In a decision issued on June 29, 2009 the Tenth Circuit held that a Web site advertising the sale of personal telephone records (1) committed an unfair practice in violation of the Federal Trade Commission Act; (2) that the Federal Trade Commission was authorized to enjoin; and (3) the Web site operator was not entitled to immunity under the Communications Decency Act. F.T.C. v. Accusearch Inc., No. 08-8003, 2009 WL 1846344 (10th Cir. June 29, 2009).
Factual Summary
Abika.com is a website that has sold various personal data, including telephone records. Specifically, from February 2003 to January 2006 Abika.com advertised access to personal telephone records. The Web site stated that its customers could acquire “details of incoming or outgoing calls from any phone number, prepaid calling card or Internet Phone,” and that “Phone searchers are available for every country of the world.” Abika.com's customers could purchase both cell phone and landline records. The Web site specified that cell phone records would detail the numbers dialed from a particular cell phone and generally include the “date, time and duration of the calls” made. Landline records would include the same information, save for the specific time at which calls were made. Acquisition of this sort of information would almost inevitably require someone to violate the Telecommunications Act or to circumvent it by fraud or theft. Accordingly, the Federal Trade Commission (FTC) brought suit against the operator of the Web site, Accusearch Inc., and its president and owner, in Wyoming federal district court to curtail Accusearch's sale of confidential information and to require it to disgorge its profits from the sale of information in telephone records. The FTC alleged that Accusearch's trade in telephone records (which are protected from disclosure under the Telecommunications Act of 1996, 47 U.S.C. § 222 and 18 U.S.C. § 1039) constituted an unfair practice in violation of the Federal Trade Commission Act (FTCA), 15 U.S.C. § 45(a) (2006). The district court granted the FTC summary judgment and entered an injunction restricting Accusearch's future trade in telephone records and other personal information.
Issues on Appeal
On appeal to the Tenth Circuit, Accusearch argued that the district court should have granted judgment in its favor because (1) it broke no law, (2) the FTC acted outside its authority by attempting to enforce the Telecommunications Act, and (3) it was entitled to immunity under the Communications Decency Act (CDA), 47 U.S.C. § 230 (2006).
Accusearch Violated the FTCA and the FTC Did Not Exceed its Authority
The FTCA prohibits “unfair or deceptive acts or practices in or affecting commerce,” 15 U.S.C. § 45(a)(1), and vests the FTC with authority to prevent such practices by issuing cease-and-desist orders, id. § 45(b), by prescribing rules, id. § 57a(a)(1)(B), and by seeking injunctive relief in federal district court, id. § 53(b). To be “unfair,” a practice must be one that “(1) causes or is likely to cause substantial injury to consumers (2) which is not reasonably avoidable by consumers themselves and (3) not outweighed by countervailing benefits to consumers or to competition.” Id. § 45(n).
On appeal Accusearch argued that at the time of its actions there was “no law preventing a third-party from collecting telephone records” and, therefore, its practices could not be unfair because they did not violate some law independent of the FTCA (18 U.S.C. § 1039 was passed after Accusearch ceased its activities and 47 U.S.C. § 222 only applies to telecommunications carriers). However, the Tenth Circuit rejected this argument, ruling that the FTCA enables the FTC to take action against unfair practices that have not yet been contemplated by more specific laws.
Relatedly, Accusearch also argued that the FTC had no authority to bring its claim because only the Federal Communications Commission may enforce the Telecommunications Act. However, the Court held that this argument fundamentally misapprehended the nature of the lawsuit because the FTC brought suit under the FTCA, not the Telecommunications Act. Nevertheless, the Court went on to state that FTC could proceed against unfair practices even if those practices violate some other statute that the FTC lacks authority to administer because condemnation of a practice in a criminal or civil statute may well mark that practice as “unfair” and a practice which either encourages such condemned conduct or encourages the use of fraud or theft to circumvent the statute, may likewise be considered “unfair.”
Accusearch is Not Immune Under the CDA
Accusearch also claimed that advertising access to telephone records on its Web site was protected conduct under the CDA, which provides that “[n]o 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.” 47 U.S.C. § 230(c)(1). Specifically, Accusearch claimed that it was merely the provider of neutral tools that offered “a forum in which people advertise and request” telephone records and therefore was not an information content provider. However, the Court rejected this argument in finding that Accusearch’s actions were not neutral with respect to generating offensive content inasmuch as Accusearch solicited requests for confidential information protected by law, paid researchers to find it, knew that the researchers were likely to use improper methods, and charged customers who wished the information to be disclosed. Accordingly, the Court held that Accusearch was in fact an “information content provider” because it was responsible for the development of the offending content and therefore not immune from liability arising from publication of that content.