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FCC Slaps Record Fine on Fax.com

The Federal Communications Commission (FCC) Monday fined online fax broadcaster Fax.com $5.4 million for a "massive on-going violation" of the Telephone Consumer Protection Act (TCPA). It is the largest single fine ever imposed by the Commission for a violation of the TCPA.

Rejecting the Aliso Viejo, Calif.-based company's defense that the TCPA's junk fax ban is unconstitutional, the FCC found that Fax.com had violated the TCPA and the Commission's rules on 489 separate occasions and imposed the maximum permissible fine of $11,000 for each of the violations.

The FCC also ordered Fax.com, which has been contesting the FCC's claims since 2001, to file a report within 30 days indicating whether it has come into compliance with the TCPA and FCC rules prohibiting junk faxes. The Commission indicated that this report, along with any consumer complaints, will be used to determine whether additional enforcement action should be taken against Fax.com, or the companies on behalf of whom Fax.com sends unsolicited fax advertisements.

Concerned that advertisers were shifting the cost of their business to consumers, Congress in 1991 specifically prohibited any person or company from using a telephone facsimile machine, computer or other device to send unsolicited advertising to another fax machine.

The FCC launched its investigation into Fax.com's practices in 1991 and ultimately determined the online marketer "generally conducts its fax broadcasting without any regard to whether the fax recipient has an established business relationship with either Fax.com or the advertiser, or has otherwise granted express permission for the advertisement to be sent."

The probe began with consumer complaints against Fax.com and six companies using the Fax.com's services. All six of the accused companies claimed Fax.com, which boasts on its Web site that it has the world's largest fax telephone number database, assured them their fax campaigns were in full compliance with the TPCA.

By August of 2002, the FCC recommended the maximum fine possible against Fax.com.

"Fax.com appears to have founded its business on the practice of sending unsolicited faxes in flagrant violation of the TCPA," FCC Commissioner Kathleen Abernathy said at the time. "The record also suggests that Fax.com deliberately misled consumers regarding the company's requirements and consumers' rights under the TCPA. Despite repeated warnings from the Commission and numerous consumer complaints, the company appears to have made no effort to mend its ways."

Since then, Fax.com has contested the TPCA is unconstitutional under commercial free speech rights and that the fine was excessive. The FCC dismissed Fax.com's arguments on all counts.

"Fax.com not only subjected consumers to greater numbers of unlawful faxes, its deceptive marketing also left its predominantly small business clients vulnerable to federal, state, and private enforcement actions that may involve substantial monetary penalties," the FCC ruled Monday. "The record further demonstrates that Fax.com failed to disclose to its clients the broad prohibition on faxing unsolicited advertisements."

Attempts by internetnews.com to contact Fax.com were unsuccessful and, by late Monday night, the company had not issued a statement on whether it planned to appeal the fine.