Second Circuit Holds Monetary Compensation for Survey Participation Not an “Unsolicited Advertisement” Under the TCPA; Disagrees with Third Circuit

The Second Circuit recently held, in Bruce Katz, M.D., P.C. v. Focus Forward, LLC, that an unsolicited faxed invitation offering $150 to participate in a market research survey does not constitute an “unsolicited advertisement” under the Telephone Consumer Protection Act of 1991 (the “TCPA”).

The TCPA defines “unsolicited advertisement” as “any material advertising the commercial availability or quality of any property, goods, or services which is transmitted to any person without that person’s prior express invitation or permission.” The Second Circuit reasoned that the subject fax transmissions “plainly do not advertise the availability of any property, goods, or services” and therefore “cannot reasonably be construed” as unlawful advertisements. The panel did note, however, that its holding may not necessarily extend to all “communications, including faxed surveys, offering the recipient both money and services,” as some such communications could incur liability under the TCPA depending on the specific content of the communication.

The Second Circuit’s holding in Katz departed from the reasoning in the Third Circuit’s divided opinion in Fischbein v. Olson Research Group, Inc. The faxes at issue in Fischbein consisted of requests to doctors to participate in market research surveys in exchange for monetary compensation. The Third Circuit held that such faxes are advertisements, reasoning that “an offer of payment in exchange for participation in a market survey is a commercial transaction, so a fax highlighting the availability of that transaction is an advertisement under the TCPA.”

The Second Circuit’s rejection of Fischbein was grounded in the TCPA’s definition of “unsolicited advertisement” and FCC regulations, rather than the encyclopedic definition used by the Third Circuit in Fischbein. In the Second Circuit’s view, “[f]axes that seek a recipient’s participation in a survey” communicate “the exact opposite of availability – it is stating a need for something not readily available to the sender.” The court also declined to extend the meaning of “property” under the statute to mean potentially available monies, here $150. The word “property” does not appear to include money as the word is used in the TCPA, and thus, the court declined to adopt such a broad meaning of “property.”

In sum, in the Second Circuit, “mere invitations to participate in a survey, without more to render them a pretext for advertising, should not themselves be viewed as prohibited advertisements under the TCPA.” In the evaluation of whether a fax advertises property, goods, or services, both the pretext and substance or content of the message must be considered. Time will tell how other circuit courts deal with the issue of payments for survey participation, and ultimately the Supreme Court may resolve the split as it has for many other TCPA issues in the past.

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