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Tuesday, January 06, 2004 - Page updated at 12:00 A.M.
FCC fines Fax.com $5 million over ads
By Tony Pugh
WASHINGTON In the largest penalty ever imposed for unwanted telephone solicitations, the Federal Communications Commission (FCC) yesterday fined a California fax company nearly $5.4 million for transmitting such ads.
The FCC ordered Fax.com of Aliso Viejo, Calif., to pay $11,000 each for 489 alleged violations of the Telephone Consumer Protection Act in 2001 and 2002. The 1991 law prohibits the transmission of unsolicited fax advertisements because recipients must pay for them with their own paper and toner.
Fax.com, a so-called "fax broadcaster," faxed millions of ads for its clients, which included a copier company, an auto-parts outlet and a mortgage broker. In its order imposing the fine, the FCC said Fax.com's business model "constitutes a massive ongoing violation" of the federal phone law.
In earlier filings, the FCC rejected Fax.com's arguments that the law imposed an unconstitutional ban on commercial free speech. The commission also rejected the company's argument that the fine is unreasonable.
The company can either pay the fine, wait until the Justice Department takes collection action or petition the commission to reconsider the fine.
Attorney Harry Cole of Alexandria, Va., who represented Fax.com, wouldn't comment. Attorney Mary Ann Wymore of St. Louis, who also represented the company, declined comment. Wymore said she had been unable to reach Fax.com President Kevin Katz.
While unsolicited faxes are not widely used by advertisers, FCC Chairman Michael Powell said they are still annoying.
"Consumers hate to go to their fax machine only to find their resources have been wasted on spam and junk," Powell said in a written statement. "We're sending relief in the form of a simple message to junk faxers: Violate our rules, and you will pay the consequences. ... We will not rest until consumers find peace from unwanted and unlawful intrusions whether from telemarketing calls or junk faxes."
The fine is the latest regulatory crackdown on consumer marketing tactics involving phones. In October, the FCC and the Federal Trade Commission established a national do-not-call list that prohibits most telemarketers from calling the more than 50 million phone numbers in its database.
The FCC claims Fax.com misled some clients by saying its activities complied with federal law. The FCC also alleges that the company provided nonworking telephone numbers on its faxes for consumers to call if they didn't want to receive faxes.
The fine follows more than two years of wrangling between the FCC and the company over complaints about unwanted faxes that, in some cases, came at all hours of the night.
The FCC warned Fax.com in 2001 that it had received numerous complaints from consumers about receiving unsolicited advertisements on behalf of six client companies. The FCC threatened fines unless Fax.com ensured that its client companies had obtained permission from recipients to fax the ads.
In a response, the company said it "has historically taken no steps to verify consent" from fax recipients, according to the FCC.
The company must tell the FCC within 30 days whether it's complying with federal law and FCC rules against unsolicited faxes. The company's response will determine whether the federal agency takes further action against Fax.com or its clients.
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