted to any person without the person's prior 
express invitation or permission, in writing or otherwise.

Prior Express Invitation or Permission

    The Commission clarifies that, as an initial matter, a sender that 
has an EBR with a consumer may send a facsimile advertisement to that 
consumer without obtaining separate permission from him. (A sender that 
has received an opt-out request from a consumer must cease sending 
facsimile advertisements regardless of whether there exists a business 
relationship between them.) In the absence of an EBR, the sender must 
obtain the prior express invitation or permission from the consumer 
before sending the facsimile advertisement. Prior express invitation or 
permission may be given by oral or written means, including electronic 
methods. The Commission expects that written permission will take many 
forms, including e-mail, facsimile, and internet form. Whether given 
orally or in writing, prior express invitation or permission must be 
express, must be given prior to the sending of any facsimile 
advertisements, and must include the facsimile number to which such 
advertisements may be sent. It cannot be in the form of a ``negative 
option.'' (A facsimile advertisement containing a telephone number and 
an instruction to call if the recipient no longer wishes to receive 
such faxes, would constitute a ``negative option'' as the sender 
presumes consent unless advised otherwise. However, a company that 
requests a fax number on an application form could include a clear 
statement indicating that, by providing such fax number, the individual 
or business agrees to receive facsimile advertisements from that 
company or organization.) (Trade and membership organizations could do 
so on their membership renewal statements.)
    The Commission is concerned that permission not provided in writing 
may result in some senders erroneously claiming they had the 
recipient's permission to send facsimile advertisements. Commenters 
that discussed this issue agree that a sender should have the 
obligation to demonstrate that it complied with the rules, including 
that it had the recipient's prior express invitation or permission. 
Senders who choose to obtain permission orally are expected to take 
reasonable steps to ensure that such permission can be verified. In the 
event a complaint is filed, the burden of proof rests on the sender to 
demonstrate that permission was given. The Commission strongly suggests 
that senders take steps to promptly document that they received such 
permission. (An example of such documentation could be the recording of 
the oral authorization. Other methods might include established 
business practices or contact forms used by the sender's personnel.) 
Express permission need only be secured once from the consumer in order 
to send facsimile advertisements to that recipient until the consumer 
revokes such permission by sending an opt-out request to the sender.
    The Commission concludes that, in the absence of an EBR, facsimile 
requests for permission to transmit faxed advertisements would not be 
permissible, as they would impose costs on consumers who had not yet 
consented to receive such communications.
    Senders who claim they obtained a consumer's prior express 
invitation or permission to send them facsimile advertisements prior to 
the effective date of these rules will not be in compliance unless they 
can demonstrate that such authorization met all the requirements 
adopted herein. In addition, entities that send facsimile 
advertisements to consumers from whom they obtained permission must 
include on the advertisements their opt-out notice and contact 
information to allow consumers to stop unwanted faxes in the future.

``Transactional'' Communications

    The Commission agrees with those petitioners who argue that 
messages whose purpose is to facilitate, complete, or confirm a 
commercial transaction that the recipient has previously agreed to 
enter into with the sender are not advertisements for purposes of the 
TCPA's facsimile advertising rules. For example, a receipt or invoice, 
the primary purpose of which is to confirm the purchase of certain 
items by the facsimile recipient, is not an advertisement of the 
commercial availability of such items. Similarly, messages containing 
account balance information or other type of account statement which, 
for instance, notify the recipient of a change in terms or features 
regarding an account, subscription, membership, loan or comparable 
ongoing relationship, in which the recipient has already purchased or 
is currently using the facsimile sender's product or service, is not an 
advertisement. Communications

[[Page 25973]]

sent to facilitate a loan transaction, such as property appraisals, 
summary of closing costs, disclosures (such as the Good Faith Estimate) 
and other similar documents are not advertisements when their purpose 
is to complete the financial transaction. A travel itinerary for a trip 
a customer has agreed to take or is in the process of negotiating is 
not an unsolicited advertisement. Similarly, a contract to be signed 
and returned by the agent or traveler that is for the purpose of 
closing a travel deal is not an advertisement for purposes of the 
prohibition. (However, the Commission finds that messages regarding 
travel deals, bonus commission offers and other promotional information 
are advertisements and would require the recipient's express permission 
in the absence of an established business relationship.) A 
communication from a trade show organizer to an exhibitor regarding the 
show and her appearance will not be considered an unsolicited 
advertisement, provided the exhibitor has already agreed to appear. The 
Commission also concludes that a mortgage rate sheet sent to a broker 
or other intermediary or a price list sent from a wholesaler to a 
distributor (e.g., food wholesaler to a grocery store) for the purpose 
of communicating the terms on which a transaction has already occurred 
are not advertisements. (Commercial facsimile messages that advertise 
the commercial availability or quality of property, goods, or services, 
but purport to be ``price sheets'' or ``rate sheets'' in order to evade 
the TCPA rules, are nevertheless unsolicited advertisements, if not 
sent for the purpose of facilitating, completing, or confirming an 
ongoing transaction.)
    A subscription renewal notice would be considered ``transactional'' 
in nature, provided the recipient is a current subscriber and had 
affirmatively subscribed to the publication. Finally, a notice 
soliciting bid proposals on a construction project would not be subject 
to the facsimile advertising prohibition, provided the notice does not 
otherwise contain offers for products, goods, and services. Similarly, 
bids in response to specific solicitations would not be covered by the 
rules, as such communications are presumably to facilitate a commercial 
transaction that the recipient has agreed to enter into by soliciting 
the bids.
    In order for such messages to fall outside the definition of 
``unsolicited advertisement,'' they must relate specifically to 
existing accounts and ongoing transactions. Messages regarding new or 
additional business would advertise ``the commercial availability or 
quality of any property, goods, or services * * *'' and therefore would 
be covered by the prohibition. Thus, applications and materials 
regarding educational opportunities and conferences sent to persons who 
are not yet participating or enrolled in such programs are unsolicited 
advertisements and require the recipient's permission or the existence 
of an established business relationship before faxing the recipient 
such information. Similarly, a rate sheet on financial products 
transmitted to a potential borrower or potential brokers would not be 
considered merely ``transactional'' in nature and would require the 
sender to either have an established business relationship with the 
recipient or first obtain express permission from the recipient.
    In response to arguments that a de minimis amount of advertising 
information should not convert a communication into an ``unsolicited 
advertisement,'' the Commission concludes that a reference to a 
commercial entity does not by itself make a message a commercial 
message. For example, a company logo or business slogan found on an 
account statement would not convert the communication into an 
advertisement, so long as the primary purpose of the communication is, 
for example, to relay account information to the fax recipient.

Offers for Free Goods and Services and Informational Messages

    The Commission concludes that facsimile messages that promote goods 
or services even at no cost, such as free magazine subscriptions, 
catalogs, or free consultations or seminars, are unsolicited 
advertisements under the TCPA's definition. In many instances, ``free'' 
seminars serve as a pretext to advertise commercial products and 
services. Similarly, ``free'' publications are often part of an overall 
marketing campaign to sell property, goods, or services. For instance, 
while the publication itself may be offered at no cost to the fascimile 
recipient, the products promoted within the publication are often 
commercially available. Based on this, it is reasonable to presume that 
such messages describe the ``quality of any property, goods, or 
services.'' Therefore, facsimile communications regarding such free 
goods and services, if not purely ``transactional,'' would require the 
sender to obtain the recipient's permission beforehand, in the absence 
of an EBR.
    By contrast, facsimile communications that contain only 
information, such as industry news articles, legislative updates, or 
employee benefit information, would not be prohibited by the TCPA 
rules. An incidental advertisement contained in such a newsletter does 
not convert the entire communication into an advertisement. (In 
determining whether an advertisement is incidental to an informational 
communication, the Commission will consider, among other factors, 
whether the advertisement is a bona fide ``informational 
communication.'' In determining whether the advertisement is to a bona 
fide ``informational communication,'' the Commission will consider 
whether the communication is issued on a regular schedule; whether the 
text of the communication changes from issue to issue; and whether the 
communication is directed to specific regular recipients, i.e., to paid 
subscribers or to recipients who have initiated membership in the 
organization that sends the communication. The Commission may also 
consider the amount of space devoted to advertising versus the amount 
of space used for information or ``transactional'' messages and whether 
the advertising is on behalf of the sender of the communication, such 
as an announcement in a membership organization's monthly newsletter 
about an upcoming conference, or whether the advertising space is sold 
to and transmitted on behalf of entities other than the sender). Thus, 
a trade organization's newsletter sent via facsimile would not 
constitute an unsolicited advertisement, so long as the newsletter's 
primary purpose is informational, rather than to promote commercial 
products. The Commission emphasizes that a newsletter format used to 
advertise products or services will not protect a sender from liability 
for delivery of an unsolicited advertisement under the TCPA and the 
Commission's rules. The Commission will review such newsletters on a 
case-by-case basis.
    Finally, the Commission concludes that any surveys that serve as a 
pretext to an advertisement are subject to the TCPA's facsimile 
advertising rules. The TCPA's definition of ``unsolicited 
advertisement'' applies to any communication that advertises the 
commercial availability or quality of property, goods or services, even 
if the message purports to be conducting a survey.

Petitions for Reconsideration on EBR Exemption

    The Commission also takes this opportunity to dismiss as moot, any 
pending petitions, or parts thereof, that seek reconsideration of the 
Commission's determination that an

[[Page 25974]]

established business relationship will no longer be sufficient to show 
that an individual or business has given prior express permission to 
receive unsolicited facsimile advertisements and those that seek 
reconsideration of the written permission requirement in Sec.  
64.1200(a)(3)(i) of the Commission's rules. The Junk Fax Prevention Act 
codifies an established business relationship exception to the 
prohibition on sending unsolicited facsimile advertisements; therefore, 
such petitions are now moot.

Private Right of Action

    The TCPA provides consumers with a private right of action in state 
court for any violation of the TCPA's prohibitions on the use of 
automatic dialing systems, artificial or prerecorded voice messages, 
and unsolicited facsimile advertisements. One commenter raises concerns 
about class action lawsuits brought under the TCPA, and asks the 
Commission to clarify the parameters of the private right of action. As 
the Commission has stated in previous orders, Congress provided 
consumers with a private right of action, ``if otherwise permitted by 
the laws or rules of court of a State.'' This language suggests that 
Congress contemplated that such legal action was a matter for consumers 
to pursue in appropriate state courts, subject to those state courts' 
rules. The Commission continues to believe that it is for Congress, not 
the Commission, either to clarify or limit this right of action. 
Therefore, the Commission declines to make any determinations about the 
specific contours of the private right of action.

Effective Date of Rules

    The record reveals that facsimile senders may need additional time 
beyond 30 days to comply with the rules adopted herein. For example, 
senders will need to ensure that opt-out contact information is 
provided on all facsimile advertisements. They also will need to put in 
place mechanisms to allow recipients to opt-out of unwanted facsimile 
advertisements and establish procedures for removing facsimile numbers 
for individuals that have opted out of such advertisements. The 
Commission believes it is important to provide adequate time for 
senders to come into compliance with the rules adopted in this order. 
Therefore, the amended facsimile advertising rules will become 
effective August 1, 2006. (Those rules requiring OMB approval under the 
Paperwork Reduction Act are not effective until approved by OMB).

Filings in Response to This Order

    The Commission recently opened a new docket--CG Docket No. 05-338--
and asked that all filings addressing the facsimile advertising rules 
be filed in the new docket. Any filings in response to this Report and 
Order also should be filed in CG Docket No. 05-338.

Final Regulatory Flexibility Analysis (FRFA)

    As required by the Regulatory Flexibility Act of 1980, as amended 
(RFA), an Initial Regulatory Flexibility Analysis (IRFA) was 
incorporated in the Notice of Proposed Rulemaking and Order (JFPA 
NPRM). The Commission sought written public comment on the proposals in 
the JFPA NPRM, including comment on the IRFA. The only comment received 
on the IRFA from the Office of Advocacy, U.S. Small Business 
Administration is discussed below. This present Final Regulatory 
Flexibility Analysis (FRFA) conforms to the RFA.

Need for, and Objectives of, the Report and Order and Third Order on 
Reconsideration

    This Order is necessary to comply with Congress' mandate for the 
Commission to issue regulations implementing the Junk Fax Prevention 
Act of 2005. In this Order, and as set forth in the statute, the 
Commission: (1) Codifies an established business relationship (EBR) 
exemption to the prohibition on sending unsolicited facsimile 
advertisements; (2) provides a definition of an EBR to be used in the 
context of unsolicited facsimile advertisements that is not limited in 
duration; (3) requires the sender of a facsimile advertisement to 
provide specified notice and contact information on the facsimile that 
allows recipients to ``opt-out'' of any future facsimile transmissions 
from the sender; and (4) specifies the circumstances under which a 
request to ``opt-out'' complies with the Act.
    Specifically, in accordance with the Junk Fax Prevention Act, the 
Order permits the sending of facsimile advertisements to recipients 
with whom the sender has an EBR, provided certain conditions are met 
regarding how the facsimile number was obtained. In addition, the 
definition of EBR for purposes of sending facsimile advertisements 
extends the EBR exemption to faxes sent to both businesses and 
residential subscribers and is not be limited in duration. Under the 
new rules, senders of facsimile advertisements must include a notice 
describing the procedures for opting out of future faxes. The notice 
must be clear and conspicuous and located on the first page of the 
advertisement. The rules require that an opt-out notice include a cost-
free mechanism for the recipient to request not to receive future 
faxes. The cost-free mechanism must include a toll-free telephone 
number, toll-free facsimile number, Web site address, or e-mail 
address. If the recipient makes a request not to receive future fax 
advertisements, the sender must honor that request within the shortest 
reasonable time, not to exceed 30 days.
    In addition, the Order declines to exempt small businesses from the 
cost-free mechanism requirement, in part because the Commission is not 
requiring senders to provide toll-free telephone numbers for recipients 
to make opt-out requests. Finally, the Order does not carve out an 
exemption for tax-exempt nonprofit professional or trade associations 
from the opt-out notice requirement, noting that the benefits to 
consumers of having opt-out information readily available outweigh the 
burden in including such notices. Finally, the Order addresses certain 
issues raised in petitions for reconsideration of the 2003 TCPA Order 
concerning the TCPA's facsimile advertising rules. Specifically, the 
Order provides guidance to fax senders on what messages do not 
constitute unsolicited advertisements for purposes of the fax rules and 
therefore could be sent without the prior permission of the recipient. 
The Order clarifies that messages that do not promote a commercial 
product or service, including all messages involving political or 
religious discourse, such as request for a donation to a political 
campaign, political action committee or charitable organization, are 
not unsolicited advertisements under the TCPA. The Order also concludes 
that messages whose purpose is to facilitate, complete, or confirm a 
commercial transaction that the recipient has previously agreed to 
enter into with the sender are not advertisements. These might include 
a receipt or invoice, the primary purpose of which is to confirm the 
purchase of certain items by the facsimile recipient, an account 
statement, or communications sent to facilitate a loan transaction 
already entered into by the recipient. In addition, the Order 
determines that facsimile communications that contain only information, 
such as industry news articles, legislative updates, or employee 
benefit information, would not be prohibited by the TCPA rules. An 
incidental advertisement contained in such a facsimile does not convert 
the

[[Page 25975]]

entire communication into an advertisement.

Summary of Significant Issues Raised by Public Comments in Response to 
the Supplemental IRFA

    The only comment filed directly in response to the IRFA was from 
the Office of Advocacy of the U.S. Small Business Administration 
(Advocacy).
    In its comments, Advocacy identified five proposed rules that would 
impact small businesses. First, Advocacy noted the Commission's 
proposal to limit the duration of the EBR as it applies to unsolicited 
fax advertisements. Advocacy contends that, as required by the Junk Fax 
Prevention Act, the proposed rule does not include an analysis or 
determination that the EBR has resulted in a significant number of 
complaints. Advocacy does not believe that the Commission has gathered 
the necessary information about complaints to limit the EBR. In 
addition, Advocacy contends that for small businesses to keep track of 
inquiries by customers would require a considerable increase in the 
amount of recordkeeping and would impede the ability of small 
businesses to respond to such inquiries.
    Second, the Commission asked whether it was necessary to set forth 
rules on what is to be considered ``clear and conspicuous'' for 
purposes of an opt-out notice on a fax advertisement. Advocacy believes 
that the clear and conspicuous requirement should be held to a 
reasonable standard and that ``any further attempts by the Commission 
to define the notice requirement would likely become mired in minutia 
and would likely cause more confusion than guidance.''
    Third, Advocacy believes that 30 days to comply with a do-not-fax 
request is reasonable. Fourth, Advocacy recommends that the Commission 
exempt small businesses from the cost-free mechanism requirement in the 
Junk Fax Prevention Act. Advocacy contends that many small businesses 
(particularly very small businesses) do not have toll-free numbers. If 
the Commission determines not to exempt small businesses, Advocacy 
recommends that the Commission allow them to use alternatives to toll-
free numbers because of the ``great expense associated with maintaining 
toll-free numbers.'' They state that small businesses recommend e-mail, 
web-based systems, or the designation of a third party as viable 
alternatives. Advocacy also says that small businesses believe that 
once a small business has chosen a means of receiving do-not-fax 
requests, then opt-out requests should only be enforceable if they are 
received in that manner. Finally, Advocacy indicates that small 
businesses believe an exemption for tax-exempt nonprofit associations 
from the opt-out notice requirement would be appropriate.

Description and Estimate of the Number of Small Entities to Which Rules 
Will Apply

    The RFA directs agencies to provide a description of, and, where 
feasible, an estimate of, the number of small entities that may be 
affected by the rules adopted herein. The RFA generally defines the 
term ``small entity'' as having the same meaning as the terms ``small 
business,'' ``small organization,'' and ``small governmental 
jurisdiction.'' In addition, the term ``small business'' has the same 
meaning as the term ``small business concern'' under the Small Business 
Act. A ``small business concern'' is one which: (1) Is independently 
owned and operated; (2) is not dominant in its field of operation; and 
(3) satisfies any additional criteria established by the Small Business 
Administration (SBA).
    The IFRA stated that the Commission's rules on the sending of 
unsolicited facsimile advertisements would apply to any entity, 
including any telecommunications carrier, which uses the telephone 
facsimile machine to advertise. Advocacy agreed, stating that ``since 
what can be considered a commercial fax is so broad, it is appropriate 
for the Commission to consider that its rule could potentially impact 
almost all small businesses.'' Advocacy also noted that the U.S. Census 
Bureau updated its estimates based upon census information from 2002, 
which places the total number of small businesses in the United States 
(which it defines as firms with fewer than 500 employees) at 5.68 
million. Advocacy explains that ordinarily the SBA defines small 
business on an industry-by-industry basis. However, Advocacy contends 
that this is not practicable for the proposed rules because of its 
``broad applicability across industry lines which would create 
confusion on the part of small businesses' as to whether or not they 
are covered by the rules. Accordingly, Advocacy recommends the 
Commission consider adopting a new small business size standard for 
this rule. Drawing from the input from small business groups, Advocacy 
recommends that the Commission adopt a size standard of 100 employees 
for this rulemaking. Based on the U.S. Census 2002 numbers, Advocacy 
indicates that 5.6 million firms would then qualify as small 
businesses. Given that the Commission is not exempting small businesses 
from the requirement to identify a cost-free mechanism for fax 
recipients to opt-out of future unwanted faxes, the Commission 
concludes that it is not necessary at this time to adopt a new small 
business size standard for this rule. Therefore, the Commission 
estimates that, consistent with Advocacy's comments, the rules apply to 
5.68 million small entities across all industries in the United States.

Description of Projected Reporting, Recordkeeping, and Other Compliance 
Requirements

    The Order will likely result in increases in projected reporting, 
recordkeeping, and other compliance requirements for senders of 
facsimile advertisements. The statutory and rule changes affect both 
small and large companies. First, in accordance with the Junk Fax 
Prevention Act, the Order adopts an EBR exemption for sending fax 
advertisements. Should a question arise as to the validity of an EBR, 
the burden will be on the sender to show that it has a valid EBR with 
the recipient. However, the Commission emphasized that there is no 
requirement that senders of fax advertisements maintain any specific 
records demonstrating that an EBR exists. The Commission believes the 
EBR can be demonstrated with records kept in the ordinary course of 
business, such as purchase agreements, sales slips, applications and 
inquiry records.
    In accordance with the Junk Fax Prevention Act, the Commission 
concludes that an EBR alone does not entitle a sender to fax an 
advertisement to an individual consumer or business. The sender must 
also ensure that the telephone facsimile number was provided 
voluntarily by the recipient. The Commission finds that it would be 
permissible for the sender to fax an advertisement to a recipient that 
had provided a facsimile number directly to the sender, for example, on 
an application, information request, contact information form, or 
membership renewal form. In the event a recipient complains that its 
facsimile number was not provided to the sender, the burden rests with 
the sender to demonstrate, with such business records, that the number 
was communicated in the context of the EBR. Similarly, if the facsimile 
number was obtained from the recipient's own directory, advertisement, 
or internet site, the Commission determined that it was voluntarily 
made available for public distribution, unless the recipient has noted 
on such materials that it does not accept unsolicited advertisements at 
the facsimile number in question. In

[[Page 25976]]

such circumstances, the facsimile recipient's own advertisement would 
serve as evidence of the recipient's agreement to make the number 
available for public distribution. If the sender obtains the number 
from sources of information compiled by third parties, the sender must 
take reasonable steps to verify that the recipient consented to have 
the number listed, such as calling or emailing the recipient. While the 
Commission is not requiring that any specific records be kept, should a 
question arise about how the facsimile number was obtained, the sender 
would need to demonstrate that it was voluntarily provided. It is up to 
senders to determine the best way to do so if that becomes necessary.
    The Junk Fax Prevention Act requires facsimile senders to include a 
notice on the first page of the unsolicited advertisement that 
instructs the recipient how to request that they not receive future 
unsolicited facsimile advertisements from the sender. In the Order, the 
Commission requires that all unsolicited facsimile advertisements 
contain a notice on the first page of the advertisement stating that 
the recipient is entitled to request that the sender not send any 
future unsolicited advertisements. The notice must be separate from the 
advertising copy or other disclosures and placed at either the top or 
bottom of the fax. The notice also must include a domestic contact 
telephone number and a facsimile machine number, and at least one cost-
free mechanism for transmitting an opt-out request. In the Order, the 
Commission concludes that a Web site address, e-mail address, toll-free 
telephone number, or toll-free facsimile machine number will constitute 
``cost-free mechanisms'' for purposes of the rules. For those facsimile 
senders that do not already have one of these mechanisms in place, they 
will need to implement one in order to give recipients a cost-free way 
of opting-out of faxes. In accordance with the statute, the mechanism 
must accept opt-out requests 24 hours, 7 days a week at the mechanisms 
identified in the notice. The rules also require that highly involved 
fax broadcasters must ensure that the faxes it transmits on behalf of 
each sender contain the necessary information to allow a consumer to 
opt-out of a particular sender's faxes in the future.
    The new rules require that a facsimile sender that receives a 
request not to send future unsolicited advertisements that complies 
with the rules must honor that request within the shortest reasonable 
time from the date of such request, not to exceed 30 days, and is 
prohibited from sending unsolicited advertisements to the recipient 
unless the recipient subsequently provides prior express invitation or 
permission to the sender. Facsimile senders will need to take steps to 
remove such facsimile numbers from their faxing databases, or maintain 
do-not-fax lists to avoid sending advertisements to recipients that 
have opted out, within the shortest reasonable time, not to exceed 30 
days. If a recipient subsequently provides the sender with his express 
permission to send advertisements, whether orally or in writing, the 
burden of proof rests with the sender to demonstrate that permission 
was given. Thus, the Commission suggests that senders take steps to 
promptly document that they received such permission by, for instance, 
recording the oral authorization, or using established business 
practices or contact forms.

Steps Taken To Minimize Significant Economic Impact on Small Entities 
and Significant Alternatives Considered

    The RFA requires an agency to describe any significant alternatives 
that it has considered in reaching its proposed approach, which may 
include the following four alternatives (among others): (1) The 
establishment of differing compliance or reporting requirements or 
timetables that take into account the resources available to small 
entities; (2) the clarification, consolidation, or simplification of 
compliance or reporting requirements under the rule for small entities; 
(3) the use of performance, rather than design, standards; and (4) an 
exemption from coverage of the rule, or any part thereof, for small 
entities.
    In this Order, the Commission adopts rules in accordance with the 
provisions in the Junk Fax Prevention Act. In doing so, the Commission 
considers a number of alternatives to minimize the economic impact on 
small entities that must comply with the rules. In this Order, the 
Commission adopts an EBR exemption to the prohibition on sending 
unsolicited facsimile advertisements. The exemption will permit all 
entities, including small businesses, to send fax advertisements to 
their EBR customers without having to secure written permission from 
them first. In addition, the Commission was authorized by Congress to 
consider limiting the duration of the EBR. In the Order, the Commission 
determined not to limit the EBR and alternatively indicated it would 
closely monitor implementation of the new EBR exemption and opt-out 
policies adopted in the Order. Within one year of the effective date of 
the Order, the Commission will evaluate the Commission's complaint data 
to determine whether the EBR exception has resulted in a significant 
number of complaints regarding facsimile advertisements and whether 
such complaints involve fax advertisements sent based on an EBR of a 
duration that is inconsistent with the reasonable expectations of 
consumers.
    In addition, the Junk Fax Prevention Act requires facsimile senders 
to include a clear and conspicuous notice on the first page of the 
unsolicited advertisement that instructs the recipient how to opt-out 
of future unwanted faxes. As discussed in the Order, the Commission 
considered defining clear and conspicuous to mean a notice that is on 
the first page of the advertisement and apparent to a reasonable 
consumer. Alternatively, the Commission considered providing additional 
guidance to ensure that consumers are aware of their opt-out rights and 
sending parties have standards by which they can comply with the law. 
In the Order, the Commission determined that ``clear and conspicuous'' 
for purposes of the opt-out notice means a notice that would be 
apparent to a reasonable consumer and located on the first page of the 
fax advertisement. The Commission further clarified that the notice 
must be separate from the advertising copy or other disclosures and 
placed at either the top or bottom of the fax. However, the Commission 
declined to adopt rules specifying the font type, size and wording of 
the notice. The statute also requires that senders identify in their 
notices a cost-free mechanism for recipients to transmit opt-out 
requests to the senders. Rather than require senders to provide a toll-
free telephone number for consumers to request that no future faxes be 
sent, the Commission alternatively adopted rules that permit senders to 
use a Web site address, e-mail address, toll-free telephone number, or 
toll-free facsimile number. Allowing senders to use Web sites and e-
mail addresses should minimize any burdens on them, particularly small 
businesses for whom setting up a toll-free number might be costly. The 
Commission also determined that recipients must use the opt-out 
mechanisms identified by the senders in their notices so that such 
businesses, including small businesses, can more easily account for all 
opt-out requests and process them in a timely manner.
    In the JFPA NPRM, the Commission sought comment on whether to 
exempt small businesses from the requirement to provide a cost-free 
mechanism for a recipient to transmit an opt-out request. As noted 
above, the Commission

[[Page 25977]]

declined to require fax senders to offer a toll-free number for 
recipients to request that no future faxes be sent. Given that the 
Commission is not mandating the use of toll-free numbers, as well as 
the support in the record for using Web sites and e-mail addresses by 
small businesses, the Commission determined not to exempt small 
businesses from the cost-free mechanism requirement. The Commission 
found that the record contained little empirical evidence that the 
costs associated with setting up a Web site or e-mail address would be 
unduly burdensome to a small business given their revenues.
    The Commission also considered the burdens to businesses of having 
to comply with opt-out requests in the ``shortest reasonable time.'' 
The record revealed that some commenters support a period of 30 days 
within which senders must comply with opt-out requests. Other 
commenters support a shorter period of time for honoring do-not-fax 
requests, such as 10 or 15 days. In the Order, the Commission 
determined to require senders to honor requests within the shortest 
reasonable time from the date of such request, not to exceed 30 days 
from the date of such request. The Commission believes this will permit 
both senders with large databases of facsimile numbers, as well as 
small businesses with limited resources, to remove numbers for 
individuals that opt-out of faxes.
    Finally, the Order withdraws Sec.  64.1200(a)(3)(i) of the 
Commission's rules which requires the recipient to obtain a signed, 
written statement indicating the recipient's consent to receive 
facsimile advertisements from the sender. The Commission determined 
instead that prior express invitation or permission to send an 
advertisement may be given by oral or written means, including 
electronic methods. The Commission notes that written permission could 
take many forms, including e-mail, facsimile, and internet form. The 
Commission believes this determination will permit small entities to 
obtain permission more easily from consumers who make inquiries, file 
applications, or request information.

Congressional Review Act

    The Commission will send a copy of the Report and Order and Third 
Order on Reconsideration, including this FRFA, in a report to be sent 
to Congress and the Government Accountability Office pursuant to the 
Congressional Review Act, see 5 U.S.C. 801(a)(1)(A).

Ordering Clauses

    Pursuant to the authority contained in sections 1-4, 201, 202, 217, 
227, 258, 303(r), and 332 of the Communications Act of 1934, as 
amended; 47 U.S.C. 151-154, 201, 202, 217, 227, 258, 303(r), and 332; 
and Sec. Sec.  64.1200 and 64.318 of the Commission's rules, 47 CFR 
64.1200 and 64.318, the report and order is adopted, and part 64 of the 
Commission's rules, 47 CFR 64.1200, is amended.
    The rules and requirements contained in this Report and Order and 
Third Order on Reconsideration shall become effective August 1, 2006, 
except for 47 CFR 64.1200(a)(3)(i), (ii), (iii), (iv), and (vi) which 
contains information collection requirements under PRA are not 
effective until approved by OMB. Certain petitions for reconsideration 
and/or clarification of the facsimile advertising rules in CG Docket 
No. 02-278 are denied in part, granted in part, and dismissed in part. 
Specifically, those petitions filed by Air Conditioning Contractors of 
America, American Association of Advertising Agencies, et al., American 
Business Media, American Dietetic Association, American Society of 
Association Executives, American Tire Distributors, Inc., America's 
Community Bankers, Association of Small Business Development Centers, 
California Association of Realtors, Chamber of Commerce of the U.S., et 
al., Coalition for Healthcare Communication, Consumer Bankers 
Association, Consumer Electronics Association, Copia International, 
LTC, Faxts, Inc., Federal Election Commission, Financial Services 
Coalition, Independent Insurance Agents and Brokers of America, 
Independent Sector, Jobson Publishing, LLC, Maryland Association of 
Nonprofit Organizations, John Mayhill, National Association of Chain 
Drugstores, National Association of Realtors, National Retail 
Federation, Newsletter & Electronic Publishers Association, Newspaper 
Association of America, Presidential Classroom for Young Americans, 
Inc., Produce Marketing Association, Proximity Marketing, Reed 
Elsevier, Inc., Scholastic, Inc., State and Regional Newspaper 
Associations, Travel Industry Group, Wells Fargo & Co., and Yellow 
Pages Integrated Media Association are dismissed to the extent they 
seek reinstatement of the established business relationship exemption.
    The Commission's Consumer & Governmental Affairs Bureau, Reference 
Information Center, shall send a copy of the Report and Order and Third 
Order on Reconsideration to the Chief Counsel for Advocacy of the Small 
Business Administration.

List of Subjects in 47 CFR Part 64

    Communications common carriers, Telecommunications, Telephone.

Federal Communications Commission.
William F. Caton,
Deputy Secretary.

Final Rules

0
For the reasons discussed in the preamble, the Federal Communications 
Commission amends 47 CFR part 64 as follows:

PART 64--MISCELLANEOUS RULES RELATING TO COMMON CARRIERS

0
1. The authority citation for part 64 continues to read as follows:

    Authority: 47 U.S.C. 154, 254(k) secs. 403(b)(2)(B), (c), Pub. 
L. 104-104, 110 Stat. 56. Interpret or apply 47 U.S.C. 201, 218, 
222, 225, 226, 228, and 254(k) unless otherwise noted.


0
2. Revise the heading to part 64 subpart L to read as follows:

Subpart L--Restrictions on Telemarketing, Telephone Solicitation, 
and Facsimile Advertising

0
3. Section 64.1200 is amended by revising paragraphs (a) and (f) to 
read as follows:


Sec.  64.1200  Delivery restrictions.

    (a) No person or entity may: (1) Initiate any telephone call (other 
than a call made for emergency purposes or made with the prior express 
consent of the called party) using an automatic telephone dialing 
system or an artificial or prerecorded voice;
    (i) To any emergency telephone line, including any 911 line and any 
emergency line of a hospital, medical physician or service office, 
health care facility, poison control center, or fire protection or law 
enforcement agency;
    (ii) To the telephone line of any guest room or patient room of a 
hospital, health care facility, elderly home, or similar establishment; 
or
    (iii) To any telephone number assigned to a paging service, 
cellular telephone service, specialized mobile radio service, or other 
radio common carrier service, or any service for which the called party 
is charged for the call.
    (iv) A person will not be liable for violating the prohibition in 
paragraph (a)(1)(iii) of this section when the call is placed to a 
wireless number that has been ported from wireline service and such 
call is a voice call; not knowingly made to a wireless number; and made

[[Page 25978]]

within 15 days of the porting of the number from wireline to wireless 
service, provided the number is not already on the national do-not-call 
registry or caller's company-specific do-not-call list.
    (2) Initiate any telephone call to any residential line using an 
artificial or prerecorded voice to deliver a message without the prior 
express consent of the called party, unless the call;
    (i) Is made for emergency purposes;
    (ii) Is not made for a commercial purpose;
    (iii) Is made for a commercial purpose but does not include or 
introduce an unsolicited advertisement or constitute a telephone 
solicitation;
    (iv) Is made to any person with whom the caller has an established 
business relationship at the time the call is made; or
    (v) Is made by or on behalf of a tax-exempt nonprofit organization.
    (3) Use a telephone facsimile machine, computer, or other device to 
send an unsolicited advertisement to a telephone facsimile machine, 
unless--
    (i) The unsolicited advertisement is from a sender with an 
established business relationship, as defined in paragraph (f)(5) of 
this section, with the recipient; and
    (ii) The sender obtained the number of the telephone facsimile 
machine through--
    (A) The voluntary communication of such number by the recipient 
directly to the sender, within the context of such established business 
relationship; or
    (B) A directory, advertisement, or site on the Internet to which 
the recipient voluntarily agreed to make available its facsimile number 
for public distribution. If a sender obtains the facsimile number from 
the recipient's own directory, advertisement, or Internet site, it will 
be presumed that the number was voluntarily made available for public 
distribution, unless such materials explicitly note that unsolicited 
advertisements are not accepted at the specified facsimile number. If a 
sender obtains the facsimile number from other sources, the sender must 
take reasonable steps to verify that the recipient agreed to make the 
number available for public distribution.
    (C) This clause shall not apply in the case of an unsolicited 
advertisement that is sent based on an established business 
relationship with the recipient that was in existence before July 9, 
2005 if the sender also possessed the facsimile machine number of the 
recipient before July 9, 2005. There shall be a rebuttable presumption 
that if a valid established business relationship was formed prior to 
July 9, 2005, the sender possessed the facsimile number prior to such 
date as well; and
    (iii) The advertisement contains a notice that informs the 
recipient of the ability and means to avoid future unsolicited 
advertisements. A notice contained in an advertisement complies with 
the requirements under this paragraph only if--
    (A) The notice is clear and conspicuous and on the first page of 
the advertisement;
    (B) The notice states that the recipient may make a request to the 
sender of the advertisement not to send any future advertisements to a 
telephone facsimile machine or machines and that failure to comply, 
within 30 days, with such a request meeting the requirements under 
paragraph (a)(2)(v) of this section is unlawful;
    (C) The notice sets forth the requirements for an opt-out request 
under paragraph (a)(2)(v) of this section;
    (D) The notice includes--
    (1) A domestic contact telephone number and facsimile machine 
number for the recipient to transmit such a request to the sender; and
    (2) If neither the required telephone number nor facsimile machine 
number is a toll-free number, a separate cost-free mechanism including 
a Web site address or e-mail address, for a recipient to transmit a 
request pursuant to such notice to the sender of the advertisement. A 
local telephone number also shall constitute a cost-free mechanism so 
long as recipients are local and will not incur any long distance or 
other separate charges for calls made to such number; and
    (E) The telephone and facsimile numbers and cost-free mechanism 
identified in the notice must permit an individual or business to make 
an opt-out request 24 hours a day, 7 days a week.
    (iv) A facsimile advertisement that is sent to a recipient that has 
provided prior express invitation or permission to the sender must 
include an opt-out notice that complies with the requirements in 
paragraph (a)(3)(iii) of this section.
    (v) A request not to send future unsolicited advertisements to a 
telephone facsimile machine complies with the requirements under this 
subparagraph only if--
    (A) The request identifies the telephone number or numbers of the 
telephone facsimile machine or machines to which the request relates;
    (B) The request is made to the telephone number, facsimile number, 
Web site address or e-mail address identified in the sender's facsimile 
advertisement; and
    (C) The person making the request has not, subsequent to such 
request, provided express invitation or permission to the sender, in 
writing or otherwise, to send such advertisements to such person at 
such telephone facsimile machine.
    (vi) A sender that receives a request not to send future 
unsolicited advertisements that complies with paragraph (a)(3)(v) of 
this section must honor that request within the shortest reasonable 
time from the date of such request, not to exceed 30 days, and is 
prohibited from sending unsolicited advertisements to the recipient 
unless the recipient subsequently provides prior express invitation or 
permission to the sender. The recipient's opt-out request terminates 
the established business relationship exemption for purposes of sending 
future unsolicited advertisements. If such requests are recorded or 
maintained by a party other than the sender on whose behalf the 
unsolicited advertisement is sent, the sender will be liable for any 
failures to honor the opt-out request.
    (vii) A facsimile broadcaster will be liable for violations of 
paragraph (a)(3) of this section, including the inclusion of opt-out 
notices on unsolicited advertisements, if it demonstrates a high degree 
of involvement in, or actual notice of, the unlawful activity and fails 
to take steps to prevent such facsimile transmissions.
* * * * *
    (f) As used in this section: (1) The terms automatic telephone 
dialing system and autodialer mean equipment which has the capacity to 
store or produce telephone numbers to be called using a random or 
sequential number generator and to dial such numbers.
    (2) The term clear and conspicuous for purposes of paragraph 
(a)(3)(iii)(A) of this section means a notice that would be apparent to 
the reasonable consumer, separate and distinguishable from the 
advertising copy or other disclosures, and placed at either the top or 
bottom of the facsimile.
    (3) The term emergency purposes means calls made necessary in any 
situation affecting the health and safety of consumers.
    (4) The term established business relationship for purposes of 
telephone solicitations means 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 purchase or transaction with the entity 
within the eighteen (18) months immediately preceding the date

[[Page 25979]]

of the telephone call or on the basis of the subscriber's inquiry or 
application regarding products or services offered by the entity within 
the three months immediately preceding the date of the call, which 
relationship has not been previously terminated by either party.
    (i) The subscriber's seller-specific do-not-call request, as set 
forth in paragraph (d)(3) of this section, terminates an established 
business relationship for purposes of telemarketing and telephone 
solicitation even if the subscriber continues to do business with the 
seller.
    (ii) The subscriber's established business relationship with a 
particular business entity does not extend to affiliated entities 
unless the subscriber would reasonably expect them to be included given 
the nature and type of goods or services offered by the affiliate and 
the identity of the affiliate.
    (5) The term established business relationship for purposes of 
paragraph (a)(3) of this section on the sending of facsimile 
advertisements means a prior or existing relationship formed by a 
voluntary two-way communication between a person or entity and a 
business or residential subscriber with or without an exchange of 
consideration, on the basis of an inquiry, application, purchase or 
transaction by the business or residential subscriber regarding 
products or services offered by such person or entity, which 
relationship has not been previously terminated by either party.
    (6) The term facsimile broadcaster means a person or entity that 
transmits messages to telephone facsimile machines on behalf of another 
person or entity for a fee.
    (7) The term seller means the person or entity on whose behalf a 
telephone call or message is initiated for the purpose of encouraging 
the purchase or rental of, or investment in, property, goods, or 
services, which is transmitted to any person.
    (8) The term sender for purposes of paragraph (a)(3) of this 
section means 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.
    (9) The term telemarketer means the person or entity that initiates 
a telephone call or message for the purpose of encouraging the purchase 
or rental of, or investment in, property, goods, or services, which is 
transmitted to any person.
    (10) The term telemarketing means the initiation of a telephone 
call or message for the purpose of encouraging the purchase or rental 
of, or investment in, property, goods, or services, which is 
transmitted to any person.
    (11) The term telephone facsimile machine means equipment which has 
the capacity to transcribe text or images, or both, from paper into an 
electronic signal and to transmit that signal over a regular telephone 
line, or to transcribe text or images (or both) from an electronic 
signal received over a regular telephone line onto paper.
    (12) The term telephone solicitation means the initiation of a 
telephone call or message for the purpose of encouraging the purchase 
or rental of, or investment in, property, goods, or services, which is 
transmitted to any person, but such term does not include a call or 
message:
    (i) To any person with that person's prior express invitation or 
permission;
    (ii) To any person with whom the caller has an established business 
relationship; or
    (iii) By or on behalf of a tax-exempt nonprofit organization.
    (13) The term unsolicited advertisement means 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, in writing or 
otherwise.
    (14) The term personal relationship means any family member, 
friend, or acquaintance of the telemarketer making the call.
* * * * *
[FR Doc. 06-4169 Filed 5-2-06; 8:45 am]
BILLING CODE 6712-01-P