FAX AT YOUR OWN RISK
Impending legislation would have put dealers who send faxes customers and prospects at risk. But a united front has saved the day for now.
By Scott Cullen
There’s nothing like the threat of a lawsuit to get one’s attention. That’s how Leonard Mingoia, president of FaxWorld, a Huntington Beach, California-based Ricoh dealership first became aware of the dangers of impending FCC legislation (The Telephone Consumer Protection Act (TCPA) of 1991, 47 CFR Part 64), which is aimed at reducing junk faxes, but instead has the potential to create a legal and financial nightmare for businesses--especially small and mid-size independent businesses.
Under the legislation, businesses must receive signed written permission before they can fax prospects and customers. Complicating the situation is that the permission form can not be faxed. Instead, it must be mailed or hand delivered. Businesses who fail to comply could be subject to a fine as high as $10,000.
Fortunately for Mingoia, NFIB and other small business interests, Congress has come through with the House unanimously passing H.R. 4600, legislation which restores the “established business relationship” (EBR) provision governing facsimile communications. Reestablishing the EBR, S. 2603 allows for communications among parties where a previous business relationship exists. Because the bill also requires
a mandatory "opt-out" for unsolicited faxes, it allows for the FCC to make the decision to waive the opt-out provision for tax-exempt organizations faxing members on issues related to their exempt purpose. The bill also allows the FCC, after three years time, to reevaluate whether a time limit on the EBR provision is needed.
Raising Awareness
Mingoia believes this legislation would have set independent businesses up for extortion by unscrupulous operators. The incident that opened his eyes to the problem was a letter from an attorney who claimed his office had received an unsolicited fax from FaxWorld and was threatening to sue if FaxWorld didn’t send a check for $5,000 as the attorney claimed other businesses had done. “Fortunately, current FCC regulations allow for one unsolicited event to occur,” explains Mingoia. “We responded by mailing that attorney the excerpt from the FCC regulations as well as a copy of a business card from his office that we had visited.” That was the last FaxWorld heard from the attorney, but that’s not stopping Mingoia from hopping on his soapbox. “If the FCC were to legalize the $10,000 fine, the effect on small businesses would be terrible. However, it would be a bonanza for those who would see opportunity.”
Although Mingoia believes most independent dealers weren’t aware of this legislation and how it would affect their businesses, he hasn’t been alone raising a ruckus about this issue. The National Federation of Independent Business (NFIB) and the National Office Products Association/Office Furniture Dealers Association (NOPA-OFDA) have also been up in arms over the impending legislation. The Business Technology Association (BTA) has also addressed this issue in its publication, Office Technology in General Counsel Robert C. Goldberg’s “Courts & Capitols” column.
NFIB has been fighting the good fight against this legislation and has worked with other businesses to convince the FCC to delay implementation until Jan. 1, 2005. Initially the legislation was supposed to take effect earlier this year. NFIB had been working to correct this problem by either convincing the FCC to stop the rule altogether or by lobbying Congress to overrule their action. “Businesses would no longer be able to fax material based on the common-sense understanding that the recipient is a customer,” notes Valerie Moore, Grassroots Program Coordinator for NFIB.
NOPA-OFDA contends the tighter fax rule is unnecessary and would keep small businesses and non-profit groups like itself from communicating with customers or members. “This rule would not only be burdensome for our small businesses, but would prohibit NOPA-OFDA from contacting its members regarding industry events,” says Paul Miller, NOPA-OFDA director of government affairs.
Negative Effects
Mingoia was concerned the law would have had an adverse affect on the way FaxWorld currently conducts business. As an imaging equipment reseller, FaxWorld is required to have written, on-file, resale permits for each of the thousand or so dealers FaxWorld resells to. “Before we sell, we fax and get this information completed and faxed back to us in a matter of minutes,” explains Mingoia. “Does the FCC realize that we must now either use slow USPS or costly courier services to get written permission before sending these customers a fax? If we fax to customers we’ve been doing business with for years without getting that permission we’d be breaking the law.”
As with dialing a phone number, mistakes dialing a fax number can easily be made. “Under this law if I made an honest mistake and dialed the wrong fax number, I’m criminally liable for it,” says Glenn Plank, FaxWorld’s service and parts manager.
FCC officials originally said they had to make the change to comply with a 1991 law that prevents fax marketers from pitching their products or services, even to existing customers, without written permission. That’s because receiving a fax costs recipient’s money since it uses up paper and toner. “Sometimes I’m annoyed too but it’s part of being in the game to have your fax machine on,” says Mingoia. “But I don’t see it as being overly abused. I’d be surprised if it even costs me ten cents a day.”
Faxer Beware
If the law had gone into effect, Mingoia cautions against boiler room operators who could easily duplicate a legitimate business’s letterhead and then send a fax to themselves, followed by legal action against a legitimate business. He says he wouldn’t be surprised if many small, independent businesses who received a threatening letter as FaxWorld did would just write a check and settle rather than hiring an attorney to fight it.
Opportunists abound and there is indeed money to be made in going after the faxers. NFIB identifies the Website, www.junkfax.org, which advertises itself as being “dedicated to helping stop junk faxes.” The site has a section on its home page entitled “How to sue—How to get up to $1,500 for every junk fax you receive.” While a good portion of the Website’s efforts seem to target fax broadcasters, the potential exists to affect small, legitimate businesses as well.
Simple Solutions
Mingoia remains convinced the FCC legislation was totally unnecessary, citing fax technology’s ability to police itself. “Most commercial fax machines can be programmed to receive faxes only from a list of fax numbers pre-programmed into the machine by the owner,” he explains. “Hence, if unsolicited faxes are not wanted, the technology exists to reject them.” Mingoia concedes that this technology isn’t often used because fax owners are either too lazy or don’t take the time to pre-program their machines. “What we have is another case of a few lazy people who should be responsible for their own actions but look to government to solve their slothful manner,” opines Mingoia. “There is no need for this law to suppress small business and global commerce.”
NFIB concurred with Mingoia and in a letter to the chairman of the FCC sent in 2002, wrote, “For many small businesses, the ability to fax information to their established customers is an essential commercial tool. In our opinion, a customer who provides his contact information (including fax number) when patronizing a business is offering an express invitation or permission to be contacted by that business. This is certainly true when that customer is in the market for, among other things, information, as is the case with NFIB and the products it provides to its members.”
NFIB’s position makes perfect sense to Mingoia who adds that if a customer or prospect hands out a business card with a fax number on it, it should be understood that they are open to receiving faxes from the recipient of the business card.
Meanwhile, BTA general counsel Goldberg suggests that if a written authorization is ultimately required, office equipment dealers should include a clause in all transactional documents—purchase orders, maintenance agreements, etc.--permitting them to communicate with the customer via fax regarding product notices, upgrades, supplies and new equipment.
Chances of Success
Originally Mingoia was uncertain what affect his efforts or those of NFIB and like organizations would have had on the FCC. “You just hope that someone somewhere might have some sense,” he opines. “We know fax machines well enough and hate to see an opportunity for sleazy people to screw people over.”
For now Mingoia seems satisfied with the direction things are heading although he has his concerns about legislation that could still potentially lead to abuse. “One would like to think that government would protect and encourage honest, tax paying, employment generating businesses while suppressing and penalizing the unscrupulous few.”
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