Last week, the FTC issued an Order and summary decision against the owners of Jerk.com, an "anti-social network" website for deceiving users about the source of the website's content. The website invited users to create profiles of other users and rate the users profiled as "jerk" or "not a jerk."
In a twist of fate, the FTC thought the website's operators were the real jerks after misleading consumers through claims that the content on the website was posted by other Jerk.com users. While some of the content was user-generated, most of the content had been scraped from Facebook profiles. The website also claimed that users could receive additional benefits – including the ability to dispute information posted to the site by other users – through purchasing a $30 membership, when the consumers would actually receive nothing in return for buying a membership. The website also charged consumers a $25 fee to contact the website, and placed third-party advertisements on the site.
According to the Complaint filed in 2014, Jerk.com contained between 73.4 and 81.6 million unique profiles, including millions of profiles with pictures of children, which were collected without parental consent.
The Commission alleged that the representation that the content was user-generated was false or misleading because the information was taken from Facebook. In fact, the site may have violated Facebook policies, including by (1) failing to obtain users' explicit consent to collect certain Facebook data, including photographs; (2) maintaining information obtained through Facebook even after their Facebook access was disabled; (3) failing to provide an easily accessible mechanism for consumers to request deletion of their Facebook data; and (4) failing to delete data obtained from Facebook upon a consumer's request.
Although there was a factual dispute about whether the company violated Facebook's rules, the FTC noted that it was not necessary to decide the issue in order to determine that the website's statements were deceptive.
Further, the Commission found that the statements were material to consumers' decision to use the site because many consumers, presumably believing their profiles were created by frenemies, complained and sought their profiles' removal. Consumers were embarrassed and alarmed after seeing profiles of themselves or their loved ones, and in some cases, the profiles affected the consumers' business reputation. Jerk.com represented to consumers on Wikipedia and to investors that it was a user-generated website. By the owners' own admissions, it was important that the site's content be user-generated and the site would have more value to users if they believed that people manually created the Jerk.com profiles. This evidence of intent was relevant to the FTC's consideration of whether the statements actually conveyed the representation alleged.
The Order required the company to delete personal and customer information collected while operating the website, and it prohibited the owners from selling or disclosing any of the information. The Order also included a "fencing-in" provision that required the defendants to dispose of customer information and consumers' personal information that could be used to transfer the claims to other products. However, because the Commission found no misrepresentations regarding the site's privacy practices, the Order did not include a provision that would prohibit the defendants from misrepresenting their privacy practices in the future.
The Order should not come as a surprise; it is well-established that the FTC will easily find deception in a number of contexts. However, it reinforces the importance of being straightforward to consumers in online claims about the products offered on a website.
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