Section 230 of the Communication Decency Act (CDA) promotes the free flow of information on the internet. The statute seeks to ensure that website operators and other interactive computer services are not hampered by lawsuits arising out of third-party communications, and as such, immunizes qualifying service providers from most tort liability for publishing third-party content. While courts have generally afforded online services broad immunity for publishing user-generated content, one recent decision highlighted the contours of Section 230 immunity.
In FTC v. Leanspa LLC, No. 11-01715 (D. Conn. Complaint filed Nov. 7, 2011), the Federal Trade Commission (FTC) filed suit to enjoin Leanspa, a business that allegedly hired affiliate marketers who created fake news websites to promote Leanspa's weight-loss products and market "free" trials to consumers, who could end up paying recurring payments for monthly product shipments that were hard to cancel (i.e., "negative-option" continuity plans). The fake news websites used domain names that appeared to be objective news sites and used fake reporters who claimed to have tried the defendants' weight-loss products, offering links to Leanspa's websites where consumers were offered the trial samples. Subsequently, the parties entered into a Stipulated Preliminary Injunction, ordering, among other things, the freezing of assets of the Leanspa defendants.
Interestingly, the FTC amended its complaint and advanced claims against the online marketer responsible for providing the links in the fake news stories that connected consumers to Leanspa's websites. According to the amended complaint, the marketer was allegedly paid a set fee each time a consumer clicked on a link on a fake news site and ended up purchasing a product on one of the LeanSpa websites.
In declining to dismiss the FTC's unfair trade practice claims, the court concluded that the online advertising company that provided network links that directed consumers from fake news sites to Leanspa's sites where consumers were sold products and allegedly deceived into enrolling in automatic enrollment programs may not be entitled to CDA Section 230 immunity. See FTC v. Leanspa LLC, 2013 WL 331233 (D. Conn. Jan. 29, 2013). The court found that it was unclear whether providing network links from fake news sites qualified the defendant as an "interactive computer service" that “enables computer access by multiple users to a computer server” under the statute in the way that hosting a website, message board, or search engine does. Even assuming that the defendant was an "interactive computer service," the court refused to find CDA immunity based on allegations that the defendant coordinated the use of the fake news sites, monitored them, discussed how to tailor the information to its client's products, and developed strategies intended to disguise the high level of chargebacks, all of which could plausibly make the defendant a "developer" of content on the fake news sites.
While the Leanspa court declined to dismiss the case, CDA immunity remains generally robust, as evidenced by another recent decision. In Stevo Design Inc. v. SBR Marketing Ltd., 2013 WL 308996 (D. Nev. Jan. 25, 2013), a sports handicapper brought, among other things, state law misappropriation claims against a foreign online message board that incentivized users to post content related to sports betting, with some users posting without authorization the plaintiff's proprietary information. The court found that the online message board was entitled to CDA immunity from the misappropriation claims because its sporadic editing of posts and its practice of awarding loyalty points for user posts did not make it a “developer” of content. The court held that although the defendant encouraged users to visit and interact with the site through its loyalty points system, its encouragement was not specifically directed at illegal publications or the reposting of licensed content.