The "Faxtortion" Game
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 TCPA's 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 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 you are not among the carriers who are currently under siege, you may be thinking--I am not in the business of sending facsimiles, why should I care about this issue? However, innocent as you may be, and even if you are only the provider of an inbound toll-free service used in connection with the delivery of facsimile transmissions by third parties, you may soon be in the crosshairs of those seeking to maximize their recovery.
Here's how the "faxtortion" game works. When an individual who is in the game--let's 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 RESPORG (i.e., the Responsible Organization) 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 this is where 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 (e.g. where it is switchless reseller) even if it were to elect or have the ability to do so.
The players of the world have found that it can be difficult to find 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 more unscrupulous players are now bringing actions against the carriers whose services are used to deliver the facsimiles. Although these actions are, in most circumstances, without basis in law, the apparent goal is to force innocent carriers to settle these cases rather than face the substantial legal fees required to defend against such baseless assertions.
Although it may, at first glance, seem practical and economically rational to settle these cases for a relatively small amount, often, that may turn out to be the wrong decision, both as an economic and a practical matter. Indeed, our experience suggests a growing network of players communicate regularly through websites like www.fax.org and target carriers who settle with endless threats of legal action. More importantly, if your role in the process is merely that of common carrier, and you do not have any substantial involvement in the creation of the facsimile transmissions or the selection of the telephone numbers to which the transmissions are sent, you are not legally liable and thus should not be required to pay the equivalent of "protection money" not to be sued.
In short, contrary to the rhetoric of the players, the following is the law on this issue. As an initial matter, for the conduct to be unlawful under the TCPA, an entity must have: (i) used a telephone facsimile machine, computer, or other device to, (ii) send an unsolicited advertisement, (iii) to a telephone facsimile machine. In virtually all cases, a common carrier does not actually own or operate a "telephone facsimile machine, computer, or other device," in the context of this discussion, nor have such entities ever "used" that device to "send an unsolicited advertisement." As such, players are generally unable to present any of the facts necessary to state a claim against a common carrier defendant and often the complaint is dismissed upon the filing of an appropriate motion.
Moreover, as noted above, FCC has 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. We are aware of no sound legal theory under which such carriers--who are only involved on the inbound side and who have no relationship to the sending of the facsimile--can be liable under the TCPA.
The above are just a few of the numerous 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.
Cool post. Keep a good work.