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FCC hikes Junk-Fax fines to rid repeat offenders

June 8, 2011

by Ronnie London
Privacy & Security Law
Davis Wright & Tremaine LLP,
Oregon law firm

A proposed $315,000 fine against The Street Map Company for unsolicited fax advertisements suggests the Federal Communications Commission is losing its patience – to the tune of tens of thousands of dollars in extra fines – with companies that repeatedly send “junk faxes” even after the agency has cited them, and gone so far as to propose fines, for such conduct. And, the FCC’s notice of apparent liability (“NAL”)goes on to say, it plans to increasingly impose such “upward adjustments” in junk fax fines in similar cases in the future.

The standard, or “base,” FCC fine for an unsolicited fax ad sent in violation of agency rulesis $4,500 – pretty steep for single transmission, but that has been, for better or worse, the ante. The FCC typically has increased that to $10,000 for “egregious” violations. Those generally involve instances where a fax recipient exercises the opt-out right to ask the sender to not send any more faxes, but nonetheless receives future faxes from that sender. It might also happen if a violator continues to send non-compliant faxes even after receipt of an NAL or imposition of penalties. The maximum fine the FCC can impose is $16,000 per fax. For particularly persistent violators, where scores of non-compliant faxes are involved, the total penalty imposed can climb into the hundreds of thousands dollars, or even surpass $1 million.

At first blush, the Street Map NAL looks like any other that comes down the pike – FCC receives consumer complaints about unwanted faxes, FCC issues a citation giving sender a chance to explain itself and warning that future violations can result in fines, sender does not respond to citation and keeps sending faxes, FCC issues NAL proposing fines, sender does not respond to NAL and keeps faxing. (In some cases, senders do not respond to the NAL and the FCC issues a forfeiture order officially imposing the fines – query whether they’re ever collected from forfeiture targets that already have stonewalled the agency on the citation and NAL).

But clearly, the Street Map NAL indicates, the FCC will not be ignored.

Instead, the FCC has used the Street Map case to announce it will start imposing “different and harsher penalties than … in the past,” in cases where “entities [ ] engage in a significant number violations.” In the case of Street Maps, that meant over 50 offending faxes. While, the FCC explained, it previously had not generally adjusted fines upward for multiple, repeated violations, believing the base forfeiture of $4,500 per fax alone sufficed to protect consumers and deter further unlawful conduct, the Commission feels it is now “increasingly apparent … that the amount of our proposed forfeitures … has failed to deter the more persistent wrongdoers.”

Accordingly, in the case of Street Maps, the FCC imposed an upward adjustment to the $4,500 for each offending fax the company initially sent to unconsenting recipients, and the $10,000 for each sent after opt-out requests, to tack on an additional $75,000 as a punitive/deterrent measure. The FCC justified this add-on as a “recognition of the greater power that Congress has given us, and that appears to need to be exercised in order to enforce [the] prohibition against unsolicited fax ads.” Besides, the NAL notes, at the $16,000 maximum per violation, the total possible fine to Street Maps for the faxes at issue could have been $832,000, which the amount imposed, $315,000, even with its $75,000 kicker, falls well below.

More significant is what the Street Map NAL portends for future FCC fines for unsolicited fax ads. In announcing its plan to start using its upward adjustment authority in junk fax cases, the FCC said it intends to apply an appropriate upward adjustment on a case-by-case basis, and that in doing so it “may apply a higher forfeiture amount, including the $16,000 statutory maximum if the facts of a particular case warrant.” As it is, the penalty for even a single unsolicited fax ad that violates FCC rules – $4,500 – is testament to how quickly penalties can mount if companies fail to dot their legal i’s and cross their legal t’s before sending commercial faxes. And now, apparently, woe be to those who ignore initial warnings from the FCC that they have not maintained compliance.

  
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