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SENATE COMMITTEE ON BUSINESS
AND PROFESSIONS - Fax Law
Senator Liz Figueroa, Chair
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|Hearing Date:August 20, |Bill No:AB |
|2001 |839 |
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SENATE COMMITTEE ON BUSINESS AND PROFESSIONS
Senator Liz Figueroa, Chair
Bill No: AB 839Author: Lowenthal
As Amended:April 5, 2001 Fiscal: Yes
SUBJECT: Advertising: facsimile machine.
SUMMARY: Prohibits the use of a facsimile machine to
disseminate unsolicited advertising and promotional
materials.
Existing state law:
1)Regulates false and misleading advertising generally, and
subjects violators to both civil and criminal penalties.
2)Regulates unfair or deceptive business practices
generally, and subjects violators to both civil and
criminal penalties.
3)Provides that no person or entity conducting business in
this state shall fax documents consisting of unsolicited
advertising material for the lease, sale, rental, gift
offer, or other disposition of any realty, goods,
services, or extension of credit, unless that person or
entity establishes a toll-free telephone number that a
recipient of the unsolicited faxed documents may call to
notify the sender not to fax the recipient any further
unsolicited documents.
4)Provides that all unsolicited faxed documents shall
include a statement informing the recipient of the
toll-free telephone number that the recipient may call,
or a valid return address to which the recipient may
write or e-mail, as the case may be, notifying the sender
not to fax the recipient any further unsolicited
documents to the fax number, or numbers specified by the
AB 839
Page 2
recipient. The statement shall be the first text in the
body of the message and shall be of the same size as the
majority of the text of the message.
5)Provides that upon notification by a recipient of his or
her request not to receive any further unsolicited faxed
documents, no person or entity conducting business in
this state shall fax any unsolicited documents to that
recipient.
Existing federal law: The Telephone Consumer Protection
Act of 1991 (TCPA), prohibits the transmission of
unsolicited advertisements by telephone facsimile machines
and provides various remedies.
This bill:
1)States the following findings and declarations:
a) Unlike other forms of advertising media, the use of
a fax machine to transmit unsolicited advertising and
promotional material imposes a real cost on the
recipient of the transmission.
b) Every fax transmission creates expense for the
recipient in the form of paper, ink, and wear and tear
on a fax machine.
c) Unsolicited fax advertising imposes this cost
without the knowledge or permission of the recipient.
1)Provides that no person or entity shall disseminate an
unsolicited advertisement via any telephone facsimile
machine, computer, or other device, to make an electronic
or telephonic transmission to a telephone facsimile
machine located in California by means of any connection
with a telephone network for the purpose of transmitting
a commercial solicitation.
2)Defines telephone facsimile as equipment that has the
capacity to either: (a) transcribe text or images or both
from paper into an electronic signal, and transmit that
signal over a regular telephone line; or (b) transcribe
text or images or both onto paper from an electronic
signal received over a regular telephone line.
AB 839
Page 3
3)Defines commercial solicitation as an electronic or
telephonic transmission to a facsimile device of
unsolicited advertising material for the lease, sale,
rental, gift, offer, or other disposition of any realty,
goods, services, or extension of credit.
4)Provides that commercial solicitation does not include an
electronic or telephonic transmission to a facsimile
device that is any of the following:
a) Made in the course of prior negotiations between
the party sending and the party receiving the
materials.
b) Made to a party with whom the sender has a prior
business relationship or an existing business
relationship.
c) Made in the course of a follow-up sales call.
1)Provides that any person or entity aggrieved by a
violation of this section may bring an action in the
appropriate court and shall be entitled to recover, for
each violation, the amount of actual monetary loss, or
the sum of five hundred dollars ($500), whichever is
greater.
FISCAL EFFECT: "Potential minor non-reimbursable local
costs for investigation and prosecution of violations,
potentially offset by fine revenue," according to the May
9, 2001, Assembly Appropriation Committee analysis.
COMMENTS:
1.Measure Heard by this Committee on June 25, 2001. This
Committee heard this measure on June 25, 2001, but no
vote was taken. When the author presented on the
measure, he argued that his measure simply mirrored
federal law. Additionally, the author argued, and was
supported by Legislative Counsel, that state law is
preempted by federal law. The opposition, fax.com,
disagreed and argued that not only is the federal law
unconstitutional but that the state law is not preempted.
The opposition also indicated that the issue of the
constitutionality of the federal law is currently being
AB 839
Page 4
deliberated in California and Missouri.
Ultimately, the Chair suggested that maybe the author may
want to consider coming back to Committee in August to
see if either the California or Missouri court ruled in
the meantime. The author agreed. It should be noted
that while the California court has recently ruled on the
matter before it for consideration, it is unclear whether
that ruling sheds any light on the potential implications
of supporting this measure. Additionally, it appears
that the Missouri court has not ruled on the matter
before it.
2.Measure Aimed at Prohibiting the Transmission of
Unsolicited Fax Advertising Material. According to
information provided by the author's office, unlike more
traditional media, the use of a fax machine to transmit
unsolicited advertising and promotional material imposes
a hard cost on the recipient of the fax. Additionally,
the information provided by the author's office states
that a faxed advertisement or "junk fax" is a form of
advertising that is delivered C.O.D. to the recipient.
Also, the information points out that every fax
transmission imposes a real expense for the recipient in
the form of paper, ink, and wear and tear on the fax
machine.
3.Background.
a) State Law - Business and Professions Code Section
17538.4. In 1992, the Legislature passed and the
Governor signed AB 2438 (Katz, Chap. 564, statutes of
1992). As originally introduced, the measure looked
quite similar to AB 839. As enacted, it allowed
unsolicited faxing provided certain conditions were
met. It also provided that violations were an
infraction punishable by a fine of $500.00.
In 1998, Sec. 17538.4 was amended by AB 1676 (Bowen,
Chap. 865, Statutes of 1998). AB 1676 focused on
electronic email and does not appear to have addressed
unsolicited faxes. However, since Sec. 17538.4 deals
with both emails and faxes, and the penalty provision
applied to both equally, when the author took
amendments to apparently appease opposition, the
violation provision was deleted. It is unclear
AB 839
Page 5
whether the Legislature recognized that such an
amendment also impacted unsolicited faxes.
b) Federal Law -- The Telephone Consumer Protection
Act of 1991 (TCPA). On December 20, 1991, the U.S.
Congress enacted the TCPA. The TCPA mandated that the
Federal Communications Commission (FCC) implement
regulations to protect the privacy rights of citizens
by restricting the use of the telephone network for
unsolicited advertising. On September 17, 1992, the
FCC adopted a Report and Order which established rules
governing unwanted telephone solicitations and
regulated the use of automatic telephone dialing
systems, prerecorded or artificial voice messages, and
telephone facsimile machines. These regulations
prohibit the transmission of unsolicited
advertisements by telephone facsimile machines among
other things.
The TCPA provides consumers with several options to
enforce limitations against unsolicited telemarketing
contacts. Absent state law to the contrary, the TCPA
permits consumers to file suit in state court if an
entity violates the TCPA prohibitions on the use of
facsimile machines, automatic telephone dialing
systems, and artificial or prerecorded voice messages
and telephone solicitation. Consumers may also bring
their complaints regarding TCPA violations to the
attention of the state attorney general or an official
designated by the state. This state entity may bring
a civil action on behalf of its residents to enjoin a
person or entity engaged in a pattern of telephone
calls or other transmissions in violation of the TCPA.
Additionally, a consumer may request that the FCC
take enforcement actions regarding violations of TCPA
and the regulations adopted to enforce it.
1.Is California Law -- Business and Professions Code
Section 17538.4-- preempted by the TCPA? It is the
Author's opinion, and Legislative Counsel has confirmed,
that Section 17538.4 is preempted by the TCPA.
Therefore, the author believes that his measure simply
clarifies existing federal law. However, it should be
noted that the opposition believes that California law is
not preempted by the federal law.
AB 839
Page 6
2.If the Author Feels that the TCPA Is the Law, Why Is This
Measure Needed? According to the author's office, the
TCPA has failed to deter companies from sending
unsolicited faxes. Additionally, the author's office
indicates that although it may be possible for a business
or individual to seek legal redress in state court under
the federal law, it would be easier and more user
friendly to have a similar state law on the books. The
author believes that consumers are more likely to
recognize a state prohibition as offering the opportunity
to pursue the violation in small claims court. The
author's office indicates that states such as Oklahoma,
Connecticut, Nebraska and South Carolina have enacted
similar prohibitions on junk faxes and have seen a
decrease in such activity.
In their letter of support, the Foundation for Taxpayer
and Consumer Rights (FTCR) states that while California
consumers can currently avail themselves of the federal
law in California state courts, it makes sense to amend
state law so that consumers will not mistakenly think
they have no right of action in California.
3.Should the Exemption for Prior and Existing Business
Relationships Be Allowed? This measure, in essence,
exempts electronic and telephonic transmissions to a fax
device made to a party with whom the sender has a prior
business relationship or an existing business
relationship. In a publication provided by the FCC
entitled, "What You Can Do About Unsolicited Telephone
Marketing Calls and Faxes," the FCC states that an
individual has an established business relationship with
a person or entity if they have made an inquiry,
application, purchase or transaction regarding products
or services offered by such person or entity.
Additionally, the FCC states that if the individual has
an established business relationship with the person or
entity sending the message, an invitation or permission
to receive unsolicited fax advertisements is presumed to
exist. Finally, the FCC states that an individual can
end this relationship by telling the person or entity
that they do not want them to send any more unsolicited
advertisements to their fax machine.
The author should ensure that the exemptions provided in
this measure conform to the TCPA.
AB 839
Page 7
4.Amendments to Be Proposed by the Author in Committee.
Per conversations between the author's office and
Committee staff, the author intends to submit two
amendments in Committee.
a) Findings and Declarations. At the request of
Committee staff, the author intends to amend this
measure to delete Section 1. Section 1 states three
findings and declarations. Committee staffs' internal
policy on findings and declarations is to require that
they be backed by a recognized study. In this case,
while the findings and declarations might be accurate,
author's staff was unable to produce a recognized
study. Therefore, Committee staff recommended that
they be deleted from the bill.
b) Exclusion from the Measure's Provisions. At the
request of Pacific Bell, the author intends to offer
the following amendment: As used in this section,
"disseminate" does not include or refer to the
transmission of any documents by a telecommunications
utility or Internet service provider to the extent
that the telecommunications utility or Internet
service provider merely carries that transmission over
its network. According to Pacific Bell, it would be
unfair to expose a telecommunications utility or
Internet service provider to liability under this
section merely because it provides the conduit for
transmitting a fax. Pacific Bell indicates that
current law affords this "exemption." Additionally,
it should be noted that it appears this amendment
would be consistent with the TCPA.
1.Arguments in Support. In their letter of support, the
Office of the Attorney General argues that this measure
would bring California in line with the federal
government and provide better protections for consumers.
Additionally, they argue that they believe that the
decision by the Court of Appeals of the Ninth Circuit
Court, declaring the TCPA constitutional, is a very sound
decision.
In their letter of support, the FTRC states that they
have received numerous complaints from individuals who
say that their home fax machines are inundated with
AB 839
Page 8
dozens of junk faxes per day. In a week's time, this
quickly adds up to hundreds of wasted pages of fax paper
and the need to replace toner cartridges far too
frequently. The FTCR argues that there is no reason that
a consumer or business who has no prior relationship with
the junk fax company should be forced to pay that
companies advertising costs.
In a letter of support from a small business located in
Davis, California, the business states that they have
been a victim of junk faxes for approximately the last
six months and they have been unable to stop them. They
point out that calls made to the toll free opt-out phone
numbers have been ignored in most cases. Furthermore,
none of these faxes have a return address or originating
fax number on them. They indicate that as a small
business, junk faxes waste time and supplies and are
simply an annoyance.
2.Arguments in Opposition. In their letter of opposition,
Fax.com indicates that there are several reasons for
their opposition. Initially, believe that the federal
legislation is an invitation to the type of jackpot
litigation that has clogged the courts and will
ultimately be ruled unconstitutional. Additionally,
Fax.com's letter states that they believe it makes more
sense for the Legislature to have an interim hearing
after the court rules this Fall and that it does not make
sense to conform legislation to a federal statute that
could possibly be ruled unconstitutional.
Fax.com argues that, while they recognize that commerce
isn't always convenient, consumers also have the right to
receive product notices that they send to consumers from
reputable companies, legally doing business in
California. However, they do believe consumers have the
right to say, "enough is enough." They believe that in
California a provision should be enforced so that
consumers who call an 800 number can be removed from the
fax list. Fax.com indicates that they put an 800 number
on their faxes.
SUPPORT AND OPPOSITION:
Support:
Attorney General Bill Lockyer
The Foundation for Taxpayer and Consumer Rights
AB 839
Page 9
Opposition:
Fax.com
Consultant:Kristin J. Triepke
Let's Stop The Fax Spammers In Their
Tracks!
To Report An Unsolicited Junk Fax
Please Fill Out The Form Below
THEN FAX US ALL
OF YOUR SPAM FAXES TO:
(754)
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Background
Information About Junk Spam Faxes.
The TCPA and Federal Communications
Commission (FCC) rules generally prohibit most
unsolicited junk facsimile (fax spam)
advertisements. The TCPA states that an
advertiser cannot send you unsolicited fax
advertisements unless you have given the
advertiser your prior express consent to receive
fax advertisements or you have an established
business relationship (EBR). Even if the
advertiser has received your prior express
consent or has EBR, they are also required to
allow you to ?opt out? of receiving their
junk fax advertisements. The Junk Fax Prevention
Act of 2005, directed the FCC to amend its rules
adopted pursuant to the TCPA regarding fax
advertising. The FCC?s revised rules:
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Require the
sender of fax advertisements to provide
specific information on the fax that
allows recipients to ?opt-out? of any
future faxes from the sender |
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Specify the circumstances under
which a request to ?opt-out? complies
with the Act. |
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