25 Comments

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.

I’m for reasonable accountability, but there needs to be some accountability. I had to change over my system of faxing — buy fax software for my computer — because of these scumbags who were using up my fax toner…and I resent that. It’s my fax line I pay for, and my fax toner I pay for, and my life they’re sucking time from. It’s probably hard to believe, but I don’t have a fax machine so I can be awakened in the middle of my nap by people advertising junk bonds.

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.

Dear Mr. Olson,

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: http://wirednews.com/news/business/0,1367,65291,00.html?tw=wn_story_related

-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.

Regards,
Chris Hoofnagle

I’m the guy who brought the $2.2 trillion dollar suit. But we aren’t suing the telecom companies. I don’t know where you got your information from.

Also, even though the judgments are large the net results are people settle for far less.

The law works. I get far fewer junk faxes now than I did over the past 6 years.

A junk FAXer out of Quebec is calling my home number a few times a month at 2 AM in the morning. They are able somehow to fake their caller ID. Anyone know a good way to deal with this problem?

At my old office, I had to disconnected my FAX line because I was being bombarded by so many sleazy junk FAXes. In my experience legit company’s know better than to send out unsolicited FAXes. All the ones I get are from fraudsters.

Richard

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.

I want $500 or more per fax and their first born. These scumbags hide their fax numbers, have bogus companies…my experience is the same as that of others above. I resent that I had to rejigger my business equipment due to abusers. If I could track them down and sue them I would. I’d love to become part of a class-action suit against these scumbags.

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.

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 at http://ssrn.com/abstract=920833

KC, your story is an excellent one and should be published far and wide. When more people and companies realize that contracting with a junk faxer will destroy their business, then perhaps it will stop. Also, if you don’t know that “opt-in” is a MYTH then I have no symapthy. If you are not tech savvy yet use tech services, you run this risk.

I think that plaintiff’s attorneys are the lowest form of life but in this instance I am in total agreement that there should be major lawsuits and penalties for everyone involved. I include in that the telcos, who certainly are facilitators in this and email spam.

Pat W,

I cannot understand your logic here.

If it was found out that the landscaper you contracted with had been stealing the materials they planted at your home from a local estate, would you accept criminal liability for their acts and see fairness in having to pay millions to restore the grounds when all you got were a couple lilies?

Or if you hired an investment advisor and it was found that he has using insider info. Are you going to jail or should we just cease ALL your assest, not just the gains from his advise?

KC was as much a victim, if not more, of the Junk Faxers as those taht received them.

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.

So you have the FTC fine KC’s company $10,000 total, as it does for telemarketing violations, and impose criminal sanctions on the fax.com’s of the world. That’s sufficient deterrent to bar the sending of faxes as advertisements by legitimate businesses without penalizing the 18 or so employees and owner who weren’t responsible for the one idiot employee’s falling for a scam.

Amy, I don’t understand — who sends an advertisement that can’t be responded to? Of course, I get mysterious spam that has no way of purchasing the service being advertised (and other spam that’s straight gibberish), but are you really receiving faxes that have no means of contacting the sender?

I fail to see the distinction you make. There is nothing illegal about sending faxes either. And certainly nothing illegal about hiring someone to do so. The illegaily arrises from who they are sent to.

In fact, given the difficulty in determining just who you CAN legally send them to, it seems that contracting to a third party specializing in these matters would be the most responsible way to go about it.

I have no idea just how the contract between KC and whoever was written, service/product he was trying to promote or the price paid for the service. You seem to imply that if the price was fair(1000 faxes fro $100?) then he should not have questioned it.

What would you say is a ‘reasonable’ rate that would exempt a person from being held responsible for the act of another? Isn’t this idea a little odd? It certainly does not seem supported in the law.

It seems to me that that the only crime KC committed was hiring someone who contracted for a legal service what was performed illegally and who was perhaps not skeptical enough of the offer. You seem to be saying that the law should destroy the lives of such people and all who work for them.

If the faxes did not go to potential clients, then KC did not benefit. The people that committed the scam are the ones that should be punished. Not the folks duped into participating.

I cannot wait for someone to contract to have ads for the competition faxed. The scammers will run and hide making proving that it was someone else who hired them almost impossible. The lawyers will decend and destroy your competitor. And it only cost you $100.

“What would you say is a ‘reasonable’ rate that would exempt a person from being held responsible for the act of another? Isn’t this idea a little odd? It certainly does not seem supported in the law.”

Although IANAL, I think that the concept of “willful blindness”, which is supported by the law, would apply. Putting your head in the sand and saying “I didn’t know the car was stolen, even though I paid a crackhead $100 for it” would not suffice as a defense against a receipt of stolen goods charge, it seems to me, but then again I repeat IANAL. Perhaps one of the many that frequent this site can help us out on this.

As for hiring someone to blast faxes advertising your competitor, that is indeed a scanario I can envision. However, the difference there is that your competitor would have no contract with the faxer so would not be liable for the action. If something is done on your behalf yet you did not want it to be done or cause it to be done, I don’t see how that could result in a succesful tort action. Of course, it would take a lot of attorney’s fees to point that out to the plaintiff’s attorney.

If that type of thing was successful, I think we would see a lot of ambulance chasers hiring a blaster to fax people on behalf of large corps like MS or Wal-Mart, then turning around and suing those corps.

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. KC Truby

You missed the boat on this one.

“Amy, I don’t understand — who sends an advertisement that can’t be responded to? Of course, I get mysterious spam that has no way of purchasing the service being advertised (and other spam that’s straight gibberish), but are you really receiving faxes that have no means of contacting the sender?”

I just threw a whole bunch away when I cleaned my office, but they’re typically for “penny stocks” and such and designed to obscure who’s sending them – and believe me, I’ve tried to track down the people. (And I might add, I’m pretty good at tracking, having tracked and recovered my stolen car and tracked and prosecuted a guy who did a hit-and-run on my Honda Insight.) Many junk faxes offer a number to call to have your number removed from the list. It often doesn’t seem to work.

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.

A somewhat related topic: I get my mail at a mailbox rental place in Santa Monica – as do about a hundred other people. I started getting calls from Chase asking for “Deborah” and I can’t remember the guy’s name. Well, it turns out, if somebody isn’t paying their bill, Chase (and probably other companies) just search for anybody else at that address and bug the crap out of them. I explained that not only do I not know Deborah, I don’t live in the 4 x 4 x 15″ metal box where I get my mail. Grrrr. And naturally, they call when they’re sure to get you (ie, wake you). I sleep late on Wednesday because I wake up at 4am on Tuesday to make my deadline, then I’m up into the evening. Well, I sleep late except when Chase gives me a jingle to let me know total strangers are LATE ON THEIR BILL!

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.

I hate junk emails, I don’t own a fax but getting junk faxes would be even more annoying because they are an expense in addition to crap I don’t want.

That said, it seems to me that one of the most basic concepts of law is that of proportional justice. The punishment should roughly fit the damage the crime causes. Fines of hundreds of millions of dollars for annoyance seems excessively disproportionate to me, to say the least.

The oft-repeated claim that opting out of spam just targets you for more spam is a myth. While it certainly seems superificially plausible, numerous actual studies have shown that opting out actually does reduce the amount of spam you get, not increase it.