Federal Deception Law: 6.7.3.2 Other Exceptions
There are several other exceptions that rarely apply.
There are several other exceptions that rarely apply.
The TCPA and the FCC rule adopted under it prohibit the use of a telephone fax machine, a computer, or any other device to send an unsolicited advertisement to a telephone fax machine.995 The impetus behind this prohibition is that junk faxes tie up recipients’ fax lines and shift costs from advertisers to recipients.996 The rule protects against faxes to business telephone subscribers as well as residential subscribers.997 While several of the TCP
The statute defines the term “telephone fax machine” as “equipment which has the capacity . . . to transcribe text or images (or both) from an electronic signal received over a regular telephone line onto paper.”1002 Many courts have held that the junk fax prohibition applies regardless of whether the message is sent to a fax server or computer that receives and stores the message for later printing, or to a conventional fax machine that automatically prints each message.1003
The junk fax rule generally prohibits “unsolicited advertisement[s].”1012 The statute defines this term as “any material advertising the commercial availability or quality of any property, goods, or services” that is transmitted to another person without prior express invitation or permission.1013 The definition in the FCC regulation is identical.1014
Fax messages that promote goods or services at no cost—such as free magazine subscriptions, catalogs, consultations, or seminars—can be unsolicited advertisements because they often serve as part of an overall marketing campaign.1042 In some cases, the fact that the fax is promoting the sender’s products will be apparent on its face, such as a fax that offers a free seminar but adds a laudatory description of its goods or services.
Some courts hold that “informational messages” that are not primarily advertisements are not unsolicited advertisements.1048 For example, the Eighth Circuit held that a health plan prescription benefits administrator’s fax to doctors, informing them of new limits on insurance coverage for their patients’ opioid prescriptions, was informational and not an unsolicited advertisement.
To be an unsolicited advertisement, a fax must propose a commercial transaction, but it need not be a direct transaction between the sender and the recipient.1069 For example, a fax that encouraged physicians to write prescriptions for the sender’s services was an advertisement even though the physician’s patients, rather than the physicians, would be the actual purchasers.1070 Similarly, a fax
Messages that only seek donations to political campaigns or charitable organizations,1075 or that encourage application for an award,1076 are not unsolicited advertisements. Courts have also held that faxes seeking participation in clinical trials are not advertisements.1077 In addition, the FCC has stated that faxes such as subscription renewal
The TCPA contains an explicit exemption for fax advertisements when there is an established business relationship between the sender and recipient, but only if the sender obtains the recipient’s fax number in a particular fashion and discloses an opt-out right.1104 The FCC defines an established business relationship as one created by a voluntary two-way communication on the basis of a purchase, transaction, inquiry, or application.1105 If there is an established business relationship, it ex
The TCPA requires that an unsolicited fax advertisement that is sent pursuant to an established business relationship contain a notice of the recipient’s right to opt out of receiving additional faxes.1116 This important requirement is discussed in § 6.8.3.4.2, infra.
Whenever an unsolicited fax advertisement is sent pursuant to the established business relationship exemption, the first page of the fax advertisement must contain a clear and conspicuous notice of the recipient’s right to opt out of receiving additional faxes.1122 This requirement is framed as an element of a safe harbor, and the Sixth, Seventh, and Eighth Circuits have held that non-compliance results in negation of the consent and established business relationship defenses.1123 A complian
As originally written by the FCC, the requirement of an opt-out notice applied not just to unsolicited faxes, but also to solicited fax advertisements—i.e., those sent with the recipient’s prior express invitation or permission.1131 However, a 2014 FCC order upholding the validity of the rule was appealed pursuant to the Hobbs Act, and in 2017 the D.C.
Many states have their own laws forbidding junk faxes. These statutes may make useful parallel claims, as there may be additional remedies and fewer jurisdictional issues.1150 For example, the TCPA does not provide for attorney fees for a prevailing plaintiff.
Courts usually interpret the statutory “transaction of business” test as broadly as possible within the minimum contacts standard required by the due process clause of the Fourteenth Amendment. The Supreme Court, in International Shoe Co. v. State of Washington,40 required that the nonresident defendant have minimum contacts with the forum state “such that the maintenance of the suit does not offend ‘traditional notions of fair play and substantial justice.’”41 McGee v.
Federal suits may be brought in any judicial district in which the defendant “resides, if all defendants are residents of the State in which the district is located” or in which a substantial part of the events or omissions giving rise to the claim occurred.57 The federal venue provisions should therefore be construed to permit suit to be brought in any competent federal court of a state that has long-arm jurisdiction over the defendant.58 Unlike claims of improper jurisdiction, objections to venue
Creditors, debt buyers, or those collecting on behalf of creditors or debt buyers often seek to thwart a consumer’s FDCPA or state claims by attempting to enforce a mandatory arbitration clause found in the credit agreement between the original creditor and the consumer. These clauses require consumers to bring legal claims in private arbitration as opposed to litigation in court.
Debt buyers and debt collectors wishing to take advantage of the arbitration agreement entered into between the consumer and the creditor have the burden of presenting to the court that actual arbitration agreement. The Federal Arbitration Act does not require arbitration of disputes, but only enforces arbitration agreements that have been validly created. Production of the actual agreement is also essential to determine what parties and disputes are covered by the agreement and whether any aspect of the agreement is unenforceable.
When a debt buyer seeks to force a consumer’s debt collection claim into arbitration, the debt buyer has initial hurdles to overcome. The debt buyer must produce the credit agreement binding on the consumer that contains an arbitration requirement, the debt buyer must prove that it has been assigned the credit agreement,103 and it must prove it has rights to enforce the creditor’s arbitration agreement.
Third-party collectors and collection attorneys typically do not enter into contracts with the consumer, and thus there will be no arbitration agreement between these parties. Instead, the collector or attorney will seek to piggy-back onto an arbitration agreement between the creditor and consumer.
Courts first look to the plain language of the contract and the relationship between the collection agency or attorney and the original creditor to see whether the arbitration agreement extends to cover parties with that relationship to the original creditor.116 For example, one version of the GE Money Bank arbitration clause stated that it applied to disputes between the consumer and “us,” defined as the creditor’s parents, subsidiaries, predecessors, successors, assigns, employees, officers, and directors.
A collection agency or collection attorney can only enforce an arbitration agreement as the agent of the creditor or the creditor’s assignee if there is an agency relationship. To shield themselves from liability for a debt collector’s misconduct, creditors and debt buyers often state in their contracts with debt collectors that the debt collectors are independent contractors and not agents. In that case, a debt collector should not be able to take advantage of language that an agreement applies to the creditor’s agents.135
Where the language of an arbitration agreement does not allow debt collectors and collection attorneys to enforce the arbitration requirement, they may try to enforce the arbitration agreement under an equitable estoppel argument.
A defendant debt buyer, debt collector, or collection attorney can waive the right to enforce an arbitration agreement by waiting too long in the court litigation to raise the arbitration requirement. By acting inconsistently with a known right, to the consumer’s prejudice, the defendant has waived the arbitration requirement.148 Such may be the case when the defendant first raises the arbitration requirement after extensive discovery, motions to dismiss or summary judgment, or other litigation activity.