Did The FTC Just Make Website Terms & Conditions Mandatory?

website terms and conditions requiredReed Morgan wrote an interesting article for Law360 regarding the FTC’s recent investigation into — and complaint against — JERK LLC. Ultimately, and smartly, he questioned if the commission’s decision inadvertently launched a new era of federally mandated website terms and conditions.

What Is JERK.COM And Why Did The FTC Go After It?

A revenge site that charged people to delete profiles, Jerk.com is one of the more “successful” online “reputation revenge” sites. According to Jerk’s marketing materials, the millions of profiles on its platform were put there by other people — not the site operators.

FTC Says Site Operators Created The Profiles Themselves

But the FTC thinks the Jerk execs created the majority of the profiles on the site. How did they get the information? By culling data from social media sites, like Facebook and Twitter.

FTC Says “Nah-Ah” To Profile Removal Extortion

The FTC doesn’t like extortion – especially extortion based on made-up facts. So, to punish, it slapped JERK with a deceptive marketing fine. According to the consumer watchdog commission:

“[JERK.COM] populated or caused to be populated the content on the vast majority of Jerk profiles by taking information from Facebook in violation of Facebook’s policies.”

Reed explains the significance of this FTC statement thusly (excerpts):

The fact that the information was pulled from Facebook in violation of Facebook’s policies does not seem to be material — let alone essential — to the deceptiveness allegation. Nonetheless, the complaint only alleges that “the representation [regarding the source of the content] was, and is, false or misleading” after stating that Jerk took information from Facebook in violation of Facebook’s policies.

The FTC is breaking new ground here. Jerk is not the first time the FTC has brought a case based (in part) on an alleged violation of another company’s terms or policies, but it is the first time the FTC has alleged that the violation of another company’s terms or policies can be part of a violation of Section 5 in its own right.

In other words, the FTC’s complaint can be read to suggest that simply using information pulled from Facebook in violation of Facebook’s policies is a deceptive act or practice, without any alleged misrepresentation to Facebook regarding the use of the information.

If the FTC continues to pursue this theory, it would essentially be turning Facebook’s policies into “federal law,” with compliance effectively enforced by the threat of Section 5 enforcement simply for using Facebook content in violation of Facebook’s policies.

Interesting, right? For years, though recommended – especially for legitimate businesses – the Federal Government never required website operators to have terms and conditions (unless the website had a commerce component). This recent ruling, however, could make website terms and conditions de facto mandatory.

Contact An FTC Marketing Attorney

If you need to speak with an FTC attorney who has helped many online businesses in their dealings with the FTC, get in touch with Kelly / Warner Law today.

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