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The Federal Trade Commission on Aug. 18 issued a 16-month stay of revised regulations governing fax advertisements scheduled to go into effect Aug. 25. The move gives businesses and associations some breathing room to comply with the requirements of the new rules, and for the FCC to consider numerous petitions filed this month by business and non-profit groups opposed to the FCC action.
However, the order issued by the FCC postponing the effective date of the new regulations specifically states that a new definition of "existing business relationship" (EBR) will go into effect. According to an alert sent by the National Association of Wholesaler-Distributors on Aug. 19, the amended definition does not go into effect until a review by the Office of Management and Budget, mandated by the Paperwork Reduction Act, is completed. The FCC must then publish the effective date in the Federal Register. Until that happens, the current EBR definition remains in place.
"It's good news these regulations were postponed," said NAW President Dirk Van Dongen. "But it's not a total victory. The amended definition of EBR could impose a paperwork burden to create records to ensure compliance."
There are fundamental problems with the original statute, the Telephone Consumer Protection Act of 1991, as well as the FCC's interpretation of the regulations as it applies to businesses. First, the definition of an unsolicited fax advertisement is unclear as it applies to business marketers (see definitions at end of article). Second, the FCC interpreted that the EBR exemption, written for consumer telemarketing purposes, applies to any faxed communication.
"We will be filing motions to reconsider the regulations," Van Dongen said. "The stay opens a new window for an inquiry and to build a new public record of the impact of these regulations. It may end up going back to Congress to revise some of the problems in the original law."
Several business groups are in the process of filing new petitions for a rehearing to address the burdens these modified rules will put on businesses to keep records of their transactions and inquiry histories.
The FCC stay solves the short timeframe that posed some significant hurdles for businesses that use the fax extensively to communicate with customers and prospects. But the issue of fax advertisements may require a change in law. The FCC issued the stay in part to give businesses more time to comply, and to give itself more time to consider the petitions filed. There is no guarantee that the FCC will alter its interpretation of the intent of Congress in the original Telephone Consumer Protection Act of 1991, which forms the basis for the current regulations.
What it means
Outside the Beltway, the immediate impact is that businesses and associations don't have to obtain signed, written permission to send any fax that contains an "unsolicited advertisement." Businesses and associations were beginning to send out consent forms to be able to continue sending faxes with marketing material after Aug. 25.
The current rules, in place for more than 10 years, remain in effect. These rules allow you to market by fax if you have an "established business relationship" (EBR) with a prospect or client. The new rules, now scheduled to go into effect Jan. 1, 2005, tighten the definition of EBR to require a written opt-in permission form signed by each customer or prospect with the specified fax number(s) to which faxes may be sent.
But if the current definition stays in place with approval by OMB in the next few months, businesses at the least have to make sure they are faxing to lists that fall within the timeframe of the new EBR