Federal Communications Commission Client Alert

August 20, 2003

CLIENT ALERT

Dear Clients And Other Friends:

Companies large and small use fax machines as a quick, simple and cost-effective way to distribute information to their customers and other business contacts. Whether a sale, a simple change in design, a new product line, or the availability of enhanced services, companies turn to their fax machines to get the message out. The good news is that you can still use your fax machines to reach a large audience in a short amount of time. Before doing so, however, you must comply with the new Federal Communications Commission's revised rules and regulations, which place greater restrictions on the use of fax machines for advertising. The new rules and regulations were scheduled to go into effect on September 5, 2003, but due to the onerous burden placed upon companies as a result of the changes explained below, the FCC reconsidered the effective date. According to the FCC's August 18, 2003 Reconsideration Order, the effective date is now postponed and the new rules and regulations will not go into effect until January 1, 2005.

The new rules require that any person or entity must obtain the prior express invitation or permission of the recipient before transmitting an unsolicited fax advertisement. An "unsolicited fax advertisement" is defined as any material advertising the commercial availability or quality of any property, goods or services which is transmitted to any person without that person s prior express invitation or permission. To comply with the new rules, all persons or entities must obtain a signed, written statement that includes the facsimile number(s) to which any material may be sent and which clearly indicates the recipient s consent to receive such material from the sender.

To obtain the required consent, the new rules permit the use of the internet, trade shows, direct mail and direct contact with recipients. To avoid running afoul of the old or new rules, we recommend against requesting consent by fax (the consent forms can, however, be returned by fax). In addition, consent may not be obtained by providing a "negative option," or "consent unless advised otherwise." In other words, a business can no longer send material and require the recipient to call the sender if they do not wish to continue receiving faxed materials.

Prior to the new rules, an "established business relationship" with the potential recipient constituted the requisite consent to receive faxed material. Under the new rules, however, you can no longer rely upon an established business relationship. Accordingly, even though a company has had a previous business relationship with a potential recipient on a consistent and regular basis, once the new rules go into effect, the sender must still obtain the express invitation to fax advertising material.

Once the new FCC rules and regulations become effective, failure to comply with the new rules may result in penalties, including state and federal enforcement, along with a private right of action which allows the recipient to sue the sender for $500 per violation. Knowing and willful violations can result in triple damages of $1,500 per violation. To avoid violating the new rules, companies that regularly fax advertising materials should consider their policies and procedures. First, consider sending a form to each of your customers and contacts requesting that they consent to the transmission of fax information. Keep these express consents on file and only send solicited fax advertisements in the future. For anyone who does not provide express consent, send unsolicited advertisements only by regular mail. Second, consider how your company responds to requests for information from your customers and other contacts. Your employees should understand the new rules and regulations, and require that the requesting party provide express, written consent before faxing requested information. Otherwise, send your material in the mail to avoid running afoul of the new rules and regulations. Third, contact FagelHaber LLC to discuss how we can help you to prepare a consent form or to educate your employees to ensure that your company is complying with all applicable FCC rules and regulations.

If you have any questions concerning the new FCC rules, the Telephone Consumer Protection Act, or other related matters, please contact Jamie Schwartz at (312) 580-2230, Robert Kamensky at (312) 580-2247, or any other attorney at FagelHaber LLC with whom you have contact.

Please note that this Client Alert should not be construed as legal advice or a legal opinion on any specific facts or circumstances. The contents of this communication are intended solely for general purposes, and you are urged to consult a lawyer concerning your own situation and any specific questions that you may have.

FagelHaber LLC