In September 2016, the Second Circuit handed down its decision in FTC v. LeadClick Media, LLC, holding the operator of an affiliate-marketing network liable for the fake news published by its affiliates. This case could serve as a tool in combatting fake news stories that have plagued social media and caused real-world problems (like Pizzagate) in recent years. While this Second Circuit decision is unlikely to solve the problem of fake news stories on social media, it is a step in that direction.
In the case, a generator of fake news was denied protection of the Communications Decency Act. The CDA protects Internet service providers from being held liable as publishers of material posted on their sites by third parties.
Until 2011, LeadClick operated an affiliate-marketing network to provide advertising to online businesses. The affiliates advertised in various ways, including by creating advertising websites. In August 2010, LeanSpa, a company that sold purported weight-loss and colon-cleanse products over the Internet, hired LeadClick to provide advertising through its affiliate network. Some of these affiliates created what the court called “fake news sites,” which looked like genuine news sites with reporters discussing, what they claimed to be, their own experiences and comments from satisfied users. However, all of the content on these websites was fabricated.
The court held that LeadClick was not entitled to immunity under CDA §230(c)(1) because CDA had helped develop the deceptive content and was not merely a publisher of third party content. Without CDA immunity, LeadClick could be held liable for its affiliates’ false and deceptive advertising practices.
Our Salvation? Hardly.
By denying LeadClick CDA immunity, the Second Circuit has solidified the Federal Trade Commission’s ability to go after organizers of fake news affiliate advertising networks. This is significant because, unlike the individual affiliates, the organizers of these networks are more likely to have assets against which a judgment can be assessed. Simply shutting down one individual producer of fake sites is much less effective at stemming the tide of their proliferation than is shutting down the entire network.
However, this judgment will do nothing to empower the FTC to take on those organizations that supply the fake news that has led to issues like Pizzagate and that, potentially, played a role in the 2016 presidential election. Because the goal of these fake news sites is not advertising, they cannot be regulated by the FTC. In particular, given the free speech implications of government actions to limit fake news, it is likely that any solution to the problem will have to be found by the operators of social media sites and not the government.