FTC v. Accusearch, Inc. - 570 F.3d 1187 (10th Cir. 2009)

Rule:

The Federal Trade Commission Act, 15 U.S.C.S. § 41 et seq., enables the Federal Trade Commission (FTC) to take action against unfair practices that have not yet been contemplated by more specific laws. To be sure, violations of law may be relevant to the unfairness analysis. 15 U.S.C.S. § 45(n). In determining whether an act or practice is unfair, the FTC may consider established public policies as evidence to be considered with all other evidence. Such public policy considerations may not serve as a primary basis for such determination.

Facts:

Abika.com was a website that has sold various personal data, including telephone records. The Federal Trade Commission (FTC) brought suit against the operator of the website, Accusearch Inc., and its president and owner, Jay Patel (collectively, Accusearch), 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 constituted an unfair practice in violation of § 5(a) 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. On appeal, Accusearch argued the FTC's unfair-practice claim should have been dismissed because Accusearch broke no law and because the FTC had no authority to enforce the Telecommunications Act. Moreover, Accusearch alleged that it was immunized from suit by the protections provided websites in the Communications Decency Act (CDA), 47 U.S.C. § 230 (2006).

Issue:

1. Should FTC’s unfair practice claim proceed, notwithstanding the fact that Accusearch did not break any law independent of the Federal Trade Commission Act?
2. Was Accusearch immunized from suit by the protections provided websites in the Communications Decency Act (CDA), 47 U.S.C. § 230 (2006)?

Answer:

1) Yes. 2) No.

Conclusion:

The court found that although the premise for the Accusearch’s argument appeared to be that a practice could not be an unfair one unless it violated some law independent of the Federal Trade Commission Act (FTCA), 15 U.S.C.S. § 41 et seq., the FTCA imposed no such constraint, 15 U.S.C.S. § 45(n). On the contrary, the FTCA enabled the FTC to take action against unfair practices that had not yet been contemplated by more specific laws. Moreover, the FTC could proceed against unfair practices even if those practices violated some other statute that the FTC lacked authority to administer. A website helped to develop unlawful content, and thus fell within the exception to 47 U.S.C.S. § 230, if it contributed materially to the alleged illegality of the conduct. By paying its researchers to acquire telephone records, knowing that the confidentiality of the records was protected by law, Accusearch contributed to the unlawful conduct of its researchers, and thus, was not entitled to immunity under 47 U.S.C.S. § 230(c)(1). Accordingly, the judgment of the district court was affirmed.