Section 230 of the Communications Decency Act (“CDA”) provides a safe harbor for certain online companies that host content generated by third parties, but this protection only applies to some types of liability, such as libel claims. Backpage.com’s CEO, Carl Ferrer, learned this lesson the hard way when he was arrested and charged with pimping on October 7, 2016.
The alleged facts in short are that Backpage, a classified ad website, charged fees to post “escort” ads and allegedly knew these ads were used for illegal sex trade operations, including prostitution and sex trafficking of children. Backpage’s self-reported revenue from January 2013 to May 2015 was almost $52 million, and from January 2013 to March 2015, 99% of that revenue was directly attributable to adult ads. In addition, Ferrer created two other websites using content from Backpage, including one that describes itself as an “escort phone number directory.” The government alleges that all of the information posted on the directory site was derived from “escort” ads hosted on Backpage. The government charged that by receiving fees for hosting these ads, Backpage derived support from prostitution and engaged in pimping and conspiracy to commit pimping under California Penal Code § 266h.
The relevant portion of the CDA’s shield from liability is speech-based. Specifically, under § 230, “No provider … of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider.” If a CDA defense is raised, the prosecutors will likely argue that California Penal Code § 266h creates liability for acts independent of whether Mr. Ferrer or Backpage was a publisher or speaker, such as “knowing another person is a prostitute” and “deriv[ing] support or maintenance in whole or in part from the earnings or proceeds of the person’s prostitution.”
Lessons from this situation include:
- If you know your site may be used for illegal activity, employ measures to mitigate it;
- Exercise caution before accepting fees for potentially illegal content;
- Flag and escalate high-risk content (including content for which CDA provides no immunity) for legal review.
Backpage and the Model Mayhem case suggest that a website operator may be found to have knowledge of illegal conduct when it is informed by law enforcement, and failure to act on such knowledge may create or compound liability. The question of when a website’s activities cross the line from neutral host to supporter of illegal conduct, will depend on the facts of the situation.