Congress pulls plug on junk-fax rule

Congress quietly pulled the plug this week on a Federal Communications Commission do-not-fax rule that businesses lobbied against but some consumer groups supported.

The Senate on Friday and the House on Tuesday passed legislation that allows unsolicited faxes between entities with “established business relationships” to continue.

The legislation does allow one party to opt out of the relationship, a new protection against unsolicited advertisements for hotel-room deals, cut-rate mortgage offers and the like that eat paper and fax-machine toner and tie up fax lines.

Though the FCC received a number of letters in support of its rule, Congress was apparently unanimous in its opposition. The bill passed by unanimous consent in the Senate and a suspension of the rules in the House on a voice vote.

President Bush was expected to sign the bill this week.

The FCC moved to restrict faxing in a rule initially issued in July 2003, intent on clearing citizens’ fax machines of clutter as it and the Federal Trade Commission simultaneously moved to stop telemarketers with do-not-call lists.

The do-not-fax or “junk fax” rule would have required written consent from customers before a business sent faxes. It essentially closed the established-business-relationship loophole, which critics said businesses exploited to send junk faxes.

Consumers have rushed to get on federal do-not-call lists, but the do-not-fax rules have never been implemented. The rule prompted a coordinated lobbying campaign from banks, real-estate agents and the broader business community, represented by groups such as the U.S. Chamber of Commerce and the National Association of Wholesalers-Distributors, which believed the rule would greatly increase their operating costs.

“Faxing remains an important form of communications among businesses and between businesses and their customers,” said Michael Briggs, chief legal officer for America’s Community Bankers. He said the rule would have impeded, for example, banks from passing on mortgage-rate changes to mortgage brokers.

Trade associations in town feared the rule would limit their ability to contact their members.

“This would have been a real problem, to have to get written prior permission from every group in the country,” said Jim Clarke, senior vice president for public policy at the American Society of Association Executives.

After receiving 500 complaints about the rule, the FCC delayed its implementation twice, including this week to avoid a June 30 deadline, to give Congress a chance to weigh in on the matter.

Congress passed similar legislation last year, but the inclusion of a boxing-reform bill in the Senate version that the House did not support kept it from becoming law.

FCC officials, who have not taken a position on the bill, believed they did not have the statutory power to implement, for example, an opt-out provision.

The original rule was adopted because “advertising faxes had become a much bigger deal than they were 10 years before,” when Congress passed the Telephone Consumer Protection Act (TCPA) of 1991, according to Rosemary Kimball, an FCC spokeswoman.

The act prohibited unsolicited advertisements over fax lines but allowed exceptions for existing business relationships.

K. Dane Snowden, who directs the FCC’s bureau of consumer and government affairs, responded to complaints from legislators about the proposed fax rule.

“Changes in the current rules are warranted, if consumers and businesses are to continue to receive the privacy protections contemplated by the TCPA,” Snowden wrote to a number of lawmakers, including Rep. Frank Wolf (R-Va.), who wrote to the FCC expressing concerns with the proposed rule.

On its website, the California-based Foundation for Taxpayer & Consumer Rights urged consumers to contact lawmakers in opposition to S. 714, which it said would “undo crucial protections and create a flood of unwarranted junk faxes.”

But supporters of the bill say the opt-out provision will help stop unwanted faxes.

The law also gives the FCC the ability to establish a time limit on the established business relationship and requires the Government Accountability Office to study junk-fax enforcement rules.

The FCC would also have to report annually to Congress on its enforcement policies.