FollowUPdateSM on Early Termination Fees
Washington, D.C., July 30, 2008 - Background On June 19, we reported on the FCC's Public Hearing on Early Termination Fees ("ETFs"). At the Hearing called by the FCC, executives from major telecom companies, like Verizon and AT&T, argued that ETFs are consistent with the public interest because they lower the barrier to entry for consumers, thereby allowing consumers who would not normally be able to participate in the wireless markets, to gain entry. On this basis, they urged that the FCC should pre-empt state-laws that currently allow consumers to seek civil remedies against telecom companies based on state consumer protection laws. Click to read more or click here to Listen to a Podcast of this SnapUPdate
Developments Shape the Internet - "Opt-In" Web Tracking
Washington, D.C., July 23, 2008 - For some time, companies like Google and Yahoo have been tracking consumer searches on their own sites “to tailor advertisements to their interests.” Recently, however, the problem has grown as third-party advertising companies have teamed up with phone or cable Internet carriers to track user activities on the Internet more generally. Click to read more or click here to Listen to a Podcast of this SnapUPdate
ACLU Vows to Challenge FISA Immunity Problems
Washington, D.C., July 16, 2008 - The ACLU plans to challenge the FISA bill passed on July 9, 2008, by the Senate. The Foreign Intelligence Surveillance Act (“FISA”) grants telecommunications companies, which helped the National Security Agency spy on Americans, retroactive civil immunity from lawsuits. According to the New York Times, “the new FISA bill clarifies the scope of government intelligence activities, depending on the type and origin of the communication, and provides greater latitude to use technology to track foreign terrorism suspects overseas.” The new version of the bill still requires a warrant to track Americans in the U.S., but does not require permission to track foreign citizens who are oversees, regardless of whether the surveillance passes through domestic-based communication networks. Click to read more or click here to Listen to a Podcast of this SnapUPdate
E-mail Privacy at the Office
Washington, D.C., July 8, 2008 - The introduction of new communications technologies into the workplace has created new privacy concerns for employers and employees. Should an employer have the right to view what an employee is doing on his or her computer while at work or while on company business? Should an employee have an expectation that personal e-mails or documents will be kept private from employers? These are questions that are in the process of being answered by the courts. However, there is still no clear precedent in determining a standard answer to these questions. Click to read more or click here to Listen to a Podcast of this SnapUPdate.
FCC Rules that Verizon May Not Use Customer Proprietary Information In Efforts to Retain Customers
Washington, D.C., July 2, 2008 - The FCC ruled that Verizon Communications, Inc. may not use customer proprietary information in connection with its efforts to retain customers who are attempting to switch to a cable-provided telephone service. The FCC’s ruling came in response to complaints filed by Comcast Corp., Time Warner Cable Inc., who argued that “the practice violated the law because it used proprietary information about customers. Click to read more or click here to Listen to a Podcast of this SnapUPdate.
FCC Holds Public Hearings on Early Termination Fees
Washington, D.C., June 19, 2008 - The Federal Communications Commission held a public hearing regarding early termination fees (“ETFs”) last week. The hearing included members of the industry, experts in economics and law, state regulators, consumer protection advocate representatives from governmental and non-governmental bodies, and individual consumers. All presented their arguments and evidence in favor or against the regulation of ETFs. . Click to read more.
Special Alert Election Edition: Media Owership -- Where do Obama and McCain stand?
Washington, D.C., June 16, 2008 - A study conducted in March and April 2008 by Pike & Fischer was released this week. The study surveyed 280 communications executives, engineers, and consultants in the cable, satellite, and technology industries asking about what they thought of the positions of each of the presidential candidates in relation to the communications industry and showed that 50.5% of communications executives are either "unfamiliar or unhappy with the telecommunications policies" of both presidential candidates. Click to read more.
Federal Court Rules that Carriers Can be Held Liable for the Acts of their Agents
Washington, D.C., June 3, 2008 - Based on briefs and oral arguments presented by Technology Law Group, a judge in the federal District Court for the District of Maryland ruled today that distributors selling prepaid cards may be the lawful agents of the carrier supplying the underlying telecommunications services. Click to read more.
Emerging Market Subscribership Outshines US Telecom Giants
Washington, D.C., June 2, 2008 - Telecom companies originating and doing business in emerging markets are seeing record profits and have obtained record numbers of subscribers. Currently, the telecom industries in China, India, and South Africa are undergoing major changes. Click to read more.
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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 was to help protect innocent individuals from the costs, burdens and annoyance associated with the receipt of unsolicited facsimiles.
Like many statutes that are designed to address a specific societal ill, the TCPA’s purpose was and is laudable. However, as is often the case, some unscrupulous individuals have found ways to use the TCPA, not as a means to protect them 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 then to sue everyone in sight, whether liable or not, to obtain the maximum monetary recovery. And, as the recovery can be as much as $1500 per facsimile in some instances, the financial incentives for abusing the statute are powerful.
Now, if you are not among the carriers who are under siege from these individuals, you may be thinking—why should I care about this issue? I am not in the business of sending facsimiles. 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 are 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 entity that is 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 in violation of the agreement under which they interact with the reseller or otherwise improper. In any event, in most cases, the player is able to get this information, to contact the RESPORG and to demand the name of the underlying customer.
If this is where the process ended, the problem 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, even 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 non-switch based) even if were to elect or have the authority to do so.
The players of the world have also found that it can be difficult to find the entities that are actually sending the facsimiles, either because the pop up and down overnight, or because they hide offshore. Thus, even where these players are able to obtain judgments against these entities, it can be hard to collect. To address this problem, 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 of these players is to force innocent carriers to settle these cases rather than face the substantial legal fees required to litigate.
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 that the 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, here is the law on the issue. As an initial matter, for the conduct to be unlawful under the TCPA, a defendant 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,” 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.
Moreover, as noted above, FCC has specifically concluded that common carriers are exempt from liability unless they have “a high degree of involvement” in sending unsolicited faxes. The required “high degree of involvement” can be found to exist 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 may only be providing the inbound toll free service that is 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.
These 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 the players and their endless list of clients to return to the money trough time and again.
Neil S. Ende is the founder of and a partner in Technology Law Group LLC (www.tlgdc.com), a Washington DC-based telecom-munications law firm. He can be reached by phone at +1 202 895 1707 and by e-mail at nende@tlgdc.com. We encourage interested persons to comment on this and other matters of interest on the webs first interactive telecommunications blog: www.telecommunicationsandtechnolgoylawblog.com. |
