Background

Advertisers, e-commerce websites, affiliate networks, and publishers each play a large role in the development of the Internet. One reason they have been able to do so is Section 230 of the Communications Decency Act of 1996 (CDA), which immunizes online interactive services from liability arising from third-party content on their platforms. The CDA does so in twenty-six words:

“No provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider.”

Through this immunity, the CDA allows online services to host the speech of others, without assuming responsibility for what those users may say or do. No one disputes the premise that Section 230 fosters free expression and the creation of vibrant marketplaces for advertisers and merchants to efficiently and effectively reach consumers. Recently, however, confusion and controversy have arisen as to exactly who and what Section 230 does and does not protect, leading to divisions among court decisions and to calls for legislative “overhaul.” A quick review for merchants, advertisers, agencies, and affiliate networks seems desirable.

Not All Users of the Internet are Exempt

Section 230’s immunity is broad, but not without limits. To qualify for immunity, a defendant must satisfy a three-part test:

  1. The defendant online service is a provider or user of an “interactive computer service.” “Interactive computer service” broadly encompasses any online service that publishes third-party content. But the word “user” does not mean any person or organization who transmits messages over the Internet is a user for purposes of the CDA. As we will see, the definition becomes more vague as it approaches the company or person who creates or edits or facilitates the content of the message.
  2. The claim is based on information provided by another information content provider (i.e., the claim challenges third-party content).
  3. The claim would treat the defendant as the publisher or speaker of that information.

Section 230 expressly exempts five types of claims from its scope of immunity: (1) federal crimes; (2) intellectual property; (3) state law that is “consistent” with Section 230; (4) the Electronic Communications Privacy Act (ECPA); and (5) sex trafficking and child pornography laws.

Section 230 in the Courts

Some applications of Section 230 immunity are clear. For example, courts generally hold that Section 230 immunity does not apply where (1) the defendant created or developed the challenged content in some material way; (2) the claim does not treat the online service as the publisher or speaker of the challenged content; or (3) the claim falls into one of Section 230’s five exemptions.

The first scenario raises significant considerations for advertisers and marketplaces because marketplaces and advertisers often play an inherent role in developing content. Unfortunately, there is no clear rule establishing how far a defendant can go in developing or facilitating the challenged content while still receiving Section 230 immunity. In addition, content creation and development are not expressly defined in Section 230, so courts look to the totality of the circumstances to determine if online services have materially contributed to or themselves written the challenged content. For example:

  • No Section 230 immunity applies where the online services create content, such as false dating profiles or advertisements
  • It is unlikely that Section 230 immunity will be granted where the online service materially contributes to or develops user content, such as by (1) requiring users to upload unlawful content, encouraging or incentivizing it, or altering or adding to the user content in way that makes it unlawful; (2) knowingly facilitating the deceptive practices of third parties; or (3) actively soliciting unlawful information
  • Section 230 immunity likely applies if (1) an online service is merely notified of allegedly unlawful content, but did not contribute to or encourage it; or (2) an online service uses questionnaires to develop user profiles, and some users submit unlawful information in response to lawful questions
  • The Ninth Circuit held that Section 230 immunity applied to a social networking site for claims arising from group recommendations it made to users, which were determined by an algorithm, because the algorithm “facilitated the communication and content of others.” As such, the claims were based on third-party content, and immunity applied
  • But Section 230 did not immunize an online service from false advertising claims when it represented that its website offered “the most accurate and up-to-date rating information,” when in reality it altered and deleted user-submitted reviews

Plaintiffs and defendants continue to test the limits of Section 230 immunity, and courts have been sympathetic to arguments on both sides. For example, the Eastern District of Virginia recently held claims alleging violations of the Fair Credit Reporting Act (FCRA) were subject to Section 230’s immunity because, although the defendant assembled and compiled the challenged reports itself, the content was provided by third-party vendors, state agencies, and courthouses, and the defendants’ compiling of this content did not arise to content creation or material contribution. Meanwhile, the Third Circuit recently heard arguments in a case involving a journalist’s claims under a state right-of-publicity statute based on the unauthorized use of her photo on websites. The court is determining whether the state right-of-publicity claim should fall outside of Section 230’s immunity, based on the carveout for intellectual property claims.

An Added Complication

On May 29, 2020, then-President Trump signed an executive order that sought to substantially curtail Section 230 immunity for social media platforms. Citing “selective censorship” by these platforms, the executive order instructed the secretary of commerce to file a petition with the Federal Communications Commission (FCC) requesting that it clarify whether a platform’s failure to moderate or remove content “in good faith” would disqualify it from Section 230 immunity. Although then-Chairman Ajit Pai initially indicated that the FCC would move forward on January 7, 2021, in fact it did not.. On May 14, 2021, President Biden revoked the executive order, and Acting FCC Chair Jessica Rosenworcel recently indicated she does not intend to proceed with any Section 230 rulemakings. On its face, this issue has nothing to do with commercial marketing and promotion—except possibly political advertising—but any change to the scope of the immunity will affect all users of the Internet for the transmission of messages, regardless of the content of the message. This issue, however, has prompted a spate of congressional activities.

The Legislative “Fix”?!

There are a number of bills pending or promised in Congress that are intended to “fix” or at least clarify the policy issues surrounding Section 230. These include wholesale repeals of Section 230, requiring online services to implement consumer complaint mechanisms, and limiting the scope of Section 230’s immunity. Most relevant for advertisers is the SAFE TECH Act, introduced on February 8, 2021. In addition to other exceptions from Section 230 immunity, the SAFE TECH Act would remove platform immunity for any paid third-party speech if “the provider or user has accepted payment to make the speech available or, in whole or in part, created or funded the creation of the speech.” An identical House bill is pending in the House of Representatives.

These additions would significantly exclude a wide range of online advertisements from Section 230 immunity, including sponsored, promoted, or boosted posts and advertisements, and paid editorial placements. The word “funded” is very broad and perhaps deliberately so. If passed, the bill will likely have a significant chilling effect on online advertising, with platforms facing potential liability for claims arising from third-party advertiser content. As with any legislative proposal, the SAFE TECH Act, and other Section 230 proposals, must garner sufficient support to pass both legislative chambers and earn a presidential signature.

Takeaways

For now, Section 230’s broad grant of immunity endures. However, given the tension in judicial decisions, legislative proposals, and plaintiffs’ attempts to test the CDA’s bounds, advertisers, marketers, and other online services should stay abreast of developments in this area and take care before assuming that they are immune from claims arising from third parties’ content.