This week, the Federal Trade Commission (“FTC”) issued an order against Jerk, LLC and Napster co-founder John Fanning, respectively, for deceptive trade practices in connection with the operation of Jerk.com, a social media site that invited users to create profiles of other individuals and rate those individuals as a “jerk” or “not a jerk.”

According to the Complaint, the FTC alleged that the violations of the FTC Act consisted of:

  • Falsely representing to consumers that the content appearing on Jerk.com was generated by users, when in fact the content had been harvested from Facebook by the respondents;
  • Falsely representing to consumers that through the purchase of a $30 membership, users would receive additional benefits, including the ability to dispute information posted on the site, and the ability to edit or delete a profile;
  • Making it difficult or impossible for its nearly 75 million users to lodge complaints, by charging consumers $25 just to email the customer service department and frequently ignoring requests that photos and other profile information be removed.

The FTC has ordered the deletion of all personal and customer information collected from the operation of the website, which is now defunct, and prohibited the sale or disclosure of any of that information to third parties.  Additionally, the respondents are prohibited from misrepresenting the benefits of joining any service that they operate or might operate in the future, as well as from misrepresenting the source of any content, including personal information, appearing on any website that they operate or might operate in the future.  The FTC also concluded that Fanning was personally liable for the deceptive trade practices of Jerk.com because of his direct participation in, and control of, the subject acts.

Don’t Be a Jerk, Protect Your Business From Deceptive Trade Suits

As we have previously blogged, the FTC has been incredibly active in pursuing unscrupulous marketers, including online dating and social media websites.  Using its enforcement powers under the FTC Act and other regulatory laws and rules, the FTC has been especially vigilant in its efforts to ensure regulatory compliance with respect to the collection, use and sharing of consumer data.  In order to avoid a similar fate to that of Jerk.com, it is imperative to engage knowledgeable counsel to ensure that your practices are fully compliant with all applicable state and federal laws.