Vol. 28, No. 3

Fax facts: What you need to know now about the FCC’s new rules

by Clifton Barnes

Surprise! There are surprise parties and surprise attacks. For many in the association world, this was more like the latter.

Bar leaders, and members and staff at associations throughout the country, were caught off guard in July when the Federal Communications Commission (FCC) published new rules that prohibit sending unsolicited faxes of a commercial nature. These rules would affect some faxed communications between bar associations and their members.

But surprise! (This one is more like the surprise party.) The FCC extended, from August 25, 2003, to January 1, 2005, the effective date of its new rules requiring written consent before sending faxes.

What do the rules say?

The new rules cover any unsolicited fax that has monetary considerations, including membership renewals and continuing legal education program announcements. Further, they require associations to obtain signed consent forms from each fax recipient at each fax number, whether or not there has been a previously established business relationship (EBR) with the association. This requirement would eliminate an EBR exemption that was part of the Telephone Consumer Protection Act of 1991.

At a risk management session at the Annual Meeting of the National Association of Bar Executives in August—mere weeks from the date the rules were supposed to take effect—Jim Seely, senior attorney for Association Legal Services in San Francisco, explained the new rules. One key point, he said, is that any disgruntled member could sue an association for any unsolicited fax. The FCC doesn’t have to find out on its own, he said. Also, all it takes is one fax—the disgruntled person doesn’t have to prove the association was mass faxing, Seely added.

Fines for those violating the new rules will range from $500 to $11,000 per unsolicited fax.

The nearly 16-month delay for the written consent portion of the FCC’s fax rules does not change the effective date for the comprehensive telemarketing rules, including other rules regarding faxes, says Jeffrey Tenenbaum, a partner with the Washington-based Venable law firm.

“There is a misunderstanding that this stay means that none of the proposed rules go into effect until 2005,” he says. “There are changes taking effect now.”

For example, he says, new rules dictate that on faxes the sender (and any broadcast fax service) now must identify itself with the legal name under which it is officially registered for business.

In addition, while the FCC does plan to eliminate the EBR exemption once the rules take effect in 2005, for now, it has narrowed the definition of an established business relationship to impose a time limit on its duration. There now must be a voluntary two-way communications relationship “on the basis of the subscriber’s purchase or transaction with the entity within the 18 months immediately preceding the date 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.” Tenenbaum says the new definition “provides that a request not to be faxed trumps the existence of the EBR.”

A wholly-owned subsidiary or a related foundation may be covered by an established business relationship that an association has with its members, Tenenbaum adds, but the EBR most likely won’t extend to endorsed affinity providers or joint venture partners.

Associations react

“I was totally surprised when I received an e-mail on July 24 from [the American Society of Association Executives],” says Paulette Suwa, CLE/program manager for the Hawaii State Bar Association. “At first, I did not quite understand it, nor did I realize how quickly we would have to act with the impending deadline of August 25.”

Suwa says that like many bar associations, the Hawaii State Bar Association relies on fax communications for bar events, meeting notices, dues renewal reminders, CLE programs, and more.

She got an online discussion going on the topic through the National Association of Bar Executives’ bar communicators’ discussion group. “With the help of the Listserv responses,” she says, “I immediately created consent forms using sample formats that were provided by ASAE and others and sent them out to our members.”

Evelyn Sullivan, executive director of the Lancaster (Pa.) Bar Association, says she didn’t pay attention to a casual mention of the new FCC Do Not Fax rules, but she did pay attention after the Listserv messages started flowing. “Most of my info has come through NABE and the ABA, for which I am extremely grateful,” she says. “It seemed illogical that it would really apply to a membership organization such as ours, but reading the info made me uneasy.”

While the 700-member Lancaster bar plans on asking for fax approval on membership applications in the future, Sullivan says her bar doesn’t often use fax communications.

Elizabeth Derrico of the ABA Division for Bar Services says there are a number of bar associations that no longer fax at all with CLE notices or other announcements involving money, instead relying solely on electronic communications. “They were not impacted by the proposed regulations,” she says. “Others found themselves scrambling.”

For example, in July, the Massachusetts Bar Association launched a fax campaign to all 18,000+ members to solicit their signed consent to receive faxes. MBA Communications Director Bill Weber says the bar was somewhat surprised when it was flooded with responses to allow the bar to continue faxing them. The bar received faxed responses, mailed responses, and phone calls.

An upside to the scramble to comply was that the MBA updated its records. “We asked for name, address, phone, and e-mail on the form as well, meaning we are collecting fresh details on our members,” Weber says. “But it will be a massive job to update several thousand entries in our database.”

What do we do now?

The temporary stay leaves some bars wondering whether to start or continue collecting consent forms, or whether to wait and see what happens.

The Hawaii bar staff and officials have decided to continue the campaign to collect the consent forms, Suwa says, adding that she does not think it has been a waste of time for associations to get written permissions.

“Based on member feedback and comments, I believe members were appreciative that their privacy is being considered,” she says. “Several of our members felt it was ‘about time’ that they be removed from our fax communications, but a majority of the calls I received have been positive.”

Tenenbaum says getting written consents couldn’t hurt but his firm is not advising anyone to collect consents now, “in part because we don’t know the final outcome.” Tenenbaum, who has written and spoken extensively on this subject over the past few months, notes that the rules might not take effect as is.

Susan Waters, former executive director of the Massachusetts Bar Association and now CEO of the California Society of Certified Public Accountants, says it is important right now to “carefully and consistently respect any requests by members to be removed from general distribution lists, and to keep complete documentation of that effort.”

She adds that, for now, associations should be safe to communicate with members because an established relationship would have been established within 18 months as a result of payment of dues. “But be careful about dues-exempt members and nonmembers,” she advises.

Legislative efforts coming

The FCC made it clear in its order that the stay was issued not because the Commission believes its decision to impose a signed written consent requirement and to eliminate the EBR exemption is wrong, but because more time is needed for associations and businesses to comply with the rules.

However, many, including ABA President Dennis W. Archer, who wrote a letter to the FCC praising it for the stay but expressing concerns with the new rules, would like to see an EBR exemption and a clarification that tax-exempt nonprofits are not subject to the rule. One point Archer made in his letter is that e-mail, which many now use as an alternative to faxing, has its limitations. “The e-mail channel, while flexible, has reached near saturation in member tolerance,” he wrote. “Diverting the former fax messaging to e-mail may further diminish the effectiveness of all ABA e-mail communications.”

Tenenbaum said that various groups stress either the EBR exemption or the tax-exempt clarification, but that it is increasingly evident that there will be a significant legislative effort. “The focus has changed to Capitol Hill, because the FCC may not have the authority to make EBR exemptions permanent,” he says.

Tenenbaum expects a strong legislative push early this year. “It’s important for bar leaders to make their views known on Capitol Hill,” he notes. “They need to make their congressional representatives aware of the effort to write EBR exemptions into law.”

He believes it was political pressure directly from the association and business communities and indirectly from Congress that led to the stay in the first place. ASAE, for one, had worked to build a coalition of more than 1,500 associations that asked the FCC for the stay.

Some assume that the stay came because of the atypical procedure that sprung the rules on unsuspecting associations and businesses. There was only a 30-day notice prior to the planned effective date and it came in the middle of the summer vacation season. In addition, generally, regulations are issued as proposals prior to being finalized, but that did not happen in this case.

Sullivan of the Lancaster Bar Association admits to hoping the problem simply goes away. She says she’s hopeful that there will at least be an exemption for prior business relationships. But, she says, “I’m pessimistic enough to believe that we’ll have to abide by the terms that had been initially set forth.”

For some, anything else would be a surprise.