Why Web Activity Can Harm Your Business

Can your company be held responsible for illegal activities committed by users of your Web site?

For the most part, the answer is no. But in what may turn out to be a landmark case, the U.S. Court of Appeals in California last month held that the operator of a roommate-matching Web site could be sued for user postings that may have violated fair-housing laws.

First, a little background. When Congress passed the Telecommunications Act of 1996, it expressly provided that Web site operators were not to be treated as publishers of the content users add to their sites.

Section 230, the safe harbor provision of the act, has principally protected Web site operators from a variety of damaging content, including defamation claims, misrepresentations, breaches of contract and even civil rights violations. As Internet technology has advanced, protection for message boards has expanded to cover blog hosts, sites that solicit customer comments and reviews, and classified ad sites, notably Craigslist.

The California case involved a service called Roommates.com, which asks registrants to identify their sex, marital status, sexual orientation and whether they have, or would tolerate, children as roommates. Fair-housing advocates in Southern California sued the company, arguing that since such questions couldn’t legally be asked by housing brokers in the real world, it was equally wrong to do so online.

Ninth Circuit Chief Judge Alex Kozinski, writing for the majority, ruled that Section 230 did not shield Roommates.com from being sued, because the potentially illegal content (the merits are yet to be decided) was elicited by questions the site asked in drop-down menu selections and free-form text boxes. The federal court held that the drop-down menus crossed the line between merely hosting content and assisting in the development of that content, the latter of which is not immunized.

Did Kozinski get it right? Under the court’s reasoning, operators are shielded from blog or other free-form postings by customers or other visitors to their Web site or service. But what real difference is there between having users indicate their preferences through specific menu selections versus a text box that asks, “What are you looking for in a roommate?”–other than to make searching the data more cumbersome?

And Roommates.com isn’t exactly like a local brokerage service. The site has more than 100,000 listings across the United States and Canada, and housing laws vary dramatically between states and even between different cities. An illegal question in California may be legal and commonplace in Georgia.

The Internet, Kozinski wrote, “has become a dominant–perhaps the preeminent–means through which commerce is conducted,” and as such must increasingly abide by laws of “general applicability.” That’s certainly true, but that makes it more important for law-makers and judges to understand the unique properties of digital interaction. Analogies to the physical world don’t always apply.

As a result of this case, Section 230’s safe harbor is now dotted with rocks and shoals–and more are likely to appear. You’ll need an increasingly steady hand at the wheel to steer clear of them.

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