Originally created 09/15/03

Faxed ads' days may be few



LOS ANGELES - Graphic designer Sheridan Obrien is fed up with the flood of ads for vacation cruises and penny stocks that routinely emerge from her fax machine. The unsolicited pitches use up her toner and paper, and wake her late at night.

"I feel very invaded, and very angry and very helpless," said Ms. Obrien, 53, who works from her home in Orange County.

That kind of frustration has led to dozens of lawsuits and two major court rulings in the past six months against faxed ads. The industry's days could be numbered.

"As a mass medium of advertising, fax could be dead," said John Kamp, a marketing industry attorney who represents several fax companies.

The legal wrangling reflects a broader backlash against such advertising nuisances as pre-recorded phone messages and telemarketing calls.

A national do-not-call list that blocks phone sales pitches has grown to more than 48 million numbers since it began accepting submissions on June 27. At least 32 states also have their own do-not-call laws.

At issue in both court decisions targeting faxes was the federal Telephone Consumer Protection Act of 1991, which bans faxing advertisements without prior consent from recipients. It lets consumers sue senders of the ads for $500 to $1,500 per unsolicited fax.

In March, the 8th U.S. Circuit Court of Appeals in St. Louis ruled in support of the act, overturning a lower-court ruling that held the law was an unconstitutional restriction on the First Amendment rights of fax advertisers.

The judgment was echoed last month by a California appellate-court decision that essentially gave state residents the go-ahead to sue over unsolicited faxes.

About a hundred suits targeting unwanted faxes are pending around the country. They range from small claims to about two dozen class actions.

In one case, a judge in Georgia ordered a Hooters restaurant in Augusta to pay nearly $12 million in 2001 for sending unsolicited faxes through a local telemarketing company. The award was later reduced to about $9 million through a settlement, said Harry Revell, an attorney for the plaintiff.

In addition, attorneys general in Arkansas, Illinois, Michigan, New Jersey, California, Kentucky, Missouri and Texas have sued companies in recent years.

"Hopefully, the junk fax industry will get a clue ... and get out of the business," said Nick Connon, who represents plaintiffs in an $8 million lawsuit that was revived after last month's California appellate decision.

A suit filed last year by Silicon Valley entrepreneur Steve Kirsch seeks $2.2 trillion in compensation. Although seemingly far-fetched, the figure represents an amount Mr. Kirsch says consumers are entitled under the Telephone Consumer Protection Act for unwanted faxes sent by just one company.

"I hate junk faxes," Mr. Kirsch said. "I don't know anyone who enjoys being woken at 3 a.m. to the sound of a fax tone."

There is a legitimate market for mass faxing. It helps pharmaceutical companies send drug information to doctors. Hotels and cruise lines use it to reach travel agents.

By contrast, junk fax companies blanket consumers with ads without their approval. They are normally hired by small companies and get paid a few cents for each fax.

Maury Kauffman, a consultant for the $300 million industry, said a handful of renegade firms are making it difficult for two dozen legitimate companies that "would like to see these other firms go away."