FCC Loses Fax Opt-Out Ad Ruling

Court says FCC exceeded authority; FCC chair Pai agrees

The Tom Wheeler FCC suffered another defeat in the opt-out advertising category Friday as a three-judge panel of the U.S. Court of Appeals—in a 2-1 decision—overturned a ruling regarding faxed advertisements, saying the FCC had exceeded its authority. 

That is something the new FCC chairman has said about various decisions under the former FCC chairman. 

That court decision followed the House's vote earlier this week to repeal the Wheeler-era rules that held that opting out of web data collection by ISPs for use by online advertisers was not sufficient protection for consumers.

The FCC in 2014 upheld a previous conclusion that its rule implementing The Junk Fax Prevention Act of 2005 required opt-out notices not only on unsolicited faxed ads but solicited ones as well.

That was more than an academic exercise since the FCC was responding to a 2010 request for a declaratory ruling by a drug company, Anda, that wanted the FCC to find the rule didn't apply to solicited faxes—since that meant the recipient had agreed to get them. Anda was being sued for $150 million by pharmacies that claimed, even though they had agreed to get the faxes, there should have still been an opt-out option.

The FCC agreed; the court panel did not.

Writing for the majority, judge Brett Kavanaugh said: "In trying to sidestep the statute’s language, the FCC argues that it can require opt-out notices on solicited faxes because Congress did not define the phrase 'prior express invitation or permission' in the Act. To reiterate, the Act states that an 'unsolicited advertisement' is '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.' The FCC argues that it has reasonably defined the phrase 'prior express invitation or permission' to mean that prior express permission lasts only until it is revoked, and that all fax advertisements—even solicited fax advertisements—therefore must include a means to revoke that permission." 

Kavanaugh said if that was confusing to the reader, it was to the majority too. "We do not get it either."

"Congress has not authorized the FCC to require opt-out notices on solicited fax advertisements. And that is all we need to know to resolve this case," said Kavanaugh. 

Don't look for the FCC to appeal that smackdown.

New FCC chairman Ajit Pai dissented from that 2014 ruling. “Today’s decision by the D.C. Circuit highlights the importance of the FCC adhering to the rule of law," said Pai Friday of the decision. "I dissented from the FCC decision that the court has now overturned because, as I stated at the time, the agency’s approach to interpreting the law reflected ‘convoluted gymnastics.’ [The court cited that phrase in its decision]. The court has now agreed that the FCC acted unlawfully. Going forward, the Commission will strive to follow the law and exercise only the authority that has been granted to us by Congress.”

"The ruling is a small step forward to curb the FCC’s overreach under the Telephone Consumer Protection Act," said the U.S. Chamber Institute for Legal Reform. "In recent years, the FCC has overstepped its authority by restricting legitimate, good faith communications from businesses to customers who previously gave their permission to be contacted."

(Photo via Tori Rector's FlickrImage taken on July 21, 2016 and used per Creative Commons 2.0 license. The photo was cropped to fit 3x4 aspect ratio.)