FCC’s no-fax rule draws ire of trade groups

A little-noticed provision in the Federal Communications Commission’s “do not call” regulations will stop businesses from faxing sales materials to existing customers unless they get prior approval.

Several Washington-area trade associations, including groups representing insurance agents, have been sounding the alarm to their members about the rule, which takes effect Aug. 25.

Those groups, which include the U.S. Chamber of Commerce and the National Association of Professional Insurance Agents in Alexandria, Va., have asked the FCC to reconsider the new regulations.

Kay Dempsey, a chartered life underwriter and chartered financial consultant who is president of The Dempsey Cos. in Atlanta, says the new regulations will affect her “tremendously.” Her company sells life insurance on a wholesale basis to other financial planners, stock brokers and certified public accountants.

“My unique value proposition is education,” Ms. Dempsey says. The Dempsey Cos. conducts seminars at which certified financial planners, brokers and insurance agents can earn continuing-education credits. “If I can’t fax my seminar announcements to my customers without prior approval, that limits their access.”

She adds: “These are people that have known us for 20 years, many of whom have done business with us. To get their prior approval, it puts an unnecessary step. If they don’t want to receive our fax, they e-mail, fax or call, and we immediately take them off the list. So much of this material is time sensitive. To get these turned around, we need to give very quick notice. People are busy. So we want to fax or e-mail.”

Despite an emphasis on e-mail today, “many times, our responses are better with faxes,” Ms. Dempsey notes.

free-speech implications

“The no-fax rule is really scary to us,” says Michelle Rupp, owner of Nowogroski Rupp Insurance Group Inc. in Seattle, which sells property and casualty insurance, as well as some annuities.

“When we send out faxes to our current clients, there’s quite a few things that can be construed as a solicitation if we’re talking about products and services,” Ms. Rupp says. “Part of our job, and what they pay us for, is to recommend products and services to them. We wouldn’t be doing our job if we couldn’t do that.”

FCC staff attorney Richard Smith says the FCC is considering a number of requests, including delaying implementation of the rule while it is considered further. The American Teleservices Association, a telemarketing group in Indianapolis, has filed suit in the 10th U.S. Circuit Court of Appeals in Denver contending that the FCC rules violate telemarketers’ right to free speech.

At the time it was issued, the FCC regulation was overshadowed by the overwhelming number of people signing on to the Federal Trade Commission’s “do not call” list for telemarketers (InvestmentNews, July 14).

Jeffrey Tenenbaum, a partner in the Washington office of Baltimore, Md.-based law firm Venable LLP, says the FCC may agree to delay implementation of its rule. But, he says, the delay would probably “only be limited to the requirement that the consent be given in writing. Express prior consent would still need to be obtained, and the `established-business-relationship’ exception would disappear.”

Patricia Borowski, senior vice president of the National Association of Professional Insurance Agents, is incensed by the regulation. The PIA represents about 20,000 independent insurance agencies that sell property-casualty, life and health insurance, which includes annuities.

“Not all members are created equal in terms of their communication modalities,” says Ms. Borowski, adding that many PIA members are retired and receive information about their group benefit programs by fax.

“Now I’m going to go out to my 86-year-old members who are in assisted living, and we’re going to confuse them by demanding that they sign an authorization form. Otherwise, we can’t fax to them,” she says.