Angi Can’t Dismiss Lawsuit Over Failed Vendor Authentication–Everyspace v. Encor

Angi’s is the rebrand of the former Angie’s List. It matches contractors with homeowners. The plaintiff claims that the defendant company is engaging in a form of corporate identity theft, trading on its license number, and that Angi promoted the interloper as a certified contractor without doing proper verification. Angi unsuccessfully defends on Section 230 grounds.

This is the age-old issue of when a site’s marketing representation is rendered untrue by third-party content. I first started tracking the issue 20 years ago with the Mazur v. eBay case, where eBay represented that its offerings were “safe.” Here, the plaintiff alleges “Angi failed to verify Encor’s license, yet represented on its website that it vets the contractors listed on its platform.”

Angi responded that “its alleged failure to vet the accuracy of third-party content is immunized by Section 230,” which is absolutely true. We’ve had so many cases in this genre. See, e.g., this case involving Zillow.

The court makes some unfortunate and distracting references to Section 230 applying only to “passive” transmission of information, but looking past that, the court says:

EverySpace alleges that contractors listed on Angi must go through a background check and application process, Angi verifies license information for accuracy by calling the contractor whose license number was submitted (rather than the applicant), and Angi “promoted Encor … as an Angi certified/verified/authorized contractor.” EverySpace also alleges that Angi never called EverySpace to confirm the use of its license number. These allegations raise questions of fact as to what Angi did with the information provided by Encor before Encor was listed or promoted as “certified” on Angi’s platform. It is also reasonable to infer that because Angi markets its platform as “connecting verified contractors and homeowners,” Angi’s failure to verify Encor’s license contributed materially to the illegality here. Moreover, Section 230 does not immunize Angi to the extent that EverySpace’s claims are based on Angi’s own speech outside of the Encor listing, such as Angi’s claim on its website that it “routinely checks licensure for accuracy.”

This result reminded me of the Wozniak v. YouTube ruling, which said that Wozniak might have a claim over failed authentication of interlopers even if Section 230 otherwise applies to third-party content. As I discussed in that post, user authentication is important to user trust (look what happened when Musk blew up Twitter’s blue-check verification). However, if the legal standard is that authentication must be done perfectly and services are the financial guarantors of any mistakes, fewer services will offer verification.

Case Citation: Everyspace Construction, LLC v. Encor Solar LLC, 2024 WL 4062051 (D. Nev. Sept. 5, 2024)