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Will Section 230 Protect Bloggers from the FTC?

Sunday, July 05, 2009 at 09:41 PM EDT

The Federal Trade Commission has proposed to mandate disclosure of connections between bloggers and advertisers (those selling stuff) under its Section 5 authority, which enables the Commission to prohibit “unfair or deceptive acts or practices” in commerce. In short, the FTC seeks to hold advertisers and endorsers (those would be the bloggers) liable for 1) false or unsubstantiated statements made in endorsements, and 2) failure to disclose material connections between the parties. Materiality is assessed based on consumer expectations: would the connection between the blogger / endorser and the advertiser / vendor have reasonably been expected by the audience? If not, both sides are responsible, and potentially liable, for disclosure of any payment or promise of compensation in exchange for a post that has the effect of endorsing a product / service. The FTC rules cover affiliate marketing and, perhaps most interestingly, posts by employees to discussion fora and blogs.

There’s been significant fear and loathing of this proposal. At a recent legal meetup in NYC, I suggested that there may be a barrier - Section 230 of the CDA - to the FTC’s enforcement of this move (if it is adopted). Several participants thought I was a nutjob for making this argument, so I thought I’d set it forth and see what you think.

Section 230(c)(1) of the Communications Decency Act (47 U.S.C. 230(c)(1)) forbids treating a “provider or user of an interactive computer service… as the publisher or speaker of any information provided by another information content provider.” There are statutory exceptions for intellectual property law (but compare Doe v. Friendfinder with Perfect10 v. CCBill on this), the Electronic Communications Privacy Act, criminal law, and compatible state laws. The 230 shield has been interpreted quite broadly, though and Barnes v. Yahoo! suggest some chinks in its protection. (As always, I recommend highly Ken Myers’s Wikimmunity article on this topic.)

I’d argue 230 cabins the FTC’s Section 5 authority. Imagine a blogger who gets free passes from DreamWorks to “Transformers: Revenge of the Fallen” and, against the weight of all common sense, writes a paean to the movie, without mentioning the free tix. She’s now run afoul of the FTC guidelines: there’s no reason for the blogger’s audience to think that she got in for free, and the connection seems material to the review. What if the FTC goes after DreamWorks? In effect, the FTC’s argument is that DreamWorks is the speaker here: it helped generate the post by giving the blogger free entry to the film. (This stance is made more powerful by the fact that Transformers 2 appears to suck.) But that’s exactly what Section 230 forbids: the FTC treats DreamWorks as responsible for the blogger’s content. It seems this should work in the other direction as well - trying to hold the blogger liable for failure to disclose treats her as linked with DreamWorks and speaking on the company’s behalf. (This posture seems a closer case, though, since it imposes liability directly on the speaker / author, although what makes the blogger liable is connection to another Internet content provider.)

The obvious FTC rejoiner is an agency theory: the compensation arrangement makes the blogger a DreamWorks agent for this post. But that interpretation would render 230 a dead letter; we could readily concoct consideration-based arguments for most 230 cases that cut the other way. On this theory, would be liable for encouraging users to post stories about cads - in exchange for a public airing of their complaints, the site gets desirable content. Doe v. Friendfinder wouldn’t have to rely on a flimsy right of publicity claim: Ms. Doe could simply go after Friendfinder for the quid pro quo of attractive content in exchange for use of the service.

The employee as commenter / poster angle poses the problem neatly. If a DreamWorks publicity representative writes a blog comment, at the direction of the company’s CEO, trashing Ice Age: Dawn of the Dinosaurs as “a Blue Sky Studios plot to brainwash our children,” it is uncontroversial to hold DreamWorks liable for her speech. Firms can only act through their employees. But if she writes the same comment from home, with no studio input, based on her belief that animated squirrels are the devil’s minions, we’d be reluctant to hold DreamWorks liable. So, perhaps agency must enter the 230 analysis through the determination of who the “Internet content provider” is. I think it makes sense to separate employee blogging along these lines, but it does convert Section 230 from a relatively clear rule to more of a standard.

I don’t necessarily like the outcome here. Bloggers have been quite resistant to disclosure mandates (and even strong norms, at times) and are shocked, shocked to think that anyone could buy their support! Having the FTC push back, even if only in extreme cases, could be quite helpful. And it’s not just bloggers who are affected by this analysis - it would likely hold for Internet writing and endorsements more generally. Finally, the FTC is certain to dislike this suggestion that its Section 5 power wanes on the Internet (even though experts like Eric Goldman argue that other agencies, such as the SEC, are similarly constrained). But presumably this is what Congress wanted, and at minimum the Commission needs a cogent analysis of why its proposals escape the 230 driftnet.