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      Krieg DeVault LLP
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December 2006
Faxes Last summer, Congress enacted the Junk Fax Prevention Act of 2005 (JFPA) and, effective this August 1, the Federal Communication Commission (the regulator with jurisdiction over banks with respect to fax, telephone and internet advertising) established final rules implementing it. The JFPA and rule apply to all faxes, to consumer as well as commercial recipients, which advertise the commercial availability or quality of property, goods or services. They prohibit sending unsolicited ads without the recipient’s prior express permission or invitation unless the recipient has a prior established business relationship (EBR) with the sender and the sender either obtained the recipient’s fax number from the recipient’s own publicly available directory, ad or internet site or the recipient voluntarily provided its fax number within the context of the EBR. A sender has an EBR with a recipient who has made an inquiry, application, purchase or transaction with the sender until the EBR is terminated by either party. Permissible, unsolicited fax ads, regardless of whether they are sent to recipients who have given permission or with whom the sender has an EBR, must include an opt-out notice. The notice must:
To be effective, opt-out requests must identify the fax number(s) to which the request relates and be made in one of the specified methods provided by the opt-out notice. Once a recipient has made a valid opt-out request, the sender must act on it as soon as possible and at least within 30 days. The opt-out request (unlike do-not-call lists) is effective indefinitely or until the recipient permits or invites subsequent fax ads. A sender must be prepared to provide clear and convincing evidence of the existence of such permission. Violation of the JFPA can result in regulatory fines of up to $11,000 per fax and private civil damages of $500 per fax or up to $1,500 per fax if the plaintiff can prove that the unsolicited fax was willful. The Indiana legislature in its 2006 legislative session also passed its own version of the JFPA. Effective January 1, 2007, deceptive practices will include violations of the JFPA and its implementing regulations and will be subject to civil money penalties enforced by the Indiana Attorney General. Conversations with the Indiana Attorney General’s office indicate that the Office does not currently plan to adopt its own rules to implement the Indiana junk fax legislation but will rely on the federal regulations to avoid inconsistencies between state and federal laws. Also, it is their view that even though the junk fax legislation was adopted within the context of consumer deceptive practices, it applies to commercial recipients as well as consumer recipients of unsolicited fax ads.
In Indiana, financial institutions must comply with two, not entirely consistent, sets of laws and rules, the federal Telephone Consumer Protection Act of 1991 (TCPA) and the Indiana Telephone Solicitation of Consumers Law. Both are applicable to calls to consumers only. The penalties for each are similar to those applicable to junk faxes. (Two years ago, the Consumer Bankers Association filed a Petition for Declaratory Ruling requesting the FCC to declare that only it, not the states, may regulate interstate telephone calls. The Indiana Attorney General has opposed the Petition arguing that Congress did not intend the federal Do-Not-Call programs to pre-empt stronger state laws. The FCC has not yet made a decision.) The first focus of the TCPA rules is to establish, maintain and enforce the National Do-Not-Call Registry and prohibit solicitation call is one made for the primary purpose of encouraging the purchase or rental or investment in goods, property or services. There are some exceptions: (1) calls from organizations which are tax-exempt, non-profit; (2) calls that are not commercial or do not include unsolicited advertisements such as calls from political organizations or telephone surveyors; (3) calls to a consumer who has given prior consent; and (4) calls to a consumer with whom the caller has an EBR. An EBR exists if the consumer has made an inquiry or application during the last 3 months or a purchase or transaction during the last 18 months regarding the caller’s services or products. A consumer’s registration is valid for five years; it must be renewed. Each company that makes telephone solicitations that are not exempt must access the National Registry every 31 days. This requirement applies to all companies even those whose affiliates have accessed the National Registry. The second focus of the TCPA rules is to require each company that makes telephone solicitations to develop and adopt a written policy for maintaining an internal do-not-call list, a database of consumer telephone numbers who have requested that the company not call them again. Each request must be added to the internal list within 30 days and should be maintained on it for 5 years. The policy statement should be available to anyone who requests it, cover training, cover recording and maintaining its internal do-not-call list, include procedures for honoring do-not-call requests and identify sellers and telemarketers. As pointed out recently by the OCC to national banks, these obligations apply even if banks/companies make telemarketing calls only to existing customers. The Indiana law, on the other hand, does not require internal policies and internal do-not-call lists. It does, however, establish the Indiana Telephone Privacy List and prohibits telephone sales calls to consumers who have registered. A telephone sales call is one made for the purpose of soliciting a sale of consumer goods or services which include tangible or intangible real or personal property, services related to such property and credit cards and the extension of credit. The exceptions applicable to the Indiana do-not-call prohibitions are different from the federal exceptions: (1) a call made in response to express requests for it; (2) a call made in connection with an existing debt or contract; (3) a call made by a volunteer or employee of a charitable organization or newspaper; and (4) a call made by a licensed real estate agent or insurance agent. While the Indiana law does not require companies to access its Privacy List every 31 days, it prohibits telephone sales calls to numbers that are listed on the most current quarterly Privacy List. It also invalidates any sale or contract made under a telephone sales call unless it meets specific statutory requirements. Finally, while policies and training are not required, record retention for two years of the following information is: name and number of each consumer called, promotional materials and scripts, express request by a consumer authorizing a call (if applicable) and certain information about employees involved in making telephone sales.
The Controlling the Assault of Non-Solicited Pornography and Marketing Act or CAN-SPAM Act, effective January 1, 2004, and enforced by the Federal Trade Commission (which adopted the final rule implementing it) and the FCC, prohibits sending a commercial electronic mail message to anyone unless it contains the following:
If a recipient requests to opt-out, the sender must honor the request within 10 days. A commercial e-mail message is one that is sent for the primary purpose of advertising or promoting a company’s products or services. Determining the primary purpose of the e-mail depends on its content, its appearance, the placement of the commercial message, the proportion of commercial to noncommercial content and the subject line of the e-mail. Like the do-not-call and do-not-fax rules, the do-not-spam rule also has exceptions. However, they are more specific and focus upon e-mails that facilitate an agreed-upon transaction or update a customer in an existing business relationship. The above four items do not need to be included on e-mails that:
Violations of the CAN-SPAM Act can result in regulatory enforcement and fines of up to $11,000 for each violation.
© 2006, Krieg DeVault LLP
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