Wednesday, April 08, 2009

Internet "cash gifting" schemes attracting adverse attention; more pressure on Section 230 protections?


James Temple has an important story April 6 in the San Francisco Chronicle, “Beware online programs that promise cash,” link here.

Cash gifting programs are illegal in many states, being viewed as “chain letters.” California law makes it a crime when a “participant pays a valuable consideration for the chance to receive compensation for introducing one or more additional persons into participation.” Emphatically, that activity does not include multi-level marketing companies like Amway, which have been around for decades and whose operations are perfectly legal. However, the Internet has made it easier to propagate illegal gifting or chain letter schemes, with mechanisms like YouTube, forums, comments on blogs, and sites set up just for such promotions.

Internet companies typically make such activity violations of their “terms of service.” However, Section 230 of the Telecommunications Act of 1996 protects them from liability. Temple notes a comment by Kurt Opsahl of Electronic Frontier Foundation, that the law encouraged “an environment where you can have media being democratized and all the voices of ordinary people going online. If they were subjected to liability depending on the content, the Internet would become the province of only rich, cautious media companies."

Nevertheless, there are more pressures in recent court cases to make Internet companies accept more downstream liability risk, and there could be political pressures to roll back some Section 230 protections to protect the foolish in the general public from themselves. The Viacom suit aims to make YouTube police content more for copyright infringement, and there is a recent trademark suit (Rescuecom) affecting the use of keywords in searches that could display ads in “misleading” or “diluting” circumstances, as explained on my trademark blog April 4, here.

We have to remain vigilant about all these efforts to chip away at Internet “democratization.”

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