The 1st Circuit Court of Appeals upheld a Federal Trade Commission (FTC) ruling against the creator of Jerk.com for misrepresenting that information on its site was generated by users, when it was actually scraped from the data of more than 70 million Facebook users.
The site also deceived users into believing that they could publicly dispute or remove negative information posted about them by purchasing a $30 membership.
The company’s founder, John Fanning, the former co-founder of Napster.com, launched Jerk.com – “a self-proclaimed reputation management website” in 2009. The site falsely claimed that users or an acquaintance of a person, made profile pages where users could vote on whether someone was a “jerk” or “not a jerk” or post anonymous reviews about the person.
However, the profiles on the site were not posted by willing users, but rather a software that scraped Facebook accounts for names, photos and other data to fabricate profiles on the website.
The website contained between 73.4 and 81.6 million unique profiles. For individuals finding their profile on the site, the company offered a “Remove Me!” page which allowed them to “manage [their] reputation and resolve disputes” through a $30 subscription.
The site also charged subscribers a $25 customer service fee to contact or email the website. Subscribers believed the membership would allow them to alter, dispute, or delete their Jerk.com profile, but in many instances “received nothing in return.”
The company’s customer service department ignored requests to remove photos and other profile information.
After hundreds of complaints were filed with the FTC, the commission issued an administrative complaint against Jerk.com alleging it falsely represented the material on the site was generated by users and that it deceived users into believing purchasing membership would provide the ability to dispute or remove information from the website.
The complaint also alleged that Fanning was individually liable because he “participated in the deceptive conduct and controlled the acts and practices” of Jerk.com.
The FTC granted summary judgement against Jerk.com and Fanning in violation of federal law prohibiting deceptive practices affecting commerce. The commission issued an order enjoining Jerk.com and Fanning from misrepresenting the source of any personal information or content on the website or from misrepresenting the benefits of joining any service.
The order also required him to "maintain" and "make available" "advertisements and promotional materials containing any representation covered by [the] order" for a period of five years.
The order further required Fanning to notify the commission of any new business affiliation or employment and submit the business address for the next 10 years.
Fanning appealed the order to the 1st Circuit Court of Appeals. The court agreed with the FTC, finding that Fanning and Jerk.com implicitly misrepresented that the websites content was user generated, and expressly represented that a $30 membership would allow users to contest and remove negative reviews about themselves.
The court, further agreeing with the FTC ruling, rejected Fanning’s argument on appeal that the injunction violated his First Amendment free speech protection, writing that the First Amendment “does not protect misleading commercial speech.”
The court also upheld the 5-year record keeping provisions, finding it “reasonably related to Fanning’s FTC violations.” The court also made note that Fanning started a similar website “Reper” while running Jerk.com, writing that the east with which the deceptive practices “could be transferred to other websites weighs in favor of requiring Fanning to comply with some reporting requirements.”
However, the court found the 10-year compliance monitoring provision imposed on Fanning was overbroad. Without any guidance from the commission on the inclusion of the provision, other than its traditional practice of requiring such reporting in other cases, the court deemed the provision not reasonably related to Fanning’s violation and vacated the requirement.
The case is John Fanning v. Federal Trade Commission, case number 15-1520, in the United States Court of Appeals for the First Circuit.