A business supply company could be on the hook for $17 million in damages after a New Jersey federal judge found that it violated the Telephone Consumer Protection Act (sent thousands of unsolicited faxes.). According to the lawsuit, Invecor, LLC, which does business as AMB Business Supply,
While many might ask, who still uses fax machines? The answer is that a surprising number of businesses still rely on the older technology. Even if they don’t frequently send faxes, many businesses keep the machines “online.” As a result, faxes remain a popular means of advertising for many companies seeking to target business clients.
TCPA Violations Can Be Costly
For businesses that rely on fax marketing, it is essential to understand the TCPA’s requirements. The TCPA is a federal statute that prohibits the use of “any telephone facsimile machine, computer, or another device to send, to a telephone facsimile machine, an unsolicited advertisement․”
The statute contains three key exceptions: (1) if a prior business relationship exists between the parties; (2) if the recipient voluntarily makes its fax number available for “public distribution”; or, (3) if the advertisement contains a notice informing the recipient of the ability and means to avoid future unsolicited advertisements. Running afoul of the TCPA can be costly because the statute authorizes statutory damages of $500-$1,500 per violation, regardless of the actual damages suffered by the recipient.
New Jersey TCPA Lawsuit
On January 24, 2007, Sparkle Hill, Inc. received an unsolicited telephone facsimile on its fax machine from the defendant, Invecor, LLC. The fax was an advertisement selling cash register and credit card paper rolls. Based on this fax, Sparkle Hill filed a lawsuit alleging a violation of the TCPA. The class-action suit seeks $17 million in statutory damages, which reflects the $500 statutory damages for each of the 34,000 faxes sent to nonconsenting recipients.
In a recent decision, U.S. District Judge Noel Hillman rejected Invecor’s argument that it should not be held liable under the TCPA because a third-party vendor sent the unsolicited faxes that failed to include the required opt-out information. As the court noted, companies whose services who are advertised in an unsolicited fax, and on whose behalf they are sent, may be held strictly liable under the statute even though they did not physically send the faxes.
The only issue remaining in the suit is damages, which Judge Hillman declined to address without information regarding how many class members opted out of the class-action suit, and how many members may have suffered harm beyond the $500 statutory damages. Ultimately, Invecor may get a reprieve from paying the full $17 million, as Judge Hillman asked the parties to consider whether the court should adopt the approach considered in City Select Auto Sales v. David/Randall Associates. In that case, the court asked the parties to determine whether a lower damage award would make the approved class members whole. The judge in City Select Auto Sales specifically suggested that if the typical response rate to a notice of class claims is estimated to be 15 percent, a judgment of 15 percent of $22 million may suffice.
Message for New Jersey Businesses
As discussed in a prior post, TCPA violations are attractive to plaintiffs’ class-action lawyers because the law authorizes significant statutory damages. Accordingly, New Jersey businesses should avoid sending out advertisements via fax unless you have a pre-existing business relationship with the recipients. In addition, it is also wise toand investigate any potential marketing firm that may act on your behalf.
Do you have any questions? Would you like to discuss the matter further? If so, please contact me, Robert Levy, at 201-806-3364.