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FEDERAL COMMUNICATIONS COMMISSION
Washington, D.C. 20554
In the Matter of )
) File No. EB-02-TC-120
Fax.com, Inc. ) NAL/Acct. No.
) FRN 0007-2970-47
Apparent Liability for Forfeiture )
ORDER OF FORFEITURE
Adopted: December 31, 2003 Released: January 5,
By the Commission:
1. In this Order of Forfeiture, we assess a monetary forfeiture
of $5,379,000 against Fax.com, Inc. (Fax.com)1 for willful and
repeated violations of the Communications Act of 1934, as amended
(Act), and our rules and orders. For the reasons set forth below,
we find that Fax.com willfully and repeatedly violated section
227(b)(1)(C) of the Act,2 as well as the Commission's rules3 and
orders4 by sending unsolicited advertisements to telephone
facsimile machines on behalf of its clients on 489 separate
occasions. We also require Fax.com to file a report with the
Enforcement Bureau within 30 days of this order regarding whether
it has come into compliance with the Act and our rules and orders
prohibiting unsolicited commercial faxes. This report, along
with any additional complaints and information we may receive,
will be used to consider any additional appropriate enforcement
action against Fax.com or entities on whose behalf Fax.com is
2. The facts and circumstances surrounding this case are set
forth in the Notice of Apparent Liability (Fax.com NAL)
previously issued by the Commission, and need not be reiterated
at length.5 Fax.com, according to its website, specializes in
transmitting its clients' advertisements to telephone facsimile
machines whose numbers are contained in the Fax.com database. In
its promotional materials, Fax.com also offers to design or
improve its clients' advertising copy. The unsolicited facsimile
advertisements that were the subject of the Fax.com NAL are the
product of Fax.com's broadcasting enterprise. Most of the
advertisements do not promote products, goods, or services
provided by Fax.com but, instead, promote a wide variety of
products, goods, or services offered by numerous entities that
have employed Fax.com to send their advertisements to telephone
facsimile machines. 6
3. In 2001, after receiving numerous complaints from
consumers alleging that they had received unsolicited fax
advertisements sent on behalf of six of Fax.com's clients, the
Enforcement Bureau of the Commission issued citations to Fax.com
pursuant to section 503(b)(5) of the Act.7 The Bureau cited
Fax.com for violating section 227(b)(1)(C) of the Act by
transmitting unsolicited advertisements to consumers' telephone
facsimile machines on behalf of the six clients.8
4. The TCPA prohibits the delivery of unsolicited
advertisements to telephone facsimile machines ``so that costs of
advertising could not be shifted to the recipients of facsimile
advertisements.'' 9 Section 227(b)(1)(C) of the Act prohibits
any person from using ``a telephone facsimile machine, computer,
or other device to send an unsolicited advertisement to a
telephone facsimile machine.''10 The Act defines ``telephone
facsimile machine'' as ``equipment which has the capacity: (A)
to transcribe text or images, or both, from paper into an
electronic signal and to transmit that signal over a regular
telephone line, or (B) to transcribe text or images (or both)
from an electronic signal received over a regular telephone line
5. The Commission warned Fax.com in the citations that it could
face monetary forfeitures of up to $11,000 for each subsequent
violation if Fax.com either: (1) was ``highly involved'' on
behalf of the sender of any unsolicited facsimile advertisements,
or (2) continued to transmit advertisements for any of the six
named clients without taking steps to ensure that those entities
had obtained permission from recipients to fax the
6. In response to the citations, Fax.com acknowledged that
it had indeed provided the lists of fax numbers to which
advertisements were sent for each of the six clients at issue.13
Fax.com also conceded that it ``has historically taken no steps
to verify consent or established business relationships.''14 It
noted, however, that its clients' advertisements contain a toll-
free ``opt-out'' number that fax recipients may call if they do
not wish to receive additional advertisements.15
7. Despite our warning to Fax.com, we continued to receive
information from consumers indicating that Fax.com was conducting
its fax broadcasting activities in a manner that violated section
227(b)(1)(C) of the Act and section 64.1200(a)(3) of the rules.16
Based on this additional information, which included complaints
of unsolicited facsimile advertisements received by 46
individuals, businesses, or government offices17 between
September 2001 and June 2002,18 the Commission issued the Fax.com
NAL on August 7, 2002. There, the Commission determined that
Fax.com had apparently violated section 227 of the Act and the
Commission's rules and orders by sending unsolicited
advertisements to telephone facsimile machines on 489 separate
occasions.19 The Commission also stated that Fax.com's ``primary
business itself constitutes a massive on-going violation'' of the
law, and that Fax.com's citation responses, as well as publicly
available information contained on its website, suggested that
Fax.com apparently intentionally and willfully violated the Act
and our rules and orders.20 As a result, the Commission
determined that Fax.com was apparently liable for a proposed
forfeiture of $5,379,000, the statutory maximum.21 Fax.com filed
a response to the Fax.com NAL on August 21, 2003.22
8. Subsequent to the release of the Fax.com NAL, the Commission
issued citations that included letters of inquiry (hereafter,
``citations/letters of inquiry'') to 104 businesses that had used
Fax.com's fax broadcasting service to transmit unsolicited
advertisements to consumers' telephone facsimile machines.23 In
these documents, the Commission advised the businesses of the
August 7, 2002 NAL against Fax.com and informed the businesses of
their potential liability for monetary forfeitures if they
continued to send unsolicited advertisements to telephone
facsimile machines -- either through Fax.com, through some other
entity, or on their own. The citations/letters of inquiry also
sought information concerning, among other things, the
businesses' involvement with Fax.com. The businesses' responses
to these citations/letters of inquiry are discussed below.
9. In its Response, Fax.com argues that it should not be found
liable because: 1) the prohibition on sending unsolicited
facsimile advertisements is unconstitutional under the First and
Fifth Amendments to the Constitution; 2) the forfeiture is based
on allegations of misconduct that were not sufficiently described
in the NAL; and 3) the amount of the proposed forfeiture is
excessive under the Eighth Amendment. As discussed below,
Fax.com's arguments lack merit.
A. First Amendment Issue
10. Fax.com argues that the TCPA's ban on sending
unsolicited facsimile advertisements violates its constitutional
right to free speech under the First Amendment. According to
Fax.com, it has raised a colorable challenge to the
constitutionality of the Commission's actions taken pursuant to
the TCPA. Fax.com relies primarily on Missouri v. American Blast
Fax, a subsequently reversed 2002 decision by the U.S. District
Court for the Eastern District of Missouri that dismissed an
action by the state of Missouri against American Blast Fax and
Fax.com for violations of the TCPA on the ground that the
prohibition infringed on the defendant's First Amendment
rights.24 The U.S. Court of Appeals for the Eighth Circuit
determined that the TCPA does not violate Fax.com's First
Amendment free speech protections. The court found that the
government had demonstrated a legitimate interest in restricting
unwanted facsimile advertising to prevent the shifting of
advertising costs to unwilling consumers and interference with
the reception of their facsimile machines.25 The Eighth Circuit
also rejected the argument that the TCPA was unconstitutional
because it treated commercial speech differently, deferring to
Congress' determination in enacting the TCPA, that
``noncommercial calls are less intrusive to consumers because
they are more expected.''26 For the reasons set forth in that
decision, as well as other court decisions on point,27 we
conclude that the prohibition on unsolicited commercial faxes is
constitutional under the First Amendment.
11. We also find that Fax.com's erroneous belief that its
violations were permissible under the First Amendment, whether
colorable or not, does not insulate it from enforcement action.
Fax.com transmitted nearly 90 percent of the facsimiles that form
the basis for our forfeiture action before the Missouri court
issued its ruling -- at a time when Fax.com could not have been
relying on the Missouri court's erroneous decision. Further,
Fax.com is well aware that prior to the Missouri court's ruling,
and since that decision was overturned, federal legal precedent
has fully supported the constitutionality of the TCPA.28 We
followed this clear precedent in issuing citations to Fax.com
that warned the company that it was engaging in unlawful conduct
that could subject it to monetary forfeitures for future
violations.29 With respect to these pre-Missouri decision faxes,
Fax.com thus knew, or should have known, that its fax
broadcasting activities violated the TCPA and could result in the
assessment of a forfeiture. Consequently, we find no merit in
Fax.com's contention that, based on the subsequently issued and
subsequently reversed Missouri district court's ruling, Fax.com's
conduct prior to that erroneous ruling did not warrant
12. Moreover, the faxes that Fax.com sent after the
Missouri court's ruling represent a continuation of the company's
unlawful activity, rather than any ``reliance'' on the ruling in
the Missouri case. The fact that Fax.com continued this pattern
of misconduct -- despite our warning citations and the court
cases confirming the statutory prohibition on unsolicited fax
advertising -- demonstrates Fax.com's utter disregard for the law
or, at the very least, its conscious decision to accept the risk
that the anomalous Missouri district court ruling would be
overturned, which it was. Moreover, as we observed in the NAL,
the Missouri court's ruling was not germane to the Fax.com NAL
because, to our knowledge, none of the fax transmissions for
which we assessed forfeitures was received in or sent from the
eastern judicial district of Missouri, a fact that Fax.com has
not disputed.31 In short, Fax.com's First Amendment argument is
without support in fact or law.
B. Vagueness Issue
13. Fax.com also contends that the TCPA is unconstitutional
under the ``void for vagueness'' doctrine because the statute
fails to give potential fax senders adequate warning of the
conduct it proscribes or which entities may be found liable under
the Act.32 Fax.com asserts that ``the TCPA fails to specify what
parties may be liabile under the Act.''33 Fax.com also maintains
that it is ``often impossible for an ordinary person to determine
whether a fax advertises `the commercial availability or quality
of any property, goods or services' and thus is prohibited by the
TCPA.''34 These claims too are without merit.
14. Only a statute that ``either forbids or requires the
doing of an act in terms so vague that [persons] of common
intelligence must necessarily guess at its meaning and differ as
to its application'' is considered void for vagueness under the
Fifth Amendment; the government must ``articulate its aims with a
reasonable degree of clarity.''35 We disagree with Fax.com's
arguments that the TCPA's commercial fax solicitation ban fails
to meet this test or that it is insufficiently precise to ensure
that it is not enforced in an arbitrary or discriminatory
manner.36 We have no doubt that the TCPA provides more than such
reasonable clarity and precision for persons of common
intelligence. Indeed, since we first warned Fax.com specifically
with our citations that its activities violated the law, Fax.com
has been apprised of the fact that its faxes were prohibited by
the TCPA. Fax.com therefore knew, or clearly should have known,
what was necessary to avoid continuing to violate the TCPA.
Fax.com cannot now credibly argue that it did not know what
conduct the TCPA prohibited.
III. Sufficiency of the Record
15. Fax.com next contends that it cannot be held liable for
the proposed forfeiture because the NAL is based ``in substantial
part on allegations of misconduct which have not previously been
raised [and] which are not sufficiently described in the NAL to
permit Fax.com to respond.''37
16. Fax.com is incorrect. As a threshold matter, the
staff's citations provided Fax.com with actual notice that its
fax broadcasting activities violated federal law -- as well as a
warning that future misconduct would not be tolerated. 38
Fax.com cannot now feign ignorance that its behavior would result
in penalty. Moreover, the staff's citations informed Fax.com
that the very nature of its business -- the practice of sending
unsolicited fax advertisements -- was in flagrant violation of
the TCPA. Despite such notification, Fax.com continued its
pattern of misconduct, as evidenced by the numerous consumer
complaints that formed the basis for the NAL. 39
17. Nor do we find merit in Fax.com's claim that its
misconduct was not ``sufficiently described'' in the NAL to
permit it to respond in an appropriate manner.40 Fax.com credits
the Commission with attaching copies of specific faxes to the
citations (``so that Fax.com had the opportunity to review those
faxes and respond to them with particularity....'').41 By
contrast, Fax.com complains, the Commission did not attach copies
of the 489 suspect faxes to the NAL, instead providing the
following information for each fax: the name of the recipient;
the date of transmission; the name of the entity whose property,
goods or services were advertised; and the toll-free opt-out
numbers, each traced to Fax.com, that appeared on the face of the
advertisements. Fax.com contends that, without copies of the 489
faxes, it is not able to ``confirm or deny whether any of the
allegedly violative faxes listed in the table were in fact sent
18. Contrary to Fax.com's contentions, the Fax.com NAL
described in detail the evidence upon which the proposed
forfeiture was based, including the numerous consumer complaints;
the sworn declarations filed in support of these complaints; and
the unsolicited advertisements that Fax.com sent to the
complainants' facsimile machines.43 Indeed, the NAL contained
all the information required by section 503(b)(4) of the Act.44
Beyond these basic statutory requirements, it is within the
Commission's discretion to present the evidence in the most
useful format.45 Moreover, each document cited in the NAL,
including copies of all 489 faxes, has been available for Fax.com
to examine since the issuance of the NAL. Indeed, the record of
every forfeiture proceeding is available to alleged violators.46
Hence, Fax.com could easily have obtained copies of any or all of
the faxes listed in Table 1 to the NAL.47
19. Without having reviewed the faxes at issue, Fax.com
questions, in its initial Response to the NAL, the Commission's
determination that Fax.com transmitted the faxes listed in Table
1 to the NAL.48 Fax.com asserts that neither the toll-free opt-
out numbers displayed in the allegedly violative faxes, nor the
telephone fax number displayed in many of the headers of these
faxes, establish that Fax.com sent out the faxes at issue.49
Significantly, however, Fax.com does not directly deny that it
sent the faxes at issue.
20. Fax.com reiterates these arguments in a ``Second
Supplement'' to its Response, which it filed after obtaining and
reviewing the materials cited in the Fax.com NAL. These
materials included all of the complaints that formed the basis
for the NAL, as well as all associated faxes. Despite its review
of the record, however, Fax.com continues to advance its
unsupported assertions, and, once again, fails to provide any
specific information to counter the Commission's findings that
Fax.com sent the faxes at issue, and that these faxes constitute
prohibited advertisements as defined in section 227 of the Act
and the Commission's rules and orders.50
21. Further, Fax.com does not dispute the Commission's
finding that Fax.com's toll-free opt-out numbers appear on each
prohibited advertisement. Indeed, as the Commission noted in the
NAL, the wording of Fax.com's opt-out notices, and the fact that
these notices were included in advertisements for individual
entities, is a transparent attempt to deceive consumers into
believing that the opt-out numbers were associated with
individual advertisers rather than with Fax.com.51 Nor does
Fax.com dispute the Commission's conclusion that Fax.com was the
subscriber for the opt-out numbers at the time the faxes were
sent. Fax.com also fails to present evidence to counter our
finding that Fax.com held the telephone number printed on at
least one client's advertisement as the contact number for the
22. In sum, the record before us confirms Fax.com's direct
involvement in the fax transmissions at issue. Despite this clear
evidence, Fax.com speculates that some of these businesses may
have appropriated Fax.com's toll-free numbers and unlawfully
tampered with the originating facsimile machines to falsify
automatic identification data - - either inadvertently, or with
the purpose of sending faxes that would be attributed to Fax.com.
We find such speculation to be disingenuous, considering that
Fax.com has not directly denied sending the faxes at issue.
Moreover, the record contains abundant evidence from Fax.com's
own clients that confirms Fax.com's involvement in the fax
transmissions at issue.52
23. As noted above, the Commission sought additional
information after the release of the Fax.com NAL by issuing
citations and letters of inquiry to businesses that had hired
Fax.com to transmit unsolicited advertisements on their behalf to
consumers' telephone facsimile machines. The Commission advised
the businesses of the August 7, 2002 NAL against Fax.com and
informed them of their potential liability for monetary
forfeitures if they continued to send unsolicited advertisements
to telephone facsimile machines, either through Fax.com, through
some other entity, or on their own.53
24. The businesses' responses, which we have incorporated
into the record, provide additional evidence that Fax.com
transmitted the faxes at issue in the NAL. For example, the
response from Direct Source Copiers, Inc., one of Fax.com's
clients, confirms that not only did Fax.com transmit unsolicited
advertisements on behalf of Direct Source Copiers, but Fax.com
also went to great lengths to deceive Direct Source copiers into
facilitating Fax.com's unlawful activities. According to Direct
Source Copiers' president, Fax.com initially told Direct Source
Copiers that Fax.com's activities complied with federal law.
Then, after the Commission issued the Fax.com NAL, Fax.com
continued to assure Direct Source Copiers that it offered clients
a ``fully legal service,'' and that Fax.com had ``prior
permission'' to send fax ads on Direct Source Copiers' behalf to
the contacts in Fax.com's database - statements that are
blatantly false, as the consumer declarations demonstrate. As
Direct Source Copiers later learned, the ``contacts'' in
Fax.com's database had not given Fax.com permission to receive
25. The response from Quality Auto Mart also illustrates
Fax.com's unscrupulous practices.55 In a response to the
Commission's citation letter, the president of Quality Auto Mart
recounts how he had to demand that Fax.com stop sending faxes on
his company's behalf after learning that the opt-out numbers that
Fax.com had printed on his company's faxes were not working
numbers.56 Similarly, John Jurcisin, D.P.M, and Great West
Funding explain that they eventually realized that Fax.com's
service was unlawful, despite Fax.com's claims that it was in
compliance with state and federal requirements.57 Both companies
were forced to demand that Fax.com cease its unlawful
activities.58 In light of such responses and the other evidence
of record, we affirm the Commission's determination that the 489
faxes detailed in Table 1 to the Fax.com NAL are unlawful
unsolicited advertisements, and that Fax.com sent the faxes at
IV. Appropriateness of Assessed Forfeiture Amount
26. As discussed in the Fax.com NAL, section 503(b) of the
Act authorizes the Commission to assess a forfeiture of up to
$11,000 for each violation of the Act or of any rule, regulation
or order issued by the Commission under the Act by a non-common
carrier or other entity not specifically designated in section
503 of the Act.59 In exercising such authority, we have the
discretion to apply an upward adjustment of the forfeiture amount
based on the particular facts and circumstances of the
violation(s).60 In the Fax.com NAL, we noted that the Commission
had previously considered $4,500 per unsolicited fax
advertisement as an appropriate base amount,61 which the
Commission has adjusted upwards to $10,000 per unsolicited fax
advertisement in those instances where the fax recipient had
previously asked the sender to refrain from faxing the
materials.62 In the instant case, we assessed the maximum
forfeiture of $11,000 per unsolicited fax advertisement, based
upon evidence that Fax.com's business itself is predicated upon a
knowing and willful violation of the federal restrictions on fax
advertising contained in the Act and the Commission's rules and
27. Fax.com contends that our proposed forfeiture violates
the due process guarantee of the Fifth Amendment and the
excessive penalties clause of the Eighth Amendment to the
Constitution.64 Fax.com argues that forfeitures such as those
considered in the Fax.com NAL ``can go so far beyond the actual
damages suffered that the statutory damages come to resemble
punitive damages.''65 Fax.com also asserts that our proposed
forfeiture is disproportionate because it is ``220,000 times the
harm alleged,'' which Fax.com calculates at ``pennies a page in
paper and toner.''66 Finally, Fax.com contends that in the
Fax.com NAL, we relied upon ``supposedly non-decisional''
information of ``dubious reliability'' to conclude that the
maximum forfeiture is warranted for Fax.com's egregious conduct.
Fax.com characterizes our forfeiture rationale as ``at best
disingenuous, if not affirmatively misleading,'' and requests
that we reissue an NAL that does not describe such conduct.67
28. Contrary to Fax.com's argument, the fact that we
described numerous examples of Fax.com's egregious conduct in
addition to the 489 violative faxes does not mean that these
examples formed the sole basis for our decision to impose the
maximum forfeiture. Indeed, we specifically stated:
It is clear from Fax.com's own promotional materials
and its responses to our citations that Fax.com's
primary business activity itself constitutes a massive
on-going violation of section 227(b)(1)(C) of the Act
and section 64.1200(a)(3) of the Commission's rules,
and that Fax.com is well aware of this fact.
Fax.com's primary commercial offering is a fax
broadcasting service that clearly does not comply with
federal restrictions governing facsimile
advertisements. As outlined above, by its own
admission and as demonstrated by the consumer
information, Fax.com 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. We conclude that this
unlawful undertaking merits maximum forfeitures for
each of the violations at issue here. Although we
believe that the nature of Fax.com's enterprise by
itself warrants imposition of a maximum forfeiture for
each violation, we discuss below the particularly
egregious aspects of Fax.com's conduct.68
Fax.com's insistence that we reissue the NAL without descriptions
of Fax.com's egregious conduct is clearly unavailing. The
Fax.com NAL proposed the maximum forfeiture for each of the 489
violative faxes because of Fax.com's fax broadcasting activities,
which, by Fax.com's own admission, were undertaken without regard
to the requirements of federal law.69 Any other aspects of
Fax.com's business activities that are described in the NAL were
not of decisional significance in setting the forfeiture amount,
and we clearly emphasized this fact. We are entitled to include
such publicly available ``background'' information in our orders,
as long as any proposed penalties are fully supported by the
evidence of record. In the instant proceeding, we cited
extensive record evidence to support our proposed forfeiture.
Even after finally taking advantage of the opportunity to review
these cited materials, which have been available for public
inspection since August 7, 2002, Fax.com continues to attack our
conclusions without addressing any specific supporting materials
or providing any information to discredit our extensive
29. Further, we find that Fax.com's constitutional
arguments reflect a fundamental misunderstanding of the purpose
of Commission forfeiture policies and procedures. Forfeitures
are not meant to serve as compensatory damages for harms caused,
but rather are meant to penalize unlawful activity. In the
instant proceeding, we sought to penalize Fax.com for its
egregiously unlawful conduct. As detailed in the Fax.com NAL,
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 record further demonstrates
that Fax.com failed to disclose to its clients the broad
prohibition on faxing unsolicited advertisements imposed by
section 227 of the Act and the Commission's rules and orders.
Fax.com also affirmatively misstated federal law governing
unsolicited facsimile advertisements. In light of Fax.com's
egregiously unlawful activity, we conclude that our proposed
forfeiture did not violate Fax.com's constitutional rights.
30. Moreover, the Supreme Court has held that a penalty
violates due process only when it is ``so severe and oppressive
as to be wholly disproportionate to the offense, and obviously
unreasonable.''71 In the instant proceeding, we carefully
calculated the proposed forfeiture in direct proportion to
Fax.com's offense, which, as discussed above, was in flagrant
violation of the law. Hence, we affirm our conclusion in the NAL
that Fax.com's unlawful undertaking merited the maximum
forfeiture for each of the violations at issue --particularly
because the illegal nature of Fax.com's enterprise by itself
warrants imposition of the maximum forfeiture for each violation.
V. CONCLUSION AND ORDERING CLAUSES
31. After reviewing the information filed by Fax.com in its
Responses to the NAL, we find that Fax.com has failed to identify
facts or circumstances to persuade us that there is any basis for
modifying the forfeiture proposed in the Fax.com NAL. As
discussed above, Fax.com has not shown any mitigating
circumstances sufficient to warrant a reduction of the forfeiture
32. Accordingly, IT IS ORDERED, pursuant to section 503(b)
of the Act, 47 U.S.C. § 503(b), and section 1.80 (f)(4) of the
Commission's rules, 47 C.F.R. § 1.80(f)(4), that Fax.com, Inc.
SHALL FORFEIT to the United States Government the sum of
$5,379,000 for willfully and repeatedly violating section 227 of
the Act, 47 U.S.C. § 227, section 64.1200 of the Commission's
rules, 47 C.F.R. § 64.1200, and the Commission's orders
concerning the Telephone Consumer Protection Act.72
33. IT IS FURTHER ORDERED that a copy of this Order of
Forfeiture SHALL BE SENT by certified mail to Kevin Katz,
President, Fax.com, Inc., 120 Columbia Street, Suite 500, Aliso
Viejo, California 92656 and Kevin Katz, President, Fax.com,
Inc., 30872 South Coastal Highway, Suite 201, Laguna Beach,
California 92651. In addition, IT IS FURTHER ORDERED that a
copy of this Order of Forfeiture SHALL BE SENT by certified mail
to Harry F. Cole, Esquire, Fletcher, Heald & Hildreth P.L.C.,
1300 N. 17th Street - 11th Floor, Arlington, VA 22209, and Mary
Ann L. Wymore, Esquire, Greensfelder, Hemker & Gale, P.C., 10
South Broadway, Suite 2000, St. Louis, Missouri 63102, Fax.com's
attorneys of record.
34. IT IS FURTHER ORDERED that a copy of this Order of
Forfeiture SHALL BE SENT by certified mail to the following
affiliated entities, successors or assigns of Fax.com, Inc.:
Tech Access Systems Corporation, 280 W. Sierra Madre Blvd.,
#231, Sierra Madre, California 91024; Tech Access Systems
Corporation, 521 ½ South Myrtle Avenue, Suite 1, Monrovia,
California 91016; Telecom Tech Support, 26081 Merit Circle,
#112, Laguna Hills, California 92653; Telecom Tech Support
c/o Robert Battaglia, 3621 Vista Campana South, Oceanside,
California 92057; Everglades Enterprises, c/o Cozen &
O'Connor, 200 Four Falls Corp Center, #400, Conshohocken,
Pennsylvania 19428 (Attention: Shari Odenheimer);
Everglades Enterprises, c/o Joe Garson, 352 South Canon
Drive, Beverly Hills, California 90212; Lighthouse
Marketing, LLC, 23411 Laguna Hills Drive, Suite K25, Aliso
Viejo, California 92656l; Lighthouse Marketing, LLC, 15440
Laguna Canyon Road, Irvine, California 92618; Impact
Marketing Solutions, LLC, 5404 Alton Parkway, Suite 5A #114,
Irvine, California 92604; Impact Marketing Solutions, LLC,
15440 Laguna Canyon Road, Irvine, California 92618; Data
Research Systems, Inc., 26895 Aliso Creek Road, Suite B
#681, Aliso Viejo, California 92656; Data Research Systems,
Inc., 92 Argonaut, Aliso Viejo, California 92656; and its
attorney of record, David Felsenthal, Esquire,1900 Avenue of
the Stars, Lost Angeles, California 90067.
35. IT IS FURTHER ORDERED that Fax.com, Inc. SHALL FILE a
report with the Chief, Telecommunications Consumers Division,
Enforcement Bureau, FCC, within 30 days from the release of this
Order, on whether it has come into compliance with the Act and
our rules and orders as cited in this Order of Forfeiture; such
report shall encompass the activities of all persons and entities
described in footnote 1, supra.
FEDERAL COMMUNICATIONS COMMISSION
Marlene H. Dortch
1 Fax.com, a California-based company that began operating in
1998, characterizes itself as a ``fax broadcaster,'' transmitting
messages to telephone facsimile machines on behalf of other
entities for a fee. For purposes of this Order, ``Fax.com''
encompasses its president, Kevin Katz, as well as its other
corporate officers, including Thomas Roth, Jeffrey Dupree, and
Eric Wilson. In addition, Fax.com encompasses all affiliated
entities, successors, and assigns of Fax.com, including, but not
limited to, Tech Access Systems Corporation; Telcom Tech Support;
Everglades Enterprises, Lighthouse Marketing, LLC; Impact
Marketing Solutions, LLC; and Data Research Systems, Inc.
2 See 47 U.S.C. § 227(b)(1)(C). Section 227 was added to the
Act by the Telephone Consumer Protection Act of 1991, Pub.L. 102-
243, 105 Stat. 2394, 2402 (1991), and is most commonly known as
3 See 47 C.F.R. § 64.1200(a)(3). In Rules and Regulations
Implementing the Telephone Consumer Protection Act of 1991,
Report and Order, 18 FCC Rcd 14,014 (2003) (2003 TCPA Report &
Order), the Commission amended the rules that govern telephone
solicitations and unsolicited advertisements, including those
sent by facsimile machines. In this Order, however, we cite to
the rule sections in effect at the time of Fax.com's violations.
4 See Rules and Regulations Implementing the Telephone
Consumer Protection Act of 1991, Report and Order, 7 FCC Rcd
8752, 8779 (1992) (stating that section 227 prohibits the use of
telephone facsimile machines to send unsolicited advertisements).
5 See Fax.com, Inc., Notice of Apparent Liability for
Forfeiture, 17 FCC Rcd 15,927 (2002) (Fax.com NAL). The Fax.com
NAL was issued pursuant to section 503(b)(1) of the Act, which
gives the Commission authority to assess a forfeiture against any
person who has ``willfully or repeatedly failed to comply with
any of the provisions of this Act or of any rule, regulation, or
order issued by the Commission under this Act . . . .'' 47
U.S.C. § 503(b)(1).
6 See Fax.com NAL, 17 FCC Rcd at 15,928.
7 See 47 U.S.C. § 503(b)(5). This section provides that the
Commission may not assess a forfeiture penalty against any person
that does not hold a license, permit, certificate, or other
Commission authorization, and is not an applicant for such
instruments, unless ``(A) such person is first issued a citation
of the violation charged; (B) is given a reasonable opportunity
for a personal interview with an official of the Commission, at
the field office of the Commission nearest to the person's place
of residence; and (C) subsequently engages in conduct of the type
described in the citation.''
8 47 U.S.C. § 227(b)(1)(C). We also issued citations to the
following Fax.com clients for alleged violations of section 227
and the Commission's rules and orders: Platinum Travel Club and
Teleconcepts Technologies; Colorjet, Inc.; Millenium Marketing
and Sales, Ltd.; Website University; US Travel Services, Inc.;
and Advanced Cellular Communications, Inc. We did not, however,
propose further enforcement action against these companies. Id.
at 15,929 n.10.
9 See Rules and Regulations Implementing the Telephone
Consumer Protection Act of 1991, 10 FCC Rcd 12391, 12405 (1995)
(1995 TCPA Reconsideration Order) (citing H.R. Rep. No. 317,
102nd Cong., 1st Sess. 25 (1991)).
10 This blanket prohibition applies to all unsolicited
advertisements transmitted to telephone facsimile machines. The
Act prohibits the sending of unsolicited advertisements by
facsimile to either business or residential telephone facsimile
machines. In addition, the prohibition on sending unsolicited
fax advertisements applies to both interstate and intrastate
transmissions. See 47 U.S.C. § 152(b); 47 U.S.C. § 227(e).
Section 227 is not subject to the provision that generally
excludes Commission jurisdiction over intrastate matters.
Section 227 does not, however, preempt state law that imposes
more restrictive intrastate requirements than those set forth in
the Act. The Act defines an ``unsolicited advertisement'' 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. 47 U.S.C. § 227(a)(4); 47 C.F.R § 64.1200(f)(5). The
Commission originally determined that an established business
relationship between a fax sender and recipient demonstrates
consent to receive facsimile advertisements. Recently, however,
the Commission concluded that an established business
relationship does not constitute prior express invitation or
permission to send fax advertisements, and that a consumer's
invitation or permission must be recorded in a signed, written
statement that contains the telephone number where faxes may be
delivered and that clearly evinces the consumer's agreement to
receive fax advertising from the sender. See 2003 TCPA Report &
Order, 18 FCC Rcd at 14,014. The written consent requirement,
but not the overall prohibition, was recently stayed, thus
reinstating the ``established business relationship'' option on a
temporary basis. Rules and Regulations Implementing the
Telephone Consumer Protections Act of 1991, FCC 03-230 (rel. Oct.
11 47 U.S.C. § 227(b)(1)(C).
12 See Fax.com NAL, 17 FCC Rcd at 15,929.
13 Fax.com responded to the citations on January 31, 2001, June
1, 2001, and June 21, 2001, with pleadings filed jointly on
behalf of Fax.com and its six cited clients.
14 See Fax.com January 31 Response at 30; June 1 Response at
31-32; June 21 Response at 30.
15 January 31 Response at 28-29; June 11 Response at 27; June
21 Response at 27-28. Fax.com asserted that it only transmitted
advertisements that contain such an opt-out number. Id.
16 As the Commission noted in the Fax.com NAL, several
consumers describe being awakened very late at night or in the
early hours of the morning by the noise of their fax machines
receiving an unsolicited advertisement from a Fax.com client.
See Fax.com NAL, 17 FCC Rcd at 15,931-32. Some of the consumers
also described their unsuccessful -- and frustrating -- efforts
to remove their telephone facsimile numbers from Fax.com's
17 Each complainant signed a declaration, under penalty of
perjury, attesting that s/he (1) is either the owner of or
responsible for the telephone facsimile machine that received the
advertisement(s); (2) did not have an established business
relationship with either Fax.com or the entity whose products,
goods, or services were being advertised; and (3) did not grant
prior express permission or invitation for the faxes to be sent.
See Fax.com NAL, 17 FCC Rcd at 15,931.
18 In the Fax.com NAL, the Commission mistakenly stated that
the faxes at issue were received from September 2001 until March
2002. See Fax.com NAL, 17 FCC Rcd at 15,930 n.17. Table 1 to
the NAL, however, correctly designates that the transmissions
were received from September 2001 until June 2002. This mistake
does not, however, affect the violations at issue in this order.
19 In Table 1 to the Fax.com NAL, the Commission listed the 489
unsolicited fax advertisements that formed the basis of the
Fax.com NAL. The Commission explained that the record linked
Fax.com with each of the telephone subscribers for (1) the toll-
free opt-out telephone numbers that were displayed on each
advertisement and/or (2) the telephone facsimile machine numbers
from which various advertisements were sent. See Fax.com NAL, 17
FCC Rcd at 15,930-31.
20 See Fax.com NAL, 17 FCC Rcd at 15,938.
21 See id. at 15,943.
22 Fax.com Response, Aug. 21, 2003 (Response). Fax.com had
longer than the usual 30-day period in which to file its
response, see 47 C. F.R. § 1.80(f)(3), because of an order issued
by the U.S. District Court for the Eastern District of Missouri
on August 29, 2002, staying the Fax.com forfeiture proceeding
until further notice. See discussion infra at paragraph 10. On
August 26, 2003, after reversal of that decision, Fax.com
supplemented its response with a supporting declaration from
Kevin Katz, the President of Fax.com. See Fax.com Supplement to
Response, filed Aug. 26, 2003. On September 11, 2003, pursuant
to a request from Fax.com's attorney, Commission staff granted
Fax.com an additional 10 business days to review the record of
the forfeiture proceeding and file any necessary supplemental
response. In a letter filed on September 15, 2003, Fax.com
argued that 10 days was not an adequate period of time for it to
obtain and review all of the evidence of record, and to prepare a
response. See Letter from Harry F. Cole, counsel for Fax.com, to
Colleen A. Heitkamp, Chief, TCD, Sept. 15, 2003. In an effort to
allow Fax.com to develop a more complete response to the Fax.com
NAL, Commission staff granted Fax.com an additional 10 business
days to review the record and file any supplementary response.
See Letter from Colleen A. Heitkamp, Chief, TCD, to Harry F.
Cole, counsel for Fax.com, Oct. 8, 2003. Fax.com filed its
supplementary response on Oct. 20, 2003. In total, Fax.com had
90 days from the date on which the forfeiture proceeding
recommenced in which to file a complete response to the Fax.com
23 See, e.g., Market Wizard Alerts, Citation and Letter of
Inquiry, TCD (Aug. 13, 2002); Burt Custom Finance, Citation and
Letter of Inquiry, TCD (Aug. 13, 2002).
24 Missouri ex. rel. Nixon v. American Blast Fax, Inc &
Fax.com, Inc., 196 F. Supp.2d 920, 933 (E.D. Mo. 2002) (American
Blast Fax). In American Blast Fax, in which the Commission and
the United States intervened to defend the constitutionality of
the TCPA's fax restriction, the district court determined, among
other things, that the government had failed to meet its burden
of demonstrating that the harms from unsolicited advertisements
were significant, and that the restriction on unsolicited
commercial advertising would alleviate them to a material degree.
American Blast Fax, 196 F.Supp. at 933. The government appealed,
and the district court issued a stay of the Fax.com forfeiture
proceeding, pending further judicial proceedings. On September
6, 2002, Commission staff notified those companies to which it
had issued or planned to issue citations and letters of inquiry
in connection with the Fax.com NAL that they need not respond
until further notice. See supra footnote 22.
25 Id. at 655.
27 See Destination Ventures v. FCC, 46 F.3d 54, 55-57 (9th Cir.
1995) (ban on unsolicited fax advertisements does not violate the
advertiser's First Amendment rights because it reasonably fits
the government's interest in preventing the shifting of
advertising costs to consumers); Minnesota v. Sunbelt
Communications and Marketing, 282 F. Supp. 2d 976, 981-84
(D.Minn. 2002); Texas v. American Blast Fax, 121 F. Supp. 2d
1085, 1091-92 (W.D. Tex. 2000); Kenro, Inc. v. Fax Daily, Inc.,
962 F.Supp. 1162, 1167-69 (S.D. Ind. 1997) (ban on unsolicited
fax advertisements is narrowly tailored to achieve the
government's intended purpose and does not violate the First
Amendment guarantee of commercial free speech).
28 See Fax.com NAL, 17 FCC Rcd at 15,939; see also supra
footnote 27; infra footnote 31.
29 See id.
30 Response at 5.
31 Id. The Commission and the United States intervened in the
American Blast Fax case to defend the constitutionality of the
TCPA's fax advertising restriction. Despite the Missouri
district court's ruling in favor of Fax.com in that forum, every
other federal court that considered the constitutionality of the
fax advertising restriction, both before and after the Missouri
court's ruling, found the restriction constitutional. See
Destination Ventures v. FCC, 46 F.3d 54, 55-57 (9th Cir. 1995)
(ban on unsolicited fax advertisements does not violate the
advertiser's First Amendment rights because it reasonably fits
the government's interest in preventing the shifting of
advertising costs to consumers); Minnesota v. Sunbelt
Communications and Marketing, 282 F.Supp.2d 976, 981-84 (D.Minn.
2002); Texas v. American Blast Fax, 121 F. Supp. 2d 1085, 1091-92
(W.D. Tex. 2000); Kenro, Inc. v. Fax Daily, Inc., 962 F.Supp.
1162, 1167-69 (S.D. Ind. 1997) (ban on unsolicited fax
advertisements is narrowly tailored to achieve the government's
intended purpose and does not violate the First Amendment
guarantee of commercial free speech). State courts have also
overwhelmingly upheld the legal validity of the restriction.
Texas v. Fax.com, Inc., No A-02-CA-080 JN, Report and
Recommendation (W.D. Tex. May 23, 2003); Covington & Burling v.
International Marketing & Research, Inc., Civ. No. 01-4360, Order
(D.C. Super Ct. Apr. 17, 2003); Whiting Corp. v. MSI Marketing,
Inc., No. 02 CH 6332, Opinion and Order (Ill. Circ. Ct. Apr. 3,
2003); Mark Chair Co. v. Mortgage Managers, Inc., Case No. 02 LK
247, Order (Ill. Circ. Ct. Dec. 20, 2002); Levitt v. Fax.com,
Inc., No. 42-C-01-2218, Memorandum Opinion and Order (Md. Circ.
Ct. Nov. 27, 2002); Robin Hill Development Co. v. JD&T
Enterprises, Inc., No. 01 L 527, Order (Ill. Circ. Ct. Oct. 3,
2002); Micro Engineering, Inc. v. St. Louis Assoc. of Credit
Mgmt., Inc., Cause No. 02AC-008238 X CV, Order (Mo. Circ. Ct.
Aug. 13, 2002); Kaufman v. ACS Sys., Inc., Case No. BC222588,
Decision (Cal. Super. Ct. Dec 12, 2001). But see Bonime v.Perry
Johnson, Inc., No. 61977/01, Decision and Order (N.Y. Civ. Ct.
2002) (relying on American Blast Fax district court ruling, since
reversed), appeal pending; Rudgayzer & Gratt v. Enine, Inc., 193
Misc.2d 449 (N.Y. Civ. Ct. 2002) (relying on American Blast Fax
district court ruling, since reversed), appeal pending. To have
considered the Missouri court's decision binding on nationwide
federal enforcement of the restriction would have resulted in
nullification of every other court's constitutional decisions to
the contrary, and would have created a gross legal inequity that
would have left only Fax.com and its clients immune from federal
enforcement. Such ``immunity'' from FCC (or state and private
right of action) enforcement would clearly contravene Congress's
goals in enacting the TCPA. Even if the Missouri district
court's decision had not been reversed, it would not have
affected all other judicial decisions to the contrary.
32 See Response at 5-6.
33 Id. at 8.
35 Roberts v. United States Jaycees, 468 U.S. 609, 629, 104
S.Ct. 3244, 82 L.Ed.2d 462 (1984).
36 Fax.com asserts that the court in Texas v. American Blast
Fax rejected our interpretation of who is liable under the TCPA
for unsolicited fax advertising - fax boadcasters or the
underlying advertiser. See Response at 8 (citing Texas v.
American Blast Fax, 121 F. Supp. 2d 1085, 1090-92 (W.D. Tex.
2000)). In fact, the court simply chose to follow the explicit
statutory language of the TCPA rather than a Commission order.
See 121 F. Supp. 2d at 1089 (noting that the TCPA says that ``any
person'' sending unsolicited fax advertisements is liable). This
led the court to exactly the same conclusion that we reach here -
that a fax broadcaster that serves as ``more than a mere conduit
for third party faxes'' is liable under the TCPA. See id. at
1089-90 & n. 6 (under the allegations in the case, the fax
broadcaster at issue ``does more than `simply provide
transmission facilities' for the faxes at issue'') (citing Rules
and Regulations Implementing the Telephone Consumer Protection
Act of 1991, 7 FCC Rcd 8752 (1992) and the 1995 TCPA
37 See Response at Introduction, ii.
38 See, e.g., Decorize, Inc., Citation and Letter of Inquiry,
TCD, Aug. 15, 2002.
39 See Fax.com NAL, 17 FCC Rcd at 15,939.
40 See id.
43 See Fax.com NAL, 17 FCC Rcd at 15,931-33.
44 47 U.S.C. § 503(b)(4). This subsection requires, inter
alia, that the Commission issue a written notice of apparent
liability or a notice of opportunity for hearing prior to
assessing a forfeiture. Such a notice must identify the legal
provision that has apparently been violated, set out the nature
of the act or omission and the underlying facts, and must state
the date on which the apparently unlawful conduct occurred. In
the instant proceeding, we complied with these requirements.
45 See Business Discount Plan, Inc., Order on Reconsideration,
15 FCC Rcd 24,396; 24,401 (2000).
46 The Commission does not disclose documents that would
interfere with ongoing law enforcement efforts, reveal the
Commission's internal deliberative process, or compromise the
Commission's attorney-client or attorney work product privileges.
See 47 U.S.C. §§ 552(B)(5), (7). Otherwise, virtually all of the
materials underpinning an NAL are available upon request for
public review. In some cases, including this one, certain
information is withheld from public inspection to protect the
personal privacy of individuals who have provided information to
the Commission. For instance, in this case, we do not publicly
disclose the home telephone numbers of individuals who received
47 Notwithstanding the opportunity afforded Fax.com to review
this evidence upon the issuance of the NAL , the Commission
granted Fax.com additional time for to obtain and review the
record of the proceeding and to file any supplemental response to
the NAL. See supra footnote 20.
48 Response at 16.
50 See Second Supplement to Response of Fax.com, filed Oct. 20,
2003. Specifically, Fax.com asserts, without any further
explanation or proof, that ``[r]eview of the materials [that were
cited in the Fax.com NAL] confirms the validity of the arguments
presented by Fax.com in its [initial] Response [to the Fax.com
NAL]. The Commission has no reliable basis for its allegations
against Fax.com.'' Second Supplement to Response at 1.
51 Fax.com NAL, 17 FCC Rcd at 15938 n.47.
52 See infra footnotes 53-57. Many of those clients submitted
copies of contracts with Fax.com that included ``indemnification
provisions'' whereby Fax.com assured the businesses that the fax
transmissions were lawful, and agreed to represent the businesses
in any legal actions for TCPA violations. These indemnification
provisions are entirely inconsistent with Fax.com's position that
advertisers acted alone to send the faxes at issue.
53 See Fax.com NAL, 17 FCC Rcd at 15,937.
54 Direct Source Copiers, Inc., Response to Citation, filed
Oct. 20, 2003. While some of the businesses we cited did not
recall doing business directly with Fax.com, the record
demonstrates that, in many instances, these businesses contracted
with marketing or advertising firms that, in turn, had used
Fax.com's fax services. Hence, many businesses were unaware that
Fax.com was ultimately responsible for transmitting their
55 Quality Auto Mart, Response to Citation, filed Aug. 30,
56 See id.
57 See John Jurcisin, D.P.M, Response to Citation, filed Sept.
10, 2002; Great West Funding, Response to Citation, filed Oct. 3,
2003. See also American Marble Liquidators, Inc., Response to
Citation, filed Nov. 10, 2003.
58 See id.
59 See section 503(b)(2)(C). This section provides for
forfeitures up to $10,000 for each violation for cases not
covered by subparagraph (A) or (B), which address forfeitures for
violations by licensees and common carriers, among others. 47
U.S.C. § 503(b)(2)(C). In accordance with the inflation
adjustment requirements contained in the Debt Collection
Improvement Act of 1996, Pub. L. 104-134, Sec. 31001, 110 Sta.
1321, the Commission implemented an increase of the maximum
statutory forfeiture under section 503(b)(2)(C) to $11,000. See
47 C.F.R. § 1.80(b)(3); Amendment of Section 1.80 of the
Commission's Rules and Adjustment of Forfeiture Maxima to Reflect
Inflation, 15 FCC Rcd 18221 (2000).
60 See 47 U.S.C. § 503(b)(2)(D); The Commission's Forfeiture
Policy Statement and Amendment of Section 1.80 of the
Commission's Rules to Incorporate the Forfeiture Guidelines,
Report and Order, 12 FCC Rcd 17087, 17100-17101 (1997), recon.
denied, 15 RCC Rcd 303 (1999) (Forfeiture Policy Statement).
61 See Fax.com NAL, 17 FCC Rcd at 15,942 (citing Get-Aways,
Inc., Notice of Apparent Liability For Forfeiture, 15 FCC Rcd.
1805, 1812 (1999)); see also Carolina Liquidators, Inc., Notice
of Apparent Liability for Forfeiture, 15 FCC Rcd 16837, 16842
(2000) (Carolina Liquidators NAL); Tri-Star Marketing, Notice of
Apparent Liability for Forfeiture, 15 FCC Rcd 11295, 11300 (2000)
(Tri-Star NAL); US Notary, Inc. Notice of Apparent Liability for
Forfeiture, 15 FCC Rcd 16999, 17003 (2000).
62 Fax.com NAL, 17 FCC Rcd at 15,942 (citing Carolina
Liquidators NAL, 15 FCC Rcd at 16842; Tri-Star NAL, 15 FCC Rcd at
11300). In the Fax.com NAL, the Commission also noted several
instances in which Fax.com apparently continued to fax
unsolicited advertisements to consumers even after they attempted
to stop such faxes by calling one or more of Fax.com's opt-out
numbers. Id at 15,933.
63 See Fax.com NAL, 17 FCC Rcd at 15,942.
64 See Response at 9-14.
65 Id. at 10.
66 Id. at 12-13. Fax.com ignores the substantial expense and
disruption that can occur when businesses are blanketed with
large numbers of unsolicited faxes. See Fax.com NAL, 17 FCC Rcd
at 15,931-32 (describing publicly available reports of how,
inter alia, Fax.com transmissions not at issue in this proceeding
interfered with work at a law firm that received over 1,500 faxes
from Fax.com during one week, and shut down fax servers at two
67 See Response at 18.
68 Fax.com NAL, 17 FCC Rcd at 15,938 (emphasis added, footnote
69 See supra paragraph 4.
70 See Second Supplement to Response of Fax.com, Inc. at 1-2.
71 See St. Louis, Iron Mt. & S. Ry. Co. v. Williams, 251 U.S.
63, 67, 40 S.Ct. 71, 73, 64 L.Ed. 139 (1919) (Williams).
72 The forfeiture amount should be paid by check or money order
drawn to the order of the Federal Communications Commission.
Fax.com should include the reference, ``NAL/Acct. No.
200232170004'' on Fax.com's check or money order. Such
remittance must be mailed to Forfeiture Collection Section,
Finance Branch, Federal Communications Commission, P.O. Box
73482, Chicago, Illinois 60673-7482. Requests for full payment
under an installment plan should be sent to: Chief, Credit and
Debt Management Center, 445 12th Street, S.W., Washington, D.C.
20554. See 47 C.F.R. § 1.1914.