SPAMMITY SPAM

"If Osama had sent 100,000 junk faxes, there'd be a bigger price on his head."

Although faxes are not as dominant these days of email, at one point they were the darling of every office. Some things simply work better when faxed, giving you an instant copy you can read with more comfort and ease than a computer screen. If you're like me, you prefer to print out things and read them rather than read long articles on the computer.

However, they also turned into an advertiser's dream, if they were sufficiently ethically challenged. And, given that they were advertisers, ethics rarely comes into the picture. Instead of some useful letter or memo, your fax began to spew ads, one after the other. How they got your number one could only guess. Who is doing it is a mystery that can take days to hunt down, if at all. This began to happen all over, but when it reached the offices of legislators, there was only one thing to do: make it illegal. There's a fine for turning for sending junk faxes: $500-$1500 per fax. A bounty is paid by the US government for turning in such junk faxers (a more recent law does the same thing for junk emailers - adspammers).

For example, a Georgia car wash inundated people with ads for their car wash and were nailed by the courts for fines of up to 110 million dollars. The case has since gone to the Georgia Court of Appeals on a technicality. At Overlawyered, Walter Olsen excerpts his Wall Street Journal article on the subject (subscription required):

No doubt you can make a case that getting at the most heinous wrongdoers through bounty-hunting is preferable to never getting at them at all. But note that where crimes are indisputably serious, the rewards for informing are fixed and often modest. The typical reward for helping solve a bank robbery is $5,000. At rewardsforjustice.net, the U.S. government offers bounties for information leading to the capture of leading terrorists: Even notorious masterminds tend to be worth at most $5 million, while turning in Osama bin Laden will win you $25 million.

If Osama had sent 100,000 junk faxes, there'd be a bigger price on his head.

The problem with junk emails and faxes is that they are very cheap. Such advertising is likely even less effective than ordinary ads, as they tend to annoy and frustrate, but since they cost so very little to put out, the return doesn't have to be very high to make it worth an attempt. Even one out of 1000 ads returning a sale pays for the effort easily. But is the crime so heinous that it's worthy of such titanic fines? Anger over these techniques has spawned websites that attempt to hunt down the perpetrators, and I'm all for slamming the lid on people who advertise like this. But is this truly the best way, the most reasonable?

Overlaywered commenters responded to the article:

Your junk fax article was excellent. I'd like to see you cover the practice of assigning junk faxes -- sometimes to lawyers -- where the recipient gets $25, $50, to a maximum of $100 and the assignee, who aggrigates claims against faxers, sues for up to $3,000 per fax. There is a cottage industry of these junk fax litigation mills. Some rely on suing on single faxes, knowing that defense costs more than settlement demands. The fax need not even be in violation of the law. The scam works as well.
-by David


I have litigated several personal junk fax cases. Let me add some context to explain why the $500/$1500 penalties are reasonable:

-It is very difficult to track down a junk faxer. They avoid process. They falsify caller id. Once you finally identify one, they file incredible legal challenges claiming that they have a First Amendment right to junk fax you (these challenges have universally failed). Fax.com's lawyer offered me a settlement in bad faith several years ago, and then the company tried to escape its liabilities through forming new companies: http://www.wired.com/news/business/0,60406-0.html

-Junk faxers know what they are doing is illegal. The prime senders in the past ten years were fax.com and American Blast Fax. Both employed a strategy of sending as many faxes as possible before enforcement efforts were able to catch up. As as result, they made millions, placed their profits in offshore accounts, abandoned their businesses, and remain at large. See [Wired News article]

-The cost of these fines may be high, but consider the costs to consumers imposed by these companies. Fax.com claimed to send millions of faxes a day. The toner, paper, and inconvenience caused by that intrusion is significant.

-At my old job, we received about 20 junk faxes a day. I called dozens of these businesses (the companies being advertised) and informed them of the TCPA, and they'd continue sending the faxes. It was clear that they didn't care; they didn't think they would get caught.

-In one investigation I did of a Texas company that used Fax.com, I found that the principals were fraudsters. They had businesses registered in several different states, they were being pursued by plaintiffs and law enforcement for common fraud (billing people for products they never shipped). I spent probably 10 hours trying to track down these guys, and never found them, despite the fact that they had registered agents for process, etc. That's the type of cost that necessitates $500/$1500 awards.

-The phone companies are complicit because they deliberately market telephone lines to junk faxers that allow for the falsification or non-transmission of caller ID. This means that in order to track down the sender, you have to start by suing the advertiser--they're the only contact on the fax.

-Please consider what it's like to have your phone ring at 4 AM. That's when many junk faxers send their messages. It's a bit traumatic to receive calls that late in the night; I always thought it was a family emergency until the fax beep started... Many hours of sleep were lost because of these companies, and eventually I just unplugged my fax.
-by Chris Hoofnagle


I argued in my WSJ piece that current federal law is written so broadly, especially in its advertiser liability provisions, as to expose to harsh penalties many businesses whose main sin may have been that their mom-and-pop owners or local managers succumbed to the wrong marketing pitch. In response, several commenters point out that the law provides a means to go after hardened blast-fax operatives who are perfectly aware of the law but choose to thumb their noses at its requirements. But there's no contradiction between these two observations. A more carefully drafted law would have focused enforcement on the culpable without serving as a trap for the merely naive. Of course, one of the major ironies is that the fly-by-nighters and scammers tend to have hidden their assets, while the legit advertisers having done no such thing are more likely to pay out.

Has the flow of junk faxes in fact been seriously curtailed? In comments above, as in other commentary on the web, some seem to think yes, others no. It's hard to know for sure.

I am glad that Steve Kirsch is not suing the telecom companies. For earlier comments by Mr. Kirsch that could be read to different effect, see this 2002 Reuters report (announcing intention to seek $1500-per-fax treble damage remedy from telecom operator Cox Communications), and Kirsch's site Junkfax.org, which in a FAQ page (scroll about 2/3 down) includes the following Q&A exchange: "Q. Can you really go after Cox Communications, Qwest, MCI, Global Crossing, or other common carriers or companies that supply telecommunications through a common carrier? After all, they are just the telecommunications provider. A. Absolutely. It's a slam dunk...." See Overlawyered, Aug. 26, 2002.
-by Walter Olson


One of my employees at our small Wyoming company bought some fax advertising from Fax.Com in 2003. My employee was assured by their salesman that the faxes they were doing were legal and were being sent to an 'opt-in' list. (A common term used in direct marketing in 2003.) My staff was so taken in by fax.com that no one felt compelled to even tell me about the broadcast faxing.

Soon, 6 lawyers brought class action law suits against me personally and my small business. 3 of the cases I am listed on are for faxes that we did not even send, but I can not get us removed from the case. These lawyers are clever bounty hunters who don't care who they destroy.

The legal fees have forced us to bankrupt this business that I worked for 22 years to build from the ground up. Our 19 employees have LOST their job. Last month I sold my family home to cover legal defense cost. How much penalty is fair for wasting 1 cent of your paper and toner?

Yes we sent faxes out. But no district attorney or judge would say it is fair to wipe out a life time of work,- because one of your employees sent out faxes that cost you a penny to receive. If reversed cost is the justification for unlimited penalty – then how much does it cost to receive junk mail or phone calls at work, or unending radio ads, or television commercials for 22 minutes of every hour?

Yes, we sent out faxes, but how much penalty is fair? What other crime could we have committed that would have left 19 people without a job and 35 years of hard work and saving and building to be wiped out.

When enforcement of a law is turned over to entrepreneurial lawyers and bounty hunters, the penalty phase is going to be abused, and why not? These people are not interested in justice they want money and they do not care how many lives they destroy to get it.
-by KC Truby


Walter -- An interesting piece on the junk fax legislation and class certification. You might be interested in reading a well-reasoned opinion from the Second Circuit in Parker v. TimeWarner, 331 F.3d 13 (2d Cir. 2003), declining to certify a class action under the Cable Act, precisely because it would amount, in the aggregate, to a whopping damage exposure for the defendant. I discuss Parker and the general phenomenon of class settlement pressure in a forthcoming article in Columbia Law Review. A draft is posted here.
-by Richard Nagareda, Vanderbilt Law School


Otis, both of those things you mentioned are inherently legal activities. In other words, you would not reaonably be expected to know if they were using illegal means unless the landscaper says "I can do this job for 1/10th the price of the next guy" or if the broker says "I can guarantee you extremely high returns". If these types of things are said then yes, I would say that you bear some responsibility.

If someone approaches you and says "I can send a million faxes out for $100", it's on you to recognize that it is more than likely a shady deal. If you don't, that's evolution. My wife says I'm dead inside btw, since I'm so cold-hearted.

Certainly it is not a good thing that the gentleman lost his business and his employees lost their jobs, but if you don't penalize the people that benefit from the scam, you get nowhere in trying to police the activity. We work in a free-market economy where only profit motivation works in changing behaviors.
-by Pat W


The competitor scheme has already happened. One of the harshest class action suits I’m dealing with is from Louisiana where a competitor called our office and asked for product information by fax. He then gave the fax to his lawyer (declaring the fax was unsolicited.) The lawyer used that one fax to do a discovery motion on all faxes sent to Louisiana.

In this situation (not a fax.com deal) we had faxed 1,340 businesses over the past year, but this entire group had a previous business relationship with us. None of the 1,340 Louisiana businesses complained about our faxes to them. That did not matter to the lawyer. The one fax in hand and the 1,340 list was enough to demand $250,000 and to get class action status. The judge in the case said that since no other plaintiffs filed a claim, my competitor could have $1,500 (statutory maximum) and that the lawyer could get half and the judge would pick a charity to get the other half of the $250,000.

My competitor effectively pushed our legal cost beyond our capacity, the straw that broke the Camels back. He killed us with no more effort then calling my office and acting like an interested customer. Proving any of this is impossible – so the Louisiana lawyer has a free ride to black mail us out of hundreds of thousands of dollars.

This could happen to any business, no contract need exist for law suits to be filed. I could easily send 1,000 faxes under the name of my competitor and make sure that most of them land on the desk of entrepreneurial lawyers in 50 different states. Within days my competitor would have to answer hundreds of law suits in different jurisdictions or face certain business failure from default judgments. There would be no way out of such an event for a small business. This is a very bad law.
-by KC Truby


The easiest way to s the problem with this law is the latest offering by KC Truby.

The fax itself is proof that you faxed them, but there is no proof of the phonecall asking for the fax.

Not to mention that you could fax stuff from Kinkos or any other such place in th nam of your comeptitors and not have any traceable contract.

"Strict liability" (that is, intentions don't matter) laws should be (and used to be) EXTREMELY rare, and this law shows why.

The people the law is designed to target and the ones who most easily avoid it; th people most likely to be caught and severely punished by the law are those least in need of it.

In short, the law SUCKS. It's unjust.

This is like most pirate protection schemes: the professional pirates have cracked every code ever created bfor it even hit the market, and the legal owner who wants to make a backup copy (or even re-install, in the case of some software protection) is the on who gets screwed.

Not helpful... actively harmful, in fact.
-by Deoxy

Many junk faxes offer a number to call to have your number removed from the list. It often doesn't seem to work.

I would even recommend NOT calling the number. It might actually be one that will record that the phone number entered is a valid fax number, and they might even (fraudulently) claim that you had called their opt-in number. Or, they might simply sell your validated fax number to other fax-bombers.

It's sort of along the lines of the spam email you get, where they offer a means to unsubscribe to their spam. Unless you're dealing with a company you're confident is legitimate, you do not want to reply, or click the unsubscribe link, or whatever. You've just told someone that the email address to which you are supposedly unsubscribing is a valid email address, and that's very valuable to them. They turn around and sell your email address on a list of known, valid addresses. "Unsubscribing" is a sure way to increase your spam exponentially. The same may hold true for junk faxes.
-by MF


I say sue the bastards. Despite numerous requests I CANNOT get my fax number removed from the lists. The companies sending these faxes hide their identity, their mailing address, and other identifying. A few times I was able to trace the faxes back. I found companies with numerous complaints, expired business licenses, etc. Heck, I even got my state attorney general involved (it wrote a complaint letter to the offending company) and I got a reply from the faxer's lawyer. Yet the same company continues to send me faxes.

One time, I left town for three months and turned off the fax machine. My theory was the senders would get the hint I was gone and delete the number. The moment I returned and turned the fax machine back on, the faxes started up again.
-by lj

Unlike junk emails, which you can delete without much notice, junk faxes are using your toner, your paper, and your phone line. You get a phone call for each fax pickup, which in the middle of the night can be not only disruptive but nerve wracking. But the fines and punishment in this seem grossly disproportionate to the crime committed; the punishment does not fit the crime.

Legal issues