Vendor of Illicit Phone Records Not Protected by 230–FTC v. Accusearch

By Eric Goldman

Federal Trade Commission v. Accusearch, Inc., 06-CV-105-D (D. Wy. Sept. 28, 2007)

Accusearch (a/k/a Abika) offers for sale records of telephone calls made by telephone subscribers. Abika doesn’t acquire the records itself directly from the phone companies; third parties do that. Even so, I believe the collection and resale of these phone records was illegal throughout the relevant time period. (Michael Erdman explores this more).

The FTC brings an action against Abika for unfair trade practices. Abika defends on 230. The FTC argued that Abika was the retailer; Abika argues that it is just an intermediary making matches between buyers and sellers of the records. The court rejects the 230 defense for two separate reasons:

* the statutory terms publisher/speaker are ambiguous, at least as applied to this case. Thus, the court turns to 230′s legislative history to conclude that Congress didn’t mean to protect these types of claims. The court says snarkily “It is ironic that a law intended to reflect a policy aimed at deterring ‘stalking and harassment by means of computer’ is now being urged as a basis for immunizing the sale of phone records used for exactly those purposes.” (Fair enough, but see Zeran!)

* reselling the records meant that Abika “participated in the creation or development of the information” and thus became an information content provider itself.

Both of these arguments are pretty strained. The statutory references to “publisher” and “speaker” aren’t entirely clear, but dozens of cases have interpreted them. It would have been nice to see the court consider those precedents before jumping to the legislative history as if the court is reading a 10 year old statute for the first time. As for the interpretation of “creation and development,” I don’t see how anyone can interpret those words to include retailing a record without any modifications at all.

Despite these analytical deficiencies, I think the court reached the right result. In my opinion, the retailer/intermediary distinction is the critical linchpin. It’s pretty well accepted that an intermediary between buyers and sellers is fully eligible for 230 even if the purchase/sale involves illegal goods–see, e.g., Gentry v. eBay (fake sports memorabilia), Stoner v. eBay (bootlegged recordings). In those cases, eBay was the venue to publish the seller’s advertisements to buyers. (See also Ramey v. Darkside Productions, another case holding that a publisher of third party ads wasn’t liable for the ads, even if the publisher helped prepare the ads).

In contrast, I think a retailer who acts as the merchant of record of third party goods generally should be liable for selling those goods, even if the goods were acquired for resale from third parties. I don’t see how 230 protects a retailer selling goods for its own account–I don’t think the claim is appropriately styled as either a “publisher” or “speaker” claim at that point. But see Prickett v. infoUSA, where infoUSA resold data it obtained from third parties but was still eligible for 230.

Unfortunately, I think the court’s biggest mistake is that it apparently forgot that it was addressing summary judgment motions, because the court made numerous factual inferences (some apparently contested) against Abika. So I think this ruling is best understood not as an SJ motion, but instead as a bench ruling where the court simply disbelieved that Abika was an eBay-like intermediary and instead concluded that a retailer can’t claim 230 for reselling illegal goods for its own account. Rephrased this way, I think the court reached the right result.

For more on this case, see Michael Erdman’s nice writeup.