Avoid Being Played in the Faxtortion Game

By Neil Ende

THE TELEPHONE CONSUMER

Protection Act (TCPA) prohibits any person within the United States … to use any telephone facsimile machine, computer or other device to send an unsolicited advertisement to a telephone facsimile machine … The purpose of the act is to help protect innocent individuals from the costs, burdens and annoyance associated with the receipt of unsolicited facsimiles.

Like many other statutes designed to address specific societal ills, the TCPAs purpose was and is laudable. However, as is often the case, unscrupulous individuals have found ways to use the TCPA, not as a means to protect themselves from undesired facsimiles, but as a source of income. Indeed, for these individuals, the apparent goal is not to stop receiving facsimiles, but instead to accumulate as many facsimiles as possible and to sue everyone in sight, whether liable or not, in an effort to bully them into paying regardless of their actual liability. And, as the recovery can be as much as $1,500 per facsimile in some instances, the financial incentives to abuse the statute can be powerful, particularly where a quick settlement payment can be obtained without substantial time or expense.

Now, if your company is not among the carriers and resellers that are currently under siege, you may be thinking, I am not in the business of sending facsimiles, why should I care about this issue? Heres why: As innocent as your company may be, and even if it is only the provider of an inbound toll-free service used in connection with the delivery of facsimile transmissions by third parties, it may soon be in the crosshairs of those seeking to maximize their recovery.

Heres how the faxtortion game works: When one of the individuals in the game lets call them players gets a facsimile, one of the first things he/she does is to contact the underlying carrier and/or the SMS database administrator to identify the Responsible Organization (RespOrg) for the toll-free number. It is worthy of note that in many, if not most, instances the release of this information by the underlying carrier and/or the SMS database administrator may be a violation of the confidentiality provisions of their own agreements with their reseller customers. Nonetheless, the player is typically able to get this information, contact the RespOrg and then demand the name of the underlying customer.

If the process ended with the player going after the third party who is responsible for the facsimile transmission, the issue would not be worthy of further discussion. However, whether by ignorance or intent, in many cases, the communication by the player to the RespOrg is less than professional and often contains specific threats of legal action and, sometimes, threats of violence if the facsimile transmissions are not stopped. Of course, the RespOrg is never, or virtually never, the entity that is sending the facsimiles, and may not be in a position to block the transmissions (i.e., when it is a switchless reseller) even if it were to elect or have the ability to do so.

The players have found it can be difficult to pinpoint the entities actually sending the facsimiles, either because they pop up and down overnight or hide offshore. Thus, even where players obtain judgments against these entities, it can be hard to collect. Consequently, some of the players now are bringing actions against carriers and resellers providing services to deliver the facsimiles. Although these actions are, in most circumstances, without basis in law, the apparent goal is to force innocent carriers and resellers to settle these cases rather than face the substantial legal fees required to defend against such baseless assertions.

Although it may seem rational to settle these cases for a relatively small amount, that might be the wrong decision both as an economic and a practical matter. Indeed, it appears there is a growing network of players who communicate regularly through the Internet and target carriers and resellers that settle with endless threats of legal action. Furthermore, if your companys role is that of common carrier, and it does not have involvement in the creation of the facsimile transmissions or the selection of the telephone numbers to which the transmissions are sent, your company is not legally liable and thus should not be required to pay the equivalent of protection money not to be sued.

The FCC specifically concluded common carriers are exempt from liability unless they have a high degree of involvement in sending unsolicited faxes. The required high degree of involvement exists only where the carrier has a direct role in creating the content of a facsimile message or where the carrier maintains lists of facsimile numbers used to direct its clients advertisements. If a common carrier is merely providing the network over which a subscriber (a fax broadcaster or other individual, business or entity) sends an unsolicited facsimile message, that common carrier will not be liable for the facsimile.

Further, in many instances, the common carrier under assault is only providing the inbound toll-free service referenced on the facsimile as the number to call for more information about the product or service at issue or to get off the call list. There has emerged no sound legal theory under which such carriers can be liable under the TCPA.

These are just a few of the defenses available to carriers and resellers.

So, do not be a victim. Paying protection money is a losing proposition that will only encourage players and the endless list of surrogates they inspire to feed at your money trough time and again.

Neil S. Ende is the founder of and a partner in Technology Law Group LLC, a Washington, D.C.-based telecommunications law firm. He can be reached by phone at +1 202 895 1707 and by e-mail at [email protected].