Before the

FEDERAL COMMUNICATIONS COMMISSION

# Washington, D.C. 20554

In the Matter of )

) File No. EB-02-TC-120

Fax.com, Inc. ) NAL/Acct. No. 200232170004

) FRN 0007-2970-47

Apparent Liability for Forfeiture )

## NOTICE OF APPARENT LIABILITY FOR FORFEITURE

Adopted: August 2, 2002 Released: August 7, 2002

By the Commission: Commissioner Abernathy issuing a statement.

## INTRODUCTION

1.  In this Notice of Apparent Liability for Forfeiture (NAL), we find
    that Fax.com, Inc. (Fax.com)[^1] apparently willfully or repeatedly
    violated section 227 of the Communications Act of 1934, as amended
    (Act),[^2] and the Commission's rules and orders, by sending
    unsolicited advertisements to telephone facsimile machines on 489
    separate occasions.[^3] Based on the facts and circumstances
    surrounding these apparent violations, we find that Fax.com is
    apparently liable for forfeiture in the amount of \$5,379,000.[^4]

## BACKGROUND

2.  Fax.com characterizes itself as a "fax broadcaster," transmitting
    messages to telephone facsimile machines on behalf of other entities
    for a fee. According to its website, Fax.com specializes in
    transmitting its clients' advertisements to telephone facsimile
    machines whose numbers are contained in the Fax.com database, which
    it touts as "the industry's largest fax number database."[^5] In its
    promotional materials, Fax.com also offers to design or improve its
    clients' advertising copy.[^6] The unsolicited facsimile
    advertisements that are the subject of this NAL are the product of
    Fax.com's fax broadcasting enterprise. With the exception of one
    message,[^7] 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.

3.  In December 2000 and May 2001, after receiving correspondence from
    consumers who complained about having been faxed unsolicited
    advertisements on behalf of six Fax.com clients, the Commission
    staff issued citations to Fax.com[^8] pursuant to section 503(b)(5)
    of the Act.[^9] The staff cited Fax.com for allegedly violating
    section 227(b)(1)(C) of the Act and

section 64.1200(a)(3) of the Commission's rules by transmitting
unsolicited advertisements to consumers' telephone facsimile machines on
behalf of the six clients.[^10] The citations noted that

> although entities that merely transmit facsimile messages on behalf of
> others are not liable for compliance with the prohibition on faxing
> unsolicited advertisements, the exemption from liability does not
> exist when a fax transmitter has "'a high degree of involvement or
> actual notice of an illegal use and \[has\] fail\[ed\] to take steps
> to prevent such transmissions.'" Accordingly, fax transmitters do not
> enjoy an absolute exemption from liability under the TCPA and the
> Commission's Rules.[^11]

4.  The citations informed Fax.com that it could face monetary
    forfeitures 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 the six named clients without taking steps to
    ensure that those entities had obtained permission from recipients
    to fax the advertisements. The citations also directed Fax.com to
    answer several questions regarding its general practices with
    respect to its fax broadcasting activities and its specific
    arrangements with the six clients. Finally, the citations informed
    Fax.com that within 21 days of the date of each citation, it could
    either request a personal interview at the nearest Commission field
    office, or provide a written statement responding to the citation.

5.  On January 31, 2001, June 1, 2001, and June 21, 2001, Fax.com
    responded to the citations with virtually identical pleadings that
    were filed jointly on behalf of Fax.com and its six cited clients.
    In each instance, Fax.com and the clients claimed that the
    prohibition on faxing unsolicited advertisements contained in
    section 227 and the Commission's implementing regulations is an
    unconstitutional infringement on the First Amendment free speech
    rights of Fax.com and its advertisers. Fax.com also addressed the
    staff's questions regarding its fax broadcasting operations. In that
    regard, Fax.com claimed that although it offers clients "advice and
    assistance relative to graphics presentations," it had not exercised
    any editorial control over any of the advertisements that were at
    issue in the six citations.[^12] Nonetheless, Fax.com

emphasized that it retains discretion to refuse to transmit any
advertisement it deems "offensive or misleading."[^13] Fax.com stated
that it provided the fax distribution lists for each of six clients
whose advertisements were addressed by the citations. Fax.com explained
that it compiles its database of telephone facsimile numbers by (1)
purchasing lists of fax numbers from independent vendors, (2)
identifying fax numbers "through its own research methods," and (3)
recording fax numbers provided by individuals who have asked, through an
automated process, to be included in Fax.com's database. With respect to
the telephone facsimile numbers obtained from independent vendors and
Fax.com's research efforts, Fax.com conceded that it "has historically
taken no steps to verify consent or established business
relationships."[^14] Fax.com stated that it "routinely" sends what it
characterizes as a "non-commercial" message regarding missing children
to each number added to the Fax.com database.[^15] Entitled "Your
Permission Please," the message "asks" recipients to agree to receive
from Fax.com alerts regarding missing children. The message states that
"to help offset the cost' of the missing children alerts, Fax.com will
also send "a limited amount of commercial paid advertising" not to
exceed one fax per week. The message instructs recipients who do not
wish to receive the alerts or advertisements to call a toll-free
"opt-out" number. Finally, Fax.com emphasized that it only transmits
advertisements that contain such an opt-out number that fax recipients
may call if they do not wish to receive similar advertisements in the
future.[^16]

6.  Following Fax.com's receipt of the staff's citations, the Commission
    has continued to receive information from numerous consumers
    indicating that Fax.com is still conducting its fax broadcasting
    activities in a manner that apparently violates section 227(b)(1)(C)
    of the Act and section 64.1200(a)(3) of the rules. The forfeiture
    proposed herein is based on this body of consumer information, which
    alleges that after Fax.com's receipt of the staff's citations,
    consumers continued to receive a variety of unsolicited facsimile
    advertisements, all traceable to Fax.com.

7.  Table 1, "Unsolicited Advertisements Transmitted by Fax.com and
    Subject to Forfeiture Pursuant to FCC 02-226," lists 489 unsolicited
    fax advertisements that form the basis of this NAL.[^17] Although
    only one of these advertisements mentions Fax.com in any way, some
    consumers were able to discover that Fax.com had transmitted the
    ads. By obtaining information that identifies Fax.com as the
    telephone subscriber for (1) the various toll-free opt-out telephone
    numbers that are displayed on each advertisement, and/or (2) the
    telephone facsimile machine numbers from which various
    advertisements were sent, which are displayed in the advertisements'
    fax headers, the Commission staff has confirmed that Fax.com sent
    each advertisement listed in Table 1.

8.  Nine consumers have provided information showing that they each
    received over 20 unsolicited and unwanted advertisements that were
    transmitted by Fax.com clients on behalf of its clients.[^18] The
    remaining 36 consumers have provided between one and 16 unsolicited
    fax ads each.[^19] Each consumer who has provided information
    regarding the fax messages at issue herein has signed a declaration,
    under penalty of perjury, attesting that he or she (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.[^20]

9.  Consumer complaints about the faxes offer a snapshot of the
    disruption, expense, and inconvenience caused by Fax.com's unwanted
    fax transmissions.[^21] For instance, 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.[^22] Another consumer, Elkins
    Cox, describes the expense and inconvenience of receiving Fax.com's
    unwanted transmission on an older telephone facsimile machine and
    states that he has chosen to turn off his machine rather than deal
    with the stream of unsolicited advertisements.[^23] Robert McMeekin,
    M.D., complains about receiving unsolicited advertisements on a line
    that is reserved

for the receipt of patient medical data, and emphasizes the serious
disruption to patient care caused by such unwanted faxes.[^24]

10. Some consumers complain about unsuccessful attempts to remove their
    telephone facsimile machine numbers from Fax.com's database and
    describe frustration with Fax.com's automated opt-out lines, which
    do not identify Fax.com as the entity responsible for the fax number
    database.[^25] Fax.com is not identified on its clients'
    advertisements and similarly, in many cases, the advertiser itself
    is unnamed.[^26] In such instances, consumers describe difficulties
    in ascertaining the entity to which they should direct a complaint
    about receipt of the faxes. Some consumers who were able to contact
    either the advertiser or Fax.com report that they encountered
    hostility, misrepresentation, and unresponsiveness. For example,
    Andrew Hansis has asked the Commission to take action with respect
    to two unsolicited advertisements he received in October 2001,
    neither of which identified the company whose service was being
    advertised.[^27] With respect to the first advertisement, Mr. Hansis
    states that he called the telephone number provided on the
    advertisement for service orders and was provided with a name and
    telephone number of a "responsible individual" with whom he could
    discuss the unsolicited advertisement. After unsuccessfully
    attempting to reach this individual, Mr. Hansis reports he received
    a telephone call from Charles Martin, an employee of Fax.com.
    According to Mr. Hansis, Mr. Martin "was unwilling to tell me the
    source of how the number was placed in the database, only that it
    was 'called in'" at an earlier date.[^28]

## DISCUSSION

11. 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."[^29] An
    unsolicited advertisement is defined 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."[^30] The Commission has
    determined that an established business relationship between a fax
    sender and recipient demonstrates consent to receive telephone
    facsimile advertisement transmissions.[^31] The mere distribution or
    publication of a telephone facsimile number, however, does not
    confer invitation or permission to transmit advertisements to a
    particular telephone facsimile machine.[^32]

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A.  Constitutional Issue.

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12. Fax.com and its client advertisers have argued that the broad
    prohibition on sending unsolicited facsimile advertisements violates
    their constitutional right to free speech guaranteed under the First
    Amendment. Federal courts have previously considered similar
    arguments. For example, the Court of Appeals for the Ninth Circuit,
    where Fax.com is located, has determined that the TCPA does not
    violate the First Amendment's protection of commercial speech.[^33]
    Moreover, administrative agencies are to presume that the statutes
    that Congress directs them to implement are constitutional.[^34]
    Accordingly, we reject Fax.com's arguments in this regard.

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B.  Fax.com's Liability Under 47 U.S.C. § 227(b)(1)(C) and 47 C.F.R. §
    64.1200(a)(3).

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13. Because of the nature of its operations, Fax.com is liable for
    violations of section 227(b)(1)(C) of the Act and section
    64.1200(a)(3) of our rules even though it generally acts on behalf
    of other parties in sending unsolicited advertisements to telephone
    facsimile machines. The Commission has held that the prohibition on
    sending unsolicited fax advertisements does not apply to fax
    broadcasters that operate like common carriers by merely
    transmitting their customers' messages without determining either
    content or destination.[^35] In finding that such entities are not
    liable under section 227(b)(1)(C) of the Act or section
    64.1200(a)(3) of the rules, the Commission has focused on the nature
    of an entity's activity rather than any label that that entity may
    claim. Specifically, the Commission's rulings clearly indicate that
    a fax broadcaster's exemption from liability is based on the type of
    activities it undertakes, and only exists "\[i\]n the absence of 'a
    high degree of involvement or actual notice of an illegal use and
    failure to prevent such transmissions.'"[^36] Regardless of whether
    Fax.com characterizes itself as a disinterested fax broadcaster, it
    is clear that the company's activities place it outside the exempted
    category of fax broadcasting applied by Commission and render it a
    fax sender within the meaning of section 227(b)(1)(C).

14. The record here clearly establishes that Fax.com uses its own
    extensive distribution list of telephone facsimile numbers to send
    its clients' advertisements, and that it knowingly sends
    advertisements to such numbers without regard to whether the
    facsimile machine owner or responsible party either granted
    permission to send the advertisement or had an established business
    relationship with the advertiser or Fax.com.[^37] In addition,
    Fax.com apparently reviews the text of its clients' advertisements,
    not only to assist with graphic design,[^38] but also to assess
    content.[^39] Such conduct is clear evidence of Fax.com's high
    degree of involvement in the unlawful activity. Moreover, the
    staff's citations provided Fax.com with actual notice that its fax
    broadcasting activities do not comply with federal law.

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C.  Violations Evidenced by the Consumer Correspondence.

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15. As an initial matter, the staff has reviewed every facsimile that
    forms the basis for this NAL to confirm that each message advertises
    the commercial availability or quality of a product, good or service
    and, thus, constitutes an advertisement as set forth by section
    227(a)(4) of the Act and section 64.1200(f)(5) of our rules.[^40]
    Further, the record indicates that the consumers at issue neither
    granted express permission to send the advertisements nor had an
    established business relationship with either Fax.com or the
    entities on whose behalf the advertisements were faxed.[^41] In
    light of this information, we conclude that the 489 faxes detailed
    in Table 1 all are unsolicited advertisements and, thus, violate the
    statutory prohibition on faxing such materials.

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D.  Forfeiture Amount.

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16. As set forth above, we conclude that Fax.com apparently willfully or
    repeatedly violated the Act and the Commission's rules and orders by
    using a telephone facsimile machine, computer, or other device to
    send unsolicited advertisements to telephone facsimile machines.
    Fax.com apparently did not cease its unlawful conduct even after the
    Commission staff issued citations warning that it was engaging in
    unlawful conduct and could be subject to monetary forfeitures for
    subsequent violations. Accordingly, a proposed forfeiture is
    warranted against Fax.com for its apparent willful or repeated
    violations of the ban on unsolicited facsimile advertisements
    contained in section 227 of the Act and the Commission's rules and
    orders.

17. 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.[^42] In exercising such authority, we are to
    take into account "the nature, circumstances, extent, and gravity of
    the violation and, with respect to the violator, the degree of
    culpability, any history of prior offenses, ability to pay, and such
    other matters as justice may require."[^43]

18. Although the Commission's *Forfeiture Policy Statement* does not
    establish a base forfeiture amount for violating the prohibition on
    sending unsolicited advertisements to a telephone facsimile machine,
    we have previously considered \$4,500 per unsolicited fax
    advertisement as an appropriate base amount.[^44] In addition, we
    have previously assessed a higher forfeiture of \$10,000 per
    unsolicited fax advertisement in instances in which the fax
    recipient had previously asked the sender to refrain from faxing
    such materials.[^45]

19. In the instant case, we believe that the maximum forfeiture amount
    of \$11,000 per violation is warranted for each unsolicited
    advertisement transmitted by Fax.com and documented by the consumer
    correspondence. 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[^46] 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.

20. [Fax.com's Actions with Respect to Private Suits to Enforce Section
    227]{.underline}. We are especially concerned because it appears
    that Fax.com has acted in a manner that thwarts the unique statutory
    enforcement mechanism established by section 227 of the Act. Under
    the statute, the Commission, state attorneys general, or aggrieved
    consumers may initiate actions to enforce certain prohibitions and
    restrictions contained in section 227 of the Act, including the
    prohibition on sending unsolicited fax advertisements. Section
    227(b)(3) affords consumers an opportunity to initiate actions in
    state courts to enjoin violations of, *inter alia*, the prohibition
    on faxing unsolicited advertisements, and/or to recover damages
    equivalent to the actual monetary loss caused by such violations or
    \$500, whichever is greater, for each violation. Damages may be
    trebled if a court determines that the violation was "willful and
    knowing." As we describe below, Fax.com appears to have engaged in a
    pattern of deception and intimidation to conceal its involvement in
    sending prohibited faxes[^47] and to frustrate consumers' efforts to
    exercise the statutory private right of action.

21. We have obtained evidence that Fax.com employee Charles Martin filed
    an apparently false statement regarding his employment status before
    a California court considering a consumer's section 227(b)(3) claim
    for damages against Fax.com client American Benefit Mortgage. In two
    statements filed with the Los Angeles Superior Court and signed
    under penalty of perjury, Mr. Martin falsely identifies himself both
    as "Compliance Manager for American Benefit Mortgage, Inc." and as
    "Officer of the Company \[American Benefit Mortgage\] -- Manager of
    Human Resources."[^48] Through Mr. Martin's false claim to be
    employed by a client, Fax.com subverts the judicial decision-making
    process and skews the statutory private right of action accorded
    under section 227 by ensuring that the court does not have an
    accurate record upon which to base its decision.

22. We have also obtained letters, signed by Mr. Martin, that were
    received by consumers in response to "demand letters"[^49] that the
    consumers sent to Fax.com clients seeking to obtain monetary damages
    for unsolicited advertisements. Mr. Martin's letters are labeled
    "Inadmissible Settlement Communication," and state that the
    consumers that "fall under . . . exceptions . . . to receiving
    facsimile messages under 47 U.S.C. Section 227."[^50] In addition,
    Mr. Martin warns the consumers to expect countersuits that if they
    pursue their private right of action in the state courts where they
    reside:

> If you pursue this matter in Virginia our company will seek civil and
> criminal charges in California.[^51]
>
> If you think you have an action under the TCPA then file it in New
> Jersey. I will then pursue civil and criminal actions against you in
> the California Superior Courts. You can hire local legal counsel and
> we will litigate these matters with a jury trial.[^52]
>
> If you pursue this matter in Massachusetts we will then file the
> appropriate actions in California Superior Court.[^53]

Mr. Martin does not identify who "we" or "our company" is, and there is
no information on the face of the letters that would reveal the identity
of Mr. Martin's employer or the corporate entity he actually
represents.[^54] In two cases, however, consumers have provided us with
photocopies of the envelopes in which Mr. Martin's letters arrived. In
each case, the return address shows the name and address of the
individual advertisers to which the consumers directed their demand
letters. The envelopes also show a metered mail stamp indicating that
the letters were mailed from Aliso Viejo, California -- Fax.com's
corporate headquarters -- despite the fact that the return address was
in a different location.[^55]

23. Fax.com's letters are troublesome in several respects. First,
    Fax.com's apparent deception regarding its authorship of the
    correspondence appears to be part of a concerted effort to
    discourage private enforcement actions against Fax.com's individual
    clients while, at the same time, concealing Fax.com's potential
    liability for the violations. In addition, the letters go beyond
    valid legal defenses and misrepresent the requirements of section
    227(b)(1)(C),[^56] again in an apparent effort to convince the
    recipients that they do not have a cause of action. Finally, the
    letters allude to retaliatory and possible vexatious court actions
    if recipients exercise the private right of action provided by
    section 227(b)(3).[^57] Fax.com's obvious attempts to thwart
    consumers' statutory private right of action threaten the
    effectiveness of the unique three-pronged enforcement mechanism that
    Congress created in section 227.

24. [Fax.com's Marketing of Its Fax Broadcasting Service]{.underline}.
    The record indicates that Fax.com does not disclose to its clients
    the broad prohibition on faxing unsolicited advertisements imposed
    by section 227 of the Act and our rules and orders. Fax.com's
    extensive promotional website does not mention section 227 at all.
    Information on the website creates the erroneous impression that
    opt-out numbers provide the only recourse for consumers who object
    to receiving unsolicited fax advertisements.[^58] As indicated
    above, federal law does not address opt-out numbers in any way and
    even the effective use of such numbers in no way mitigates the fact
    that every unsolicited fax advertisement violates federal law.[^59]
    In addition to deceiving prospective customers by omitting crucial
    information, Fax.com apparently has affirmatively misstated federal
    law governing unsolicited facsimile advertisements. One consumer
    reports a conversation with a Fax.com salesperson:

> I acted hesitant about the legality of the whole thing, but Mr. Horvat
> assured me that Fax.com works with the FCC and other agencies to act
> within the Federal Guidelines. He further stated that Fax.com includes
> a federally required 'opt-out' number at the bottom of the fax which
> makes sending the faxes legal.[^60]

In addition to subjecting consumers to greater numbers of unlawful
faxes, Fax.com's deceptive marketing leaves its clients, which include
small businesses, vulnerable to federal, state, and private enforcement
actions that may involve substantial monetary penalties.

25. [Fax.com's Dealings with the Commission]{.underline}. Fax.com has
    not been forthcoming in its dealings with the Commission. The
    staff's citations directed Fax.com to describe in detail its
    involvement in "providing, compiling, generating, or editing"
    distribution lists of telephone facsimile numbers used to transmit
    advertisements on behalf of clients. Specifically, the staff asked

> Does your company employ or compensate any individuals or entities
> outside the company, including any tax-exempt nonprofit organizations,
> for any service, activity, assistance, or facilities used in
> connection with your company's providing, compiling, generating, or
> editing of such \[distribution\] lists? Please describe such
> arrangements in detail.

Initially, Fax.com suggests that the staff's inquiry "appear\[s\] to be
completely irrelevant and immaterial to the violations alleged in the
Citations."[^61] The Commission, however, has broad authority and
discretion to investigate conduct under its jurisdiction[^62] and to
"conduct its proceedings in such manner as will best conduce the proper
dispatch of business and to the ends of justice."[^63] Despite its
reservations, Fax.com nonetheless purports to substantively answer the
staff's question, summarily stating that it uses "its own research
methods" as one means of compiling its facsimile number database.[^64]
In addition, Fax.com states, "Fax.com does not, to its knowledge, employ
or compensate *any tax-exempt non profit organization(s)* in connection
with Fax.com's business, including the providing, compiling, generating
or editing of distribution list(s) of telephone numbers."[^65] By
limiting its answer to tax-exempt nonprofit entities, Fax.com has failed
to answer the staff's inquiry, which clearly sought information
pertaining to "*any* individuals or entities outside the company,
*including* any tax-exempt nonprofit organizations."[^66]

Despite the staff's warning that the concealment of any material fact is
punishable by fine or imprisonment,[^67] Fax.com did not disclose to the
Commission its remunerative relationship with at least one individual
who apparently housed automatic telephone dialing equipment that Fax.com
used to "war dial" massive blocks of telephone numbers to determine
which numbers belong to telephone facsimile machines.[^68]

26. [Maximum Forfeiture Is Warranted.]{.underline} Fax.com's pervasive
    and egregious pattern of deception confirms our determination that
    the maximum forfeiture amount is warranted for each violation set
    forth in Table 1. The record here shows that even after the staff
    notified Fax.com that its actions violated the Act and the
    Commission's rules and orders, Fax.com continued its massive
    unlawful enterprise. The *Forfeiture Policy Guidelines* provide for
    upward adjustments to the maximum statutory forfeiture amount in
    cases such as this which involve egregious misconduct and
    intentional violation.[^69] Accordingly, based on the nature and
    gravity of Fax.com's conduct and the continued need to ensure
    compliance with section 227(b)(1)(C) of the Act, we find Fax.com
    apparently liable in the amount of \$11,000 for each of 489
    violations. This results in a proposed total forfeiture of
    \$5,379,000. Fax.com shall have the opportunity to submit evidence
    and arguments in response to this NAL to show that no forfeiture
    should be imposed or that some lesser amount should be
    assessed.[^70]

### CONCLUSION AND ORDERING CLAUSES

27. We have determined that Fax.com apparently violated section 227 of
    the Act and the Commission's rules and orders by using a telephone
    facsimile machine, computer, or other device to send the 489
    unsolicited advertisements identified in Table 1 and discussed
    above. We have further determined that Fax.com is apparently liable
    for forfeitures in the amount of \$5,379,000.

28. Accordingly, IT IS ORDERED, pursuant to section 503(b)(5) of the
    Act, as amended, 47 U.S.C. § 503(b)(5), and section 1.80 of the
    Commission's rules, 47 C.F.R. § 1.80, that Fax.com, Inc. IS HEREBY
    NOTIFIED of an Apparent Liability for Forfeiture in the amount of
    \$5,379,000 for willful or repeated violations of section
    227(b)(1)(C) of the Act, 47 U.S.C. § 227(b)(1)(C), and section
    64.1200(a)(3) of the Commission's rules, 47 C.F.R. § 64.1200(a)(3),
    and the related orders described in the paragraphs above.

29. IT IS FURTHER ORDERED, pursuant to section 1.80 of the Commission's
    rules, 47 C.F.R. § 1.80, that within thirty (30) days of the release
    of this Notice, Fax.com, Inc. SHALL PAY the full amount of the
    proposed forfeiture[^71] OR SHALL FILE a response showing why the
    proposed forfeiture should not be imposed or should be reduced.

30. IT IS FURTHER ORDERED that a copy of this Notice of Apparent
    Liability for Forfeiture SHALL BE SENT by certified mail to Kevin
    Katz, President, Fax.com, Inc., 120 Columbia Street, Suite 500,
    Aliso Viejo, California 92656.

> FEDERAL COMMUNICATIONS COMMISSION

Marlene H. Dortch

Secretary

SEPARATE STATEMENT OF

COMMISSIONER KATHLEEN Q. ABERNATHY

> *Re: Fax.com Apparent Liability for Forfeiture, File No. EB-02-TC-120,
> NAL/Acct. No. 200232170004*

I strongly support this Notice of Apparent Liability and hope that other
fax broadcasters will take notice that the Commission will strictly
enforce the Telephone Consumer Protection Act. As set forth in detail in
the NAL, Fax.com appears to have founded its business on the practice of
sending unsolicited faxes in flagrant violation of the TCPA. 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. As a
result, many consumers have been harassed in their homes and had their
businesses disrupted by unwanted fax solicitations ― and, adding insult
to injury, were forced to pay for this privilege.

This NAL makes clear that the Commission will not tolerate such conduct;
indeed, we propose to punish Fax.com to the maximum extent of our
statutory authority. When I became a Commissioner, I pledged to protect
consumers by stringently enforcing the Communications Act and the
Commission's rules. I am proud that the Commission is taking this
responsibility seriously and sending such a strong signal that companies
cannot violate the law with impunity.

[^1]: Fax.com, Inc. is headquartered at 120 Columbia Street, Suite 500,
    Aliso Viejo, California 92656. According to Dun & Bradstreet
    Business Information Report, Fax.com began operations in 1998.
    Fax.com is a closely held corporation whose president, Mr. Kevin
    Katz, owns 35% of the capital stock. Value Capital owns 33% of
    capital stock and Fax.com employees own the remaining 32% of capital
    stock. *See* Dun & Bradstreet Business Information Report, April 3,
    2002. For purposes of this NAL, we specify that Fax.com encompasses
    all affiliated entities, successors, and assigns as well as its
    corporate officers, Mr. Katz, Thomas Roth, Jeffrey Dupree, and Eric
    Wilson.

[^2]: Section 227 was added to the Communications Act of 1934 by the
    Telephone Consumer Protection Act of 1991, Pub.L 102-243, 105 Stat.
    2394, and is most commonly known as the TCPA.

[^3]: *See* 47 U.S.C. § 227(b)(1)(C); 47 C.F.R. § 64.1200(a)(3); *see
    also Rules and Regulations Implementing the Telephone Consumer
    Protection Act of 1991, Report and Order*, 7 FCC Rcd 8752, 8779,
    (1992) (*TCPA Report and Order*) (stating that section 227 of the
    Act prohibits the use of telephone facsimile machines to send
    unsolicited advertisements).

[^4]: *See* 47 U.S.C. § 503(b)(1). The Commission has the authority
    under this section of the Act 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 . . . ."

[^5]: *See*
    [**http://www/fax.com/Services/faxblast.asp**](http://www/fax.com/Services/faxblast.asp)
    (website accessed May 29, 2002). Fax.com's website, copyrighted
    2000, contains the following additional claims:

    > Fax.com is the only company that can boast 16 million fax numbers.
    > With another 16 million records soon available, Fax.com will be
    > the leading place to purchase fresh fax broadcasting data.
    > <http://www.fax.com/company_profile/our_business.asp> (website
    > accessed May 29, 2002).
    >
    > Broadcast your advertising fax based on radius, Zip Codes, Metro
    > Area, Area Code, County, State or the entire U.S. using a database
    > that will exceed 30 million fax numbers.
    > [**http://www.fax.com/Why_use_fax/direct.asp**](http://www.fax.com/Why_use_fax/direct.asp)
    > (website accessed May 29, 2002).

[^6]: *See*
    [**http://www.fax.com/Consumer_support/FAQs.asp**](http://www.fax.com/Consumer_support/FAQs.asp)
    (website accessed May 29, 2002) ("If you would like, we can send you
    a questionnaire about your company, consult with you and design
    outstanding fax broadcast ads for you.");
    [**http://www.fax.com?Services/addl_seerv.asp**](http://www.fax.com/?Services/addl_seerv.asp)
    (website accessed May 29, 2002) ("Our design department will work
    with you to design your fax ad, choose type fonts, create graphics,
    and develop the ideal fax that will achieve the greatest
    response.").

[^7]: *See* note 40, *infra*.

[^8]: Citation letters from Kurt A. Schroeder, Deputy Chief, FCC
    Telecommunications Consumers Division to Kevin Katz, Fax.com
    President (Dec. 26, 2000; May 11, 2001; May 31, 2001) (collectively
    *Fax.com Citations* or staff citations).

[^9]: 47 U.S.C. § 503(b)(5). Under section 503(b)(5), 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." We note that this section does not require the multiple
    citations given by the staff here; only a single citation was
    necessary before initiation of a forfeiture proceeding.

[^10]: The staff also cited 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. This
    proceeding does not encompass any actions against the cited
    companies.

[^11]: *Fax.com Citations* at 2 (footnotes omitted) (citing *Rules and
    Regulations Implementing the Telephone Consumer Protection Act of
    1991, Memorandum Opinion and Order*, 10 FCC Rcd 12391, 12407 (1995)
    (*TCPA Memorandum Opinion and Order*)); *TCPA Report and Order*, 7
    FCC Rcd 8752, 8780 (1992) (quoting *Use of Common Carriers*, 2 FCC
    Rcd 2819, 2820 (1987))).

[^12]: January 31 Response at 27; June 1 Response at 28; June 21
    Response at 27.

[^13]: January 31 Response at 27; June 1 Response at 29; June 21
    Response at 28.

[^14]: January 31 Response at 30; June 1 Response at 31-32; June 21
    Response at 30.

[^15]: January 31 Response at 30-31; June 1 Response at 32; June 21
    Response at 31. Judging by information provided by consumers to this
    Commission, it does not appear that Fax.com is using this message
    routinely at the present time; only one such message is included in
    the instant forfeiture action. *See* note 40, *infra*. ­­

[^16]: January 31 Response at 28-29; June 11 Response at 27; June 21
    Response at 27-28.

[^17]: As set forth in Table 1, these unsolicited facsimile
    advertisements were received by 46 individuals, businesses, or
    government offices between September 2001 and March 2002. Although
    some consumers' correspondence and related declarations detail
    additional unsolicited advertisements received before August 7,
    2001, we do not list these violations in Table 1 because they are
    beyond the one-year statute of limitations set forth in section
    503(b)(6)(B) of the Act, 5 U.S.C. § 503(b)(6)(B). Finally, we note
    that evidence of additional instances of unlawful conduct by
    Fax.com, subject to section 503(b)(6)(B)'s statute of limitations,
    may form the basis of additional enforcement actions.

[^18]: *See* Table 1 recording faxes received by Robert Isaac Carr (27
    faxes), George D. Demet (29 faxes), Robert R. Dzimidas (21 faxes),
    L. ("Les") R. Docks (24 faxes), Allan Howard Frey (21 faxes),
    Heather Ann Hartnett (30 faxes), Douglas M. McKenna (95 faxes; 28
    faxes -- residential line, 67 faxes -- business line), John P.
    Strang (30 faxes), and Wayne George Strang (48 faxes).

[^19]: Some consumers indicate that they actually have received far more
    advertisements from Fax.com than they have submitted to the
    Commission. *See* Facsimile message from John Koltun to Evelyn
    Dyson, FCC Telecommunications Consumers Division (Apr. 12, 2002);
    facsimile message from George Craig (on behalf of Gary Chou,
    Internal Revenue Service) to Evelyn Dyson, FCC Telecommunications
    Consumers Division (Mar. 18, 2002).

[^20]: One consumer describes particular circumstances to show that he
    neither solicited the faxes nor permitted another individual to do
    so on his behalf. *See* Declaration of Wayne George Strang (Jul. 22,
    2002) (stating that Mr. Strang is the only member of his household
    and, thus, the only individual entitled to grant access to his
    telephone facsimile machine).

[^21]: Although not the basis for our action here, we note that accounts
    in public media, litigation against Fax.com, and correspondence to
    the Commission describe in detail substantial disruption and expense
    caused by Fax.com's widespread fax broadcasting of unsolicited
    advertisements. *See* "E-Mail Bill May Fail to Curtail Spamming,"
    Brett Arquette, eWEEK Magazine,
    [**www.eweek.com/article/0,3658,s=1868&a=8229,00.asp**](http://www.eweek.com/article/0,3658,s=1868&a=8229,00.asp),
    2001 WL 4412169 (July 16, 2001) (describing disruption caused by
    business organization's receipt of up to 1,000 faxes per week from
    Fax.com):

    #####  

    ##### We have 320 DID (direct inward dialing) fax numbers assigned to our organization and recently had to add two more inbound trunks to keep up with the number of unsolicited faxes Fax.com was pumping out. During one week, Fax.com took up all four of the inbound lines that feed our 320 RightFax server numbers for 1.5 hours, virtually shutting down our fax system for that time. 

    *See also* "Fighting Back on the Fax," Ed Foster, InfoWorld
    Magazine, 2001 WL 22048648 (Aug. 13, 2001) (relaying readers'
    reports of disruption caused by Fax.com: "'We received over 100
    faxes from Fax.com even though we had previously opted out for all
    our 135 or so incoming phone numbers. . .'"); *Covington & Burling
    v. International Marketing & Research, Inc., et.al.*, Second Amended
    Complaint, Civil Action No. 01-004360 (D.C. Superior Court, filed
    Dec. 13, 2001) (\$2.45 million lawsuit alleging Fax.com "bombarded"
    law firm with 1,634 unsolicited advertisements during one week,
    "substantially interfer\[ing\] with the work of the firm."); Letter
    from Phillip L. Verveer and David M. Don, counsel for j2 Global
    Communications, Inc. to Kurt Schroeder, Deputy Chief, FCC
    Telecommunications Consumers Division (May 9, 2001) (describing
    disruption to j2's business operations caused by faxes transmitted
    by Fax.com and other fax broadcasters that send unsolicited
    advertisements):

    > Over the last several months, Fax.com and American Blast Fax (and
    > its affiliates) have flooded j2s telephone facsimile lines with
    > hundreds of unsolicited faxes, despite j2's requests that they
    > cease and desist transmission of unsolicited faxes. The flood of
    > unsolicited advertisements severely disrupts the j2 service,
    > interferes with customers' abilities to utilize the services, and
    > on many occasions, crashes j2's servers for several hours at a
    > time during the workday. When a server crashes, j2 customers are
    > unable to access their accounts and thus cannot receive or send
    > faxes and voicemails using the j2 service. Delivery of legitimate
    > faxes to customers' email accounts is often delayed for hours.

    *See also* "j2 Global Communications, Inc. Secures Agreement to End
    Unsolicited Fax Spam," j2 Global Communications, Inc. Press Release,
    [**http://biz.yahoo.com/prnews/020130/law050**](http://biz.yahoo.com/prnews/020130/law050)
    (Jan 30, 2002) (reporting that j2 secured an agreement to end
    Fax.com's transmission of unsolicited fax advertisements to j2's
    more than 4.5 million customers).

[^22]: *See* Letter from James Allan Dobbins to the Direct Marketing
    Association (Oct. 4, 2001); facsimile message from Richard V.N. Ginn
    to Carmen Bates, FCC Telecommunications Consumers Division (Mar. 16,
    2002); Letter from Steven M. Greenberg to FCC (Dec. 7, 2001); Letter
    from Sally Collins to FCC Consumer Information Bureau (Dec. 13,
    2001).

[^23]: Letter from Elkins Cox to FCC Consumer Information Bureau (Sep.
    21, 2001) and attached letter from Elkins Cox to Georgia Governor's
    Office of Consumer Affairs (Sep. 5, 2001) ("In my home setup, I must
    answer the phone, realize it is a fax call, and transfer the call to
    the fax machine," which prints the fax at a cost of \$.30 per page).

[^24]: Letter from Robert R. McMeekin, M.D. to FCC Consumer Information
    Bureau (Jan. 11, 2002). Dr. McMeekin mistakenly identifies two faxes
    as being transmitted on October 31 and December 31, 2000. The faxes
    included with Dr. McMeekin's letter contain header information that
    shows that they actually were received on those days in the year
    2001.

[^25]: Information provided by consumers indicates that Fax.com
    continued to send faxes even after receiving opt-out calls. For
    instance, a log provided by William Robert White, President of
    Regency Sales, Inc., documents over 50 attempts between May 2000 and
    August 2001 to use Fax.com's opt-out numbers to halt Regency's
    receipt of unsolicited advertisements from Fax.com clients. Despite
    these attempts, Fax.com continued to transmit unsolicited
    advertisements to Regency, as evidenced by at least 12 faxes
    received by Regency from December 2001 to February 2002. *See* Table
    1; s*ee also* Letter from Andrew Hansis to Consumer Information
    Bureau (Oct. 5, 2001) (*October 5 Hansis Letter*) (stating that Mr.
    Hansis continued to receive faxes even after using Fax.com's
    automated opt-out system and speaking with a senior Fax.com employee
    in an effort to end the faxing); Consumer Form for Telephone-Related
    Issues from Norman Jensen, III (rec'd Jan. 8, 2002) (consumer
    continued to receive at least one advertisement a week despite
    "repeatedly" calling opt-out numbers and faxing a message to the
    originating fax number asking that his telephone facsimile number be
    removed from the fax number database); Consumer Form for
    Telephone-Related Issues from Dora Wong Goto (rec'd Oct. 15, 2001)
    (*Goto Complaint Form*); annotated copies of faxes submitted by
    James Allan Dobbins. It is clear that a call to one Fax.com opt-out
    line does not end all fax transmissions from the company. We
    emphasize here that even an effectively administered opt-out system
    does not change the statutory ban on sending unsolicited facsimile
    advertisements or insulate such transmissions from statutory
    penalties. However, the fact that Fax.com apparently does not even
    adhere to its own stated procedures makes its conduct even more
    egregious.

[^26]: Over 20 per cent of the faxes listed in Table 1 do not identify
    the entity whose products, goods, or services are being advertised.
    Section 227(d)(1)(B) of the Act and section 68.318 of the
    Commission's rules require that all faxes display in a margin at the
    top or bottom of each page or on the first page of a fax
    transmission, the following information: the date and time of
    transmission; the name of the individual, business, or other entity
    that sent the fax; and the telephone number of either the sending
    machine or the individual, business, or other entity responsible for
    sending the fax. With respect to identification requirements for the
    fax sender and the telephone number of the sender or sending
    machine, the Commission has determined that the entity that creates
    the content of the fax message is generally responsible for
    compliance. *Rules and Regulations Implementing the Telephone
    Consumer Protection Act of 1991, Order on Further Reconsideration*,
    12 FCC Rcd 4609, 4610 n.7, 4613 (1997) (finding that liability rests
    with entity that is responsible for the content of the fax message,
    not with a fax broadcaster that does "not determine the message
    content or to whom they are sent.") If, however, a fax broadcaster
    voluntarily chooses to place its own identifying information on a
    message faxed for another entity, "it must be clear which entity is
    the content originator and which entity is merely the transmitter of
    the message." 12 FCC Rcd at 4613.

[^27]: Letter from Andrew Hansis to Consumer Information Bureau (Oct. 4,
    2001) (*October 4 Hansis Letter*); *October 5 Hansis Letter*.

[^28]: *October 4 Hansis Letter; see, e.g., Goto Complaint Form*
    (consumer made two calls to Fax.com but was unable to reach a live
    person or have calls returned).

[^29]: 47 U.S.C. § 227(b)(1)(C). Section 227 defines a 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 onto paper." *Id.* §
    227(a)(2). This blanket prohibition applies to all unsolicited
    advertisements transmitted to telephone facsimile machines. The Act
    does not permit the sending of unsolicited advertisements by
    facsimile to either business or residential telephone facsimile
    machines.

[^30]: 47 U.S.C. § 227(a)(4); 47 C.F.R. § 64.1200(f)(5).

[^31]: *See* *TCPA Report and Order*, 7 FCC Rcd at 8779 n. 87; *TCPA
    Memorandum Opinion and Order*, 10 FCC Rcd at 12408.

[^32]: *Id.*

[^33]: *See Destination Ventures v. FCC*, 46 F.3d 54, 55-57 (9^th^ 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); s*ee also 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); *Texas v. American Blast Fax*, 121 F.
    Supp. 2d 1085, 1091-92 (W.D. Tex. 2000). *But see* *Missouri v.
    American Blast Fax*, 196 F. Supp. 920 (E.D. Mo. 2002), appeal
    pending Nos. 02-2705, 02-2707 (8^th^ Cir.) (government failed to
    demonstrate that the harms associated with unsolicited facsimile
    advertisements are real, that the blanket prohibition on faxing such
    materials would significantly alleviate such harms, and that the
    prohibition was not more extensive that necessary to serve the
    government's interests). The latter case is not implicated in this
    NAL because none of the fax transmissions for which we are assessing
    a forfeiture were received in or, to our knowledge, sent from the
    eastern judicial district of Missouri.

[^34]: *Johnson v. Robison*, 415 U.S. 361, 368 (1974) (quoting
    *Oestereich v. Selective Service Board*, 393 U.S. 233, 242 (1968)
    (Harlan, J., concurring in result) ("Adjudication of the
    constitutionality of congressional enactments has generally been
    thought beyond the jurisdictions of administrative agencies.")).

[^35]: *TCPA Memorandum Opinion and Order*, 10 FCC Rcd at 12407. *See*
    *TCPA Report and Order*, 7 FCC Rcd at 8780.

[^36]: *Id.* (quoting *Use of Common Carriers,* 2 FCC Rcd at 2820).

[^37]: *See* para. 5, *supra.*

[^38]: *See* note 6, *supra*.

[^39]: Fax.com's website states that "\[a\]s a responsible service
    provider, Fax.com makes a conscious effort to censor any offensive
    literature or graphic content from its platform."
    [**http://www.fax.com/company_profile/our_business.asp**](http://www.fax.com/company_profile/our_business.asp)
    (website accessed May 29, 2002). In addition, as indicated above, in
    response to our citations, Fax.com has suggested that it may review
    its clients' advertisements to ensure that they are not "offensive
    or misleading." *See* para. 5, *supra*. Such editorial influence is
    inconsistent with Fax.com's claim that it does not exercise control
    over the content of its clients' advertisements. Fax.com's close
    involvement in the undertakings of its clients is evidenced by the
    fact that Fax.com is the subscriber for the toll-free sales number
    (800-550-0406) displayed on one of its client's advertisements.
    *See, e.g.,* Advertisements from Infinity Communications to Heather
    Ann Hartnett (Nov. 2, 2001; Dec. 12, 2001).

[^40]: 47 U.S.C. § 227(a)(4); 47 C.F.R. § 64.1200(f)(5); *see* para. 8,
    *supra*. The advertisements include promotions for cellular
    telephone service, stock market offerings, commercially offered
    seminars, clocks, vacation packages, office supplies and equipment,
    and insurance services. The Moneyline Report's stock advertisements,
    claim, "This Fax is intended for information purposes only and is
    not a commercial solicitation under the Telephone Consumer
    Protection Act. It is not an offer to buy or sell anything." Despite
    this disclaimer, the faxes clearly promote a stock offering and thus
    constitute an advertisement under 47 U.S.C. § 227(a)(4) and 47
    C.F.R. § 64.1200(f)(4). *See, e.g*., Advertisement from Moneyline
    Report to John P. Strang (Oct. 16, 2001) ("Moneyline Report is
    putting FXGP on our Strong Buy-Aggressive Growth recommendation
    list. . . ."). Finally, one of the advertisements included in this
    forfeiture action is Fax.com's own "Your Permission Please" message,
    which purportedly seeks permission to fax consumers both missing
    children alerts and "a limited amount of paid commercial
    advertising." See Advertisement from Fax.com to Heather Ann Hartnett
    (Dec. 31, 2001). Contrary to Fax.com's assertion, such messages are
    indeed both commercial and prohibited under section 227(b)(1)(C) of
    the Act and section 64.1200(a)(3) of our rules. *See TCPA Memorandum
    Opinion and Order*, 10 FCC Rcd at 12408 ("\[F\]acsimile requests for
    permission to transmit would impose costs on facsimile recipients
    unless and until the recipient were able to ask that such
    transmissions be stopped. This kind of 'negative option' (in which
    the sender presumes consent unless advised otherwise) is contrary to
    the statutory requirement for prior express permission or
    invitation.").

[^41]: In fact, several consumers indicate that Fax.com continued to fax
    advertisements to them even after they attempted to stop such faxes
    by calling one or more of Fax.com's toll-free opt-out numbers. *See*
    note 25, *supra*.

[^42]: Section 503(b)(2)(C) provides for forfeitures up to \$10,000 for
    each violation by cases not covered by subparagraph (A) or (B),
    which address forfeitures for violations by licensees and common
    carriers, among others. *See* 47 U.S.C. § 503(b). In accordance with
    the inflation adjustment requirements contained in the Debt
    Collection Improvement Act of 1996, Pub. L. 104-134, Sec. 31001, 110
    Stat. 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).

[^43]: 47 U.S.C. § 503(b)(2)(D); *The* *Commission's Forfeiture Policy
    Statement and Amendment of Section 1.80 of the Rules to Incorporate
    the Forfeiture Guidelines, Report and Order*, 12 FCC Rcd 17087,
    17100-17101, (1997), *recon. denied*, 15 FCC Rcd 303 (1999)
    (*Forfeiture Policy Statement*).

[^44]: *See 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).

[^45]: *See Carolina Liquidators NAL*, 15 FCC Rcd at 16842; *Tri-Star
    NAL,* 15 FCC Rcd at 11300.

[^46]: Fax.com's website, copyrighted 2000, claims:

    > By mid-1999, all systems were in place with an initial
    > broadcasting capacity of two million faxes per day. Following its
    > plan to continue increasing line capacity to three million faxes
    > per day by 2001, Fax.com is well on its way.

    [**http://www.fax.com/company_profile/about.asp**](http://www.fax.com/company_profile/about.asp)
    (website accessed May 29, 2002).

[^47]: As mentioned above, only one of the 489 faxes that form the basis
    for this NAL identifies Fax.com in any way. Nonetheless, Fax.com's
    various toll-free opt-out numbers appear on each advertisement. In
    fact, the wording of the opt-out notices, and the fact that they are
    contained on advertisements for individual entities, clearly convey
    the erroneous impression that opt-out numbers are associated with
    individual advertisers. *See, e.g.*, Advertisement from Y2 Marketing
    to D. Leon Taylor (Oct. 16, 2001) ("If you received this fax in
    error and would like to have your number removed from our database,
    call toll-free at 800-822-9033; Advertisement from eStock Pick of
    the Week to Robert Isaac Carr (Jan. 9, 2002) ("To have your name
    removed from our database, please call our toll free service at:
    (800)-331-4510); Advertisements from Central Imaging Supply to L.
    ("Les") R. Docks (Nov. 2 and 8, 2001) ("To have your number removed
    from our database, please call our automated toll-free center at
    800-457-5410). As shown in Tables 2 and 3, however, opt-out numbers
    are not assigned uniquely to individual advertisers. These tables
    reveal that a single advertiser may be associated with multiple
    opt-out numbers and likewise a single opt-out number may be
    associated with multiple advertisers.

[^48]: "Representative Appearance Declaration Pursuant to CCP
    116.540(B)" signed by Charles Martin and filed in Los Angeles
    Superior Court (Feb. 26, 2001, Apr. 3, 2001). According to Dun &
    Bradstreet, Charles Martin is not an officer of American Benefit
    Mortgage. *See* Dun & Bradstreet Business Information Report (June
    7, 2002). In addition, an Enforcement Bureau staff member called
    American Benefit Mortgage's automated telephone directory, followed
    instructions to press keypads to spell Mr. Martin's name, and
    received a message that the name could not be found in the
    directory.

[^49]: Demand letters are a popular tool among TCPA advocates and
    consumers who seek to self-enforce section 227 though the statute's
    private right of action. In such demand letters, a consumer
    generally complains about receiving a prohibited advertisement,
    asserts the private right of action to recover monetary damages, and
    asks the advertiser to pay a specified amount to avoid being sued in
    state court. We do not suggest that any advertiser or fax
    broadcaster is obligated to accede to a demand letter or that
    failure to do so somehow indicates an alleged violator's bad faith.

[^50]: *See* Letter from Charles Martin to Terry P. Carter (Oct. 25,
    2001) (*Carter Letter*); Letter from Charles Martin to Amy K.C.
    Goebel (Nov. 2, 2001) (*Goebel Letter*).

[^51]: *Carter Letter*.

[^52]: Letter from Charles Martin to Richard M. Zelma (Nov. 9, 2001)
    (*Zelma Letter*).

[^53]: *Goebel Letter*.

[^54]: The line below Mr. Martin's name simply reads, "Compliance
    Department." *See* *Carter Letter* (reference line refers to
    Advanced Communications); *Goebel Letter* (reference line refers to
    Advanced Communications); Letter *Zelma Letter* (reference line
    refers to Colorjet, Inc.).

[^55]: The envelope for the *Zelma Letter* shows a return address for
    Colojet, Inc. in Louisville, Kentucky while the metered postal
    stamp, PB8722193, shows that the envelope was mailed from Aliso
    Viejo, California. Likewise, the envelope for the *Goebel Letter*
    shows a return address for Advanced Communications in Long Beach,
    California (located in Los Angeles County) and the identical metered
    postal stamp number, which shows that the envelope was mailed from
    Aliso Viejo, California (located in Orange County).

[^56]: One letter states, "As you are aware there are three exceptions
    to receiving facsimile messages under 47 U.S.C. Section 227. You
    fall under two of those exceptions." *Carter Letter*. In reality,
    there is one exception to the ban on faxing unsolicited
    advertisements: when the recipient has given prior express
    permission or invitation to send the advertisement. 47 U.S.C. §
    227(b)(1)(C). As noted above, the Commission has determined that an
    established business relationship between the fax sender and
    recipient constitutes the requisite permission or invitation to fax.
    *See* para. 11, *supra.* Other information from consumers also
    indicates Mr. Martin's deception regarding the section 227(b)(1)(C)
    of the Act:

    > Mr. Martin has continued to attempt to misinform me about the
    > TCPA, stating at various times that Fax.com is exempt from the
    > TCPA, that California law overrides the TCPA, that Fax.com was a
    > non-profit organization and thus exempt from § 227(b)(1)(C), that
    > Fax.com has never lost a case, that the FCC has not cited Fax.com,
    > etc.

    Letter from Mark James, Marketing Power, Inc. to Yanic Hardie, FCC
    (Apr. 2, 2001) (*James Letter*).

[^57]: One consumer has alleged that he was a victim of such a
    retaliatory lawsuit. Richard Zelma, a well-known TCPA advocate,
    claims that Charles Martin falsely swore out a complaint in the
    state of New Jersey charging Mr. Zelma with harassment. *State of
    New Jersey v. Richard Zelma*, Norwood Municipal Court Summons No.
    S-2001-000002-0241, File No. 8875.1000 (Jan. 23, 2001). The case was
    dismissed for failure to prosecute. The claims made by Mr. Zelma and
    Mr. Martin are moot, and in any event, would not be properly before
    this Commission; we therefore take no position on the validity of
    such claims.

[^58]: See
    [**http://www.fax.com/Customer_support/FAQs.asp**](http://www.fax.com/Customer_support/FAQs.asp)
    (website accessed May 29, 2002) ("Q: Do prospective clients complain
    about receiving the faxes? A: If someone does not want to receive
    any more faxes, there is an 800 number at the bottom of each and
    every fax sent through Fax.com that an individual can call to have
    the fax number removed from your campaign list.")

[^59]: *See* note 25*, supra*. We note that the broad federal
    prohibition on faxing unsolicited advertisements applies to both
    interstate and intrastate transmissions. *See* 47 U.S.C. § 152(b)
    (section 227, *inter alia*, is not subject to the provision that
    generally excludes Commission jurisdiction over intrastate matters);
    47 U.S.C. § 227(e) (section 227 does not preempt state law that
    imposes *more restrictive* intrastate requirements).

[^60]: *James Letter*.

[^61]: January 31 Response at 29; June 1 Response at 29-30; June 21
    Response at 28-29.

[^62]: 47 U.S.C. § 403 provides that "\[t\]he Commission shall have full
    authority and power at any time to institute an inquiry, on its own
    motion, in any case and as to any matter or thing . . . concerning
    which any question may arise under any provisions of this Act, or
    relating to the enforcement of any of the provisions of this Act."

[^63]: 47 U.S.C. § 154(j).

[^64]: *See* January 31 Response at 29; June 1 Response at 30; June 11
    Response at 29.

[^65]: *Id*. (emphasis added).

[^66]: *Fax.com Citations* at 2 (emphasis added).

[^67]: *Id*.

[^68]: In this context, war dialing uses automated equipment to dial
    telephone numbers, generally sequentially, and software to determine
    whether each number is associated with a fax or voice line. In April
    2000, the state of Washington entered into a consent decree with
    Fax.com to settle its complaint alleging that this war-dialing
    scheme had resulted in a barrage of calls to telephone lines at the
    University of Washington Medical Center, including lines for
    emergency services and patient rooms, in violation of section
    227(a)(1)(A) of the Act and section 64.1200(a)(1) of our rules.
    *State of Washington v. Fax.com, Inc.*, No. C01-0369 (W.D. Wash. May
    13, 2001) (consent decree permanently enjoining Fax.com from, *inter
    alia*, using automated dialing equipment to call any hospital
    patient room or emergency medical telephone number within Washington
    state and providing for \$90,000 payment to the state in civil
    penalties, damages, and attorneys fees). We recognize that although
    Fax.com has agreed to an injunction and monetary payment, it does
    not admit the allegations in Washington's complaint. We do not
    address or pass judgment on all aspects of Fax.com's conduct in this
    regard, which, in any event, is beyond the statute of limitations
    set by the Act. Nonetheless, we need not ignore materials that
    document an arrangement whereby Fax.com paid an individual to house
    and operate the war-dialing equipment. *See* Participation Agreement
    between Fax Broadcast Systems and Mike Salvus (Apr. 4, 2000)
    (providing for Mr. Salvus's agreement to house in his residence
    war-dialing, or "casting," equipment as part of Fax Broadcast
    Systems' "Fax Broadcast Placement Program"); "Dear Participant" Form
    Letter from Paul L. Stanton, Fax Broadcast Systems (Mar. 30, 2000)
    (informing recipients that Fax.com has taken over from Fax Broadcast
    Systems, payments to participants in the fax broadcast placement
    program). In light of this information, it is clear that Fax.com did
    not honestly answer the staff's questions. We do not address here
    possible sanctions against Fax.com for its concealment.

[^69]: *Forfeiture Policy Statement*, 12 FCC Rcd at 17,101.

[^70]: *See* 47 U.S.C. § 503(b)(4)(C); 47 C.F.R. § 1.80(f)(3).

[^71]: The forfeiture amount should be paid by check or money order
    drawn to the order of the Federal Communications Commission.
    Reference should be made on Fax.com, Inc.'s check or money order to
    "NAL/Acct/ No. 200232170004." Such remittances must be mailed to
    Forfeiture Collection Section, Finance Branch, Federal
    Communications Commission, P.O. Box 73482, Chicago, Illinois
    60673-7482.