A Federal Communications Commission rule that businesses that send out solicited fax advertisements must include opt-out notices exceeds the commission’s authority, says the U.S. Court of Appeals for the District of Columbia Circuit in a divided ruling.

The Junk Fax Prevention Act of 2005 bans most unsolicited fax advertisements, and requires businesses that send out permitted, but unsolicited, faxes to include opt-out notices, according to Friday’s ruling by the appeals court in Bais Yaakov of Spring Valley et al. v. Federal Communications Commission and United States of America et al. The act allows plaintiffs to obtain at least $500 for each violation from fax senders.

In 2006, the FCC issued a rule that requires businesses to include opt-out notices even on solicited fax advertisements, according to the ruling. The term “solicited” refers to faxes sent by businesses with the recipient’s invitation or permission, the ruling said.

Weston, Florida-based Anda Inc., which sells generic drugs, sought a declaratory ruling from the FCC clarifying that the act does not require an opt-out notice on solicited fax advertisements. 

 It had been sued in a Missouri class action for alleged violations of the 2005 law, with many of the pharmacies in the case admitting they had expressly given permission for the company to send them fax advertisements. 

“Let that soak in for a minute,” said the ruling. “Anda was potentially on the hook for $150 million for failing to include opt-out notices on faxes that the recipients had given permission to send.”

Several other businesses facing similar class action lawsuits joined Anda’s petition to the FCC. The FCC denied the petition, and Anda and other companies then filed a petition for the appeals court’s review.

“Although the Act requires an opt-out notice on unsolicited fax advertisements, the Act does not require a similar opt-out notice on solicited fax advertisements,” said the majority opinion, in vacating the FCC’s order in the case, and remanding the case for further proceedings.

The dissenting opinion says the majority ruling “shortchanges the FCC’s statutory authority” to implement Congress’ ban on unsolicited fax ads.