Two years ago, the Federal Trade Commission accused Napster co-founder, and creator of Jerk.com, John Fanning of pilfering data from Facebook accounts then charging people $30 each to manage their online reputations. A federal appeals court recently upheld most of the FTC’s ruling that Fanning deceived consumers about the source of the information contained on Jerk.com and the benefits of paying for membership.
To go back to the beginning, Fanning launched Jerk.com in 2009 — effectively a clone of the old “Hot or Not?” sites, where users make an immediate, binary ruling on the jerkiness of a random person based on minimal information — that also allowed users to post comments and reviews of the potential jerks. Within a year, some 85 million profiles were available for rating/commenting on the site.
If you ended up on Jerk.com and weren’t happy about it, you could click “Remove Me!” and be taken to a page where you could pay for a $30 “membership” to the site. Contrary to the “Remove Me” claim, a membership only allowed users to dispute comments posted about them on the site; profiles remained posted.
What really got under the FTC’s skin was the fact that most of the content on the site wasn’t posted by willing users — or even vindictive a-holes looking to get even — but via software that scraped Facebook accounts for names, photos, and other information, then used this data to fabricate profiles to be judged (and then allegedly ransomed for the membership fee).
In 2015, the FTC reached a summary decision against Jerk.com and Fanning, determining that the site had violated federal law by misrepresenting the source of its content, and by misrepresenting the benefits of purchasing a $30 membership.
Fanning was ordered to cease making these sorts of deceptive statements, and was required him to maintain records of advertising and marketing materials, along with and notifying the FTC of any complaints related to misleading or deceptive statements. He was also required to provide the FTC with updates on his employment status.
In response, Fanning petitioned the First Circuit Court of Appeals, arguing that Jerk.com never actually made the claim that all the profiles were generated by users.
But the appeals court notes that Jerk.com didn’t need to explicitly state “All our content is user-generated” if that claim can be implied through other means.
For example, the disclaimer on the site that Jerk.com could not be held liable for content because the content reflected the views of its users, along with references to its “millions” of users, are significant enough to be considered a declaration that the content on Jerk.com was created by users.
“[W]e see no basis for setting aside the Commission’s conclusion that at least a significant minority of users could reasonably view Jerk.com as claiming its content was wholly user generated,” writes the court in its opinion [PDF]. “Moreover, even if Jerk.com never expressly represented that its profile pages were created exclusively by users, it never expressly stated how the pages were created. The only information regarding the origin of the profile pages was the ‘Post a Jerk’ page allowing users to create profiles for other people. Given Jerk.com’s emphasis on user-generated content and the lack of information to the contrary, reasonable consumers could conclude other Jerk.com users created their profile pages.”
Additionally, the appeals court notes that many of the complaints filed with the FTC about Jerk.com mentioned a belief that another person had created a profile on the site. That, says the court, is an indicator that reasonable consumers believed the content on Jerk.com was created by human beings and not by some sort of data-scraping software.
Fanning argued that it was ultimately immaterial whether or not people believed the content on Jerk was user-generated or auto-generated using Facebook data.
Again, the court disagreed.
“A consumer’s belief that Jerk.com had many users or that an acquaintance made his or her profile page would influence that consumer’s decision to use Jerk.com or purchase a membership,” explains the panel. “The Commission also cited evidence that some consumers, in fact, purchased memberships from Jerk.com based on concerns that someone they knew created their profile pages and it would be seen by others.”
Regarding the $30 membership fee, the court says Fanning failed to show “any evidence that Jerk.com provided even one paid member the opportunity to contest information on a profile page. There is no evidence suggesting the people who paid but received no benefits were an aberration or mistake.”
Fanning attempted to argue that the FTC’s prohibition against him making misrepresentations about the “source of any content on a website” and “the benefits of joining any service” is a violation of his First Amendment rights, but as the court points out, there is no First Amendment protection against misleading commercial speech.
The only victory for Fanning came in the court’s decision to vacate the condition that he must update the FTC about his business affiliations and employment, even if it’s not related to the type of work involved in this dispute. The court determined this may be overly onerous and irrelevant, remanding the issue back to the FTC for further consideration.
“This ruling makes it clear that the defendant’s misrepresentations in this case were harmful to consumers,” says Jessica Rich, Director of the FTC’s Bureau of Consumer Protection. “We are pleased with the ruling, and will closely monitor the defendant’s compliance with the order, as we do in all our cases.”
by Chris Morran via Consumerist
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